Dear Shareholders,
I am pleased to present BFIL's FY23 performance. On the face of it, the
year 2022-23 marked a watershed in our existence. Commencing our voyage in 1989, we have
nurtured consistent growth throughout the years, culminating in an accomplished presence
spanning over three decades within the precision engineering industry. However, an
epiphany has dawned upon us, signalling that the moment is ripe for an accelerated
expansion, thereby creating an enhanced value for our esteemed stakeholders.
What made this journey incredible is that we have successfully embarked
on our strategic vision and have achieved a majority of the milestones set by the
management over the course of our journey. Over the period, we have sincerely worked on
our commitments, ensured we kept our promises and thus, today BFIL has emerged as one of
the leading players in the Indian precision engineering, crankshaft sand forging
components industry space.
That being said, the big message that I wish to communicate today is
that we are working very hard to sustain such crests and will continue to work tirelessly
to create a sustainable future growth strategy for the Company, and our time starts now.
There were a number of reasons behind this optimism
In the face of widespread global uncertainty, the Indian economy
demonstrated remarkable determination and strength. It not only managed to recover to
levels seen before the pandemic but also showcased its robustness on the international
platform. Retaining its position as the second-fastest growing economy within the G20
nations, this achievement was propelled by a combination of heightened consumer
expenditures, supported by favorable governmental policies, and substantial investments in
infrastructure. These factors collectively fostered a promising environment for conducting
business operations within India.
As a domino effect, the Indian automobile industry also showcased
consistent growth over the last few years and aims to double the size of the automobile
industry to '15 lakh crore by 2024. According to the industry experts, the demand for
passenger vehicles (PV) and medium to heavy commercial vehicles (MHCV) within the country
remained robust in 2023. This was due to strong interest from consumers and increased
activity in industries. As a result, India has now emerged as the third largest automotive
market, surpassing Japan. Additionally, the electric mobility sector is experiencing
significant growth, particularly with electric two and three-wheelers. This growth can be
attributed to the support of FAME II subsidies and tax incentives provided by various
state governments.
The India metal forging market is projected to grow from $4.32 billion
in 2022 to $8.80 billion by 2029, growing at a CAGR of 10.69%.
I am pleased to state that at BFIL we had foreseen this industry
optimism a few years back and thus accordingly realigned our business strategy and
capabilities to tap on these opportunities. We believe that this prudent approach has led
to one best performing year in the history of BFIL, thereby enhancing stakeholder value.
A reflection on our performance in FY23
FY23 was a record year with the Company achieving historical high
revenues, EBIDTA and PAT in the history of BFIL. In FY23, BFIL clocked total revenue of
'33,928.48 lakhs, representing a 15.2% increase over the previous year, on the back of an
increase in the orders executed. Our EBITDA margins grew to 18.4% from 15.5% in FY22 on
the back of lower material cost and continued focus on efficient cost management. Net
income for the year stood at '3,891.29 lakhs, a 30.4% increase over the prior year and PAT
margin stood at 11.5%, an increase of 140 bps compared to the previous year. Our EBIDTA
for the year stood at '6,242.37 lakhs, an increase of 37% compared to the previous year.
The next growth phase
In a competitive and regulated sector like ours, the luxury of standing
still does not exist.
Companies that need to enhance their competitiveness need to keep
growing all the time, either by enhancing their manufacturing capacity, or by investing in
cutting-edge technologies, or by undertaking strategic alliances or acquisitions that
enhance our capability, bolster our product and service offering.
With a strong commitment to maintaining our leadership in the industry,
we undertook one of the most significant expansion plans in the history of BFIL. Our
primary objective was to boost our machining capabilities. As a result, we successfully
acquired the precision machining unit located at the Mercedes Benz Truck Plant in
Mannheim, Germany. This strategic acquisition was finalized in FY22, and in FY23, we are
currently in the process of seamlessly integrating these newly acquired machines into our
existing manufacturing facility situated in Belgaum, Karnataka. We anticipate completing
this integration by the second quarter of FY24.
