Bharat Forge Ltd — Interim / Quarterly Report 2021

Aug 12, 2020

B H A R A T F O R G E

August 12, 2020

To,

BSE Limited,

National Stock Exchange of India Ltd.

1st Floor, New Trading Ring, ‘Exchange Plaza’, Rotunda Building, P.J. Towers, Bandra-Kurla Complex, Bandra (East) Dalal Street, Fort, Mumbai- 400 051 Mumbai - 400 001 Symbol: BHARATFORG BSE SCRIP CODE – 500493 Series: EQ

Dear Sirs,

Re: Earning Update for Q1 of FY 2020-21

Please find enclosed herewith Earning Update issued by the Company for Q1 of FY 2020-21.

Thanking you,

Yours faithfully,

For Bharat Forge Limited

CHAUDHARI Digitally signed by CHAUDHARI Tejaswini Tejaswini RAMKRISHNA Date: 2020.08.12 13:11:55 RAMKRISHNA +05'30'

Tejaswini Chaudhari Company Secretary

Encl.: As above

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BHARAT FORGE LIMITED, MUNDHWA, PUNE 411 036, MAHARASHTRA, INDIA. PHONE: + 91 20 6704 2476 6704 2451 6704 2544 (Secretarial) Fax 020 2682 2163 Email: secretarial@bharatforge.com WEBSITE: www.bharatforge.com CIN L25209PN1961PLC012046

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BHARAT FORGE LIMITED

Analyst Update – Q1 FY21 Results

BFL 3 MONTH REPORT

“The quarter gone by was impacted by the Covid19 pandemic and the stringent measures adopted by countries to control the spread. The government imposed economic lockdown coupled with lower underlying demand had an adverse impact on Sales. This has resulted in the company posting a loss of Rs 563 million for the quarter.

Despite being operational for only one month in the quarter and running at ~ 20% capacity utilization, we were able to reduce breakeven levels through continued focus on cost reduction and improve productivity.

In these uncertain times and working within guidelines set by local authorities, we continue our steadfast focus on 4C’s: meeting customer demand, ensuring the safety & wellbeing of our colleagues, control on costs and working on the cost reduction initiatives already mapped out.

“Looking ahead in to demand for the coming quarter, we are witnessing marginal improvement in demand across both domestic & export markets. We expect our domestic revenues to be flat as compared to Q2 FY20 while the exports will be lower than levels witnessed in Q2 FY20. The sustainability in the recovery in underlying demand is a key factor to track in the coming months”

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B.N. Kalyani, Chairman & Managing Director.

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STANDALONE FINANCIAL HIGHLIGHTS Q1 FY21

	TABLE 1 Rs. Million	TABLE 1 Rs. Million
	Particulars	Q1 FY21 Q4 FY20 QoQ % Q1 FY20 YoY %
	Shipment Tonnage Domestic Revenue Export Revenue Other Operating Income Total Revenue EBIDTA EBIDTA % Other Income PBT PBT % Exchange Gain/ (loss) PBT after Exchange Gain/ (loss) Exceptional Item Profit After Tax	17,840 40,173 -55.6% 60,874 -70.7% 1,541 2,592 137 3,703 4,896 213 -58.4% -47.1% 5,556 7,528 381 -72.3% -65.6% 4,270 8,812 -51.5% 13,465 -68.3% 17 1,482 -98.9% 3,517 -99.5% 0.4% 16.8% 26.1% 420 315 401 (670) 535 - 2,645 - - 6.1% 19.6% (46) (379) (24) (716) 156 - 2,621 - - (939) - (563) (732) - 1,740 -

• Total revenues in Q1 FY21 at Rs 4,270 million declined by 51.5% as compared to the previous quarter due to the shutdown of manufacturing operations in the month of April and May on account of the lockdown imposed by the government to control the spread of the pandemic.

• Operating deleverage played out with EBITDA for the quarter at Rs. 17 million. The company posted a loss at the PBT & PAT level of Rs 716 million and Rs 563 million respectively.

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TABLE 2 Rs Million

TABLE 2	Rs Million
Particulars	June 30, 2020 March 31, 2020
Long Term Debt Working capital & Bill Discounting Equity D/E	18,550 18,351 13,286 14,084 53,477 53,551 0.60 0.61

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REVIEW OF INDIA BUSINESS

Automotive Business

The domestic automotive industry was severely impacted by the outbreak of COVID-19 pandemic and the resultant nationwide lockdown imposed by the Government. As a result, there was no production of vehicles for a major part of the quarter. Most of the OEM’s restarted operations from mid-May onwards and are gradually scaling up capacity in a phased manner but activity is still at sub-optimal levels on account of supply chain disruptions and intermittent local lockdowns.

With economic activities coming to a complete standstill, the M&HCV segment was the worst affected with production down 92.5% as compared to the same quarter last year while passenger car production was down 84% for the same period.

