Vardhman Special Steels (NSE:VSSL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Vardhman Special Steels Q2 FY 'twenty seven Earnings Conference Call hosted by IIFL Capital. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Prateek Singh from IIFL Capital. Thank you, and over to you, sir. Thanks, Shaura. Good morning, and welcome, everybody. On behalf of IFL Capital, we invite you to Vardhman Special Steels two q FY twenty seven earnings conference call.

0:51 From the management, we have mister Sachin Jan, CMD mister Sandeep Sindha, CFO Mr. RK Riewari, Executive Director and Ms. Somya Jan, Executive Director. Before we begin, note that this conference call may contain certain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. So without any further ado, I will now hand over the call to mister Satid Jain for opening remarks. Over to you, sir. Thank you. Thank you so much. And in relation to the team mentioned, we have Sonam, company secretary with us, and we also have the AdLabs factor. Ad factor's with us, our investor relations firm. And mister Vardhman is... Had to step out, so he has left the meeting. He's not there in this call.

1:55 So we've had a a good quarter last one. And the... One of the big highlights of this quarter has been the foundation stone of a forging plant was laid by the honorable chief minister of Punjab,, and that happened in July end of this year. And in this quarter, we've had record sales. Demand was strong, and partly demand has been strong because of the GST cuts, which happened last year on two wheelers as well as the smaller vehicles, as well as SUV sales have been good, and the other sales also have been good.

2:41 So there has been good demand. I also... We are getting the feeling that from the nonautomotive space, also demand has increased, which has started affecting various other of our competitors. So overall, material supply for automotive segment was tighter, And there were there were one or two shutdowns, unscheduled shutdowns from one of the large companies that led to also slight shortage in the market. There was a pull. So the demand supply imbalance, we we got good price increases in the last two quarters, which has led to good profits.

3:27 Most of these have settled the prices for q two that we are talking about price settlements for q three. Not all have settled for q two, so that's still ongoing. In addition to that, we have work going on in our... On a new steel plant. We have finalized the equipment for our... The plant part. Land has been finalized for the SMS, and we should be file... Filing for environmental approval within December this year. And we are on track as of now to complete the project by September '29 and stabilization by March '13.

4:19 In addition to that, the solar plant has been running well, and we are now expanding the solar plant by another 22 and a half megawatt. 20 megawatt of... Megawatt for this will be for the current plant, and two and a half megawatt will be for the entity line, which is being set up in the forging plant. For the forging plant, the... There will be solar power coming in by the time it starts reaching better utilization. This... The forging plant is expected to come up by March '28, and then, of course, it'll take some time to fill up the capacity. A slight change or in thought process is happening on the financial financing structure of the new plant.

5:15 We were earlier looking at a debt equity for the company was point five is to one. It should have been at max point seven five is to one. More and more, as we were talking to some financial experts and some of the company, advisers, some... We are now coming around with a conclusion. We are diluting a bit more than required, and therefore, we may look at a one is to one debt equity. And therefore, the debt component will become a bit higher, and the equity raising part will be a bit lower. For the equity part, we'll be doing the rights issue, which will happen in the later part of next calendar year, second half of next calendar year.

6:07 As far as the project cost is concerned, we are also looking at the project cost. Some aspects of the project have gone up in terms of cost. Land is definitely more expensive than the. As well as for the equipment, the rupee has depreciated after the Iran war substantially. Sea freight has gone up as well as metals have gone up, so our commodities have gone up. So the project cost is going to be higher than what we then decreased. Also, certain equipment that we had planned in the second phase, we have preported the first phase. And we are also looking at some product reconfiguration to look at... To better service the nonautomotive parts.

6:55 So all that, that project is being reconcept... Being modified to the conceptualization. Everything will be finalized by March, April next year. So... But but suffice it to say at this point in time that the project cost will be higher than the 2,000 crores that we had in this stage two. But we will also have the ability to have a higher production than 500,000 tons eventually. So we are building a scope to increase the production beyond 500,000 tons to at least 700,000 tons in the second phase. And further after that, also with some more additional. The additional equipment that we'll have to add will not be of a highly significant quantity.

