Vardhman Special Steels (NSE:VSSL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the q one FY twenty seven earnings conference call of Vardhman Special Steels Limited. This conference call may contain forward looking statements about the company, which are based on the belief, opinions, and expectations of the company as of date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. 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 0 on your touch tone phone. Please note that this call is being recorded. I now hand the conference over to mister chairman and managing director Vardhman Special Steels Limited.

0:53 Thank you, and over to you, sir. Thank you so much. Good morning, ladies and gentlemen. Thank you very much for continuing to show an interest in our company and being with us here today. We closed a good quarter. And overall, probably highlights for the quarter have been, first, of course, we signed the technical assistance agreement for the forging unit with IT Steel Japan. So the forging project is going on as scheduled, and looks like the project cost is going to be a bit lower than what we had estimated. And we'll update once we have a better fix on the numbers. But, clearly, the project cost is going to be less than what we had estimated.

1:45 As far as this quarter is concerned, volumes have been good, and price revisions have taken place because costs have gone up. Some prices have been agreed. Some are in the process of agreeing, meaning the OE has agreed to a particular amount, but it's likely to upwardly increase the price because other companies have not accepted that type of increase. Anyway, that will happen when it happens. Demand scenario is good. We are, in fact, finding it difficult to meet the requirements of the customers. So we are scrambling how we can make sure that we are able to increase capacity further.

2:35 We have applied to the environment ministry for approval to increase capacity to 360,000 tons of melting, But that will happen when it will happen. Meanwhile, some of the other things that we have been doing is the new reheating furnace has been stabilized. New entity line will be commissioned by September, October of this year, and new PD line will be commissioned by September, October of this year. This, the bottlenecks in our smooth flow of production will get removed. Currently, we continue to have a pile up of material that is ready as the customer want, but because of lack of testing capacity, it's not able to go through.

3:23 Even peeling, we need to get some peeling material done on job work from outside. All those things will come in in house, and we'll be able to improve the product mix and quality of sales in the second half of this year. Solar plant, we've got a full quarter of savings. We've had 2.3 core units this quarter, and roughly 43% of our total power consumption is coming from solar. There have been further changes in the government policy, which means we can enhance the solar project. We expect in about a year or year and a half's time, We'll be going ahead, and we'll be increasing the capacity by almost 15% of our solar plants.

4:12 So that will add to the bottom line and to reduce the carbon footprint. Already, our carbon footprint is below point five. So it places us with the best amongst the AT and companies in terms of carbon footprint and approvals. So there is... There isn't any other company which is near us in carbon footprint that has the approvals. This enables us to have a very strong position for exports to Europe. Overall, EBITDA numbers are within our range of eight to 11. We would like to remove part of the EBITDA for your calculation purposes because some of the EBITDA and other income is from the earnings we have got from the funds of the of money markets.

5:08 That is really not business income, so we have removed that in our calculation. And if we remove that, our EBITDA per ton for this quarter comes to 10,700. So I'm gradually getting the confidence that for next year, we can improve our range. Today, our range is eight to 11. But next year, we should be able to increase the range from eight to 12. So I can see product profitability improving, and and that is a result of cost reductions and bigger productions, so fixed cost being spread over a bigger volume. That's all from me in the opening remarks. Oh, sorry. One last thing. As far as the new steam plant is concerned, are partly reconvening the plant to reduce carbon footprint further and improve energy efficiency.

6:03 So things like scrap preheating, which was not emphasized earlier, and some other equipment that we had not emphasized earlier, including testing lines. They... We had planned only one continuous testing line for the new plant. But seeing the way market is changing and demand for continuous testing and automatic testing lines, we will have to need more... Need to add more lines, which means the project cost is going to increase as well as the capacity will decrease at this plant. So, again, details are still being worked out. I think by next board meeting, we will be able to have a clear picture, and we'll present a ref... Refined project with increased capacity and try to keep cost per ton similar to where we had in this phase. Maybe a little higher because of Iran war.

