PRESENTATION ON:

“ BHARAT FORGE LTD.”

PRESENTED BY:
GROUP – KAIZEN
Gulshan Kaur Bhamrah (17007)
Harshita Parasrampuria (17009)
Niki Kumari (17011)
Prosenjit Roy (17014)
Vidushi Bharti (17026)

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Overview
 Industry overview
 Introduction of the company
 Vision and Mission
 Product portfolio
 Organizational structure
 Global presence
 Triggers for going global
 Internationalization & growth
 Integration success
 Organizational strategy & philosophy
 Key element for Bharat Forge strategy
 Subsidiaries , integration and control
 Strategies for long run
 Reference
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Indian Auto Component Industry
Indian Auto Component Industry
Introduction
 Bharat forge limited is, the world’s largest forging company, with an annual output of over
4,03,750 TPA.
 BFL is among top 26 innovative companies in India.
 Incorporated in 1961 by Neelkanthrao Kalyani, BFL is the flagship company of the Pune based
Kalyani group.
 The company operates in two main segments- Manufacturing of automotive components
(vehicles, diesel engines) and non automotive components (railways, energy,construction
equipment).
 The world’s largest forging company with manufacturing facilities spread across India, Germany,
Sweden, China.
 It is India’s largest manufacturer and exporter of automotive components.
 BFL has diversified global customer base including the top 5 CV & PV manufacturers in the
world, automotive, power, oil & gas industries.
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Vision and Mission
Vision

To be committed to listening and responding to the

needs of our customers, associates and business
partners and honoring their individual value.

Mission

Spirit of innovation is the core of organization’s

DNA and plays a paramount role in delivering value
to customers through extensive focus on technology
& value addition.
Multiple Sectors with Multiple Products
Organizational Structure
Global Competitors

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Global Perspective

￮ Bharat Forge Global perspective is “Polycentric”

 Polycentric is when a firm exports to not just one market but
to several markets. It looks for customers in different foreign
markets but is still interested in selling its existing product in the
existing form.
o Bharat Forge has acquired companies in their respective areas
principally with a view to benefit from the economies of scale.

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Global Presence of Bharat Forge

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 Triggers for going global
 Though Bharat Forge Limited started in 1961, but the company’s real journey to become a global
player began in 1997.

The three main triggers that made them go global are:

 They want to improve quality, R&D, productivity and business processes so they ventured out
and learn best practices.

 They had sufficient faith in domestic demand, they wanted to grow beyond the Indian market.

 They also wanted to take advantage of differential growth opportunities across varying
geographies.
 Joint Ventures
JOINT VENTURE NAMES COMPANIES YEAR OF JV FORMATION

Automotive Axles Limited Kalyani Group and Meritor Inc., USA 1980

Kalyani Carpenter Special Steels, Ltd. Technology Corporation, USA 1995

Kalyani Lemmerz Ltd (KLL) Hayes Lemmerz,USA and Kalyani 1995

Group.

FAW Bharat Forge (Changchun Co Ltd) FAW Corporation, China 2006

BF NTPC Energy System Limited NTPC and Bharat Forge 2008

Kalyani ALSTOM Power Ltd Alstom, France 2009

KPIT Cummins, Bharat Forge KPIT Cummins, Bharat Forge 2010

David Brown Bharat Forge Gear David Brown, Bharat Forge 2011
Systems India Ltd.
 History and Acquisitions
Year History & Acquisition
1996 BFL is the leading player in the sector. It is the flagship of the Kalyani group and was established in 1961 in collaboration
with Steel Improvement and Forge Co., USA (SIFCO), Commercial production of forgings began in 1966 with the setting up
of a plant at Mundhwa near Pune.
1999 Bharat Forge has surprisingly turned an impressive results. Being the fifth-largest forging company in the world in volume
terms.
2002 Bharat Forge signs a contract with Dana Corporation's Spincer Europe Ltd., for the supply of forgings.
Leading Chinese Auto Dealer OEM has awarded the company a large contract for the supply of engine components, which is
worth around million order.

