RAMKRISHNA FORGINGS LTD (NSE: RKFORGE) Q4 2025 Earnings Call dated Jun. 02, 2025
Corporate Participants:
Unidentified Speaker
Naresh Jalan — Managing Director
Lalit Kumar Khetan — Whole-Time Director & Chief Financial Officer
Milesh Gandhi — Whole-Time Director
Analysts:
Unidentified Participant
Raghunanthan — Analyst
Manish Ostwal — Analyst
Mitul Shah — Analyst
Chirag Shah — Analyst
Dhaval Shah — Analyst
Devvrat Mohta — Analyst
Rajit Aggarwal — Analyst
Mithun Soni — Analyst
Bharat Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good morning and welcome to the Ramakrishna Forging Q4FY25 Earnings Conference Call hosted by Nuvama Wealth Management Limited as a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded. I would now like to hand the call over to Mr. Raghunandan from Nuvama Wealth Management Limited for opening remarks. Thank you and over to you.
Raghunanthan — Analyst
Good morning everyone. Thank you for joining the call. We are pleased to host Ramakrishna Poaching’s Q4FY25 earnings call. From the management team we have Mr. Naresh Jalan, Managing Director Mr. Chaitanya Jalan, Full Time Director Mr. Lalit Kumar Ketan. Full time Director and Chief Financial Officer Mr. Nilesh Gandhi, Full Time Director Mr. Rajesh Mundra, Vice President Finance and Company Secretary. We thank the management for giving us the opportunity initially. We’ll start the call with opening remarks from management and then we open for. Q and A session. Over to you sir.
Lalit Kumar Khetan — Whole-Time Director & Chief Financial Officer
Thank you Raghu. Good morning everyone and thank you for joining us on this call to discuss the Q4FY25 earnings. I trust all of you have had a chance to review the earning documents that we have shared. Earlier financial year 25 was a year defined by both challenge and progress. Despite the complex macroeconomic environment we made good progress on multiple fronts. It has been a good year in terms of order swings and customer addition as we have reported around 4,600 calls of new orders during the year which has been well diversified across geographies as well as across and user industries of auto and non auto and railway.
My colleague Milesh will speak later on this coming to capacity addition. I am sure you all would recall that in January we commissioned our cold forging capacity of 25,000 ton and in March we commission our hot forging and warm forging balance capacity of 14,250 tons. With this new capacity on stream right now presented 268400 metric ton at RKF stand alone and on the 27th of March NCLT approved the merger of ACIL into the parent entity. And with the appointed date of 20.2.24 this is a key milestone in our plan to simplify our business structure. The final step merging multitech auto and Mal metallic into our Ram Krishna casting solution is underway and will be completed during this year.
Now let me share some financial Highlight for the fourth quarter we have reported a consolidated revenue of 947 coal lower by 3% on year. On year basis EBITDA excluding other income was 99 crore in Q4 compared to restated EBITDA 188 core for Q4 last year. Profit after tax is rupees 200 crore in Q4FY20 compared to 65 crore in Q4FY24 and however this PAT was added by the defer tax credit on account of merger of ACIL amounting to 223 core. Coming to the financial highlight for the on the balance Sorry yes, we reported consolidated revenue of 4,034 core higher by 9% compared to the previous year full year Consolidated beta stood at 564 compared to 774 for FY24.
Profit after tax for the year is rupees 332 crore compared to restated path of 283 crore in FY24. In April 25 India Ratings has upgraded the company’s long term bank loan rating to Ind AA with a stable outlook from end AA and also affirmed the short term rating to Ind A1 plus. Now regarding the inventory discrepancy, the Company has received the interim joint fact finding report from the external agencies which have confirmed that certain erroneous entries in production and non recording of rejections at some plants have resulted in overstatement of inventory as book stock of these inventories were high higher than the physical stock.
The discrepancy amounts to rupees amounts to rupees 224 for FY24 25 and 54 for 2324 in the as accounted for in the accounts and the same has been accounted for in the financial results of the company for the quarter and year ended March 24 and March 24 respectively. I would like to state that here that as a management team we firmly believe that there will be there will be no further accounting or significant wanting on financial impact on the books of account arising out of the balance part of the fact finding studying being carried out by the independent agencies.
The approximate adverse impact net of tax on net worth of the company is around 202core which is around 6.7% of the net worth of the company as on March 2030 first 2025. The promoter group remains fully committed to bridging the shortfall reaffirming Its dedication to safeguarding the interest of all stakeholders. Details of immediate actions to be undertaken by the counter group will be covered by our MD Mr. Nadesh. Now I enable the proceeding to Mr. N or MD. Thank you. Over to you sir.