7:47 The other thing we are examining, of course, the decision will be taken by the board, is also to look at examine suspending the dividend for three, four years. It does not make sense to give dividend, pay tax on that, and then ask rights issue for these same investors to put in money and rights issue. We are examining this. This issue, of course, will be taken by the board in the April board meeting. So overall, I think the business remains good. The demand for the next quarter is also good, And we have finally received the approval from the European OE. Mass manufacturing for that has started. Also, on a major import substitution of domestic major, which is a large quantity and because highly...

8:41 Very high end quality. We have successfully got approval, and mass manufacturing for that too has started. Sales for that will start happening from January. So we are on track in terms of all our workings. Our new entry line will get commissioned by December, and the new leading line will get commissioned by early November. With this, we'll have some more capacity, more flexibility to service customers better. So capacity increase will be for. Overall capacity is still constrained by the environment approval of 300,000 tons. We have applied for increasing the capacity to three hundred sixteen hundred tons.

9:31 We seem to have got a recommendation. Maybe this may happen. But till... We haven't received any letter so far. Until we have not received a letter, we don't have any further information at this point. That's all for opening comments. And over to mister, CFO. And then, of course, we'll do for question and answers. Thank you, Vardh. Good morning, everyone. On the financial part, we have already circulated the media release. And as for this, our total sales for the quarter has increased on year on year basis by 27%, and revenue from operations is up by 39%.

10:16 And once weekly, a beta pad, they are up by about 50% for the quarter over the previous... Over the postponing quarter of the last year. The main increase... The main reason for the increase in profitability apart from the robust demand, which such as our has already explained, is also coupled with the the operational efficiencies which we have started arriving from the CapEx, which we have undertaken last year in the form of this putting up box block and the reusing furnace. So, really, we have started now getting some benefit in terms of cost savings from these CapEx in the second quarter. And going forward, it will further increase. And, of course, this power plant is also yielding us a benefit.

11:04 So this quarter in other income also, GST benefit is a little higher than the corresponding quarter because the GST benefit was sanctioned by the government for seven years, and the seven year period has has over by August 26. And now we are left with only electricity duty benefit, so which will continue for ten years, and the validity is up to August 29. So that's all on the operational side. Now I request that we One more thing I think is that our EBITDA per ton is of the highest part of our range.

11:49 So so I will not expect... I I would request you not to treat that for now as a standard kind of a thing. We still believe the EBITDA range will be between 9 to 12,000 rupees EBITDA per ton. Currently, we are at the higher end of the. Yeah. So that's all from our side as initial opening remarks. So we are open to questions. Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. Session. The first question is from the line of Desha from Sapphire Capital Limited. Please go ahead.

12:50 Hello? Yes. Yes, ma'am. You're audible. Yeah. Thank you so much for this opportunity. Couple of questions. Firstly, sir, you... So you mentioned our EBITDA per ton has sharply improved. How much of this has been driven by inventory gains? We don't separate our goals, but there are... There is a... There is an element of. As I said, these are not sustainable numbers. Mhmm. So if we get it one quarter, maybe we get it... Get something next quarter. Those are not in our control. Our guidance remains nine to twelve thousand rupees a little bit. Okay. Okay. Sorry, ma'am. Just to add that from last year, from 07/01/2025, we have shifted to SAP as for Hana.

13:37 And in that, we have... We are doing the evaluation based on the each batch. And whatever the material has been issued, accordingly, the evaluation is done. So there is no... The earlier concept which we were re... Evaluating based on the last three months of averages. So now it is on batch wise costing. Each batch is having its own costing at the time of production. And accordingly, that cost is carried till this day, and accordingly, the profitability is good. So there is no devaluation of the inventory at the end of the month or at the end of the quarter. Okay. Okay. Is this the volume growth for this quarter? Sorry? Yeah. Yeah. So the volume so the volume growth in this quarter has been very set up. You mentioned that the demand you see was very strong. So do you see this momentum sort of continuing ahead and maybe will surpass the volume guidance that we've given?