7:04 Metals have gone up everywhere as well as the sea has depreciated. So the cost of specialty is going to be also based on. So those are being worked out, and we will have a better estimate in the next quarter. As of now, we are still on track that that... To commission the project if the financial year 2950. That's all for me for now. The opening remarks. Things I require, some numbers, and then we can have a nice q and a session. Thank you, Vardhman. Morning, ladies and gentlemen. The... On the numbers for the quarter, this quarter, we have achieved 59,000 tons of sales, which is higher than the corresponding quarter of last year by second half percent.

7:53 And revenue from operations is at $486 higher by 12%. So the combination of both. One is because of the higher volumes and secondly, because of the increase in sale prices. And as well, our Aviso this quarter is... For the quarter, I believe, yes, 68 crores per quarter, and 41 crores is the bad. Overall, EBITDA per ton as it is already explained, because it's 10,700 rupees per ton. So and all that is 41 course in this quarter as against the 34 course in the immediate proceeding quarter and 20 course in the corresponding quarter of last payment.

8:40 This is all on the numbers for the quarter, and now we can open for the question and answer session. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and 1 on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wishes to ask a question may press star and one on your touch tone telephone. The first question is from the line of Singh from Capital Arc. Please proceed.

9:30 Good morning, sir. Congratulations on the good set of numbers. Thank you. Am I audible? Yes. Yes. Sir, I wanted to ask that we had collected that our revenue would grow in exports. Could you please quantify how much the exports were in this quarter? Hear that part. Can you repeat your question, please? So we had projected that our export sales would increase. We own account of our sales was in export. Sales in export. How much is the export? So the total exports is still accounting for about six to 7% direct export, and another 5% is going as indirect exports through... Which is going to five g through their trading arm in in in India.

10:21 So what we are finding is that our estimates of direct exports of steel were off. But more and more customers are wanting to buy it from India, but they are wanting to buy components and force products from India. So larger part of our business is... One of our customers are exporting products to Europe and to The US. Yes. So what we will start doing, I think, is I think the valid point, the question that you raised. From next quarter, we try to calculate, I guess, give an estimate that how much of our product is actually getting indirectly exported out of India as components.

11:11 Thank you, sir. That's very helpful. And, sir, I had another question. So with the partnership with, could you quantify how much of the business is... Like, what is the business concentration per client? Because Toyota is a partner of iQIYI, if I'm not wrong. Business concentration Is the growth in our No. No. Business cost, we are very well diversified across customers. But our increased focus and the go forward, the concentration with Maruti as a customer will be our target. If we're able to achieve that, that's a separate issue. But we will try to continuously increase businesses, Vardhuti, more than as a bigger share of our customer.

11:56 As of now, it's it's it's it's a small percentage. That's about 10%. So we don't have any concentration risk. Okay, sir. And, sir, if I can ask another question? Please, can you wait? Come back? Because there's a queue. Yeah, sir. Sure. Sure, sir. Thank you, sir. Thank you. The next question is from the line of Gupta from Vayton PMS. Please proceed. Hi, sir. Two questions. One is... I... And I joined late, so it's because of repetition. I'm sorry. Then the status of the expansion of the existing plan from three to 3.6, if you can share any update on that.

12:42 And second is on the land acquisition for the five lakh... 5,000,000 plant that we are planning. 5,000,000. So the new plant is five lakh tons, not 5,000,000. I'm sorry. 5,000,000, we will get into Not five. Big big territory. We have no plans to be Yeah. Yeah. My question is the overall. My bad. My bad. It's a big big big boy. Yeah. We have small area. So land is in the last stages of getting finalized, machinery is also in the last stages of getting finalized. So, hopefully, by August 10 or latest by mid September, we should be able to finalize everything. Got it. And on the EC application from three to three point six? We have made the application.

13:29 And so in all probability, next three, four months, you should get the approval because the... But, again, you haven't got it till you have got it. So Mhmm. Fingers crossed till that time, we'll be close to our final production capacity because we had never never imagined we would even reach this level. So I must... I have publicly thank my team who have done great work in figuring out how to keep improving productivity to reach this level. Now all this is helping us in a new plant. In the planning of the new plant, as I said, what was to be a five lakh ton plant is going to be significantly bigger than that. Of course, we'll have to make some more investments in that.

