Challanging for Equipment Manufacturer

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.


13/15


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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

Documents

Challanging for Equipment Manufacturer