BHARAT FORGE LIMITED E
Integrated Annual Report 2023-24
CF O R T I F Y OI N G T H E
R E
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Corporate Information
BANKERS
Bank of India
Bank of Baroda
Bank of Maharashtra
Canara Bank
State Bank of India
HDFC Bank Ltd.
ICICI Bank Ltd.
Axis Bank Ltd.
Citibank N.A.
Standard Chartered Bank
Credit Agricole CIB
HSBC Ltd.
JP Morgan Chase Bank N.A.
Deutsche Bank AG
Kotak Mahindra Bank Ltd.
AUDITORS
BSR & Co LLP
Chartered Accountants
COMPANY SECRETARY
Ms. Tejaswini Chaudhari
REGISTERED OFFICE
CIN: L25209PN1961PLC012046
Bharat Forge Limited
Mundhwa, Pune Cantonment,
Pune - 411 036, Maharashtra, India.
Phone: +91 20 6704 2777 / 2476
Fax: +91 20 2682 2163
Email: secretarial@bharatforge.com
Web: www.bharatforge.com
Contents
02 | About the Report | 24 | Environmental, Social | |||
06 | Highlights of the Year | and Governance (ESG) | ||||
08 | Message from the | 28 | Financial Capital | |||
01 | Chairman and Managing | 30 | Intellectual Capital | |||
Director | 34 | Manufactured Capital | ||||
14 | About Bharat Forge | 36 | Human Capital | |||
PG.01 | 17 | Geographic Footprint | 38 | Social and Relationship | ||
18 | Business Model | Capital | ||||
20 | Strategy | 44 | Natural Capital | |||
21 | Stakeholder Engagement | 48 | Governance | |||
CORPORATE | 22 | Materiality | 49 | Board of Directors | ||
OVERVIEW | 50 | Risk Management | ||||
PG.52 | 52 | Management Discussion and Analysis | |
63 | Board's Report | ||
91 | Report on Corporate Governance | ||
STATUTORY | 117 | Business Responsibility and | |
02 REPORTS | Sustainability Reporting | ||
PG.163 | |||
FINANCIAL | 163 | Standalone Financial Statements | |
03 STATEMENTS | 302 | Consolidated Financial Statements | |
About the Report
BASIS OF REPORTING
Integrated Annual Report 2023-24
BOARD ASSURANCE
Corporate Overview | Statutory Reports | Financial Statements |
OUR CAPITALS
we use in our business. Further, we cover information on material matters, governance, performance and prospects in context of the external environment. Our intent is to provide relevant information to the stakeholders to better equip them to evaluate our performance and take an informed decision.
REPORTING PRINCIPLE
This Report has been prepared in accordance with:
- Companies Act, 2013 (and the Rules made thereunder)
-
Indian Accounting Standards, the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 - Secretarial Standards
Other international guidelines referred to include:
The members of the Board acknowledge having applied their collective minds in the preparation of this Report. They accept the responsibility for its integrity and are of the opinion that the Report addresses all material issues and provides a fair and balanced view of the Company's performance.
FORWARD-LOOKING STATEMENTS
Certain statements in this Report regarding our business operations may constitute forward-looking statements. These include all statements other than statements of historical fact, including those regarding the financial position, business strategy, management plans and objectives for future operations. Forward-looking statements can be identified by words such as 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', 'plans', 'outlook' and other words of similar meaning
in connection with a discussion of future operating or financial performance.
Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and that may be incapable of being realized and as such, are not intended to be a guarantee of future results, but constitute our current expectations based on reasonable assumptions. Actual results could differ materially from those projected in any
Financial Capital
It represents the capital that we employ in the business to support our operations and execute business strategy for generating returns to our investors and shareholders.
Manufactured Capital
It represents our modern manufacturing facilities and equipment. We continually invest financial capital in it to support our growing scale of operations and enable manufacturing of diverse and evolving range of products.
