Bharat Forge Limited Case Study
Growth Strategies Case Study
Bharat Forge : Catalyst in Global Auto Forging Industry
Publication Year : 2006
Authors: Abhijit Sinha
Industry: Auto Component
Case Code: GRS0248K
Teaching Note: Not Available
Structured Assignment: Not Available
India-based Bharat Forge Limited (BFL) was globally the second largest auto forging company after ThyssenKrupp of Germany. BFL was the flagship company of Pune- based Kalyani Group with interests in steel, steel-based products, forgings and automotive components. The company made a humble beginning in 1961 with a small plant in Pune. Over the years, the company became the second largest auto forging company, globally the second largest engine component manufacturer. It owned the largest single-location forging plant in Asia and globally the largest plant for manufacturing axles. Along with manufacturing forging items and components for automobiles and commercial vehicles, the company was also a global leader in producing components for railways, earth moving equipments, hydrocarbons, sugar, steel, coal, ship building, oil and gas, refinery and general engineering equipments. Globally, BFL was known for its operational excellence, technical supremacy and cutting edge know-how. The cutting edge technology and manufacturing excellence helped the company to become the preferred supplier of global automotive companies. It had an enviable buyers list from global automotive companies, like General Motor, DaimlerChrysler, Volvo, Mitsubishi Corporation, Toyota Motor Corporation and Hyundai Motors. It also had tie-ups, joint venture and technology sharing with leading auto component manufacturers and original equipment manufacturers like Meritor, Carpenter Technology Corporation, Rockwell International and Delphi Corporation. As a part of the growth strategy, the company opted for both green-field expansion and brown-field expansion. BFL made a few significant acquisitions globally to mark its presence. Among the list of the acquisitions, Carl Dan Peddinghaus, CDP Aluminiumtechnik and Imatra Kilsta AB were the most significant ones.
This case study discusses in detail about the expansion strategy of Bharat Forge Limited; how the company became the global leader in auto forging industry, management philosophy of the company, expansion strategy adopted by the company to become the global leader, business model of the company and glimpses of the domestic and global auto component industry. This case further offers a scope for discussion about the trends and strategy of the industry, strategy adopted by the company to become the market leader and how it leveraged its advantages to mitigate the pitfalls and limitations of the strategy.
- To discuss how Bharat Forge established itself as the second largest global forging company
- To understand the global structure of the auto component industry with the emergence of Tiers in the value chain
- To discuss how BFL started as a small supplier of mechanical equipments in 1961, transformed itself into the second largest global forging company in just four decades
- To assess how the company planned to change its business model by foraying into non-auto component sector as it had been highly depended on the automotive sector.
Bharat Forge Limited (BFL); Original equipment manufacturer (OEM); Auto forging; Auto component; Tier 1 supplier; ACMA (Automotive Components Manufacturers Association); Delphi Corporation; Crankshafts; Single die forgings; Dana Kirkstall; CDP Peddinghaus; DaimlerChrysler; Growth Strategies Case Study; General Motors; Mitsubishi Corporation; Greenfield expansion
Bharat Forge Limited
Competitiveness of Indian Auto Component Industry
BFL: In Search of Operational Excellence
BFL: Diversifying in new segments
BFL: From Pune to Peddinghaus
Domestic and global clients of BFL
Auto Component Industry Structure (Turnover)
Currency Exchange Rates
Case Study :
INR 200 = USD ($)
INR 150 = USD ($)
Teaching Note :
INR 400 = USD ($)
Analysis Of A Global Company-Bharat Forge
- Length: 1703 words (4.9 double-spaced pages)
- Rating: Excellent
Analysis of a Global Company - Bharat Forge
It's a surprising fact: The world's largest factory for forgings - parts for
engines, axels and the like - sits not in Detroit, Tokyo or Stuttgart, but in the
industrial city of Pune.
The factory, equipped with gleaming robots and networked with plants
overseas for technical support, belongs to Bharat Forge, foremost among a
group of auto parts companies that are rapidly putting India on the world
map for manufacturing.
