Vardhman Special Steels Limited (NSE: VSSL) Q4 2025 Earnings Call dated Apr. 23, 2025
Corporate Participants:
Deepika Murarka
Sachit Jain — Chairman
Sanjeev Singla — Chief Financial Officer
Unidentified Speaker
Analysts:
Muskandra Stogi — Analyst
Jitendra Khatri — Analyst
Raman KV — Analyst
Ritvik Sheth — Analyst
Saket Kapoor — Analyst
Angad Katade — Analyst
Metri Shah — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to The Vardaman Special Seals Limited Q4 and FY25 earnings conference call hosted by Choice Equity Broking Private Limited. As a reminder, all participant lines will be in 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepika Murarkar from Choice Equity Broking Private Limited. Thank you. And over to you, ma’am.
Deepika Murarka
Thank you. Good morning everyone. On behalf of Choice Equity Grouping, welcome to the Q4 and FY25 post earnings conference call of World Financial Limited. I also take this opportunity to welcome the senior management team. So on today’s call we have with us Mr. Sachet Jain, Vice Chairman and Managing Director. Mr. R.K. rawdy, Executive Director. Mr. Sanjeev Singla, CFO and Ms. Soumya Jain, Executive Director.
This conference call may contain certain forward looking statements which are based on the beliefs, opinion and expectations of the company as on the date of this call. These statements are not guarantee of future performance and involve certain risks and uncertainties which are difficult to predict. I now invite Mr. Sachit Jain from the management side for the opening remark to be followed by the question and answer session. Over to you sir.
Sachit Jain — Chairman
Thank you. Yeah, thank you so much and good afternoon everybody. In addition to the names mentioned, Sonam, our company secretary is also on the line. Thank you so much for being here with us. And this has been a good year for us. We’ve had record production, record sales and we have tested our rated capacity and a Targeted capacity of 300,000 tonnes a year for one month. 25,000 tons of billet making. So we tested that. That was one big achievement that we had. The second area I would say is that we were implementing our cox block. This is a sizing block which comes in in the rolling mill. It’s an attachment which gives us precise diameter control and we can go into precise dia including in decimal ranges also. So first that’s one point. So that becomes a better value added product for our customers. It’s a standard product, good mints. It’s not something exotic that we have discovered so no R and D involved. But for us the important part was we could manage it with a very small shutdown. We were told by the directors of Cox, 25, 30 years experience that this was perhaps, perhaps the fastest implementation anywhere in the world. The mill was shut down for 23 days and we could start hot trials. So that was something very exciting and we’re looking forward to this. With this implementation of the cost block three things would happen as I said. One, precise control would happen. Second, our capacity in rolling would increase which means over time our job work for outside rolling would come down and three are working capital inventory would come down. So as you know as of 31st March we had a high working capital inventory, finished goods inventory primarily because of the shutdown. So it first come down to normal level and over next six, eight months we hope to bring those down. The new targets, apart from this, this is the first year we have given a dividend of three rupees. They were able to increase the dividend from two to three. This is a 26% dividend payout and our target is to maintain around 25% dividend payout. So we are at our target and our company policy is always to maintain as far as possible or increase dividend while trying to be around 25% dividend payout. And we’ll be targeting that. The other big thing is that we were discussing that we intend to put up a new plant. We’ve been discussing this over various con calls and various meetings with large investors who showed interest in the company. And finally we’ve been discussing with IG for the last almost a year. Finally the board has taken a decision in the meeting yesterday to put up the new plant. We have selected this plant to be put up in Punjab. We believe Punjab is a very strong location to put up a nonoyed steel plant. This will be green steel. It will have a solar plant right from the beginning. And our carbon footprint would be lower than the existing plant. The investment as of now is targeted to be about 2000 crores. In addition to more of the same, that is expansion. We’ll be able to increase the diameter sizes towards the higher diameter products that we don’t have. We’ll be able to. Improve our quality from our current levels. And we’ll have to reduce costs from our current levels. In addition to this, the new plant will give us flexibility later on add other products, no decisions taken on that. But products like wire rod which are in short supply. High quality wire rods with short supply lot of them get especially for top quality fasteners. This is something which we are hearing from the auto OEs that there’s a shortage in this product. And then it also gives us flexibility in the future. Again, no plans just now to move into non automotive steel products. Which is something I’ve been talking in the past in my annual reports. In my letter to the shareholder in the two years 2017 or 16 or 17, I’ve been talking about the desire to move to non automotive steams. Of course with Aichi’s partnership that was postponed. It was never dropped. So with the new plant we will have the flexibility at some stage to move into the non automotive. Overall our partners Aichiyi are also very excited about this project. And we’ll be discussing with them to provide us the full technical know how to put up this plant and all those in the next few months. We’ll be discussing with them how to move forward in that area also. And the plant is going to be financed through a mix of equity and debt. So there will be equity issuance in due course. And we have talked to banks. So at least three banks have expressed support to give us the loans for this project. So again in due course all that will be done. So the process of land purchase has begun and hopefully the next two to three months we should be able to complete the land purchase. And once that is done then we’ll apply any group applications and balance the provisions so on. That’s all for my opening remarks. Mr. Singla, our CFO will take you through some financials and then we’ll open the Q and A.
