Abridged NDR Final Presentation 20 Mar 10 - Bharat Forge · 4,912 FY06 FY07 FY08 FY09 9M FY09 9M FY10 Domestic Exports 1 US$ -Rs 41 17 Unconsolidated Financial Performance ... Exchange

INVESTOR PRESENTATION

1

Auto Sector Revival – Bharat Forge Well-Positioned

Conclusion

Financial Performance – Strong Revival Post The Downturn

Non-Auto Sector – Emerging Growth Platform

Bharat Forge – A Leading Global Forging Company

2

� FY09 Consolidated Revenues: ~ US$1.1 bn.

� 11 Manufacturing locations across 5 countries.

� Global Marquee Customer base of more than 35 OEM’s

& Tier- 1 companies across automotive & non

automotive applications.

� Non Auto: 21.4% of consolidated revenues in FY 09.

� In FY09, No single customer exceeded 10% of

consolidated revenues.

Revenue Break-up by Segments – FY 2009 Revenue Break-up by Geography – FY 2009

Global Forging ConglomerateBharat Forge: Profile

Bharat Forge Limited (BFL) - A Global Forging CompanyBharat Forge Limited (BFL) - A Global Forging Company

Geography Capacity (MTPA)

365,000

200,000

135,000

60,000

CV Chassis

27.4%

Passenger

Vehicles

21.8%

Non Auto

21.4%

Diesel

Engines

29.4%

Europe

52.6%

USA

15.7%

India

22.1%

Asia Pacific

9.6%

1 US$ = Rs 45

3


Conclusion




4

23,502

25,717

21,44523,384

25,97327,372

4,986

20,395

21,496

16,487

21,117

16,072

7,7015,800

12,082

21,377

17,80416,999

14,33613,02112,999

20,626

0

5,000

10,000

15,000

20,000

25,000

30,000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

(units)

2008 2009 2010

Month on Month Domestic CV Production Picking Up

Source: SIAM Flash Monthly Reports

Recent Pick up in Domestic CV Market Expected To Continue

Recent Pick up in Domestic CV Market Expected To Continue

Period Phase Type No. of years CAGR

FY 1998 Decline 1 -27.3%

FY1999 Growth 1 25.0%

FY 2000 – FY 2001 Decline 2 -6.9%

FY 2002 – FY 2008 Growth 7 21.0%

FY 2009 Decline 1 -34.7%

FY 2010 Growth Ongoing 22.9%

� Strong pick up in domestic CV volumes driven by revival in industrial activity

� Continued infrastructure development focus (roads, construction etc.) to enhance the growth momentum

� New players like Man, Volvo, Daimler, Navistar who have entered the domestic market

Periods of Decline In Indian CV Markets Been Short; Growth Phases Have Been Longer With High CAGR

Strong growth expected to continue …

Source: SIAM

5

US Automotive MarketUS Automotive Market

• BFL has a significant market share for Chassis & Engine components in the North American Class 8

commercial vehicle segment.

• The North American Class 8 truck market reached peak levels in 2006 with volumes of 376K units. In CY09,

the segment recorded volumes of 116K, a drop of 69% from 2006 levels.

• The segment is showing signs of demand revival as visible from the increase in production from Q2 CY09.

The sector is forecasted to grow at 47% CAGR till CY 2011 from CY 2009 levels.

• Replacement demand expected to be significant growth driver, given the average age of the fleet is very

old, almost close to 7 years.

North American Class 8 Production

376339

269212 205

116142

253

0

100

200

300

400

2004 2005 2006 2007 2008 2009 2010 E 2011E

Figures in ‘000

Source: ACT Research

CY 2008 CY 2009

North American Class 8 Production

5058 52 47

28 25 30 33

-

20

40

60

80

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

6

European Automotive MarketEuropean Automotive Market

• Commercial vehicle production in CY 2009 was 245,000 units, a drop of 64% as against CY 2008 levels.

• The industry witnessed destocking of inventory through out the year as automakers adapted stocks &

output levels to the economic situation, significantly impacting suppliers.

• However, the production levels have started to pick up as visible from Q4 CY09 numbers which shows a

growth of 37% over Q3 CY09.

Source: ACEA

Commercial Vehicle Production

156176

67

163190

54

150 151

54

199

158

70

-

50

100

150

200

250

CY 2007 CY 2008 CY 2009

Q1 Q2 Q3 Q4

Figures in ‘000

7

Outlook for Key Automotive MarketsOutlook for Key Automotive Markets

Particulars

� Growth of 22.9% for M& HCV sector YTD FY 2010 over corresponding period. (source: SIAM)

� The segment is expected to witness growth in FY 2011 on back on infrastructure spending and global OEM’s entering the space.

