Bharat Forge eyes hybrid, connected vehicles

Leading auto component maker Bharat Forge is looking to grow the business from emerging areas like electric, hybrid and connected vehicles. This will allow the Pune-headquartered company to expand the revenue from passenger vehicles beyond the current 10-12 per cent. 

The component maker currently gets half of its revenue from commercial vehicles and another forty per cent from industrial buyers. “The automobile as we know today is going to change. Because of youth, India will adopt changes faster than many countries. We are doing a lot of work on hybrid and electric. We are looking at various options to grow this,” Amit Kalyani, executive director told Business Standard in a recent interaction. 

The company, Kalyani said, is looking at several new products and technologies that will allow it to increase the revenue per vehicle in the passenger vehicle segment. “We definitely expect it to go up”. Bharat Forge is waiting for harmonisation of standards in the hybrid-electric vehicle space before it firms up investment plans. “Today everybody’s technology for electric and hybrid is different. Once harmonisation happens, one can tune investments in that direction,” he added. 

A foot into these new areas will help the company go beyond its traditional products such as engine and chassis components and enhance the value chain. The company gets about 60 per cent of its consolidated revenue of $1.2 billion (FY16) from the overseas markets.   

Talking about connected automobile space and related emerging areas, Kalyani said the company has to work in these areas. It may have to look at getting into joint ventures or acquiring companies in these areas. “Wherever we have technology gaps and we think we can’t bridge those gaps organically; we will look at opportunities. We are looking at the world as our resource”, he added.  The company sits on a cash reserve of about Rs 1,800 crore. 

As a move to widen its portfolio, the company has ventured into industrial spaces like mining, oil & gas and aerospace in recent years. Revenues from industrials are up to 40 per cent compared to 7-8 per cent 3-4 years ago. “If we had not done that, the impact in this downturn would have been severe”, said Kalyani.

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