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Aim to grow topline; maintain margins at 29-30%
Baba Kalyani, CMD, Bharat Forge
Feb 05, 2016 | Source: CNBC-TV18
• Baba Kalyani, CMD of Bahrat Forge is confident of maintaining 29-30 % margins going forward. The year on year margins were stable at around 30 %. The real challenge remains to get the topline up through initiatives in growth businesses. Although exports were weak for the quarter he does not expect further weakness because the company has seen gaining business for the component business in the passenger area.
• The domestic business has growth better than the industry with the commercial vehicle segment seeing 20 % growth, in roads into passenger car business, new customers – all things move in right director. The next driver for the domestic business would be Euro-6, where the company has complete capabilities.
• The truck market is not very bad. It is still at a very healthy level. We are expecting 2016 to be somewhere in the region of 270- 275 thousand class 8 trucks which is a very healthy situation. Last year was little bit higher than this because I think it was a very peak demand after many years of downturn, so huge replacement demand. I am quite satisfied with that and we are doing quite well in that market.
• Domestic business growth batter than market: We have grown in the domestic business better than the market. Commercial vehicle (CV) business grew about 22 %; we have grown more than 25-26 % in the CV space domestically. We are making more inroads in the passenger car related areas. We have new customers like Hyundai, Volkswagen, General Motors in India so things are moving in the right direction.
• On Chinese auto market: The CV business still continues to drop in China. I think last year it dropped 25 %. This year will drop another 10-15 %. There are two things in China – a) there is huge amount of over capacity in all industries and that is causing a fairly large amount of price erosion in many areas like steel coming in India from China and then all those issues that you keep reading in the papers, so that is one issue. Second is the Chinese demand itself is not picking up to a level where people thought it would so we have two problems out there.Related Keyword
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