Naresh Jalan — Managing Director
Thank you. Good morning to everybody. Thank you for taking time to join the call. The interim fact finding report has come and in response to that we have implemented corrective measures including enhanced recordings, auto recordings and stricter controls and improved processes across our manufacturing process. This is the first instance for the company in its history since inception. And we ensure and we will do what all is required to ensure that this never happens again. To continue to adhere to higher standards of corporate governance. While conducting affairs of the company as indicated and committed. The promoter group would come forward to make good the shortfall arising due to the inventory discrepancies.
In order to facilitate that the board of directors have Approved the issuance of 7 lakh 9 lakh 75000 warrants to promoter entity at a convertible into equity shares of 975000 at a face value of rupees to each at a price of 2,100 rupees aggregating to 2. 204 crores. 204.75 crores. And as promoter entity we commit to get this entire money within this financial year by by end of this finance before the end of this financial year. Now I request Mr. Mil Gandhi to update the investor group in terms of the order wins and the market conditions currently.
Milesh Gandhi — Whole-Time Director
Good morning. Thank you. Nareji. I would like to communicate the order wins. In Q4. The company received new order wins worth Rupees 710 crore for a program life being 4 years against the total order win. 74% are from automotive segment while 23% is coming from the non automotive segment. Which is in line with the diversification strategy of the company. We are also looking forward to the next level of growth that is coming. The passenger car segment. We believe the revenue stream will start from the financial year 27 in a big way. At the same time we have also received orders from Indian Railways for the supply of fully assembled bogie frames.
This bogie frames assembly will help us to demonstrate the full potential of our fabrication business. That is the natural progression from the individual frames and bolsters to the fully assemblies makes it complete. That’s from my side. Thank you. And Raghu. Now we can open the floor for the Q and A session.
Questions and Answers:
operator
Thank you. Ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to Ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use their handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Manish Otswell from Nirmal Bank Securities Private Limited. Please go ahead.
Manish Ostwal
Yes sir. Thank you for the opportunity. Sir, my first question your inventory related issue. So the reported number is much higher than what we said at the time of the last call. So and in the nostril account the management said there is not see any significant impact still the joint sector Finance committee report is not finalized. So on what basis we are saying that? And secondly, can you comment on the. Higher number than what we indicated earlier?
Naresh Jalan
Joint fact finding Committee interim report has already been published based on the TV which they had conducted and post this right now only forensic which is going on which will and we are sure that that is basically to estimate the reasons why this has happened. So there is not going to be any financial impact in the balance sheet we are absolutely firm and that there is not going to be any financial impact in the balance sheet based on whatever we have seen and we have provided hundred percent of what we have been given from the third party and in terms why the reasons I think reasons for this why it has happened.
It is still I think only a week left when we will have the first full final report and the same will be made public to understand the actual reasons and final reasons for the same in terms the why these why the quantity has gone up. We had given our estimates based on whatever we at that period of time were able to assess. But as we had said that period of time also the assessment is still under progress. And during this third party PV we had closed down all our operations for a couple of days and we conducted the entire piece to piece PV across all locations and whatever every single piece was accounted for so that every single thing was will be what should have been provided and so that near future or near decade never again this may occur.
So we have taken a prudent step to close operations for a couple of days and ensure that every single thing is provided of and in future this never ever occurs again.
Manish Ostwal
Sir and the second question on the. On the this gross debt and the working capital increase we have seen during the year March 2025 versus so any. Specific reason of this kind of working. Capital increase and where do you see the working capital days to settle in F26 and over the medium term.
Lalit Kumar Khetan
So in terms of market capital increase, if you look at the overall working capital it has gone up by almost 400 crore during the year. And that is mainly as you have also we have discussed in the past. That is mainly due to increase in transit time and risk issue. So the goods are taking more at the in the sea. Plus as you know a lot of new development happened during the year due to this new customer wins and new orders for which bulk supply are yet to start.
But account has been built up on all those, all those accounts and in upcoming period you will see an improvement on this account. And this is because the increase in turnover will help to improve the moderation in inventory on these accounts.
Naresh Jalan
I would like to also I think one thing which should be noted that the new developments which went into pipeline over in last quarter to fill up the warehouse in overseas market we had to ship parts which is getting consumed in this quarter. And that’s that once that starts, consumption starts automatically normalization of the working capital or the debt will start happening. And in terms of future we can assure the investors with the current cash flow which we see in terms of our business and where the business is performing right now and with the kind of robust pipeline which we believe we have and with the kind of customers we have been able to build, we feel that we will be able to reduce substantial debt including working capital going forward in coming days and coming months, by the year and basically FY26 a substantial reduction will happen in terms of the overall debt is concerned.
Manish Ostwal
Okay sir, thank you for answering my. Question and all the very best to come out strongly from this. Thank you.
operator
Thank you. The next question comes from the line of Amitul Shah from Dam Capital Advisors. Please go ahead.