Intellectual Capital
It represents our knowledge, process, technical excellence, and digital readiness and innovation capabilities led by our research and development (R&D) centers which provide us a competitive edge in the industry. We are continually investing in these to strengthen our ability to develop innovative solutions as per the evolving trends in the industry.
Human Capital
It represents the competencies, experience, engagement level and motivation of our people. They drive the organization's ability to innovate and run business efficiently, better serve customers, maintain strong relations, and achieve strategies.
Social and Relationship Capital
It represents the quality of relationships that we have with the customers, business partners and communities which enhances our reputation, and facilitates business growth and giving back to society.
Natural Capital
It represents the renewable and non-renewable environmental resources that we use in our operations and the impact our operations have on the environment. We are continually investing in these towards making our operations more sustainable.
- framework of International Integrated Reporting Council (IIRC)
- Global Reporting Initiative (GRI) Standards
BOUNDARY AND SCOPE OF REPORTING
The Report covers financial and non-financial information and activities of Bharat Forge Limited, India from April 1, 2023 to March 31, 2024. We have captured significant material events up to the Board Meeting held on May 8, 2024.
forward-looking statements due to various events, risks, uncertainties and other factors. We neither assume any obligation nor intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UN SDGs)
02 | 03 |
Integrated Annual Report 2023-24
For the past two decades, we have been on a remarkable journey of transformation and diversification. We've expanded our capabilities & competencies, strengthened our product portfolio, and broadened our horizons, all with the singular aim
of fortifying our CORE - customer relationship, organization, research and engineering capabilities.
We've evolved into a powerhouse of innovation and excellence, backed by our strategic endeavors and technology capabilities. What began with manufacturing components has now evolved into the development of critical systems across a range of sectors. Our journey is a reflection of our skills, fortitude and prudent investments, which enabled us to bolster capabilities across automotive, defence, industrial, and aerospace segments.
Corporate Overview | Statutory Reports | Financial Statements |
Our automotive business has made significant strides. Investments in world-class technology have facilitated the production of high-quality, sustainable solutions.
In defence, we've developed a comprehensive range of products and capabilities, poised to meet the diverse needs of global markets. Our industrial castings business has flourished since the acquisition of J S Auto Cast (JSA), becoming a trusted supplier of high-performance castings. Meanwhile, our aerospace segment is at a pivotal point, led by our focused efforts in state-of-the-art facilities and advanced components.
Best-in-class technical capabilities, customer engagement and a pristine balance sheet are the cornerstones of our success, enhancing our competitive edge and opening new avenues for growth. Our engineering and R&D capabilities have been at the heart of every innovation we've undertaken across our businesses.
As we steadfastly move forward, our focus remains on leveraging our strengths, capitalizing on opportunities, and fortifying our CORE. By doing so, we are setting the stage for a prosperous and sustainable future, ready to soar to new heights of success.
04 | 05 |
Integrated Annual Report 2023-24
H I G H L I G H T S O F T H E Y E A R
Delivering a strong performance
D15,682 Crore
Consolidated revenues
21.5%
D8,969 Crore
Standalone revenues
18.4%
D4,928 Crore
Standalone export revenues
10.5%
OTHER ACHIEVEMENTS
Corporate Overview | Statutory Reports | Financial Statements |
Record order wins of
D6,300 Crore in FY2024 driven by D4,494 Crore from Defence, D1,350 Crore from Core Business, and `456 Crore from
Ferrous Castings.
Achieved a 4X jump in Defence revenue to D1,561 Crore.
The executable order book for Defence as of March 31, 2024 was D5,192 Crore; the strong order pipeline provides good earnings visibility for the next 3 years.
06 | 07 |
M E S S AG E F RO M T H E
C H A I R M A N A N D M A N AG I N G D I R E C TO R
Integrated Annual Report 2023-24 | Corporate Overview | Statutory Reports | Financial Statements |
We've undergone significant transformation in the past two decades, from just an auto components supplier to a reliable & dependable components supplier for auto & industrial applications, solutions provider to defence industry and developing solutions for e-mobility.
