Bharat Forge, India’s largest forging company, has set forth plans to allocate Rs 1,000 crore for capital expenditure (capex) over the span of 2.5 years, encompassing the financial year 2023-24 until the first half of FY 2025-26. This significant investment will be directed towards various facets of its Indian business, including core operations, electric vehicle components and systems, and defense ventures, according to a senior executive from the company.
Within the defense sector, particularly in artillery systems, Bharat Forge has already developed an array of offerings such as protected vehicles, armored vehicles, unmanned vehicles, and ammunition. Furthermore, the company is gearing up for internal production of a range of components, including traction motors, high-voltage DC-DC converters, controllers, and inverters.
Amit Kalyani, Joint Managing Director of Bharat Forge, highlighted the scope of expansion across different segments of the Indian business. “We are undertaking a large expansion now in various areas within our Indian business. This will be in forging, machining, EV related forging, and components, and our defense plants are also coming online. So, we’ll probably invest somewhere around Rs 1,000 crore in the next 2.5 years,” Kalyani stated during a recent conference call.
Kalyani also pointed out that the defense division had secured additional orders worth Rs 280 crore in the previous quarter, spanning multiple customers and product segments. He predicted that, given the current global demand, the defense segment would contribute around 10 percent to the company’s total revenue.
“Our combined order pipeline (in defense) now stands in the range of Rs 2,200 crore to Rs 2,300 crore, which is largely exports. This will be executed over the next 18 months, and this encompasses orders across vehicles, artillery systems, components, naval solutions, and unmanned systems. Seeing the global demand, this segment should be close to 10 percent of our overall revenue by the end of this year and will keep on increasing going ahead,” Kalyani added.
Kalyani further indicated that the company aims to reduce its debt by over Rs 1,000 crore in the next two years through internal approvals.
Bharat Forge’s established businesses, developed over the past 5-10 years, are poised for growth and have the potential to offset potential challenges in core operations, as noted by brokerage firm Motilal Oswal Financial Services (MOFSL) in its recent report. The defense sector, the e-mobility sector, and a strong order book in the non-auto segment are anticipated to contribute to the company’s positive trajectory.