14:32 Do you see that as a possibility? No. See, second quarter is always the best quarter because this is a buildup for inventory for the season, the festive season. So unlikely that we've even up our inventories of finished goods and. So this kind of volume is unlikely, but, clearly, we will be at the higher end of our... We'll be a bit higher than our initial forecast. So we expect sales of about $260,000 now for the year. I think it was also $260,000. Okay. Okay. And, sir, also on the realization, there's been a sharp improvement.

15:19 Do you see that? You mentioned because of the demand supply imbalance. So what sort of average realization should we expect for this year and going forward? Average realization, I think it will continue at the same pace because we are getting the pricing base from... In the first quarter also, the pricing base was a same second quarter also. So third quarter also expecting some pricing base. So this average will continue for the full year. But maybe it will have. Okay. Okay. Okay. And see what partner as a... The other companies have set out letters for price increases, which are ranging between 3,500 to 4,000 rupees a ton. Those are letters which are gone out.

16:07 What will be the final settlement will be seen. So far, no settlement has happened for 50. Okay. Okay. And you mentioned, sir, for the coding, we... We're expecting that to be back to the queue, please. Sure. Sure. Okay. Yeah. Thank you. The next question is from the line of, an individual investor. Please go ahead. Hello? Yes. Hello. Yeah. Am I audible to you, sir? Yes. Yeah. Thank you for the opportunity, sir. So my first question is, so the capacity is at three lakh tons for billets and 270,000 for rolled bars and 48,000 for bright bars, right? So what are the current utilization levels and the bottle...

17:08 Principal bottlenecks and the near term opportunity to improve it throughout without any major incremental CapEx, sir? Rolling mill capacity is also three lakh tons of input, which is for at least 270,000 tons of output output. After the new reheating furnace was commissioned, which was commissioned in March, after that, the capacity has gone up to be full rated. So this is the full capacity. We cannot produce more than this because of environmental approval. So if we get the environmental approval to go up to 360,000 tons, then we'll be able to produce more. Okay. Okay. And, sir, basically, borrowing has been increased to $1.62.93 crores as of, you know, September 30, which was, you know, 92 crores at the end of q four.

18:01 While our trade receivables rose to INR $4.10 crores from INR $2.77 crores. So what explains this moment, sir? And what are the actions we are planning to take to improve the cash conversion cycle and the working capital efficiency, sir? Actually, in this... There is a reclassification this time because of the changes in the India as well. Okay. And here, there were some creditors which were against the discounting of the LCs were clubbed under a trade table. So now because of the changes in the in the s, those have been reclassified in the. Oh. So, otherwise, in total, if you will see taken together borrowing and the creditors, there is no increase rather the... There is a increase... There is a decrease.

18:49 Okay. Yes. Then our raw material inventory carried forward from the previous quarter supported I'm glad to you. Can you come back to the queue, please? Okay. Okay. Got it, sir. Okay. Yeah. Thank you. The next question is from the line of Prithvik Shed from one up Financial Consultants Private Limited. Please go ahead. Yeah. Hi. Good morning, sir, and congratulations on a great day. Sir, two questions. Firstly, on the brownfield expansion. You mentioned that the EC has already recommended, but you are awaiting final approval. Right? There has been a recommendation of a committee. Now when the final approval will come, whether some conditions will come, who are the one who waited. So until we have something in our hand, we don't know.

19:40 Right. And, sir, once this final approval comes, say, January 2027, hypothetically, how long can we take to increase our capacity from three hundred to three sixty? There's not also a when. There's also an if question. If the approval comes and when it comes, it will take... About a year or December next year, whichever is later. Right. Got it. Got it. And indicated CapEx for this? I am saying December, if the, let's say, the approval comes in October and itself in the next one week. It will be December because we need a fifteen day shutdown.

20:27 Right. And Mhmm. Shutdown cannot be taken in the season. So we have to look for Yes. Lean period for a shutdown. And the the leanest period is December end when the OEs go on a shutdown, maintenance shutdown for a week, twenty days. So that is the leanest period. So most probably, we will plan a shutdown at that point in time. Again, if the approval comes and when the approval comes. Right. Got it. And, sir, my second question is the EOEM, sort of, general approval. What kind of contract is this going to be? Is it going to be on a spot basis or it's a long term contract?

