Bharat Forge has retrenched over 800 people which represents close to one-fourth of its total workforce at its manufacturing facility in the city with the company blaming it on the sharp fall in demand for its products due to slowdown in the automotive sector in the US and India.
However, sources in the company point out that one of the major cause of retrenchment has been the commissioning of the highly capital intensive and automated second forging press line imported from Muller Weingarten, Germany. This facility cost the company a whopping Rs 145 crore in March 2000.
The 16,000 tonnes Weingarten forging line with a capacity to produce 30,000 forgings per annum has computerised line integration and visualisation systems with material handling done by robots and is manned by only 45 people, compared with a similar capacity conventional forging line requiring 1,800 people. The company has an identical press line set-up at a cost of Rs 120 crore and operational since 1993.
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"We have cut down our workforce by 800 people over the last one year and brought it down to around 2,700 people as part of the cost cutting measures. The job cuts will continue but depending on market conditions we will decide on the target of further workforce reduction," Baba Kalyani, chairman and managing director of Bharat Forge, the flagship company of the Rs 1,600 crore Kalyani group said.
However, Kalyani denied that the large job losses at Bharat Forge were due to the commissioning of the two highly automated forging lines.
"In fact we have created new jobs at the new forging press lines that have been commissioned," Kalyani said, but blamed at the high job losses at the conventional forging lines of the company due to the slump in sales of commercial vehicles in the US and the domestic market as well.
The high investments in the Weigarten press lines has already impacted the performance of the company in fiscal 2000-2001 with interest cost shooting up by 29.55 per cent to Rs 57.30 crore (Rs 44.23 crore), while depreciation jumped up by 32.87 per cent to Rs 39.69 crore (Rs 29.87 crore).
As a result, net profit dipped sharply by 47.87 per cent to Rs 32.64 crore (Rs 62.62 crore). Net sales were down by 6.85 per cent at Rs 540.52 crore (Rs 580.33 crore).
The company has projected that manpower reduction and cost cutting in areas of operations, finance, materials is expected to bring in savings to the tune of Rs 40 crore per annum.
The commissioning of the new lines has jacked-up the forging manufacturing capacity of Bharat Forge by 40 per cent to one lakh tonnes per annum making it the largest single location forging plant in the world and its productivity being benchmarked one of the best in the world.
The production of medium and heavy commercial vehicles in India dipped by 22 per cent to 88,000 units in fiscal 2000-2001 as compared to 1.12 lakh units produced in the corresponding period of the previous year.
The decline in anticipated sales of Class 7 and 8 trucks in the US market was very sharp at 57 per cent. As against the projected sales of 3 lakh heavy trucks in the US in the year 2000, the actual sales were only around 1.30 lakh units.