14:22 But... And cost per ton is going to be lower than what we estimated in the new plants. But as as data, once we have better estimates, next quarter will happen in the. Got it. Can I ask another question, or should I join back in the queue? Come back in the queue, please. Sure. Sure. Thank you. Before we take the next question, we would like to remind participants that you may press star and 1 to ask a question. Participants who wishes to ask a question may press star and 1 to ask a question. The next question is from the line of Anand Kumar Sharma, an investor. Please proceed. Good morning, sir, and thanks for the congrats for the great set of numbers.

15:12 So my question is regarding this next project five lakh ten projects. You have said that by first quarter, we will be able to start the production of this forging unit. And what was the... What will be the direct to the elimination of the cost by reduced reduced cost? Can you explain to give some light on that? And what are the other projects apart from this forging project? But other project... What about the other projects? So 14 project is likely to get commissioned by last quarter of twenty seven, twenty eight. And then to fill up the project, we'll do. The plant will take six months to one year because it's a totally new product.

16:01 Customers need to come and see the plant and then approve it, and then business will start coming. So so revenue for that will start coming from the year '20... Maybe at the end of twenty nine, end of twenty nine, thirty. Project cost, as I said, has come... Has... Is is lower than estimated as we have been able to negotiate better terms. And some equipment that we have seen as Japanese equipment, we are able to find India substitutes for that. And so overall, those those costs are being estimated. And then the next three months, we... Again, by next quarter, we'll have a far better grip on the total saving. But as of now, we can say there is a... From the 475 crore that we had estimated, there is a substantial saving from that.

16:52 The saving is more than 10% Okay. As of second question is regarding this extension of the grant for that. When you expect that to start line for the... This leasing The new seed plant, we expect to start in the financial... In the... By end of twenty nine thirty. So six to eight months to stabilize the plant, and 1331, we'll start getting revenues from them. Grow one of '28, sir?. This is this is 2930. This is new steel. New steel plant. This is a new steel plant. I'll just think about the the 3 lakh to $3.60. Once we get the approval only, then we will have to invest some money. So that that would take some time. But till we get the approval, we can do nothing.

17:47 And just to add that the current year, we don't have any capacity constraint because whatever our plans are there for the current year, so we have enough license capacity. And once this approval comes, so it will be helpful for in the next year. Okay. Next year. Right. Okay, sir. Thanks. Again, congrats for a good set of number and for your hard work. We salute you. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

18:34 The next question is from the line of Deepak Kodar from Capital. Please proceed. Hello. Am I audible, sir? Yes. Please go ahead. Thank you very much, sir, for this opportunity. So just wanted to understand, now you mentioned we don't have any capacity constraint this year. So so what's the volume growth you are targeting for FY '27? We are targeting for this year, we are targeting about 250,000, 55,000 tons for this year. This year, like two seventy. Two seventy. Okay. Okay. So so I mean, in terms of growth, we are still quite nominal. Right? I mean, the the the target in terms of our growth from FY twenty eight itself, it's it's it's not seven, 8% only. So so what will drive our revenue growth? And then will will it be more value addition?

19:25 So how should one look at revenue growth? So I think, see, what we are looking at in the future is diversifying away into nonautomotive. So there's a whole category of nonautomotive that we were not interested earlier. One, we didn't have the capacity to... We did not have the technical capability in the. So in that casting is the roof, which is going to be used for many of these products. As in that casting is something that we plan to establish in the plant by third quarter of this year. And by fourth quarter, we hope to stabilize. So this year, we would have established and stabilized the ingot casting. Now we intend to get into diced steels.

20:13 India today imports a thousand crores worth of diced steels. So that's a big area for us to grow and do. So that is diced steel. Railways, the the big for axles, there's a big demand for steel for that. Windmill shops, there's a big demand. A lot of it gets imported. So we have been moving it a lot into import substitution. Earlier, we didn't have that capability. So by end of this year, we will have the capability. So we will start a second engine of growth. Today, we have only automotive steel as an engine of growth. Tomorrow, we will have a second engine. This is non automotive steel. And once the 14 plant comes up, then the third engine of growth. And the fourth engine of growth will come up.

