Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Vardhman Special Steels Limited (NSE: VSSL) Q4 2026 Earnings Call dated Apr. 29, 2026
Corporate Participants:
Sachit Jain — Chairman and Managing Director
Sanjeev Singla — Chief Financial Officer
Analysts:
Ritwik Sheth — Analyst
Saket Kapoor — Analyst
Unidentified Participant
Unidentified Participant
Nishita — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q4NFI 26 conference call hosted by Vardaman Special Steels Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantee of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant line will be in the listen only mode and there will be an opportunity for you to ask question after the presentation.
Conclude. Should you need assistant during the conference call please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sachit Jain, Chairman and Managing Director Vadaman Special Steel Ltd. Thank you. And over to you sir.
Sachit Jain — Chairman and Managing Director
Ladies and gentlemen, very good morning to all of you. It’s my first investor annual investor call after taking over as chairman of the also so it’s a and I’m addressing all of you. As we close a record year, record profits, 122 odd crores. Volume has been the highest, 225,000 tons which was our budget and also we are poised for better times ahead as in the last year interesting things have happened. One of course the last quarter with the Iran Iraq War, Iran U.S. War Raw material has shot up in prices as well as gas.
Disruption was was a concern. Luckily for us there was no disruption of gas though the cost of gas has gone up substantially and I must say the government has handled the overall situation pretty well. That whatever disruption in LPG which was there for us and for some other people, some other commodities or disruptions were there but they have not caused major chaos. As far as our Capex reheating furnace was commissioned in March. It will improve our rolling capacity to 270,000 tonnes of finished product.
I hope as we close to 270,000 tonnes we might find ways to tweak it further to increase it a bit further. New entity line is in progress, New peeling line is in progress and we are trying to see if we can increase our overall melting production beyond 3 lakh tonnes to maybe 3 60,000 tonnes. So our team has come out with a plan to do that. So we will soon be applying for environmental approval which is not sure that we’ll get. But if we get that environmental approval and we will increase the production in this plant, the solar plant was commissioned also in this quarter.
We will be getting 9 crore units of power per year and a new section of 210 by 210 has also been introduced. Now what does this new section mean? That with this new section, our productivity of our Comcast goes up, which was a bottleneck and which is why we are more confident of increasing production. And second, it improves the quality of our products. So our rework will come down. So first, rejection of some of these critical parts, especially the bigger DIA products will come down which will improve throughput as well as reduce some cost.
Also we have increased the heat size from 37 tons to 40 tons. These will also help in improving productivity as well as reduce costs during the line. So overall, I think we are on track in the next two years. I think we are getting more and more confident that we will be raising the guidance further. So this year our guidance is now up from last year, which is eight to eleven thousand rupees a ton EBITDA and from two years from now. I think we are confident now that this range can be increased further to 9 to 12.
So we are seeing better times ahead. As we move ahead, a couple of other interesting things. I think our new steel plant planning is going on full swing. We seem to be on track that we will start our plant in July 2029 as of now. And our forging plant also a lot of equipment has been ordered. So we seem to be on track in starting commissioning the plant. In end third quarter of next year and January of 28, we hope to start the production from the forging line. We will also very soon start planning further expansion of the forging line as well as strategically.
Now we are looking at a newer direction with a new steel plant. We will have a capacity of 5 to 600,000 tons. I think we announced 500,000 tons. But gradually looking after talking to manufacturers, we are able to see maybe we will be able to reach 600,000 tons. So with 600,000 tonnes there and 300,000 tonnes here, we will have almost 900,000 tonnes of steel. Now this is the time for us to start diversifying our special steel portfolio into non automotive steels also. So we have taken a strategic view that over the next 10 years we will be about 30% non automotive steel, 70% will be automotive steel.
And non automotive steel has several categories and we will do deep dive into them as we go along in this year and next year. So there is railways, there is oil and gas, there is bearings, there is windmill shafts, ship shafts and so on. And then there is also a newer area which is more sophisticated of advanced alloys and advanced materials. Where we are will start looking at aerospace defense, very special steel, nuclear dyes, dye steel. So those are other areas which go into the more super specialized range.
So these are all the next three to five years. You will see more planning and more thrust in that area. Also we are now we are going to soon doing internal organization structure, moving into divisions. We’ll be having a forging division where one of the senior Japanese people is going to from Aichi will come in here. He will be posted here. So the president of the forging division would be a Japanese gentleman from Aichi. We will have a. We are now looking for a president of the automotive steel division.
And then we will structure a separate non automotive steel division. So all this in the next three to five years and which will again enable the company to grow further, look for further alliances and joint venture partners into more specialized areas. So I think more and more of my time is now going to go into developing these strategies, these relationships and making the company stronger and serving what the country needs today. To just give an example, tool and die steels. There’s about a thousand crores which gets imported into the country every year.
