Business Today

Baba Kalyani's new growth engines

Prompted by the sudden collapse of the global auto industry, the Kalyanis want to transform Bharat Forge — the world's second-largest forgings maker — into a high-value engineering giant.

twitter-logoAnand Adhikari | Print Edition: September 20, 2009

Harley-Davidson, the cult American motorcycle brand, has earned a place in the history books for being one of just two motorcycle manufacturers to survive the Great Depression of the 1930s (the other was a brand called Indian). It did so by getting into new businesses like industrial engines and also launching a three-wheeled delivery vehicle. At a time when a recession not too different from the one that started some 80 years ago has taken its toll of global economies and industry — including the automobile sector and, of course, Harley all over again — the American motorcycle maker's decision to move away from its bread and butter business could be a good case study for companies trying to survive the downturn.

At his sprawling headquarters at Mundhwa on the outskirts of Pune, the Harley lesson wouldn't be lost on Babasaheb Neelkanth Kalyani, who knows a thing or two about these big bikes; he owns two of them, and till not too long ago could be seen on weekends cutting through Pune's hilly outskirts on one of his giant machines. "I hardly have any time now," shrugs the Chairman & Managing Director of the $2.4-billion Kalyani Group's flagship Bharat Forge Ltd (BFL), a business that Kalyani picked up from his father and transformed into the world's second-largest maker of forgings. (Forgings are used to make, amongst other things, components for auto chassis and suspension systems.)

If the 60-year-old isn't seen on his road kings these days, it's because Kalyani is virtually living out of his suitcase, visiting the company's dozen manufacturing plants that span the globe, from Scotland to Germany to Sweden to the US and to China. Yet, one is tempted to draw a parallel between the MS from MIT's recent detachment from the Harleys and his conscious attempt to reduce BFL's exposure to the automotive segment.

At the same time, however, to battle the raging recession in the auto sector, BFL — a supplier to the likes of Ford and Volvo — is doing something pretty similar to what Harley did in the 1930s to survive the Great Depression: Looking beyond its mainline business and seeking out new markets (incidentally last fortnight, the US cruiser maker announced it would start its India operations by 2010). Just as Harley moved into the market for industrial engines; BFL is keen to take its high-end engineering skills into other sectors like aerospace, energy, railways and oil & gas by making highly-specialised products for them. "We thrive in challenges," declares Kalyani. "Something good always comes out of new ones."

The similarity with Harley-Davidson ends there (bikes, after all, will always be its mainstay, unlike what BFL is trying to do). The "something good" that Kalyani sees at the end of the tunnel has the potential to make BFL three times its current size. "In energy itself—between thermal, wind and nuclear—we can generate Rs 15,000-20,000 crore annually. Compare that to what we are doing today—Rs 4,000-5,000 crore—and you will realise the scale of this opportunity," says the CMD. Adds his 34-year-old son Amit Kalyani, who is the Executive Director: "Our future investments will be in the fastergrowing non-automotive sectors."

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