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RKFL aims to double revenue with Strategic Expansion Plan
Industry News- Sep 12,23
The company, headquartered in Calcutta with manufacturing facilities in Jamshedpur, is pinning its hopes on several key developments including acquisition of JMT Auto.
Ramkrishna Forgings (RKFL), the nation's second-largest forging company, has set ambitious growth targets, aiming to double its revenue in three years through a strategic combination of acquisitions and joint ventures.
RKFL, a prominent component supplier to the commercial vehicle sector both in India and internationally, is determined to conclude the fiscal year 2025-26 with a conservative revenue estimate of Rs 6,000 crore. This target represents a significant leap from the Rs 3,000 crore recorded in the fiscal year 2022-23.
The company, headquartered in Calcutta with manufacturing facilities in Jamshedpur, is pinning its hopes on several key developments. These include the acquisition of JMT Auto, an Amtek Auto Group entity, which is currently in insolvency proceedings. Additionally, negotiations for the acquisition of Multitech Auto are in progress, promising further growth opportunities. RKFL has also emerged as the highest bidder for ACIL (formerly Amtek Crankshaft India Ltd), a matter pending finalisation by the Supreme Court.
Should these plans come to fruition, RKFL stands to diversify its product range, ascend the value chain, and increase its presence in the casting sector, becoming a significant player in this domain.
Lalit Khetan, RKFL's whole-time director and CFO, reaffirmed the company's commitment to the automotive sector, even as the share of non-auto business is expected to rise from 22 per cent to 30 per cent. Furthermore, RKFL remains dedicated to the export market, anticipating it will comprise 40 per cent of its business, despite potential growth opportunities in the domestic market.
Khetan stated, "We estimate the topline to reach Rs 6,000 crore on a conservative basis by FY26."
In the current fiscal year, RKFL is investing Rs 350 crore to expand its forging capacity from 210,900 tonnes to 243,000 tonnes. It is also establishing a cold forging unit with a capacity of 25,000 tonnes, slated to commence operations in the first quarter of 2024-25, with projected capital expenditures of Rs 200 crore for the next fiscal year. Khetan noted, "Once completed, we will be the only company in India to have hot, warm, and cold forging facilities, allowing significant diversification possibilities." The entire production from the cold forging unit will be exported.
Inorganic growth plays a pivotal role in RKFL's strategy. The acquisition of JMT Auto positions the company to move up the value chain in the auto component sector and expand its supply scope to oil and gas and aerospace components. Lenders will receive Rs 125 crore in total, with Rs 70 crore upfront and Rs 55 crore disbursed over four years as part of the resolution of JMT Auto.
RKFL's acquisition of Multitech Auto, valued at approximately Rs 205 crore, is expected to facilitate further expansion, with plans to invest around Rs 300-350 crore in the next two to three years, increasing capacity to 100,000 tonnes. This move will bolster RKFL's presence in passenger vehicles, light commercial vehicles, and heavy commercial vehicles.
Upon completion, the ACIL acquisition will allow RKFL to diversify geographically, with the plant located in Manesar, the automotive hub of northern India. ACIL is a significant supplier to the tractor segment.
A potential game-changer for RKFL is the proposed 50:50 joint venture with Titagarh Rail Systems Ltd, geared towards supplying forged wheels to Indian Railways. The investment for this project amounts to approximately Rs 1,400 crore, and the plant, the location of which will be finalised shortly, is scheduled to be operational by 2026-27.
Source: telegraphindia.com
RKFL
Ramkrishna Forgings Ltd
JMT Auto
Multitech Auto
ACIL acquisition
Indian Railways
forged wheels
Titagarh Rail Systems
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