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Ramkrishna Forgings Ltd.

BSE: 532527 Sector: Engineering
BSE 00:00 | 20 May 165.80 4.55






NSE 00:00 | 20 May 166.00 4.80






OPEN 163.50
VOLUME 19403
52-Week high 251.92
52-Week low 120.75
P/E 12.86
Mkt Cap.(Rs cr) 2,656
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 163.50
CLOSE 161.25
VOLUME 19403
52-Week high 251.92
52-Week low 120.75
P/E 12.86
Mkt Cap.(Rs cr) 2,656
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Ramkrishna Forgings Ltd. (RKFORGE) - Director Report

Company director report

Your Directors are pleased to present the 31st Annual Report of your Company along withthe Audited Accounts for the financial year ended 31st March, 2013.


(Rs. in Lakhs)
Particulars Year ended 31st March, 2013 Year ended 31st March, 2012
Sales and Operating Income (Gross) 40,389.70 50126.29
Other Income 132.97 76.50
Profit before Interest, Depreciation & Tax 6165.09 8170.15
Finance Cost 2,042.48 1878.89
Depreciation 2,262.21 2706.74
Profit Before Tax 1,860.40 3584.52
Provision for taxation :
- Current Tax 368.00 1049.00
- MAT (261.00) -
- Deferred Tax 654.40 85.50
- Income Tax of earlier years (3.88) 21.10
Profit After Tax 1,102.88 2428.92
Add : Surplus Brought Forward 8486.50 6686.51
Surplus available 9589.38 9115.43
Dividend and Tax on Dividend paid for 2010-11 - 22.08
- Transfer to General Reserve 100.00 185.00
- Dividend 251.09 362.97
- Tax on Distributed profits 42.69 58.88
Balance carried to Balance Sheet 9195.60 8486.50

Financial and Performance Review

• Net Sales decreased by 19.42 percent from 501.26 Cr in 2011-12 to Rs. 403.90 Crin 2012-13.

• EBIDTA decreased by 24.54 percent from Rs.81.70 Cr in 2011-12 to Rs. 61.65 Cr in2012-13.

• PAT decreased by 54.58 percent from Rs.24.28 Cr in Rs.11.03 cr in2012-13.

With the onset of the slowing industrial growth and weakening investment sentimentacross sectors, the strong growth phase of the domestic commercial vehicle (CV) industrycame to standing halt in 2012-13.

M&HCV segment bore the brunt of slowing industrial activity with weak investmentsentiment and the impact of significant fleet capacity addition over the past three years,especially in the heavy-duty categories of the trucking market. Within the M&HCVsegment, while buses saw a recovery in volumes compared to the previous year on back ofhealthy off take from private segment and improving order inflows from STUs, thecontraction in demand for the higher tonnage category of trucks such as tippers, tractortrailers and multi-axle vehicles (MAVs) has been the sharpest.

The cumulative production of commercial vehicles fell from 929136 vehicles in 2011-12to 831744 vehicles in 2012-13 registering a fall of around 10.48%.

However the production of medium & heavy commercial vehicles (M&HCVs) segmentregistered a de-growth at 27.61 percent during the year 2012-2013 and light commercialvehicles registered a marginal growth of 1.63 percent

The overall domestic sales of the commercial vehicles segment registered a de-growthfrom 809499 vehicles in 2011-12 to 793150 vehicles in 2012-13 registering a de-growth of2.02 percent. The medium & heavy commercial Vehicles (M&HCVs) segment registered asharp downfall of 23.18 percent during the year 2012-2013 but light commercial vehiclesmanaged to register a growth of 14.04 percent.

Transferto Reserves

Your Company proposes to transfer Rs.100 lakhs to General Reserve out of the amountavailable for appropriation and an amount of Rs.9195.60 lakhs is proposed to be carriedover to balance sheet.


In view of the better performance of your Company, your Directors are pleased torecommend a dividend of Re.1 per share for the year 2012-13. The total payout on dividend(including dividend tax), if the dividend is approved by the members at the Annual GeneralMeeting, will be Rs. 293.78 lakhs during the year under review.

