Vardhman Special Steels (VSSL) Q4 19/20 earnings summary

Executive summary

• FY20 marked an operational reset: a modernized electric arc furnace and Aichi Steel’s strategic investment supported plans to improve safety, quality and cost competitiveness.

• Weak automotive demand, lower steel prices and COVID-19 disruption pressured results; revenue fell to ₹846.20 crore from ₹1,120.76 crore, while PAT was ₹3.34 crore.

Financial highlights

• Revenue from operations was ₹846.20 crore versus ₹1,120.76 crore; PBDIT was ₹49.12 crore versus ₹69.72 crore.

• PBT was a loss of ₹2.32 crore versus profit of ₹22.14 crore; PAT was ₹3.34 crore versus ₹22.21 crore, and EPS was ₹0.89 versus ₹6.22.

• Total comprehensive income was ₹2.50 crore versus ₹22.02 crore; exports declined to ₹24.99 crore from ₹58.23 crore.

• Operating cash flow was ₹135.43 crore versus cash used of ₹18.85 crore; inventory fell to ₹151.78 crore from ₹313.22 crore.

Outlook and guidance

• FY21 Q1 was expected to incur significant losses; recovery was anticipated in later quarters, with demand potentially improving from Q2 and automotive demand returning in H2, subject to pandemic conditions.

• Priorities include flexible short-cycle planning, efficiency and safety improvements with Aichi, OEM product development, and converting new approvals into business.

• Capacity expansion toward 3 lakh tonnes annually is conditional on operating at full capacity, global-standard processes and environmental and other clearances.