Mitul Shah
Yeah, good morning sir and thanks for the opportunity. So again first question on standalone Q4 revenue. We believe that there is no one time adjustment in revenue. Entire inventory related impact is in raw material side. Right? So the contraction in revenue is too high. Compared to the peer group Bharatpurj and all those leaders reported number at the same time commercial vehicle production Q and Q was also reasonably good. So any specific reason apart from this inventory related thing?
Lalit Kumar Khetan
Mithul, I would like to explain this. See after this inventory issue whatever happened and we have now decided to go or take more chances with the enemy recognition policy and in this quarter we have not accounted for the goods which is less effective but not reach the customer’s place. So on that account about 100 crore of revenue has not been recognized in this quarter and going forward we follow this policy only. And apart from that you know that there has been a duty in the US and so in lot of goods there has been and from the March the duty of 10% we are paying on our goods.
So since March we are whatever the goods we are paying the duty in the US is being recognized on payment of duties earlier once it left India we have recognized sales as now the importance is GDP and there was no duty earlier so it was getting recognized. So 74 on account of that has not got recognized in this quarter. So going forward it will be a normal practice and there will be no impact of this accounting in the future. And that amount has been very basically inventory. From data to inventory.
Naresh Jalan
To answer you very straightforward. Whatever you asked for 170 crores approximately has not been recognized. Looking into prudence of future I as as said in my earlier statement we have taken cognizance of whatever has happened and going forward to get into best practices we have basically reset our entire recognition model and 170crores in all has not been recognized as revenue which will be recognized in coming quarter. And going forward this is going to be the policy. One reason basically is the duties which have not been paid at the port the revenue for the same has not been recognized.
And second for the goods which have left in our plant but has not reached customer and has not been recognized as sales. So taking both together it’s close to 170 crores plus which has not been recognized business revenue in the quarter. 4.
Mitul Shah
This is then question is then FY26 revenue. Do we still maintain that guidance of about 15 to 20% revenue growth potential?
Naresh Jalan
I I am absolutely sure that we are looking at 15 to 20% revenue growth in FY26. This is this revenue recognition policy which has changed in one quarter. This is going to now be always there. So obviously this 180 crores is going to get recognized in this quarter leaving no stones for future reorganizing in the revenue recognition policy.
Mitul Shah
And just lastly on the balance sheet side it is almost now 18002000 crore type of a date. Of course you explain about working capital but still it remain elevated over last few years. So any roadmap in next two or three years where do you want to bring it?
Lalit Kumar Khetan
I, I I don’t want to give you a two or three year roadmap basically in by FY26 and we can assure you or the entire investor fraternity you will see substantial debt reduction. One is one There are a couple of reasons because of that one, the warrant money coming in second due to tax refund which will get based on the ACIL merger. Third, the free cash flow from the debtor. And as well as we are at the end of our capex cycle I think by September end all capex which you are seeing right now based basically 8,000 ton press or aluminum forging press.
All these things are going to come to an end July or mid August all the presses are starting and will start giving revenues. So we don’t look at any substantial or any meaningful capex going into second half of the year. So we are absolutely sure by end of FY26 there will be substantial reduction in the overall debt of the company.
Mitul Shah
Understood sir. Thanks a lot sir and best wishes. Thank you.
operator
Thank you. The next question comes from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Chirag Shah
Thanks for the opportunity. Yeah, thanks for the opportunity. Yeah, thanks for the opportunity and good that the disclosure has really improved from the company and you are upfront on that. I really appreciate that. So two, three questions. One, how should one look at the new margin when ROC roe guidance you had indicated that you will on this based on the findings and conclusion of the same. So have you formed a thought or you want to wait for the final forensic report to share your sustainable return on capital and margin guidance that you shared earlier? So that’s question number one.
Lalit Kumar Khetan
I think in terms of margins and other things I think this was one off incident. This does not dent company’s performance, overall performance or growth aspects going forward. One of incident does not take away from us our capability to produce and the kind of pipeline and the kind of projects which we have implemented gives us confidence of going forward a robust top line as well as robust bottom line. In terms of percentage I would not like to comment but in terms of guidance I would still maintain that we are going to create healthy margins and which in coming quarter we will be able to coming quarter onwards we will be able to demonstrate.
Chirag Shah
Okay, so I was asking is because there will be a permanent resetting of your gross margins, right? Because of the accounting. Not accounting Lexus but whatever errors which have happened. So that’s why I was asking the question that there would be a permanent rebasing of your of your margins and will have any impact on roc?
Lalit Kumar Khetan
No, I think in terms of there is no not going to be any permanent within one time inventory which has not which excess inventory which was there in the system or say basically that has got removed. So I don’t think that really creates any gross margin issues or anything.