2003 Bharat Forge Ltd secured the second Largest Customer in China. Guangxi Yuchai Machinery Co. a part of second Auto
Works is among the Largest Auto companies in China, which is a stepping stone for acquiring a large size of the Chinese
Markets.

2005 BharatForge Ltd receives `outstanding organisation' award for quality from the National Institution for Quality and
Reliability on April 23
-Bharat Forge acquires Imatra Kilsta AB, Sweden & Scottish Stampings,Scotland
-Bharat Forge Ltd has signed a Joint Venture contract with FAW Corporation for its forging business

2016 Bharat Forge Expands in U.S. with Tennessee Acquisition 15

 Integration Success
The company has used a two-stage policy for integration.

In the first phase, the company focused on alignment of the acquired company with BFL in the first six
to eight months after each acquisition.

In the second phase focus was on alignment in all the business processes.

They can produce all their core products, crankshafts, beams, knuckles and pistons in a minimum of
two locations worldwide.

 In order to better serve its customers across borders and to meet the requirements of just in time delivery-
Bharat Forge adopted the strategy to have more than one design, manufacturing and machining base for
all core components.

The production hubs focused on product design, development and manufacturing high end critical
components.

 Bharat Forge bought loss making companies with attractive client bases in Europe, US and China, and
the strategy has paid off.
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 The Philosophy
To use our specialized skills and innovative technology to contribute to the welfare of
society. It is our intention to grow along with our employees and to aid and encourage them
to participate in our goals in order that they realize their full potential. Our prosperity is
linked to the prosperity of our customers

Source : (Baba Kalyani, BFL web site)

Hofstede Cultural Dimension

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 Strategy
 Bharat Forge is permanently extending it’s partnerships with major global OEMs and Tier I companies
around the world, offering support as full service supplier. Innovation runs through everything that they do.

 BFL focused on creating a position of global leadership in engine and chassis components for passenger and
commercial vehicles.

The objectives of drawing a five-year strategic plan were:

 To grow the business aggressively by accessing global markets

 To be among the top three global players in the chosen industry segment;

 To set global industry benchmarks in cost, quality, technology, speed-to-market and customer service;

 To create sustainable competitive advantage by taking strategic initiatives in areas of marketing, technology
and product development, operations and human resources.
Key Elements for Bharat Forge Strategy

1. De-Risking Business Model

 Company followed this strategy to diversify markets, products and

customers to develop resilience.

 Avoid being overly sensitive to any product, industry, geography or

customer.

 The de-risking has paid off over the years.

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2. Dual Shore Model

 “Dual shore” concept revolves around establishing more than one

manufacturing location for all core components.

 It involves best of both worlds by having one close to the customer for
working closely with the design/development and another at a low cost
location like India for taking cost advantage.

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3. Customer Relationships

 Putting efforts for developing customer relationships.

 Moved from a supplier to development partner and full service provider for
customers from design to delivery of finished products.

 Focused on building strong design and engineering capabilities to each of its

global locations to respond to the global customer’s preference for suppliers
having such facilities close to their product development facilities.

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4. Scale and Low cost

 BFL has been able to bring operation efficiency among the units it has acquired
internationally.

 given concerted attention to costs and productivity.

 build scale and created an environment to share best practices across the
organization through flexible product lines.

 enhance growth in rated capacities by sharing best-in-class shop floor practices

within their group companies which have resulted in increases in productivity
and throughout.

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5. Full service supplier capability

 Bharat Forge a full service supply capability from product conceptualisation to

designing to manufacturing and product testing and validation.

 transformed itself from being a mere supplier of automotive components to

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becoming a preferred technology and engineering driven development partner.

 It has various certifications like ISO/TS 16949:2002; ISO 9001:2000; ISO

14001; API-6A; and AS 9100

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Subsidiaries Integration & Control
 The management has kept a high level of autonomy in terms of daily operations and marketing after the
acquisitions.

 In order to be responsive to the requirements of suppliers, customers and government officials, they
expect local managers to act on the ground of their experience and judgment to take such decisions.

 Kalyani stresses the need to develop global managers with the ability to operate across borders with
confidence and who can operate in spite of high ambiguity and frustration.