Share Capital

During the year the Company at its Board Meeting held on 19th January, 2013 hasallotted 2148400 equity shares to International Finance Corporation at a price of Rs. 128per share & 781000 equity shares to M/s. Eastern Credit Capital (P) Limited (formerlyEastern Credit Capital Limited), Promoter at a price of Rs. 128 per share on apreferential basis.

The Company has also issued 30,77,000 warrants to M/s. Eastern Credit Capital (P)Limited (formerly Eastern Credit Capital Limited), Promoter on a preferential basis at aprice of Rs. 130 per warrant at the Board Meeting held on 19th January, 2013. The Companyat its Board Meeting held on 30th March, 2013 has allotted 18,000 equity shares of Rs. 10each by conversion of 18,000 warrants to M/s. Eastern Credit Capital (P) Limited (formerlyEastern Credit Capital Limited), Promoter. Consequently the issued, subscribed and paid upcapital increased from 1814.85 Lakhs to Rs. 2109.59 lakhs during the year.

The Company has further allotted 37,24,500 equity shares to Wayzata II Indian Ocean Ltd,Foreign Body Corporate, at a price of Rs. 132.75 per share on a preferential basis on 3rdApril, 2013. A further request was received for the conversion of 289000 warrants intoequity shares from M/s. Eastern Credit Capital (P) Limited (formerly Eastern CreditCapital Limited), Promoter group, along with the balance consideration of 75% of the issueprice of Rs. 130 per share.

Consequently after the allotment the issued , subscribed and paid up capital increasedfrom 2109.59 Lakhs to Rs. 2510.94 lakhs.


The Company has embarked upon a project to manufacture front axle beams, crankshafts,stub axles and connecting rods on press lines. The Company has procured 12500 ton pressline from SMS Meer Gmbh and the same is expected to be shipped by end of June, 2013. Theother press as envisaged in the project has also been procured.

The financial closure for the project has been accomplished and the equity as mentionedabove has been raised for this project. The commercial production from the 12500 tonpressline is expected to commence from September, 2014.

Operational Highlights Forgings and Machining facility

The Company derives the major share of its revenues from the commercial vehiclesegment. Your Company produced 25572 tons (incl.job work) during the year under review ascompared to 37721 tons last year registering a decrease of about 32.20 %. The Company hasbeen able to utilise around 67.80 percent of the production capacity for the year ascompared to about full capacity utilisation last year.

The Company has the-state-of-art of CNC Machining and Gear Cutting Facilities in whichit has achieved accuracies of class 7 in the shaving stage and Class 8 & 9 in the hardand hobbing stage as per DIN 3962 in gear manufacturing. The Company has made 99 newproduct development in the CNC machining, 49 new development in gear cutting and 36 newitems in the, VMC machining which has helped to enhance the product basket with existingclients and add new clients.

Ring Rolling Line

Ring rolling is a cost-effective and efficient production process for production ofring-shaped components like crown wheels, bearing rings etc. The equipment is fullycapable of meeting the requirements of the automobile industry, especially that ofcommercial vehicles (primarily medium and heavy vehicles).

The Company has produced 15356 tons during the year as compared to 18168 tons last yearthus registering a decline of about 15.47 percent. It has achieved a capacity utilisationof around 64 percent during the year as compared to around 75 percent last year on accountof lower demand from the commercial vehicle segment.

The Company has developed 32 new products and has been able to enhance its exportportfolio by adding new clients and enhancing its product range which will help to augmentthe export market of the company and will also help to propel the growth in future.

Credit Rating

Your Company's rating is A- from ICRA and CRISIL for its fund based facilities and A1for its Commercial Paper/Short Term Debt from ICRA Ltd.