Bharat Forge has embraced a strategy that includes heavy investment in
technology, a scientifically skilled workforce, and aggressive overseas
With revenue exceeding $1 Billion, Bharat Forge's success offers a roadmap
to other ambitious Indian manufacturing firms. It's a classic example of a
company with an entrepreneurial management team that understands the
global industry well.
"Information technology leveraged India's intellectual power in services,"
says Amit Kalyani, executive director of Bharat Forge. "We're doing the same
in manufacturing. "
Bharat Forge Ltd (BFL) is one of the most innovative and exciting companies
to emerge in the history of the forging industry. BFL is the flagship company
of the US $ 2.1 billion Kalyani Group.
It is a leading global Full Service Supplier' of forged and machined - engine
& chassis components. It is the largest exporter of auto components from
India and leading chassis component manufacturer in the world. The
company manufacturers a wide range of safety and critical components for
passenger cars, commercial vehicles and diesel engines. The company also
manufactures specialized components for the railway, construction
equipment, oil & gas and other industries.
Bharat Forge has been investing in creating State-of-the-art facilities, worldclass
capacities and capabilities. It has built up a strong capability in design
and engineering, including a full fledged product testing and validation
facility, which gives Bharat Forge a Full Service Supply Capability - from
product conceptualization to designing to manufacturing and product testing
Its customer base includes virtually every global automotive OEM and Tier I
supplier. Daimler Chrysler, Toyota, BMW, General Motors, Volkswagen, Audi,
Renault, Ford, Volvo, Caterpillar - Perkins, Iveco, Arvin Meritor, Detroit
Diesel, Cummins, Dana Corporation, Honda, Scania and several others
source their complex forging requirements including machined crankshafts,
front axle beams and steering knuckles from Bharat Forge.
Technical agreement with SIFCO, USA for hammer forging
1966 Start of hammer shop commercial production
1972 Execution of maiden export order to Greece
Technical agreement with Tokyo Drop Forge, Japan for technology
up-gradation and quality improvement for hammer forgings
Entry in the erstwhile USSR market by winning a large contract for
under carriage components
Major breakthrough in the developed markets of Japan, USA and
UK for the critical suspension and engine components like front
How to Cite this Page
| Essay about McDonald's: A Global Company - Introduction The purpose of this research is to provide a substantial assessment/explanation/analysis of the degree to which the McDonald’s operates based on a universal cultural or whether it is most strongly influenced by the national culture of that country. The researcher will explain how McDonald’s uses diversity and organizational initiatives to contribute to the corporate bottom line. Finally, the researcher will evaluate the company’s bottom-line rationale for diversity initiatives. Specific Aspects that Makes McDonald’s a Diverse Organization According to Royle (1999) McDonald’s is a very large multinational enterprise (MNE) and the largest food service operation in the world.... [tags: Business Administration]|
:: 9 Works Cited
|Essay on History of Nestle: A Swiss Company - ... Year Award/Certification 2010 Nestle Purina Malcolm Baldrige National Quality Award 2010 Nestle Global Food Industry Award. 2011 Nestle 27th World Environment Center (WEC) Gold Medal award 2011 Nestle Stockholm Industry Water Award 2011 Nestlé Malaysia Award of the Association of Chartered Certified Accountants for their Sustainability Reporting 2006 Nestle Japan ISO standard certifications: ISO14001, ISO 22000 2006 Nestlé OHSAS 18001 certification 2009 Nestle Waters LEED certification Employees by Geographic area Factories by Geographic area Products The company has a diversified portfolio of products.... [tags: food company, competitors, nutrition]||2625 words|
|Hilton Worldwide: A Global Hospitality Company Essay - ... Ans: Hilton HHonors Worldwide: Loyalty Wars” by John Deighton and Stowe Shoemaker details the importance of this program to their strategy and marketing efforts. The competitive advantage that Hilton derived from the “HHonors” is apparent. The use of Information Technology in loyalty programs provides access to information of consumers that can be analyzed for decision making purposes. Information collected from consumers can be stored in data warehouse and analytical tools applied to it can provide business intelligence that will give businesses a competitive advantage.... [tags: guest, program, members, anaylsis]||920 words|
| Business Plan for Beauty Products Company Essay - Table of Contents Executive summary 2 The company 2 Company description 2 Vision statement 3 Mission statement 3 Objective 3 Company background 4 Product/ service and industry 4 Product/ service description 4 Industry description 5 The market 5 Market and target customer 5 Competition and competitive advantage 6 Marketing strategy 6 Overall strategy 7 Sales plan 7 Competitive plan 7 Research and development or growth plan 8 The organization 8 Legal and organizational structures 8 Key personnel 8 Related service providers 8 Location 9 The financials 9 Critical risks 9 Income statement 9 Cash flow projection 10 Balance sheet 10 Start- up costs 10 Assumptions 11 Schedule 11 Conclusion 11 Refere... [tags: Business Plan for Cosmetics Company]|