The pandemic outbreak, coupled with weakening financial profile of fleet operators and significant price hikes because of transition to BS-VI emission norms, the overall CV demand is expected to decline by 3035% in FY 2021 with a more severe hit in the M&HCV segment than the LCV segment. Volumes are however expected to recover gradually from H2FY21 onwards from the current lows with any meaningful demand recovery expected in FY 2022 only.

Sustained and meaningful macroeconomic revival, pick-up in infrastructure projects, implementation of scrappage policy and reduction in GST rates, remain critical factors for the revival of the industry.

Industrials Business

All sectors in the Industrial business were affected by the complete shutdown of economy.

INDIA REVENUES

TABLE 3 Rs. Million

TABLE 3			Rs. Million
Particulars	Q1 FY21	Q4 FY20	Q1 FY20
Commercial Vehicles Industrial Passenger Vehicles Others*	330 1,020 76 252	983 1,773 542 618	2,159 2,090 535 1,153
Total	1,678	3,916	5,937

• Others include other operating income, sale of manufacturing scrap etc.

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REVIEW OF INTERNATIONAL BUSINESS

Automotive Business

After strong growth in the North American Class 8 and European heavy truck production from CY 2016 to CY 2019, demand in CY 2020 was expected to decline as part of a normal cyclical slowdown, but it was further accelerated by the onset of COVID-19 pandemic. Lockdown measures adopted by countries globally to control the spread had a significant impact on OEM production and fleet utilization.

Though production and economic activity has re-started, demand is expected to continue to remain tepid in the near term on account of the lower economic activity and a relatively newer fleet. The freight markets will continue to improve as concern about the pandemic wanes and more sectors of the economy reopen.

Our trajectory on the passenger vehicle side remains on track as we continue to add new value added products and increase share with existing customers.

Industrial business

The Industrial business revenues were also affected due to COVID-19 related shutdowns and weak economic activity. Our key sectors such as O&G and Construction & Mining, witnessed considerable decline in activity and low demand.

While customer demand is slowly improving, there is significant uncertainty around the pace of global recovery in the key markets that we cater to.

We have in place a successful execution strategy and are well positioned to respond to any changes in our customers demand in these challenging times.

INTERNATIONAL REVENUES

TABLE 4 TABLE 5 Rs. Million

TABLE 4					TABLE 5			Rs. Million
Particulars	Q1 FY21	Q4 FY20	Q1 FY20		Particulars	Q1 FY21	Q4 FY20	Q1 FY20
Commercial Vehicles Industrial Passenger Vehicles	822 1,198 572	2,388 1,403 1,105	3,893 2,429 1,206		Americas Europe Asia Pacific	1,393 1,089 110	3,396 1,426 74	5,302 1,854 372
Total	2,592	4,896	7,528		Total	2,592	4,896	7,528

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CONSOLIDATED FINANCIAL HIGHLIGHTS Q1 FY21

TABLE 6 Rs.	TABLE 6 Rs.	Million
Particulars	Q1 FY21 Q4 FY20 QoQ % Q1 FY20	YoY %
Total Revenue EBIDTA EBIDTA % PBT Exchange Gain/ (loss) Exceptional Items PBT after Exchange Gain/ (loss) Profit After Tax Associate/ JV (Profit /Loss) share Minority Interest Profit After Tax	11,542 17,370 - 23,279 112 1,703 - 4,148 1% 9.8% 17.8% (1,191) 369 - 2,761 (224) (272) (44) (27) (513) - (1,442) (416) - 2,717 (1,254) (19) 15 (1,258) (471) (214) (35) (720) - - 1,776 (56) 12 1,732	- - - - - -

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CONSOLIDATED FINANCIALS

TABLE 7 OVERSEAS MANUFACTURING OPERATIONS	TABLE 7 OVERSEAS MANUFACTURING OPERATIONS		Rs. Million
Particulars	Jan-Mar 2020	Oct-Dec 2019	Jan-Mar 2019
Total Revenue EBITDA EBITDA % PBT before Exchange Gain/(Loss)	6,374 204 3.2% (357)	5,937 (206) - (532)	8,107 426 5.3% (80)

TABLE 8 Indian Subsidiaries	TABLE 8 Indian Subsidiaries		Rs. Million
Particulars	Apr- Jun 2020	Jan –Mar 2020	Apr- Jun 2019
Total Revenue EBITDA EBITDA % PBT before Exchange Gain/(Loss)	133 (27) - (45)	320 18 5.6% 7	214 (6) - (14)

TABLE 9 BFL + BFIL (Trading Subsidiary)

TABLE 9 BFL + BFIL(Trading Subsidiary)			Rs. Million
Particulars	Apr- Jun 2020	Jan –Mar 2020	Apr- Jun 2019
Total Revenue EBITDA EBITDA % PBT before Exchange Gain/(Loss)	5,035 (65) - (809)	11,113 1,891 17.0% 894	14,958 3,728 24.9% 2,855

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