Bharat Forge : Annual Report for 2023

Tonnage and

Technology

Annual Report 2022-23

Contents

Tonnage and

Technology

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167

Corporate Information Bankers

Bank of India

Bank of Baroda

Bank of Maharashtra

Canara Bank

State Bank of India

HDFC Bank Ltd.

Annual Report 2022-23

The cover design

The cover features an exquisite blend of orange hues representing molten metal and blue tones which embody the spirit of cutting-edge technology. It depicts our seamless and cohesive transformation from a traditional manufacturing company into a dynamic, technology oriented engineering firm.

Corporate Overview

02 About the Report

06 Highlights of the Year

08 Message from the Chairman & Managing Director

1. About Bharat Forge

1. Geographic Footprint
2. Business Model

1. Strategy

1. Stakeholder Engagement

1. Materiality
2. Risk Management

1. Financial Capital

1. Intellectual Capital

1. Manufactured Capital

38 Embedding ESG into Operations

44 Human Capital

46 Social and Relationship Capital

1. Caring for the Communities

1. Natural Capital

1. Being an Ethical Organization

Statutory Reports

56 Management Discussion and Analysis

69 Board's Report

102 Report on Corporate Governance

130 Business Responsibility and Sustainability Reporting

08

I thank all the stakeholders for their trust in us every time we transform.

Financial Statements

1. Standalone Financial Statements

1. Consolidated Financial Statements

47

ICICI Bank Ltd.

Axis Bank Ltd.

Citibank N.A.

Standard Chartered Bank

Credit Agricole CIB

HSBC Ltd.

JP Morgan Chase Bank N.A.

Deutsche Bank AG

Kotak Mahindra Bank Ltd.

Auditors

BSR & Co LLP

Chartered Accountants

Company Secretary

Ms. Tejaswini Chaudhari

Registered Office

CIN: L25209PN1961PLC012046 Bharat Forge Limited Mundhwa, Pune Cantonment, Pune - 411 036, Maharashtra, India. Phone: [phone] / 2476 Fax: [phone]

Email: [e-mail]

Web: www.bharatforge.com

See this report online at

www.bharatforge.com36

Annual Report 2022-23

BHARAT FORGE LIMITED

About the Report

Corporate Overview

Statutory Reports

Financial Statements

About the Report

Basis of Reporting

This is our fourth year of integrated reporting based on the principles of Integrated Reporting by the International Integrated Reporting Council (IIRC). This reporting is in line with our philosophy of transparently disclosing information beyond the statutory norms. We have tried to provide all-inclusive insight of our value creation process and factors that may affect it. The report covers the six capitals - financial, manufactured, human, intellectual, social & relationship and natural capitals - that we use in our business. Further,

we cover information on material matters, governance, performance and prospects in context of external environment. Our intent is to provide as much relevant information

to the stakeholders to better equip them to evaluate our performance and take an informed decision.

Reporting Principle

This report has been prepared in accordance with:

• Companies Act, 2013 (and the Rules made thereunder)
• Indian Accounting Standards, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
• Secretarial Standards

Other international guidelines in accordance with:

• framework of International Integrated Reporting Council (IIRC)
• Global Reporting Initiative (GRI) Standards

Boundary and Scope Of Reporting

The report covers financial and non-financial information and activities of Bharat Forge Limited, India for the period of April 1,

2022 to March 31, 2023. We have captured significant material events up to Board Meeting held on May 05, 2023.

Board Assurance

The members of the Board acknowledge having applied their collective minds in the preparation of this report. They accept the responsibility for its integrity and are of the opinion that the report addresses all material issues and provides a fair and balanced view of the Company's performance.

Forward-looking Statements

Certain statements in this Report regarding our business operations may constitute forward-looking statements. These include all statements other than statements of

historical fact, including those regarding the financial position, business strategy, management plans and objectives for future operations. Forward-looking statements can be identified by words such as 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'may', 'will', 'plans', 'outlook' and other words of similar meaning in connection with a discussion of future operating or financial performance.

Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or

imprecise and that may be incapable of being realized and as such, are not intended to be a guarantee of future results, but constitute our current expectations based on reasonable assumptions. Actual results could differ materially from those projected in any forward-looking statements due to various events, risks, uncertainties and other factors. We neither assume any obligation nor intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

United Nations Sustainable Development Goals (UN SDGs)

Our Capitals

Financial Capital	Manufactured Capital	Intellectual Capital
It represents the capital that	It represents our modern	It represents our knowledge,
we employ in the business to	manufacturing facilities and	process and technical excellence
support our operations and	equipment. We continually invest	and digital readiness and
execute business strategy	financial capital in it to support	innovation capabilities led by
for generating surplus for the	our growing scale of operations	our research and development
investors and shareholders.	and enable manufacturing of	(R&D) centers which provide us a
	diverse and evolving range	competitive edge in the industry.
	of products.	We are continually investing in
		these to strengthen our ability
		to develop innovative solutions
		as per the evolving trends in
		the industry.

