Bharat Forge Is Treading A Cautious Path To Recovery
India’s largest exporter of automotive parts prefers to err on the side of caution while forecasting recovery in business as the global economy emerges from the disruption caused by the Covid-19 outbreak.
“Growth and recovery hinges on multiple factors,” Amit Kalyani, deputy managing director of Bharat Forge Ltd., told BloombergQuint in an interview, adding that ever since national lockdowns were eased, the demand “pull” is there because of the festival season. With U.S. elections ending, there’s more certainty, he said, but people are still are nervous about the second wave of the Covid-19 outbreak.
“One has to be cautiously optimistic about what’s happening going forward.”
Later in a call with analysts on Nov. 11, Kalyani said his firm isn’t getting long-term projections from customers as things are changing on a day-to-day basis.
Bharat Forge’s net profit declined 71.3% year-on-year to Rs 70 crore in the quarter ended September, while revenue fell 30% to Rs 881 crore.
The company is however bullish on an increase in demand for class 8 trucks in the U.S., which surged to a two-year high recently. “It’s a big positive for us, and we see a lot of potential and positive momentum,” he said during the call.
“But these kinds of order levels have to sustain for a few months before some traction happens in the market, that’s our view,” Subodh Tandale, executive director at Bharat Forge, said during the call.
Kalyani said their supply chains are intact and are geared up to meet the demand of its clients. He said the demand is back in the commercial vehicle segment—both in the intermediate and light commercial vehicle segments—but is operating at 50% of its peak capacity. “These aren’t substantial volumes.”
“For volumes to go up you need significant economic activity and capital formation to start taking place,” Kalyani said. “When those big projects and infrastructure start it is when there will be an improvement in the overall market.”
Watch the full interaction here: