OVERVIEW OF INDIAN FORGING INDUSTRY:
Forging and casting is traditionally considered as the back bone of manufacturing industry. It is a major input to the sectors which support economic growth of the nation, such as, Automobile, Industrial Machinery, Power, Construction & Mining Equipment, Railways and General Engineering. The Indian forging industry is well recognized globally for its technical capabilities. With an installed capacity of around 38.5 lakh MT, Indian forging industry has a capability to forge variety of raw materials like Carbon steel, alloy steel, stainless steel, super alloy, titanium, aluminium and so forth, as per the requirements of user industry.
Over the years, the Indian forging industry has evolved from being a labour-intensive industry to capital-intensive manufacturing sector. The current investment in the plant and machinery by Indian forging companies is about worth of INR 27,833 Crore. The forging industry of India provides direct employment to about 95,000 people. The small and very small units are mainly dependant on manual labour, however medium and large units are more mechanized. Quality standards in the industry have improved significantly and the sector is now well known globally for its high quality.
Current share of auto sector is about 58% of total forging production while the rest is with the non-auto sector. Changes in Indian automobile industry directly impact Indian forging industry, because the forging components form the backbone of the Indian automobile industry. Since the automobile industry is the main customer for forgings the industrys continuous efforts in upgrading technologies and diversifying product range has enabled it to expand its base of customers to foreign markets. In order to reduce the impact of cyclicality and dependence on auto sector, the industry plans to diversify into non-automotive sectors.
The Indian forgings industry has made rapid strides and currently, not only meets almost all the domestic demand, but has also emerged as a large exporter of forgings. The industry is increasingly addressing opportunities arising out of the growing trend among global automotive OEMs (Original Equipment Manufacturers) to outsource components from manufacturers in low-cost countries. As a result, the industry has been making significant contributions to countrys growing exports.
INDUSTRY STRUCTURE AND DEVELOPMENT:
Casting and forging are one of the key engineering segments supplying various components to end-user industries such as Railways, Automobile, Defense, Aerospace, Material handling, Construction equipment, and Mines. In this regard, the Indian casting and forging sector is in a good position to generate higher revenues from the auto sector. Major expansion of manufacturing units, by way of organic and inorganic growth, has been playing an important role in this industry.
Any automotive industry depends significantly on steel-forged metal components. The industrys products are used for demanding applications such as crankshafts, transmission gears, and bearings, and are essential in handling the torque and stress placed on these components. Stiff competition among key auto industry players is primarily driving the demand for more attractive and lightweight vehicles in the country. The India management consultant hopes that in almost no time, the Indian casting and forging industry is going to be at par with China. Moreover, the forging industry is looking to double its growth rate spurred by imminent demand from emerging sectors, resulting in an increase in the set-up of foreign business in India.
Global Metal Forging Market was valued at US$ 95.84 Bn in 2022 and is expected to reach US$ 147.00 Bn by 2029 at a *CAGR of 6.3% over the forecast period 2023-2029. ^(Compound Annual growth Rate)
Global Metal Casting Market size was valued at US$ 35.46 Bn in 2022 and the total revenue is expected to grow at 18.9 % through 2023 to 2029, Metal Casting Market is reaching nearly US$ 119.15 Bn by 2029.
> India Ranks third in casting production in the world.
> The Indian metal casting industry is expected to reach US$ 17 Bn by 2028 a 6.7% CAGR during 2023-2028.
> The Indian metal forging market is expected to reach US$ 8.0 Bn by 2029, implying a 10.69% CAGR during 2023-2029.
> With an installed capacity of around 38.5 lakh MT, Indian forging industry has a capability to forge variety of raw materials like Carbon steel, alloy steel, stainless steel, super alloy, titanium, aluminium and so forth, as per the requirements of user industry.
> The Indian forging industry is concentrated around its end user customer locations. Therefore, the major forging clusters are found to be in the states of Maharashtra, Punjab, Gujarat, Tamil Nadu, Haryana, Delhi, Karnataka, Jharkhand, West Bengal and Andhra Pradesh.
> The Indian casting and forging sector has equipped itself to retain its prowess to accelerate revenue from the auto sector.
> Industry stakeholders are taking initiatives to acquire technology, knowledge, experience, and expertise in the industry.
> The Indian Casting and Forging industry has gone through up-gradation to be in sync with the international practices.
> Given the enormous potential, frontline domestic players have started building up world scale capabilities by either putting up Greenfield projects or acquiring sick global facilities and turning them around as business solutions for setting up a foreign business in India.
Company Overview:
Ganga Forging Limited ("The Company") is also a forging and casting manufacturer, catering the closed die forged products to both automotive and nonautomotive segment. Automotive segment includes manufacturing of products catering to commercial vehicle, passenger car, three wheelers, two-wheeler and tractor. Non-automotive segment includes electric power transmission, dairy equipment manufacturing, agricultural, gear and gear box, crank shafts, connecting road, heavy engineering industrial, hubs and flanges.