Sanjeev Singla — Chief Financial Officer
Thank you sir. On the financial performance for the full financial year 25 FY25, our total sales volume is 250,000 tonnes. It is higher by close to 11% over the previous year. And in terms of value it is higher by only 6.2%. So the difference is because of price reductions happened during the year. So first decrease was happening from 1st of July and then from 1st of October. So with these price reductions our total revenue in terms of rupees at.
Sachit Jain — Chairman
Has increased by 6.2%. As a result, our EBITDA including other income is 177 crores as against 172 crores in the previous year. EBITDA per ton. We have achieved 8200 rupees per ton, well within the stated range of 7 to 10,000 rupees per the year. And as a result our PAT stands at 93.09 crores, marginally higher than over the previous year. So the dividend Jennifer has already discussed.
Solar power plant is the one item which we are expecting to be commissioned in the current year. From 1st of July the plant will be commissioned and accordingly about 40 to 45% of power requirement will be. Ladies and gentlemen, we have lost the connection for the management. Please stay connected while we reconnect them.
Operator
Thank you. Ladies and gentlemen, we have the management connection back on call, so please continue. I think that’s checking. I We can’t hear anybody about the Q and A so you are connected now. SA. Ladies and gentlemen, we have the management connection back on call. Please continue now. I don’t know which part were we cut off? So were my comments completely under heard? Yes sir. Last few lines were missing for me. Yes sir. And. Oh, okay. And CFO could not be heard, right? No sir. Okay, then I’ll ask Sinclair to complete his. And then we take a Q and A after that or we straightforward Q and A. We will go to Q and A. Please. You may ask people to ask. Sure sir. Thank you very much. We will now begin the question and answer session. Anyone who 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 will wait for a moment while the question queue assembles. The first question is from the line of Muskandra Stogi from BNK Securities. Please go ahead.
Muskandra Stogi — Analyst
Hi sir. Thank you for the opportunity. My question is to reach rolling and capacity of 2 50,000 to 2 60,000 tonnes. What is the left out Capex and.
Sachit Jain — Chairman
From September once we reach a full 250-260k ton capacity what is the capex plan for rolling in capacity for next two years? And additionally what is our capex plan for two years for this 20 billion investment and will the capacity commissioning will come in phases or at 1 once at FY30. So as far as this plant is concerned largely the capex is done except for the reheating furnace which is one piece of equipment which will come up by October and get commissioned by December and maybe two, three months of stabilization and then after that the rolling mill capex is complete so no more capex in the rolling mill.
The other capacity is for a non destructive.
Muskandra Stogi — Analyst
Sorry. So how much capex we’ve done to reach 50. 50 you said largely it is done so how much is it?
Sachit Jain — Chairman
That amount already been announced but again last year we have come, we have done the total capex of 127crores and as Jayanthar has explained reheating pernaire will be done in the current year. So another I’m sorry the left out capex left out in the current in the next two years including this FY26 and FY27 will be close to 175 crores.