Basically we would like to reset the balance sheet. We have one thing cleaned up the balance sheet and whatever provisions or whatever write offs we had to take, we have taken that upfront looking into the future and looking into the better prospects going forward of the company. So that does not absolved us from the responsibility of going ahead and creating better margins, healthy margins and good conditions. And this basically this reset is giving us more opportunity to do better things than concentrating on what has gone by.
Chirag Shah
Yes. The second question is if you can just share some thought on the how did this 2100 rupee pricing were determined? I am asking it is significantly out of the money. It is more than 3x the current right or something like that. So how was it determined that? If you can share some thoughts.
Lalit Kumar Khetan
Basically this is. This is as promised or as agreed in the previous call. We have taken this as a lesson learned and as agreed and as committed to my investors. We will look at the minority shareholders benefit and to affect minority share minimum effect to the minority shareholders. As such, if you see this pricing has been arrived with an objective of only having 0.5% overall equity dilution so that it is not affecting the overall investor community who has put trust in RKFL for past so many years.
So we did not want that one such issue should dent the entire confidence of our investor community. And that’s the reason this premium has been paid. To basically give a message to the overall investor community that promoters are with standing with the company. They would want the investor community to be assured that we are not here to make short term gains or looking at the future of the company. I don’t think we have paid a huge premium out of it. I am very sure with the coming years of performance of the company in coming couple of years I will not be out of money.
We will be in the money in going future.
Chirag Shah
Your full intent to convert right to subscribe it. It’s not that you will allow it to
Lalit Kumar Khetan
opening statement. It’s in my opening statement itself. I have said that this entire money will come within this financial year. It is not going to take 18 months. Time has been prescribed in the warrants. I can stretch it up to 18 months. I have very categorically said that we will do because I need to borrow money so I don’t have a ready line set up to get the money tomorrow itself.
So taking that time into my hand we have basically taken it as a warrant. Otherwise we could have done it as a preferential. If I would have had ready money in my account so I will need to borrow through last or something. So we have basically taken time but I am absolutely sure and I commit to get this entire money before March 26th is completed.
Chirag Shah
Really appreciate your stance on this and your disclosure. So one last question if I can based on the findings till date, is this more of a system error? It is more of a human error.
And is the error at the production level or is the error at the accounting slash what you call inter department transaction level? If you can set from light it would be helpful.
Lalit Kumar Khetan
So whatever findings till now we have in hand, I can tell you it is not intentional, it is not purposefully made error. It is it has a company has grown faster than its system. I can only give you only a very simple answer. That company has grown faster than its system and that is my fault that we have not been able to bring in or get more robust system as the company grow.
That’s the learning lesson we have taken and we are fixing the system in a robust manner that in future with the growth my system is also upgraded in such a manner that in future this or never occurs again.
operator
Thank you. The next question comes from the line of Daval Shah from Gillig Capital. Please go ahead.
Dhaval Shah
Yeah Hello. Hello team. Thank you for the opportunity. So very happy with your messages. The way you articulated everything, it’s given a very strong message across. Sir, a couple of questions on the balance sheet. So you mentioned about the not recognition of 170 crore of revenue. So does it lead to the similar impact on the inventory and higher receivables and plus the borrowings is my understanding correct?
Lalit Kumar Khetan
So it has nothing to do with the borrowings. So suddenly revenue has a controlling impact on the inventory. So when the revenue will be recognized inventory increase to that extent, suddenly the margin value is reduced to that extent. Rest all is same normal.
Dhaval Shah
Okay, on the EBITDA margin front I mean the sir said about stronger margin but would you like to share anything in terms of the numbers? I mean the earlier guidance which we. Are giving regarding 0.5 to 1% increase every year. So do we hold by the guidance. And when we look at utilizing a full capacity are you still aiming at around 242425 EBITDA margin by FY28
Lalit Kumar Khetan
in terms of my aspirational margin we still are intact of getting to 24 25% margin by FY28 and in terms of quarter on quarter I would not like to give you any next quarter or overall next 2/4 guidance but I can only confidently tell you by end of FY26 and FY27 you will see us getting back to much above what we were in the past and we continue to strive for excellence and our endeavor. That and our entire effort on a war voting is to basically do whatever is required to negate what has gone by in terms of once incident and one incident cannot rock the overall board of our futures future and 4,000 people of RKSL.
So I am very confident that going forward margins will be robust and my 24 25% vision or margin for FY28 still remains intact. And with the kind of activity we have done in terms of capacity and with the kind of activity which my marketing has done in terms of bringing in new railway business in terms of fully assembled supply of bogey frames and the kind of strong customer base which we have built over last couple of quarters in terms of getting into PV which is going to show in FY27 in full scale you will see a significant improvement and a robust margin profile going forward.
