Kalyani Forge Ltd has earmarked capital expenditure of ₹30 crore for FY27, with a significant portion directed towards commercial vehicle programmes, new business opportunities and production ramp-ups, as the company targets 15-20% revenue growth across its strategic customer accounts in FY28.
The company is prioritising investments in the commercial vehicle segment following a 75% year-on-year increase in truck sales in Q2FY27. Trucks now account for 43% of its sales, and the management expects demand to continue growing.
Kalyani Forge Managing Director Viraj G. Kalyani outlined the company’s investment priorities and medium-term growth strategy during an earnings call with analysts.
Growth programmes account for bulk of capex
Of the planned ₹30 crore capital expenditure for FY27, approximately ₹10 crore will be allocated to ramp-up programmes, another ₹10 crore to new business, ₹5 crore to future business opportunities and the remaining ₹5 crore to the existing business.
The company is directing investments towards commercial vehicle original equipment manufacturer (OEM) programmes as it prepares for higher production volumes and new business opportunities.
The capex programme will be funded through fresh term loans, part of the ₹45 crore funding plan approved by the board and internal accruals.
Targets 15-20% growth in strategic accounts
Looking ahead to FY28 and FY29, Kalyani Forge is shifting its focus towards tracking revenue growth at the individual strategic customer account level rather than providing an immediate consolidated revenue forecast.
The company is targeting 15-20% revenue growth across its strategic customer accounts. It has already achieved this growth trajectory in approximately 30% of these accounts, according to the management.
The strategy involves closely tracking customer demand forecasts, upcoming product launches and production ramp-up schedules to ensure the company secures a larger share of business from existing strategic customers.
Kalyani said the company wants to pursue growth sustainably rather than provide aggressive top-line projections that could create unrealistic expectations among investors.
Margin improvement through operational efficiencies
Alongside revenue expansion, the company is pursuing a phased improvement in operating margins, with a long-term target of 20%.
The management intends to consolidate its current margin levels for at least six quarters before moving towards the next milestones of 18% and subsequently 20%.
Cost optimisation across materials, power consumption and manpower productivity will be central to achieving these targets.
Despite rising steel prices, the company has maintained control over material costs through nearly three rounds of price revisions during the previous quarter, with the increases passed on to customers.
However, coordinating price revisions with both suppliers and customers remains important to protecting margins.
The company is also undertaking dedicated projects through its Vriddhi Council to improve material utilisation, reduce consumption and increase material yield.
Power and manpower costs under focus
Kalyani Forge is working with electricity utilities and state electricity boards to rationalise power costs. Some manufacturing facilities had historically secured higher sanctioned power loads than their current operational requirements. Improvements in operational efficiency have created opportunities to optimise these sanctioned loads and reduce electricity expenses.
On the manpower front, the company is focusing on productivity improvements by shifting several manual processes to machine-based operations.
Its engineering team is working on improved machine programmes, fixture designs and tooling solutions to reduce manual intervention and improve manufacturing efficiency.
The combination of capacity expansion, commercial vehicle demand, strategic customer growth and tighter cost management is expected to shape Kalyani Forge’s growth strategy over FY27-FY29.