Auto-component maker Bharat Forge's standalone net profit dropped 45 per cent to Rs 55 crore for the quarter ended March 2012. This is primarily due to provisioning of Rs 70.4 crore for impairment of investment in its North American operations.
Bharat Forge America had been incurring losses since inception in 2005. Earlier, it was being accounted for in the consolidated balance sheet of the company. However, this quarter the company shifted these losses to Bharat Forge's India standalone income statement and wrote them off. This has not had any impact on cash flow, the company clarified.
The company saw its standalone net sales rise by 19 per cent to Rs 977 crore. Sales of the company's domestic business grew by 14 per cent to Rs 544 crore, while sales from the company's operations outside India rose by 28 per cent to Rs 457.55 crore during the same period. “Growth in the domestic market had been sluggish due to macro headwinds,” said Mr Amit B. Kalyani, Executive Director, Bharat Forge.
Demand upswing
On a consolidated basis, the company's revenues for FY-12 grew by 23 per cent to Rs 6,279.06 crore. The net profits were up by 41.5 per cent to Rs 420.22 crore. The growth in the consolidated revenue was driven by demand from commercial vehicles (CV) industry globally and sustained growth in the non-auto business from India.
“The CV market in China is steeply down. Europe saw 10-15 per cent lower demand in the CV market. However, US witnessed 20-25 per cent upswing in demand,” said Mr Baba N Kalyani, Chairman and Managing Director, Bharat Forge Ltd. He also added that 16-17 per cent of sales from CV on a global basis.
The company will not be incurring any new capital expenditure in FY13.
The company's stock went up by three per cent to Rs 318.60 per share on the BSE.