Ramkrishna Forgings' capacity addition to bolster growth

Kolkata-based Ramkrishna Forgings looks to augment growth with the expansion of its press line. The automotive components supplier's total capacity of press lines is slated to increase to 308,400 tonnes by FY25 end. The installed capacity as on June 30, 2024, was 229,150 tonnes the company informed investors.

Elaborating further on its new 8000 tonne press line expansion, the company stated that its proposed date for commercial operation is March 2025, with 100% capacity booked by an OEM for a contract period of seven years. The project cost of the upgradation is estimated to be Rs 80 crore. Within it, the cold forging press line will be commissioned by Q3 FY25, with the total project cost estimated at Rs 125 crore.

Furthermore, the company is in the process of adding a capacity of 14,250 tonnes, comprising upsetter forgings by Q2FY25. It stated that there is sufficient capacity for the next phase of robust growth. 

Q1FY15 Earnings

Meanwhile, Ramkrishna Forgings reported a net profit of Rs 73 crore during Q1FY25, indicating a drop of 5% when compared to Rs 77 crore year-on-year (YoY) in Q1FY24. However, the company's total revenue increased to Rs 868 crore in Q1FY25, translating into a 4% jump YoY over Rs 836 crore in Q1FY24, the company informed in a regulatory filing.

The management informed investors that the domestic revenue fell 3% year on year, due to the lower off-take from the customers and a decrease in steel prices. However, the total revenue growth of 4% was supported by an increase in exports, mainly driven by the conversion of orders into revenues.

Naresh Jalan, Managing Director, Ramkrishna Forgings Limited said: “Our revenues on a standalone basis stood at Rs 868 crore, reflecting our strong market presence and operational efficiency. Our adjusted EBITDA was Rs. 201 crore, yielding an impressive EBITDA margin of 23.1%. Our Profit After Tax (PAT) for the quarter was Rs 73 crore." 

The company's top executive noted that they have received a significant order inflow, amounting to Rs 1,679 crore to be executed over four years. The order book also includes an undercarriage business order from a metro car in the railway segment, contributing to our diversification into the non-auto space.

Furthermore, the company in a regulatory filing explained that its  Board of Directors has approved the merger of ACIL Limited with the company. ACIL is engaged in the manufacturing of high precision engineering automotive components. "The merger will provide the significant synergies and cost savings and opportunities to expand the market and to drive further growth", the statement noted

In addition, the Board of Directors has also approved the acquisition of Resortes Libertad, S.A. DE C.V. in Mexico. The new entity is proposed to be named as Ramkrishna Forgings Mexico S.A. DE C.V. "We plan to commence our machining and warehousing operations from Q3 FY25 onwards. These developments underscore our commitment to expanding our global footprint, diversifying our business portfolio, and delivering sustainable growth. We are confident that these strategic initiatives will position us for continued success and create long-term value for our stakeholders," the statement added.  

Over the years, Ramkrishna Forgings has increased its forging and die making capacities and added machining and heat treatment facilities, including isothermal annealing. Some of its clients include OEMs such as Tata Motors, Ashok Leyland, VE Commercial and Daimler in India and Volvo, Mack Trucks, Iveco, DAF, Scania, MAN, UD Trucks and Ford Otosan in the overseas markets. It supplies globally to Tier 1 axle manufacturers like Dana, Meritor and American Axles.