21:17 Any... What kind of volumes Also, does it does not... Well, I mean, we don't operate on any spot contracts. Prices are fixed within every quarter. Those prices change based on the negotiations that various deal companies have with various employees. So the prices change as per that. Now this European OE is new to the Indian market, so they will figure out with us whether they want to go with the Indian system or they'll go with the European alloy system because Europe has a different set of pricing. We are flexible. We are open to both because of the lag, both match eventually. Okay. So, actually, I was asking from the volume perspective.

22:03 Sorry. Like, is there any fixed volume that they've committed? We don't disclose volumes of each customer like this. And since they're anywhere in full, so eventually, if the if the volume increase, we will be able to reduce our less paying customer. Okay. Okay. Sir sir, I'm... I have a couple of more questions. I'll get back in with you. K. Thank you. Thank you. You. Participants, in order to ensure that the management is able to address questions in the conference, please limit your questions to two per participant. The next question is from the line of Divyans Gupta from Latent PMS. Please go ahead.

22:50 Hi, sir. Good afternoon. First question regarding financials. So the incentives that we receive from the government, right, in the other income, is it recognized based on accrual or only when we receive the money? And what is a... And if it's on accrual, then what is the typical timeline between accrual and receipt of the money and any delays in government that we have experienced? There are two types of incentive. One is GST, and another one is electricity duty. So electricity duty, regularly, we are getting in our monthly power bill. Secondly, GST refund. GST refund is basically... It is a centralized... Sent... Made by the central government. So GST refund is agreed by the state government.

23:40 So normally, it is a lag of two years three years time there. So we are recognizing on a dual basis, but it takes to get the money in cash from the state government. Normally, it takes three years. Got it. And is... Therefore, the second related part to the question is if we see the financial, we see a large jump in the account receivables. What is driving such a increase in account receivable if I just look at from a number of days perspective? I know sales have increased, so amount should increase, but on days basis also have increased. Yes. It is directly in proportion to the increase in sales. Because if you will see, the sales numbers are also during this quarter is more than 70,000 tons of sales, which in quarter one was only 59,000 tons.

24:33 So the difference... The incremental sales of 11,000 tons, which happened in the last two months, August and September, is leading to this high receivables and. Got it. So there's no reason days on a BAU basis. It's just matching of things. In number of days, it has increased by four to five days only because of some sales to the customers who are having a high credit bureau. Got it. Got it. And the second question is what would be the export sales deemed or direct in this quarter? It is almost in the same ratio as was there in the last year.

25:18 So six to 7% is direct, and another six to 7% is again direct to to Understood. And sir, just the last question. I know there are limited, but just the last question. Can you come back in the queue, please? Sure. No worries. The next question is from the line of Anand Darshan from three sixty one Capital Market Private Limited. Sir, my first question is regarding the new revised CapEx. You had mentioned there has been a upward revision from the CapEx numbers now, sir. What's the CapEx for both the new steel plant and forging plant? I mean, what payback period we will be assuming for the new numbers here?

26:13 As I said, there will be... We are still revising all those things. This has not been declared. So we are not... This will all be done by March, April. So we'll have a a better idea, but we're still reconfiguring some of the things to service the nonautomotive segment, which are becoming very attractive now. So do we see, like, any 20% upside of cost or something like that, sir? We are not... As I said, we are not sharing any information at this point in time. Okay. Okay. Right, sir. So my next question is regarding the forging facility. Forging the cost will be lower than what we had budgeted. Oh, great. Okay.

27:00 So regarding the forging facility, sir, we have around $4.75 plus CapEx plan. So can it roughly absorb, like, around 65,000 tons of steel, sir, from our facility? No. No. No. No. Initially, it'll it'll absorb about 15,000 tons annually at full capacity, and it will take some time. So the end of the new business, it'll take some time to build up the full capacity. Alright. So this is a phase phase one. Right, sir? 15,000 tons can be absorbing. Yeah. It's the first time that you're putting up. That's fine. Okay. Okay. Sir, on the EBITDA per... EBITDA range, which you had mentioned as nine to 12 per GB, is it for the next two quarters, or what's your guidance for the next year,? No. This is this is our guidance for the foreseeable future.

