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) Q3 2026 Earnings Call dated Jan. 21, 2026
Corporate Participants:
Amit Sharma — Investor Relations
Sachit Jain — Chairman and Managing Director
Sanjeev Singla — Chief Financial Officer
Analysts:
Amit Agicha — Analyst
Unidentified Participant
Nishita — Analyst
Aditi Chawan — Analyst
Saket Kapoor — Analyst
Rohan — Analyst
Presentation:
Operator
Ladies and gentlemen. Good day and welcome to Vardaman Special Steels Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 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. Amit Sharma from Add Factors PR.
Thank you. And over to you, Mr. Sharma.
Amit Sharma — Investor Relations
Thank you, Rensood. Good afternoon everyone. On behalf of the entire management of the Special Steels Ltd. I thank all the participants present on the call. And I wish you a very warm welcome to be present here for the Q3 and 9M FY26 earnings conference call. To guide us through the results today we have with us the senior management team of the company represented by Mr. Sachit Jain, Chairman and Managing Director. Mr. Sanjeev Singla, Chief Financial Officer. Mr. R.K. Rivani, Executive Director and Ms.
Soumya Jain, Executive Director. Before we begin, please note that this conference may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. We will commence the call with an opening speech by Mr. Sachit Jain followed by the financial by Mr. Sanjeev Singla. After this we will open the forum for the Q and A.
With that I now hand over the call to Mr. Sachet sir. Over to you, sir. Thank you.
Sachit Jain — Chairman and Managing Director
Amit. Thank you. Ladies and gentlemen. A very good afternoon to you on behalf of my team and myself. And thank you for showing your interest. Continued interest in our company. Last quarter has been very very interesting. We’ve had good volumes. But price reduction has happened primarily because of lower prices of raw material. However, the trend has changed in raw material prices and raw material prices started rising in the last week of December and continue to do so in the beginning of January.
The impact of this in terms of prices. Some impact may come in the fourth quarter. Otherwise first quarter of next year. The impact of this cost increase will come in. Overall availability of raw material continues to be fine. Demand continues to be strong. And the other significant events have been is that we have renewed the third technical assistance agreement with Aichi for the next three years as well. As we have announced our forging project. We had earlier Indicated we will decide by January as things happen.
We decided we had a special board meeting in the month of December when we announced our forging project. Now, little bit about Aichi’s forging abilities. Aichi, as you know is a Toyota Group company which is very strong in special steels, in automotive steels as well as they are also very strong in forging. Almost their entire production and they are the largest forging company in Japan. And almost their entire production is consumed totally by Toyota Group, partly Toyota and. Partly by Toyota Group companies.
So all the Toyota manufacturing systems, all. The production systems, all those capabilities are part of their skill set. And those capabilities are going to be transferred to the new plant. As we are putting it up. The target date of commissioning of this plant is going to be July of 28th. So one year before our new steel plant. So the forging business will start production before the new steel plant. The Investment proposed is 475crores which includes land and buildings. Some extra buildings will be made.
But most of this CAPEX would also take care of the second line which will come in. So second line of forging which will come in will take lesser investment in this one. As far as Vardaman Steel is concerned itself, the reheating furnace CAPEX is in progress. It is likely to get commissioned by March and we should get the full benefits of it from mid April onwards. So let’s say May onwards we’ll get. The full benefits of the new reheating furnace. Two benefits that we are expecting from this is one, a large part of our job work outsourcing will go away and will come in house.
Second, we will be able to improve our yield and therefore that will add to the bottom line. And third, we will also improve our servicing to the market and which will lead to inventory reductions as we go along. And of course the entire job reduction job work will not go away. Some job work happens because of our bigger size billet which we don’t have the rolling capability and some job work, excuse me, happens for our Breitbart and really the profit that we are passing to our vendors and the transportation costs to our vendor for job work that and our relative better efficiencies that is.