Dear Shareholders,
It is my privilege to present to you our Integrated Annual Report for FY2024. This has been an exceptional year for Bharat Forge on many fronts. Our performance in the core forgings business has been strong, the defence vertical has taken off in a meaningful way, and the Indian subsidiaries continue to deliver strong results. While the overseas operations are showing signs of stability, there is still a long way to go before we reach there. The most heartening aspect of the year has been the slow but steady progress in the E-mobility business. I will touch upon all these points in more detail later in my letter.
08 | 09 |
Integrated Annual Report 2023-24
Corporate Overview | Statutory Reports |
Financial Statements
A THRIVING OPERATING ENVIRONMENT
The macroeconomic volatility and geopolitical tensions have dominated the global economic environment during FY2024. Against this backdrop, India's growth continues to be resilient, underpinned by strong public capex, booming industrial and manufacturing activity, and robust private consumption. India's Gross Domestic Product (GDP) grew by 8.2% in
FY2024, making it one of the fastest-growing economies in the world.
The global automotive industry has demonstrated resilience despite macroeconomic challenges, such as higher inflation, supply chain disruptions, and rising raw material costs. Demand momentum continued in CY 2023, with the easing of supply chain issues and inventory restocking. Growth was primarily led by the North American and European automotive markets with sustained demand for fleet replacement and personal mobility.
The Indian automobile industry delivered a robust performance in FY2024, propelled by strong economic growth and favorable government schemes. Improved vehicle availability, higher production, and the launch of newer, premium models contributed to a positive consumer sentiment and growth in the Passenger Vehicle (PV) segment. The domestic Commercial Vehicle (CV) segment was marginally impacted by a shift towards higher tonnage trucks with greater payload capacity.
A YEAR OF STEADY PERFORMANCE AND PROGRESS
FY2024 was a year of performance supported by all business verticals. The standalone business achieved revenue of `89,686 million, reflecting a growth of 18.4%. EBITDA was up 28% to `24,686 million and PAT grew by 36% to `14,249 million. The export business surpassed USD 580 million in revenue owing to a sharp increase in the PV export segment, which grew by 33% to `12,694 million. A deeper dive into the financials will reflect how de-risked the revenue stream has become, potentially reducing the impact of CV cyclicality.
For the year, the return ratios witnessed a sharp improvement with ROCE% inching towards 20% mark, ROE% closer to 17% and D/E (Net of cash) of 0.20.
Our consolidated revenue grew by 21.5% to `156,821 million while PAT increased by 79% to `9,102 million.
The consolidated balance sheet remains strong with cash of `31,800 million on the books and D/E (net of cash) at comfortable levels of 0.6.
During the year, we secured new businesses worth nearly `63,000 million, across automotive, industrial, defence and industrial casting businesses.
Our strategic focus and investments have yielded exponential growth in the defence business. This segment has taken off in a very meaningful way. With robust execution of export orders, we have achieved a strong revenue of `15,610 million, with more than 90% being export-driven. Overall, the defence vertical secured new orders worth `44,940 million.
Our industrial castings business, acquired in July 2022, has begun to deliver on its promise.
In its second year post-acquisition, this segment significantly contributed to our overall growth. J S Auto Cast ended FY2024 with a revenue of `5,667 million representing an impressive growth of 29.4% and an EBITDA of `755 million, marking a growth of 80%. We are working on several initiatives to enhance operational efficiencies and expand capacities including new product development, which will translate into stronger performance in the future.
8.2%
GDP Growth in FY2024
The overseas aluminum operations faced a challenging period due to both internal and external headwinds. A steadfast focus on improving capacity utilization, cost optimization, and cost recoveries will deliver the performance envisaged during the project conception stage. In FY2024, our European operations posted an EBITDA of `1,410 million, while the US operations reported an EBITDA loss of `953 million. The aluminum assets will capitalize on the megatrends of lightweighting and new mobility technologies. The products produced in the EU and NA are powertrain agnostic with supplies to both ICE and
EV platforms.