 Kalyani explains that they improved subsidiary performance by combining the technology and
engineering capability of the Europeans with Indian management practices, philosophies and strategies.

 Every six weeks, they go to one subsidiary to conduct an analysis and make a report with an action list to
be implemented.

 Through a common system, BFL integrated the global engineering capability into its low cost engineering
centre in India, having 70 percent of the design done in India. 26
 BFL keeps an EBITDA margin of 20 percent while most profitable competitors only achieve between
10 and 15 percent.

 On the one hand, headquarters are not involved in the sales process since every subsidiary manages
its own customers.

 On the other hand, there is a significant influence and support from headquarters, not only in terms of
providing low margin products, but also in terms of designing products when needed.

 Future projects are required to have a return of around 20 percent, a requirement that can be difficult
to meet in a mature market such as Sweden.

 Not only decision making is to a great extent centralized, but also headquarters is constantly re-
evaluating the sales orders in high cost countries in order to coordinate design and production issues.

 Despite the cost control, BFL recognizes that global leadership can only be achieved with advanced
technology and therefore it is constantly tapping into new technologies.

 This suggests that BFL does not hesitate when it comes to meet customer requirements.
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 Strategies For Long Run
 Focus on new product development:

Expand its footprint in the global aerospace and defence value chain
New products for the automotive sector
Developing a new product portfolio under Make in India

 Leveraging R&D capabilities:

Develop a highly differentiated portfolio of technology-driven products

Research of new exotic materials and new additive manufacturing
processes

 Focus on quality excellence and customer satisfaction:

Establish a comprehensive purchasing and quality control ecosystem

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Contd.
Investment in technologies
 Optimize the different manufacturing processes and gain significant operational efficiencies

Focus on key sectors:

￮ Railways, Aerospace & Defence

Industry 4.0:
￮ Digital transformation of the manufacturing sector to create a fully integrated, automated and
optimized manufacturing system
￮ Increase manufacturing productivity, improve efficiency, shift economics and foster industrial growth

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 References
 Anand, M. (2007), “We want to be in every BRIC economy: Baba Kalayani”, Outlook Business online, available at:
www.outlookbusiness.com/print.aspx?articleid ¼ 464&editionid ¼ 18&catgid ¼ 11&subcatgid ¼ 9 (accessed 12 June 2008).

 Association of Indian Forging Industry (AIFI) (2008), “Current trends: Indian forging industry”,
AIFI web site, available at: www.indianforging.org/current_trend.aspx (accessed 14 June).

 Barkema, H.G. and Drogendijk, R. (2007), “Internationalizing in small, incremental or larger steps?”, Journal of International Business Studies,
Vol. 38 No. 2, pp. 1132-48.

 BFL (2005), “Annual report 2004-05”, BFL web site, available at: www.bharatforge.com (accessed 12 June).

 Cyert, R.M. and March, J.G. (1963), A Behavioral Theory of the Firm, Blackwell Business, Cambridge, MA.

 Dyer, J.H., Kale, P. and Singh, H. (2004), “When to all & when to acquire”, Harvard Business Review, Vol. 82 No. 7, pp. 109-15.

 Euroforge (2008), “Industry portrait”, Euroforge web site, available at: www.euroforge.org/page/ industry_portrait.html (accessed 12 June
2008).

 Ghemawat, P. (2001), “Distance still matters: the hard reality of global expansion”, Harvard Business Review, Vol. 79 No. 8, pp. 137-47.
Ghemawat, P. (2003), “Semiglobalization and international business strategy”, Journal of International Business Studies, Vol. 34 No. 2, pp. 138-52.

 Govindarajan, V. and Gupta, A. (2001), The Quest for Global Dominance, Jossey-Bass/Wiley, San Francisco, CA.
 McKinsey & Company (1993), Emerging Exporters. Australia’s High Value-Added Manufacturing Exporters, McKinsey & Company and the
Australian Manufacturing Council, Melbourne.

 Moneycontrol (2008), “Bhart Forge-Chairman Speech 2008”, Moneycontrol web site, available at:
www.moneycontrol.com/stocks/company_info/chairmans_speech.php?sc_did ¼ BF03 (accessed 18 August 2008). 30
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