21:00 That will come up maybe a year and a half down the line as we start working towards aerospace and steels for nuclear plant and so on. So that is a that is a fourth lever of growth, which will take a few years for us for it to come, but that is the thinking of going ahead. So just now, we are constrained because our capacity is three lakh tons, which is the license capacity. We can't go more than that. So we can keep saying that you are very conservative going only seven, 8%. When when that is our capacity, we can't go more than that. We are also examining can we get imports... Import spirits from outside and roll it outside and do some job work and develop that market. So if you are able to find a credible source, then because you have to have complete supply chain for that. So if we are able to do that, then then let me have a chance of growth again.

21:53 So meanwhile, what we will do is if we don't have growth possibility, then we'll work on internal how to keep improving margins and better product mix. Meanwhile, the new plan will come up. So once the new plan comes up, then again, then there's massive growth possibility. That... That's very helpful, sir. And and my second question is on your Japanese tie up. I mean, we have done this tie up. So so what sort of potential is there? Can you throw some more light? I mean, how we are... We're looking at the tie ups that we have done? So for example, approval for Toyota, which happened for global approval. We got because of that. The approval for localizing imported steels for a customer like, they're getting because of our partners.

22:44 Then there are internal improvements in terms of overall quality, safety. So so many other improvement that are happening. Toyota in India is expanding. TTM is expanding with a new plant in Orangabad. What's it called? So --. Right. So, anyway, Aurangabad, the earlier Aurangabad. So so with the new plant coming up, we are looking at us for more. We are the only leads. Somebody in other. Sorry. Somebody in other where very clearly, they need more green steel. We are the only company which can provide green steel with all the approvals. So as GreenSteel becomes more and more important, we become the only players which can provide that.

23:34 And with our expansion coming up, we will be very well placed. And most companies have targets by 2013 to to have a large part of green steel coming in. Yeah. And circular economy is. Still at... And I'm reasonably confident if we'll get this approval. But, again, I said till we have not got this approval, we don't have it. Okay. Understood. Understood. Yeah. Yeah. That's very helpful, sir. I mean, that would be it from my end. Thank you so much. Thank you. The next question is from the line of from one of Financial Consulting. Please proceed. Hi. Good morning, sir. So couple of clarifications.

24:21 Sir, in the opening remarks, you mentioned that the greenfield plant, we are looking to increase the capacity from five lakh tons. And because of inflation, metals and INR depreciation, the cost will increase. Is is this the right understanding? Right. That's right. Okay. Okay. Sure. And, sir, you mentioned that FY 'twenty eight, you'll be increasing the EBITDA per ton guidance from 8,000 to 11,000 this year to 8,000 to 12,000. So can you quantify that or can you give us a color what will be the key drivers for this increase, of 5,000 rupees per ton? The key drivers are three.

25:09 First, that we will have bigger production, production, and therefore, the fixed cost will be spread over a bigger food volume. Two, there are operating costs that have have... That are... Have come down and that are further coming down as we go ahead. We can see all those things happening as we go along. Third will be... We still have job work and outside processing going on, which will start coming down from second quarter partly. No. Not second quarter. From third quarter, you'll see them coming down. Okay. Okay. So these are three levers. And the fourth lever will be in a year's time, roughly, we'll have to see. We we have not given an exact forecast of when the new solar plant will come up. Okay. So when the new solar plant comes up, again, there'll be cost saving based on the... For that.

26:05 Okay. So this is a... This is brownfield expansion of the solar plant which we have... Which which we have right now, Or is there any plant? No. It will be no solar plant. Okay. With similar cost savings? No. Because now the the government has changed the rules. The the solar panel. The the cells have to be... As for the panels are locally made. The cells have to be also locally made. So the cost of panels is now higher than earlier. Okay. So the savings on account of the solar will be lower than in the first phase which came up. Right. And, sir, just one last question from my We are working with a European OEM to supply materials.

26:59 Any update on that? I don't have an exact update, but that should happen by later part of this financial deal. Okay. So we expect to start commercial supply to them in h two? Yes. Great. Okay, sir. All the best, and thank you.. Correct. So samples have gone all... One work is going on track. Thank you. The next question is from the line of from IGE India. Please proceed. Yeah. Hi. Thank you for the opportunity, and congratulation on good set of number. I just wanted to know how does this EBITDA per ton drive into your company, which is within the range given?