Okay out of that about 5560 crores for the for the rolling mill remaining part and the other part for the entity line, environment, expenses and other expense we are this plant is almost complete so no major capex in this plant and then replacement capex at the right time that normally going on. As far as new plant is concerned in the next two years the major capex is only going to be land and then the advances of machinery and all will start sometime in the financial year 2627. So no major capex apart from the land which is going to happen this year.
Muskandra Stogi — Analyst
Okay? Sir with the limited capex requirement in the existing line can we become net debt free by FY26?
Sachit Jain — Chairman
Our target is if you don’t take the capex for the new project then we will be net debt free in the next three years. Next year. Debt. So we will have roughly thousand crore net worth company with zero debt to finance the new project of 2000 crore.
Muskandra Stogi — Analyst
Okay. Okay. And like I’m new to this industry, could you help me? How will Cox Block help in reducing the inventory and increasing the quality? And what is the total investment in Cox Block and what is the payback return that we are expecting?
Sachit Jain — Chairman
We don’t separate out each individual expenditure, but it’s a significant expenditure that is 1 and 1. The quality improvement happens with precise diameter control. So diameter control is very precise. So what is really high quality, when you get into import substitution of steel which are still very imported from Japan, so those kind of steels, to replace them you need very precise diameter control. So the Cox Block will help us to do that.
So that is 1, 2. The changeover times become much lesser. So the time lost and therefore capacity lost in changeover goes down. And which enables our rolling mill capacity to go up. That is the second advantage. And inventory comes down because the changeover is faster. So you don’t need to stock as much finished goods as we have today. So the inventory will come down. Inventory, you need to stock inventory because a changeover costs a lot of time and therefore when customers in the auto space require just intent delivery and therefore need to maintain finished good stops for our service buffer, we not a commodity seal player.
Muskandra Stogi — Analyst
Okay, so how much capacity will go up with this change? About 10, 15,000 tons. Okay. And another question. Many of our peers are unlisted. Wait in the line. There are. Come back again in the line.
Operator
Thank you. The next question is from the line of Jitendra Khatri from Tata Mutual Fund. Please go ahead.
Jitendra Khatri — Analyst
Yeah. Thank you sir. So my question is what would be the EBITDA per turn once your entire new capacity comes online and it ramps up and all. So what would be the big EBITDA per ton targeted for you see from next year that is 26, 27, we’ll be raising our target upwards to 8 to 11,000.
Sachit Jain — Chairman
Okay. In this plant. Yeah, new plant, the production will start somewhere in 28, 29. So very difficult to predict it now. So when it reaches full capacity it should again be around the same figures as this. Okay. Maybe. Predict that far ahead. Yeah, yeah. And secondly sir, from your community, the fixed cost. Yeah, the fixed costs, all management costs, marketing costs, all the top management, all those costs will be spread over a much bigger volume. Yeah, yeah, yeah. So the top management will not change, will not be adding in top management. So all those costs will be spread over a much bigger volume and therefore both costs will come down.
Jitendra Khatri — Analyst
Sure, sir. So my second question is in your talks with Toyota and IC Steel. So, so what is the communication you’re getting from them on the tariff preparation? So are there any change in plans or something on that line?
Sachit Jain — Chairman
No, no changes.
Jitendra Khatri — Analyst
Okay, thank you so much. Thank you. This project has been announced after knowing fully where the tariffs are in place.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow up question, I would request you to rejoin the queue. The next question is from the line of Raman KV from Sequent Investments. Please go ahead.
Raman KV — Analyst
Hello sir, can you hear me? Yes, loud and clear. Please go ahead. Sir, you said the solar power plant completely is commenced by this year and it will cater to the 40 to 45% of the power demand. So how much will this have, you know, impact on the beta? Like how much will the incremental EBITDA be? We are not sharing those figures or specific changes of cost. So. But one of the reasons that we are confident of our range going up is because of cost saving initiatives like this.