And as we talk to the customers are the same. Most of the dye steel customer all are our forging companies who are our customers. And each one that we talk to says there’s a big headache importing these seeds from Europe or from Japan or from Korea. So there is a big opportunity in those areas also. So we have not decided on anyone. But I just think these are the areas of opportunities opening up for us as this plant is becoming saturated. So at the beginning we want to start with ingot casting in this plant.
We’ll start in a small way and then we will be increasing our ingot casting. Now within the in gut casting is a different method of steel making. Melting is the same. It’s just a casting. They are continuous casting which really is mass market because of the automotive space. In gut casting will be higher alloys and limited volume that we will be moving into. And so the specialized products will require much bigger diameter products which will maybe you may just forge it and it may be sold straight to forging companies rather than the whole process of rolling after that.
So those are the kind. So I’m just sharing broad outline with you today that we have reached a possibility. We have reached our stage where we can think of all these newer areas. So we are very clear we will remain only in the area of special steel and automotive forgings. But more and more we want to see our vision now is to see us as A supermarket of special steels. So this is a new term that we have started thinking about it in the last couple of months. And I think today, in today’s annual call is the first time I’m announcing this to our shareholder community that we will try to be a supermarket of.
But we are very clear we will remain only in the areas of special skills. And of course once we get into specialized alloys for defense and aerospace, then adjacencies come up where you can move into gradually in a slow process over the next five to 10 years, move into other alloys also so that all will be the job of the next generation of management after me. But we will lay the foundation strong company which can grow into separate agencies with separate JV partners as we go along. And overall, seeing the confidence in the future, your board decided to recommend a dividend of three and a half rupees a share.
Frankly, I had gone into the meeting with the mind of three rupees a share. But seeing the results and seeing our plans and discussions, the board decided no that these kind of plans and the confidence the entire board has in the management and the company then we all decided that 3.5 rupees a share. One more thing. Last year the important part was Iqiyi increased their shareholding to 24.9 which is a statement of tremendous confidence from their side. Also they are very happy with the partnership and they want to see a bigger play in India as we go along.
Thank you. This has been my longest opening comments so far.
Ritwik Sheth — Analyst
The
Sachit Jain — Chairman and Managing Director
Figures have already are already uploaded so we can open it to QA now.
Questions and Answers:
Operator
Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question comes from the line of Saket Kapoor from Kapoor and company.
Please go ahead.
Saket Kapoor
Hello.
Sachit Jain
Yes, Saket, please go ahead.
Saket Kapoor
Yeah, Namaskar Jensen and thank you for the opening remark elaborating your your plans ahead. So sir, now what should we look forward in terms of our ramp up in volume of road products? I think so with the commissioning and the annealing of the new line with I think so we close this year at sub 230 levels. So what kind of
Unidentified Participant
Going forward?
Sachit Jain
225. We closed this year. Last year at this we Expect about to cross 250, so maybe 255 we will target. But let’s say for Your calculations keep 50 in mind.
Saket Kapoor
250 is the available number for us of the off road products.
Sachit Jain
Yes,
Saket Kapoor
Your line is muffled. I’m so sorry
Operator
Sir, but you. Hello.
Sachit Jain
250,000 tons for this year. You should please keep that figure in mind though we will try to target to sell a bit more but we will see as we go along.
Saket Kapoor
Okay sir, then you have all. You have also spoken about our Cox block commencement and then the efficiency and kicking in in. So post post factoring that also we. We will keep our EBITDA per turn trajectory in that vicinity of 8,500 to 11,000 only. Or should we look that would be.
Sachit Jain
Our range earlier was 7 to 10. We have now from this year we are increasing the range to 8 to 11 and we said two years later we would like to increase the range to 9 to 12.
Saket Kapoor
Okay. It’s a two small points.
Sachit Jain
We are trending upwards. That’s what we are seeing that we are gradually going to be trending upwards.
Saket Kapoor
This year we did average of 8,500 plus. Even. Even with all the veggies of the market we were able to.
Sachit Jain
Can you come back in the queue so there’ll be other people. I’ll address a question later. This one
Saket Kapoor
I’ll do that. But your line is still muffled. That could be correct.
Sachit Jain
Oh, I’m so sorry. Let me. Am I more audible now?
Operator
Yes sir, you are audible now. Thank you so much.
Sachit Jain
Okay, okay. Sorry. My apologies for that.
Operator
No problem, sir. All right, so we’ll take the next question come from the line of Sana and individual investor. Please go ahead.
Unidentified Participant
Good morning sir and thank you for the opportunity.