Going to be addition to the bottom. Line, not the entire job work item if you’re expecting that kind of increase happening. But it will be part of that job work which is going to be the increase. As regards the Greenfield steel plant land purchase, we are in the final stretch now. We should be able to complete the. Purchase of land all Goes well in this quarter and discussions with machinery suppliers are going on full swing. We hope to come out with a very robust plan and we are sticking with our date of July 29 for the commissioning of the new steel plant.
The new steel plant is expected to have a capacity about 500,000 tonnes. We believe we’ll be able to produce more from it than the stated capacity of 500,000 tons. As of now, it’s too premature to say what we think we can increase produced from here, but definitely more than 500,000 tonnes. The second, with the new plant coming. In, we are going to add to. Our product mix portfolio. Currently we are restricted to smaller sizes and medium sizes. For larger sizes, which is 90mm and above, which is required for some crankshaft materials and for some specialized gears.
And for products required for commercial vehicles and off highway vehicles, we don’t have those capabilities. In the new plant we will have those capabilities. In addition, as of now we have almost 100% automotive steel business. We don’t have the technical facilities to produce non automotive steels. And some of you who read my annual reports related to the shareholders. In my annual reports of 2016 17, I have been expressing my desire to get into other specialized steels apart from auto steel.
So with the new plant we will have those technical capabilities into the machinery park which will enable us to get into those areas. And just for your attention, the non automotive space is a very vast space. And I’m not saying we get into. All these spaces, but I’m just to. Give you an idea what it covers. Bearings, railways, defense, aerospace, tool and die steels, oil and gas. So it’s a. And few others, the turbines and the shafts for shipping shafts for windmills. So there are the massive areas which are non automotive.
In fact, globally the non automotive steel segment is 60% of special steel. In India it’s lower and in Vardaman it’s close to zero. So in the next 10 years we expect to have a reasonable non automotive steel portfolio too. This will entail of course, lot more. Thinking and we’ll be ready for some announcements maybe in a year, year and a half’s time. But just now the focus is optimizing the current steel plant to take it up to 300,000 tons of billet making and 270,000 tons of finished product. The second is the new forging plant and third is the project implementation of the new steel plant.
And as I said, simultaneously looking for avenues to create technical capabilities into the machinery park to be able to make the non automotive steels as regards the solar plant, we are again in the final stretch now. As we had shared earlier, the plant. Has been ready since June. The connectivity to the substation was a problem as some farmers had gone to court in between. All those cases have been resolved and the connection, the last tower has also been put. The stringing has been done. So in the next week, 10 days, everything going well, we should have solar power coming in so which will reduce our carbon footprint from 0.73 to 0.48 as well as lead to cost savings on account of the solar power which is going to be cheaper than our existing power.
Anyway, that’s a very long update from my side, one of my longest. And I’ll leave it to Pingla, our. CFO to take you through some numbers. And then we are open to Q and A.
Sanjeev Singla — Chief Financial Officer
Thank you sir. Good afternoon ladies and gentlemen. Happy New year. This is first call in 2026. So on financials for the quarter 3Y on Y basis we have achieved 55,000 tons of sales as against 52600 tons. If we compare with rolled versus rolled leaving aside the billet part and on terms of revenue it is 430 crores as against 426 crores a marginal increase only because as Sachi sir has explained that it has been mitigated by a decline in prices. A beta for the quarter is 56 crores as against 42 crores in the corresponding quarter of last year registering an increase of 34%.
So this EBITDA per ton is 10,200 per metric ton in this, this quarter and the previous quarter in other income. Normally we are having the income from electric duty exemption and GST refund from the state government which is operational income. But this quarter we have interest income received on unutilized funds which were invested by it. And secondly the interest accrued income which has been booked by us on the advance deposit given to the PSPCL Punjab State Power Corporation. So these two incomes if we exclude then our beta per ton is 9263 rupees for the quarter and similarly for the nine months ended the EBITDA excluding these incomes is 8600 rupees per ton.