� CV sector volumes fell by about 50% in CY 2009. (source: ACEA)

�Volumes are expected to be flat in CY 2010.

� Class 8 truck volumes were down close to 70% compared to peak levels of CY 2006.

�The segment is expected to grow at a CAGR of 47% from CY 2009 to CY 2011 driven by need for replacement of legacy fleets. (source: ACT Research)

� Growth in this sector remains strong driving higher per capita income & growing middle class.

� The passenger vehicle segment witnessed only a small decline in volumes in CY 2009 on back on scrappage incentives.

�CSM expects vehicle sales in Europe to fall for the third consecutive year in 2010, as governments in the West pull away the scrappage schemes that propped up demand in 2009. (Source: CSM)

�Full-year sales in 2009 have come in at a 39 -year low, with 10.4 million units sold in the United States.

�CSM is projecting auto sales in 2010 to improve by 13.5 percent to 11.8 million units in the United States.(Source: CSM Worldwide)

8

Capacity Utilization: Headroom for Growth in Auto SegmentCapacity Utilization: Headroom for Growth in Auto Segment

• Robust financial performance even at low levels of capacity utilization• Enough headroom to reach previous peak utilization levels on the back of improvement in domestic

CV markets & revival in US & Europe.

9


Conclusion




10

AerospaceOil & GasEnergy

Construction & Mining Railways

Windmill shafts, gas engine

componentsStructural & rotating components Valve bodies, bonnets, choke

bodies, composite blocks

Engine components, GETs Engine components, turnouts

Expanding the Horizon – Focus on Non AutomotiveExpanding the Horizon – Focus on Non Automotive

Marine

Engine components

Infrastructure Supply Business

11

Facilities Products & Industries Product Dimensions

� Heavy Forge Division II – 4,000 MT Press & Machining Capacity

� Wind turbine components. Hydro, gas & steam turbine components and components for mining, metal industry & general engineering applications.

� Max Ingot weight upto 70T single piece

� Centre For Advanced Manufacturing - 80 MT Hammer & Machining Capacity

� Large components for energy sector, transportation including aerospace, railways & marine.

� Components up to 2.5 tons in weight and 4.5 m in length

� Ring Rolling facility � Large rings & gears blanks for various sectors like marine, wind and construction equipments.

� Rings up to 3 Tons in weight and 4.5m in dia.

Advanced New Non-Auto Capacity has been commissionedAdvanced New Non-Auto Capacity has been commissioned

Total Outlay: Rs 500 crores since FY 2008

12

Power Sector: Opportunity SizePower Sector: Opportunity Size

1000 MW Power Plant100%

Turbine Generator:27-28%

Boiler:28-29%

BOP:27-28%

EPC:17-18%

Joint Ventures Focus Area Capacity

Alstom - JV 1 Turbine Generator 5,000 MW

Alstom – JV 2 Auxiliaries

NTPC BOP 4,000 MW

BFL will see additional benefits by supplying forged & machined components to the above ventures and also directly to other customers like BHEL.

13Import substitution of critical part for power sector

Select Non Auto Product PortfolioSelect Non Auto Product Portfolio

14

Crankshaft for locomotiveLength: 3.95 mApprox. Weight : 2.1 tons

Select Non Auto Product PortfolioSelect Non Auto Product Portfolio

15


Conclusion




Indian Power Sector

16

1 US$ - Rs 41

16

Consolidated Financial PerformanceConsolidated Financial Performance

6,251

7,8267,388

5,907

FY06 FY07 FY08 FY09

Consolidated EBITDA * (Rs. million)

17.3%

19.1%

16.5%

12.9%

Strong Historic Consolidated Revenue Growth (Rs. million)

19.1%

9,755 11,940 13,239 11,049

21,09630,812 34,277 37,378

FY06 FY07 FY08 FY09

India Overseas

% indicates EBITDA Margins

17

9,75511,940 13,239

11,049 9,173 8,231

6,555

7,513

9,61010,014

8,822

4,912

FY06 FY07 FY08 FY09 9M FY09 9M FY10

Domestic Exports

1 US$ - Rs 41

17

Unconsolidated Financial PerformanceUnconsolidated Financial Performance

19.1%

Strong Historic Standalone Revenue Growth (Rs. million)

4,9384,358

3,167

4,432

5,4605,845

FY06 FY07 FY08 FY09 FY09

9 mths

FY10

9 mths

Standalone EBITDA * (Rs. million)

