India’s Second-Largest Forging Company Tried to Hide ₹220 Crore. Spoiler: They Couldn’t.

A Forging Company That Forgot to Forge Trust

Ramkrishna Forgings Ltd, incorporated in 1981, manufactures forged automobile components, railway parts, and engineering equipment. The company operates six manufacturing plants across India—Jamshedpur, Adityapur, West Bengal, and NCR—and has expanded internationally with units in Mexico and the US. They supply to Tata Motors, Volvo, Daimler, Indian Railways, and over 218 OEM customers. On paper, it’s a respectable industrial story: 2,000+ SKUs, 42.5% export revenue share, a footprint in four continents.

Then, in June 2025, the narrative got hijacked. Management discovered a ₹220 crore inventory valuation discrepancy during an internal audit. Worse, the external auditors (the people paid to catch this stuff) missed it too. The company’s board commissioned an independent fact-finding study. Result: inventory was genuinely overstated; internal controls were, plainly speaking, theatre. CRISIL downgraded the rating outlook to Negative. The promoter had to inject capital via preferential warrants.

Yet here’s the plot twist: the fundamental business is intact. Q3 FY26 revenue was ₹1,099 crore, +2% YoY. EBITDA margin recovered to 14.9% from 13% in Q2. New orders worth ₹680 crore were booked in Q3—with 66% automotive and 34% non-auto. Railways division is being positioned as a double-digit growth pillar. A new 8,000-ton press came online in March 2026, adding 40,000 tonnes annual capacity. But is this enough to forgive ₹220 crore in “oops, we miscounted”?

They Forge Steel. They Forged the Numbers. Now They’re in Debt.

Ramkrishna Forgings operates in a simple but capital-intensive business: buy raw steel → forge it under massive hydraulic press (they have a 1,30,800-ton press facility) → machine the components → ship to OEMs. Primary verticals: automotive (79% of pre-FY25 mix), railways (3%), oil & gas (2%), and earth-moving/mining (8%).

The company’s structural advantage is vertical integration. They own the forging, casting, and machining capabilities end-to-end. That means no third-party dependencies, faster turnaround, and control over quality. They also score points for long-term customer contracts: Tata Motors, BHEL, Indian Railways, Volvo, Daimler—all under multi-year supply agreements. The export footprint (42.5% of revenue) provides currency hedging and geographic diversification.

But—and there’s always a but—capital intensity is a double-edged hammer. The company is perpetually in capex mode. In H1 FY26 alone, they spent ₹350 crore on expanding capacity while simultaneously carrying ₹2,613 crore in gross debt (up from ₹2,013 crore in March 2025). Interest coverage has compressed to 2.7x (from 3.4x). Working capital cycle is 121 days—inventory-heavy due to “significant exports and large number of SKUs.” Every rupee spent building new presses is a rupee not available for deleveraging.

Q3 FY26: A Mixed Bag Disguised as Recovery