Dhaval Shah
And so last question regarding the the kind of business environment you are noticing for the US market. It’s been couple of months since the tariff talks have happened so what sort of conversations you’re having a with the customers, the short term outlook, did they stop on inventory? How are they giving out the purchase orders now? Second is have we won any or any new business after the tariff announcements have happened in the month of March and thirdly in terms of negotiating after this after July, after June or June. July onwards when the three month pause. Is over how does this who is going to bear the tariffs and how. Are we going to work around it? Some bolder discussions which the customers will be having at their side. Any insights from there? You know if you can share it will be really helpful because right now everything is a lot of variables, everything is very volatile. So some direction will help from your side. Thank you.
Naresh Jalan
I think Dhaval to answer your questions couple of things. One at the right moment we have set up our Mexican entity. I can tell you this Mexican entity is going to be the golden goose for us for his next three years time. We are seeing huge traction to for our Mexican entity to do value add over there while we send forgings from here from India to US and to Mexico and get it fully machined and supply from there.
Second, we have had no order reset right now from our any of our customers and no customers have come back to us asking for price decreases or absorbing the whatever is going to get applied is going to be paid by our customers. Yes, overall the market demand in us is subdued but whenever we stick speak to any of our customers we are of the opinion and they are also of the opinion that very soon or maybe in couple of months they they feel that that it is going to be a hockey stick recovery which is going to be extremely fast.
If you see the market right now over there it is gone below the replacement and as soon as things settle down I think you will see a hockey stick recovery in the North American market and we are extremely confident of that. In terms of new order wins post this tariff. Yes we have had order wins post this tariff from couple of new customers in North America. We would not like to name the customers but it is on the off highway side, it is on the PV side and also it is on the CV side. All the three sides we have one new contracts both from March till right now in the month of May and as well as in our Mexican entity we have won a very large order which for basically conversion of castings to finish product from and supply from our Mexican entity.
And in terms of right now market is down but we don’t see that going forward in you may see any moment maybe it may happen in next two months, it may take three months but it is not that it is very far away. The recovery in the market is going to be very very steep.
Dhaval Shah
Got it. So very encouraging and thank you very much and good luck to anxiety. Thank you.
operator
Thank you. The next question comes from the line of Devrat Mota from Capital International. Please go ahead.
Devvrat Mohta
Hi Nehruji, thanks for the call. I have two questions. Firstly on your revenue recognition that you mentioned the 170 crore impact in this quarter. So effectively what that means is that what you’re saying is that the sale at the end of Q4 was impacted which sort of flows through to Q1 Q1 and then there’ll be an impact in the end of Q1 2 through Q2. So on a go forward basis I mean this 170 crore essentially you should go back to whatever run date you were pre all of this on a revenue basis, is that right?
Naresh Jalan
Yes, you’re absolutely right sir. 170 crores plus means. Exactly number is close to 173 crores is what we have not recognized as revenue which is going to flow into this quarter and this is going to be a continued effect which is now going it has been reset and there is not going to be any more new reset going forward in this revenue recognitions.
Devvrat Mohta
Understood. And the second question that I had was again I think someone asked you before on margin given the number of moving parts that have happened through the course of this year. I mean what is the right base level of margin to start thinking about? I mean if I look at you know your restated number for March 24, March 24 restated number was you were at 20.9% EBITDA margin. I mean is that roughly ballpark the right kind of base benchmark to use going forward or you think that etc. But like what is the, what is the. I mean I’m just trying to understand what is the base number to start with given the number of moving parts.
Naresh Jalan
Yes, I think the 5/4 number are not the right judgment. Basically having inventory write offs during this quarter, that’s not the right judgment in terms of getting into the assumption of what margins we are at or what we can be. Sir, as stated in my earlier answer, our as we are still intact with our aspirational margins of 24 25% going into FY28 and with the kind of new capacities of heavy forgings, aluminum forgings, cold forging, whatever we have installed and is on in progression.
I would not be able to comment on quarter on quarter basis or next quarter but overall in terms of yearly basis we still believe and we are of the firm view that we will be able to maintain our margin and we will be able to build on that going forward.
Devvrat Mohta
When you say maintain your margin, what is the I mean Is it like FY24 number? Is the, is the thing is to maintain is the FY24 the base in your mind or is FY23 what is the base? I mean when you say maintain base in my mind is FY24 but we have to still build on that case and I, I think that’s the base which we are working with.
Devvrat Mohta
Got it. Understood. And then one more last question for me is just your capex was quite elevated in FY25. You said I think to someone else’s question that you’re coming to the end of the CAPEX cycle will be done by September. So for FY26 how much capex do you expect for the full year?
Naresh Jalan
For a full year, total full year including maintenance, 100 to 150 crores is going to be the capex for whatever is in the WIP that is going to get completed before end of September. So all these capacities are going to be in place and we are going to be up and running.
Rest all is going to be 100150 crores. Whatever is going to be basically on account of maintenance or line balancing. No additional capex at least for next one and a half years. Nitin FY27 we don’t see any capex major capex coming in.