27:47 When we change the guidance, we will change it. We don't look at quarter to quarter. We look annually. K. Sure, sir. Sir, regarding the post substitution which you have mentioned. Come back? Can you come back? Thank you. Sir, I'd request you to come back in the question queue. The next question is from the line of Akash Rawal from Tangmi Family Office. Hi. Thank you for the opportunity, sir, and congratulations on great set of numbers. Sir, I just want to understand how much CapEx is budgeted for the next three years. So, like, FY '27, FY '28, and FY '29. And in proportion to that, how much debt we are going to take? Hello?

28:40 It'll be about a 150 crores for the existing plant. And for the steep plant, as I said, we are still comparing the final figures that we... That will be investing. Okay. So, sir, the right amount 100 crore. Understand the 475 budget. Okay. So, sir, if I assume a cumulatively thousand crore, that can be taken in the next two years? Even if finalize everything, you will share in the next year. We said in April. Don't make any assumptions. No. That's the audio. We we have no comments at this point in time.

29:26 Okay, sir. And, sir, just want to understand your strategy around the non automotive OEM part. So what are the steps taken by the company over here? So we are starting with ingot casting, which is the route to make specialized deals. This is something that we will start in the end of November. It will start. It'll take a couple of months to stabilize, and then we'll figure out the markets. There are attractive segments, and we will gradually get into those segments. Tool and ice teas is one. Oil and gas is another. Railway is a third. Then bearings later. Eventually, there'll be aerospace, defense. So there are several sectors which open up. But today, we don't have much capacity, so we are just going to be seeding some of these segments.

30:15 And then when the new plant comes up, we will have the capacity to have higher diameter blooms. Some of that will go into automotive for sure, but we'll also be able to make steel for railways, for the win win sector. So we are sealing those sectors now, and the real volume will come when the new brand comes up. Okay, sir. Thank you, sir, and all the best. Thank you. Thank you. The next question is from the line of, an individual investor. Please go ahead. Hello. Can you hear me? Yes. Yes, sir. Please go ahead. Yeah. Congratulations on a good set of numbers.

31:02 So my question was regarding the entry of VSSL into the ring care section that you'll mention in the last conference. So what is the quantum that we are looking at? And I suppose there was a timeline given of completing the commissioning till next October. That is one year from now. And what will be the capacity, and what is the competitive environment currently in India? And, like, what is the plan of VSSL regarding that sector? So we fully stabilized submission and so on at March 28. And this is something which is a highly automated line. This is a specialized line, which gives us a advantage in terms of better quality and much better yields compared to the normal methods of manufacturing in India.

31:55 And so, already, we have got approval and orders from one of the big global tier ones. So the process has started, but this is a new business we're getting into. So it's a slow process, and we do not have any certain plans. Steel will have certain plans. But Fortings is a slow... And ITR partners, they have nine such lines. So they have... They are experts in this method of steelmaking, a a Fortings. And they have dispatched a senior level person who is going to be... Who has been appointed as president of the forging business.

32:44 So I see the Japanese will be driving this business. Of course. Is there any any that you are looking at and the expected EBITDA levels from those? At full capacity, it will be 15,000 tons. Okay. Take some time to build up to that capacity. And the EBITDA realization would be higher than the current level? We don't... Actually, this is a new business. Give us some freedom to start learning this business before we start committing something. Yeah. Thank thank you so much. The best wishes for your journey. Thank you. Thank you.

33:29 The next question is from the line of Vardhwaksheet, one of Financial Consultants Private Limited. Please go ahead. Yeah. Hi, sir. Thank you for the follow-up. So on the greenfield plan, is the line... Land acquisition completed, the entire The land acquisition part... Venting part is completed. And for the rolling is ongoing, and we should be completing it by January... January of next year. Jan of Feb. And then then we'll have to apply for the EC. Right? EC will be applied within this year because EC for the steel... For the melting part takes a longer period. So that will be applied within this year.

