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Bharat Forge Q3: Slight pickup in global demand but uncertainty continues in domestic business

Updated : February 10, 2020 04:02 PM IST

Bharat Forge sulked in trade on Monday on the back of a weak set of Q3 results with both the auto and industrial businesses seeing a decline. Amit Kalyani, deputy MD of the company shared his views and outlook.

“We are seeing a bottoming out in the domestic market. The bottom has been reached in the commercial vehicles (CV) market, passenger vehicles (PV) market but we are not seeing any big growth coming from these markets. On the global environment, in certain markets like PVs we see good growth. We expect that the business in Q4 will be higher than Q3,” he said.

“Overall the sentiment in the automotive industry in India is not very positive yet. There are a lot of unknowns and overhang. We just have to wait and watch and see what happens. We are in very close dialogue with all our customers both domestically and globally and domestic customers are not willing to give a forecast for anything more than a month to a month and a half,” he added.

In terms of recovery in the North American market, Kalyani said, “I don’t see any further decline in the North American CV space. We expect our PV exports will go up in North America, both in this quarter as well as in the next because we have won a lot of new products. In the CV business for Europe, we expect the business to go up next year because we have again won a lot of new programmes, which are for new products. So it will be additional value per vehicle. So even if the number of vehicles stays the same, we will have additional dollars per vehicle or euros per vehicle"

Kalyani acknowledged a dismal third quarter. "I think this is pretty bad and pretty much our worst quarter. This quarter we have also had an exchange loss of about Rs 15 crore. That has also further impacted our bottomline. We expect that there will be some improvement in the next quarter but it is not going to be very substantial.”

Speaking about the targets for revenues or for profits by the end of the fiscal, he said, “We are in derived demand business. We can only focus on maximizing our revenue based on what our customers do. What we can do is focus a lot on cost innovation and basically be as efficient as possible. This is pretty much the bottom of the barrel, we should start seeing an upward tick going forward.”

The company is financially on a strong footing. "We have almost Rs 1,900 crore of cash, we have a strong balance sheet, extremely strong technology. We are working with all our customers to see how we can take advantage of global economic scenarios and global other scenarios to see how we can leverage what we have and grow our business,” Kalyani noted.

When asked if it is likely to see any HR related issues in terms of job losses in the sector or in the company, he replied, “As a company we have always been a good corporate citizen, we have tried to be as fair and as good to our team and employees as much as possible. Whenever there are instances like this, you do need to restructure but it will be done in a most humane and in a staggered manner. It is not going to be done abruptly.”
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