Once fully operational, this venture is projected to elevate our
capacity to approximately 30,000 tonnes, contributing to our continued growth and success.
On the organic front, we have set our eyes on setting up a new 52,000
sg.mt manufacturing facility in Belgaum, Karnataka. Equipped with state- of-the-art
facilities, this precision engineering center would not only enhance our production
capability but would also enable us to extend our portfolio in both the ICE & the new
energy sphere. We've already taken the first steps towards making this plan a reality
during FY23. Our goal is to have the plant up over the next few years. This move not only
reflects our commitment to advancement but also our dedication to meeting the evolving
needs of our stakeholders.
Additionally, during the year, we are focused on developing solutions
across the entire spectrum of New Energy Components. This strategic effort not only
enhances our operational efficiency but also bolsters our capabilities, positioning us to
effectively fulfil the rising demand for superior and cutting-edge products. Expanding the
new energy components unit will enable BFIL to broaden its presence in the emerging new
energy sector. Additionally, we also concentrated on developing essential expertise in
fuel-agnostic systems and components, aiming to both diversify and harmonize the overall
product range.
We also put our attention on making our internal processes smoother,
aiming to boost how well we operate, cut down on unnecessary steps, and make things
faster. These changes have not only brought down costs but also made our customers even
happier with our services. We also focused on developing a robust supply chain strategy
that predicts potential disruptions and guarantees a smooth and consistent supply of
materials.
We aimed to diversify our suppliers and establish a contingency plan to
enhance our preparedness.
We believe that there is considerable relationship head room available
for us to deploy additional manufacturing and technological capacities in servicing the
growing needs of our esteemed clients and acquire a larger wallet share.
Growing opportunities
At BFIL, we foresee India emerging as the shining star of the global
economy, poised to sustain an annual GDP growth surpassing 7% well into the foreseeable
future. Against this backdrop, the realization of the government's vision for India as a
military superpower, a global manufacturing hub, and an Atmanirbhar' India is within
reach. As these aspirations come to fruition, we expect a substantial surge in demand for
the products manufactured by us, thereby presenting a captivating opportunity for a
forward-looking company like ours.
BFIL's preparedness
At BFIL, we will not only increase our manufacturing and technical
capacities to address the markets of the future, but also reinforce our industry position
by aggressively engaging in acquisition and collaboration activities. Further, by
investing regularly on R&D, we intend to enhance our operating efficiency and build on
our capabilities to introduce pioneering products and to assess new material compositions.
As we continue to grow our presence, we intend to focus on
understanding and meeting customer needs through personalized products, efficient customer
service, and strong relationships. Proactively collect customer feedback to identify
weaknesses and opportunities for improvement. We use this feedback to drive product
innovation and improvement.
Adopting a responsible approach
Ensuring responsible business practices remains a top priority for us.
Throughout the year, BFIL's senior management dedicated their efforts to setting clear
goals and creating a comprehensive roadmap to address environmental, social, and
governance (ESG) considerations across all our operations. In our day-to-day activities,
we place a strong emphasis on responsible management of resources and continuously explore
methods to decrease waste, save energy, and limit our impact on the environment. Through
the adoption of streamlined production methods and the use of environmentally friendly
materials, our aim is to play a role in shaping a more environmentally sustainable future.
Road ahead
BFIL has reached an exciting turning point, and we are eager to see
where it takes us. Thanks to our corporate strategy, we have been able to maintain an
EBITDA margin of 15% or higher, regardless of market fluctuations.
Therefore, we believe that our planned capacity expansion and
acquisition strategy, combined with positive macroeconomic developments, will allow us to
achieve sustainable revenue growth, increased surpluses, and enhanced shareholder value at
a faster rate in the near future.
With best wishes
Jaspal Singh Chandock
Chairman & Managing Director