Sachit Jain
Yes,
Unidentified Participant
Go ahead. What is the current capacity usage and how much can we see improvement in the next year?
Sachit Jain
Our current capacity we actually sold full because our rolling mill capacities was close to 180,000 tons. And we have done a lot of outsourced rolling and therefore managed to sell 225,000 tonnes in the year 2627. Our rolling capacity is 270,000 tons and we hope to sell about 250 to 200. Hope is 255 but for your calculations keep 250,000 tonnes.
Unidentified Participant
250. Okay, sir. And sir, one more question I have. Are we expecting any changes in our product mix going forward?
Sachit Jain
Not this year, but this year we will see the beginning. Just the tiny beginning, tiny shoots. As I said, we will start in gut casting in a small way and so that’s the change we will see and we will be selling ingot products. Then gradually as we learn and as we improve on this, we will be improving the product mix. So from next year you will see small changes. But really the impact that you will see will not be enough impact will take about five years for the outside world to see the impact. And by then the volume of the new plant would have come in.
So again you will not see an impact in terms of proportions.
Unidentified Participant
Okay, sir. All right.
Sachit Jain
So for the foreseeable future please assume the same product may similar product mix of automotive steels.
Unidentified Participant
Okay. So we can consider it similar one for the next five years. And after five years we can see a good number. You’ll
Sachit Jain
Start seeing changing. Yes,
Unidentified Participant
There will be
Sachit Jain
Again initially when the new plant commissions, there’ll be a small in the kind of products we are making because we will be ramping up volume in the new plant and therefore we will be shifting to some commodity products to build up volume. So the product mix will be a bit changed and then again so it will remain similar, then deteriorate a bit and then again start improving. Five years from now and seven years from now you should start seeing a change. I know little long term perspective than most investors on this call.
But to see changes in the stuff that I was talking about, the futuristic businesses, it will take five to seven years we start making some impact and for a change from investors to see maybe seven years onwards.
Unidentified Participant
Okay sir. Thank you so much and all the very best.
Sachit Jain
Yeah. Thank you.
Operator
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch from telephone. Our next question come from the line of Nishita from Clown Capital. Please go ahead.
Nishita
Yes, hello. Good morning. So I just had a clarification question and the previous participants question. I just wanted to understand when you mentioned that the new capacity that will commission is. Are you referring to the 500,000 ton capacity of bullet production?
Sachit Jain
Correct.
Nishita
Okay, so I just wanted to understand when are we expecting that to commission?
Sachit Jain
We are expecting that to commission by July 29.
Nishita
Okay. Okay. And what is the growth trajectory that you can see going forward?
Sachit Jain
I’m sorry, can you speak a little louder? I couldn’t hear that.
Nishita
Yes. What is the growth trajectory that we see going forward? Like with the IG increasing their stake and now with all the capex that we are doing. If you can give us a growth planner, that would be very helpful.
Sachit Jain
The first target is to reach the full 270 or 280,000 tons that we can make in this plant because Our license is 300,000 tons of steel making. If we get a government license to increase which is a 5050 chance, we get it, then there is a swap to grow further. So but as of now, please target keep in mind 270,000 tonnes for the next three years and then after that there’ll be a sudden jump when the new plant commissions.
Nishita
Okay, so like for this license, have you already applied for the license? And like by when can we expect to get some results on this?
Sachit Jain
So we will be applying in two months time. We have some pending environment work to be done before that which will be done maybe in May itself and June. We will apply and we should know before March of next year.
Nishita
Okay, thank you so much.
Operator
Thank you. Next question comes from the line of Shlok Bhartiya from Swan Investments.
Sachit Jain
Sorry, may I just say one more comment that Normally if a 20% increase in capacity is applied for, you don’t need a public hearing. So environmental approval. Normally people say what I hear from consultants, other people is normally not that difficult to get. So we are reasonably confident that we will get it. Why I’m still saying 5050 is because Ludhiana still is in the critically polluted zone. So separately from a CSR activity, I’m talking to think tanks or to see how to work on getting Ludhiana out of the critically polluted zone.
That’s a separate topic, but that’s just by the side. As an aside,
Operator
She left the Q. Thank you so much for your remark. Our next question come from the line of Shlok Bhartiya from Sven Investments. Please go ahead.
Unidentified Participant
Good morning sir and thank you. A couple of questions. First thing on the commissioning of the solar power which you indicate that will be generating almost 9 crores of unit in financial 28 and with the installation of rating finance, what sorts of savings one can see in FY28
Sachit Jain
We have not shared those figures. But by the very fact that we are saying our EBITDA range which has been stuck at 7 to 10 for some time will go up to 8 to 11 this year and then two years from now 9 to 12, maybe next year itself will feel more confident if the oil price is correct, if the economy see we are also facing a possible recession of the economy, global economy.