Sachit Jain — Chairman
Okay. And so I just wanted to understand why the ebitda margin during Q4 had a 370 pips impact. We don’t see quarter to quarter is very difficult to explain. But one of the main reasons is we had a shutdown of the plant and therefore the plant production was very low. So that leads and lot of job work outsourcing also happened. So all kinds of things happen. We don’t discuss quarter to quarter. We look at annual EBITDA figures and also depends on when raw material prices go up and the price changes happen later. So quarter to quarter situation will keep fluctuating. No, no, I mentioned year on year EBITDA margin itself has decreased. Like last year it was 11%. This. Year on year the EBITDA is within our range of 7 to 10,000 rupees EBITDA per ton. Okay. The full year. The full year. Please don’t look at any one quarter, especially a quarter. We’ve had a major shutdown there. You will get distorted results. Okay. Okay. So now the plant has the shutdown down. Plant has it has been like working or is it still shut up? Plant has started but not running at full capacity because each size has to be tested. Please understand we are making automotive steels and therefore each size has been made tested and then given a clearance to go ahead. So full scale production has not started. But production has started. The that’s the main thing. And the shutdown time was less. And all that has been taken into account in a phase forecast and inventory planning for the shutdown.
Raman KV — Analyst
Okay. Okay sir, I just have one doubt. The adjustment of quality and stabilization is so far seems to indicate it is taking much less time than we had anticipated and you prepared for. Okay sir, I just have one doubt with respect to the Ktex which you said earlier. So what was the capex like you said 175 capex for FY26 and 27. And what is the, what was the breakdown?
Sachit Jain — Chairman
It is largely for as you said, the remaining, the reheating furnace, the non destructive testing line, some R and D equipment, some straightening machines here and there, some environmental expenditure, combination of everything.
Raman KV — Analyst
Okay, thank you sir.
Operator
Thank you. The next question is from the line of Ritvik Sheth from oneup Finance. Please go ahead.
Ritvik Sheth — Analyst
Hi, good afternoon sir. And sir, congratulations. Sorry to interrupt. Sir, I would request you to please use your handset. Yeah. Is this better? Yes, sir. Yeah. Hi, good afternoon sir. And congratulations on the announcement of the Greenfield plant. So couple of questions on the Greenfield plant itself. So earlier in the previous calls you had mentioned that the CAPEX could be anywhere between 1500-1700 crores. And we have announced a capex of about 2000 crores. So any specific reason that it is significantly higher than we anticipated or are we adding something?
Sachit Jain — Chairman
So those things keep changing as some of the machinery configurations that we would. Initially it was just an idea and now as our ideas are getting more refined and some of the equipment.
Unidentified Speaker
That we need to add in the plant. Those are being looked at just to give an idea. This Cox block was something that we had not planned initially that we said we’ll postpone it, put it at later stage and now we’re going to put it up in the new line also immediately. So you know, stuff like that keeps getting added as we get deeper into negotiations and start and so on, we’ll get more precise ideas of the cost.
Okay, so so this is like a ceiling of the capex. It could be lower also. Right? It could be lower. It could be higher as you go around. This is an idea that we have as of now.
Ritvik Sheth — Analyst
Got it, got it. And so earlier, you know, a couple of years ago we had targeted for 25 EBITDA to a capital employed for the existing plant. So we are towards that direction. So does this hold true for the Greenfield plant as well which you are going to set up?
Sachit Jain — Chairman
We will not at that stage be talking of separate plant wise because products will be allocated to plants separately. But company as a whole. Yes. When the new plant works at full capacity we would like to target the same 25% liquid down capital. Okay. And so one last question. What is the amount that we will be spending on land? Total amount. We don’t again give out all those specifics. Sure. Okay. It come up later at the right time. Sure. And any timelines on the. I said next to three months.
We. Okay, next two, three months we want to complete the land purchase. See funding is as I said, equity. We have said in the past also our partners at some stage will increase their stake. Now when do they increase their stake? That is up to them. So in the next three years at some stage they will increase their stake. And so that will be one source of funding. And at some stage if they invest, the promoter might also like to pitch in a bit. Then if there’s a gap we might do a qip. So all those options are open to us. And so any
Incentives we will receive from the state government. Yes, we will receive incentives. Okay. So so would it be possible to highlight that on 2000 crores what could be the incentives that you can look it up in the industrial policy of Punjab. It’s there, it’s on public, public information.
