RKFL to Raise Steel Casting Capacity to 120,000 tonne

Kolkata headquartered Ram Krishna Forgings Limited (RKFL) has become India's second largest forging company supplying parts and machined components. It supplies parts to sectors from automobiles to railways, farm equipment to oil and gas and power, among others.

It is a family run business that was founded in 1981. Third-generation entrepreneur, 27-year-old Chaitanya Jalan, is the Executive Director. The business was started by his grandfather Mahabir Prasad Jalan. 

Starting with a modest loan in 1981 and initial focus on the railway sector, the company has successfully over the years been transformed from a metal forging set up to a modern value added product maker serving various industry domains including automotive OEMs.

In 2004, RKFL went public with Rs 30 crore in revenues and Rs 60 lakh in profits. From a market perspective, it was quite a bold move, especially considering the IPO boom was still on the horizon and for an entity with a track of relatively modest profits. The decision reflected a belief in strong future growth potential and an effort to leverage the capital markets for long-term benefits.

The confident approach helped the company expand the business and capitalise on the growing automotive market, bringing in efficient technologies such as isothermal annealing. 

RKFL has significantly expanded its operations since 2019, growing from two verticals to five, and increasing its product categories from 35 to 69 by 2024. This diversification has also included the addition of nearly 100 new customers across 22 geographies, reducing its previous reliance on the North American market, says Jalan. 

On a product level, RKFL offers a diverse portfolio, catering to both the automotive and railway sectors. 

Interestingly, the foray in the newer automotive domains is paying rich dividends for RKFL. In the year 2000, RKFL's railway business contributed to half of its income and now approximately 70 percent of its revenue comes from automotive clients, from automotive forgings like suspension parts, gears, shafts, and axles whose demand continues to fuel growth and profits. It has emerged as a major Tier 2 supplier to OEMs like Tata Motors and has onboarded CV makers like Ashok Leyland, Volvo and Eicher Motors.

Since Covid, the management at RKFL has recognised the need to diversify in response to the significant shift toward electric vehicles (EVs). 

While the automotive industry increasingly embraces EV technology, the demand for traditional internal combustion engine components, many of which require extensive forging, has decreased. This is an aspect that doesn't worry Jalan. 

"We are aware that electric vehicles typically utilise fewer parts, particularly as they don't have engines, but there are other parts or components that are common to both ICE and EVs.”

Scaling Up

RKFL's current steel casting capacity is 60,000 tonnes per annum, a number that Jalan wants to boost up to 120,000 tonnes per annum by 2025. Jalan is confident that it is possible to do so with the infrastructure that consists of 16 plants located in Jharkhand. Major investments have been made in recent acquisitions for this purpose.

RKFL has been in the export business since 2010 and has done quite well so far and represents 60 percent of the company's turnover. Volvo, Mack Trucks, Iveco, DAF, Scania, MAN, UD Trucks and Ford Otosan are among clients in the overseas markets.

"Our export business has seen significant growth, particularly from North America, which is a major hub for automotive requirements," he says. 

Sixty percent of the export revenue comes from America. Recently the company has secured a contract with a large EV maker in the US. “India has been emerging as a leading supply chain destination for global mobility, especially with China plus one strategy adopted by companies,” he says.  

Sustainability

Despite coming with their own costs and risks, RKFL is also focused on sustainability initiatives. In 2007, it set up a ring rolling facility for steel wheels. The company has also focused on cuttind down on waste by improving its technology. 

"Earlier, OEMs were buying forging products which had 60 percent yield. That means that you are using raw material of 100 kgs to make a product of 60 kgs and selling it to the customer at a higher price. We brought in cutting edge technology from Germany in 2007 where we achieved 90-95 percent yield. This aspect became a big value jump for the OEMs that paved our way into the highly competitive international markets," says Jalan.