Vardhman Special Steels Limited (VSSL) has announced a significant financial milestone, completing the repayment of all long-term and short-term loans in early July. This strategic move is expected to result in reduced finance costs for the company in the upcoming quarters, potentially boosting its profitability.

Financial Performance

The company's Q1 FY26 financial results, released on July 25, 2025, show a steady performance:

Despite a 4.56% year-on-year increase in revenue, the company experienced a decline in EBITDA and net profit. This was primarily attributed to lower gross margins during the quarter.

Operational Highlights

• Sales volume for Q1 FY26 stood at 55,574 tonnes, marking a significant 10.49% increase from the previous year.
• EBITDA per ton for the quarter was Rs. 7,077.

Strategic Developments

Mr. Sachit Jain, Vice Chairman & Managing Director of Vardhman Special Steels Ltd., commented on the company's recent developments:

1. Debt Repayment: The company has fully repaid its long-term and short-term borrowings in the first week of July, which is expected to lead to lower finance costs in subsequent quarters.

2. Kocks Block Commissioning: The Kocks Block has been successfully commissioned, with trial runs nearly complete. The company is awaiting approval from some OEMs before commencing commercial production through this facility.

3. Reheating Furnace: The capex for the reheating furnace is proceeding as planned, with commissioning expected in the second half of the financial year.

4. Strategic Partnership: Aichi Steel Corporation (ASC) has increased its stake in VSSL to 24.9% by investing Rs. 384.91 crore. This move strengthens the partnership and reflects confidence in VSSL's future direction.

5. Expansion Plans: Discussions have begun with ASC regarding the setup of a forging facility, indicating potential for further growth and diversification.

Future Outlook

The debt elimination is a significant step for Vardhman Special Steels, potentially improving its financial flexibility and profitability in the coming quarters. The strategic partnership with Aichi Steel Corporation and ongoing capital expenditure projects suggest that the company is positioning itself for long-term growth in the special steels sector.

Investors and industry observers will be keenly watching how these strategic moves translate into financial performance in the upcoming quarters, particularly in terms of reduced finance costs and potential expansion into new product segments.

Vardhman Special Steels Limited (VSSL) has unveiled ambitious plans for growth while reporting its first quarter results for the fiscal year 2026. The company has announced a significant greenfield expansion project and shared its financial performance for Q1 FY26.

₹2,000 Crore Greenfield Expansion Project

Vardhman Special Steels has announced a ₹2,000 crore greenfield expansion project, aiming to establish a new steel plant in Punjab. The expansion targets a capacity of 5 lakh tonnes per annum of billet production by FY30. This strategic move is designed to position VSSL as a leader in EV-grade steel and the global forging market.

Key points of the expansion plan include:

• Total capital expenditure estimated at approximately ₹2,000 crore
• Funding through a mix of internal accruals, equity, and debt
• Planned commissioning by FY 2029-30
• Focus on Green Steel and Circular Economy trends
• Diversification into new product segments such as wire rods, forging, and non-automotive sectors

Strategic Partnership with Aichi Steel Corporation

In a significant development, Aichi Steel Corporation (ASC) has increased its stake in VSSL from 11.33% to 24.9%. This move strengthens the partnership between the two companies and demonstrates ASC's confidence in VSSL's future direction. The investment of ₹384.91 crore by ASC was completed through the allotment of 14,770,100 fully paid-up equity shares at ₹260.60 per share on July 4, 2025.

Q1 FY26 Financial Results

Vardhman Special Steels has reported its unaudited financial results for the quarter ended June 30, 2025:

Key highlights:

• Sales volume increased by 10.49% year-on-year
• Revenue growth of 4.56% despite pressure on realizations
• EBITDA per ton for the quarter stood at ₹7,077

Operational Updates

• The Kocks Block has been successfully commissioned, with trial runs completed
• Capex for the reheating furnace is proceeding as planned, with commissioning expected in the second half of the financial year
• Discussions have begun with Aichi Steel Corporation on setting up a forging facility

Commenting on the results, Mr. Sachit Jain, Vice Chairman & Managing Director of Vardhman Special Steels Ltd., said, "In Q1 FY26, our revenue increased by 4.93% on a year-on-year basis on account of higher volumes despite pressure on realizations. The volumes increased by 10.49%. We are hopeful to commission the reheating furnace in the second half of the financial year."

The company's focus on expansion, strategic partnerships, and diversification into new product segments indicates its commitment to long-term growth and market leadership in the special steels sector.