Human Capital

It represents the competencies, experience, engagement level and motivation of our people. They drive the organization's ability to innovate and run business efficiently, better serve customers and maintain strong relations and achieve strategies.

Social and Relationship Capital

It represents the quality of relationships that we have with the customers, business partners and communities which enhances our reputation, and facilitates in business growth and giving back to the society.

Natural Capital

It represents the renewable and non-renewable environmental resources that we use in our operations and the impact our operations have on the environment. We are continually investing in these towards making our operations more sustainable.

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Annual Report 2022-23

BHARAT FORGE LIMITED

Bharat Forge's

Corporate Overview

Statutory Reports

Financial Statements

Tonnage to Technology

Vision 2030 targets

journey of the past two decades has been one of exponential growth.

• Consolidated Revenues:
  12-15% CAGR between FY 2022-30 by creating balanced revenue streams across components and products/systems
• Consolidated EBITDA of 20%: As the incubated verticals progress from investment phase to production mode and the international operations turnaround after a challenging period

• Consolidated ROCE: Improvement of 500 bps by FY 2030 from FY 2022 levels of 20% through a combination of operational improvement across all business verticals and shrinking the balance sheet

The quantitative results have been impressive:

14% *CAGR IN SALES

13% *CAGR IN PROFITABILITY (PBT)

19% *CAGR IN SHAREHOLDERS WEALTH (EX-DIVIDEND)

*FY 2003 to FY 2023 standalone financials

However, it is the qualitative aspects that inspires and excites us more: of transforming and diversifying, building capacities and capabilities, forging enduring relationships and embedding sustainability.

Ours has been a journey of broadening horizons. From being a supplier predominantly to the Commercial Vehicles sector

to a supplier with a balanced exposure across Commercial Vehicles, Passenger Vehicles and an array of Industrial sectors. Our endeavors have seen us graduate from being just a steel forging company to adding capabilities across aluminum, titanium, ferrous and other alloyed materials.

It has been a mission of building diversified technology and knowledge capabilities to stay

at the forefront of innovation. What began with manufacturing of simple components has now evolved into development of critical components across sectors in collaboration with our clients, resulting in exceptional outcomes. Our Engineering

• Design centers, supported by multi-disciplinary sectoral engineering and R&D capabilities, proved key to this progression. They have been at the core of all innovations that we have undertaken and implemented across businesses. Additionally, we have nurtured a strong talent pool of over 200 M. Techs and PhDs dedicated to process innovation, product prototyping, and component development, enabling us to strengthen our IP profile with 84 patent filings.

Last and more importantly, it has been a pursuit of embedding

sustainability across every facet of business to secure our long-term interests and ensure value for all stakeholders.

This multifaceted approach has laid a solid foundation from which we can leverage to propel us to the next level of success. We look ahead to a stronger tomorrow which will be transformational from end-markets point of view as well as from the solutions across technologies and processes that we will be able to deliver.

Towards this end, we have laid out our Vision 2030, entailing financial targets and evolving to an innovative engineering conglomerate, dedicated to meeting customer expectations while developing newer avenues of growth.

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Annual Report 2022-23

Corporate Overview

Statutory Reports

Financial Statements

Highlights of the Year

BHARAT FORGE LIMITED

HIGHLIGHTS OF THE YEAR

Reflecting on a year of progress and achievements

Delivered record performance

`12,910 Crore

Consolidated revenues

`7,573 Crore

Standalone revenues

`4,461 Crore

Export revenues

Record Order Wins

We won a record `3,900 crore of orders driven by order inflow of `2,000 crore from Defence, `1,500 crore in the core forging business across automobiles and Industrials and `380 crore in JS Autocast.

Maiden export order in Defence

Our Defence subsidiary, Kalyani Strategic Systems Ltd. secured its maiden export order of USD 155.5 million for Artillery Gun System.

JS Autocast Consolidation

Consolidated operations at JS Autocast and further enhanced its competencies with the acquisition of assets of Indo Shell Mould Ltd.'s SEZ unit. This has strengthened our foothold in the casting space and the additional capacities will be crucial in meeting growing demand.

Commencement of E-2W Manufacturing Plant

We successfully started commercial production at our new Electric 2-wheeler manufacturing at Chakan. It has capacity of 60,000 vehicles per annum, expandable to 100,000 vehicles.

Prestigious Recognitions from Customers

Global Supplier of the	Performance of the	Sustainability	Supplier Excellence for	Supply Chain Excellence	Partner Level
Year	Year (2021 & 2022)	the year
		Initiatives Lead			Performance
Supplier of the Year	Global Supplier of the	ESG Award	Quality for the year	Overall Business	Business Alignment
Year	Performance	- Gold

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