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8/8/2019 Challanging for Equipment Manufacturer
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Challenges for equipment manufacturing companiesInternational Conclave on
Key inputs for Accelerated Development of Indian Power sector for 12 th
plan & Beyond
New Delhi, 18 th August 2009 Abhijit BhattacharyaAdvisor, Bharat Forge
B H A R A T F O R G E
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Kalyani Group established in 1960s, is today aleading industry house with sharp focus on primarily4 sectors:
Engineering Steel Kalyani Steel Kalyani Carpenter Steel
Kalyani Gerdau Steel Automotive & Non-Automotive components
Bharat Forge Kalyani Thermal Automotive Axles Kalyani Lemmerz
Infrastructure BFUL NICE Kenersys Khed SEZ
Specialty Chemicals Hikal
Diversified group ... ... building upon its strengths Geographical spread
Kalyani Group is extremely well-positioned toaddress the demand arising out of developingeconomies and replacement demand of developedeconomies for the infrastructure sector
Presence across the value chain
Kalyani Group is spread across the entire valuechain from iron ore to value added products.
Strong focus on quality Kalyani Group aims to produce best-in-class hi-
tech products of good quality at competitive cost.
Presence in high growth segments Kalyani Group aims to solidify its growth & position
by leveraging strong domestic demand for capitalgoods and infrastructure sector
Kalyani Group: strong Indian corporate entity ...
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.
Key Companiesin the Group
Marsing, Denmark Hikal Chemicals Ltd
Specialty Chemicals
Kalyani Steels Ltd Kalyani Carpenter
Special Steels Kalyani Gerdau
Engineering Steel
FAW BharatForge
BF America CDP Bharat Forge GmbH, Germany Bharat Forge Daun GmbH, Germany
Bharat Forge AluminiumtechnikGmbH, Germany Bharat Forge Kilsta AB, Sweden Bharat Forge Scottish Stampings,
Scotland
Bharat Forge Ltd Kalyani Thermal
Forgings
Auto Components Automotive Axles Ltd Kalyani Lemmerz
BF Utilities
Kenersys India Khed SEZ
Renewable Energy &
Infrastructure
... with presence in major markets across the globe
Kenersys GmbH, Germany
China USAIndia Europe
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Over last several years, Group has achieved marketleadership through successful joint ventures
AUTO COMPONENTS
ENGINEERING STEEL FORGINGS
KALYANI CARPENTER & KALYANI GERDAU FAW BHARAT FORGE (CHANCHUN) CO.LTD.
AUTOMOTIVE AXLES LTD. KALYANI LEMMERZ LTD.
4Market Leadership through Technology
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Bharat Forge Limited is the flagship company of the over $ 2.4 billion Kalyani Group
Strong capability in Design & Engineering with full service capability.
Wide product range across automotive and non-automotive components.
Customers include top Global CV & Passenger Car Manufacturers.
Strong engineering talent pool with over 2000 engineers globally.
Strong financials & consistent growth.
De-risked Business Model.
Strong global dual shore manufacturing capability across 6 countries. 12manufacturing locations 4 in India, 5 in Europe, 1 in USA & 2 in China.
Bharat Forge: Key part of Kalyani Group
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46
5
3 12 7
BF
Global Manufacturing Capability
Capacity over 700,000 Tons per annum Crankshaft machining capacity of 1,000,000 Nos. Capacity to machine 500,000 FAB & 750,000 steering knuckles
CAPACITY
60,000 tons Strong Foray in the largest auto market
USA Strong customer relationship Dual Shore manufacturing
CAPACITY
200,000 tons Production base close to the customer Proximity to large marquee Customers Dual Shore manufacturing
CAPACITY
340,000 tons Worlds largest single location forging facility Technologically advanced, flexible forging &
machining facility Proximity to fast growing Auto markets of China &
india Dual Shore manufacturing
BF AMERICALansing
4
BF SCOTTISH
STAMPINGS, Scotland6
BHARAT FORGE KILSTA,Sweden
5
CDP BHARAT FORGE
Ennepetal, Germany1
BF ALUMINIUMTECHNIKDresden, Germany
3
CDP BHARAT FORGEDaun, Germany
2
FAW BF (Changchun) Co.Ltd. Changchun, China
7
CAPACITY
135,000 tons JV with FAW in China with 52% stake Foothold into fastest growing market Dual Shore Manufacturing
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Expanding current capabilities
Forgings Castings Machining Welding Assembly
Currentcapabilities
1600 t press foringots of max 17 t 4000 t press foringots of max 70 t 16000 t press forclosed die forging