BUILDING A STRONGER ENTITY FOR THE FUTURE
We've undergone significant transformation in the past two decades, driven by the belief that the industry will increasingly shift towards emerging technologies and benefit from the booming domestic economy. We have established the necessary levers and executed meaningful investments to lay the groundwork for a robust future.
Our evolution from a manufacturer of critical auto components to a supplier of critical components and products/systems across multiple sectors has led to exceptional outcomes over a period. We have focused on creating opportunities in our areas of strength: material science, metallurgy, and metal forming and leveraging our customer relationships. With these as our foundation, we aim to move up the product and system value chain across various verticals, with an emphasis on technology and innovation.
We've strengthened our core business and expanded capabilities across automotive, defence, industrial, and aerospace segments through the introduction of new products, technological advancements, and acquisition of marquee customers. We have also enhanced our execution competencies with a combination of dedicated plants and a strong human resource pool, positioning Bharat Forge for sustained growth.
The Defence business represents a critical pillar in our growth strategy. It's a sector which we seeded in 2013 and has taken 10 years to bear fruit. With a comprehensive range of world-class products, including towed, mounted, and ultra-light guns, as well as protected vehicles and unmanned systems incubated through indigenous technologies, we are well-positioned to meet the diverse needs of global markets. Our commitment to innovation and excellence has led to the development of nine platforms in the artillery segment. We are now building the capability to manufacture over 250 guns and 1,000 vehicles per annum. Our manufacturing ecosystem will be structured to exceed this capacity should the demand rise. Since inception, we have been categorical about the activities we will not undertake as part of the defence business, which includes all weapons and systems banned by various UN and other international conventions. In FY2025,
the defence vertical will transition entirely into our 100% owned subsidiary, Kalyani Strategic Systems Limited (KSSL) once the new facilities are fully commissioned and licenses are transferred.
The defence business will not venture into businesses barred under various UN Conventions including those which ban manufacture and use of cluster munitions.
21.5%
Consolidated revenue growth in FY2024
29.4%
Growth in industrial casting business in FY2024
10 | 11 |
Integrated Annual Report 2023-24
Our industrial castings business has demonstrated remarkable progress since its acquisition in June 2022. This business has enhanced our overall capacities and capabilities, enabling us to deliver high-performance castings to a broad range of industrial and automotive applications. Leveraging advanced manufacturing techniques and focusing on quality has positioned us as a trusted supplier in this sector. Given JSA's strong reputation, accomplished management, and a superior talent pool, we expect robust growth in the coming years. With its ability to deliver high-quality complex castings, we anticipate JSA will become one of India's top three casting suppliers.
Our aerospace business is on the cusp of a significant breakthrough. Investments in cutting-edge technology and facilities have enabled us to become a key player in the aerospace supply chain for global leaders, aligned with the Atmanirbhar Bharat initiative. We are developing advanced components that meet the stringent requirements of the aerospace industry, ensuring safety, reliability, and performance. Our continued efforts in this segment are set to yield substantial growth, driven by increasing demand and our ability to innovate continuously.
The overseas business has significantly graduated from steel to aluminum forgings. Our priority remains to achieve sustainable profitability in our overseas business. The European operations are already in the black, and we expect our US operations to achieve operational stability in the coming year. We anticipate robust performance from our overseas subsidiaries in FY2025, driven by strong demand for drive train-agnostic components.
As we endeavor to stay future-ready in an evolving technology landscape,
I am pleased to inform you that we have inaugurated a state-of-the-art digital center with advanced capabilities in AI/Machine Learning and IoT applications. These investments will help us make
our manufacturing process more competitive and enable us to incubate future technology capabilities and talent development.
Our investments in e-mobility are showing promise. We continue to build capabilities and competencies aligned with the needs of the end consumer. All our endeavors in this space will be organic in nature, utilizing our own technology and know-how.
