Bharat Forge, the country’s largest forging company, will reduce capital expenditure (capex) in India this year, and will instead focus on sweating its assets and make select investments in electric technology companies.
A total of Rs 1,250 crore was earmarked for FY19 and FY20, including a capex program of Rs 850 crore, which will encompass units in Nellore (in Andhra Pradesh), Baramati (in Maharashtra), and forging and machining facilities.
The capex included Rs 500 crore for FY19, and Rs 350 crore for the present financial year. The reduced capex for this year comes even as the auto sector is going through a slowdown. Car sales were down 21 percent in May.
“This (capex) will result in significant headroom for growth in the next two, three years and we expect the capex intensity to drop very significantly as we will cut down on all significant capital expenditures and only focus on sweating our assets”, said Amit Kalyani, executive director, Bharat Forge speaking to analysts.
In addition to the Rs 850 crore spread out over last year and this year there is about Rs 400 crore of maintenance capex for both the years. There is also an additional investment of 55 million euros (Rs 430 crore) for a new aluminum forging plant in the eastern part of Germany.
“We are going to set up aluminum forging plant in the US also, location is yet to be finalised because we are looking at all the options where we can get the best overall deal, but that we will announce by October, November of this year”, added Kalyani.
The Pune-based company is taking new strides in the area of electric mobility. It recently formed a joint venture with Germany’s Refu Electronik GmbH for development and manufacture of electric vehicle components with an investment of Rs 89 crore.
Bharat Forge also increased its stake in Tork Motorcycles, the Pune-based electric bike start-up, to 48.86 percent through an additional purchase of shares worth Rs 4 crore.
Last year Bharat Forge picked up an equity stake in UK-based Tevva Motors, the provider of electric powertrain solutions to commercial vehicles for 10 million pounds. Further investments are lined in the UK company as per Kalyani.
“We have made so far 10 million pounds in Tevva and about Rs 30 crore in Tork Motorcycles. We may have to put in maybe somewhere in the region of between 3 million pounds and 5 million pounds in Tevva going forward”, added Kalyani.
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