:: 13 Works Cited
|Pigeon Forge Essay example - Pigeon Forge The Pigeon Forge area attracts students because of the entertainment choices and location. Teenagers enjoy Pigeon Forge because of the shopping, restaurants, and tourist attractions. It is a getaway from their hometown with plenty of choices of things to do. There are outlet malls that sell a variety of clothing. A few of the attractions located in this area are race tracks, bungee jumping, indoor skydiving, and put-put. Families with young children will be able to do a limited amount of outside tourist activities, but instead might opt to shop within some of the popular outlet malls.... [tags: Descriptive Essay About A Place]||1016 words|
| Essay on Lenovo- technology company - Introduction about the company One of the largest technology company in the world, Lenovo had a humble beginning as a small Chinese firm founded in 1984. The company showed modest growth throughout the rest of the 20th century. It wasn’t until the company’s acquisition of IBM’s personal computer business in 2005 (Martin, 2014) that the company began to gain prominence in the technology industry. Lenovo’s innovation and strategic decision making has allowed the company to evolve on a global platform and enabled it to become one of the leading technology companies in the market today.... [tags: company, technological advancements]|
:: 30 Works Cited
|Gap Analysis: Global Communications Essay - Recently the telecommunications industry has been a disappointment. Stockholders are in an uproar over plummeting returns on their investments and fear that the trend will not return to normal. There has been a drop in stock prices that top over 50%. The harsh environment has put Global Communications under the microscope to perform economically. The market is saturated with companies domestic and abroad vying for the same business. Cable companies have dealt a devastating blow by bundling services that were once sold separately, such as computer, television, and telephone.... [tags: Global Communications Case Study]||1612 words|
| Bharat versus India Ideology Essay - “Bharat” and “India” Two Ideas of an Independent Indian State Hindu revivalism has been a part of Indian nationalism almost since the independence movement itself began. However, it has gone through many forms and been embodied in many different organizations, often being ignored in the forum of Indian politics. However, the victory of the Hindu revivalist Bharatiya Janata Party (BJP) in the elections since 1998 has forced many scholars to reconsider the history of such movements, to analyze the forms they have taken throughout the 20th century.... [tags: Hindu Bharatiya Independence]|
:: 4 Works Cited
|Ford Motor Company Strategic Audit Essay - Ford Motor Company Strategic Audit Abstract The purpose of this paper is to give a brief detail of the strategic audit of Ford Motor Company. The method of research used was Internet research by topic. In addition to the class textbook audit example used, other written references in the area of Ford Motor Company were used, in order to develop the subject more in detail. This topic was selected among a series of topics of general interest in the area of strategic audit for a corporation, as a class requisite.... [tags: Analysis Ford Motor Company]||1313 words|
| Essay on Global Business - Essay 1 – CAGE Framework In the text Redefining Global Strategy, Pankaj Ghemawat discusses a method of indentifying the various differences that can exist between two countries, and that must be addressed when considering cross-border operations. This method is called the CAGE Framework. CAGE is an acronym used to describe the cultural, administrative, geographic, and economic distances that can exist between multiple countries. While methods of measuring physical and psychic distance have been already been incorporated over the last three decades, “… the CAGE framework takes a much broader view of distance, and has a much more solid empirical base.” (Ghemawat, 41) By exploring these four... [tags: global strategy, language, ethnicity]|
:: 4 Works Cited
axle beams and machined crankshafts
1993 ISO 9002 accreditation
Establishment of new machining facilities for crankshafts, front
axle beams and heavy steering knuckles
1999 QS 9000 accreditation
Implementation of a US $ 30 million forging facility expansion
programme by commissioning of second 16000 MT's Weingarten
(Germany) make screw and 2500 MT's mechanical press lines
Acquired Carl Dan Peddinghaus GmbH & Co. KG (CDP), one of the
largest German Forging Companies with plants in Ennepetal and
Acquired CDP Aluminiumtechnik now known as Bharat Forge
Aluminiumtechnik. Provided an entry into the hi-end & fast
growing aluminum component business
Acquired Federal Forge now known as Bharat Forge America Inc.
