Vardhaman Special Steels–Quick Notes from QIP Placement Document

Starting a new series on quick notes from the QIP Placement Document shared by the companies. We find this document to be more detailed in comparison to the Annual Report. The most detailed document is the DRHP but that comes out only for new listings.

This is not a Buy/Sell Recommendation. We may only post on companies we track.

All QIP documents generally updated on this link - 

Vardhaman Special Steels Placement Document


· Dependent on one manufacturing facility located in Ludhiana, Punjab

· Derive a significant portion of our revenue from a few major customers.

· Volatility or fluctuations in prices of raw materials

· If purchases of new vehicles decline, it could significantly decrease the demand for our products

· plans to have a major shift towards electric vehicles by 2030, may adversely impact the demand for alloy steel in light of the lower consumption of alloy steel in electric vehicles

Plants and Warehouses

· Manufacturing facility located in Ludhiana, Punjab and Warehouse in Bilaspur, Haryana. Also leased six warehouses across other key locations in India, and engaged one bonded warehouse in Bangkok, Thailand. (Our warehouses are responsible for receiving and dispatch of goods to our customers)

· The lease rent expenses recognized for the Fiscal 2017 and Fiscal 2016, were Rs. 87.13 lakhs and Rs. 78.21 lakhs, respectively.


· Over 350 full-time staff members and over 550 permanent workmen.

· R&D team comprised of over 50 individuals as on December 31, 2017

Client Concentration

· For the nine months ended December 31, 2017, and Fiscal 2017, our top 10 customers contributed 46.71% and 46.33%, of our total revenues from operations, respectively.

· Top five customers accounted for 36.92% and 32.86% of our total revenues in Fiscal 2016 and Fiscal 2017

· in Fiscal 2017, we had over 200 customers

Principal Raw Materials

· The principal raw materials we use to manufacture our products include shredded scrap, directly reduced iron, pig iron, sponge iron, bundled scrap, forging flash, mil steel turning boring and various types of ferrous alloys

· The volume of our imported materials has reduced significantly over the past fiscal years.

Capacity and Utilization

· At the aforesaid facility, we have set up an advanced electric arc furnace, a rolling mill and a bright bar shop. As on December 31, 2017, we had an installed melting capacity of 1,80,000 MTPA, rolling capacity of 1,80,000 MTPA and bright bar capacity of 36,000 MTPA

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· Also invested in equipment with a relatively small heat size (about 30 MT) as it provides it with the flexibility to meet urgent client demands


· We specialize in the manufacture of steel bars in a variety of sizes, ranging from lower diameters such as 16 mm to higher diameters such 90 mm to 110 mm. Our current product portfolio comprises alloy steel bars and bright bars of various specifications, and finds applications in the automotive, engineering, bearings and allied industries. These products find end-use in crank-shafts for 2Ws, rear-axle shafts and gear shafts for 4Ws, drive-shafts for LCVs, MHCVs and other vehicles

· Based on the application needs of tier-1 suppliers to automotive OEMs, we customize the grades of our steel products. Currently, we are well-equipped to produce diverse steel grades, including basic carbon steel, high alloy steel, bearing steel, micro alloy steel and other special steels.

· A significant portion of our products are sold to tier-I suppliers(such as 2W, 4W, LCV, MHCV and other vehicle manufacturers.) that cater to the raw material requirements of major global and Indian automotive OEMs in India

· Sale of special and alloy steel products that find end-use in the 2Ws and 4Ws space constitutes the largest portion of our products sold, both in terms of value and volume

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Manufacturing Process

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Domestic vs Exports

· In the nine-months ended December 31, 2017, and in Fiscal 2017, we derived 94.20% and 94.74% of our revenue from operations from our sales in India

· We also supply special steel with forging applications to the international markets of Thailand, Taiwan, Turkey, Russia, Italy and Spain

· Revenues from exports decreased from Rs. 4,250.67 lakhs in Fiscal 2016 to Rs. 3,953.28 lakhs in Fiscal 2017, the volume of exports of rolled products was significantly higher in Fiscal 2017 as compared to Fiscal 2016

Pending Clearances

· We have submitted an application to the Punjab Pollution Control Board, and are awaiting its approval in respect of the recent increase in the production capacity of the melting shop and rolling mill at our manufacturing facility.

Debtors and Creditors

· For the nine-month period ended December 31, 2017, 2017, and Fiscal 2017, our trade receivables were Rs. 18,731.25 lakhs and Rs. 18,897.16 lakhs, respectively, which constituted 28.80% and 24.90% of our total income for the same periods

· Our credit terms vary according to market practices and typically, the credit period ranges between 7 days to 90 days.

