MOSL: ANNUAL REPORT THREADBARE (ART) | BHARAT FORGE FY18-Performance impressive at standalone level
ANNUAL REPORT THREADBARE (ART) | BHARAT FORGE FY18: Performance impressive at standalone level, subdued at subsidiaries
Bharat Forge’s (BHFC) FY18 annual report analysis highlights its strong operating performance, with EBITDA growing at 38% to INR17.2b led by standalone operations. PBT growth was lower at 25% to INR12b primarily due to exceptional loss on impairment provision for: (a) oil and gas exploration assets (at INR822m); and (b) loan to an associate (at INR132m). However, profitability of subsidiaries (derived) remained weak with PAT declining 62% to INR0.5b, which led to a lower consolidated RoCE of 11.6% (standalone RoCE of 14.5%). OCF declined to INR9.7b (FY17: INR10.5b) due to a rise in working capital investment. Cash and investments stood high at INR18.1b, 39% of net worth (NW) (FY17: INR15.3b), leading to a decline in net debt at INR15.1b (FY17: INR16.4b), with net D/E declining to 0.3x (FY17: 0.4x). BHFC yield from investment stood at 5%, thereby leading to higher other income at INR1.4b, 12% of PBT, while borrowing cost remained lower at 3.3%. Purchases from related parties declined to INR5.4b, 15% of RM cost as against INR17.7b, 62% of RM cost in FY15.
- Standalone operating performance impressive: Revenue grew 38% to INR53.2b fueled by growth across all business segments. EBITDA was higher at 44% to INR15.4b with margins expanding 115 bp to 29%. Non-auto business segment revenue grew higher at 53% to INR22b aided by underlying growth in oil and gas, and high horse power engine.
- Subsidiaries' performance stays muted: Subsidiaries' (derived) performance remained muted with EBITDA growing a mere 4.3% to INR1.9b with margins declining 100 bp to 6%; despite high revenue growth of 20% to INR30.4b. This subdued operating performance has led to a lower RoCE at 1.8%; thereby dragging higher standalone RoCE of 14.5% to consolidated RoCE of 11.6%.
Bharat Forge Limited is engaged in the business of steel forgings, finished machined crankshafts, and front axles assembly and components. The Company's segments include Forgings and Projects (Capital goods). Forgings produces and sells steel forging products comprising forgings, finished machined crankshafts, front axle assembly and components, and ring rolling, among others. Projects (Capital goods) include engineering, procurement and commissioning business for power and infrastructure related projects. It manufactures a range of components for various sectors, including automobiles (across commercial and passenger vehicle), oil and gas, aerospace, locomotives, marine, energy (across renewable and non-renewable sources), construction, mining and general engineering. It has factories at Pune, Satara and Baramati. Its manufacturing facilities are spread across India, Germany, France and Sweden. It operates in Delhi, Noida, Hyderabad, Jamshedpur, Kolkata, Chennai and Mumbai.
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