Our Company also complies with Quality Assurance System like ISO and strives to deliver quality products to the customers. Our Company is ISO 9001:2008 certified. We believe in manufacturing and delivering quality products and our manufacturing process is under constant supervision by Engineers. The entire system is backed by proper documentation, traceability until the end product, with full proof checks required as per ISO regulations. We are dedicated towards supply of quality products by controlling the procurement of our raw material, monitoring the process parameters and maintaining appropriate measures to comply with applicable statutory and regulatory requirements of our products.
Opportunities and Strength:
• Rising adoption of Automation in manufacturing to drive market growth
• Government initiative "Make in India" have boosted the manufacturing industry in the region by creating a positive business environment
• Increasing export of forging products
• Increasing Foreign Direct Investment to boost Market Growth
• Automotive to be fastest growing end-user due to rising growth of electric vehicles
• Continues development of new Railway lines
Threats and risk:
• Electrification in Automotive Industry to slow down Market growth
• The industry lacks acutely the resources for upgrading its technological status and there is also a dearth of quality or skilled manpower.
• Increased competition in the sectors / areas in which we operate;
• Our ability to meet our capital expenditure requirements;
• Fluctuations in operating costs;
• Changes in political and social conditions in India, the monetary and interest rate policies of India and other countries;
• Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
• The performance of the financial markets in India and globally;
• Any adverse outcome in the legal proceedings in which we are involved;
• Our failure to keep pace with rapid changes in technology;
• The occurrence of natural disasters or calamities;
• Other factors beyond our control;
• Conflict of Interest with affiliated companies, the promoter group and other related parties; and
• Changes in government policies and regulatory actions that apply to or affect our business. Internal Control Systems and their adequacy:
Effective internal financial controls are essential for the integrity of the Companys financial reporting. Management and employees at all levels are responsible for understanding and implementing these policies and procedures to ensure robust internal controls.
There is an adequate internal control system commensurate with the size of the company and nature of the business for inventory, fixed assets and for the sale of goods or services. The Company has implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorized, recorded and reported correctly. The system ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial, reporting, accounting and information security.
The Company has constituted Audit committee to overlook the internal control systems and their adequacy. Audit committee regularly reviews and gives recommendations on proper and adequate internal control systems.
Financial performance:
During the reporting year, your company has earned Rs. 3,674.06 Lacs. as revenue from operation and out of total revenue Rs. 204.68 Lacs has been earned form the export of products. As compared to previous fiscal, revenue from operations of the company has been increased by more than 10%. During the year, company has earned net profit of Rs. 44.71 Lacs as compared profit earned of Rs. 168.46 Lacs during the previous fiscal. Performance trend of last three years is as given under:
Segment Reporting:
Ganga Forging Limited is operating in only one segment. Hence, comments on segments wise performance is not required.
Human Resources:
Our company is committed to provide work environment that ensures every employee is treated with dignity and respect and equitable treatment for all irrespective of their designation. The company is also committed to promoting a work environment that is conducive to the professional growth of the employees and encourages equality of opportunity.
Further, the company will not tolerate any form of sexual harassment and is committed to take all necessary steps to ensure that the employees are not subjected to any form of harassment. Company always be responsible for the safety of employees as well as the public. Create a positive and dynamic work environment that enable personal achievements, work life balance and business success. We inspire each other to explore ideas that can make the community and world better place.
Key Financial Ratios:
Analysis of key financial ratio for the year as compared to previous financial year is as given under:
Ratio Analysis |
Unit of Ratio in | F.Y. 2023-24 | F.Y. 2022-23 | % Variance and reason of variance |
Current Ratio |
Times | 2.41 | 1.16 | 106.99% Due to improvement in working capital |
Debt Equity Ratio |
Times | 0.32 | 1.07 | -70.34% Due to increase in Shareholders Fund |
Debt service coverage Ratio |
Times | 2.13 | 1.16 | 84.09% Due to Lower Interest Cost on Borrowed Working Capital |
Return on Equity (ROE) |
0/ % | 0.50 | 3.11 | -84.05% Due to Increase in Average Equity |
Inventory Turnover Ratio |
Times | 1.76 | 4.00 | -56.07% Due to higher Inventory holding |
Debtors Turnover Ratio |
Times | 5.25 | 11.70 | -55.16% Due to higher credit sales |
Trade Payable turnover Ratio |
Times | 8.76 | 10.50 | -16.57% Due to higher credit purchase |
Net Capital Turnover Ratio |
Times | 2.14 | 13.14 | -83.69% Due to change in working capital cycle |
Net Profit Ratio |
0/ % | 1.19 | 4.96 | -75.98% Due to interest cost on Borrowed working capital |
Return on Capital Employed (ROCE) |
0/ % | 84.95 | 6.76 | -26.74% Due to increase in Shareholders find |
Return on Investment |
- | NA | NA | NA |
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