Corporate Overview
Our Capitals
Statutory Reports
- Management Discussion and Analysis
- Board’s Report
- Report on Corporate Governance
- Business Responsibility Report
Our Financial Capital represents the engine that enables investments in other capitals to drive our growth and strengthen our competitive positioning. Over the years, we have created a right capital structure and allocated funds judiciously in right areas which is reflected in our resilient performance and balance sheet position. These have translated into a robust financial foundation which is sustainable across market cycles.
At Bharat Forge, we have a robust system in place to assess funding requirement for ensuring sustainable operations. All funds are either generated from business surplus or through financing activities. Our focus is on determining an optimal capital structure to reduce cost of funds and use funds prudently to generate maximum returns. We use surplus funds either to pay off debt, address inorganic growth opportunities, invest in business or for working capital requirements. All such decisions are made keeping in mind that the Company maintains adequate liquidity given the cyclical nature of our business.
In the past few years, we have made investments in capacity expansion. We have also invested in automation and digital manufacturing to reduce costs, in our subsidiaries to make their operations more sustainable in the long run and in new ventures where we see growth. This prudent capital allocation has helped us generate adequate cash flows and maintain operating profitability in excess of 20% despite the immense challenges faced due to cyclicality and the COVID-19 pandemic.
We have effectively used free cash flows in paying off debt, which is an important part of our strategy, to lower debt and finance cost. As a result, our net debt/equity stands at a comfortable 0.16 as on March 31, 2021. We also invest remaining surplus cash in a diversified portfolio (fixed deposits with premium financial institutions and safe liquid instruments) with the aim of generating returns. Our cash and cash equivalents stood at ₹26,752 Million as on March 31, 2021.
FY 2021 was a challenging year due to the impact of the COVID-19 pandemic and the ensuing economic lockdown globally. The pandemic further impacted demand, production and deliveries. We saw a decline in demand across all major geographies and business segments. As a result, all key performance indicators have been on a negative trend.
Unlike the previous downturn, our sustained efforts in prudent financial management has ensured that it remained strong throughout the current downturn with significant level of liquidity. Our gearing position remains at a comfortable position and strong cash flows provide headroom for expansion.
We have created a robust business model and adopted a strategy which is focused on long-term value creation, despite any short-term hiccups. This has ensured sustained returns to our shareholders and capital appreciation for our shareholders in the last ten years. Despite the volatility and uncertainty in our end markets and the need to invest in new businesses and manufacturing capacities, we have ensured uninterrupted distribution of wealth creation in the form of dividend to the shareholders.