Ritwik Sheth
So a
Sachit Jain
Lot depends on what you see, friends. But we are now again for the first time we are saying that two years from now we should be getting 9 to 12. These figures are just aspirational figures. Now we are saying that we are now quite confident that we should be able to up the range. So yes, those cost savings, volume increase, all those things are being taken into account.
Unidentified Participant
So from 8 to 11 to 9 to 12 right now it’s more looks like a reality rather than aspiration. So is it going to come with more of a cost efficiency or it will be driven by the change in the product mix.
Sachit Jain
As I answered in the earlier question, the product mix I don’t see a much of a change just now.
Unidentified Participant
So
Sachit Jain
It is volume, cost cutting, process improvement. Even this year though we have had record profits, there are areas we saw that we could have improved further. So there is clearly you see the beauty like some of you where you read my annual report, know that I’m a trekker. When I go trekking and you cross a mountain which seems at a height, as you cross reach that top then you suddenly see newer vistas which were not visible earlier. True. So you keep as you improve to reach a particular level and you find newer areas which you didn’t see earlier.
Then you say, you kick yourself and say bike. How come we didn’t see it earlier then I have a famous saying for last 30 years. So I don’t ask people a question why they didn’t see it. Why didn’t you think of it earlier? If you think of it today, great. Implement it now.
Unidentified Participant
Right? Agreed. Agreed. So one question on your pausing plan now which is expected to come missing on third quarter of financial 28 what sorts of capex have we spent and how much it is? And secondly, what sorts of roc? One can assume only on the forging unit.
Sachit Jain
So as of now not much has been spent. We have of course bought the land so and some initial LCs start getting open open. So really not much has been spent on that. Maybe about 50 crores, 80 crores have been spent
Unidentified Participant
And how much you will be spending in the nine months
Sachit Jain
The total project cost was 75 crore plus. Our entity line is also in that same premise. So overall the budgeted investment is more than 500 crores. The NDT part has already was already part of the earlier approved VSS Steel expansion of 350 crore. So. So that. Let’s not double count that. But for the forging project, 475 crore was a budgeted expenditure. And the way we are going ahead, it looks like we may not be spending that much. We’ll be spending less than that. We’ll have a better estimate in six months time of what will be the actual expenditure.
But looks like we’ll be clearly less than 475 which we had budgeted.
Unidentified Participant
And the plant is expected to commission on third quarter of FY28
Sachit Jain
Let’s say will be commissioned. So fourth quarter. Finally we start seeing some performance. So really 2829 is the first year of performance that you will get
Unidentified Participant
Realistically. And in terms of the payback or the irr. I mean is there anything
Sachit Jain
We don’t. We don’t disclose project by project. And one line as you can make out will not be sufficient. So we will soon be adding a second line and a third line. So we have plans to add at least three lines of forging. So that’s when it will be completed. And we’ll see by when we complete this entire. This. This forging project. But the first line will start operations in the fourth quarter of 2728.
Unidentified Participant
And incremental CapEx for the new line, assuming the same capacity
Sachit Jain
Will be clearly lower.
Unidentified Participant
It will be of the same capacity, right? Which we are in part one Phase one.
Sachit Jain
Those things. We will. We will. We will evolve as we go along. As we are entering a new business, those things will take shape as we go along.
Unidentified Participant
That’s quite helpful, Mr. Jin. Thank you. And all the best.
Sachit Jain
Thank you.
Operator
Thank you. Our next question comes from the line of Ritwik set from one of financial consultants. Please go ahead.
Ritwik Sheth
Hi. Good morning sir. Congratulations on a great setup. So I have few questions. Firstly, has the land acquisition been completed for the new Green City plant?
Sachit Jain
We are the last stages. It should happen the next within May. We should be closing it.
Ritwik Sheth
Okay. Okay. So my second question is related to the CapEx for FY27 28 with the forging plant and also with the new greenfield plant and potentially expanding capacity the existing site. What can be the capex for FY27 and 28?
Sachit Jain
Singular. 2728 capex. Huh?
Unidentified Participant
2078 for that steel plant and forging plant will be. We will be incurring maximum capital expenditure in that year. So figure. So we don’t have a calculation but a ballpark figure will be more than 700 or 800 crores.
Ritwik Sheth
Okay. In the current year,
Unidentified Participant
Not 2728 you are saying
Ritwik Sheth
No. So in the current year and next year I’m asking.
Unidentified Participant
Okay. So in current year it will be very less expenditure only on a procurement of land and some development work. But the major capex will happen 2728 only.