And as a result for the nine months our total PAT is 88 crores as against 73 crore in the corresponding nine months of the last year. So this is the ever highest Pat.88 crore for the nine months and hopefully after completing this fourth quarter so we will be registering ever highest profit for the full year also. So that’s all on the performance. And now I request for the question answer session.
Questions and Answers:
Operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch tone 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 will wait for a moment while the question queue assembles. The first question comes from the line of Amit Agicha with Edgar and co. Please go ahead.
Amit Agicha
Yeah, good afternoon sir. Am I audible?
Operator
Yes, you are.
Sachit Jain
Yes. Thank
Amit Agicha
You for the opportunity. Thank you for the opportunity. So congratulations for good set of Numbers Sir. The 475crore forging in machining capex. Like can you just explain the expected peak revenue potential EBITDA margin and ROC from this facility?
Sachit Jain
Those details will come in. But once both the lines are established. We should be able to get a decent return on capital employed.
Amit Agicha
And so second question really quick. What is the sustainable EBITDA pattern that investors should model like excluding the non operational income?
Sachit Jain
We have said that for this year. It was 7 to 10 and from next year 8 to 11.
Amit Agicha
This is 7 to 10. Next year 8 to 11,000 per ton.
Sachit Jain
Correct?
Amit Agicha
Yeah. Thank you. Thank you. I will join back that you have more questions. Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes on the line of Nishita with Sapphire Capital. Please go ahead.
Unidentified Participant
Yes, hello.
Nishita
Yeah,
Unidentified Participant
So I just wanted to ask with all of the capex that we are doing and so how do we see our revenue growth in the next three to four years? And also on the EBITDA front, what margins do we see going forward? Forward. And what will be the sustainable margins in say once all the capacity is commissioned?
Sachit Jain
So the sustainable margin as of now will remain at 8 to 11,000 rupees a ton. Aspirationally we have said we like to. Target 12,000 but we are not ready to reach that level as of now. And once the capacities are fully commissioned. We will have about. 8 lakh tonnes roughly of steel production which will mean about 7,20,000 tonnes. 7 20,000 tons of finished seal. So this year we are targeting about 215,000 tons. So we will go up more than. Three times from the current level as far as steel production and sales is concerned.
In addition there would be forging business coming in. Now when we say the new steel plant is getting commissioned in July 29, it will take a few years to reach full capacity utilization unless the Government’s policies on green steel kick in which. Is on the anvil. But it’s very difficult to predict when. It will kick in. But moment they kick in then of. Course there will be a very big pull for.
Unidentified Participant
Okay, understood. Thank you.
Sachit Jain
And in the next three years we should reach our full potential of 270,000. Tons before the new steel plant comes in. So from 215 this year, in the next three years we will reach at 270. 275,000 tons.
Amit Sharma
225 this year.
Sachit Jain
Sorry, 225 this year. Pardon me.
Operator
Thank you. A reminder to all the participants that you may press Star and one to ask a question. Next question comes from the line of Amit Agicha with Edgy Hawa and co. Please go before
Sachit Jain
That, before that, just a clarification again if some of you. Are new out here, we always give. Our sales in tonnage, not in rupees because pricing is in the hands of. What is a raw material movement. So if prices go up, the sales will go up. If prices come down, the sales will come, the turnover will come down. Volumes is in our control. And this is why we don’t look at EBITDA margin as a percentage. We look at EBITDA per ton. So just for clarification why we are speaking here per ton and otherwise what is reported of course is rupees.
I hope that clarifies our thinking. Yeah, go ahead Amit for your next question.
Amit Agicha
Thank you for the follow up, sir. So VI export geographies are likely to contribute meaningfully.
Sachit Jain
Export. As we have shared earlier, for us our direct exports, the biggest market is. Thailand. And a little bit exports go. To Philippines, little bit Indonesia, little bit Malaysia. So all those are tiny bits. Exports Primarily Thailand is 70% of our total exports. More than 70% of our total exports.
