#1Vardhman Vardhmān Delivering Excellence. Since 1965. VARDHMAN SPECIAL STEELS LIMITED CHANDIGARH ROAD LUDHIANA-141010, PUNJAB T: +91-161-2228943-48 F: +91-161-2601048, 2222616, 2601040 E: [email protected] Ref. VSSL:SCY:JULY:2022-23 BSE Limited, New Trading Ring, Rotunda Building, P.J. Towers, Dalal Street, MUMBAI-400001. Scrip Code: 534392 Dated: 25-July-2022 The National Stock Exchange of India Ltd, Exchange Plaza, Bandra-Kurla Complex, Bandra (East), MUMBAI-400 051 Scrip Code: VSSL SUB: COMPLIANCE OF REGULATION 30 OF THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIRMENTS) REGULATIONS, 2015. Dear Sir, Pursuant to the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, please find enclosed herewith Investor Presentation on the Un-audited Financial Results of the Company for the quarter ended 30th June, 2022. Kindly note and display the notice on your notice board for the information of the members of your exchange and general public. Thanking you, Yours faithfully, For VARDHMAN SPECIAL STEELS LIMITED Special am Steels Ludhiana (SONAM TANEJA Limited Company Secretary YARNS FABRICS THREADS GARMENTS FIBRES STEELS PAN NO.: AADCV4812B CIN: L27100PB2010PLC033930 WWW.VARDHMANSTEEL.COM#2TEAM WORK Vardhman Special Steels Limited Result Update Presentation Q1 FY23 VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY#3Disclaimer VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY This presentation has been prepared by Vardhman Special Steels Limited (the "Company") solely for information purposes and does not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. Certain matters discussed in this Presentation may contain statements regarding the Company's market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company's actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. 2#4Table of Contents Financial Highlights Company Overview Business Overview Way Ahead VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY 3#5CAUTION Financial Highlights#6Management's Message VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Commenting on the results Mr. Sachit Jain, Vice Chairman and Managing Director said - "Q1 FY23 has been a quarter that has witnessed strong headwinds in terms of raw material price fluctuations. While, the industry was negotiating a price increase with the OEMS, that has been due for sometime, we witnessed a sharp fall in raw material price in later half of May which significantly impacted the quantum of price increase we were supposed to obtain. This led to a pressure on the gross margins thereby impacting the EBITDA performance. In terms of sales volume, we performed rather very well, registering a growth of about 20% and crossed 52,000 tons mark in the quarter. Another 20% increase in the turnover came from the 20% price increase we got from the OEMs. The change in product mix towards value added products, as a part of the strategy, is an on-going process and about 2% increase in topline has come in due to this. The progress of the Aichi association continues with the commencement of phase II. After success of the sampling phase, the phase for supply of Trial order has already begun. This is in line with the expected timeline as stated earlier. The entire team of Vardhman has put in an immense amount of effort to face the recent headwinds and deserves appreciation. I would also like to express my gratitude towards our customers, suppliers, Banks and the Government for their unstinted, cooperation and support. I assure my shareholders that we will keep up the momentum of efforts and hard work and keep performing as per stated targets." 