pro-activeHow Once-Profitable Foundry Companies Fell into Losses—and What SMEs Must Learn About Costing
India’s forging, casting, and foundry sector has long been a cornerstone of industrial growth. Yet, in recent years, several companies that once thrived have reported significant financial losses. While external factors like market shifts and global competition play a role, the deeper issue often lies in internal cost mismanagement. This blog explores how five listed companies lost their profitability—and what small and medium enterprises (SMEs) can learn to avoid the same fate. Here are the insights into listed companies in NSE/BSE who are going through tough business cycle.
Casting, Forging, Foundry Company #1: From Market Leader to Insolvency
The company was once a respected name in the forging industry. However, a series of internal disruptions and governance failures led to its downfall. The company’s journey into insolvency offers a cautionary tale about the importance of leadership stability and operational control.
Top Causes of Losses:
Once a prominent player, the company has been under Corporate Insolvency Resolution Process (CIRP) since 2018. The company’s downfall was driven by:
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- Leadership Vacuum & Governance Breakdown
Delayed board meetings and financial disclosures eroded investor confidence.
- Operational Disruption
Poor asset utilization and lack of modernization led to declining margins.
- Strategic Paralysis
With operations managed by a resolution professional, long-term planning stalled.
- Leadership Vacuum & Governance Breakdown
Casting, Forging, Foundry Company #2: Debt-Heavy and Demand-Light
The company’s decline highlights how financial overextension and stagnant demand can erode profitability. Despite having a strong legacy, the company struggled to adapt to changing market conditions and internal inefficiencies.
Top Causes of Losses:
The company’s financial strain stems from a combination of internal inefficiencies and market stagnation:
- High Debt-to-EBITDA Ratio
Excessive leverage reduced flexibility and increased financial risk.
- Negative Operating Profit
Persistent structural inefficiencies kept the company in the red.
- Sales Decline & Underutilization
Weak demand and poor capacity utilization led to margin erosion.
Casting, Forging, Foundry Company #3: Revenue Collapse and Cost Rigidity
The company’s financial troubles stem from a sharp drop in revenue and an inability to adjust its cost structure. The company’s case underscores the risks of relying on a narrow customer base and neglecting sales and marketing investments.
Top Causes of Losses:
Despite its potential, the company faced a steep decline in profitability due to:
- Sharp Revenue Drop (-66.96%)
Loss of key customers or market share severely impacted top-line performance.
- High Fixed Costs
Inflexible cost structures couldn’t adapt to falling volumes.
- Neglected Sales & Marketing
Lack of investment in distribution and customer acquisition limited growth.
Casting, Forging, Foundry Company #4: Efficiency Lost in Translation
The company faced a dramatic fall in income and profitability, despite stable input costs. The company’s experience illustrates how poor cost control and inventory mismanagement can silently erode margins over time.
Top Causes of Losses:
The company saw its operating income collapse by over 60%, driven by:
- Revenue Decline
Lost contracts or competitive pressure reduced income drastically.
- Operating Profit Erosion
Inefficiencies in production and cost control hurt margins.
- Inventory & Input Cost Mismanagement
Poor control over raw materials and fuel costs added to the burden.
Casting, Forging, Foundry Company #5: Asset-Rich but Performance-Poor
EL Forge’s story is one of underutilized potential. Despite having significant fixed assets, the company failed to generate adequate returns, largely due to high depreciation, finance costs, and weak operational efficiency.
Top Causes of Losses:
The company’s losses were rooted in financial and operational misalignment:
- High Depreciation & Finance Costs
Heavy capital investments didn’t translate into revenue.
- Poor Inventory Turnover
Sluggish sales and delayed collections impacted liquidity.
- Underutilized Assets
Fixed assets remained idle, dragging down productivity.
The Hidden Culprit: Years of Cost Mismanagement
What ties all these companies together is not a single catastrophic event—but a slow, creeping decline caused by years of cost mismanagement. Costing is often seen as tedious and time-consuming, involving data collection across sourcing, manufacturing, inventory, and pricing. But when ignored, it leads to:
- Mispriced products
- Inefficient sourcing and recycling
- Bloated inventories
- Poor capital allocation
- Loss of pricing power
- Stagnation in innovation
Over time, these inefficiencies compound. A company that once thrived begins to bleed cash, lose market share, and eventually report losses.
How Proactive Solutech Helps SMEs Avoid This Trap
At Proactive Solutech, we specialize in cost consulting for the casting, forging, and foundry industry. We understand the unique challenges SMEs face—limited capital, lean teams, and high competition—and we help them build cost systems that are both practical and powerful.
What We Offer:
- ABIS~Pro: Our advanced ABC software helps you understand true product-level costs.
- Strategic Consulting: We guide SMEs in pricing, cost audits, and bundled models.
- Analytics & Reporting: Real-time insights to monitor outcomes and optimize decisions.
We help you turn costing from a back-office chore into a strategic advantage.
Conclusion: Costing Isn’t Just Accounting—It’s Survival
The downfall of these listed companies is a stark reminder that costing is not optional—it’s foundational. For SMEs, the path to profitability lies in knowing your costs, pricing smartly, and investing wisely. With the right tools and guidance, even small companies can build sustainable, competitive businesses.