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Two companies | One is engaged in manufacturing various types of steel | Second is a holding company with book value 3x the current price.


This week, we’re presenting a company that we feel is well ahead of its time. The reason for this is that the company has been approached by one of the major companies for a cooperation, but the company does not have a practical strategy in place. Also, plans for capex will be revealed in the near term, and the company expects to begin realising revenues for the stated business in 2025, which is three years from now.As a consequence, users are advised to thoroughly assess the firm before making any decisions, as the investment time frame could well be extended.

Vardhman Special Steels is a company with negligible debt part of around US$1.5 billion Vardhman Ground, engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels.

Vardhman Special Steels

Current Market price on the date of publishing this report-: 307


Vardhman group ventured into the steel industry back in the year 1973 with the commissioning of Oswal Steels at Faridabad, with an initial capacity to produce 50,000 metric tonnes of special & alloy steels. Since then, the company has exponentially expanded its operations on all fronts, attaining a capacity of 150,000 metric tonnes per annum producing high-grade hot rolled bars for varied applications.

Although the group had been into the steel manufacturing since 1973 it was only in 2010 Vardhman Special steels was incorporated. Company’s business primarily consists manufacturing billets, steel bars and bright bars of various categories of special and alloy steels. Company

This company is a leading producer of special steels. It is also one of the largest producers of special and alloy steels, particularly for the local automobile industry. It presently manufactures high-quality special steel, which is mostly imported.

The company meets a wide range of hot rolled bar requirements for the engineering, automotive, tractor, bearing, and associated sectors. It has some of the most modern production facilities as well as equally dependable support facilities. The facility features a well-planned layout with sophisticated material handling facilities, all of which are geared for efficient material processing and human capabilities. Vardhman’s capacity to adapt to technological developments is reflected in its significant use of automation and modern concepts.

The company has a long list of clients, including Toyota, Hero Moto Corp, Caterpillar, Hino Motors, and Bosch.

Aside from that, the company is ISO 14001:2004, OHSAS 18001:2007, ISO 9001:2008, and ISO/TS 16949:2009 certified.

Business Products

VSSL’s technical capabilities include:

  • 30MT EAF (UHP-EBT) – GA Danielli, Italy
  • LRF- 30MT Ladle Refining, Twin wire feeding for AI & S
  • Vacuum Degassing Unit- VAI Technometal, Austria/Germany
  • Bloom Caster – Concast Zurich, Switzerland
  • Rolling Mill – Morgradshammer Sweden
  • MFLT and Automatic UST
  • Heat Treatment
  • Bright Bar Shop

Vardhman Special Steels product range includes various different types of steels such as

  • Carbon Steel
    • Plain Carbon Steel
    • Carbon Manganese Steel
  • Case Hardening Steel
    • Chrome Steel
    • Chrome Manganese Steel
    • Nickel Chrome
  • Through Hardening Steel
  • Chrome Steel
    • Boron Steel
    • Micro Alloyed Steel
    • Vanadium Steel
    • Nitriding Steel
    • Ball Bearing Steel
    • Free/ Semi Free Cutting Steel
    • Spring Steel
    • High Titanium Steel:
  • Carbon Steel Plain Carbon Steel
    • Carbon Manganese Steel
    • Case Hardening Steel
    • Chrome-Moly Steel


Partnership with Aichi Steel

Aichi Steel is a Japanese steel manufacturer and a member of the Toyota Group. The company was established in 1934 as Aichi Seiko and today it supplies 40% of the steel, springs and forged products for automotive use to members of the Toyota Group.

Vardhman Special steels partnered with Aichi Steel Corporation of Japan starting October 2019 with a dream to work together to create a World Class Company. As per this agreement VSS was supposed to have 3 members from Aichi stationed here with support of other members from Head office as well as specialists who would visit as per need.

Initial orders for Toyota’s manufacturing have begun to arrive from Thailand and even the Philippines, and additional orders are quite likely to follow while they wait for clearance. What matters most is how effectively the Vardhman Aichi team is collaborating and getting along with one another.

Aichi may plan to eventually raise its present 11.4% ownership of the firm.

This year, VSS is expected to accomplish 3000-4000 tonnes, and in the following three years, this figure should climb to around 30,000 tonnes. Beyond that, the potential is enormous since a big portion of Toyota’s Southeast Asia business, which comes from Aichi Steel, is anticipated to migrate to India.

Capital Expenditure

The company made capital investments in its segment of roughly Rs 35 crore. The Continuous Casting Machine (CCM) modifications, which raised its melting capacity from 2 lakh TPA to 2.60 lakh TPA, were the most significant. This will assist the firm in reducing its reliance on imported steel. Additionally, the final items that are supplied to the consumer will be of higher quality.

The other significant capital investment was connected to changing from furnace oil to natural gas, a greener fuel that would significantly lessen our carbon footprint, as the fuel for reheating the furnace.


