Ramkrishna Forgings to acquire Multitech Auto for Rs 205 crore

Ramkrishna Forgings, one of the leading suppliers of rolled, forged, and machined products has announced its financial results for Q1 FY2024 and plans to acquire Multitech Auto, a wholly-owned subsidiary Mal Metalliks for Rs 205 crore.

For Q1 FY2024, the company reported revenue of Rs 835 crore, up 28 percent YoY, EBITDA of Rs 187 crore at 22.4 percent margin, compared to Rs 143 crore at 22.1 percent margin a year ago. The net profit came at Rs 76 crore versus Rs 47 crore for the same period last year.

During the same period the company renewed the long-term contract with additional new product range with its Tier 1 customer based in North America and also received an order worth 4.5 million euros (Rs 40 crore) from Prominent European Railway Passenger Coach Manufacturer.

It has commenced commercial production of 13,700 TPA (tonnes per annum) of R A Shaft – Press Line and 10,100 TPA of a 5-inch Upsetter, enhancing production capacity by 23,800 TPA to 210,900 TPA.

The overall capacity utilisation reached 92 percent in Q1 FY2024, compared to 103 percent in Q4 FY2023 and 78 percent in Q1 FY2023.

New investments

The new acquisition for Multitech Auto marks Ramkrishna Forgings’ focus on growing its business through both organic as well as inorganic growth. This will add an additional capacity to manufacture 21,600 MT of Machined SG and CI Castings. It has also has the capacity for Bar Draw Facility of 6,000 MT.

It was in December 2022, the company acquired majority stake in Tsuyo Manufacturing to strengthen its EV portfolio, followed by restructuring of JMT Auto.

Naresh Jalan, MD, Ramkrishna Forgings said: “Our company is committed to stringent capital allocation practices, aimed at improving return ratios and generating higher shareholder value. We prioritise sustainable growth and profitability by carefully evaluating investment opportunities and integrating sustainability principles into our operations. Through automation and artificial intelligence, we are in process of enhancing operational efficiency, increase productivity, and address evolving customer demands. Our focus on improving return on capital employed (ROCE) and return on equity (ROE) drives financial performance.”

He further states that the company remains vigilant and closely monitor macroeconomic risks, proactively mitigating them by prioritising customer relationships and delivering excellent service. We are dedicated to proactively positioning ourselves for future growth and increasing our market share. Our strategic focus revolves around preparing for improved market conditions, ensuring that we are well-prepared to seize opportunities.

“Additionally, we are actively working towards reducing our debt burden, targeting a Debt to EBITDA level of 1:1 by FY 2025. This disciplined approach will strengthen our financial position, reduce risks, and provide us with flexibility to pursue growth opportunities.”

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