Ramkrishna Forgings (RKFORGE) Status Update summary

Inventory discrepancy and audit findings

• Discrepancy found during annual physical inventory verification, with book stock higher than physical inventory; preliminary assessment suggests irregularity in inventory recording as the main cause.

• This is the first such occurrence in company history; two independent external agencies have been appointed for a joint fact-finding study to determine the root cause.

• Estimated adverse financial impact is 4-5% of net worth, to be accounted for in FY25 financial statements.

• Discrepancy relates to work-in-progress (WIP) inventory, not raw materials or finished goods; no shortage in raw materials or stores.

• Fact-finding agencies are expected to conclude their review before the results are published by May 30.

Remedial actions and governance

• Comprehensive remedial actions initiated, with a focus on transparency, accountability, and best governance practices.

• Promoters intend to fund any resultant shortfall through legally permissible instruments, ensuring no adverse impact on minority shareholders.

• Fund infusion aims to enhance financial position and liquidity, with board and shareholder approval required for any action.

• Promoters emphasize moral responsibility and commitment to stakeholder confidence.

• Assurance given that future processes and controls will be strengthened to prevent recurrence.

Stakeholder communication and next steps

• Company is in a silent period and will not provide forward-looking guidance until annual results are released.

• Updates will be provided after the independent agencies complete their review and results are incorporated into financial statements.

• Audit committee appointed the agencies, with scope shared with current auditors for satisfaction.

• Promoters and management repeatedly assured that minority shareholder interests will be protected in any remedial action.

• Management takes moral responsibility and commits to best-in-class corporate governance going forward.