Employees Stock Option Scheme

Pursuant to the approval accorded by the shareholders on 22nd August, 2009, yourcompany has formulated the Employee Stock Option Scheme, (ESOS) 2009, for the benefit ofthe permanent employees including Directors ,whether whole time or not but excluding thepromoters of the Company. The said scheme is administered by the Remuneration andCompensation Committee of the Board through a Trust. Under the said scheme 4,68,159 stockoptions was initially granted at an exercise price of Rs. 20/- per share .The stockoptions granted to eligible employees are, interalia, performance linked options .Inaccordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999 (hereinafter "SEBI guidelines"), the details in relation to theoptions granted, vested exercised, lapsed etc. under ESOS, 2009, as on 31st March, 2013are given as under:

Description ESOS 2009
Total number of options granted 468159 options
Pricing formula/exercise price Rs.20/-
Number of options vested 110136
Number of options exercised 87853
Total no. of shares arising as a result of exercise of option Nil
Options Lapsed 81763
Variation in terms of option NA
Money realised by exercise of option Rs.1757060
Total no. of options in force 218270
Grant to senior managerial personnel No options were granted during the year
Grant to non-executive director under the scheme No options were granted during the year
Employees who were granted 5%or more of the total number of options granted during the year No options were granted during the year
Employees who were granted options equal to exceeding 1% of the issued capital of the Company at the time of grant No options were granted during the year
Diluted Earning per share pursuant to issue of shares on exercise of option calculated in accordance with AS 20
Difference between the employee compensation cost computed using the intrinsic value of stock options and the employee compensation cost that shall have been recognized had the fair value of options, were used. Intrinsic Value : Rs. 30.20 Lakhs
Fair Value 35.80 Lakhs
Difference : Rs. 5.60 Lakhs
Impact of this difference on profits of the Company The Profits would decrease by Rs. 5.60 Lakhs.
Impact of this difference on EPS of the Company The basis and diluted EPS would decrease from Rs. 5.89 toRs. 5.86
Weighted average exercise price; NIL
Weighted average fair value of options for options whose exercise price either equals or exceeds or is less than the market price of the share. NIL

The Company has received a certificate from the Auditors of the Company that the Schemehas been implemented in accordance with the SEBI Guidelines and the resolution passed atthe Annual General Meeting held on 22nd August, 2009. The Certificate will be placed atthe Annual General Meeting for inspection by members.

Subsidiary and Consolidated Financial Results

During the year the company has acquired and subscribed to equity shares representing72.82% of the paid up share capital of Globe Forex and Travels Limited. It has become thesubsidiary of the company pursuant to section 4 of the Companies Act,1956 w.e.f 10thJanuary, 2013.

The Ministry of Corporate Affairs, Government of India, has granted a general exemptionto companies, by general circular no. 2/2011 dated 8th February,2011 under section 212(8)of the Companies Act,1956 from attaching individual accounts of subsidiaries with theirannual accounts, subject to fulfilment of certain conditions. Accordingly the Board ofDirectors of the Company has by resolution given consent for not attaching the BalanceSheet, Statement of Profit and Loss and other documents of the subsidiary companies in theAnnual Report of the Company for the financial year ended 31st March, 2013.

In accordance with the Accounting Standard AS-21 on consolidated financial Statementsthe audited consolidated financial statements are provided in the Annual Report. Inaddition the financial data of the subsidiary has been furnished under the head "Financial Information of Subsidiary Company " and forms part of this Annual Report.

The Annual accounts of the subsidiary and other related detailed information will bekept at the Registered Office of the Company and also at the Registered Office of thesubsidiary company and will be available to the investors seeking information at any time.

Management's Discussion And Analysis Report

Management's Discussion and Analysis Report for the year under review under clause 49of the Listing Agreement with the Stock Exchange in India is presented in the separatesection forming part of the Annual Report.

Pollution Control Measures

Your Company has installed adequate pollution control equipment in all its units as perthe legal requirement and has the requisite approvals from the concerned authorities.

Conservation Of Energy, Technology Absorption, And Foreign Exchange Earnings And Outgo

The particulars relating to energy conservation, technology absorption, foreignexchange earnings and outgo, as required to be disclosed under section 217(1)(e) of theCompanies Act, 1956 read with the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988 is given in "Annexure - A" to thisReport.