Ritvik Sheth — Analyst
Sure, sure. Okay sir, so thank you and all the best of.
Sachit Jain — Chairman
Yeah, thank you.
Operator
Thank you so much. The next question is from the line of Saket Kapoor from Kapoor and company. Please go ahead
Saket Kapoor — Analyst
And thank you for this opportunity. Firstly, in continuation to what the previous gentlemen were asking. Sir, in terms of the government.
Sachit Jain — Chairman
They are coming to the sunset are saying comparable to that or capital subsidy. Those public information of. Please don’t ask those questions on a company corner. Public information. I think 25% is the which we have hit for the month of March. So for the Current financial year 2526 December. So capacity achieved. Capacity achieved. Plan Hamara 27202627 may later stage. But 2728 may be for sure. We like to achieve that kind of production.
Saket Kapoor — Analyst
Just to conclude. So what should be the tenant we should work when we look at this presentation. Hello again. Can you come back to. Thank you.
Operator
The next question is from the line of Angad Katade from Samiksha Capital. Please go ahead.
Angad Katade — Analyst
Thank you for the opportunity. Sir. Sir, two small questions. Any plans to for plant shutdown in a projection? If plant. Yes, there will be some more shutdown. Because you have reheating furnace. Then we will have a small shutter. But no major shutdowns now. Okay. And also you mentioned during the call that the new plant will start contributing from FY 2829 onwards. So just want to ask. Will the new plant capacity will start in multiple phases or is it on one go?
Sachit Jain — Chairman
No, no. It will be one one short commissioning. So there are two parts to it. Melting and rolling. Very difficult to synchronize which they will come up exactly the same time. So one may come up a little earlier than the other. That’s all. But it’s just an implementation part as far as plan is concerned. It will be one furnace, one rolling mill, one refining furnace, one vacuum degassing and one caster. So it’s all one single line. So it’s not going to come up in phases. It’ll come up one shot.
Angad Katade — Analyst
Got it, sir. So thank you.
Sachit Jain — Chairman
Sure. Get back in phases. Capacity utilization will come up in phases.
Operator
Thank you. The next question is from the line of Metri Shah from Sapphire Capital. Please go ahead.
Metri Shah — Analyst
Yeah, hello. Hello. Yes, we can hear. Yeah. So previously you guided for an ebitda range of 8,000 to 11,000 for. Was that for FY26 or FY27? We will target it this year also. But as we said that still we are not running at full capacity of our rolling mill because our reheating furnace got delayed. So we were target this year itself. But next year we are fairly confident of this range and the realization. Do you see them anytime going up this year or will they stay stable at this rate Or. Or they might even go down.
Sachit Jain — Chairman
I don’t indulge in forecasts on pricing. That’s something which is not in our control. But overall in the current circumstances I don’t see the probability of prices going down from the current level. So if at all, at some stage prices may start going up. We’ve asked the OE’s for a price increase. So let’s see how things shape up.
Okay, thank you. All depends on Tata Steel. One company, they decide the pricing. So if you all put pressure on Tata Steel and when their margins start getting affected they’ll want to increase prices and they change the sentiment in the market. Thank you. And maybe with the safeguard duty which has come in so that may start at least the downward pressure which was there, the negative sentiment would most probably be corrected.
Operator
Thank you. Ladies and gentlemen. You may press Star and one to ask a question. The next follow up question is from the line of Muskandra Stogi from BNK Securities. Please go ahead.
Muskandra Stogi — Analyst
Thank you for the opportunity. Again. So I want to ask. Many of our competitors are unlisted. So getting data becomes difficult. Since you’re interacting with the marketing team, I want to understand the demand and supply scenario. Also could you please talk about the dynamics and reason for the pricing pressure and will it continue or not? So one demand is okay in the car segments. It is okay in the two wheeler segments. The problem seems to be in the commercial vehicle segment. And the growth is not.
