Bharat Forge Makes a Play To Expand

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Bharat Forge Makes a Play To Expand

NEW DELHI — A little known name in India's defense sector — privately owned Bharat Forge — plans to become a major player, especially in the artillery and specialized vehicles segment.

The company, which belongs to the Kalyani Group, has acquired the gun manufacturing facility from Switzerland's Ruag and has been given permission by the government to set up a joint venture with Elbit Systems of Israel.

The joint venture will be called BF Elbit Advanced. It will develop, assemble and manufacture defense systems, particularly artillery guns, mortar gun systems and ammunition.

Until 2011, private companies in India could not enter the defense sector.

Rajinder Bhatia, CEO of Bharat Forge, said the company has received requests for information (RFIs) for several high-tech projects in the past year, including the low-level quick-reaction missile system; medium-range, surface-to-air missile system; and long-range, surface-to-air missile system. Bhatia said Bharat Forge will concentrate mainly on the gun projects and will not participate in the RFIs offered.

"Kalyani Group has a very focused approach, and we intend participating in certain chosen segments which are aligned to our core competence," Bhatia said. "Our competence is towards weapon systems which require high-tech manufacturing and in-depth knowledge of metallurgy and materials."

The company has developed a 155mm/52-caliber gun and has teamed with Elbit Systems to co-develop and co-produce the mountain version of the gun.

The Indian Army has a requirement for a variety of 155mm/52-caliber guns worth more than US $3 billion. Yet, the Army has failed to acquire a single gun from the overseas market.

With Elbit, Bhatia said he sees an opportunity.

"Elbit is a very strong company with a wide ranging portfolio," Bhatia said. "There are a number of segments like artillery systems, protected vehicles, precision ammunition and other high-end products where we can collaborate with each other."

Overseas Tie-up
To tap into the $100 billion defense market — and encouraged by the government's initiative to boost domestic defense companies — Bharat Forge plans several tie-ups with overseas companies, but isn't ready to name them yet.

Analysts say domestic defense companies will need to partner with overseas companies aggressively to compete in several defense tenders being offered first to domestic firms as part of an unwritten Defence Ministry policy to boost the domestic industry.

"Without a doubt, [Bharat Forge] will need to collaborate with overseas companies for system-level know-how and will most likely get to start a build-to-print facility should they win the contract," said Rajesh Narayan, a Mumbai-based investment banker. "However, should they aspire for the partnership to evolve into local system integration, they need to forge alliances and partnerships with Indian small manufacturing enterprises."

Gun Facility
Bharat Forge's acquisition of Ruag allows it to build self-propelled artillery guns and vehicles at Pune in India.

The facility has been manufacturing artillery systems, including M109 self-propelled tracked systems. The line was upgraded in 2004 to tackle artillery systems for 155mm/52-caliber guns. In addition, the line has also been used to upgrade tank systems from 105mm to 120mm artillery gun systems.

Another Bharat Forge executive claimed the company can manufacture a variety of guns, including 105mm, 130mm and 155mm/52-caliber naval guns. The facility can also upgrade armored systems, the executive added.

Some of Bharat Forge's ongoing projects include upgrade programs for light multipurpose reconnaissance vehicles, light bulletproof vehicles and light strike vehicles.

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