For the year ended March 22

  • Company sold 1,73,308 lakh tonnes in FY22 against 1,50,265 lakh tonnes in FY21 – a jump of 15%.
  • Steel output increased by 24% from 1,34,091 MT in FY21 to 1,65,809 MT in FY22.
  • Company reported Revenue from Operations of Rs 1,368.46 crore in FY22 against Rs 937.08 crore in FY21.
  • EBITDA scaled by 74% from Rs 116.31 crore in FY21 to Rs 202.58 crore in FY22
  • EBIDTA margin improved from 12% in FY21 to 15% in FY22.
  • Net Profit stood at Rs 100.75 crore in FY22 against Rs 44.19 crore in FY21.
  • Net Cash flow from Operations stood at Rs 58.88 crore in FY22 against Rs 67.28 crore in FY21.
  • Return on Net worth upped considerably – from 10% in FY21 to 20% in FY22.
  • Working capital cycle stood at 82 days in FY22 against 63 days in FY21.
  • The net debt portfolio was Rs 121.53 crore as on March 31, 2022 against Rs 135.90 crore as on March 31, 2021.
  • ROCE stood at 23.51% as of March 22 against 13% in FY 21.

For Q2FY23

  • Net Sales stood at Rs 443.16 crore in September 2022 up 32.03% from Rs. 335.65 crore in September 2021.
  • Quarterly Net Profit stood at Rs. 28.01 crore in September 2022 up 15.31% from Rs. 24.29 crore in September 2021.
  • EBITDA stood at Rs. 49.05 crore in September 2022 up 1.03% from Rs. 48.55 crore in September 2021.
  • Vardhman Steels EPS has increased to Rs. 6.90 in September 2022 from Rs. 6.00 in September 2021.

Managements comments

  • Management is aiming for an EBITDA/Capital Employed ratio of roughly 20%, while maintaining commitment to a 25% objective by 24-25. This year’s positive aspect will be the company’s transition to a 25% tax structure.
  • In terms of EV, management is working hard to develop its position in this area, and around 6% of the company’s sales were for EV applications last year.
  • Company received approval from the Ministry of Environment for expanding rolled-products capacity from 2 lakh TPA to 2.80 lakh TPA.
  • Management also plans to increase its sales volume by 15% in the coming period. Also company is on the track to meet its revised target of 195,000 tons for the year.
  • Obtaining client approvals is a time-consuming procedure that involves delivering material, fabricating components, testing those parts, and receiving approvals, all of which occur at breakneck speed. As a result, no other Indian firm can mimic what the company can do.

Sectorial Outlook

The Indian government has announced a PLI scheme for the specialty steel industry for 5 years starting from 2023-24. The scheme is supposed to benefit both steel making giants as well as the MSMEs. This scheme is expected to draw investments of Rs 400 billion ($5.37 billion) and expand the capacity of specialty steel from 18 MT in 2020-21 to 42 MT in 2026-27.

According to the recent World steel estimate, steel demand is expected to grow by 0.4% in 2022 to 1.84 billion metric tonnes. The stable recovery of the global steel sector has been adversely impacted owing to the Russia- Ukraine crisis and rising inflation. In 2023, it is going to see a growth of 2.2% to reach 1.88 billion metric tonnes.

The passenger vehicle segment continues to see high demand and long waiting period as semi-conductor availability.


Vardhman Special Steels is a company with negligible debt part of around US$1.5 billion Vardhman Ground, engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels. Vardhman Special Steels is a company with negligible debt part of around US$1.5 billion Vardhman Ground, engaged in manufacturing of Billets, Steel bars & Rods and Bright Bars of various categories of special and alloy steels. The company has partnered with Aichi Steel, a Japanese steel manufacturer and Toyota Group member. Aichi Steel has acquired an 11% interest in the firm and intends to enhance it further. Once the product clearance is granted, VSS anticipates a significant increase in business from Aichi Steel. However, it is extremely far in the future, for which the company will have to incur more capex as well, which is why we would suggest people to check this company with caution because the time period cannot be anticipated.

Vardhman Holdings

Current Market price on the date of publishing this report-: 2918 Rs

Vardhman Holdings Ltd, founded in 1962, is a part of the Vardhman group. The company is a registered NBFC. Other than textile-related assets, the company’s assets mostly consist of investments. At the moment, profits come in the form of dividends on investments. The company’s current portfolio comprises of debt, equity, and real estate assets.

Vardhman Holdings investments consists of following

Current Market Capitalisation of Vardhman Holdings is 935 Crores, stock price is 2930 Rs while per share investment price is around 10,000 Rs.

Users need to understand the risk while investing in this type of companies as well as that, this type of companies are not meant for investing rather they are for exploring/educational purpose only. Despite amazing financials or high book value of the company, it may so happen that over a period company may fail to deliver any meaningful return for the shareholders thereby leaving it as dead investment.

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