Bharat Forge lines up Rs 1,250 crore capex for FY19 & FY20
The Kalyani Group-controlled company will incur Rs 500 crore capex in FY19 and about Rs 350 crore in FY20
August 21, 2018 / 14:42 IST
Bharat Forge | Government of Singapore name appeared in shareholding pattern of September quarter with 1.11 percent stake, LIC raised stake to 4.90 percent from 4.66 percent in June quarter.
Bharat Forge, the country largest forging company, has lined up capital expenditure of Rs 1,250 crore for FY19 and FY20 as it looks to open new plants, secure defence contracts and get ready for Bharat Stage VI.
The Kalyani Group-controlled company will incur Rs 500 crore capex in FY19 and about Rs 350 crore in FY20. A further $55 million (Rs 380 crore) will be spent on setting up an aluminium forging plant in the US for its automotive clients.
Confirming this development, Amit Kalyani, Executive Director, Bharat Forge, said, “We are now in the midst of Rs 500 crore capex where we are expanding our forging and machining capacities. This will start coming online from next year and will provide us substantial growth headroom. In FY19, our capex is about Rs 500 crore and next year it may be Rs 350 crore. Right now, the US capex for which we have a large order is $55 million.”
The company’s focus on the US market follows the huge surge in demand for aluminium forged auto parts in light of the light weighting of vehicles ahead of the rollout of tighter emission norms. While aluminium forged products are more expensive than steel, they are however stronger and lighter.
“We are seeing strong traction in aluminum forging demand in the US and have now decided to set up a facility. This will be a brownfield expansion. We expect strong export market demand across all sectors. In the domestic market, we see fairly strong demand, in spite of this weight load change that has been made on axle loads,” Kalyani added.
The company is betting big on defence orders over the next 6-12 months, especially from field artillery guns that the Indian Army has been testing for the past few years. Four of the company’s artillery platforms have been tested. It is now fielding the guns for Army Trial 1 platform. This means that post-testing by agencies the guns will be sent for user trials.
Kalyani hopes to secure a pilot order for some products before FY19-end.
"In terms of revenue from the defence space because of components and exports, this year itself will be an inflexion point. Once you start receiving revenue from this programme, it will become big. This year itself, we will garner substantial revenue from defence by this fiscal-end,” Kalyani told analysts.
