Vardhman Special Steels (VSSL) Q4 15/16 earnings summary

Executive summary

• FY2015-16 returned to profit after two loss-making years: PAT ₹5.21 crore versus a ₹15.13 crore loss in FY2014-15; lower raw-material and fuel costs supported margins.

• Priorities include increasing melt-shop throughput, expanding value-added bright bars, targeting critical steel grades and developing new steel grades for customer cost or performance gains.

Financial highlights

• Gross revenue from operations was ₹729.33 crore versus ₹734.18 crore; exports were ₹39.35 crore versus ₹28.64 crore.

• PBDIT was ₹45.77 crore versus ₹18.96 crore; finance costs were ₹23.53 crore versus ₹20.21 crore, and depreciation was ₹17.03 crore versus ₹13.87 crore.

• PAT was ₹5.21 crore versus a ₹15.13 crore loss; basic and diluted EPS were ₹2.81 versus a loss of ₹8.15 per share.

• Operating cash flow was ₹50.10 crore versus a ₹32.75 crore outflow; cash and cash equivalents closed at ₹3.79 crore versus ₹8.65 crore.

• New Rolling Mill cost savings were ₹10.62 crore in FY2015-16 versus ₹9.60 crore in FY2014-15; exports of alloy steel rose to 5,710.12 MT from 4,178.97 MT.

Outlook and guidance

• Melt-shop revamp was expected to finish in FY2016-17, lifting annual melting capacity from 125,000 MT to 160,000 MT; next-year production and sales target was 150,000 MT.

• Higher production impact was expected to begin in FY2016-17 after furnace tap-to-tap time improvements; rolling capacity is 180,000 MT, while melting capacity had constrained output to about 130,000 MT.

• Bright Bar section performance improvement target was 15–20%; higher throughput was intended to meet anticipated demand, with full melting-project impact expected in the next year.

• Management expected growth and profitability gains from export development, value-added products, rolling-mill stabilization, quality improvements and cost-reduction initiatives.