Devvrat Mohta
because it’s 150 crore. You’re saying is because of maintenance. Every 100 to 150 crore of maintenance. How much is the balance? Whatever is due in FY26 from your growth capex that you’ve done in the last whatever. So I’m just trying to arrive at like what is the total capex for FY26? If you. You know
Naresh Jalan
that is 100 to 100 sir pending. I think everything is showing in wit to finish that off maybe 5060 crores or more. Requ and rest is 100 crore means total in totality what I am speaking is close to 100. 250 crores is going to be the total extra money spent above the wit which is showing already in the balance sheet.
Devvrat Mohta
Okay so. So basically so it is 150 crore that include maintenance capex plus whatever is pending to finish off the wit project.
Naresh Jalan
Yes. Yes.
Devvrat Mohta
Okay. And the corresponding number in FY25 was almost 9. 970. 976 crore or something. So from 976 is going to be 150 crores.
Naresh Jalan
Yes sir.
Devvrat Mohta
Okay. Thank you sir.
Naresh Jalan
Major of the cash flow to answer your question sir from warrants, tax refunds and free cash flow which is generated post the interest payment in the coming year. Because this year also we presume we should be tax free based on our ACL merger. So all this money mostly will be either utilized. Part will be utilized for working capital and balance will be utilized for repaying the debt.
Devvrat Mohta
Thank you.
operator
Thank you. The next question comes from the line of Ranjit Agarwal from Nilgiri Investment Managers Private limited. Please go ahead.
Rajit Aggarwal
Good morning sir. I really appreciate the follow up comments and the capital commitment that the management has made. But forgive me but unless and until I understand what’s what actually happened it’s very difficult to believe that it is going to be back to where it was earlier. Now the question really is, I mean I’m sure the company like you would have SAP. You would have an internal auditor. You have bankers, the best of the bankers who conduct annual inventory audit. So how did this lapse and it didn’t happen over one quarter or over one year.
It happened over more than one year. I don’t even know if it went beyond Two years. So there is something specific that you can share how this happened. And it’s not even a small amount. It will really help me to understand, you know that going forward things cannot and will not be repeated.
Lalit Kumar Khetan
I think to answer your question, yes, we have SAP, we have internal audits. I don’t think banks conduct any audit in the plant. In terms of the inventories are concerned. Yes, as I answered to your earlier question of one of the investor fraternity that with the growth we.
We don’t deny that there has been lapses. We don’t deny that we have. We are at fault. We take full responsibility of the fault which has happened. So there is no denying of the fact that there has been lapses and there has been controls which have been missing with the kind of growth we have had over last five years. Yes, we have not built a robust system to ensure that this growth also takes care of the systematic issue which has. Which should ensure that no such things occur. So we are extremely unhappy ourselves like you are.
We are extremely sorry for what we. It has happened. But reasons for the same is not intentional. It is not purposeful. It is basically which is on ignorance lapses which have happened. And right now I can assure you the kind of controls we are putting in. The kind of systematic controls in terms of manual removal of manual feeding in the system. Doing the manual intervention in the system. Putting the system on the auto mode directly linked to the production equipments is the way forward which we are working on. And I think we. In next three months time.
By end of September most of our systems will be autofit rather than doing manual feeding is concerned. So I can assure you that this kind or any such kind of incident will never come in future.
Rajit Aggarwal
Right sir. Thank you again for the reassuring your you know commitments. I have a few quick questions if you. If you don’t mind. And just. I mean just bear with me please. Has any bank come to you saying they would like to withdraw their limits or reduce.
Naresh Jalan
No such bank. No such banks have come. And as well as. If you see when banks are concerned with the money.
Promoters are bringing in upfront money into the system. So to the bank reassured that promoters stand by their commitment and the money is coming into the system. And as such also I would like to reiterate one thing that there is no. You will be able to see when the fact finding report comes. It is an error. It is no leakage of money from the system. I would like to reiterate that there is no theft. There is no leakage. There Is no manipulation or there is no unique nothing wherein money has flown out of the system.
So it is an error which has occurred. But still as a moral responsibility as. As a promoter of the company I took full moral responsibility of the fame and I funded the amount. And banks are concerned with the money in the system and the money is coming back into the system in a manner which is and non dilutive for the entire investor community.
Rajit Aggarwal
Right. And that is very well appreciated. Last one. Do you have any obsolete inventory or rejected WIP or any sort of inventory which can’t be put to use on your books right now?
Naresh Jalan
Can you repeat the question please?
Rajit Aggarwal
Obsolete or rejected.
Lalit Kumar Khetan
So we always have a policy for provide for the obsolete inventory or unusual and we make it as a scrap and there is no such inventory left in the system. And therefore we. That is a continuous practice we always follow and policy also to provide for the slow moving inventory.
