Mumbai: Bharat Forge Ltd (BFL) is planning to achieve 50 per cent of the company''s sales from exports by 2005 and also seeks to enter the car market through small forgings.

Currently its mainstay is large forgings for trucks and industrial applications. BFL aims to be among the top three companies globally in its segments, Baba Kalyani, chairman and managing director, BFL, said at a conference organised by ICICI Securities in the US recently.

BFL has until now focused on large forgings used primarily in commercial vehicles, which accounts for 48 per cent of its turnover. But the market for car forgings is four times that of commercial vehicles forgings and BFL plans to build capacities in this segment.

BFL''s supplies to Toyota for the world car platform will commence during the latter part of FY04 and this could potentially propel rapid growth. BFL''s move into exports of car components will help maintain this momentum.

BFL continues to maintain its leadership position in the domestic market with a market share of 80 per cent and is the preferred supplier to all leading domestic companies. In order to develop a well-balanced portfolio in exports, BFL is increasing its exposure to the oil and gas industry by manufacturing wellhead equipment, which accounted for 6 per cent of FY03 sales.

Similarly, by catering to the Chinese auto market, BFL has developed a balanced export portfolio and moved away from its US-centric tilt, Baba Kalyani said at the I-Sec conference.

BFL is also focusing on the construction equipment market, which requires large forgings and is an area of strength for BFL. This diversification strategy has paid off, and dependence on US for exports has declined from 70 per cent in FY02 to 49 per cent in FY03, and exports to Asia increased from 2 per cent to 25 per cent in the same period. Exports have grown at a CAGR (compound annual growth rate) of 38.2 per cent over the past four years.

The company reiterated that China does not pose a significant threat in product development and high-end engineering. The ICICI Securities report said Indian companies manufacturing forges possess better capability and quality and also enjoy cost-advantage. BFL has invested extensively in product development capability such as infrastructure. BFL has also invested in extensive R&D facilities, and has reduced the product development cycle time.

Further, BFL has nurtured relationships with leading auto component companies such as Dana, Cummins and Arvin Meritor. BFL has invested in product development capabilities to enhance speed-to-market and to improve the quality of forgings.

With an employee profile comprising qualified engineers (as opposed to unionised shop floor employees) the company has been able to upgrade product development capability by investing in CAD/CAM and tooling facilities, the ICICI Securities report said. This positions BFL to move from being an order-based supplier to a supply partner (five-fold rise in sourcing opportunity) and further to become a collaborative supplier (25-fold rise).