Fixed Deposits

During the year Company has not accepted any Fixed Deposit within the meaning ofSection 58A of the Companies Act, 1956 and as such, no amount of principal or interest onaccount of Fixed Deposits is outstanding, as on the date of Balance Sheet.

Stock Exchange

The Equity Shares of your Company were listed on two Stock Exchanges :

• National Stock Exchange of India Limited, Exchange Plaza, Plot no. C/1, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai400 051.

• Bombay Stock Exchange Limited, Phiroze Jee jeeboy Towers, Dalal Street, Mumbai400 001.

The Annual Listing Fees for the year 2013-14 are paid to both the Stock Exchanges wherethe shares of your Company were listed.


M/s Singhi & Co, Chartered Accountants, Statutory Auditors of the Company, holdoffice until the conclusion of the ensuing Annual General Meeting and are eligible forre-appointment. The members are requested to consider their reappointment as Auditors ofthe Company for the year 2013-14 and authorise the Board of Directors to fix theirremuneration.

The Company has received a certificate from the proposed Auditors to the effect thattheir appointment, if made, would be within the prescribed limits under Section 224 (1B)of the Companies Act, 1956.

With regard to the comments in the Auditor's Report the notes on accounts areself-explanatory and therefore does not call for any further comments.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section233B of the Companies Act, 1956, M/s. U. Sharma and Associates has been appointed toconduct the cost audit.


In accordance with the provisions of the Companies Act, 1956 and as per the Articles ofAssociation of the Company, Mr. Mahabir Prasad Jalan, Mr. Surendra Mohan Lakhotia and MrSatish Kumar Mehta, Directors, retire by rotation and being eligible, offer themselves forreappointment at the ensuing Annual General Meeting

Mr. Subhasis Majumdar resigned from the Board of Director. Your Directors place onrecord the appreciation of the valuable services rendered by him to the Company during hisassociation with the Company.

Mr. Ravi Lekhrajani has been appointed as Additional Director of the Company tillconclusion of the next Annual General Meeting of the Company and the Company has receiveda notice in writing proposing his candidature for the office of a Director not liable toretire by rotation.

The re-appointment of Mr. Pawan Kumar Kedia as the whole time director of the Companyfor the period of 3 years w.e.f 1st April,2013 has been proposed.

None of the Directors of the Company are disqualified for being appointed as Directors,as specified in section 274 (1)(g) of the Companies Act, 1956.

Corporate Governance

Adoption of Best ethical business practices in the Company within the regulatoryframework is the essence of good Corporate Governance. On one hand good CorporateGovernance calls for accountability of the persons who are at the helm of affairs of theCompany and on the other hand it also brings benefits to all stakeholders of the Companysuch as investors, customers, employees and the society at large. Your Company continuesto believe in such business practices and gives thrust on providing reliable financialinformation, maintenance of transparency in all its business transactions and ensuringstrict compliance of all applicable laws.

The report of Corporate Governance as stipulated under Clause 49 of the ListingAgreement forms part of the Annual Report.

The requisite certificate from the Statutory Auditors of the Company, confirming thecompliance with the conditions of Corporate Governance as stipulated under the aforesaidClause 49, is attached with the Corporate Governance Report.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, withrespect to Director's Responsibility Statement, it is hereby confirmed that:

i) In the preparation of annual accounts for the year ended 31st March, 2013,applicable Accounting Standards have been followed along with proper explanations relatingto material departures;

ii) The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year2012-2013 and of the profit or loss of the Company for that period;

iii) The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956 forsafeguarding the assets of your Company and for preventing and detecting fraud and otherirregularities; and

iv) They have prepared the annual accounts for 2012-2013 on a going concern basis.

Particulars of Employees

The information as required in terms of the provisions of Section 217(2A) of theCompanies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 asamended forms part of this Report as "Annexure B".

Transfer of amounts to Investor Education and Protection Fund

Pursuant to the provisions of Section 205C of the Companies Act,1956, unpaidapplication amount, dividends which remained unpaid or unclaimed for a period of 7 yearshave been transferred by the Company to the Investor Education and Protection Fund.

