Mumbai: Bharat Forge Ltd on Tuesday reported a 64% jump in fourth quarter net profit helped by growth in both its auto components and non-automotive space and said it will be expanding forgings and machining capacity.
Bharat Forge, the world’s second biggest forgings maker, expects to invest 2.5 to 3 billion rupees over the next two years to boost the automotive output, it said.
It will also invest £1.5 million in its gear boxes JV with David Brown, chairman Baba Kalyani told reporters.
The firm is setting up a heavy press line, which is expected to increase forging capacity by 15%, and is also increasing machining capacity for crankshafts.
Earlier on Tuesday, the company reported a quarterly net profit of Rs 100 crore beating analysts’ expectations of Rs 85.523 crore, helped by increasing sales due to healthy domestic demand.
The car sales in India, which saw a record 30% growth in 2010-11 driven by demand from a growing middle class in Asia’s third-largest economy, easier access to loans and a wider choice of models. The growth however, has now started moderating.
“Growth momentum on the domestic front might slowdown on account of macro headwinds, but should be compensated by buoyancy on the export front with strong growth forecast for North American CV (commercial vehicle) markets and continuation of demand pick-up in Europe,” the company said in a statement.
But the growth in the overseas markets, especially in the North American commercial vehicle segment, will be high over the next two years, Kalyani said.
“We are now entering South America, we have started supplying our products to Brazil, we are also getting into Russia.”
Bharat Forge has been increasing focus on its non-automotive business and has formed joint ventures with Alstom for supercritical turbine generators and NTPC for high pressure pumps, valves and pipings for the power sector.
It expects revenue from non-automotives to contribute over 40% by end of the current financial year ending 31 March, while it plans to invest about Rs 200 crore over two years in its joint ventures in non-automotive segment, Kalyani added.
The firm said it expects its Alstom JV to be awarded a Rs 4,455 crore NTPC contract for 5 turbines of 660 MW.
Its engineering procurement and construction (EPC) division is currently executing a 18 billion rupee project, which involves setting up a 450 MW power plant over two years starting from FY12.
The firm’s current net debt is at 9 billion rupees while it holds the cash worth 5 billion rupees, Kalyani told reporters.
The company’s shares closed down 6.49% at Rs 304.50 in a flat Mumbai market.