Bharat Forge Ltd, an auto forging company, said that its fourth quarter net profit rose 16% to Rs80 crore on account of higher capacity utilization. Revenues grew 17% to Rs1,132.4 crore for the quarter ended 31 March.
For the full year, Bharat Forge reported a 13% increase in profit to Rs283.4 crore, with revenues rising 38% to Rs4,275.2 crore because of higher sales from outside India—which rose 46% as three subsidiaries acquired in 2005 had a full-year contribution in 2006-07. Bharat Forge acquired Federal Forge Inc. of the US, as well as Sweden's Imatra Kilsta AB and its wholly owned subsidiary Scottish Stampings in Scotland. The company also formed a joint venture contract with FAWCorp of China for its forging business.
“It was a year of consolidation wherein we completed our ambitious expansion programme in India and began aggressively ramping up the capacity utilization. On the global front, we continued implementing operational improvement initiatives across all our subsidiaries,” said B.N. Kalyani, chairman and managing director, Bharat Forge in a statement.
The company has also been continuously improving capacity utilization even as it added capacity in the last two-and-a-half years.
“We achieved capacity utilization of 76% in the fourth quarter, which is up from 62% in the first quarter of the year and 67% and 71% in the second and third quarter on a stand-alone basis,” said S.G. Joglekar, chief financial officer. The company has increased its forging capacity to 2,40,000 tonnes a year from 1,20,000 tonnes two and a half years ago.
The Pune-based company is also diversifying from auto components to non-auto component businesses. It is planning to make forged and machined components for aerospace, ship-building, rail and construction business equipment. It has already invested Rs350 crore in a new factory in Baramati, close to Pune, which will start production in April 2008.
The company plans to take the contribution of non-auto component business to total sales from the current figure of 17% to 25% in 2008-09, and about 40% within five years. “The diversification into the non-auto components would positively benefit the company,” vice-president SSKI Securities, S. Ramnath said.