Ramkrishna Forgings Flags ₹2.03 Billion Hit To Net Worth From Inventory Issues

Ramkrishna Forgings Ltd. on Saturday said its board had reviewed a joint fact-finding report that highlighted discrepancies in inventory balances and stock accounting at its manufacturing plants. The report confirmed that certain incorrect entries and unrecorded rejections at the plants had led to overstatement of work-in-progress, raw material, or scrap inventory, the company said in an exchange filing.

The discrepancies were valued at ₹2.21 billion as on March 31, 2023, and ₹502.2 million as on March 31, 2024. As a result, the company recorded an adverse impact of ₹2.03 billion on its net worth as on March 31. This adjustment has been included in the financial results for the March quarter and for fiscal 2024-2025.

The company said there will be no further financial impact following the final joint fact-finding report. It added that appropriate disciplinary action will be taken against the employees involved. Ramkrishna Forgings also said it has tightened internal controls and introduced new processes to restrict manual interventions.

Further, the management is in the process of appointing an external SAP (systems, applications and products) consultant to review the existing production process. The consultant will also recommend steps to strengthen controls and streamline SAP systems. The company expects this process to be completed within four to six months.