27:49 And what makes you the change of range this time? And what what to be the outlook going ahead? So why we are... We stick with the range is because we deal with the auto OEs. And the auto OEs change the prices upwards or downwards based on what parameters. So because of cost, raw material cost goes up, therefore, they would they would increase the price of the steel. So that is... That gives us a range. We remain protected within a range. And every few years, the range gets bumped up or lower depending on market circumstance. In addition to that, as we... As I said earlier, with an increased production, cost per ton comes down.

28:41 With the current modernization that we have done, certain costs have come down. Yields have improved. We've already said that earlier. The renewed heating furnace, yields have improved, they have improved. Then outsourcing that we are doing, the job work that we are doing, that is gonna come down. So these are the factors, and that gives us the confidence. And then with the new solar plant coming up, that will add further. Once the solar plant gets commissioned, then we would like to change the range to nine to 12 rather than eight to 12. So for next year, it is... It'll be eight to 12, and I hope all goes well. The year after that, we should go to nine to 12.

29:27 Then the other kicker that's gonna come in once we are able to establish our ties, and they'll basically... These are all high margin products. Very difficult to make. Unfortunately for us, IT, our partners, they make dice teas also. So it is very, very important for dice teas to have a a foreign know how, and we have our partners, IT, who who know this business and who make... And they are the largest forging company in Japan. They have about 150 or 170,000 tons of forging in Japan. They are about 50% market share in Japan. And they use their own die steel in their forging. So it's tried and tested in their own... In house. That know how is going to be available with us.

30:21 Got it. And for our new complete green printer plant, what what are the next footsteps to check, let's say, from one to two years of perspective? So the next steps to track will be purchase of land. Second is placing of orders. Third is status of environment clearance, and there is progress of the plant. Got it. Thank you. Funding is not a problem for us because, one, we already have a reasonable funding available with us. Already cash has come in. And second, sometime next year, depending on when we need the funds, we will be doing a capital raising.

31:11 Both the large shareholders, the largest shareholders, Vardhman Group and IG, they have given their commitments for putting it as much capital as required. And then we are also in touch with certain large institutions. There is a certain appetite to put money in the company. So raising equity is not a problem. And then you probably in touch with banks to raise the debt is also not a problem. So funding is not a problem. And lastly, Punjab government, because we intend to put up this plant in Punjab, is very keen for this project. So government support is also fully assured. Got it. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.

32:02 The next question is from the line of, an investor. Please proceed. Yep. Hi, sir. Am I audible? Yes. Please go ahead. So just just one... Most of my questions, just one clarification. You said the brownfield capacity will require the environmental approval. When do you be let's say it was come by next quarter, three, four months. So what will be the ramp up to... For the revenue to come kick in? So what... If the approval comes in if approval comes in, then we will up the sales target for next for next year from two seventy. We will up it up to something like two ninety because we can improve production up to a point without any further CapEx.

32:50 Beyond that, we will need CapEx. So moment... And we want to finalize everything for the new CapEx and sign it immediately once the approval comes. And it'll be roughly a little over a year for the new CapEx to come in. So we should be able to reach three thirty, three forty in the year 2930... '28, '29. 2029. Okay. And, also, you mentioned that you are looking at a nonautomotive area as well for this year. So is there a potential upside also coming from there in Yes. To just give you an idea, diced steel prices currently at average prices about 85,000 rupees a ton.

33:41 Dice tees are about 2.5 lakh rupees a ton, non ESR. And as we get into ESR, if they cross $3.5.04 lakh rupees a ton. The volumes are small, but price is high. Of course, there's a lot of heat treatment, and you need pressing and other other things. So there are other process. It's not that the profit jump up by that much. So the costs are also higher to make it, but the margins definitely are higher in those products, and the sales value per ton is higher. Okay. Okay. But the die casting, the plan will also come up in 2020. Right? No. No. We'll we'll start that that process. No. No. Again, die steel.

