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regular-article-logo Tuesday, 25 June 2024

Ramkrishna Forgings maps growth plan, aims to close 2025-26 with Rs 6,000 crore revenue

RKFL, which has a registered and corporate office in Calcutta and plants in Jamshedpur, is expecting the acquisitions of JMT Auto, an Amtek Auto Group firm, from the insolvency court and Multitech Auto, by negotiation, will usher a new phase of growth, apart from its ongoing expansion

Sambit Saha Calcutta Published 11.09.23, 09:35 AM
Representational image

Representational image File picture

Ramkrishna Forgings Ltd (RKFL), the second-largest forging company in the country, is looking to double its topline in three years, aided by a series of acquisitions and joint ventures.

The company, a major component supplier to the commercial vehicle segment in India and abroad, is aiming to close 2025-26 with a revenue of Rs 6,000 crore on a conservative basis compared with Rs 3,000 crore recorded in 2022-23.

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RKFL, which has a registered and corporate office in Calcutta and plants in Jamshedpur, is expecting the acquisitions of JMT Auto, an Amtek Auto Group firm, from the insolvency court and Multitech Auto, by negotiation, will usher a new phase of growth, apart from its ongoing expansion.

It has also been declared as the highest bidder for ACIL (formerly Amtek Crankshaft India Ltd) by a committee of creditors of the company and the matter is pending before the Supreme Court for finalisation.

If the business runs according to the plan, RKFL would be able to expand the product basket, move up the value chain, increase the share of the non-auto segment and become a significant player in the casting space.

Lalit Khetan, whole-time director and CFO of RKFL, said the focus of the company will continue to be in the auto segment even as the share of non-auto business is projected to go up to 30 per cent from 22 per cent.

The company expects the focus on the export market to continue and it would account for 40 per cent of the business, despite growth opportunities in the domestic market.

“We estimate the topline to reach Rs 6,000 crore on a conservative basis by FY26,” Khetan said.

During this fiscal, the company is spending Rs 350 crore to expand forging capacity to 243,000 tonne from 210,900 tonne.

It is also adding a line of cold forging unit of 25,000 tonne which is expected to be operational in the the first quarter of 2024-25. The capex for the next fiscal is projected to be Rs 200 crore.

“Once completed, we will be the only company in India to have hot, warm and cold forging facilities, allowing significant diversification possibilities,” Khetan explained. The entire cold forged products will be exported.

Inorganic growth

The JMT Auto acquisition will enable the company, which has recently crossed the market capitalisation of Rs 10,000 crore, move up the value chain in the auto component segment, and to become a supplier to the oil and gas and aerospace components.

Lenders are going to get Rs 125 crore — Rs 70 crore upfront and Rs 55 crore over four years — as part of the resolution of JMT Auto, which has six plants in Jamshedpur and 2 in Dharwad.

Another Rs 50-crore investment will be made in the plant and machinery.

RKFL is acquiring Multitech Auto for about Rs 205 crore, again a company based out of Jamshedpur, having about 21,600 tonnes of machined casting capacity. It is hoping to invest about Rs 300-350 crore in the next two-three years to expand the capacity to 100,000 tonne.

The takeover will strengthen the presence of RKFL in passenger vehicles, light commercial vehicles and heavy commercial vehicles segment.

ACIL acquisition, when completed, will allow RKFL to diversify geographically as the plant is based in Manesar, the auto hub of north India. ACIL is a major supplier to the tractor segment.

“Our offer is Rs 110 crore, including Rs 85 crore upfront and Rs 25 crore over a period of five years,” Khetan added.

A game changer for RKFL will also be the proposed 50:50 joint venture with Titagarh Rail Systems Ltd to supply forged wheels to Indian Railways.

The investment in the project is about Rs 1,400 crore and the plant, whose location will shortly be finalised, will be operational from 2026-27.

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