27.2%28.1%

24.1%

23.4%25.6%

24.2%

* EBITDA before exceptional items & exchange gain / loss

% indicates EBITDA Margins

18

Recovery in Unconsolidated Financial Performance On a Sequential Basis

Recovery in Unconsolidated Financial Performance On a Sequential Basis

1,2831,084801

580

25.0%25.0%22.0%

18.9%

0

500

1,000

1,500

Q4FY09 Q1FY10 Q2FY10 Q3FY10

EBITDA

(Rs. mm)

0%

10%

20%

30%

EBITDA %

3,171

1,998

1,876 2,2122,848

1,1921,427

1,487

0

1,000

2,000

3,000

4,000

5,000

6,000


35,28330,428

22,14518,246

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000


21% 19%

38%

Tonnage (MT) Total Revenues(1) (Rs. mm)

EBITDA(1) (Rs.mm) PBT Before Excp. Item (Rs.mm)

606430

163

(24)(100)

0

100

200

300

400

500

600

700


19%37%

18%

YoY growth in EBITDA margin even at low capacity utilization

(1) Includes other income

16%

19%

35%

Domestic Exports

24% *

36%

26%

42%

* % Capacity Utilization

19

Unconsolidated Consolidated

FY2007 FY2008 FY2009 FY 2010 9 Months

FY 2009 9 Months FY2007 FY2008 FY2009

Total Income 19,453 22,849 21,064 13,143 17,995 42,752 47,516 48,427

EBITDA 5,460 5,845 4,938 3,167 4,358 7,388 7,826 6,251

PBT before excp item & Ex. Gain/(Loss) 3,641 3,406 2,439 1,199 2,464 4,440 4,287 2,443

Exchange Gain / (Loss) 25 261 (863) (208) (1,851) 45 211 (1,037)

Exceptional Item (68) 303 - - - (121) - (299)

PBT after excp item & Ex. Gain/(Loss) 3,598 3,969 1,577 991 613 4,363 4,498 1,107

PAT* 2,410 2,736 1,033 658 422 2,906 3,015 583

Debt 14,016 12,875 18,079 20,377 16,220 17,896 16,544 21,908

Rs Million

Historic Financial PerformanceHistoric Financial Performance

* PAT is after minority interest in case of consolidated financials

In a year in which many suppliers are in financial distress, we have been able to maintain positive EBITDA margin on a consolidated basis in FY09

Exchange Gain/(Loss) is mainly on account of revalorization of Foreign currency loans in accordance with Indian Accounting Standard. Indian Rupee at the end of FY 2008 & FY 2009 was Rs 39.81 & Rs 50.72 respectively.

20


Conclusion




Indian Power Sector

21

� Business line started more then 10 years ago, existing customer base of over 30 clients.

� Addition of dedicated facilities to provide major thrust to the non auto segment.

� Well positioned to address the growing demand from new sectors such as marine, power, transportation, wind & Nuclear energy etc.

� Increasing share of business from existing customers & continuing additions to the customer portfolio.

Non Auto

Auto

� Riding on strong growth in domestic market.

� Strong relationships with global OEMs due to global presence and full service capability.

� De-integration of OEM facilities to result in greater offshoring.

� Well positioned to increase market share from global OEMs due to ‘supplier consolidation’.

Capital Goods - Power

� Cater to the growing demand for capital goods.

� Foray through JVs with reputed players like Alstom, Areva and NTPC.

BHARAT FORGE

Key Growth DriversKey Growth Drivers

22

This presentation contains certain forward looking statements concerning our future business prospects and

business profitability, which are subject to a number of risks and uncertainties and the actual results could

materially differ from those in such forward looking statements. The risks and uncertainties relating to these

statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to

manage growth, competition ( both domestic and international), economic growth in India and the target

countries for exports, ability to attract and retain highly skilled professionals, time and cost over runs on

contracts, our ability to manage our international operations, government policies, fiscal deficits, regulations

among others. We do not undertake to make any announcement in case any of these forward looking statements

become materially incorrect in future or update any forward looking statements made from time to time by on

our behalf. No part of this presentation shall be reproduced, copied, forwarded to any third party either in print

of in electronic form without our prior express consent.

This presentation does not constitute an offer or solicitation of an offer to purchase or subscribe for any

securities in any jurisdiction including the United States. No part of this presentation should form the basis of or

be relied upon in connection with any investment decision or any contract or commitment to purchase or

subscribe for any securities. None of our securities may be offered or sold in the United States, without

registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from registration

there from.

Disclaimer

Documents

Abridged NDR Final Presentation 20 Mar 10 - Bharat Forge · 4,912 FY06 FY07 FY08 FY09 9M FY09 9M FY10 Domestic Exports 1 US$ -Rs 41 17 Unconsolidated Financial Performance ... Exchange