34:24 Okay. Okay. Okay. Should apply for DEC. Okay. Got it. Okay. And, sir, any ROC or EBITDA to capital employed for the forging plan you would like to lay out for the future future? Any comments at... Forging, we're not making any comments at this point in time. It's one line. It is a Mhmm. A small line. It is suboptimal. Mhmm. It is an entry into a business. Got it. We have the advantage of our partners who are experts in this area. Mhmm. So we are relying on their knowledge. Mhmm. And once we add two, three lines, that is when EBITDA on capital employed and all the start coming in.

35:10 So now our focus is only successful implementation of the project, getting the production lines operating, and getting quality right and the throughput right. Those are our objectives. Got it. And, sir, just one last question from my end. So the brownfield expansion, if and when we get the approval from three hundred to three sixty eighty PM ending capacity, what kind of CapEx will be required approximately? It's not substantial, but about 100 about $100,100 180 crores. $100,115 crores. Okay. Yeah. Sure. Okay, sir. Thank you, and best wishes for the upcoming sessions.

35:57 You. Thank you. Thank you. We have the next follow-up question from the line of DeviAnch Gupta from Latent PMS. Please go ahead. Hi, sir. The land add question we just answered was one of the question. The other question was we were hearing that one of the other listed specialty steel player is in the process of increasing its capacity by about 40 to 50%. The last time when we discussed it was that the industry is capacity constrained. So just wanted to understand how do you see, let's say, the request for price increases in view of upcoming capacity by competitor impacting our realizations or even EBITDA per ton?

36:45 I don't waste my time on trying to forecast what price increase will come or not. I focus on our operations, and the price increase will depend on market situation at that point in time. Previous quarter, we got more than... More... A better price increase than what we were anticipating. We can easily get wrong here and there. We focus on our 9 to 12,000 rupees EBITDA per ton. But my understanding is any new plan which gets announced will take three years to four years after announcement for it to start. So I don't know which company you're talking about and when they made the announcement and what are the status of their project. And so I have no idea. So I... But to my understanding, next two years, no new capacity is coming up. That is my understanding.

37:41 But I may be wrong. Got it. It. I'll it offline. Understood, sir. That's it from my side. Thank you. Anyone who wishes to ask a question may press star and one on the touch tone telephone. The next question is from the line of from NP Investment Management. Please go ahead. Hello. Hello, sir. Congratulation on good set of numbers. Am I audible? Can you be a bit louder, please? Hello. Am I audible, sir, now? Yes. Yes. Now you are. Yes. Okay. Thank you. Okay. Also, first of all, sir, congratulations on the good set of numbers. So I have a couple of questions. So first thing, what majority of benefits have been realized from the COGS block and reheating furnace CapEx throughout I mean throughput yield, energy consumption, product quality and cost per ton, what further benefits remain to be kept?

38:42 So with the combination of cost block and reheating furnace, we have been able to increase our capacity to 300,000 tons. And we can actually increase this capacity even beyond this. But that depends on once we get the environmental approval, but we can now go up to 330,000 tons. So that is one. The second is that quality has improved all around. So our rework and rejection have come down. Third, we were doing job work from outside, so that has come back in largely. So that is why the job work area of our expenditure has come down, and therefore, the margin has gone up.

39:34 And years have become better because from a 4.2 meter billet, we've gone to 5.2 meter billet. So the waste is happened at each end of the billet. So now the waste is happening at the end of a longer billet, and therefore, these are improved. Understood, sir. Yes. And, also, because of the better quality, we have been able to stabilize our production at one product size. So this will be fully implemented in the next six months. This will give better flexibility. That means we can service customers better using the combination of the billet as well as billet size as well as the box block. Absolutely, Rich. So my next question is, which end markets are contributing most to incremental demand passenger vehicles?

40:23 Two wheelers, tractors, bearings, engineering, or other applications? And sir, are any are any customer segments showing signs of slowing? Across the board, the demand is there. Okay. And that is what I'm hearing from all the customers seems to be slowing down a bit. Oh, okay, sir. Got it. That's it from my side, sir. Thank you. Thanks, sir. Thank you. You. Anyone who wishes to ask a question, may press star and one on the touch tone telephone. The next question is from the line of Dipesh from I Wealth Management LLP. Please go ahead. Dipesh, kindly unmute your line, please.