Naresh Jalan
One more thing sir, I would like to reiterate. One more thing to add to your question. I would like to reiterate sir, as answered also earlier all provisions may be anything related single piece also has already been provided. And there I would like to stress that there is not going to be a single piece provision. Whether obsolete, whether lost any any such inventory issue has been addressed while taking. We have not tried even to save a single penny out of it. Everything what was required has been provided.
Rajit Aggarwal
Thank you. Much appreciated sir.
operator
Thank you. We take the next question from the line of Raghunandan from Nuwama Wealth Management Ltd. Please go ahead.
Raghunanthan
Thank you sir for the opportunity. We appreciate management commitment on investment of 205 crore through warrants a few housekeeping questions to Lalit Sir. Sir, for FY25 can you share within the revenue mix how would be auto non auto and generally you should give some guidance about within non auto. Railway, Mining, oil and gas others if you have that number Sandy please do share.
Lalit Kumar Khetan
So Raghu, I will just say auto non auto is maintained at 7822 right now. Okay. And I will share separately you the mix of the. Because I have not been able to work out due to the positive time on the other revenue you. But it is more or less on the 10 what we have in the last quarter. On the other segments there is no significant change.
Raghunanthan
Got it sir. And for full year FY25 if you can also share the revenue for Multitech, JMP and ACIL.
Lalit Kumar Khetan
So ACI revenue is already merged in the RKFL resort. As ACI has been merged so the revenue of ACIL RK includes the revenue of ACIL on about of Multi Take and GST combined together for the full year. And so I think a lot of elimination happened at console level but in isolation if you look at VMT was about 140 crore and Multitech was above 360 or more.
Raghunanthan
Got it sir. And what would be the margin sir for Multitec?
Lalit Kumar Khetan
So overall margin for the full year for the multitech was more than 15% and for GMT we have a very nominal margin and but from this quarter onwards you see JMT full potential as the GMT is getting ramped up quite significantly and you can see significant margin contribution from GMT in the FY26.
Naresh Jalan
Just add on to Lalit’s answer in GMT auto now it it is an NC, it was an NCLT company. It has taken us over more than a year to get back into shape. And also because the company was closed all the customers had shifted back their business to some other suppliers. Now getting back all those customers we have been able to get one of the biggest oil and gas customer from North America back in rkcsl. Samples have already gone there and we expect from next quarter onwards significant sales to come in oil and gas directly from GMT auto as well as of highway business POS purchase order samples and everything is almost under completion and we will see significant revenue coming from off highway sector also from GMT auto which is now arctic ESL from next quarter onwards.
Raghunanthan
Thank you for that sir. And congrats on the oil and gas order sir. Lastly within exports for FY25, 41% of revenue is export broadly if you can break it up to North America, Europe and others.
Lalit Kumar Khetan
So out of the entire 41% we will attribute 26% to North America, about 30% to Europe and 2% to others.
Raghunanthan
Got it sir. Thank you so much sir. That’s all from my side. Wishing you all the best.
operator
Thank you. The next question comes from the line of Mithun Soni from GCC Holdings. Please go ahead.
Mithun Soni
Yeah hello. Thanks for the opportunity sir. Just one clarification I needed. Of course as we said it was an error whatever happened because of the system ramp up being stored in the board. But the error was in cost calculation. Like for example there is a cost team which will do the cost analysis of what is the raw material and XYZ and then that is passed to the revenue team. The revenue is recognizing it and accordingly. The inventory gets adjusted. So and because what is happening is that is there like there was a revenue which was recognized but against that which their inventory was not there or over recognition of inventory revenue will happen to what? I mean I’m still not able to understand what is the error. I’m just. I understand it’s an error, but what is an error?
Lalit Kumar Khetan
Yeah, just to your question. So there is no revenue question in place. There is nothing. This inventory error is nothing to do with the revenue recognition. All the recognize whatever moves out of the factory and moves to reach to the customer and that has been built and paid by the customer. There is no ambiguity in that. And coming to. We have always. This was an error in recording of production and error recording of rejections of industry which has made book stock of inventory higher than the physical stock which has been.
Mithun Soni
So basically just to understand. So basically what you’re saying is that the system over recorded the inventory?
Lalit Kumar Khetan
Yeah. More inventory a lot worse than the more inventory.
Mithun Soni
If we record more production, then technically. The cash should be there in the system basically agar production. When you’re recognizing then you have the raw material. If you have the raw material,
Lalit Kumar Khetan
there is no cash question comes here because see if you have produced only hundred but we call it 102 so it’s only optional,
Mithun Soni
your core raw material is better. No, sir, please understand what I’m saying. Sir, you have bought a basic raw material, steel. Okay. You know there is X amount of. Steel which you bought and against that when you convert there is X amount of scrap and X amount of finished. Products which you have finally made. Okay?
Lalit Kumar Khetan
Yeah.
