Mumbai (Maharashtra): Engineering major Bharat Forge, part of the three-billion dollar Kalyani Group, on Tuesday reported profit after tax of Rs 174.1 crore during the April to June quarter of current fiscal, down 25.8 per cent as compared to Rs 234.5 crore in Q1 FY19.
Total revenues of the company also declined by 9 per cent in Q1 FY20 at Rs 1,346.6 crore as compared to the same period last year -- mainly due to a weak demand environment in the domestic market and inventory de-stocking in oil and gas.
Earnings before interest, tax, depreciation and amortisation (EBITDA) at Rs 351.9 crore de-grew by 17.9 per cent as compared to Q1 FY19.
"Q1 FY20 was a challenging quarter with negative demand development in the domestic market across segments, with original equipment manufacturers focussed on correcting inventory levels across the value chain," said Chairman and Managing Director B N Kalyani.
"This coupled with the inventory destocking in export oil and gas business had an adverse impact on our performance," he said in a statement.
While the sales development through the course of FY20 is dependent on end markets, the company's focus will be on aggressively cutting cost, accelerating new product development through its own R and D, free cash generation and strengthening the balance sheet.
"We have previously seen such cycles and are confident of coming out stronger and faster than before," said Kalyani.
The domestic automotive industry in this quarter witnessed significant de-growth across all sectors as compared to last year due to continued liquidity tightness, the rising cost of ownership and weak consumer sentiment. Medium and heavy commercial vehicle industry production was down 23 per cent sequentially and 18 per cent compared to last year same quarter.
Bharat Forge's medium and heavy commercial vehicle revenue stood at Rs 215.9 crore in Q1 FY20, marking a decline of 30.8 per cent on a year-on-year basis.
A similar double-digit decline in passenger vehicle production was witnessed during this quarter. Strong production growth in FY19 coupled with revision in axle load norms amid weak freight demand has led to an oversupply of freight-carrying capacity.
Tightening of lending norms on account of the ongoing non-banking finance companies (NBFC) crisis and falling freight rates have dampened fleet operator sentiments, said Kalyani.
"The government is cognizant of the prevailing economic environment and is expected to implement a certain set of measures such as boosting infrastructure investments, sectoral incentives, GST relief to specific sectors like auto and other confidence-building steps for the private sector to stimulate economic growth," he said.
Bharat Forge is a Pune-based Indian multinational company involved in automotives, power, oil and gas, construction and mining, locomotive, marine and aerospace industries.
It is the world's largest forging company with trans-continental presence across 10 manufacturing locations spread across India, Germany, Sweden, France and North America.