Nishita
As far as indirect
Sachit Jain
Exports go, which. Is our steel which is getting converted. Into components at the hands of our customers, exports are going primarily to US and Europe, some partly even to Mexico because ultimately again going to the US as far as. But that is from our customers. Customers like Sona, Comstar, Gna Axle. So another. So just to give you an idea. Of that.
Amit Agicha
As far as automotive steel is concerned, I think so. We are the number one player in India.
Sachit Jain
I’m sorry repeat that. As per green steel, as
Amit Agicha
Far as. Special steel for automotive segment is concerned, I think so we are number one in India.
Sachit Jain
No, no we are not. So size wise JSW would be bigger and Tata Steel is in fact we are amongst the smallest players.
Amit Agicha
The Market share point of view.
Sachit Jain
OEM wise I would still say as far as we would consider ourselves number two. Players in terms of width of OEs. I would consider ourselves as second best player. Too presumptuous to call us as the best. Our target of course is after the new plant is commissioned then we should. Rightfully in a few years time become the number one special steel in India. Again just now we’re talking only automotive. Steel
Amit Agicha
And so I think so. I also like you also thinking about the non automotive steel as well. What could be the size of that.
Sachit Jain
In the next 10 years? I’ve just put a number out here because you’re not even there in that business. But in the next 10 years we expect to be about 30% of our business. Just as a, as a rough guidance I would say please take it as a just a very rough guidance but that’s what we would like it to be. But it will take some time because. Just now we don’t have the machinery. To make it right. That knowledge is there. The technical knowledge is there. The knowledge IGR partners have the know how. We have the knowledge, our own technical people have the knowledge.
We just don’t have the equipment to make those kind of products. And the capex required for some of those products is not as much and for some the capex required is higher. But again nowhere near the terms of. These large capex amounts of 2000 crore. So once we do this 2000 crore. Capex our incremental capex is never going to be in that kind of size.
Amit Agicha
If I can ask one more
Sachit Jain
Word. But unlike you to be in that kind of style. Yeah, sorry, go ahead.
Amit Agicha
Yeah. Can I ask one more question?
Sachit Jain
Can you just get back to the queue? If there’s nobody else you can come back.
Amit Agicha
Yes. Yes, thank you. Thank you.
Operator
Thank you. The next question comes from the line of Aditi Chawan with Deshmukh Securities. Please go ahead.
Aditi Chawan
Thank you. Thank you so much for the opportunity. I wanted to ask is the reheating furnace project on the track for Q4FY26 commissioning and what are the expected fuel and yield benefits from it?
Sachit Jain
So it’s on track in Q4. It’s supposed to. We are taking a shutdown end of February. It may spill over into March and. One month or so of stabilization. So which is why I said in. The first half of second half of. April onwards we should get full benefit of the reheating furnace. We have not shared the benefits of the reheating furnace but a couple of the benefits I’LL give you an idea. And you can do your own calculations. Currently our billet size is 4.2 meters. And you take some end from both sides that are cut as waste which goes into scrap and we reuse that scrap, that billet size is going to go up from 4.2 to 5.2 meters.
So that’s where the yield benefit is going to come in. Also the yield benefit partly will come. In in our continuous casting machine because of longer sized billets and again cuts that the burning loss when you do the, when you cut the billets. In addition to this, because of the quality of the reheating furnace, the kind of reheating furnace, the quality of our product is likely to improve, which should reduce our rework and rejections. Now, we don’t have any number in mind as to how much will it reduce.
It will definitely improve the quality and. Hence we expect the reduction should, the rejections and rework should come down. But those are the two improvements. And it is on the back of. Projects like this that we have raised the guidance of EBITDA by 1000. So from 7 to 9, we have raised the guidance to 8 to 11. So it’s on the back of these kind of projects.