Mithun Soni
For the steam which you bought, you have paid cash. Okay. Now if the output of the production. Which we say that the inventory was produced more, it will not tally because you have not bought so much amount of metal. And the cash is also not gone out of system because since you’ve not bought the metal, you’re not paid for the so excess inventory got created because there. So we for with the analysis of. Input output ratio went for a toss.
Lalit Kumar Khetan
Yeah, correct. So certainly there was a lapse on the analysis part on this also.
Lalit Kumar Khetan
So basically.
Naresh Jalan
Basically, I think to answer your question. Answer your question, this first issue came to light only because input output ratio went for a toss. And that’s the reason the issue was highlighted in the system. And when we started digging deep and that’s the time we realized that this mess has come into the system. Basically, if input output ratio would not have changed or input output ratio would not have significantly impacted there would not have been an alarm raised internally in the system that this issue is prevalently. Right. Understand? Yes.
Mithun Soni
So what you’re saying Is the sales. Were happening at its own pace. Whatever we were ordering was happening. We were make order was coming. We were making. But you are saying that the end. The production was also happening at the. Same time that you were buying the. For the. For the order which you received. You buy the metal, you will convert it into finished goods that will be scrapped. But then there was over reporting of. The finish of the products made
Naresh Jalan
production. It is. It is. There are two couple of things I think when you will see the final exclusive summary of the fact finding report it will be more clear to you but to very safe on the side by not commenting on what comes out of it that was there a couple of things that it was over reporting of the production as well as under reporting of the rejections. Both combined together have accumulated into this. And you as rightly said this is not a error which has happened over a quarter or over a year. It is an error which has happened over a couple of years. But in order to have a final number to it we did a full physical inventory of every single piece in the system and came to conclusion and have provided this in last five quarters.
operator
Thank you. We take the next question from the line of Bharat Shah from ask Investment Managers Ltd. Please go ahead.
Bharat Shah
Yeah. Hi. While the final report would emerge as you have mentioned in some time and I hope it confirms everything that has been meditated just now, I. I don’t have a question today so I just wanted to make an observation. Every failure or every challenge is a source of opportunity. A failure is a source of opportunity to make things far more robust and prevent brittleness to come in. I hope this has been a significant and a rude kind of a shock but it doesn’t have to remain that way. If we convert this challenge into a big opportunity by making our systems tight, by making things more efficient and in fact given that this opportunity has created confusion about margins but which you talked about at length, I think it gives us a fresh opportunity to look at our cost structure, our pricing, our efficiency so that as soon as possible possible we get back to the kind of profitability and capital efficiency that we believed would come forth with the rising scale and the sophistication of the kind of products that they are offering.
In short, while indeed this is. This has been a root kind of very important kind of interruption which has occurred. But it doesn’t have to remain that way if you take the right and constructive lessons out of it.
Naresh Jalan
Thank you. Bharatbhai. Being a veteran from the industry, you, your comments or your observations are absolutely right and we respectfully take these comments on the right earnest and I personally promise the overall fraternity of the investors who have backed RKIFL that this is one such incident and a rude incident and a bad incident which has been aggressively been looked at by us.
We have spent sleepless nights over last two months and first time ever we have had eight days practical closure of our plants for complete audit of every single thing, every physical count of everything. And I can assure the investor community that this is never ever going to happen, ever. And we are putting in absolutely robust systems and integration before end of September to ensure that this incident is a past and a forgotten incident and will never ever reoccur in times to come. Also, I would like to assure you personally that we are working absolutely diligently because we are responsible to our people in our case and our investors, our customers.
So taking all this into account, we are now going to pace our growth with the system growth also we are just not going to grow in terms of capacity. We are going to grow in terms of overall building the robust system to ensure that system creates profit rather than all these things.
Bharat Shah
Deeply appreciate and I also appreciate that your statement earlier that there has been no cash leakage and there has been no theft or manipulation which has occurred and therefore despite no cash leakage from the system, if you have chosen to put as promoter the funds back into the money by restoring the network because implicit assumption is that the investors believe the profits which were there for these two years even if there was no cashews, these profits at least were presented today. And therefore now that they have not been, you have chosen to put it back into the system. I think it’s an act of definitely good behavior. I appreciate and I deeply appreciate.
Naresh Jalan
Thank you very much. Thank you sir. Thank you sir.
operator
Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I now hand the conference over to the management for their closing comments.
Lalit Kumar Khetan
Thank you. I would like to thank all the participants for taking our time to join our earnings call. I hope we have been able to answer and address your queries. For any further information, kindly get in touch with us or with CDR India. On behalf of Ramakrishna Forgings Limited we wish you all a very wonderful week ahead. We look forward to interacting you again in the next quarter. Thank you very much for taking out the time again. Thank you.
operator
Thank you. On behalf of Nuama Wealth Management Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.