Sachit Jain
And we are also having replacement items. As our old peeling line needs a replacement. We are adding to our testing line and so on. So roughly about 100 odd crores of normal capex at the placement and quality upgradation and so on will be done in the next two years for normal work for this plant.
Ritwik Sheth
Okay, so hundred tons this year and 700 to 800 to next year
Sachit Jain
For the expansions and for the existing plant about 100 crores more. And if we get the environmental approval then we will take maybe another 80 to 100 crores.
Ritwik Sheth
Okay.
Sachit Jain
Figures are up in. These are very, very ballpark rough figures. So once those, those things come up and then we will take clear decisions and then we’ll be announced that stage.
Ritwik Sheth
Sure, Got it. And so just one question on the brownfield expansion, the melting shop which we are planning to take from 300 to 360 KTPA. Once we get the approval from environment from UC. What will be the timeline for this expansion to get completed?
Sachit Jain
If things work out well, our target will be. Again these are very rough idea because three of these equipment is a long delivery. But we would expect sometime in later part of calendar year 27.
Ritwik Sheth
Okay, okay. And EC you mentioned in six to nine months you can get the EC clearance.
Sachit Jain
Yeah. So yes. So we are, we are discussing with the suppliers how to shorten the time
Ritwik Sheth
Otherwise these
Sachit Jain
Equipment take a year and a half. We are talking to suppliers and we have good relation and we figure out how we can get it earlier.
Ritwik Sheth
Sure, sure. Thank you sir. I have few questions. I’ll join back in the queue.
Sachit Jain
Thank you.
Ritwik Sheth
Thank you. Thank you.
Operator
Thank you. Anyone who wishes to ask a question press star and one on their touchstone telephone in order to join the queue. Thank you. Our next question come from the line of Manav Gogia from yes, securities limited. Please go ahead.
Sanjeev Singla
Yeah, hi, very good morning and thank you so much for the opportunity. Most of my questions are more or less answered. I just have a couple of follow ups. So first one being, you know, so you just guided for the better per ton to be around 8,000 to 11,000 and you know further going ahead towards 9 to 12,000 on a per ton basis. My question comes, I mean what sort of realization assumptions are we building out over here? Is it the current spot prices or the average for FY26?
Sachit Jain
No, no. So we always look at, it’s consistently true. Whatever you take, if you take the average of last year even that is fine. You take the current, even that is fine. Because in auto industry we don’t work as a commodity pricing. So pricing will change based on scrap going up. So our spreads are more or less protected a little bit here and there. It changes which is why we keep a range in our ebitda. So which is why when the commodity steels have gone up substantially, alloy steel prices will not rise up to that extent.
And when commodity steel prices fall, then alloy steel prices don’t fall that dramatically either. So which is why, so as I said in my earlier remarks, opening remarks that the scrap prices have gone up and therefore we are asking for a price increase from Q1 and we are likely to get those pricing in Q1. Those discussions are ongoing.
Sanjeev Singla
Got it, got it. So basically in a nutshell it’s you know, much more cost driven growth tax year coming out with apart from along with some operating leverage also kicking in
Sachit Jain
Which is why we always talk about spreads, we don’t talk of actual selling price. I mean for example the average selling price of steel was lower in the previous year in 25, 26 and 2425. So despite a higher volume, our sales are actually lower on a higher profit. So EBITDA margin looks much better than normal. Net profit margin looks much better than normal. That’s why I don’t look at those figures. I always urge our investors, please look at EBITDA per ton and volumes.
Sanjeev Singla
Yes, that is, that is quite helpful. So for the greenfield, I mean for the run rate that you have given for the capex over the course of the next couple of years, so just again we have sort of a 100 to 150 crores of maintenance capex and then incremental 400, 500 crores of growth CAPEX figures are
Sachit Jain
More. What we will do is I think these questions are coming up. We will have exact better calculations after next three months when we negotiate all the machines we’ll have a much better idea and once we have that we’ll update our presentation and post it on the company website. Yeah,
Sanjeev Singla
Sure, that would be quite helpful. Just one last question out over here. For the greenfield plant that we are targeting for July of 2029, what sort of ramp up do we period do we expect, you know, to reach the peak capacity utilizations over there?
Sachit Jain
Very difficult to say that today because you are talking of six, seven, eight years into the future. Who knows what the market is going to be there then. But now if I can hazard a guess and please, please take this as a very, very, with a very very, very big pinch of salt attempt will be within three years to reach full capacity. If it could take five years then for all our budgeting we have taken five to six years to reach full capacity utilization.
