Investigation confirms discrepancies at Ramkrishna Forgings, company to take corrective action

Ramkrishna Forgings Limited, a key supplier of forged components to the automotive and other heavy industries, announced today on Saturday the findings of a  a joint fact-finding investigation which confirmed that  certain erroneous entries/non recording of rejections at plants resulted in overstatement of WiP/Raw Material /Scrap Inventory as at 31 March, 2025 and as at 31 March, 2024 valued at Rs. 220.52 crore  and Rs. 50.22 crore  respectively. 

The approximate adverse impact (net of tax) on the Net Worth of the Company would be around 6.73% of the Net Worth of the Company as on 31 March, 2025. Such a shortage has been recorded in the Financial Results for the Quarter and Financial Year ended 31 March, 2025 and 31 March, 2024. 

"We would further like to mention in the outcome that there is no further financial impact required on account of the final Joint Fact Finding Report" the company said in a regulatory filing. 

The audit, commissioned after irregularities surfaced during the FY2025 physical inventory count, found that production was overstated and rejections underreported—leading to a material overstatement of inventory balances.

According to the preliminary report, discrepancies were valued at Rs 220.52 crore as of March 31, 2025, and  Rs 50.22 crore a year earlier. The net adverse effect on the company’s net worth is expected to be Rs 202.06 crore, representing 6.73% of the FY25 figure—higher than the 4–5% initially anticipated. Shares of Ramkrishna Forgings plunged to a one-year low following the April disclosure, as markets reacted to the unexpected shortfall and the broader implications for governance within the firm.

The management added that it  has taken cognizance of the observations made in the report. "The management will be taking appropriate disciplinary actions on the concerned employees for the same" . "Further, the internal controls and all the above processes are being tightened and all the manual intervention has been restricted/ regulated" the company noted. 

Moreover, the company emphasized that they are  in the process of appointing an external SAP consultant / other Consultant to review the existing production process in SAP and recommend actions to be taken, towards strengthening controls and streamlining SAP processes. "We expect this to be completed over the next 4-6 months" the company continued.