Rajkumar Forge Ltd Management Discussions.


Rajkumar Forge is one of the leading forging companies in India in the open die forging segment and amongst the first few to cater to the Oil and Gas markets in the US , Europe, Middle East and South East Asia. The company till the year 2016 was only supplying to the Oil and Gas segment and that too in the export markets. However with the slump in Oil prices, company de-risked its business by expanding its markets in the domestic domain. Presently the company is a preferred supplier to the Steel, Power, Mining, Gear and other engineering industries. With the oil prices finally looking up since October of last year, the Oil & Gas segment has increased substantially both domestically and internationally, an area in which Rajkumar Forge was most predominant.


India has overtaken France to become the sixth biggest economy, according to the updated World Bank data for 2017. Data released by International Monetary Fund (IMF) earlier this year also showed India replacing France at the sixth position. In current US dollars, Indias GDP at $2.597 trillion for 2017 exceeded that of Frances $2.582 trillion. India could overtake the UK in 2019, according to IMF projections, to break into the worlds top 5 economies. IMF forecasts India to grow at 7.4% this year up from 6.7% for the full year 2017-18.

After a slight gap, India retained its position as the worlds fastest growing economy in the January- March quarter at 7.7%. Sectors contributing to this growth were manufacturing, agriculture, construction and automobile. Due to the impending GST introduction in July 17, sales in the first quarter of last year was extremely poor. However with the Goods and Services Tax (GST) in place for nearly a year, heady growth is expected in the current year 2018-19. Various initiatives have been taken by the Government to improve and boost the confidence in the Indian economy one of them being the IBC.


Going further the Indian economy outlook is very bright and positive, backed by Make in India initiative, liberalized norms for enabling ease of doing business (India has come in the top 100), increased consumption, implementation of Goods and Services Tax, capital investment and the structural reforms undertaken by the Government. Global economy too is on a rebound and expected to clock higher growth as compared to last year. According to the IMF, global growth will move to 3.9% in 2018 from 3.8% in 2017 with the main drivers being US, China, Japan and India.


Indian forging industry is one of the key industries in the growth of the Manufacturing sector in India, mainly catering to the automobile sector as well as other heavy industries like general engineering, steel, construction, mining, sugar, cement , power and the Oil and Gas industry, and is well recognized globally for its technical capabilities and quality standards. It has a capability to forge variety of raw materials like carbon, alloy, stainless, super alloy, titanium, aluminum etc. More than 60% of the total forging capacity is supplied to the Auto Sector and the rest to the Engineering Non- Auto Sector.

The Indian Forging industry meets almost all the domestic demand and has now emerged as an exporter of forgings due to growing trend among global OEMs to outsource forgings from manufacturers from low cost countries.


With the Oil prices again moving up and crossing $70, rig counts have gone up substantially over the year, resulting in increased business from the Oil & Gas sector. Also exports have become lucrative too. ‘Rajkumar being a dominant force in this sector, stands to gain the most. Coupled with the geo political situation in the world and the ongoing trade war between the US and Europe / China, resulting in the US imposing hefty sanctions on imports from Europe and

China, India will benefit the most, as it would now be able to compete with low cost China. Rajkumar Forge with its technical knowledge, trained manpower and its ability to supply quality forgings on time, will have an edge over all its competitors.

Along with opportunities come threats. The current capacity utilization of the Indian Forging Industry is less than 70%. Also due to enhanced forging capacity being created in the open die segment, ‘Rajkumar Forge faces extreme competition in this segment. With the growing demand of automobiles and the closure of many steel plants, who have come under NCLT, there is an acute shortage of steel in the country, resulting in delayed deliveries and high prices. Import was the only option for purchasing steel at competitive prices, but unfortunately due to devaluation of India Rupee to an all-time low of 70/-, that option has been ruled out.


The risks most prominent are;

• Dependency on one single sector that is the Oil & Gas sector.

• Increasing raw material prices.

• Shortage of raw material.

• Shortage of skilled manpower.

Rajkumar Forge strives to timely identification of the probable risks and initiating timely assessment and analysis which helps in mitigating the effects of it on the business the company.


The company has adequate and internal control robust systems and processes to ensure safeguarding of the companys assets against loss and to have proper policies and controls to ensure that all the transactions are authorized, recorded and reported correctly. An extensive exercise of internal audit and periodical review by the management strengthens the above procedures. difference to the companys


Detailed financial information is available in the Directors report and the attached financial statements. After the takeover by the new management of Western India Forgings Private Limited, a company with more than 34 years of experience in Open Die, Close Die and Ring Rolling, the companies performance has improved by leaps and bounds recording profit in the very first full year of operations. With a strong management in place, the company is poised to achieve greater heights in the current year, by increasing the customer base, both in the domestic and international markets. Company has also undertaken strong cost control measures in all the areas and is also planning major investments this year to increase the forging capacity as well as to reduce manufacturing costs. All these steps will result in improved top line as well as bottom line.


The company has been able to settle the long pending old demands of the workmen by successfully negotiating a wage settlement. Similar wage hikes were implemented for the staff. With these steps, company is enjoying extremely cordial relations with the Human resources, who are totally involved towards the overall objectives of the company.


Statements made in this report describing the companys projections, estimates, expectations or predictions maybe be "forward looking" within the meaning of applicable securities laws and regulations. Actual results may differ from such estimates whether expressed or implied. Factors which would make a significant operations include changes in Government regulations and tax laws, economic conditions affecting demand/supplies, raw material prices, competition, economic developments within and outside the country and any other environmental factors over which the company does not have any control.

For and on behalf of the Board of Directors
Arun Jindal
Place : Pune Chairman
Date : July 21, 2018 DIN : 00121523