Econ 634 Bharat Forge and Suzlon Case Study

Apoorva(B7, @03413496)  Barath(B9, @03413524)  Akshay(B4, @03413501)  Pavan(B34, @03413527), Team 2 Cohort B

ECON 634 Bharat Forge and Suzlon Case Study

Bharat Forge progressed from being a manufacturer for domestic consumption to the second largest forgings company in the world under the leadership of Baba N Kalyani. The journey of Bharat Forge began in 1961, when it was supplying only Engine parts to meet India’s domestic automotive production needs. Through the years, with the liberalization of India in 1991, Bharat Forge was ready to enter the global market. With strong focus on Innovation, Customer service, people sensitive and successful implementation of bold acquisition strategies, Bharat Forge has now become the world’s second largest forgings company. Suzlon on the other hand, was initially a Textile Industry whose profits were offset by rising cost of electricity. While looking for alternatives for electricity, Mr. Tulsi Tanti, the owner of Suzlon, decided to harness Wind Power as an alternate source of Electricity. With its Unique business model, Suzlon rose to become India’s first indigenous company to harness and provide wind power. In order to recover its huge investments, Suzlon had to go global to fully integrate the supply chain and offer a complete portfolio for Wind Power Technology. Presently, Suzlon is the world’s fifth largest wind turbine manufacturer in the world.

Bharat Forge and Suzlon are now the top MNC’s in the global market, with expertise in their respective field of work. Throughout their journey from being an India only to a globalized firm, we see a pattern of similarities in their strategies to conquer the global market.

In the first Similarity, both Bharat Forge and Suzlon emerged from a country with unreliable infrastructure and reputation for low quality but beat these problems by investing in Technology. Bharat Forge invested in latest, fully automated machinery for manufacturing forgings and began the process of creating world class products where precision was measured in 0.001 millimetres. While in the case of Suzlon, machines for generating wind power was available in the market but knowledge and expertise on how to operate and maintain those machines was not readily available. With technology upgradation, Suzlon provided an end to end service to its customers by taking charge of all the activities starting from identifying the sites, conducting wind measurement study, building grid connections, substations and also offered complete operating and maintenance services. Suzlon built a fully integrated supply chain that enabled them to manufacture as many components as possible to ensure timely and quality supplies at low costs.

The next similarity that we observe in their strategies, is their mode of entry into the global market by merges and acquisitions. Bharat forge’s vision was to surpass Thyssen Krupp of Germany and become the leading forging company in the world. The journey of Bharat Forge towards Global Leadership began by assisting Dana Corporation’s UK Operation, to find buyers. Very Creatively they obtained the Order book of the company while finding buyers for their other physical assets. This brought in new customers worth over 10 million pounds for the next 7 years. Next they acquired Carl Dan Peddinghaus (CDP) in Germany which was the home of the Auto Industry and source of technological developments. The integration of CDP with Bharat Forge ensured a Return On Investment of 160 million pounds. To secure their presence, they acquired a US Manufacturer to gain traction in one of its largest markets. The Collaboration with China, boosted their manufacturing capacity to a hundred thousand metric tonnes. Suzlon on the other hand did not have an expertise in Turbine Technology and therefore had to collaborate with a number of foreign companies to expand its product portfolio. In order to create a fully integrated supply chain, they had to create their R & D Division.  This was achieved by setting up their Headquarters in Denmark, a country which is a world leader in integration of wind power. The acquisition in the year 2006 of Hansen Transmissions of Belgium who excel in gearbox manufacturing facilitated Suzlon to create more efficient turbines.