pro-activeFrom Strategy to Sustainability: How India’s Top Forging Giants Mastered Cost Management—and What SMEs Can Learn
In India’s dynamic manufacturing sector, forging and casting companies are under constant pressure to balance cost efficiency with innovation. While large players have achieved remarkable success, their journey offers valuable lessons for small and medium enterprises (SMEs) striving to compete with limited capital. This blog explores how these industry leaders made strategic decisions in cost management and pricing, and how SMEs can apply similar principles using tools like Activity-Based Costing (ABC)—with support from Proactive Solutech.
Market Leader #1: Engineering Excellence Through Data and Diversification
The company has long been a benchmark in the forging industry, known for its global reach and multi-sector presence. Its success stems from a deep understanding of cost structures and a proactive approach to pricing and market diversification.
Top Cost & Pricing Decisions:
- Tariff-Responsive Market Shifts
Rebalanced its global footprint to reduce exposure to tariff-heavy regions, improving cost predictability.
- European Operational Restructuring
Streamlined steel manufacturing operations to cut overhead and boost margins.
- Defense-Focused Pricing Strategy
Secured ₹847 crore in new orders by aligning pricing with high-value defense and industrial contracts.
Follow-Up Activities:
- Invested in R&D and filed 70 patents.
- Built a ₹9,463 crore defense order book.
- Embedded sustainability across six capitals.
Market Leader #2: Capital Discipline Meets Market Expansion
The company has demonstrated how strategic capital deployment and diversification can drive growth even in cyclical industries. Its cost management decisions have enabled it to expand into new markets while maintaining financial stability.
Top Cost & Pricing Decisions:
- Capital Infusion via QIP
Raised ₹1,000 crore to reduce debt and improve working capital efficiency.
- Diversification into Rail & EVs
Entered new verticals to reduce pricing pressure from cyclical markets.
- Lean Manufacturing for Margin Expansion
Improved EBITDA margins and reduced debt-to-equity ratio.
Follow-Up Activities:
- Formed JV with Titagarh Rail Systems.
- Built an aluminum forging plant for EVs.
- Secured ₹3,900 crore in new orders in 9 months.
Market Leader #3:: ROI-Driven Growth with EV Readiness
The company has built its success on disciplined investment and a forward-looking product strategy. Its ability to manage costs while preparing for the EV transition has positioned it as a leader in automotive components.
Top Cost & Pricing Decisions:
- Disciplined Capital Allocation
Focused on ROI and decentralized cost control across plants.
- EV-Ready Product Strategy
Developed premium-priced components for electric vehicles.
- Global OEM Integration
Leveraged parent company’s expertise for pricing and innovation.
Follow-Up Activities:
- Achieved 21.3% Return on Net Assets.
- Maintained double-digit EBITDA margins globally.
- Converted 62% of EBITDA to operating cash flow.
The Common Thread: Knowing Your True Costs
Across all three companies, one principle stands out: cost visibility is the foundation of strategic success. Whether it’s pricing defense contracts, launching EV components, or entering new markets, these leaders rely on granular cost data to make informed decisions. This is where Activity-Based Costing (ABC) becomes essential.
Proactive Solutech’s Role in Cost Transformation
Proactive Solutech helps manufacturers and hospitals unlock the power of cost analytics through:
- ABIS~Pro: Advanced ABC software for procedure-level costing.
- Consulting Services: Strategic support in pricing, cost audits, and bundled models.
- Analytics & Reporting: Tools to monitor outcomes and support regulatory compliance.
By integrating costing into operational workflows, we enable organizations to move from reactive budgeting to proactive strategy.
What Indian SMEs in Casting, Forging & Foundry Can Learn
For SMEs operating with limited capital, the path to profitability doesn’t require massive scale—it requires precision and focus. Here’s how smaller firms can apply the lessons from industry leaders:
- Start with a Cost Audit
Use ABC to identify high-cost, low-margin products and services.
- Bundle Strategically
Offer bundled pricing for high-volume clients to stabilize revenue and improve margins.
- Invest in Data-Driven Tools
Even basic costing software can reveal inefficiencies and guide smarter decisions.
- Focus on Niche Markets
Like RKFL’s move into rail wheels and EVs, SMEs can find high-margin niches with less competition.
- Partner for Expertise
Collaborate with firms like Proactive Solutech to build costing and pricing capabilities without heavy upfront investment.
Conclusion: Costing Is Strategy
The success of these three top Indian companies proves that cost analytics isn’t just a financial tool—it’s a strategic compass. For SMEs, adopting ABC and partnering with experts like Proactive Solutech can unlock new levels of efficiency, profitability, and growth.