Provided BFL with a manufacturing presence in USA one of its
Acquired Imatra Kilsta, AB, Sweden along with its wholly owned
subsidiary Scottish Stampings, Scotland (together called as Imatra
Signed a JV with FAW Corporation, the largest automotive group
in China. JV named FAW Bharat Forge.
Acquisition Strategy: Inorganic Growth
BFL is among the first in the Indian automotive component industry to have
adapted inorganic growth as a means to establish a global manufacturing
footprint. BFL started executing on this strategy of acquisitions at the start of
the century. BFL needed access to the European markets and the stringent
laws of the EU made it almost mandatory that they have a manufacturing
presence in Europe.
These acquisitions have provided BFL access to customers in new
geographies, enhanced technological capabilities and enlarged the company's
In 2004 BFL acquired Carl Dan Peddinghaus (CDP), the 2nd largest
forging company in Germany that is mainly engaged in the
manufacture of passenger car components.
CDP Aluminiumtechnik, a company in Germany that manufactures
aluminum components for automotive applications.
In 2005, BFL acquired Federal Forge now known as Bharat Forge
America Inc., which provided BFL with a manufacturing presence in
USA one of its largest markets.
Acquisition of Imatra Kilsta, AB, Sweden along with its wholly owned
subsidiary Scottish Stampings, Scotland (together called as Imatra
December 2005, Bharat Forge signed a JV with FAW Corporation the
largest automotive group in China. Through this new JV BFL makes a
powerful entry into the large and fast growing Chinese automotive
Bharat Forge is aggressively pursuing global expansion. This is in line with
the company's aim of de-risking its business. While the company has
achieved market de-risking by expanding its global reach, product de-risking
is being achieved through acquisitions.
While Bharat Forge is strong in commercial vehicles and is now venturing into
passenger car engine components, CDP's strength has been passenger car
chassis components. In the future, Bharat Forge will focus on passenger car
engine components and heavy duty machined crankshafts and CDP will focus
on its core strength. Also, through CDP, Bharat Forge gets access to
European customers like Audi, BMW and Volkswagen.
In expanding global markets, technology based innovation is the most
important driver of growth. Innovation runs through everything that is done
in BFL. The task is to move fast in the direction set by their focused
strategies. Belief that fast execution of their strategies imparts tremendous
De-risking: A Business Strategy
To pursue a business model that focuses on diversifying their product profile,
BFL is moving into the non-automotive segment. The company is also
moving into different geographies and tapping a wide range of customers.
The focus is to build the business that is not overly sensitive to any product,
industry segment, geography or customer. The key objective of this strategy
is to develop inherent resilience where the company can continue to grow
profitably despite normal macro economic cyclical pressures.
The foray into non-automotive component business is based on two strategic
1. Enhance the market size by entering a domain that has significant
2. De-risk the company's revenue model.
BFL is diversifying its product portfolio by aggressively promoting its nonautomotive
business. This portfolio now includes forged and machined
products for oil and gas, construction equipment and heavy engineering
sectors. For the financial year 2006-07 close to 17%, of BFL's consolidated
revenues came from this new business lines.
