Kolkata-based Ramkrishna Forgings, which is amongst the leading suppliers of rolled, forged and machined products to the automotive industry, is believed to have won new orders worth around $25 million (Rs 186 Crore) on an annualised basis from Europe and North American countries in the past few months.
Start of supplies for these new business contracts, spread over five years, is expected from FY2023. It is learnt that MAN Trucks and Scania are amongst the OEMs which have placed new orders. On July 13, in a regulatory filing, Ramkrishna Forgings announced receiving PPAP (Parts Production Approval Process) clearance of 15 million euros (Rs 132 Crore) from a European OEM. The company did not reveal the identity of the customer.
Speaking to Autocar Professional Lalit Kumar Khetan, executive director and chief financial officer, Ramkrishna Forgings said that the company's major export markets – Europe (except the UK) and North America – remain largely unaffected currently by the pandemic situation. As a result, he is optimistic that new orders to help the company reach its targeted Rs 800 crore revenues from exports in FY2022, translating into 45 percent of total earnings. In FY2021, export-driven revenues accounted for Rs 525 crore or 41 percent of consolidated revenue share. .
Founded in 1981, Ramkrishna Forgings counts some leading OEMs such as Tata Motors, Ashok Leyland, VE Commercial Vehicles and BharatBenz in India and Volvo, Mack Trucks, Iveco and Ford in overseas markets amongst its clients. It also supplies globally to Tier 1 axle manufacturers like Dana, Sisamex, Meritor and American Axles.
Demand for Class 8 trucks in the US
One of the reasons for RFL management's optimism about exports is the resurgence of demand for Class 8 trucks in the US. Basing their opinion following talks with OEMs, Ramkrishna Forgings executives say that robust demand for Class 8 trucks is likely in CY2023. With the global semiconductor shortage also impacting this vehicle segment, production ramp-up is impacted. However, with chip supply from Japan improving, the situation is expected to improve in the next six months.
According to Naresh Jalan, MD, Ramkrishna Forgings, “Generally the margin in exports tends to be better. Now, since the domestic market has also started opening up after the second wave of Covid-19, we hope to achieve better sales and profitability both from domestic as well as international markets in the upcoming quarters.”
Negligible disruption from EVs
According to Jalan, the disruption due to the global transition to electric vehicles is expected to be just about 1-1.5 percent of total revenue to Ramkrishna Forgings which is not majorly into manufacturing of vehicle engine parts except for crankshaft and connecting rods and that too only for light commercial vehicles.