Bharat Forge: “No Capex plan for this year; lost orders worth Rs 200 cr. due to COVID-19 pandemic”

India’s leading forging company Bharat Forge has no plan for capital expenditure this year as the company plans to preserve cash and only address the market demands.

India’s leading forging company Bharat Forge has no plan for capital expenditure this year as the company plans to preserve cash and only address the market demands.

While speaking at an earnings conference call to the stakeholders, Amit B Kalyani, Deputy Managing Director, Bharat Forge said, “Overall, the company will concentrate on getting nimble in these times. We will address the dynamic demands of our customers, work more closely with them. In fact, we have a whole new digital exercise on working virtually in a collaborative mode with our customers. We will focus on cash flow generation, cash flow preservation. We have no plans for any Capex as of now.”

“We will win new business through the customer-facing approach and the cost optimization that we have undertaken and we will continue to build upon whatever we have achieved in the last few years,” he added.

On the company’s last fiscal year performance, he pointed out that we were on the track that Q4 performance would have been on par with Q3. However, in the last 13-odd days, we were unable to ship out about Rs 200 crores worth of goods, both export and domestic, and that has impacted our earnings by about Rs 90 crores for the quarter.

The company reported a net profit of Rs 349.25 crore in FY20, against Rs 1,032.6 crore in the previous year.

To subsidize the further impact on business due to COVID-19, the company is taking various steps to reduce costs in different areas. Even the company is looking to consolidate its manufacturing facilities.

Amit B Kalyani said, “We`re looking at energy, manpower. We`re looking at even consolidating facilities. We have certain older facilities where for historic reasons when we had huge demand, we used to run them. For example, when we grew our front axle beam machining, we had lines that did 2,000 pieces a month. And 5 lines of 2,000 pieces a month is now replaced by 2 lines of 5000 pieces a month. So, you have 20 percent of the manpower or 30 percent of the manpower versus 3x as much productivity. Those are the kind of things we are doing.

In March 2020, the company floated VRS for employees above 10 years due to slow demand in the local and key export markets. And around 40-odd people who have taken a VRS. So hopefully, this is something that we are going to also accelerate, said Kalyani.

India’s leading forging company Bharat Forge has no plan for capital expenditure this year as the company plans to preserve cash and only address the market demands.

While speaking at an earnings conference call to the stakeholders, Amit B Kalyani, Deputy Managing Director, Bharat Forge said, “Overall, the company will concentrate on getting nimble in these times. We will address the dynamic demands of our customers, work more closely with them. In fact, we have a whole new digital exercise on working virtually in a collaborative mode with our customers. We will focus on cash flow generation, cash flow preservation. We have no plans for any Capex as of now.”

“We will win new business through the customer-facing approach and the cost optimization that we have undertaken and we will continue to build upon whatever we have achieved in the last few years,” he added.

On the company’s last fiscal year performance, he pointed out that we were on the track that Q4 performance would have been on par with Q3. However, in the last 13-odd days, we were unable to ship out about Rs 200 crores worth of goods, both export and domestic, and that has impacted our earnings by about Rs 90 crores for the quarter.

The company reported a net profit of Rs 349.25 crore in FY20, against Rs 1,032.6 crore in the previous year.

To subsidize the further impact on business due to COVID-19, the company is taking various steps to reduce costs in different areas. Even the company is looking to consolidate its manufacturing facilities.

Amit B Kalyani said, “We`re looking at energy, manpower. We`re looking at even consolidating facilities. We have certain older facilities where for historic reasons when we had huge demand, we used to run them. For example, when we grew our front axle beam machining, we had lines that did 2,000 pieces a month. And 5 lines of 2,000 pieces a month is now replaced by 2 lines of 5000 pieces a month. So, you have 20 percent of the manpower or 30 percent of the manpower versus 3x as much productivity. Those are the kind of things we are doing.

In March 2020, the company floated VRS for employees above 10 years due to slow demand in the local and key export markets. And around 40-odd people who have taken a VRS. So hopefully, this is something that we are going to also accelerate, said Kalyani.


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