Bharat Forge, the largest forging company in India, has lined up capital expenditure of INR 1,250 crore for FY19 and FY20. The fund will be invested in opening new plants and securing defence contracts. The Kalyani Group-controlled company plans to invest US$55 million (inr 380 crore) on setting up an aluminium forging plant in the US for its automotive clients. The company will further invest INR 500 crore capex in FY19 and about INR 350 crore in FY20 in business expansion.
Commenting on the expansion plan, Amit Kalyani, Executive Director, Bharat Forge, said, “We are now in the midst of Rs 500 crore capex where we are expanding our forging and machining capacities. This will start coming online from next year and will provide us substantial growth headroom. In FY19, our capex is about Rs 500 crore and next year it may be Rs 350 crore. Right now, the US capex for which we have a large order is $55 million.”
The US market is seeing huge demand growth for forged aluminium auto parts as lightweight vehicles are becoming a norm to conform to the new stricter fuel economy and carbon emission standard. Though forged aluminium products are more expensive than steel, they are stronger, durable and much lighter. Bharat Forge plans to leverage on the growing demand through its expansion.
“We are seeing strong traction in aluminium forging demand in the US and have now decided to set up a facility. This will be a brownfield expansion. We expect strong export market demand across all sectors. In the domestic market, we see fairly strong demand,” Kalyani added.
On the domestic front, the company is looking at more defence orders over the next 6-12 months. The demand is expected to come for use in field artillery guns that the Indian Army has been testing for the past few years. He confirms that four of the company’s artillery platforms have been tested for applications.
Kalyani hopes to secure a pilot order for some products before the end of FY19.
"This year itself, we will garner substantial revenue from defence by this fiscal-end,” he concluded.
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