5#7Financial Highlights - Quarterly Revenue from Operations (Rs. Crore) Sales Volumes (tonnes) VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY 52,265 43,705 43,283 44,723 41,596 359.32 330.14 335.65 343.35 469.16 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 EBITDA (Rs. Crore)# PAT (Rs. Crore) 30.30 29.19 53.71 48.55 40.76 59.56 27.80 51.61 24.29 19.47 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 #EBITDA is including Other Income 6#8Financial Highlights - Q1 FY23 VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY INR Crore Q1 FY23 Q1 FY22 Y-O-Y % Q4 FY22 Revenue From Operations 469.16 330.14 42.11% 343.35 Other Income 5.91 2.64 21.51 Total Income 475.08 332.78 42.76% 364.86 Cost of Materials Consumed 292.01 227.29 233.21 Q1 FY23 volumes stood at 52,265 tonnes Increase in Revenue of 42.11% this growth is - Purchases of Stocks 0.00 0.30 0.00 Changes In Inventory 18.32 (45.77) (29.62) Raw Material Expenses 310.33 181.81 203.58 attributed to about 20% increase in volumes and about 20% due to price increase from OEMs Employee Expenses 21.92 18.68 21.42 Power & Fuel 41.97 36.43 35.09 Other Expenses 49.24 42.14 45.20 Decline in EBITDA mainly on account of higher raw material prices Total Expenditure 423.46 279.07 305.30 EBITDA 51.61 53.71 (3.90%) 59.56 Depreciation 6.92 6.62 6.84 From 1st April 2022 - have switched over to new tax regime having an effective tax rate of 25.17% Interest/Finance Cost 4.07 4.40 3.80 PBT 40.63 42.69 (4.82%) 48.93 Aichi Commenced Phase II of association with Tax 10.33 14.89 19.74 supply of trial orders PAT 30.30 27.80 8.99% 29.19 Basic EPS in Rs. 7.47 6.86 8.89% 7.20 7#9Financial Highlights - FY22 INR Crore FY22 FY21 Y-O-Y % Revenue From Operations* 1,368.46 937.08 46.03% Other Income 28.89 12.96 Total Income 1,397.35 950.04 Cost of Materials Consumed 896.53 537.41 Purchases of Stocks 0.62 0.00 Changes In Inventory (100.32) (12.25) Raw Material Expenses 796.82 525.17 Employee Expenses 80.99 59.61 Power & Fuel 141.77 116.26 Other Expenses 175.19 132.69 Total Expenditure 1,194.77 833.73 EBITDA 202.58 116.31 74.17% Depreciation 26.96 30.23 Interest/Finance Cost 17.28 19.71 PBT 158.34 66.38 138.54% Tax 57.59 22.18 PAT 100.75 44.19 Basic EPS in Rs. 24.87 10.94 127.97% 127.33% VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY • Volumes for the full year . stood at 1,73,308 tonnes YoY growth of 15.33% - • EBITDA growth of 74.17% mainly due to higher sales volumes, price increases and higher operational efficiencies. It also includes exemption from electricity duty amounting to Rs. 18.65 crores • ROCE stands at 28.30% on yearly basis • Board recommended increased dividend of Rs. 3.50 per equity share compared to Rs. 1.50 last year * Includes sale of billets and traded goods; #Capital employed in ROCE does not include unutilized funding of Rs. 50 cr from Aichi Steels as it is deposited in FD 8#10Balance Sheet Highlights VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY INR Crore Equity* As on 31st Mar’22 As on 31st Mar'21 INR Crore 554.96 459.36 Equity Share Capital 40.56 40.51 Non-Current Assets Property Plant & Equipment As on 31st Mar'22 As on 31st Mar'21 Other Equity 514.40 418.86 Capital work in progress Non-current Liabilities 103.04 112.87 Other Intangible Assets Financial Liabilities Right of Use Asset 324.15 288.22 12.88 12.74 0.08 0.13 0.86 0.91 320.45 281.49 Borrowing 78.89 109.65 Financial Assets Lease Liability 0.91 0.94 Long Term Loans 2.92 1.78 Other Financial Liabilities 0.11 0.32 Other Financial Assets 2.57 0.00 Provisions 1.81 1.76 Deferred Tax Assets (Net) 0.00 9.69 Deferred Tax Liabilities (net) 20.85 0.00 Income Tax Assets (Net) 0.32 0.83 Other Non-Current Liabilities 0.46 0.19 Other Non-Current Assets 16.31 12.88 Current Liabilities 262.88 230.50 Current Assets 596.73 482.28 Financial Liabilities Inventories 304.32 192.26 Borrowings 82.03 79.81 Financial Assets Lease Liabilities 0.14 0.11 Investments 15.40 0.00 Trade Payables Trade Receivables 221.86 224.30 Total O/s dues of Micro, Small Ent 2.07 2.57 Cash & Cash Equivalents 0.27 2.34 Total O/s other Than Above 145.41 127.61 Other Bank Balance 15.71 50.00 Other Financial Liabilities 19.77 10.58 Loans 1.52 0.99 Provisions 0.27 0.24 Other Financial Assets 2.07 4.71 Other Current Liabilities 8.99 9.46 Assets Held for Sale 0.00 0.00 Current Tax Liability (Net) 4.21 Total Equity & Liabilities 920.88 0.13 802.73 Other Current Assets Total Assets 35.58 7.67 920.88 802.73 *On 4th November 2019, Company allotted 46,29,629 equity shares on preferential basis of Rs.10 each at Rs. 108/- (including security premium) aggregating to Rs. 50 Crore to Aichi Steel Corporation 9#11CAUTION Company Overview#12About Us VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Amongst