Sachit Jain — Chairman
Happening to the extent people are forecasting. I’m sorry, we are primarily in the car and two wheeler segments, so we are fine. And the other issue is exports of components which is another area where our steel goes. And in the current tariff situation, there is some turmoil in the next few months. So we’ll see how that shapes up. Some customers may cut down their purchasing. My belief is that overall this tariff situation is going to eventually be beneficial for India.
So if you leave aside the turmoil of the next three to six months, things should be better for India as a whole. But overall when I talk to people, nobody is too concerned about the demand. And the other issue is the pricing pressure. As the big boys see, we are smaller players. The big boys primarily Tata Steel and jsw they come under pressure because of Chinese imports on the big steel players. So in the commodity steels.
So eventually when customers and OE is talking of HRC and crc there is a pricing pressure because of imports. So somewhere along the line they also feel if we ask for a price increase for our product where the other product is for a price reduction somewhere psychological not to allow a price increase or push for a price reduction. I think that pressure is over but very difficult to make those kind of forecasts. I wanted to ask what is the alloy? Our focus is on our internal cost improvement and efficiency improvement. That market conditions being what they are, we will try to keep improving our internal factors. And in the current market situation we expect to be able to match this. O
Ur range 7 to 10 for this year. And 8 to 11 is the new range we like to offer for next year. The market fixes improve further then we will be at the higher end of this range. Okay. I wanted to understand the dynamics demand and supply scenario. Alloy steam. Yeah, I’m talking about our product segment. Yeah. So we are currently demand is reasonable which is why we are talking about increase in sales next year.
Muskandra Stogi — Analyst
All right. Okay. So last year exports were 5%. How much was it for FY25 and how much volume should they report from IC for FY25? We are not declaring specifically for what they are buying, but they are buying less.
Sachit Jain — Chairman
Than what we had estimated. Toyota’s sales in Thailand have come down a bit. So their own sales have come down and therefore their requirements have not been commensurate to what we were expecting. And we have alternate plans to see where what they had said could be made up. How much was export in this year? 5%. Okay, and last question. What is the market share? And you mentioned that with IC tires we can get more business overseas and opportunities overseas.
So for exports, how much mix are we expecting from ic? We don’t give a takeout any such numbers. We see how they shape up. And I was surprised to learn from my export team that we are by far the largest exporter from India. Even at 5%, we are by far the largest exporter of alloy steel bar of automotive steel bars from India, the biggest market in Southeast Asia.
Operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next follow up question is from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor — Analyst
Yeah, so when we look at your investor presentation. Yes sir. In the investor presentation we find two slides wherein we are mentioning wide range of rolled and bright bark product and diverse application of our products. So can you make. I’m sorry for this question but I cannot. What do we make of this diverse application of our products? These goes to the OEMs or these are the final products for which the bars are used. Ultimately it goes to the OEM 97% business.
Sachit Jain — Chairman
Okay. Car, two wheelers, trucks and tractors. Then drivers, various kinds of parts, rear axle, shaft hair axles, connecting rods. So Allagala parts of vehicles may Hamara Steel. Jatai. Hello. Hello. Yeah. The bars only and then this action gears and all these have been done by the other manufacturer and then goes to the OEM. Yes. So we. Yeah, so we would be tier twos in most cases and sometimes tier 3s. Okay, so. So the charging plate and all are also buying come out and then creating that Excel shop. No, no, no. Our customer segment is a forging industry. Our products are all forging steel, mostly for a largely importing steel. So our products will be taken by a customer who will forge the product. Then there will be some machining which will go into an assembly which will go into the automotive company. Some parts will go for direct machining. That’s a smaller part of our business. But there is a proportion we go straight for machining without any forging. But largely our product goes for forging industry. Just to conclude sir, when we see players like GMA Excels or Auto Excels, are they in the second third tier to result into the end product or they do not fall in our value chain companies like Auto XL and Gnaxel. GNA Excel is a large customer of ours and they will be. They would supply to a tier one like Meritor and that Meritor will be supplying to the OE company. So GNA Excel for our product largely would be a tier two and we’ll be at tier three. And in some cases some of our products they may be supplying directly to the tractor manufacturers. In which case there’ll be a tier one and will be a tier two.
