RKFORGE — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

& CHIEF FINANCIAL OFFICER · MR. MILESH GANDHI – WHOLE-TIME DIRECTOR

MR. MILESH GANDHI – WHOLE-TIME DIRECTOR MR. RAJESH MUNDHRA – COMPANY SECRETARY & VICE PRESIDENT (FINANCE)

Moderator · Conference Operator

RAGHUNANDAN, NUVAMA WEALTH MANAGEMENT

Ladies and gentlemen, good morning, and welcome to the Ramkrishna

Thank you.

The first question comes from the line of Manish Ostwal from Nirmal Bang Securities Private Limited.

Manish Ostwal

My first question, this inventory-related issue.

So, the reported number is much higher than what we said at the time of the last call and in the notes to account, the management said they does not see any significant impact still the joint fact-finding committee report is not finalized.

So, on what basis we are saying that?

And secondly, can you comment on the higher number than what we indicated earlier?

Naresh Jalan

A joint fact-finding interim report by the independent external agencies has already been published based on the PV which they had conducted.

And post this, right now, only root cause analysis of fact finding exercise, which is going on, which and we are sure that, that is basically to estimate the reasons why this has happened.

So, there is not going to be any financial impact in the balance sheet.

We are absolutely firm and sure that there is not going to be any financial impact in the balance sheet based on whatever we have seen, and we have provided 100% of what we have been given from the third party.

And in terms why the reasons, I think reasons for why it has happened, it is still, I think, only a week left when we will have the first full final report, and the same will be made public to understand the actual reasons and find reasons for the same.

In terms of why the quantity has gone up, we had given our estimates based on whatever, we, at that period of time, were able to assess.

But as we had said that period of time also, the assessment is still under progress.

And during this third-party PV, we had closed down all our operations for a couple of days, and we conducted the entire piece-to- piece PV across all locations.

And every single piece was accounted for, so that every single thing that should have been provided.

And so that in near future or near decade, never again this may occur.

So, we have taken a prudent step to close operations for a couple of days and ensure that every single thing is provided off and in future, this never ever occurs again.

Moderator · Conference Operator

The next question comes from the line of Mitul Shah from DAM Capital Advisors.

Mitul Shah

So again, first question on stand-alone Q4 revenue.

We believe that there is no onetime adjustment in revenue.

Entire inventory-related impact is in raw material side, right?

So, the contraction in revenue is too high compared to the peer group Bharat Forge and all those leaders reported number.

At the same time, commercial vehicle production Q-on-Q was also reasonably good.

So, any specific reason apart from this inventory- related thing?

Moderator · Conference Operator

The next question comes from the line of Chirag Shah from White Pine Investment Management.

Chirag Shah

Good that the disclosures have really improved from the Company and you are upfront on that.

I really appreciate that.

Sir, 2, 3 questions.

One, how should one look at the new margins and ROCE, ROE guidance?

You had indicated that you will act on this based on the findings and conclusion of the same.

So, have you formed a thought, or you want to wait for the final forensic report to share your sustainable return on capital and margin guidance that you used to share earlier?

So that's question number one.

Naresh Jalan

Chirag, I think in terms of margins and other things, I think this was one- off incident.

This does not dent Company's overall performance or growth aspects going forward.

One-off incident does not take away from us our capability to produce.

And the kind of pipeline and the kind of projects which we have implemented gives us confidence of going forward, a robust top line as well as robust bottom line.

In terms of percentage, I would not like to comment.

But in terms of guidance, I would still maintain that we are going to create healthy margins and which in coming quarter onwards, we will be able to demonstrate.

Moderator · Conference Operator

The next question comes from the line of Dhaval Shah from Girik Capital.

Dhaval Shah

So very happy with your messages, the way you've articulated everything.

It's given a very strong message across.

Sir, a couple of questions on the balance sheet.

So, you mentioned about the non-recognition of Rs.

170 Crores of revenue.

So, does it lead to the similar impact on the inventory and higher receivables and plus the borrowings?

Is my understanding correct?

Lalit Kumar Khetan

So, Dhaval, it has nothing to do with the borrowings.

So certainly, revenue has a contra-impact on the inventory.

So, when the revenue will be

Moderator · Conference Operator

The next question comes from the line of Devvrat Mohta from Capital International.

Devvrat Mohta

I have two questions.

So firstly, on your revenue recognition that you mentioned, the Rs.

170 Crores impact in this quarter.

So effectively, what that means is that, I mean, what you're saying is that the sales at the end of Q4 was impacted, which sort of flows through to Q1. And then there will be an impact in the end of Q1, which will flow through Q2. So, on a go- forward basis, I mean, this Rs.

170 Crores essentially, you should go back

Moderator · Conference Operator

The next question comes from the line of Ranjit Aggarwal from Nilgiri Investment Managers Private Limited.

Ranjit Aggarwal

I really appreciate the follow-up comments and the capital commitment that the management has made.

But forgive me, but unless and until I understand what actually happened, it's very difficult to believe that it is going to be back to where it was earlier.

Now the question really is, I mean, I'm sure the Company like you would have SAP, you would have an

Moderator · Conference Operator

We take the next question from the line of Raghunandhan from Nuvama Wealth Management Limited.

Raghunandhan

We appreciate management commitment on investment of Rs.

205 crores through warrants.

A few housekeeping questions to Lalit sir.

Sir, for FY '25, can you share within the revenue mix, how would be auto, non- auto?

And generally, you give some guidance about within non-auto, railway, mining, oil and gas, others.

If you have that numbers handy, please do share.

Lalit Khetan

So Raghu, I will just say auto and non-auto is maintained at 78% right now, okay?

And I will share separately the mix, because I have not been able to work out due to the positive time on the other revenue.

But it is

Moderator · Conference Operator

The next question comes from the line of Mithun Soni from GCC Holdings.

Mithun Soni

Sir, just one clarification I needed.

Of course, as we said, it was an error whatever happened because of the system ramp-up being slower than

Moderator · Conference Operator

We take the next question from the line of Bharat Shah from ASK Investment Managers Limited.

Bharat Shah

While the final report would emerge, as you mentioned, in some time, and I hope it confirms everything that has been narrated just now.

I don't have

Moderator · Conference Operator

Ladies and gentlemen, we take that as the last question and conclude the question-and-answer session.

I now hand the conference over to the management for their closing comments.

Questions and answers

11:57:41 +05'30' · Research Analyst

Ramkrishna Forgings Limited

RAJESH · Research Analyst

Thank you.

I would like to thank all the participants for taking out time to join our earnings call.

I hope we have been able to answer and address your queries.

For any further information, kindly get in touch with us or with CDR India.

On behalf of Ramkrishna Forgings Limited, we wish you all a very wonderful week ahead.

We look forward to interacting you again in the next quarter.

Thank you very much for taking out your time again.

Thank you.

Moderator · Conference Operator

Thank you.

On behalf of Nuvama Wealth Management Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Disclaimer

This is a transcript and may contain transcription errors.

Certain statements made or discussed on this call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that the company faces.

The company does not undertake to update these forward-looking statements publicly.

Please also note that this document has been edited without changing much of the content, to enhance the clarity of the discussion.

No unpublished price sensitive information was shared/discussed on the call.