Today virtually every global automotive OEM and Tier I supplier,
as well as automakers sources complex forgings like machined
crankshafts, front axle beams and steering knuckles from Bharat
Bharat Forge's client list is straight out of the top echelons
of the fiercely competitive global automotive sector and includes
Ford, General Motors, Volvo, Daimler Chrysler, Toyota, BMW,
General Motors, Volkswagen, Audi, Renault, Ford, Volvo, Caterpillar-Perkins,
Iveco, Arvin Meritor, Detroit Diesel, Cummins, Dana Corporation,
Honda, Scania among others.
Within a decade Kalyani has turned BFL into the largest exporter
of auto components from India and a leading chassis component
manufacturer in the world. BFL's Pune plant is the world's
largest capacity single-location plant. In 2004-05 Forbes
ranked BFL among Asia's 200 'best under a billion' (dollar
With $1.8 billion in market capitalisation, it is now the
second-largest forgings combine in the world and aspiring
to climb to No.1 by 2008.
Liberalisation of the Indian economy during the early '90s triggered
Kalyani's imagination that eventually propelled BFL straight
into the global league. Kalyani devised a holistic three-pronged
strategy to take on global opportunities:
||With meticulous planning incorporating
upgradation and modernisation he hiked production capacity
at his Pune plant
||He wooed automakers spanning
half the globe from North America to Europe into buying
his engine and chassis components and
||He went on a takeover spree
to acquire small forging companies abroad to enlarge his
customer base. BFL today has manufacturing facilities
spread over nine locations and six countries - two in
India, three in Germany, one in Sweden, one in Scotland,
one in North America and one in China
Born in an agricultural family in Maharashtra, Baba inherited
from his father, Neelkanth Kalyani, about 60 acres of sugarcane
plantations. In the 1960s the elder Kalyani decided to venture
into manufacturing and set up a unit to forge parts for diesel
engine makers, mostly for tractors and agricultural pump sets.
Baba Kalyani, who was away at a boarding school, spent summer
vacations watching the family business grow. "This experience
taught me to look at the broader picture," said Kalyani
in a press interview." .
After his engineering studies from the premier Birla Institute
of Technology & Science, Pilani, and Boston's MIT for
his master's in mechanical engineering, Kalyani joined his
During his first year of running the business he helped upgrade
the manufacturing process and make the unit profitable. But
he soon grew impatient with the sloth and morbidity of the
low-technology cheap-labour combination. Instead, he wanted
to shake-off the sloth to make the company globally competitive
with a focus on innovation and technology.
In the late 1980s and early 1990s, amid bitter opposition
Kalyani pushed Bharat Forge into investing around $55 million
to consolidate and modernise the Pune plant when the company's
annual sales were $120 million, and interest rates were above
20 per cent.
His focus remained equally on enhancing quality as well as
quantity, and set up a new, largely automated plant alongside
the old one, with in-house R&D, design and engineering,
a full-fledged product testing and validation facility. This
fetched BFL its first big US order - for $5 million worth
front axle beamsfrom ArvinMeritor of Troy, Michigan in 1993.
The client signed on after visiting BFL's high-tech factory.
As orders began to flow from elsewhere in the US, Bharat
Forge became a major supplier to the heavy truck industry.
Passenger cars were added to the commercial vehicle trade,
with Pune still the factory base. BFL's customer segments
now include even the non-automotive oil and gas sectors.
With the global expansion of BFL's customer base came the
need to customise as well as to diversify risk geographically.
Kalyani realised that BFL would operate a forge business more
profitably in Europe or the US by using back-end manufacturing
from its Indian operation to bring down costs.
For instance, it could churn out forgings at its Pune factory
while staff in Germany worked with clients in designing and
engineering products. Having a front end "gives you the
ability to get involved in the design and development of new
products for your customers, which is not possible from a
long distance," says Kalyani.
Kalyani entered into global acquisitions, with the prize catch
being the Dusseldorf-headquartered Carl Dan Peddinghaus, Germany's
second-largest forging company, situated near the industry's
world leader, ThyssenKrupp, in 2004, for €29 million.
BFL has systematically made inroads into auto manufacturing
hubs like Detroit and industrial Germany.
BFL has since made highly strategic acquisitions like CDP
Aluminiumtechnik now known as Bharat Forge Aluminiumtechnik,
Federal Forge now known as Bharat Forge America Inc Imatra
Kilsta, AB, Sweden along with its wholly owned subsidiary
Scottish Stampings, Scotland (together called as Imatra Forging
Group) and has signed a JV with FAW Corporation, - the largest
automotive group in China, now named FAW Bharat Forge.
"These acquisitions have given the company an edge of
dual shore model and tremendous opportunity to leverage existing
customer relations of the two companies, especially the European
passenger car manufacturers," says Kalyani.
BFL also holds the distinction of being the first Indian
automotive component manufacturer to have made a breakthrough
into China in 2003 by securing large business from the two
leading automotive manufacturers). Making further inroads,
BFL is now even supplying machined crankshafts for diesel
trucks, which it sells to two big Chinese engine makers, Wuxi
First Auto Works and Yuchai.
Currently, BFL is implementing a major expansion programme
at a cost of $110 million. When completed in 2005-06, the
expanded capacities will enable BFL to address global market
opportunities even more aggressively and capture a larger
Like his machines, Kalyani is equally scrupulous about hiring
the best engineers to run his plant- 1,500 of his 3,500 employees
have engineering degrees. In a tribute to his Alma Mater,
he sponsors a special programme for his employees to get an
Baba Kalyani has elevated BFL to a role model for the Indian
auto ancillary industry with a comprehensively designed business
model, incorporating well-diversified product range, strategic
partnerships for capturing global markets, and sustained cost
reduction. Augmenting the effort is greater reliance on IT,
R&D in design and technology to considerably compress
development time and create the best 'speed to market' standard
in the industry.
Compiled by Shubha Khandekar.