India's Leading Steel Bar Producers for Automotive Applications ■ Incorporated in May 2010 ■ Headquartered in Ludhiana, Punjab ■ Caters to sectors such as Engineering, Automotive, Tractor, Bearing and Allied Industries Specialized Product offerings - ■ Steel Bars and Rods and Bright Bars of various categories of Special & Alloy Steels 200+ Reputed and long-term customers • Toyota, Hero Moto Corp, Caterpillar, Hino Motors, Maruti, Bajaj and Hyundai, among others Experienced Management Team ■ Significant experience in Steel Industry ■ Long term vision and proven ability to achieve long term goals for Company Strategic alliance with Aichi Steel Corporation State-of-art manufacturing facilities ■ Cutting-edge manufacturing technology ■ Manufacturing Capacity Billets 2,00,000 MTPA Rolled Bars -2,00,000 MTPA Strong Domestic & International Customer Base for forging applications ■ Thailand, Taiwan, Turkey, Russia, Germany and Spain Quality Standards, Assurance & Certifications ■ ISO 14001:2004; OHSAS 18001:2007; ISO 9001:2008; ISO/TS 16949:2009 11#13Journey So Far VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY What We were... ■ 1973 - Started as Oswal Steels 50,000 TPA capacity of special & alloy steels ■ 1986 - Acquired Mohta Alloys with capacity of 1,00,000 TPA ■ 1995 - Installed modern Steel Melting Shop with Electromagnetic Stirrer ■ 2000 - Commissioned Vacuum Degassing System ■ 2001 - Strengthened product portfolio - added Bright Bar Facility ■ 2010 - Independent identity under Vardhman Group ■ 2012 - Listed on BSE & NSE ■ 2013 - Installed fully automatic rolling mill with capacity of 1,50,000 TPA & Magnaflux leakage testing system (Dr. Foerster Germany), and Ultrasonic Testing from (Olympus, Canada) ■ July 2015 - Installed Fume Extraction system ■ Aug 2015 - Increased Bright bars capacity to 36,000 TPA & 1,80,000 TPA for Hot Rolled ■ Dec 2016 - Upgraded transformer & allied equipment to reduce melting time & resulting in SMS capacity to 1,65,000 TPA - ■ April 2017 – Rights Issue of Rs 67.85 Cr. ■ Oct 2017 - Purchased ~8 acres of adjoining land for Rs. 36 Cr. 2016 - 2017 ■ Feb. 2018 - QIP of Rs 50 Cr. ■ June 2018 - CRISIL upgraded credit rating - ■ August 2018 – Change in Statutory Auditors to M/s B. S. R. & Co. LLP ■ Feb 2019 - Fortified Board of Directors -one Independent Woman Director and one Additional Director appointed ■ Sept 2019 - Replacement of electric arc furnace and other related activities ■ Nov 2019 - Signs Technical Assistance Agreement with Aichi Steel Corporation - Issuance of equity shares on preferential basis worth Rs. 50 Cr. ■ Appointed Additional Director as representative of Aichi Steel Corporation ■ July 2021 - Received environmental clearance for capacity expansion 1973-2011 2018 - Till Date 2012 - 2015 ** Transforming into one of India's leading steel bar producers 12#14Strong Experienced Board of Directors contd... Mr. Rajeev Gupta Chairman & Independent Director B. Tech from BHU/IIT, Varanasi and MBA (IIM, Ahmedabad) Rich experience of more than 35 years - One of Country's topmost Investment Bankers ☐ - ◉ Ms. Suchita Jain Non-Executive Director Master's degree in Commerce from Punjab University, Chandigarh Over 25 years of rich experience in textile industry Representative of Vardhman Group Mr. Sanjoy Bhattacharyya Independent Director B.Sc (Statistics Honours) and MBA. from IIM, Ahmedabad More than 21 years of experience in equities & investment management - Among leading stock market Gurus Mr. B.K. Choudhary Non-Executive Director Degree in B.Sc., M.Com & MBA Rich experience of more than 44 years in Steel & Textile industry ■ ☐ ◉ ☐ " VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Mr. Sachit Jain Vice Chairman & MD B. Tech (Electrical) - IIT, New Delhi, MBA (Gold medallist) - IIM, Ahmedabad and Owner/President Management Program - Harvard - Experience of over 29 years in Textile & Steel Chairman of CII, Northern Region Mr. Rajinder Kumar Jain Non-Executive Director Chartered Mechanical Engineer from Institute of Mechanical Engineers London Retired as General Manager from Indian Railways after 35 years of service Mr. Toshio Ito Additional Director (Non-Executive Non-Independent) Mechanical