As our new, high-potential verticals gain traction and become profitable, we expect capex intensity to reduce and return ratios to improve. A stronger foothold in less cyclical sectors and diversification across B2B, B2G, and B2C customer segments will translate into consistent revenue generation. We are confident that our dedicated efforts, strategic pivots, and focus on technology and innovation will fortify our core and drive our success.
12
Corporate Overview | Statutory Reports | Financial Statements |
CONTRIBUTION TO SUSTAINABILITY
Sustainability is an integral part of our business, and we remain committed to advancing sustainability across operations. We aspire to lead ESG in the manufacturing space and have set bold targets for the same. Accordingly, we have institutionalized an ESG framework at the Board level. This framework acts as a guide for all our decisions. Consistent progress has been made in the areas of stakeholder engagement, resource efficiency, climate change, supply chain sustainability, customer engagement, risk management, ethics, and compliance. Our unwavering commitment towards reduction in emissions, increased use of secondary raw materials, optimal use of resources, and enhanced use of green energy remains on track. As a testament to our efforts, Bharat Forge's ESG score has seen significant improvement over the previous year. While maintaining a laser-sharp focus on implementing ESG initiatives,
we ensure that the outcomes are intertwined with our business priorities, ensuring sustainable growth.
We continue to prioritize R&D, quality, technology and engineering excellence, and sustainability in operations which positions us on a stronger footing.
THE BIG | Bharat Forge is a company in constant evolution and in value |
creation mode. At the core, we remain focused on innovation, | |
PICTURE | indigenization, and customer satisfaction. As the new verticals |
grow in scale, size, and reputation in their respective domains, we | |
expect the financial profile of the parent company to massively | |
transform into a cash-generating entity focused on incubating | |
newer businesses and verticals. Exciting times are ahead as we | |
focus on execution, creating a very vibrant and dynamic talent | |
pool. The Bharat Forge of circa 2030 will be an engineering | |
conglomerate spanning various sectors and applications. | |
ACKNOWLEDGMENT
I extend my gratitude to all our employees, customers, supply chain partners, investors and the Government of India for their continued support. Looking ahead, the opportunities before us are abundant. We have cemented our position as an eminent player in the industry with large capacities, high-end technologies, operational excellence, and a talented workforce. Now with our ambitious plans, we are well-positioned to continue our journey of growth and innovation. Our strategic investments, technological advancements, and unwavering commitment to quality and customer satisfaction will propel us into the next orbit of success.
I remain dedicated to our continued success and look forward to working with each one of you to take Bharat Forge to greater heights and create value for all.
Warm regards,
B N Kalyani
Chairman and Managing Director
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Integrated Annual Report 2023-24
A B O U T B H A R AT F O RG E
Globally recognized in innovation and advanced engineering
Bharat Forge has evolved into a diversified, global conglomerate, engineering critical solutions for automotive and industrial OEMs. Our engineering excellence, cutting-edge manufacturing and R&D expertise form the bedrock of our operations. We have constantly pushed the boundaries of technological advancements, creating indigenous products and solutions that meet the highest standards of quality and performance.
Our multi-sectoral engineering expertise, full service supply capabilities, and innovative solutions have driven our transformation from a single-product,single-location enterprise into a diversified, multi-product company serving diverse sectors. Our newer and emerging businesses, including E-mobility, automobile light-weighting, defence, and aerospace, are making remarkable strides. This progress is a testament to our continued efforts in pivoting these sectors, strengthening our foundation as a key player in the global market.
OWNERSHIP STRUCTURE
45.25% | 19.82% | 16.47% | 13.05% | 5.41% |
FI/Banks/Ins
Others
FII
MF
Promoter
Corporate Overview | Statutory Reports | Financial Statements |
KEY FIGURES
50+
Years of manufacturing experience
30+
Years of exporting experience
D52,592 Crore
Market capitalization
(As of March 31, 2024)
14 | 15 |
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Disclaimer
Bharat Forge Limited published this content on 16 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 July 2024 12:13:05 UTC.
