Bharat Forge expects Q4 to be better than Q3

A: I definitely hope it will continue in this quarter. We are seeing little bit of bullishness from our domestic customers for this quarter. It should be better than Q3. In fact Q3 has been the worst quarter for the medium and heavy commercial vehicle sector in the last 3-4 years. Q4 should be better and that should give us a little more positive momentum to end the year.

Menaka: Does that mean that you will sustain the growth that you have seen in exports helped a little bit by what we saw in terms of currency movement last year as well as see a recovery in the domestic market in this fourth quarter?

A: That is what we are hoping. Exports should be flat to slightly positive from this quarter, slightly positive over this quarter and domestic market should be slightly better than where we are at. Even if you see this quarter our domestic market Y-o-Y is down only 6 percent whereas the MHCV market is down 35 percent. So obviously we have grown our market share, we have grown our penetration and we are on a lot more new products that have entered the industry over where we were last year.

Senthil: Take us through the profile of your customers? How are they doing? I know auto is your largest but you have a fairly substantial exposure into other areas as well, power for instance. How is that doing?

A: One of the main reasons for the strong performance this quarter has been our non-auto performance where our non-auto revenues have now grown to 44 percent of total revenues and these are across sectors like power, oil and gas, rail, marine, construction and mining and we are starting to see tremendous growth opportunities and growth activities happening in these sectors, both abroad and in India. In India clearly the focus areas are energy and railways where we are focusing very hard on indigenising the procurement and on exports it is on high value products in energy and oil and gas and construction and mining and this is what has given a boost to our top-line and bottom-line in this quarter.

Senthil: Energy and power in the domestic market - are you seeing your clients going in for fresh capital expansions or is this renewal of existing projects?

A: Basically we are supplying components that go into projects here. If you look at the components we are supplying, we are starting to see again slight pick up on the small power plant side which are basically your cogen and industrial power plants. These are not the mega power projects that you are talking about, but some of the mega power projects that were announced in the last 2-3 years are now starting to see action on the ground and that is also where some opportunity is.

Menaka: Does that mean that you would characterise 2013 as the bottom of the cycle for India and that we are now moving upwards even if it is slowly and incrementally and would you extend the same to Europe as well which seems to have turned the corner. It is a big market for you. You have a large presence there. Can you talk us through the sentiment in both these markets?

A: I think that is a great question. I will say three things. One is Europe definitely has turned the corner. I think the sentiment is improving and we expect to see improved performance from our European subsidiaries. Already we have a good performance and we expect next year to be a little better. As far as India goes we are hoping that this is bottom. I do not think it can get any worse in few quarters. It is already looking better. How much better it gets incrementally and how fast we start growing the manufacturing sector really depends on the kind of support that is given and impetus given to the manufacturing industry. If you look at it right now manufacturing sector is pretty much comatose in India and on life support and it needs some shock therapy or some real intensive treatment to get it back on its feet again, but as far as our company is concerned even 13-14 will not be a bad year and I definitely expect 14-15 to be a pretty strong year.