The forging company discovered inventory shortages worth ₹220 crores while announcing a ₹1 per share dividend and approving warrant issuance to promoters.
01 Jun 2025 | 5881 Views | By Angitha Suresh
Ramkrishna Forgings Limited has reported significant inventory discrepancies totaling ₹220.52 crores for the financial year ended March 31, 2025, according to documents filed with stock exchanges on June 1, 2025. The company simultaneously announced a second interim dividend of ₹1 per equity share and approved the issuance of convertible warrants ...
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Ramkrishna Forgings Limited has reported significant inventory discrepancies totaling ₹220.52 crores for the financial year ended March 31, 2025, according to documents filed with stock exchanges on June 1, 2025. The company simultaneously announced a second interim dividend of ₹1 per equity share and approved the issuance of convertible warrants to promoters.
An independent external investigation revealed inventory shortages in work-in-progress, raw materials, and scrap inventory at the company's plants. The interim joint fact-finding report confirmed erroneous entries and non-recording of rejections, resulting in overstatement of inventory valued at ₹220.52 crores as of March 31, 2025, and ₹50.22 crores as of March 31, 2024. The net adverse impact on the company's net worth is approximately ₹202.60 crores, representing 6.73% of total net worth.
The company's auditors, S.R. Batliboi & Co. LLP and S.K. Naredi & Co., issued a modified opinion on the financial results due to these inventory discrepancies. The auditors noted that during physical verification, book stock was higher than physical stock in certain cases, prompting management to initiate the independent investigation.
Despite these challenges, the board approved a second interim dividend of ₹1 per equity share of face value ₹2 each for the financial year 2024-25. The record date for dividend payment has been set for June 6, 2025, with payment to be completed within 30 days.
The board also approved the preferential issuance of up to 975,000 convertible warrants to Riddhi Portfolio Private Limited, a promoter entity, at ₹2,100 per warrant. This issuance, valued at ₹204.75 crores, is subject to shareholder approval at an extraordinary general meeting scheduled for June 28, 2025. The warrant price represents approximately 2.95 times the regulatory floor price of ₹712.34.
Ramkrishna Forgings, established in 1981, is a leading manufacturer of forged components primarily serving the automotive industry. The company operates multiple manufacturing facilities and has been recognized as one of India's growth champions. The Kolkata-based company trades on both BSE and NSE under the symbols 532527 and RKFORGE respectively.
The independent external agencies continue their fact-finding study regarding root cause analysis, with the final report expected within statutory timelines under the Companies Act, 2013. Management stated it does not expect any further significant accounting or financial impact from the ongoing investigation.
The company's board meeting was held over two days, commencing on May 30, 2025, and concluding on June 1, 2025, with the session being adjourned and reconvened to complete deliberations on the financial results and other agenda items.