Complied by: Dion Global Solutions Limited INNOVATION FINANCIALS OPERATIONS CAPABILITY EMPLOYEES CUSTOMERS Success through 53rd Annual Report Transformation 2013-14 Complied by: Dion Global Solutions Limited 41% Standalone 59% Revenue from Standalone Industrial Sector Revenue from Automotive Sector CONTENTS 300,00 TPA The largest single-location forging facility in the world, situated at Mundhwa in Pune Company Review 02-25 Bharat Forge at a Glance 02 Business Verticals 04 Board of Directors 06 Corporate Information 07 Chairman’s Message 08 Financial Performance 12 Success through Transformation NADCAP Transformation is Innovation… 14 CERTIFICATION Transformation is Excellence… 16 Transformation is the First Step 18 For Aerospace Applications Transformation is Right Relationships… 20 Transformation is People Power… 22 7,000 + Transformation is the Right Numbers… 24 Global workforce Statutory Reports 26-73 Management Discussion & Analysis 26 Report on Corporate Governance 42 Directors’ Report 64 Financials 74-212 Standalone Financials 74 Consolidated Financials 134 EVERY 2ND Heavy truck in the US carries a front axle beam manufactured by Bharat Forge Complied by: Dion Global Solutions Limited “To improve is to change; to be perfect is to change often.” Sir Winston Churchill Transformation, at Bharat Forge, is the drive to remodel our future. It is our effort to forge a new path to growth – to focus on new opportunities and differentiate ourselves as an end-to-end solution provider. We have redefined and reshaped ourselves from just an India-focused auto component supplier to a global engineering company. Today, we cater to varied high-growth sectors in industrial segment like power, oil and gas, construction and mining, locomotive, marine and aerospace while strengthening our presence in the automotive segment. The transformation is constant. With a unique mix of talent, innovation, experience and a growing clientele, we have no time to stand still. We have to keep reinventing ourselves to stay at the top of our game. As we continue to expand across sectors and geographies – our vision for success is clear. LARGEST GLOBAL 1st INDIAN EXPORTER LEADERSHIP COMPANY OF AUTO IN POWERTRAIN TO RECEIVE NADCAP COMPONENTS AND CHASSIS ACCREDITATION FROM INDIA COMPONENTS Complied by: Dion Global Solutions Limited BHARAT FORGE AT A GLANCE Part of the Kalyani Group and established in 1961, Bharat Forge is among the world’s largest forging companies with manufacturing facilities spread across India, Germany and Sweden. It manufactures a wide range of high performance, critical and safety components. We are among the world’s largest forging companies with manufacturing facilities spread across India, Germany and Sweden. A technology-driven global leader in Venturing into new processes and metal forming with its presence across technologies, while experimenting eight manufacturing locations, the constantly, has been its core strength. Company has expanded its product The Company has the largest repository offerings across both the automotive and of metallurgical knowledge in the region the industrial sectors. and offers full-service supply capability to its customers from concept to product It is the leading powertrain and chassis design, engineering, manufacturing, component manufacturer in the world. testing and validation. BFL’s customer base includes virtually every global automotive OEM Tier 1 suppliers and various OEMs in the industrial segment. 2 Complied by: Dion Global Solutions Limited COMPANY REVIEW STATUTORY REPORTS FINANCIALS % GEOGRAPHIC SALES SEGMENTATION STANDALONE CONSOLIDATED 34 46 GLOBAL PRESENCE Customers 54 66 Manufacturing & Customers Global Headquarters-Servicing the World India Outside India India Outside India Annual Report 2013-14 3 Complied by: Dion Global Solutions Limited BUSINESS VERTICALS AUTOMOTIVE % REVENUE DISTRIBUTION BFL has achieved a strong global leadership position in the commercial vehicle sector for safety and critical (STANDALONE) powertrain and chassis components. 41 KGS Segments Powertrain Chassis Transmission Components Parts 59 Crankshafts Connecting Rods Front Axles Steering Knuckles Industrial Automotive PASSENGER VEHICLES (CONSOLIDATED) 10-30 <1 NA 2-10 0.5-6 LCV/MCV 25-80 1-3 30-60 10-30 3-30 37 HCV 60-250 2-5 60-150 25-40 20-100 63 OTHER AUTOMOTIVE PRODUCTS • Pistons, Rockers Arms • Control Arms, Swivel Hubs, Wheel Carriers and Brackets Industrial Automotive 4 Complied by: Dion Global Solutions Limited COMPANY REVIEW STATUTORY REPORTS FINANCIALS INDUSTRIAL BFL has always aimed at replicating the success of the automotive business in other verticals. We are exploring further opportunities in high value, high growth sectors, such as Power, Oil & Gas, Rail & Marine, Construction & Mining and Aerospace, among others. ENERGY Oil & Gas Power Nuclear, Thermal, Wind, Hydro TRANSPORTATION Locomotive Marine Aerospace CONSTRUCTION & MINING Construction Metal & Mining General Engineering Annual Report 2013-14 5 Complied by: Dion Global Solutions Limited BOARD OF DIRECTORS MR. B.N. KALYANI MR. PRATAP G. PAWAR Chairman & Managing Director MR. S. M. THAKORE MR. S. D. KULKARNI MRS. LALITA D. GUPTE MR. P. H. RAVIKUMAR (up to 08-08-2013) PROF. DR. UWE LOOS MR. P. C. BHALERAO MR. ALAN SPENCER MR. NARESH NARAD (up to 08-08-2013) (up to 27-05-2014) DR. T. MUKHERJEE MR. VIMAL BHANDARI MR. G. K. AGARWAL MR. AMIT B. KALYANI Deputy Managing Director Executive Director MR. B. P. KALYANI MR. S. E. TANDALE MR. SUNIL K. CHATURVEDI Executive Director Executive Director Executive Director (up to 31-12-2013) 6 Complied by: Dion Global Solutions Limited COMPANY REVIEW STATUTORY REPORTS FINANCIALS CORPORATE INFORMATION Kalyani Centre for Technology and Innovation, Pune India BANKERS AUDITORS REGISTERED OFFICE Bank of India S.R. Batliboi & Co. LLP Bharat Forge Limited Bank of Baroda Chartered Accountants Mundhwa, Pune Cantonment, Pune 411 036, Maharashtra, India. Bank of Maharashtra Phone: +91.20.6704 2476 Canara Bank COMPANY SECRETARY Fax: +91.20.2682 2163 Email: [email protected] State Bank of India Prashant S. Vaishampayan Web: www.bharatforge.com HDFC Bank Ltd. ICICI Bank Ltd. Axis Bank Ltd. Citibank N.A. Standard Chartered Bank The Royal Bank of Scotland N V Credit Agricole CIB Annual Report 2013-14 7 Complied by: Dion Global Solutions Limited CHAIRMAN’S MESSAGE Dear Shareholders, For a business or for the economy as a whole, consistent transformation paves the way for a successful journey forward. Without significant transformation, growth can happen in fits and starts, but it remains essentially fragile. If we look at the world today, this is exactly what is happening. Driven by advanced economies, global recovery has gathered momentum, but still a bit fragile. The reason is that macro- economic fundamentals of economies and businesses have not yet transformed enough to withstand unpredictable stress. At your Company, we believe success through transformation is the only way forward. The picture is not very different if we study India’s economic growth curve. The country’s economy has been consistently underperforming, despite an enormous growth potential. This is because apart from sporadic measures to revive growth, no sustained reforms were undertaken to drive the next level of economic transformation. Therefore, proactive measures to unleash India’s growth potential is the need of the hour — from focusing on infrastructure and corporate investments to rethinking the shape of labour market institutions, to increasing competition and productivity in multiple sectors, to examining the role of public and private investments for nurturing skills and spurring innovation. At your Company, we believe success through transformation is the only 8 Complied by: Dion Global Solutions Limited COMPANY REVIEW STATUTORY REPORTS FINANCIALS way forward. How does it pan out in increased 8% from ` 32,429 Million in Although your Company our business scenario? We believe the last fiscal to ` 35,140 Million this transformation is about reshaping the year, while net profits increased 31% operated at sub-optimal way we approach our business either from ` 3,056 Million in FY2012-13 to driven by a need for agile innovation to ` 3,999 Million in FY 2013-14. There is utilisation levels through stay ahead of customer expectations significant headroom for growing the top or to focus on new opportunities to line in the next two years by sweating FY 2013-14, it was one of stay on a growth path and sustain of the existing assets. Your Company’s the better years in terms of industry leadership. Your Company has consolidated total income increased 30% succeeded in the global competitive from ` 52,786 Million in the last fiscal performance in the history markets, because of the transformation to reach ` 68,410 Million this year. Net from one of the many ‘part to print’ profits more than doubled from ` 2,476 of Bharat Forge. manufacturers to an enterprise Million in constantly differentiating itself by FY2012-13 to ` 4,985 Million in FY2013- virtue of value-added manufacturing 14. Your Company continued to and providing technology solutions to strengthen its balance sheet by divesting customers. Such an approach, coupled its 51.85% stake in the Chinese JV with reliable performance, has enabled operations for us to remain an industry frontrunner, US$ 28.208 Million (` 175 crores) and despite operating in a challenging reduced net financial debt, both at industry scenario. consolidated and standalone levels. Net Debt/Equity as of 31st March 2014