Operator
Thank you, sir. I joined it. Thank you. Participants who wish to ask a question may press star in one. Now the next question is from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor — Analyst
Yes, just touch upon the point when we speak of 20, 28, 29 and we running short of capacity. So can you just translate for us? Maner, what gives us this visibility of three to four years? Is it the historical part or are we seeing the end customers also planning similarly in terms of the value chain? Other players are also in the same preparation. That is what given us the commit to come up with this greenfield facility. So there is visibility because we recently.
Sachit Jain — Chairman
With the OES directly. Also we know the developments that are going on with the OEs. For example, we are working on import substitution of steel that are coming into some of the OE’s where we have got approved. And we know that after one year of testing and so on, those businesses will result in actual business coming in. And initially it will be gradual and then over next two, three years we pick up more volume. So we have an idea of how much business will come in.
Similarly, we’ve talked about European OE coming into India. They’re coming in again in May, I met them in Europe in March. So they are very gungo on sourcing, forging parts from India. So again, those are developments that are going on. So we have full track of developments which are going on with specific OEMs. So that gives us some confidence. Second, there is natural growth in the auto market. So the CAGR over the last several years has been 6 to 7% in the auto market. So that kind of growth will keep coming in. And then in addition, there are tailwinds like green steel economy as the government of India and the world is pushing to reduce the carbon footprint. Government of India has come out with a definition of green steel is below 2.2 carbon footprint.
We are today at 0.72 and after our solar plant will come down to about 0.45 or 0.48. So we will be amongst the lowest carbon footprint steel companies in, in the country. And that gives us, once the government starts putting in these norms, we will get an advantage. And as the global OEs, some of them are putting in pressure on reducing carbon footprint, then there will be better sourcing for us. So we believe just now people are talking in the next two, three years we will start translating into business which will lead to a bigger shortage than what we are forecasting today.
And we feel that by the time a new plant comes up, it will fill up maybe much faster than any of our forecasts that we have done for getting approval of the board. So we are not taking any of these trends in our forecasts, but these trends are very clearly visible. And as we talk to customers, they are talking about it very seriously. One of the reasons is European OE is coming to us is only because of green steel. And one more OEE has already approved us European oe. So one has approved us, one is a process of approving us and gradually more such companies will come in. We are today perhaps the leading company in this area or among. But in the automotive space with our customers, we would be far ahead of most of our competitors. In this area of green steel and the second area of circular economy, which means crap coming in from the auto company, coming to a steel company, going to a component maker and going back to the auto company, we are far ahead of our competitors in this space also. So this all is serious talks going on. And the moment it happens translates into reality. We will be facing much larger orders than what we are currently doing. But all this is currently talks. These talks will materialize at some stage. At some stage could happen next year. It could happen two years down the line, three years down the line. As of now we have no way of predicting that. Apart from the fact that the serious situations that are talking on this topic is very high. So you have to take care of draw your own quick releases. Sorry to interrupt sir, I would request you to rejoin the queue for your follow up question.
Operator
Thank you. The next question is from the line of Kirtan Mehta from Baroda BNP Parivas Mutual fund. Please go ahead.
Unidentified Participant
Thank you sir for giving the opportunity. When we are planning to sort of raise our production targets from 250kt to 250kt, what are the new products or applications that we are targeting? Would you be able to give some color that what can be introduced over next two, three years and who could be the target customers for this one?
Sachit Jain — Chairman
There are no new products. This is the same product. There will be some changes in chemistry to meet the requirements of a particular customer. And one change is in a nickel moly product. A little chemistry, little nickel going up, a little moly going down or some other grade veridium, another alloy getting added. Those are all minor variations.