Aditi Chawan
Okay, sure. Thank you. I got it. I also wanted to ask, the Coxblock operation has been operational for like a whole quarter now. So I wanted to ask what improvements visible in the premium? Yeah, very.
Sachit Jain
Yeah, very clearly we are getting all. The benefits that we had envisaged. So the first benefit is the roundness of the bars is better, which enables superior quality. And especially some of the products that we are trying to be targeting as import substitution from Japanese steels, those products will be better served because of this better roundness. Second, we can give exact diameters, so whatever the customer wants. So normally today a rolling mill you have 42mm, 45mm, 48mm, but if somebody.
Needs 47.3mm, he has to take 48mm and 0.7mm is wasted and their yields go down. Now we can give exact to the 0.1 mm. So that’s the second advantage. And the third advantage is the changer of size. Time goes down, which increases our flexibility to give better service to customers. And you will see the impact of. That in working capital reduction in the future. Within the next financial year, you’ll see the. Within the first half you will see the working capital, the finished goods stocks coming down.
Operator
Thank you. Next question comes from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor
Yeah, Namaskar sir, thank you for the opportunity. Hope I’m audible sir.
Sachit Jain
Absolutely. Go ahead.
Saket Kapoor
Thank you sir.
Sachit Jain
Go ahead.
Saket Kapoor
Yeah, yeah, yeah. Sir, firstly if you could just explain once again the matrix is currently our melting shop is 3 lakh and that this will go up to 5 lakh in two years. Yeah.
Sachit Jain
No, no, this capacity will remain at 3 lakhs. We are applying to the. We are applying to the government to. Increase our license to the environment Ministry. If we get that license then the capacity we believe can go up in a year’s time. We have to make some more capex for that. But as of now please take 3 lakh as our capacity rolling mill. Today our capacity is 210,000 tons and this will go up to 270,000 tons from April. So moment the reheating furnace is commissioned. Then the capacity will go up to 270,000 tonnes.
Then we will not have the capacity constraint. Except for the bigger billets which is 240mm by 260mm which we our rolling. Mill does not have the capability to roll those products. These have to go outside for rolling. Or a double rolling process. So in the new plant we will not have these limitations. The 300,000 tons and 270,000 tons.
Amit Agicha
The 500,000
Sachit Jain
Tons we are talking about. Is a new plant. The 500,000 tons is a new plant and the new plant will come up by July 29th.
Saket Kapoor
Okay so because I think so. In, in the earlier capex in the April announcement there was. There was about this. The new billet production capacity of 5 lakh was also announced. I think so in the.
Sachit Jain
Is a new plant. Yeah, it was announced in April. Correct. Yeah, we are. I’m referring the same announcement
Saket Kapoor
That
Sachit Jain
5 lakh tons, this is the billet capacity. It will come up by July 29th.
Saket Kapoor
Okay. Currently our addition
Sachit Jain
To the current 3 lakh.
Saket Kapoor
Currently.
Sachit Jain
Okay.
Saket Kapoor
It’S
Sachit Jain
A new plant.
Saket Kapoor
So that just to. Just to have a one more basic understanding our end product which we are selling to our customer is the bright bar. And how do we label that?
Sachit Jain
Black bars and bright bars. Black bar. So we. We call it hot rolled bars.
Saket Kapoor
Okay.
Sachit Jain
So our rolled capacity as I said is roughly little over 270,000 tons. And then because some part goes into bright bar. So our bright bar capacity is about 50,000 tons.
Saket Kapoor
Okay. In terms of the. Yeah, please go down.
Sachit Jain
No, the capacity goes down if the diameter of the material coming in is becomes smaller. If the trend is towards smaller diameter as currently we see see that then the capacity of 50,000 tons goes down. To about 40,000 tons. That varies between that depending on the product.
Saket Kapoor
Okay. That the tonnages which we have done for the nine months we are now now averaging in this 55000 per ton per quarter. So this will be how we’ll be exiting the the fourth quarter. Also in terms of the deliverable schedule.
