Kalyani Forge Limited has reported a significant improvement in profitability for the second quarter of fiscal year 2026, despite facing challenges in its US export business due to tariff-related issues. The company's investor conference call revealed several key developments and financial highlights:

Financial Performance

Operational Highlights

• Domestic Sales: Maintained momentum following post-GST cuts
• Export Sales: Currently represent 20% of total sales
• US Market: Successfully ramped up high-volume, non-auto export business
• European Market: Commenced transmission business consignments
• New Business: Acquired a new MNC customer in the axle business

Strategic Initiatives

• Completed Rs. 7 cr of projects from capital work in progress
• 58% of the capex program in process or completed
• Implemented clean audit review actions and new ERP controls
• Improved Internal Financial Controls scores

Management Commentary

The company attributes its improved profitability to cost control measures and operational efficiency improvements. These initiatives have helped Kalyani Forge navigate the challenges posed by reduced US exports due to tariff-related issues.

Future Outlook

While the company faces headwinds in its US export business, it has shown resilience by diversifying its market presence and focusing on operational efficiencies. The new order wins and strategic projects indicate potential for future growth, although the company remains cautious about the ongoing impact of tariffs on its export business.

Corporate Governance

In a separate announcement, Kalyani Forge has appointed Mr. Vishwanathan Swaminathan as an Additional Director (Independent) for a five-year term, subject to shareholder approval. This appointment is part of the company's ongoing efforts to strengthen its board and corporate governance practices.

Investors and stakeholders will be watching closely to see how Kalyani Forge capitalizes on its domestic market strength and new business developments to offset the challenges in its export markets in the coming quarters.

Kalyani Forge Limited , a key player in the forging industry, has announced significant changes to its board and revealed its latest financial results, marking a period of transition and challenges for the company.

Board Appointment and Succession Plan

The company's Board of Directors has approved the appointment of Mr. Vishwanathan Swaminathan as an Additional Independent Director for a five-year term, effective November 12, 2025. This appointment is subject to shareholder approval at the upcoming general meeting. Mr. Swaminathan, a 66-year-old Chartered Accountant, brings 25 years of diverse domestic and international experience across manufacturing, services, and retail sectors.

In a strategic move, Mr. Swaminathan is set to assume the committee positions currently held by Mr. Abhijit Sen upon the latter's retirement on February 2, 2026. This succession plan aims to ensure a smooth transition in the company's leadership structure.

Financial Performance and Auditor Concerns

Kalyani Forge has reported its unaudited financial results for the quarter and half-year ended September 30, 2025. The company's performance shows signs of strain, with profit before tax for the half-year period declining to ₹429.25 lakh, compared to ₹617.51 lakh in the previous year.

However, the financial report comes with significant caveats. The company's statutory auditors, M.P. Chitale & Co., have issued a disclaimer opinion, citing several concerns:

1. Refinement needed in stock valuation methodology
2. Pending reconciliations of trade receivables and payables
3. Inadequate documentation of internal financial controls
4. Issues with GST balance reconciliation

These audit observations underscore the challenges Kalyani Forge faces in its financial reporting and internal control systems.

Policy Updates

In response to evolving corporate governance standards, Kalyani Forge's Board has adopted new policies on:

1. Materiality and dealing with Related Party Transactions
2. Determination of Materiality of events/information and their disclosures

These policy updates aim to enhance transparency and compliance with regulatory requirements.

Market Implications

The combination of board changes, financial performance, and audit concerns presents a complex picture for Kalyani Forge. While the appointment of Mr. Swaminathan may bring fresh perspectives to the board, the company faces immediate challenges in addressing the auditors' concerns and improving its financial position.

Investors and stakeholders will likely be watching closely to see how Kalyani Forge addresses these issues in the coming months, particularly in terms of strengthening its internal controls and financial reporting processes.

As the company navigates through these challenges, the effectiveness of its new board composition and recently adopted policies will be crucial in restoring confidence and driving future growth.