THE STORY of Ramkrishna Forgings (RKFL) can be traced back to its founder, Mahabir Prasad Jalan, who laid its foundations back in 1981. Since then RKFL has evolved, transitioning into a limited company on May 25, 1995, and is now the second-largest forging company in the country.

Since its inception, the forgings giant has been a supplier to multiple sectors, including automotive, railways, farm equipment, bearings, oil & gas, power, construction, earth moving & mining, both domestically and overseas. The company’s product portfolio caters to original equipment manufacturers (OEMs), including Tata Motors, Ashok Leyland, VE Commercial and Daimler in the domestic market and Volvo, Mack Trucks, Iveco and Ford, overseas. It has industrial plants in Jamshedpur, Jharkhand, Dugni at Saraikela, and Liluah, West Bengal, among others.

In recent years, the Kolkata-based company has witnessed significant growth. Despite inflationary headwinds, elevated fuel costs and rising interest rates, commercial vehicles registered a 28.50% year-on-year growth in sales volumes in FY23. This has worked in favour of the company. Revenue from operations increased 31.31% from ₹2,285 crore in FY22 to ₹3,000 crore in FY23, underlining the growth trajectory, while exports rose 25.72% from ₹990 crore in FY22 to ₹1,245 crore in FY23, underscoring its global presence. This pushed net worth up 22.5%, from ₹1,078 crore in FY22 to ₹1,321 crore in FY23, reducing debt 17.6% YoY to ₹1,333 crore.

“We are increasing our capacity, and have raised ₹1,000 crore through a qualified institutional placement (QIP) to reduce debt and fund growth initiatives. Ushering in the era of Industry 4.0, we will amplify our efforts towards in-house R&D and testing capabilities,” says Naresh Jalan, managing director. “Our ongoing restructuring, with subsidiaries like ACIL, JMT, MultiTech, and Mal Metalliks set to be consolidated into RKFL, will streamline our approach for future endeavours and provide cross-selling opportunities to marquee clientele,” says Jalan. “It will also lead to improved synergies of the product mix, larger customer reach, improved profitability matrix, cross leverage of the management and administrative functions, ease of operations and reduction of operational costs due to the economies of scale.”

In FY23, RKFL recorded a production of 85,725 tonnes, compared with 69,649 tonnes in FY22, a 23.08% increase YoY. Average capacity utilisation stood at 73.21%. It developed 124 products during the year, out of which 64 are sold in machined condition to customers. Machining is a value-added manufacturing process wherein extra material is removed from a larger piece of raw material to achieve the desired shape or part.

In March 2023, the company in consortium with Titagarh Rail Systems, emerged as the lowest bidder for the supply of 15.40 lakh forged wheels to Indian Railways. The JV, Ramkrishna Titagarh Wheels Ltd., will be engaged in manufacturing and supply of forged wheels under the Atmanirbhar Bharat initiative. “We’ve expanded our presence in the railway sector to increase our revenues manifold from this segment within the next two years,” says Jalan.

In March 2024, RKFL’s board cleared the commencement of manufacturing and supplies from the company’s Mexico unit. It also approved an investment of up to ₹90 crore to establish a facility to manufacture components in the passenger vehicle segment. The Mexico facility will have an installed production capacity of 11,000 metric tonnes per annum. The operation is backed by a 10 year $3.5 million per annum “Take or Pay” agreement for machining components with a North American customer.

The company derives a major share of its revenues from the commercial vehicle segment. It produced 48,160 tonnes of various forged components for commercial vehicles during FY23, against 46,513 tonnes last year, registering an increase of about 3.54%.

“We have been strengthening our balance sheet, whether it is in terms of reducing our debt-to-EBITDA ratio, or generating free cash flows. We’ve focused on de-risking our business by increasing our outreach in export markets and in different geographies,” says Jalan. The company recorded an EBITDA margin of 21.73% in FY23.

RKFL plans to expand the product portfolio for electric vehicles, going ahead. “Over the years, we’ve placed special emphasis on investing in advanced technologies, growing exports, launching new products, increasing content per vehicle and strengthening our relationships across the industry to remain competitive,” says Jalan. The in-house R&D team is conducting value analysis and value engineering to reengineer existing manufacturing facilities and optimise capacity utilisation. The EV segment will likely contribute 6% to the company’s consolidated revenue by FY25.

“We are running electric vehicle programmes in North America and Asia, and are planning to diversify further in the electric vehicle segment inorganically,” says Jalan. “Trials are underway for developing an entire kit, including motor controller, e-axle, and transmission, for the three-wheeler and four-wheeler market,” he adds. In February this year, the company secured a $220 million contract to supply to the light vehicle segment across North America. Earlier in the month, it bagged a contract worth $13.16 million from a leading North American axle manufacturing company to supply rear axle components and services for the off-highway sector over four years.

“Our expansion and innovation prospects are tied to emerging trends, including alternative fuels, electrification, and industry modernisation. Factors such as the surge in online retailing, supportive government policies, and advancements in logistics services, will contribute to the overall expansion of the sector,” says Jalan.

Eye On Sustainability

RKFL has implemented safe recycling of e-waste and hazardous materials, and has authorised recyclers and treatment agencies i.e. transport, storage and disposal facilities (TSDF). It recently started the process of life cycle assessment for three of its major products namely, Front Axle Beams, Crown Wheels and Knuckles.

“We have partnered with Prozeal Green Energy to install a 7.82MW solar rooftop power project. The company has also drawn its roadmap to become net zero,” says Jalan.

Even though RKFL does not currently have a procedure in place for sustainable sourcing, it is in the process of setting up a supplier evaluation process, where vendors will be evaluated based on environment, social & governance (ESG) parameters.

The company sees the cyclical nature of the business, influenced by macro-economic fundamentals, industrial production, fleet utilisation, and freight rates, as a potential threat to growth. “RKFL derives a significant portion of its revenue from the medium and heavy commercial vehicle sector, which is particularly susceptible to these fluctuations,” says Jalan. It is looking to diversify into other segments to mitigate the risks associated with this dependency. “One key initiative involves penetrating the passenger vehicle segment. By expanding into this area, we aim to reduce our reliance on the volatile commercial vehicle market and establish a more balanced revenue stream,” adds Jalan.

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