Sachit Jain
Around around the same figures as Our target is 225000 tons for this year and we hope to make that target.
Saket Kapoor
Okay. Okay. Sir, how has the this tariff part has impacted your customers you did mention and all they are they have been exporting to the US So have any offtake? Yeah.
Sachit Jain
There was a reduction in offtake earlier but there seems to be covering up now. So slowly covering up. So which is why we are able to sell what we are able to sell. Our sales haven’t gone down. We are, we are on track with our budget.
Operator
Okay.
Sachit Jain
If at all, if we had capacity we could have sold another 5,000 tons at least.
Saket Kapoor
Okay. In the full year. Not for
Sachit Jain
This quarter.
Saket Kapoor
Not the further quarter. Okay. So this 225 would have gone to 2, 230.
Sachit Jain
Yep, that’s right.
Saket Kapoor
Okay, I’ll join the Q. Sir, again, thank you.
Operator
Thank you. Reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Amit Agicha with Hgaway and Co. Please go ahead.
Amit Agicha
Thank you for the follow up once again sir. So amongst forging, wire rods and non automotive segments like which vertical is expected to scale up fastest over the next three years or five years.
Sachit Jain
So forging is good is coming up in the next one and a half. In the next two years
Amit Agicha
Forging
Sachit Jain
Will come up. It’s the wire rods and other areas where we are still studying which segments to get into. So we will decide in a year’s. Time roughly as to which segment to enter. So that’s further off. So the first thing to happen will be the forging plant. The next thing will be probably the new steel plant and next would be. The foray into non automotive.
Amit Agicha
Are there any low margins? Hello.
Sachit Jain
Go ahead.
Amit Agicha
Yes sir. Are there any low margin product lines that the management is considering like deprioritizing over time or exiting?
Sachit Jain
Not really because we are going to be tripling our sales. So when you’re tripling your sales you don’t look at exiting any segment.
Amit Agicha
Thank you. So thank you for answering all my questions. All the best for the future. That’s it from my side. Thank you.
Sachit Jain
Thank you.
Operator
Thank you. Next question comes from the line of Samarth with Janet Merchant Securities. Please go ahead.
Amit Agicha
Hello sir. Am I audible?
Sachit Jain
Yes, Janet, go ahead.
Amit Agicha
So sir, in your opening remark you have mentioned that IG forging is the largest forging company company and oil production is generally consumed by the Toyota group companies only. So when we come up with a forging plant in India will we follow the similar pattern or we’ll sell it to other customers as well? No,
Sachit Jain
No, no, no, no. We are very clear. We are serving the Indian market. So Indian market. Everybody. So primarily in the car segment. That is the first line which is coming is going in the car segment. So Tata Mahindra. But again maybe they are served through. A Toyota group company. That’s also possible. And then customers like Sona Comstar, all those are part of our target segment.
Amit Agicha
Sir, can you give any idea about the components which are the forging components which will be making. Here.
Sachit Jain
We are. We are still finalizing all that in the next six months we’ll give you more ideas.
Amit Agicha
Okay, sir, that’s all from my side. Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Rohan and individual investor. Please go ahead.
Rohan
Hello. Good afternoon, sir. Thank you for the opportunity. So just building onto the product mix that was discussed sometime earlier. If you could shed some more light on how you see, you know the split in revenue between bright powers and special alloy grades for the next couple of years, FY27 and 28. And if you have any ideal mix in mind which would be best in terms of our margin profile.
Sachit Jain
So bright bar is also the same alloys because basically it is all going into the car segment primarily. And bright bar is basically where a customer is using cold forging technique. So when they use cold forging then. They need zero surface quality defect. So you do a turning operation before you supply to the customer. So you just remove the 1 mm from the surface. So it is a small value addition. To the existing black bars. So it’s not really a different product.
Rohan
And about the special alloy grades.
Sachit Jain
No, no. All our products are special steel. We are not making any commodity steel.
