Well, we've got Bharat Forge management joining us then. So, you may want to listen in, but of course I mean they do a lot more. Baba Kalyani is with us, CMD at Bharat Forge, as always to talk about the numbers. Mr. Kalyani, good morning, good afternoon. Pardon, Prashant, to you.
Thanks very much for joining us, sir. I just want to start by asking you about — I mean, you know, usually we get you to give us the big picture, but maybe we do the reverse this time. Margins, Mr. Kalyani, if you will allow me, have come off a little bit at about 170-odd basis points lower. And I think the commentary is that margins would have been 28% normalized for input cost increases. So could you give us a sense of how much of this is sort of temporary, how much of this can be passed on — these input price increases can be passed on to consumers — and when should we expect the reported numbers to get back to the 27 to 28% range, sir?
Actually, you would have seen the same range even in this results that we came out with. We have had almost 160 basis point increase in the energy cost, which we will recover from our customers. And with the growth that we have, as we have committed, we will see better margins coming up. I mean, even for the last quarter, we will recover these cost increases that have taken place.
Right. So could you give us a sense of when you will be back in that 27–28% range?
I think this quarter itself.
The quarter we're in — Q2?
Okay, so this basically was an inability to pass this on immediately?
The problem is when you have this kind of inflation, and this is largely because of the West Asia war and shortage of LPG to start with, then switching to other fuels and all those things, it takes a little time with customers to give them all the information that they need in the level of detail that they need for us to get our increases. But all the understanding with all our customers, both domestic and export, is that these — you know, metal prices, energy prices, and of course transportation in case of exports, that's a big cost increase — they will get reimbursed.
Okay. So in the press release, the language you've used is 'continue to re-evaluate the current global manufacturing footprint.' Does this go beyond the CDP restructuring which is already ongoing? Will we have more exceptional costs related to CDP? And are you looking to further wind down any of your other global operations? Is that getting extended? And if yes, some details about it.
Right now, no. I think right now we are quite busy with getting the CDP restructuring done. We have now signed an agreement with the works council. So that is pretty much finalized and I think we will complete that. It will take probably middle of next year to complete it and we will see how things go. You know, Germany is in a bad shape right now as you probably heard. Almost all the companies are suffering in Europe because of this problem. So let's see what happens.
All right. Hi, Mr. Kalyani. Good to see you, sir. You're talking about growth bouncing back in the second half of the year. Will that mean that quarter two as well will be a little bit softish, or you're expecting to get back to —
We should see quarter two reasonably strong, and of course quarter three, quarter four will be even stronger. You know, the problem is that we are seeing growth from many areas which were not traditional, and I think it takes a little time to prepare for that growth and get it going. Actually, the growth momentum is very strong for us and we just have to put in the requisite capacities in place to take advantage of this. So we are doing that. So we will see growth — we will definitely grow this year by 20–25% as I had committed last time in our standalone business. All our other subsidiaries in India are doing well. They're also growing.
And of course we have a problem in Europe. We are — you are all aware of this, and we will fix this.
Okay, all right. You're also — you know, you'll have taken an approval to go ahead and raise some equity, some money via equity — that's 2,500 crores — something we should hear about. It's just an enabling resolution, or are you going to be tapping the market soon?
No, I think, you know, we've taken an enabling resolution from the board to raise funds because we — to make the growth happen in the next three to four years, we need to put in a lot of capacity in addition to our normal capacities because our growth is happening in a lot of new areas. And those new areas require new things to be put in, and they are far more technologically sophisticated and also good margin businesses.
Okay, so this is enabling for now, Mr. Kalyani, right? And this allows you to do it if you need to. I just want to go back to the earlier point about the global operations and the global footprint. Mr. Kalyani, should we expect — I mean, I think there is a 358 crore consolidated exceptional charge in the first quarter. Should we expect more of this this year in FY27, sir?
I don't think — look, it takes a lot of time and effort to restructure a business. So we've been able to now restructure CDP in a very appropriate manner, very beneficial manner to our company. Matter of fact, we've been able to sign an agreement with the works council there, which is the most important part in Germany, if you ask me. So I think it's pretty much good — by middle of next year all this will be done. A lot of — we will get a lot of new business because of that, so things will get much better.
So you mentioned Europe specifically, but even US, right? I think Q1 FY27 year-on-year has kind of turned negative if you look at the —
We had a specific problem in the United States. In our forging plant, we had two forging presses out of the three broken down all of a sudden, and that created a lot of problems for two months. Hopefully, you will see better results in the next quarter from the US side.