34:30 So there is a forging plant, which is separate. Die steel is a steel making process. For that, you're putting it in that casting, which will be ready by second half of this year. In q three, we should have the in the casting ready. Now then it is a stabilization process, learning this thing and so on. That should take six months. So in the financial year twenty eight... Twenty seven, twenty eight, we should have production of dice teas as a regular thing. Okay. Okay. And all this will be within the overall limit of three lakh tons. Okay. Environmental approval. So what what will happen things are going to improve.

35:20 So so in terms of growth, the inflation part will come up come up from FY '28 onwards. Right? And one thing Yes. If we get it back, the 2728, it'll improve automatically. Then, again, other other than the the throttling of sales that we have, that seven, 8% kind of, I think that limit is gone then. Okay. Okay. Just now we have a limit that we can't do more than that. Okay. Okay. Thanks. Thank you. The next question is from the line of from three sixty one Capital. Please proceed. Hi, sir. Good morning here. I have some, like, good set of numbers.

36:07 Here. Just want to know the export volume guidance for... Hello? Yeah. Go ahead. Anyway, just let me know the export volume guidance for this time, sir. And how much is towards 80 still? It's... I think export volumes are small. It is about 7, 8%. So no need to track it specifically, and it'll not really be very high. At max, it'll go up to about 10%. Yes. So we we... As I said earlier during the call, we had earned... We had... We made a mistake in our assumptions. At that time, it seemed like sports will take a bigger chunk. But today, we are finding we are not able to meet the requirements of our existing customers. So exports is not high on our agenda.

36:54 Whatever is going... Growing organically will continue to grow a little bit. So out of this Sure. Sure. Seven, 8%, IT is about half? Yes. Little over half. Little over half. So total direct and indirect to Vardhman nine to 10%. Yes. Sure. Nine to 10 Okay. The numbers are small. I think there's no need for you to drag that specifically. Thank you.

37:43 One more thing, I think, which is a follow-up of all the questions that you have you have raised. So when we are talking of this nonautomotive steel, which is whether it's die steel or railways and so on, initially, these volumes are going to be low. But what we are doing is we are creating an option that once a new plant comes up, then we have the capacity. Once the business has been established and we have seeded the business, to grow after that faster becomes much easier, which will help us in filling up the capacity of the new plant faster. So that is the other objective of why we are pushing so hard on these products right now.

38:31 Yeah. Go ahead. Next question. Thank you. The next question is from the line of from. Please proceed. Hi, sir. Just one question. In the deck, we have mentioned that for the long term aerospace and everything else, it would be under a dedicated JV. So the question around that is, is there a is there a short list of they identified, or is it probably IG? And is it purely legal terms where there will be a separate subsidiary under a JV structure, or is this a technology JV that we are aiming? Like, we have with IT that they take stake and then they transfer the technology.

39:20 So we are talking to a few people. We are looking for more people. So this will be a non IT JV. So the partner... IT is strong in automotive steels. They're strong in stainless steels, including medical steels, and well... As well as they are strong in. So the volumes are not that big because they use largely for internal consumption. So for the advanced metals that we're looking at, the advanced metals division, we'll be looking for a partner outside. So that process of finding a partner will take its own time. It'll take a couple of years, and we are in no hurry because, one, this is a slow process of finding the right partner with the right understanding is important.

40:09 So this is just a directional thing that this is what we want to do in the future. For your forecast, for looking at valuation, etcetera, for getting a hang of the numbers, these numbers will be too small, and they will out... Outside your horizon to think too much about it. So anybody... It will be a separate company. It will be a JV because nobody's gonna pass their know how without being an equal partner in it. So once we find the right partner, we make the announcement. Understood. Understood. That's it. That's from my side. Thank you. Thank you. The next question is from the line of, an investor. Please proceed.

40:56 Hi, sir. Am I audible? Yes. Firstly, sir, congratulation on great set of numbers. Most of the questions are answered already, but just a few questions. You mentioned that better realization came from OEM price revisions during the quarter. Could you help us understand whether these revisions are largely complete or should additional pricing benefits accrue during the year going forward? So for q two, we were for further prices... Price increase. So q two process will happen later. Q one, the price settlement has been completed with some of the OEs, but some of the OEs that is still not complete.