Engineer, graduated from Nagoya University, Japan Managing Executive Officer at Aichi Steel Corporation since 2020 Experience as Plant Manager at steelmaking, rolling mill and forging plants of Aichi Steel Mr. Rakesh Jain Independent Director Ph.D. in Polymers from the University of Akron Worked in the Advanced Technology Group at GE Electro- materials Division (EMD) in Coshocton, OH, USA & Aditya Birla Group (ABG) as MD of Indo Gulf Fertilizers Ltd 13#15■ Strong Experienced Board of Directors contd... VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Mr. Sanjeev Pahwa Independent Director B. Tech from IIT, Delhi -Experience of more than 26 years in bicycle/automobile tyres and tubes industry Chairman-cum-MD of Ralson (India) Ltd. - Largest tyre manufacturer in the World Ms. Shubhra Bhattacharya Independent Director Bachelor's degree in Mathematics and MBA from Xavier's Labor Relations Institute More than 25 years of experience in Human Resource Management Mr. Raghav Chandra Independent Director B.Sc (Hons.); M.Sc in Mathematics; Master's in Public Administration, Harvard University Addt'l Secretary & Financial Advisor - various Ministries; Chairman-NHAI; CMD - Indian Highway Mngt Co. Ltd.; CEO - MP Housing Board; MD- MP SIDC; Chairman SEZ Mrs. Vidya Shah Additional Director (Independent) MBA from the Indian Institute of Management, Ahmedabad 11 years of career in field of investment banking - ICICI, Peregrine and NM Rothschild She is Non-Executive Director of Edelweiss Financial Services Ltd. and Executive Chairperson of Edel Give Foundation Recognised as India's Top 100 Women in Finance by Association of International Wealth Management of India (AIWMI) 2019 ■ Mr. Suman Chatterjee Additional Director (Independent) Graduation in B.Sc. Economics from Presidency College, Kolkata Holds post graduate diploma in Business Management from Indian Institute of Management, Ahmedabad Over 30 years of experience in Multiple Leadership roles - worked in sales & marketing and has led businesses for Levi Strauss and SC Johnson in India Mr. Rajendar Kumar Rewari Additional Director (Executive) B. Sc. from Punjabi University, Patiala and LLB & Post Graduation diploma from Kurukshetra University More than 30 years of experience in manufacturing sector More than 10 years of experience as Managing Director of Morarjee Textiles Limited He has long track record at Vardhman Group in various key positions 14#16CAUTION Business Overview#17Wide Range of Rolled & Bright Bars Products Hot Rolled Bars ☐ Bright Bars Diameter Size: Increased from 25-70 MM in 2012 to 16-120 MM Size: 14.66 to 78 mm (Peeled), 18 to 55.25 mm (Drawn) VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY 16#18Axle Gears Stabilizer Bar Diverse applications of our products VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Knuckle Spindle Piston Connecting Rod Camshaft Center Velocity Joint Crankshaft M ميتري Differential Gears Transmission Gear Drive-Shaft Tie-Rod Bearings Companion-flange Axle Shaft Piston-Pin Steering-Yoke Steering Shaft 17#19State-of-art Manufacturing facilities VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY NASE Steel Melting Shop Annual Capacity: 2,00,000 TPA 30 MT Ultra High Power (UHP) Eccentric Bottom Tapping (EBT Type) Fully automated continuous feeding system for DRI & other raw materials Automatic lance manipulator for oxygen and coke injection Electrode regulation system - Melt Controller CELOX for active oxygen measurement (Electronite) Rolling Mill Annual Capacity: 2,00,000 TPA Rolling Mill installed in 2013-14 Mill with complete automation 33 TPH "Walking" Hearth Type Reheating Furnace Reversible 2 high shift able stand with Bar Manipulator 10 Continuous Stands in Horizontal & Vertical configuration Online Dimensional Measurements Rack Type Cooling bed designed for better straightness & Hardness levels ☐ Abrasive Cutter Bright Bars Annual Capacity: 48,000 TPA Bar Peeling & Centreless Grinding Straightening Peeling Cold drawing Polishing Centreless grinding Full length bar Magnetic Particle Inspection High Speed Band Saws • Circular Saw - Cut to Length Steel 18#20Process Flow Sponge, DRI, PIG IRON, Shredded Scrap Exports