Contingent Liabilities

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Industry Overview


· A sector-wise break-up for finished steel in India is as set out below:


· Automobile production in India expanded at a CAGR of 8.76 per cent during FY10–17


The Individual Investor now a Majority in Mutual Funds

Some very interesting stats from the #AMFI website.

I think its for the first time Individual Investors category share has crossed Institutional Investor.

  • “Individual investors now hold a higher share of industry’s assets, i.e. 51.1% in January 2018, compared with 44.5% in January 2017. “

The Beyond 15 locations are gaining superbly in terms of participation.

  • “19% of the assets of the mutual fund industry came from B15 locations in January 2018. “
  • “Assets from B15 locations have increased from Rs.2.97 lakh cr. in January 2017 to Rs.4.39 lakh cr. in January 2018. The rate of growth in assets for B15 locations was 47.7% (30.4% for the industry as a whole during the same period). “
  • “About 28% of assets held by individual investors is from the B15 locations up from 25.03% in January 2017. “

The Individual Investor category is yet to shift towards going direct into mutual funds

“The proportion of direct investments in equity, to the total assets held by individual investors, was about 7% in January 2018. “

Concall Summaries – Century ply KEC International Greenply Indigo Daawat GSFC and more

A lot of concall summaries – Harsh Doshi.

Companies covered :

  • Century ply
  • KEC International
  • Greenply
  • Indigo
  • Daawat
  • GSFC
  • Kwality
  • NCC
  • Satin Credit
  • Ruchira Papers
  • JKIL
  • Banswara Syntex
  • Ahluwalia Contractors
  • Camlin fine science 

For detailed concall audios –

Anil Kumar Goel’s 290 crore bet on Sugar Stocks

Anil Kumar Goel is one of the veteran value investors. One of his major stakes is in KRBL. As we go through the public disclosures he is one of the few investors who continues to remain invested for long periods of time.

In the last 2-3 years the investor has picked up a substantial stakes in UP based Sugar companies.

Just take this example of Dhampur Sugar Mills. As of December end has more than 10% stake in the company.

ANIL GOEL Jun-16 1295000 1295000 1.95   SEEMA GOEL Sep-16 900000 900000 1.36
ANIL GOEL Sep-16 1090000 2385000 3.59   SEEMA GOEL Dec-16 34000 934000 1.41
ANIL GOEL Dec-16 594071 2979071 4.49   SEEMA GOEL Mar-17 146000 1080000 1.63
ANIL GOEL Mar-17 1100929 4080000 6.15   SEEMA GOEL Jun-17 410000 1490000 2.24
ANIL GOEL Jun-17 600000 4680000 7.05   SEEMA GOEL Sep-17 234000 1724000 2.6
ANIL GOEL Sep-17 473000 5153000 7.76   SEEMA GOEL Dec-17 189000 1913000 2.88
ANIL GOEL Dec-17 38000 5191000 7.82            
TOTAL HOLDINGS   5191000           1913000 7104000 10.7

As of yesterdays closing the total bet on the sector is now worth 290 crores roughly.

DHAMPUR 7104000 213 1513152000
DWARIKESH 11540000 41.6 480064000
TRIVENI 6620000 69.35 459097000
UTTAM 3054000 129.5 395493000
AVADH 54375 818 44478750
TOTAL AMOUNT     2892284750

Source –

Sugar maybe a regulated sector but the amount of earnings the companies have started making from Power and Ethanol is becoming a major portion of their EBIDTA.

If the end prices of sugar remain close to the production cost or make the business a little profitable on an average over the next 3 years this could be one interesting sector as these companies could have huge cash flows. Warrants a detailed study.

2007–DLF Market Cap = IT Sector and Single Telecom Company = Pharma Sector

A very interesting snippet from Sailesh Raj Bhan interview in Outlook Business.

I think the single telecom company he mentions could be Reliance Communications mostly


Sailesh Bhan

Read the Magazine on this link

Outlook Business - February 2, 2018 Digital Magazine from Magzter - World's Largest Digital Newsstand

Ricoh India – New Term – Circular Sales.

Over the years we have heard how Circular Trading was done for manipulation of stock prices.

Ricoh India took it a step ahead with Circular Sales itself to inflate Revenues.

You can read the full order here -  



A Quick Analysis on Indian Equities


Welcome to this new blog from Analyse India.

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Interesting Stock Research and Tidbits on Smallcaps.

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