Unidentified Participant
Got it. So that is actually helpful. Yeah,
Sachit Jain
Yeah. Because again, we are not in commodity steels that you just put up a plant and then start producing and selling. But the advantage in the new plant will be that our costs are going to be much lower than the existing plant and therefore some of the commodity within the alloy steel, the commodity end of the business like tractors and trucks, which we normally stay out of because of lower cost of steel making in the new plant, we may be able to access those markets and therefore we will be. We will try to ramp up earlier.
Ritwik Sheth
Got it? Got it. Sure. Thank you so much and all the very best, sir.
Operator
Thank you. A next question come from the line of Abdul Joshi from 3 Vantage Capital. Please go ahead,
Sachit Jain
Go ahead. We can barely hear you. But we can.
Unidentified Participant
Okay. So my question was on the exports. If you look at our exports, it has remained in a single digit. But earlier when our guidance was to reach up to 20% of the export by the end of FY27. So with the new capacity coming in, I would like to know how we are thinking about the exports going further. So
Sachit Jain
You are right that we had a guidance at that point in time. Exports are going to be a much lower proportion of our business. But we are seeing exports in the form of components increasing from India. So more and more our attention is towards serving OEs from component exports from India, including from our forging new forging line. We’ll be targeting through some more vendors in India, some global companies coming in who will use our forged products and machine them and export them. So we’ll be looking at that possibility.
We are talking to a couple of other global forging majors to expand capacity in India that we will supply steel to them. We are talking to some global OEs who are wanting to source big quantities from India. But they will all be sourcing more and more of components from India. So Europe, as you know is having a much higher cost of operation because of the gas cost, energy cost being high wage costs, also becoming higher unavailability of young people to work in the night shifts and in hardcore manufacturing.
And with an FTA which has been signed with eu, they are expecting much bigger imports of and in CBAM which is there for steel imports into Europe. We stand very well, very well placed in CBAM calculation. And within a year or two, I think even components are going to come under cbam. Once components, some components already come in, some come in in the next coming few years. So because of green steel, our abilities in green steel, we will be able to take full more and more advantage of this. So exports will Be more and more indirect exports rather than direct exports.
Unidentified Participant
Okay. Do we see a realization or the EBITDA better into this kind of exports?
Sachit Jain
It depends. Customer to customer and part to part. Clearly for a customer like if you’re in the luxury end, if you’re able to serve a customer like BMW or Mercedes Benz, the prices are normally a bit better. So in some cases yes, prices are better.
Unidentified Participant
Understood. And secondly on the pogin part when we are building the capacity which will come on stream by beginning of the same January 28th but on the other side, the customer approvals or how long that will take for us to get. So we are,
Sachit Jain
I think it’s a very valid point. So we are strategizing because our partners Iqiyi are amongst the world leaders in the kind of 4G they’re going to enter into. So we are talking to customers if they can start supplying from Japan initially to get those approvals. And since Aichi is the partner here and Iqiyi people are going to be heading the forging. So attempt will be to reduce the approval process and approval time.
Unidentified Participant
So on ballpark, what’s our product validation or the process validation period for products like forging? For us
Sachit Jain
Very difficult to say. They’ll vary from customer to customer. So some customer that we are talking to see, all these are just not talks because everyone says we haven’t seen the product, we haven’t seen the factory just now. So these are all talks. But hopefully for a couple of customers we have talked to, we should be validated before our plant starts production.
Unidentified Participant
So we are integrating those two things
Sachit Jain
Through our partners because of our partners. Otherwise it will be very difficult because of our partners iqi we will be. We should get better approval for some customers. For some customers like Maruti, they very clearly said we will first see the factory in operation here then start the validation process.
Unidentified Participant
So is it fair to say that forging ramp up will happen in FY28 or by the fag?
Sachit Jain
No, no, no, no. 2829. We have, we very clearly said it is going to start operations in Jan to March of 28. Ramp up will be 2829.
Unidentified Participant
That’s it from us.
Operator
Thank you ladies and gentlemen. Anyone who wishes to ask a question, you press star and one on the question. Next question come from the line of Saket Kapoor from Kapoor and company Spirit.
Saket Kapoor
Hello.
Sachit Jain
Yes Waket. Welcome back.
Saket Kapoor
Thank you sir. Just to take the chronology of events for this financial year we are modeling in or factoring in a 10% volume growth with a higher ebitda range by rupees thousand and then when are we expecting how will the forging and the new steel plant commensurate to each other? Means if you could just explain the chronological event and this 10% volume will be flattened out for the coming two years. That means we will be reaching the peak for this year and even for the next, next financial year.
Is this understanding correct?
