Crisil Puts Ramkrishna Forgings On Watch Negative Over Inventory Discrepancies

Crisil Ratings has placed Ramkrishna Forgings Ltd.'s long- and short-term bank facilities under rating watch with negative implications due to concerns over inventory irregularities, the company said in a filing on Friday.

The rating agency has maintained the 'AA' rating on the company’s long-term facilities worth ₹16.50 billion and the 'A1+' rating on short-term borrowings of ₹3 billion. However, the watch status reflects concerns about the company’s internal controls after investigations revealed inventory overstatements.

Crisil cited an independent audit which confirmed that discrepancies in work-in-progress, raw material, and scrap inventory stemmed from errors or lapses in systems, operations, or personnel. The findings point to an estimated loss of ₹502.2 million in 2023-24 and another ₹2.21 billion in 2024-25, eroding the group’s net worth by about ₹2.03 billion, or 6.7%, as of March 31.

To offset the impact, Ramkrishna Forgings plans to raise ₹2.05 billion through preferential issue of 975,000 convertible warrants to promoters at ₹2,100 apiece. The funds will be raised within 18 months to support the company’s financial risk profile.

Crisil warned that delays or changes in this plan could further affect the credit outlook. It will continue monitoring the company’s ability to maintain sustainable operating profitability and deliver timely corrective actions.