41:43 So it is likely to rise higher. So the q one price for for the settlement is likely to rise higher. If that settles higher, then our ask for q two will come down a bit. So q two numbers will not change except that certain profit of q one will be spilled over into q two. Okay. So another follow-up question. So following the commissioning of our block and reheating furnaces, what is the current rolling capacity utilization? And beyond operational efficiencies, are there any bottlenecks remaining before the plant reaches its designated utilization?

42:30 Yeah. So the rolling mill after the commissioning of the cost block and the reheating furthers has reached its capacity of three lakh tons of input. And the way our team is working, they are confident that we will hit 330,000 tons capacity of input. So so we are already confident of 10% higher production. But, again, as I said, this is constrained by license today. So it's running at full capacity utilization. Okay. So last question from my end. On the and machinery... Machining project with IT Steel, could you elaborate on customer qualification timelines? Should we expect commercial production immediately after commissioning, or will there be a gradual ramp up before meaningful revenue contribution?

43:23 Gradual... Very gradual ramp up. So we are already talking to customers, and we are starting the... Again, we are very lucky that because our partners are already there, we are already get sending steel to IT, getting it forged from there, and getting to... It to customer for approval. So at least the process approval will have happened. So those things will shorten the process of wrapping up. But it will take time because it's a new business. We have to learn this business, and the customer have to get confidence also. The the confidence is high because IT is already an expert in this area. But this area and this method of reach on the products that we're do for the customers is new.

44:16 So... And it has benefits, which is why their customers are also excited, but they have to see this in action. Correct, sir. So so over the next two to three years, we can expect the margins to improve majorly because of the cost optimization as well as value added gray... Grades that are evolving. Am I right in that? Value added grades will be a very small chunk. But, again, I'm repeating three areas which will lead to margin improvement. One is volume increase and therefore spread of fixed costs. Two is operational improvements and therefore some operational costs coming down. And third is job work reducing and therefore post cost cutting down.

45:04 And in addition, will be the fourth part of solar, which will happen a little over a year from now. So it'll be the second half of twenty seven twenty eight. Okay. These are... These are... That was my questions. Thank you so much. Products will have a impact on the value added products to start happening in 2829. So 2829, we should try to modify our range from eight to 12. We like to remove the eight and say we are confident of nine to 12. Okay. Thank you so much, sir, for the opportunity. You. Thank you.

45:49 The next question is from the line of, an investor. Please proceed. Hi. Yes. Good morning, sir. I hope I'm audible. Yes. Please go ahead. I just had two questions on the line. First of congratulations on the great numbers. So two questions on the line. One is that what is our current order book visibility from OEM customers? And secondly, what is your outlook on steamed realizations over the next two quarters? So one, we never have a strong output. There is there is there is no system of a very strong order book. We are completely booked out, and we are refusing orders. So, I mean, required a strong order book or visibility.

46:38 We are currently having trouble meeting the requirements of our customers. The demand is very strong. No customer gives long term orders that, okay, you have this much coming in in the third quarter or fourth quarter. All depends on their volumes. So the customers are steady. It is all repeat business which comes in. And the next volume increase is gonna come from the commercial production beginning for the import substitution for my rupee, which will happen... Start having the fourth quarter of this financial year. So that's what I can say. I don't know. Realizations for the next quarter. Again, we are asking for the price increase from July 1. Q two will be higher in prices. Yes.

47:24 Realizations will be higher in q two than q one. And q three depends on how raw material prices continue to function. So more or less, as of now, q three, we don't expect a major change. So it may be either same or a little bit higher or a little bit lower. But q two, definitely, we expect an increase in prices. Okay. Sure. Thank you so much, sir, for your clarification. Thank you. As there are no further questions from the participant, I now hand the conference over to the... To mister Jain for his closing comments. Over to you, sir. Ladies and gentlemen, thank you once again for continuing to be very strongly engaged.

48:11 The kind of question you're... You've been asking us means that you have deep request in our company, and you're forcing us to think and find out answers and be ready for your... For next quarter when you come back again. Thank you so much, and we hope to continue to perform steadily and improve steadily. Thank you. On behalf of Vardhman Special Steels, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.