Rohan
Got it? No, I. Okay. Okay. So we’re not looking at the special alloys as a separate product segment.
Sachit Jain
No, that is what is the high. What you’re talking about is the high alloys. High nickel, high moly and titanium based. Those are all. What we discuss is a non automotive process which will come through the ingot casting route and which will then go into either tool and die steels, aerospace, defense, all Those other sectors where we don’t have the technical capability, the machinery you need, it’s not very difficult. It’s ingot casting route that you to put in. It’s a process that almost all metallurgists know, even our organization used to have ingot casting 20 years ago.
That time continuous casting was seen as an upgrade from ingot casting.
Nishita
And
Sachit Jain
We are now going back to ingot casting because for those very high alloys you cannot cast them through a continuous casting machine. So ingut root is the route to. Make those kind of products. And then for certain absolutely supercritical alloys which go into aerospace, then you require further processing of those. Either a billet or bloom that we make or an ingot and do further processing which is called remelting. So you have electro slag remelting, vacuum arc re melting or vacuum induction melting.
Those are all special processes which are required where the lot sizes are very small and very, very high value alloys and so on. And it’s a totally approval based business.
Rohan
So that
Sachit Jain
Business is what we are examining whether we can get into those businesses. But all that is part of the commoditized or easier non automotive steels. You might start a bit sooner but the product that I just described, those kind of products we are targeting for 20, 30 or 32. So it’s five, seven, I mean it’s what, six, six years away. Six, seven years away from now.
Rohan
Got it. I’m just
Sachit Jain
Giving a futuristic idea as far as for the purposes of the stock market for analysts through the valuation models. Please don’t consider those things. Those are further out of your horizon. Time horizon.
Rohan
Got it? Got it sir. Fair enough. That is what I was looking for. And so you mentioned, spoke a bit about green steel also. So. Are there in terms of tangible impact of, you know, getting into green steel initiatives, are there any commercial advantages or in terms of getting preference from, in terms of getting orders, do we see that sort of advantage?
Sachit Jain
Yes. So one, there are no commercial advantages as of now, but getting preferential access and so on and getting attention from customers, that has clearly begun more from the European customers.
Amit Sharma
And so which means
Sachit Jain
Either a European OE or Indian Tier 1 or Tier 2 exporting to Europe. So when we talk to customers there. Is a lot of excitement. And even our largest customer, largest car company in India, Maruti Suzuki has started discussing this more seriously. Other OEs have also started, car OEs particularly started discussing this. So far they are not implementing anything. But I have seen one thing. Once discussion starts, the implementation is. Just a question. Of time. It could be a year or two. It could be three years, could be.
Five years, I don’t know. And if you ask me, my wish, my wish is it doesn’t happen before three years because if it happens we don’t have the capacity. So ideally it should happen four years from now when the new plant is set up, it stabilizes and then when the demand comes we are ready to serve the market.
Rohan
Fair enough sir. And sir, it would be fair to say that it’s not going to translate into a big difference in terms of premium pricing but more of a goodwill and a sort of a flagship connotation to it for having being one of the green steel suppliers.
Sachit Jain
Would
Rohan
That be accurate sir?
Sachit Jain
As of now, yes. But if you ask me, my personal belief though I will never put that into our forecast and so on because it’s all still in the air. My personal belief is moment the government of India makes that into mandatory, that everyone has to have a minimum percentage of this thing it will lead to commercial gains also.
Rohan
Fair enough, but
Sachit Jain
When will it happen? 3 years from now, 2 years from now, 5 years from now, 10 years from now? I can’t say it depends on government of India policy. But the fact is this is on the government’s agenda and it will get, it is likely to get implemented at. Some stage as I said, ideally four years from now. But who knows when it gets implemented.
Rohan
Fair enough sir, Understandable. Thank you for that insight. Just one last question sir.
Sachit Jain
And this is why, which is why. We have not included this into any of our forecasts.