Turn, mill, boreoperations withcomponent weightup to 35 t
EAW, SAW, MIG ,TIG welding ASME SEC IX andDIN standard X Rayquality welding
Assemblies of upto 35 t
Plannedcapabilities
14,000 t press foringots of max200t/525 Mt-Tmanipulator 350 t up to 500Tingot wt for forging
Castings from upto 300 t hot metal Large casings andother large castings
CNC machiningfacility will beappropriate andsized to suit specificproduct profile
TIG welding SS overlaycladding ASME U standards Superalloys
Assemblies of upto 100 t and 350 t
Approach
Created technical
teams in India &Europe with best ofglobal experts
At new steel
facility of BFL Hiring experts infield
Existing BFL team
and hiring of newexperiencedpersonnel
Welding
development centerat GED, Satara Hiring of experts infield
Specific product
engineering throughtechnology tie upsand joint ventures
7
Castings from upto65 t hot metal
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Power
TG sets, BOP, Windmills,components
Aerospace
Structural & Rotating components
Oil & Gas
Valve bodies, bonnets, chokebodies, composite blocks
Construction & Mining
Engine components, GETs
Marine
Engine components
Railways
Engine components, turnouts
8
Focus on non automotive sectors to drive next level ofgrowth
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India expected to become # 3 worldwide in terms of installedcapacity in 2030
1. As indicated by Indian Pl anning Commission 2006: Integrated Energy Policy; more optimistic estimate by Ministry of Power: 900 1100 GW (8% - 9% GDP growth)Source: Energy Information Administration, International Energy Annual 2005, World Energy Outlook, 2006
78
91
113
120
124
217
248
442
957
05001,0001,500
USA
China
Japan
Russia
India
France
Germany
Brazil
UK
GW
Installed capacity by country in 2005 Installed capacity by country in 2030
122
172
177
187
286
305
Russia
France
700-800India1
Japan
1,496China
1,431USA
500 1,0000
UK
1,500
GW
Brazil
Germany
India: 20-25 GW p.a.vs 3-4 GW p.a.
today
x 3.4
x 1.2
x 1.3
x 1.6
x 1.6
x 1.6
x 1.9
x 1.5
x 6.5
Growth
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In India, thermal, and especially coal, will remain dominant
16,553
30,000
3,380
78,577
40,000
11th Plan2007-12
58,644
Nuclear
Hydro
Thermal
12th Plan2012-17
82,000
12,000
Spill over
Thermal
Revisedestimate2012-17
16,5533,380
~60.000
11th Plan2007-12
75000 80,000
15,000-20,0006,000
~18,-20,000
39,867
spill-over
Despite Government s keenness toreduce thermal...
Plan assumptions:
Strong increase of hydropower Strong increase of nuclear Full completion of 11 th plan until 2011/12
... Thermal Power is likely to remainmainstay of energy solution
Government revised assumptions:
Spill-over of some 20 GW of thermal and hydropower to12 th plan period Coal will be majority as gas is captive to other industry Hydropower cannot be realized to the planned extent due
to political /environmental pressures Govt keen on nuclear, however, gestation period / fuel
supply issues / key policy ingredients need to be securedNote: Exchange rate $1 = Rs 40
Source: Expert interviews; Team analysis
$10.5 B
$1.3 B
$0.9 B
In MW In MW Value ofequipment
Nuclear
Hydro
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Historically, the power sector has realized only around half ofthe planned expansion...
0
10,000
20,000
30,000
40,000
50,000-56%
VIII Plan(1992-1997)
IX Plan(1997-2002)
X Plan(2002-2007)
TargetAchievement
-48%
-55%
MW
.Source: Ministry of Power Eleventh Plan 2007, CEA, CRISIL research; BCG analysis
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To help meet expansion targets, there are certain keychallenges for power equipment manufacturers
Challenges forpower equipment
manufacturers
Step-up number ofBOI suppliers
Rapidly augment PPEmanufacturing capacity
Improve supply of
skilled manpower
Increase number ofconstruction agencies
Strengthen supply chain ofcritical inputs like forging,
castings etc.
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JV with Alstom in very advanced stages
Scope of business will cover both manufacturing and EPC of TG sets
Entire range of TG sets from 300 800 MW covered
JV will have 5GW per annum of production capacity
Short listing of three sites, technical evaluation done, site to be finalized in next few weeks
Mundra SEZ Dahej Krishnapatnam
Facilities finalized
Production to start by mid of 2011
Complete facilities to be commissioned by early 2012
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JV with Alstom in very advanced stages
THANK YOU