In terms of geographies, BFL's de-risking strategy is well established with a
mix of customers across India, Europe, USA and Asia. These are being
serviced by BFL's global manufacturing base, which span across nine
locations spread across six countries: China, India, Germany, Scotland,
Sweden and the US
On a Consolidated Basis, the financial highlights of BFL for 2006-07 are:
Revenue from Sales was Rs.41,783 million in 2006-07 up by 38%
over the previous year.
EBITDA was Rs.7,433 million in 2006-07 a growth of 26% over
PAT increased by 16% to Rs.2,906 million in 2006-07.
EPS before and after exceptional items were Rs.13.45 and Rs.13.01
The consolidated revenues outside India grew by 46.1%. Rs. 30,651
million were derived from markets outside India.
The addition of FAW-BF increases the revenues of BFL (consolidated)
by Rs.1,627 million.
BFL's share net of minority interest of operating losses of FAW-BF was
Rs. 74 million in 2006-07.
The net loss for the China operations (BFL's share) is Rs.160 million,
Even though there has been a growth in the revenue and profits, we need to
look at some key ratios to identify how the company is managing its funds
This graph shows a different view of how the company is doing. This clearly
shows pressure on the bottom line.
Second largest forging company
in the world.
Strong emphasis on Technology
Present in 3 continents
Dual Delivery centers
Low cost competence.
Commercial vehicle sector
Technically not as strong as some
of its peers
Has acquired scale through
acquisitions. Managers may not be
able to cope with the scale
80% exposure to automobile
Under utilization of capacity.
Exports are on the raise
Increase in Passenger car
Growth of Indian and world
Input raw material costs like steel
have seen a sharp raise
Raising cost in European Labour
Interest rate fluctuation for loans
Infrastructure and training issues
Bharat Forge has firmly established itself as a global player in
automotive components Business.
Strategic initiative towards integrating itself into the global automotive
Expanded to most geographies and has built strong client relationships
Manufacturing capacities are in place
Multi-location operational presence and design and engineering
Growth in the commercial and passenger vehicle markets will enable
BFL to grow at a rapid rate. The world economical indicators for this
are currently in favor of BFL.
Due to the measures taken to de-risk the business, the company is
fairly well insulated.
Chinese market remains elusive. It's a significant challenge to break
into this market. Capacity utilization rate at only 38%, the operations
Diversification is still limited. 80% exposure to automobile market.
Currency fluctuation holds a significant risk for BFL. Almost 50% of its
revenues are derived from exports.
Loans they have taken in Europe and America for acquisitions are
under interest rate pressure. The company has been in an expansion
mode and has used borrowings to fund its expansion cum acquisition
needs. With any increase in interest rates the corresponding interest
outgo on such loans increases.
BFL need to have a strategy to contend with a cyclical downturn in the
US and China
The opportunities exist. They need to be converted into orders. At present,
India only exports about $1.8 billion in auto parts each year. Countries such
as Mexico, Canada and Japan export between $25-35 billion. Analysts expect
the global outsourcing in auto parts pie to keep growing -- from $110 billion
in 2005 to $700 billion in 2015
India's lack of infrastructure and trained manpower, the appreciating rupee,
and unable to utilize all their capacity will be major hurdles that CFL will need
to tide over.
Based on the above data, these should be the concrete thrust areas.
Consolidation process that focuses on building capacities, ramping up
production, developing flexible production systems, optimizing product
mix and improving efficiencies across group companies.
Leverage overall capabilities to broaden the relationship with the
existing customers of the acquired entities, and enhance the level of
Develop and commence implementation of the strategy to enter the
non-automotive forgings business.
Focus on integration of China operations.
Continue to focus on diversification.
Boston Consulting Group and Wharton University study on
46th Annual Report 2006-07
Indian Automobile Industry Report Jan 2007