Mumbai: On the back of automobile demand falling by at least 50% in Europe, Bharat Forge Ltd could shutter an unviable plant in Europe.
Around 75% of the company’s consolidated revenue comes from overseas, and a lion’s share of it from the automotive sector.
“We have six plants in Europe and we could do with five instead of six. It doesn’t really make any sense but we have not made that decision yet,” chairman and managing director Baba Kalyani said. “We will make that decision once we get a little more clarity from our customers.”
Scottish Stampings Ltd, which the company bought in 2005, could be the first. Deputy managing director G.K. Agarwal said: “At Scottish Stampings, which is located in the UK, we have seen some issues with the volumes being very low, as it is a single press operation. So that is a operation that could possibly get reorganized.”
The firm is now planning for flexible capacity that can be realigned to market demand quicker than fixed capacity. Although the company is trying hard to maintain profitability by shutting idle capacities, it is also looking to buying assets to climb up the value curve.
Agarwal said: “We are looking at a lot of consolidation opportunities right now. What would interest us is opportunities that would consolidate our business in terms of technology, market share and obviously our efforts to rationalize our own capacities on a global scale.”
The company said most consolidation opportunities are in Germany and the US.
With at least Rs500 crore in surplus cash, the company is looking at forging itself stronger to better weather future economic storms.