Bharat Forge open to more acquisitions

Firm targets global leadership in two years.

Pune-based Bharat Forge (BFL) has set a target to become the global leader in its business by 2008, for which it is open to more acquisitions to complement organic growth.

However, according to BFL chairman and managing director Baba Kalyani, it does not make a business case for Indian auto component companies to acquire the assets of troubled US automotive component giant Delphi.

"We want to achieve global leadership by 2008. Part of that will be organic growth and some inorganic," Kalyani told Business Standard.

In December last year, Bharat Forge, India's largest auto-components company, gained control of its counterpart in China, a division of First Automobile Works, the country's largest vehicle manufacturer.

The deal with FAW Forging boosted BFL's capacity by 1,00,000 tonne, taking the total to about 6,00,000 tonne, second only to Germany's Thyssen Krupp.

After the acquisition "� Bharat Forge's sixth in four countries in the past two years "� Kalyani said that his company's global strategy was complete, creating the widespread impression that its appetite had been satiated.

Far from it. "Our strategy is complete in the sense that we are now present in all the important markets of the world: North America, Europe and China. In each market, we now need to consolidate and grow," clarified Kalyani.

However, Delphi, in whose assets numerous Indian companies have shown interest, is nowhere on Kalyani's wish list.

"It does not make sense. Delphi will only sell where there is maximum legacy cost (high wages, healthcare and pension costs)," said Kalyani.

Moreover, he pointed out, Delphi won't sell businesses with a future, which have technology and innovation capabilities. "Why buy?" he asked.

BFL's acquisition strategy is guided by garnering customers and getting closer to its big markets. Besides, the outfit being acquired must have enough high technology to complement BFL's low-cost production base.

Besides, Kalyani does not see the not-so-good going by General Motors, one of BFL's clients, as a business risk. "Cars being made by GM will not disappear. Somebody will make them. We respect GM as a client. Our only concern is that we need to be careful," he said.