Sachit Jain
No. So 252, 55,000 that we reached now we will, the next year will be 270 or 275. We will see the exact numbers and then we will try to see, we will try target some outsourcing and so on. So we try to, we will keep seeing that we are trying to grow, that we will not stop growth. But to figure that out two years later what kind of model we will have is difficult to say just now. So for your calculations please assume static at 270 or 275. And then if we get this government approval, environmental approval, then yes, then this sales will increase.
So it’s very difficult to commit today. So as far as this plant, existing plant is concerned 270 is the figure you should take where we remain static at. And then in 2829 we will start seeing results of the forging business but we have very small volumes, really not seeing any impact. And the new steel plants will get commissioned in 2829 also July 29 is a target and then you’ll see volumes coming in towards the second half of 28:29. So 29:30 we will start seeing a better impact of the new plant.
Saket Kapoor
Okay. And the government clearance is for the existing melting shop of 3 lakhs and we are, we are contemplating a 20% increase on the soil.
Sachit Jain
No, no, currently we are producing less than 3 lakh tonnes. So we will, our first attempt is to quickly go to 3 lakh ton which will happen next year
Saket Kapoor
And, and the government, and the government clearances for
Sachit Jain
3 lakh tons. So we’ll be, we’ll be at full government capacity level.
Saket Kapoor
Right. When we look at our plant and property closing balance for the financial year 26 it is closer to 585 and that is a significant increase from the last, last year closing balance. So if you could just give us understanding of the breakup of how the capex has been and
Sachit Jain
I think they sent a specific email to the company, to the CFO and it’ll be answered. But largely we have had Capex going on. A box block was commissioned, reheating furnace was commissioned, some warehouses were built, being built
Nishita
And
Sachit Jain
Land has been bought. So those are the things which is there. So as you know that we bought some land initially where we started buying the land for the steel plant we are stuck at 50 crore. So that’s one area we have for some possible expansion. And then we bought land and with a constructed shed for our new forging line. So this is all largely for the new capex for the new plants as well as the Cox block and the reheating furnace.
Saket Kapoor
Two more questions. Firstly on the incentive part for the current financial year. What should be factoring for a quarterly run rate in terms of the government subsidies whether it is electricity or the other tax subsidies if any for the full year. If you could share the number. And also for the new steel plant does it fall under any government incentive of PLI benefits that we are going to accrue going ahead?
Sachit Jain
The new plant will not be under any pli. However it will be under the Punjab government subsidy scheme. So again we will have a similar set of subsidies of electricity duty as well as GST refunds and some capital subsidies. Some on workers. So there will be subsidies in new plant also this year. What is the subsidy question?
Sanjeev Singla
So
Unidentified Participant
Currently we are getting two types of subsidies from the Punjab government. One is electricity duty exemption and the second is the GST refund. So electricity duty exemption will continue until August 29th. So for next financial year it will be close to 12 to 13 crores for both the incentives. Because electricity duty exemption will also come down because of the solar power commissioning. So the total incentive will be close to 13 crores
Sachit Jain
In this financial
Unidentified Participant
Year. In this current financial year. Yes.
Saket Kapoor
26, 27 and. And how much have we factored for financial year? 26.
Unidentified Participant
It is 24 crores.
Saket Kapoor
It will be hard for the next financial year.
Unidentified Participant
Yes.
Saket Kapoor
Right. And one more understanding, Jayanta. When I joined the queue in. In terms of the forging unit. The forging unit will serve the the products from our. The current facility and the new steel facility both. Or will. Will it just cater to the 5 lakh ton new plant that we are contemplating?
Sachit Jain
No. It will start from here and then diameter. I’m sorry sir, but your voice
Saket Kapoor
Is muffled. Sir, we can’t hear you.
Sachit Jain
New steel plant. But initially it will come from this plant. Because that’s what we have today.
Saket Kapoor
Will you repeat the same? Sir, we could not hear you. Sir,
Sachit Jain
I said most of the all volume will come from the existing steel plant. To start with. Once the new steel plant gets established and the quality gets in then more and more of the volume for the Current products that we are putting in will come from the new steel plant.
Saket Kapoor
Okay. And lastly. Thank you. I’m
Operator
Sorry to interrupt you, Mr. Kapoor. But you may please rejoin the queue for more questions. Thank you. Our next question come from the line of Priyanka Sarkar from Square 64 Capital Advisor. Please go ahead.
Ritwik Sheth
Good afternoon. Good morning, sir. It’s a couple of questions on the balance sheet, friend. What are the plans of funding in terms of debt, equity, internal accrual. That’s one. And also do we have any figure in mind that we don’t want to cross a certain debt equity ratio that we won’t be comfortable crossing?