Rohan
Fair enough sir. That’s well appreciated sir. So just one last, if you can spare a minute, I missed the early parts of your opening remarks so you may have mentioned this but for our sake if you could just shed a little more light on the ongoing CAPEX in terms of our new melting shop facility, the status of the modernization product projects and related how the progress is going on that front sir.
Sachit Jain
So everything is on track in terms of it’s already previously announced CAPEX plan. So there is no new CAPEX plan. It is the implementation of the earlier announced CAPEX plan.
Operator
The
Sachit Jain
Furnace is already ready which is. The electric arc for the steel making. Process is ready to produce 300,000 tons today. We don’t have the facility to roll. It now with the reheating furnace getting commissioned we will have the capability to. Even roll the material. Then this next bottleneck comes in terms of non destructive testing line.
Amit Agicha
That
Sachit Jain
Capacity is the next bottleneck which. Will get broken by that constraint will get Broken by June or July. So then even we can produce as much of the high quality material which. Needs to be tested on the non destructive testing line.
Rohan
More and more customers
Sachit Jain
Are asking for that. More and more customers asking for that. And we will have the capacity by June or July. Latest of 26
Rohan
Up and running by June or July.
Sachit Jain
Yes,
Rohan
Got it, got it. All right, sir. Okay, thanks. Thanks a lot. That is not a constraint
Sachit Jain
For in terms of more production and sales. It is just that it restricts some. By a small amount, little bit of. Product mix which will get released by that time.
Rohan
Fair enough. Understood, sir, Understood. Thank you so much and all the very best.
Sachit Jain
Thank you.
Operator
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Saket Kapoor with Kapoor and company. Please go ahead.
Saket Kapoor
Just a small clarification. You just spoke about June and July. What will be the new product introduction that you were telling.
Sachit Jain
The testing line. The testing line. There’s a testing line. Non destructive testing line
Saket Kapoor
For
Sachit Jain
High, very high end users. They need all material to go through on disruptive testing line.
Saket Kapoor
Okay, so that. That is more about the product validation.
Sachit Jain
Yes, absolutely.
Saket Kapoor
Okay. But that will not. That will only change the product mix. That is what you have alluding to. That is what the target is also. And
Sachit Jain
Marginally. Marginally by. By. By a thousand tons a month kind of a thing. It’s very small impact.
Saket Kapoor
But those will be higher margin products. Not
Sachit Jain
Necessarily, not necessarily. They are highly more sophisticated products. But depends on pricing and competition in every product. The pricing is sometimes very highly sophisticated products are low margin products and sometimes simpler products are higher margin products.
Saket Kapoor
Correct. Right, sir. If I have anything I will ask the II team for getting in touch later on. And thank you for the elaborate discussion sir, which we have and hope for continuity of this. Thank you, sir.
Sachit Jain
Thank you. Thank you so much.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference over to Mr. Sanjeev Singler for closing comments.
Sachit Jain
Okay. Singla has passed the baton back to me. So this Sachet Jain here. Ladies and gentlemen, thank you so much for being here. Really next year. I’m looking forward to next year because. This year has been a year of many, many constraints and those constraints will be over and we can start operating freely from next year. So this will be very big advantage. And then our focus on the two projects. Both Mr. Rivadi and Soumya are fully involved in those projects. So that’s a very, very exciting time for our company.
So thank you very much and keep on the lookout. And one more thing, interestingly. Yes, of course. Sorry, I forgot to mention. We are having full support from both our major shareholders. Aichi Steel, which has increased their stake to 24.9% and have expressed their willingness. To. Invest more money as and when required. Also, Vardaman Group has expressed their willingness. To add to the capital whenever we need capital to raise for the new projects. Anyway, thank you so much, ladies and gentlemen.
Operator
Thank you. On behalf of Vardaman Special Steels limited that concludes this conference. Thank you for joining us. You may now disconnect your lines.