Ramakrishna Forgings set to export 50% of output

Kolkata-based Ramakrishna Forgings Limited plans to export close to 50 per cent of its production once its expansion is over by June.

The company, which is one of the largest suppliers of forged components to the Indian Railways, expects to increase the production capacity at its Jamshedpur plant from about 5,500 tonnes to about 18,000 tonnes, making it the largest forging company in East India.

Ramakrishna Forgings already has existing tie-ups with Indian automobile majors like Tata Motors, Mahindra & Mahindra and Hindustan Motors.

The company is coming out with an initial public offering to part finance its expansion project. The IPO aggregating Rs 12.25 crore will see the company offer 61,25,000 equity shares of Rs 10 each at a premium of Rs 10 on the face value. The issue opens for subscription on 2 April and closes on 10 April.

Addressing a media conference here on Saturday, Naresh Jalan, the managing director of the company, said that the company was also planning to supply ready-to-use parts for the Indian automobile majors once the expansion project was over.

According to Jalan, the net profit of the company was expected to increase to about 15 per cent of total revenues after the expansion. Of the total fund requirement of Rs 26.29 crore for the plant expansion, the promoters are investing about Rs 4.7 crore besides a Rs 9.25 crore term loan.

"Raising only a small portion of the total requirement through a public issue and a considerable contribution from promoters itself is a strong point of the IPO," the company's managing director said.

He said the company has been achieving a steady 25 per cent annual growth. The current turnover of the company is Rs 30 crore.

The other important strength, Jalan said, is that the company does not depend on any one particular sector for the marketing of its products.

"Till 2000 more than 50 per cent of the production was meant for the Indian Railways. Now we are also supplying forged components to automobile manufacturers, collieries and the heavy engineering industry," he said. The automobile sector alone contributes to about 30 per cent of the utilisation of the company's production.

Jalan said that the company was targeting the US market for future exports. The plant expansion works, which also include machining facilities would be completed by June, 2004. "Once the machining facilities are in place, the company will be in a position to supply ready to use products to all the auto majors in India," he said.