So I would say no new product which is on the horizon in this plant and the new plant we will have be able to serve bigger diameter of steel than what currently we are able to supply. So that will be a product extension, not really a new product wire rods. If we get into the new plant, that will be a new product for us. And the moment we get into non automotive steel, that will be new technology, new product, both. Thank you sir. And in terms of the customer segments or customers specifically where we see the scope for expansion, the customers are the same. There is, I mean the car companies are Maruti, Tata, Hyundai, Toyota. So car companies are all the same. The two wheeler coming also there’s no new customer coming in. It will be replaced. It will be participating in their growth. As they grow their volumes and maybe getting some import substitution. Because the government of India is very clear that steel if it is produced in India should be brought from India. And the OEs are working very hard with steel companies like us to see if those steel can be replaced and reproduced from India. And we are at advanced stages for some of these products.
Unidentified Participant
Sure sir. Thank you.
Operator
Thank you. The next question is from the line of Muskaan Rastogi from BNK Securities. Please go ahead.
Unidentified Participant
Thank you for the pleasure. So what this export mix which is currently at 5% we mentioned the PPT that it will reach 27% in next two years. So is it possible for us to reach with the current trend our next to happen. And thank you for pointing it out to us. We will correct the presentation. Thank you.
Sachit Jain — Chairman
Hopani is out. So it will there will be minor increase in this or is it forecast on exports? We are not making any forecast or exports. Because the other companies, even the European OES that are coming. We originally thought they’ll be taking steel from us. So they are now looking at getting forging sources in India. So the destination would be Europe. But the sales would be domestic from us. Any volume guidance for next year? Sir, we are hoping to do 225,000 so marginal increase.
Because the capex increase is still limited by our rolling mill. The impact of the capacity increase will happen only last quarter. But that will also be may be taken up in stabilization. So next year it is 26:27. We will be targeting 250,000 tonnes. So a bigger jump coming in 26:27. Any like in FY23 you mentioned that we see good traction from Martha Suzukian, Toyota post, Aishi Tayak. So any inquiries coming through? Are we getting orders from them? See those things are happening.
Okay. Import subscription I talked about will be happening from these foreign companies only. So those are the products which are being developed. We have got into the queue and hopefully from next year we should start seeing orders coming in on some of those products. Okay. In this high buyer currently what is the size range that we can go? Currently we can maximum go to 90. In the new plant we expect to go up to maybe 130 mm. Okay, one last question. Due to capacity constraints, so we are outsourcing. So when will this stop so that we can see benefit in EBITDA per kg27. The outsourcing will stop some product which is 240 by 260, which is a heavier billet that we have, which we can’t use in our rolling mill. So it has to be rolled outside. So that part will continue. But that’s a much smaller part. How much volume? So about 5,000 tons annually. So it will be a small part. That’s the only part is the outsource. And little bit in our bright bar, sometimes in our feeding lines for servicing reasons we have to do a little bit of outsourcing. But the largest chunk of the outsourcing will be over in 26%. Thank you. This year itself you will see a drop in the job work.
Operator
Thank you. The next question is from the line of Ramakrishna Neti from Zen Wealth Management Services Ltd. Please go ahead.
Unidentified Participant
Hi. Thank you for the opportunity. Just at a industry level, one question sir. With respect to the requirement of Allan Steel within India. So what is the total domestic capacity and what are the import status? Any breakup available?
Sachit Jain — Chairman
I don’t have those specific information. If you mail us we can send that. But roughly the market size today is about 4 million tons. And we expect in the next 10 years this market size to reach about 10 billion tonnes. Imports is not too big an area. But in our product segment, even if 50,000 tonnes is getting imported, that’s a very big segment for us to target. Got it. I’ll drop an email. Thank you. And most of the steel which are getting imported are high quality. And where we are well positioned to take advantage of that, which is where again our partnership with IQI comes in strong.
Operator
Thank you ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Satchit Jain for closing comments.
Sachit Jain — Chairman
So ladies and gentlemen, thank you so much for being here. And the most exciting part for us is clearly this new project. Though the results of that will start showing up much later than the horizon most people have. So as of now Our target is 2930 is the year we start production. But basically it conveys. Pays. A signal that we are optimistic about this market and we are optimistic about our partnership with Aichi and becoming stronger over time. This year we’ll complete our second three year agreement. So it’s a very important period for us and we are going ahead with full commitment for strengthening this business. Thank you so much for being with us today.
Operator
Thank you. On behalf of Choice Equity Broking Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.