Bharat Forge Limited, a leader in advanced engineering and metal forging, has made headlines today, August 6, 2025, with a substantial internal restructuring focused on its defence operations. The company officially entered into a Business Transfer Agreement with Kalyani Strategic Systems Limited (KSSL), its wholly owned subsidiary, to hand over the bulk of its identified defence business assets and related obligations for a deal valued at 4,533 million rupees.
Key Highlights of the Transaction
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The transaction marks a pivotal step as Bharat Forge recalibrates its business portfolio for sharper growth and strategic clarity in the high-potential defence sector. Here’s what stands out from the latest move:
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The Board of Bharat Forge had delegated powers to the Investment Committee (Defence Business), which approved the Business Transfer Agreement (BTA) with KSSL today, paving the way for the transfer of defence-related assets and obligations at a fair market value determined by an independent valuer.
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The transaction value is fixed at 4,533 million rupees, with KSSL compensating Bharat Forge through Optionally Convertible Redeemable Preference Shares (OCRPS).
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The deal encompasses not just physical assets but also related liabilities and obligations, ensuring an all-rounded transfer of the defence vertical to KSSL.
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In parallel, the two entities signed an Intellectual Property Rights Licensing Agreement, securing the seamless use and protection of proprietary technologies and designs developed over the years by Bharat Forge in its defence business.
Deal Structure and Financial Context
KSSL will issue up to 4,533 million rupees in OCRPS as consideration for the business transfer.
The transfer is structured as an itemised sale on a going-concern basis, which means that the assets, obligations, and ongoing client relationships will move intact to the subsidiary, preserving both operational continuity and growth momentum.
The transaction will be concluded within 45 days and does not affect Bharat Forge’s consolidated financials since KSSL remains its wholly owned subsidiary. This mechanism further reinforces Bharat Forge’s hold over the defence business’s future growth, now with a tailored operational focus through KSSL.
Broader Strategic Rationale
Bharat Forge aims to unlock greater value and deepen its presence in the fast-evolving domestic and global defence sectors by creating a dedicated platform for future defence innovations and contracts.
The move enables KSSL to scale up as an agile, end-to-end defence solutions provider, enhancing its own capabilities in artillery, protected mobility, ammunition, and advanced systems development.
This transaction comes on the heels of KSSL’s win of significant export orders and international collaboration agreements, underlining its growing stature in the field.
Market Response and the Road Ahead
As of the latest trading session, Bharat Forge shares saw marginal pressure, indicating a market-in-progress adjustment to the restructuring news. However, analysts point out the strategic benefits: streamlined core operations at the parent level and sharper, independent scaling opportunities for KSSL.
The Intellectual Property Rights Licensing Agreement complements the business transfer, allowing KSSL unimpeded access to proprietary defence technologies, essential for future R&D, exports, and customer obligations.
Conclusion and What to Watch
This transformative move by Bharat Forge is squarely aimed at driving operational efficiency, strategic clarity, and robust growth in the years to come. With KSSL positioned as a focused defence sector champion and equipped with both assets and intellectual property, Bharat Forge is enabling a new growth trajectory without relinquishing business control. Investors, industry watchers, and stakeholders should now expect more agile defence sector moves, expanded exports, and accelerated innovation emerging from the KSSL stable in the upcoming quarters.
Source: India Infoline; Financial Express; official NSE/BSE announcements.
