Kirloskar Ferrous Industries Ltd. (KFIL) has outlined an ambitious expansion roadmap involving investments of ₹2,000-2,500 crore over the next three years to transform itself into a diversified value-added steel and engineering products company.
The manufacturer of pig iron, castings, seamless tubes and steel products is targeting revenue of well over ₹10,000 crore over the next five years by expanding its steel, castings and seamless tubes businesses while reducing dependence on commodity pig iron.
Capacity expansion
In a message to shareholders, Managing Director R.V. Gumaste said pig iron production will temporarily increase to 7 lakh metric tonnes per annum.
However, external sales will gradually decline once the Koppal steelmaking project becomes operational, as a significant portion of hot metal will be consumed internally for steel production.
In the castings business, KFIL plans to increase production from around 1.53 lakh tonnes to 1.75-1.80 lakh tonnes in FY27.
Foundry growth
The company’s current order book, covering delivery commitments for the next three years, has necessitated further expansion of foundry capacity.
Its sixth foundry, a large casting facility, is being commissioned. Gumaste said the company would require a seventh foundry over the next two to three years to meet customer demand and support new product development.
Tube and steel plans
In seamless tubes, KFIL plans to expand capacity at its Baramati plant to 4 lakh tonnes per annum by adding around 1.5 lakh tonnes to the existing capacity of 2.3 lakh tonnes. The expansion is expected to be completed over the next two to three years.
The company’s Koppal steelmaking project has secured all statutory clearances and is under implementation. At Jejuri, KFIL is debottlenecking its rolling mill to increase rolled steel output to 3 lakh metric tonnes.
Investment roadmap
The expansion programme will involve capital expenditure of around ₹2,000-2,500 crore over the next three years, in addition to the ₹2,500 crore already invested during the past five years.
Gumaste said these projects are expected to fundamentally transform KFIL in terms of scale, integration and business mix while preserving the company’s core values.
Business transformation
“We expect KFIL to become a fundamentally different company over the next five years. Our target is to build a business with revenue exceeding ₹10,000 crore through capacity expansion in seamless tubes, higher casting volumes and growth in value-added steel.
These are not aspirational targets but are backed by projects that are already under execution or will be approved over the next twelve months,” the company said.
Pig iron share to decline
He added that the share of pig iron in the company’s revenue and profitability will decline over time as KFIL shifts towards higher-value engineered products.
Castings, seamless tubes and value-added steel are expected to become the primary contributors to revenue and earnings, reducing exposure to commodity price cycles and improving earnings quality.
Long-term vision
KFIL aims to become one of the top two or three foundry groups in India by volume while establishing itself as the preferred supplier of complex precision ferrous castings for the agricultural, automotive, earthmoving and industrial equipment sectors.
In seamless tubes, the company plans to emerge as a full-range supplier covering standard line pipes, OCTG, premium connections and power generation tubes, with a stronger presence in export markets.
It also aims to position its Jejuri facility as a benchmark green steel plant in India.
Competitive advantage
According to Gumaste, iron ore security, green energy self-sufficiency and the Koppal steelmaking integration will form the foundation of KFIL’s long-term competitiveness.
He said these long-cycle investments will create a cost structure that will be difficult for competitors to replicate, positioning the company for sustainable growth over the next decade.