Bright Bar Shop VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Domestic Shipment Final Inspection and Dispatch NDT Line 30 TON ELECTRIC ARC FURNACE Spherodize Annealing Vaccum Degassing Unit Laddle Refining Unit Continous Casting Facility Billet Reheat Furnace Rolling Mill As Rolled Bar "Hot Rolled" 19#21In-House Steel Melting Shop Electric Arc Furnace Continuous Casting Machine VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Two Ladle Refining Furnace Vacuum Degassing 20 20#22Rolling Mill Rolling Mill Rolling Mill & Bright Bars Reheating Furnace Bright Bar Shop Bright Bar Shop VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Spherodizing & Annealing Machines 21 221#23Automatic Line of Bar Inspection - NDT Line VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Straightening Straightness: 2mm/ meter Chamfering Bar ends free from Burr Shot Blasting FOERSTER FOERSTER 14/02/201 MFLT Acceptance Criteria: 0.2x10mm EJP OLYMPUS UST Acceptance Criteria: SDH - 0.8x10mm, FBH - 0.8 & 1.2mm 22#24☐ Best in class R&D Facility Spectrometer: ARL 4460:1454 for Chemical Analysis. Can check 32 different elements CS 230 Analyzer for Carbon & Sulfur content in steel LECO gas analyzer - TC 600 H2, N2, O2 Analyzer Mobile Spectro and XRF for Mix up Testing of Bars Mechanical and Metallurgical Testing Lab ■ Rockwell Hardness Tester ■ Impact Testing Machine (Material Toughness) Metallurgical Microscope with Image Analyzer ◉ Carl Zeis microscope with maximum magnification of 1000x ■ Olympus microscope with maximum magnification of 2000x RADLAB-1 GAMMA RAY Spectrometer ■ For Testing Steel Samples for Radiological Content The 14/02/2014 10:31 VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY STROHLEIN APPARATUS ECO BAROMETER C&S ANALYSER CS 230 CS230 ■ Can identify different types of Isotopes present in Steel Sample and show Results in Bq/gm Samples Radiological content can be certified with 300 Second scan in RadLab "Well" XRF Spectrometer - Higher range & All input/ output material can be checked and chemically analysed ...ensuring highest levels of quality and compliance 23 23#25Strategically located Warehousing Facilities VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Bilaspur Rudrapur Aurangabad Pune Bangalore Chennai One Owned Warehouse Bilaspur Haryana Five Leased Warehouses in India ■ Bangalore Chennai ■ Rudrapur ■ Pune Aurangabad 24#26Key Strengths VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY State of Art Manufacturing Facilities and advanced R&D Capabilities ■ Well equipped with latest upgraded Technology Machines Diversified Product offerings ■ Manufactures diverse range of products with wide applications across sectors ■ Further expanding product offerings to increase wallet share with existing customers and adding new clients 01 02 Rich Management Experience ☐ Dynamic & rich experience in special steel sector ■ Diverse team with right mix of operational & technical expertise along with dedicated and skilled employee base 03 Quality Standards & Assurance ■ Adherence to quality standards across all stages of manufacturing ■ Checked for dimensional accuracy & temper at every stage ■ Well equipped modern testing facilities to check for physical, mechanical & chemical properties 04 Brand Image ■ Continuous brand building exercise by providing excellent services to satisfy our customers 05 25 25#27101. Cars 200+ Reputed & Long term customers.... TOYOTA HYUNDAI MARUTI SUZUKI Two Wheelers YAMAHA Revs Your Heart NISSAN Ford TVS RENAULT Auto Components K GKN Automotive ærlikon graziano JOHN DEERE MERITOR A MAGNA * VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY HCL/LCVS Hero BAJAJ ΤΑΤΑ ASHOK LEYLAND Swaraj mazda VOLVO HONDA DAIMLER Tractors TAFE AAM Mahindra Off Highway Vehicles NEW HOLLAND AGRICULTURE CATERPILLAR SONALIKA INTERNATIONAL DANA JCB 26#28... . Across Globe with Customer Base Russia VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Germany Italy Japan Turkey Vietnam/ Taiwan Thailand 5% of FY22 sales from exports 27 22#29Way Ahead#30Vardhman Leadership Development Program Park Plaza, Ludhiana -16th to 20th January 2019 Investing in Our Real Assets VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY 2 वर्धमान स्पैशल स्टील्ज़ लिमिटेड "VSSL का है यही प्रयास नदी ज्ञान और कौशल विकास" Centre for Creative Leadership ■ CCL - US based Organisation - offers leadership programs across 160 countries, FT top10 in executive education with 500K alumni over 50 years ■ Customized leadership training for 12 senior management 'Manav Vikas Kendra' ■ Training programs - functional, attitudinal, skill development, quality – - across all levels of employees ■ Specialized & customized programs 'EKLAVYA - B.Sc. to B. Tech.' ◉ New Initiative undertaken Formalized training programs that focus on technical knowledge, enhance skill sets and productive efficiencies of personnel 29#31VSSL entered a strategic alliance with Aichi Steel Corporation (ASC) Japan. (Main material maker for Toyota) Gasoline Phase - 1 VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Technology and technical know how shared with VSSL to make steel for Toyota companies and other OEM's To raise quality of steel of VSSL to be supplied to future ready cars like Hybrid, Hydrogen fuel and Electric Hybrid EV's CAMRY Phase - 2 Increase VSSL production capacity with aim to achieve high quality combined with minimum cost Enable VSSL to build an optimal global production system and customer requirements in India and ASEAN regions TARGET - To make Japanese quality steel in India for Indian auto majors and ASEAN region To reduce manufacturing costs by reducing and the eliminating waste 30#32Possibilities What advantage for VSSL after alliance with Aichi VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY ■ Future Ready products - Patent steel grades developed for special application in EV's, hybrid and conventional Cars ■ Own In House R&D - Toyota Car Company takes input from Aichi on special steel to be developed car parts. It means we can target more approvals for VSSL in Maruti Suzuki and Toyota ■ More customers for Vardhman in India and ASEAN region Export expected to increase from current 1% in FY 2021 to expected 20%-25% by FY 25 ■ Ministry of Environment grants Environmental Clearance for expansion from 2,00,000 MT per annum to 2,80,000 MT per annum of rolled capacity ■ Forward Integration of VSSL into specialised Forging plant in India 118 Road map of production volume (billets) < Steel Production Volume > 200,000 MT FY20~22 220 250,000 MT 250 300,000 MT 300 FY23~25 FY26~28 31#33Timeline for activities VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY Phase 1 Phase 2 Continuous improvement in quality and productivity by strengthening existing procedures Focus on Improving safety levels Start marketing to customers in India, Thailand, Philippines and Indonesia FY 2021-22-Year of Sampling for Aichi 2019-2022 Phase 3 Initiate CAPEX to increase production capacity to 250,000 MT in first phase FY 2022-23: Year of manufacturing of Trial orders for Aichi Anticipate to receive orders from Aichi for Southeast Asia as well as import substitutions FY 2023-24: Year of start of supply of products against firm orders for Aichi Take Japanese approvals like Yamaha, Mushashi, JTEKT, Toyota, Aichi Forge, Suzuki, Hino Motors 2022-2025 Production 300,000MT/year Export 60,000 MT / year Vardhman may look forward to Forging business in India Time for Aichi to Invest more in Vardhman VSSL AICHI may lay foundation for future steel company in India 2025-2028 Goal 2030 - VSSL to emerge as # 1 company in special steel making in India 32#34ESG Initiatives VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY CSR Environment: • • • Committed towards a cleaner, greener and healthier environment by implementing stringent standards & policies for Environment in our unit Making steel through Electric Arc Furnace route which is significantly more environment friendly than Blast Furnace route. Most of our competitors are making steel through Blast Furnace route In 2015, we installed Secondary Fume Extraction system with an investment of Rs. 12 crores, to capture the dust going into the air. Its annual operational cost is approximately Rs. 5 crores On our journey of expanding production capacity from existing 2 lac TPA to 2.80 lac TPA, we are also leaping a step forward in