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Bharat Gears


Bharat Gears supplies gear components to the light, medium, heavy, utility vehicle segments as well as construction equipment and agricultural tractors.

It is the leading supplier of gear components in India with a strong customer base including the likes of John Deere, JCB, Toyota, M&M, Tata, etc.

The company reported stable operating profits on growing revenues in the last five years – reporting about 45cr in operating profits on revenues of 430cr in the last twelve months.  It operated with a modest net debt load as at 31st March, 2012.

Demand for the company’s products is cyclical and strongly linked to interest rates.  These rates also have an impact the company’s existing debt servicing costs and future investment plans.

A large portion of the revenues is derived from tractor and off-highway segments and is therefore largely dependent on agricultural conditions (monsoon factors, etc.) and demand from construction equipment manufacturers (infrastructure economics, etc.).

One segment of the company’s market - the replacement market - doesn’t appear to be strong enough to provide opportunities for substantial growth in the future probably as a result of higher quality and longer-lasting original equipment currently in the market.

There is increasing competition from global OEMs and this will pose a competitive threat to the company in the future.

The revenue is somewhat concentrated on a few large customers and therefore, the loss of one such customer could dent the revenues and profits badly.

The business is exposed to inflationary cost increases on all fronts including crude oil, steel, and other raw materials.

It is a net exporter and therefore, it is exposed to a strengthening INR.

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