Corporate Social Responsibility

The responsibility of the Company is to make a positive impact on the communities inwhich the company does business through its support of select programs, outreach effortsand initiatives that improve and enhance the quality of life. Our goal is to make thingsbetter for the planet, better for people, better for business, better now, better for thefuture.

Your company believes in the principle of symbiotic relationship with the localcommunities, recognizing that business ultimately has a purpose - to serve human needs.Close and continuous interaction with the people and communities in and around themanufacturing divisions has been the key focus while striving to bring around qualitativechanges and supporting the underprivileged

The Company has helped to organise various camps and will ensure that more steps aretaken in this regard.


Your Directors would like to convey their appreciation for all the co-operation andassistance received from the Government authorities, financial Institutions, Banks,customers, vendors and stakeholders of the Company during the year under review. YourDirectors also express their deep sense of appreciation for the committed services by theexecutives, staff and workers of the Company. We look forward to receiving the continuedpatronage of all our business partners to become a better and stronger company.

On behalf of the Board
Place: Kolkata Mahabir Prasad Jalan
Dated : 18th May, 2013 (Chairman)

Annexure -A to the Directors7 Report


(a) Energy conservation measures taken.

The Company provides high priority to energy conservation schemes to conserve naturalresources and remain competitive. Some of the significant measures adopted are :

(1) Installation of Flameless Electrically Heated Furnace.

(2) Modification in the Vertical Machining Centre to conserve electricty

(3) Modification im the Bofco 4 Ton furnace to conserve electricity.

(4) A Fan less cooling tower installed for bearing cooling of 2 ton and 4 ton HeatTreatment Furnace.

(5) Improvement in the Burners of the Heat Treatment Furnace.

(b) Additional Investment Proposals, if any, being implemented for reduction ofconsumption of energy.

The Company has converted the existing oil fired furnace into Induction furnaces.

(c) Impact of the Measures at (a) and (b) above for reduction of the energy consumptionand consequent impact on the cost of production of goods.

On account of the measures taken and proposed to be taken by the company it isconfident of improving raw material yield and reduce the cost incurred towards fuel costs. The measures taken will in turn help to reduce the cost of production of the goods andwill make our products more competitive.

(d) Total Energy consumption and energy consumption per unit of production as per FormA of the annexure to the rules.

Particulars with respect to Conservation of Energy

Particulars 2012-13 2011-12
1 Electricity
A) Purchased
- Units (KWH) 4,05,33,660 4,32,39,617
-Total Amount (Rs.) 19,72,36,057 20,47,13,876
- Rate/Unit (Rs.) 4.87 4.73
B) Own Generation
Units(KWH) 546169 492344
Ltrs consumed 187031 157860
Cost/Unit (Rs.) 14.98 13.23
C) Total (A+B)
Units(KWH) 41079829 43731961
Total Amount (Rs.) 205420112 204713876
2 Coal (Hard Coke Used in Smithy)
Quantity (in Kgs) 16663 18572
Total cost (Rs.) 227118 201372
Avg Cost (Rs.) 13.63 10.84
Particulars 2012-13 2011-12
3 Furnace Oil
Quantity (in Ltrs) 33,86,229 43,67,471
Total cost (Rs.) 13,36,30,444 15,74,22,007
Avg.Rate per Ltr (Rs.) 39.46 36.04
4. Others:
i) Propane Gas
Quantity (in Kgs) 14,66,879 17,27,131
Total cost (Rs.) 9,13,58,531 8,86,81,625
Avg.Rate per kgs (Rs.) 62.28 51.35
ii) Diesel
Quantity (in Ltrs) 115683 175647
Total cost (Rs.) 5189033 7270467
Avg.Rate per Ltr (Rs.) 44.86 41.39
Consumption per unit of Production :
Product: Steel forging in Tons
Electricity (KWH) 1003.71 782.48
Coal (Hard Coke Used in Smithy) (Kgs) 0.41 0.33
Furnace Oil (Ltrs) 82.74 78.15
Propane Gas (Kgs) 35.84 30.90
Diesel (Ltrs) 2.83 3.14


The particulars with respect to technology absorption as per Form-B is given below :

a) Research and Development(R & D):

1. Specific areas in which the R&D carried out by the Company: The R&Deffort in our industry is an ongoing process. Continuous efforts are taken in variousareas of the manufacturing activity.