tightening our norms towards environment protection. These include development of Greenbelt of over 33% existing land area, emissions below 30 ppm against 150 ppm followed by most of our competitors, zero liquid discharge and reduction of substantial water extraction even after expansion. Apart from this, we are developing a forest on 5 acres of land owned by Vardhman Textiles Ltd. situated at middle of Focal Point, Ludhiana with a Japanese technique known as "Miyawaki”. This will be a unique facility on such a large area for the benefit of environment and society at large. All this will be done with a total capital outlay of over Rs. 30 crores We plan to replace Furnace Oil with Natural Gas (being a Greener Fuel), thus reducing load of carbon emissions going into environment Trees are planted every year to increase green area in and around our factory. We have planted over 33,000 trees till March 2021 and also undertaken parks and other areas for development Focusing on water conservation by recharging water through 7 rainwater harvesting pits in our factory and adopted more than 10 ponds for desilting Disposing all types of wastes being generated in our factory through agencies duly approved by the Pollution Control Board Social: Support principles of inclusive growth and equitable development through CSR initiatives for sustainable development in core business activities We have made several contributions towards: (i) Preventive & Promoting Healthcare and Sanitation (ii) Towards Environment sustainability (iii) For Promoting Education (iv) Towards Women Empowerment (v)Towards socially and economically backward groups 33#35ESG Initiatives VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY CSR • Have an In-house oxygen generation plants for our captive consumption. During Covid time, we had served the society by supplying oxygen cylinders. During 2nd wave of Covid, we have been able to serve for 50% requirement of oxygen of Ludhiana city Employee well being: ✓ We hadn't laid off anyone during Covid time, rather we had paid full salaries to our employees and ensured full payment to our contract workers. Apart from this, we had given timely increments, production incentives and above all distributed one time incentive for the hard work done by the entire team during tough times of Covid In the current year, we had developed a well-equipped Health Fitness Centre in the campus managed by a professional trainer We have launched 3 welfare policies in the current year: ➤ Chalo Ghar Bhi Banaye (Housing loan scheme) Main Hoon Naa (Taking care of education of children on unfortunate demise of our employee till graduation irrespective of any College/University) ➤ Vidwaan Bano (Scholarship of Rs. 50,000/- to outstanding children of our employees) We are having a strong Women Grievance handling mechanism in place We have various unique facilities and schemes for the benefit of employees such as single roof canteen serving same food from Worker to MD, Two full time Doctors posted in the campus, promoting Trekking, Meditation in Vipasana or equivalent, helping to maintain BMI and many more GOVERNANCE Governance: • M/S BSR & Co LLP, an affiliate of KPMG, Chartered Accountants are our Statutory Auditors. • We are led by a strong Board consisting of 11 members out of which 6 are independent directors. The Chairperson is a non-executive independent director. Our Board includes two women directors, out of which one is an independent director. Aichi Steel Corporation Japan, main steel supplier to Toyota Group had selected us as their partner and entered a strategic alliance in 2019 along with equity participation in VSSL and have a seat on the Board 34#36BSE 534392 EXPERIENCE THE NEW Thank You VARDHMAN SPECIAL STEELS LTD. A COMMITMENT TO QUALITY ONSE VSSL Bloomberg VSSL IN REUTERS VARM.BO National Stock Exchange India Limited For further information, please contact: Company: Investor Relations Advisors : Vardhman Special Steels Limited Mr. Sanjeev Singla [email protected] www.vardhmansteel.com Bridge Investor Relations Pvt. Ltd. Mr. Amit Sharma +91 9867726686 [email protected] Ms. Disha Shah +91 9699060134 [email protected] www.bridge-ir.com 35