41:22 VSSL. Requesting you to unmute your line, please. As there is no response, we move on to the next participant. The next question is from the line of Vanshathur from JJ Advisory. Please go ahead. Hello. Hi. Good afternoon, sir. Congratulations on a great set of numbers. Thank you. Actually. So as the management mentioned that they are targeting a mix of roughly 70% automotive and twenty twenty five to 30% non auto revenue by FY thirty five. Among these verticals... Among the non auto vertical, we'll be oil and gas bearings and tool and diode, which segment are we particularly prioritizing first for the near term scale?

42:12 And do we see any growth in the near term? Near term, there is very limited that we can do because we are running actual capacity, and we are focused on our current business automotive. So we are taking trials and we will start taking trials in fuller ties. So we're trials in each one of these segments, then we will have the products ready. And, really, when the new plan comes up, we'll be be able to start expanding the product. Okay. Okay. So the next part of my question would be, what does the management think that we... About the outlook for the domestic automotive segment in the country over the next one or two years? How do you... What do you think about the sector?

43:06 We are too small a player to start focusing on what the automotive sector will do. You all have better access to the auto company than they're conquer. But my understanding is Yeah. The auto companies are bullish on growth, so we don't see any problem. And more and more so, the... Some of the auto companies are diverting better shares to us for the more sophisticated qualities. We don't see any problem in meeting our volume targets. Okay. So And and we don't see a problem in filling up the capacity. Of course, giving her two, three year time to fill up the capacity with new plant.

43:51 So we don't see much of a problem in Mhmm. Sales. So have you identified any downside scenarios such as any risks that you factored in for your growth outlook? Any downside scenarios? There are several risks. One, there's a project implementation risk. Two, I think that's the biggest risk that we have. Mhmm. Okay. Everything else is everything else is secondary. Okay. Okay, sir. Noted. Thank you so much for taking my questions, sir. All the best for your future, sir. Thank you. Thank you.

44:37 The next question is from the line of Manaslini from Oracle Investments. Please go ahead. Hello. Hello. Congratulations, sir, on the good set of numbers. I... My first question to you is revenue growth has outpaced volume growth. So then how have realizations changed, say, by product category, and what is driving the price? Is it customer mix, value added grades, market prices, or probably contractual resets? So the largest impact is market prices, which means contractual reset because we don't sell in the spot market. Right. So that's the largest element.

45:24 The price increase... Because of commodity prices going up, the price increase has been substantial, which has led to... Over the last two quarters, the prices have gone up. And for some OEs, around 8,000 rupees, some OEs, little less because they're settled with a lag, and some OEs are in the middle of settling, so... Which has not yet fully settled. So second quarter is still not fully settled just now. Okay. That that makes sense. Also, I had another question. Realistically, what market share or tonnage can VSSL capture here over the next, say, three to five years? We are too tiny to have a large market share. We are... Our capacity is 200...

46:15 This year, we do about 265,000 tons. The market size is about 8,000,000 tons, and there are several products that we are not even present in. So That makes sense. I... Again, these are all questions when you're a larger player, they will look at market share and so on. For us, how much capacity we can put up and assess that capacity. That makes sense, sir. Thank you so much. Thank you. Thank you. Thank you. As there are no further questions from the participants, I now hand the conference over to mister for closing comments. Thank you so much for showing so much interest in our company, and your questions are all well noted.

47:01 And we will have more precise answers in the next six months. With this capacity that we are putting up, we will become a substantial player in the alloy steel bar market. We still will not have right bar... Wire rods, which is a very large segment of the alloy steel market. We will not be in that segment. And in the bar segment, cars and two wheelers, we will be a major supplier in India. But... And overall, we remain optimistic. The business is strong, and there is the tailwind of green steel. More and more customers are coming to us talking about green steel. No price benefit as yet, but share of business benefit clearly seems to be visible as far as trend is concerned.

47:55 Beyond that, we remain optimistic for the future. Thank you so much. Thank you. On behalf of IIFL Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.