Vardhman Special Steels commits ₹1,116 cr for forging unit, up from ₹475 cr plan
The Ludhiana forging plant, double the originally planned size, will make ring gears and precision parts. First line due by March 2028.
What's new
- Foundation stone laid for forging unit in Ludhiana; Punjab CM present.
- Investment jumps to ₹1,116 cr from ₹475 cr, more than double the earlier plan.
- First forging line and NDT line by March 2028; second line later based on demand.
Why this matters
At 38% of market cap and over 60% of FY26 revenue, this is VSSL's biggest bet yet, a forward integration from special steel to precision forging. The partnership with Aichi Steel adds technology credibility, but the scale is the real surprise. Analysts will need to rework capex and earnings models.
What we're watching
- Debt funding mix: VSSL's current D/E is 0.15; this capex may change that.
- Customer tie-ups for forged components, especially for export markets.
- Execution milestones; first line commissioning in March 2028 is the next hard deadline.
The full read
Vardhman Special Steels just did more than double its biggest bet. The company laid the foundation for a forging unit in Ludhiana with a committed investment of ₹1,116 crore, up from the ₹475 crore the board had approved earlier. That is 38% of its current market cap and over 60% of FY26 revenue, a scale that changes the company's risk profile overnight. The plant, built with technology from Aichi Steel, will make ring gears and precision-forged components for both domestic and export auto markets. The first line is due by March 2028, with a second line to follow. Punjab CM Bhagwant Singh Mann attended the ceremony. For a company with a debt/equity of just 0.15, the big question is how this will be funded. The plan is clear. The execution clock just started ticking.
Questions answered
- Why did Vardhman Special Steels increase its forging investment from ₹475 cr to ₹1,116 cr?
- The company chose a larger facility with two forging lines instead of one, plus additional testing infrastructure. The expansion targets both domestic and export demand for precision-forged automotive components.
- How does the ₹1,116 cr capex compare to VSSL's financials?
- It is about 38% of the company's market cap of ₹2,735 cr and more than 60% of its FY26 revenue, making it a transformative investment relative to scale.
- What products will the Ludhiana forging unit make?
- Ring gears and other precision-forged automotive components, leveraging technology from Aichi Steel Corporation of Japan.
- When will the forging unit start production?
- The first forging line and non-destructive testing line are targeted for commissioning by March 2028. A second line will follow based on customer demand.