Sachit Jain
Yes. At the peak debt equity we will keep it below 0.75 total debt equity. So. And we are comfortable at 0.5. So there will be an equity infusion. There will be a further equity infusion sometime later. Part of next year. And at that point in time we’ll see how we will fund that equity. So clearly our partners IQIYI are ready to invest more. Vardaman Group has committed 3 to 400 crore rupees. So we will have that also. And at some stage we might do a QIP or something for outside investors. So roughly we see about 1200 crore of equity infusion.
Out of which 385 has already come in. So about 800 crores or so roughly equity. And about 1200 crore of debt which will be raised.
Ritwik Sheth
Right, sir. Okay. Thank you very much and wish you all the best.
Sachit Jain
Thank you.
Operator
Thank you. Our next question come from the line of Anil Kumar Sharma, an individual investor. Please go ahead.
Unidentified Participant
Good morning, sir. First of all, congratulations. The wonderful job you are doing for us. Sir, my question has already been answered up to some extent. My. I want some clarification. As you recently said that our capex equity will be 1200 crore. And that will be 1200 crore. So what are the total expenditure Capex you are thinking about? It means just now it was 6,007 700 crore. So. But how much capex you are planning? Up to 30.
Sachit Jain
So the total capex that we have planned for the new steel plant is about 2000 crores. For the forging project is about 475 crores which is being announced. We feel that Capex would be a little lower than that. Then there is some internal capex. Plus we will also start some replacement Capex and normal Capex. And then as I said we are going to start a process of ingred casting and then moving into specialized alloys. So as those plans get formulated there will be Investments in electro slag refining, vacuum arc refining, vacuum induction melting, all those areas we have to study.
But I’m saying that the directional area they will be investing in those. Those have not been discussed fully announced planned fully. So in the next one year we’ll be finalizing those and announcing our plans in that area. So PHI is it will be a smaller investment to start with. We are a discovered when we enter a newer area, we start with a smaller area, smaller investment and then gradually build up. So but as of now the committed investment is about 2,600 crores.
Unidentified Participant
Okay. Right. Only second question is how much after this all the established capital planned as planned is already there is committed. So what are your ROC you are keeping in mind? Actually you are always talk of the some sort of target of ROC. What can we get some figure after 30
Sachit Jain
So after the plants are established and running towards full capacity utilization EBITDA on capital employed, we hope to continue to be above 20%.
Unidentified Participant
Okay, thank you sir. This is a very
Sachit Jain
Very futuristic figure because we are looking into the future. So. But yes, below 20% then it doesn’t make sense for us to continue investing
Unidentified Participant
So much Precious sir. And thanks once again for your wonderful efforts you are doing. Thank you.
Sachit Jain
Thank you. Energy.
Operator
Thank you. Next question comes from the line of Sri Ram and individual investor. Please go ahead.
Ritwik Sheth
Thank you for the opportunity. So what will be the components that will be made in the forging plant and what will be the capacity like? If you can also give in terms of asset turns of the forging plant, it will be helpful.
Sachit Jain
See, we are entering a new business so it’s very difficult to give all those numbers. We are entering into the area of ring gears. So that’s the area we are entering into. Each car uses one ring gear. So that’s the potential volume for car manufacturing in India and export. It’s a superior method of making ring gear. So it’s not a new product. It will be replacing an existing product with which customers are already using with a far more efficient process. All customers we have talked to are very excited with the announcement of the project that we are bringing into the country now.
Aichi is one of the world leaders in this method of gear making. And that same know how is going to come into India to VSS as of now as per their study, there really is no viable competition for this process of gear making. As per I choose knowledge. We are still new in the area of forging. So we are relying more and more on their knowledge and their confidence in this process. They have nine lines of this product. We are putting in only one line just now.
Ritwik Sheth
Fine, sir. Understood. Thank you. Thank you.
Operator
Thank you so much. Ladies and gentlemen. That was the last question for today. I would like to hand the conference over to Mr. Jen for the closing remarks. Thank you. And over to you, sir.
Sachit Jain
So, ladies and gentlemen, thank you so much for the interest that you’ve shown in our company today. So today I did lay out some futuristic thinking again. Now as management, our job is to look 5, 7, 10 years in the future. Which may be longer than the horizon for some of you. But I also see some of you on this call are HNIs and individual investors who may have a longer term perspective also. So our job is to show the direction in which we are going while maintaining existing performance. So if the existing performance to be maintained is very, very important.
And continue to enhance and make the company stronger as we go ahead. So thank you so much for your interest and we look forward for your continued support. All the best.
Operator
Thank you so much, sir. Ladies and gentlemen, on behalf of Vardaman Special Stills limited that concludes this conference. Thank you for joining us. And you may
Sanjeev Singla
Now disconnect your lines.