2. Benefits derived as a result of the above R&D: The Company has been ableto reduce the cost of production of certain components through their process engineering.

3. Future Plan Action : The Company will focus on more areas of reduction ofcost and process optimization.

4. Expenditure onR&D: The Company has not incurred any expenditure on theResearch and Development.

b) Technology absorption, adaptation and innovation

1. Efforts, in brief, made towards technology absorption, adaptation and innovation :Continuous efforts are made on conservation of raw material by improving design and layoutof the dies.

2. Benefits derived as a result of above efforts : Reduction in Raw MaterialConsumption.

3. Technologyimportedduringthelast5years: Nil


Activities relating to exports : The Company has derived Rs. 5439.56 Lakhs from exports which forms 12.37% of the total turnover.
Initiatives taken to increase exports a development of new export market for products and services and export plans. : The Company has identified exports to be a thrust area and has roped in new export customers during the year. Vigorous efforts are also being made to develop new customers. The Company has also opened overseas office to develop new market.

The particulars of the total foreign exchange used and earned are given below :

Particulars 2012-13 2011-2012
Earned :
Exports (FOB) 5197.61 4534.58
Die Design & Preparation Charges 25.06 49.19
Capital Equipment's 183.02 1239.86
Components & Spare Parts 104.67 157.35
Travelling 114.02 87.92
Foreign BankCharges 1.01 1.74
Repairs to Plant & Machinery - 10.38
Claim against Export Sales 29.38 55.71
Professional & Consultancy Charges - 15.02
Interest 4.54 7.21
Technical Service & Supervision Charges 7.91 -
Commission Paid 3.38 -
Loan Processing Charges (IFC) 108.68 -
Salary 87.73 -
Office Equipments 7.17 -
Management Fees (LBBW) 9.49 -


On behalf of the Board
Place : Kolkata Mahabir Prasad Jalan
Dated : 18th May, 2013


Annexure -B to the Directors' Report

Sl. No. Name Age (years) Designation/ Nature of Duties Gross Remuneration (Rs. in Lacs) Qualification Total Experience (years) Date of commencement of employment Previous Employment
A. Employed part / throughout the year and in receipt of remuneration aggregating Rs. 5,00,000 / Rs. 60,00,000 or more :
1 Mr. Mahabir Prasad Jalan 64 years Chairman cum Wholetime Director 174.67 B. Tech 49 years 12.11.1981 NA
2 Mr. Naresh Jalan 38 years Managing Director 146.04 MBA (Marketing & Finance) 18 years 05.11.2001 NA
3 Mr. Kasi Nath 63 years Executive Vice President 87.72 MBA, Master of Technology (M. Engg), Bachelor of Engineering (Hons), Dip in Business Administration 28 years 01.07.2012 Director Global Purchasing Meritor Inc.

Notes :

1. Gross Remuneration includes Basic Pay, Allowances, Monetary value of Perquisites,Retirement benefits and Healthcare Insurance.

2. Mr. Mahabir Prasad Jalan, Chairman cum Wholetime Director and Mr. Naresh Jalan,Managing Director are related to each other.

3. The nature and terms of the employment are as per resolution or the appointmentletter.

4. Mr. Mahabir Prasad Jalan holds 451000 equity shares and Mr.Naresh Jalan holds 285750equity shares as on 31st March, 2013 representing 2.13 % and 1.35% of the paid up capitalrespectively.


(Rs. in Lakhs)
Name of the Subsidiary Capital Reserves Toal Assets Total Liabilities Turnover Profit/ (Loss) before Taxation Provision for Taxation Minority Interest Profit/(loss) after Taxation Dividend
Globe Forex and Travels Limited 88.14 (225.02) 570.05 570.05 1742.16 (264.09) 40.49 (79.56) (225.02) Nil