Vardhman Special Steels Ltd
NSE:VSSL
Earnings Call Analysis
Q3-2024 Analysis
Vardhman Special Steels Ltd
In the dynamic steel industry, the company maintains its competitive edge by ensuring customer confidence through high-quality steel products and timely service. Continuous improvements in product quality are pursued, fostering strong relationships with customers and vendors. Following Aichi's philosophy—prioritizing safety, then quality, productivity, and cost—the company sees favorable outcomes in growth and customer acquisition.
While the company usually refrains from providing specific guidance, the expectation is that performance will approximate current levels, with any additional sales likely to improve both the top and bottom lines. An approximate target of achieving last year's figure of 200,000 tonnes is set for FY '24. Looking forward, a 7% to 10% volume increase is targeted for the following year.
Exports are anticipated to constitute around 7% to 8% of the total turnover for the full financial year, including exports to Aichi Forge. This is an uptrend compared to previous figures. Moreover, the company aims to elevate export contributions to 25% by FY '27.
Leveraging its association with Aichi, the company is gaining significant footholds in Southeast Asian markets, where it typically requires one to two years for gaining necessary approvals. Positive developments in market expansion are expected within the next fiscal year.
Billet capacity has surged to nearly 260,000 tonnes, attributed to the improvement in scrap mix and reducing operational times in the steel melting shop. The rolling mill is also undergoing a revamp, which is phased to increase capacity further.
Following significant plant shutdowns, particularly in the rolling mill, the company has managed to increase production by about 700 tonnes per month, nearing the targeted benefit of 800 tonnes. This is seen as a mission nearly accomplished in enhancing production efficiency.
While there's no concrete news to share, the company is thoughtfully considering opportunities for greenfield expansion, suggesting an openness to strategic long-term growth initiatives.
The company exhibits optimism towards future market conditions, bolstered by rising auto sales. EBITDA levels are deemed manageable with supportive raw materials pricing. Strengthening ties with Aichi enrich the company’s prospects, as do ongoing efforts in Environmental, Social, and Governance (ESG) initiatives. Strategic actions, like integrating solar power, are being employed to improve ESG performance further, reinforcing a robust financial position and an overall positive outlook for the company.
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Ladies and gentlemen, good day, and welcome to Vardhman Special Steels Limited Q3 and 9 Months FY '24 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vatsal from Choice Equity Broking Private Limited. Please go ahead, sir.
Yes. Thank you, Tushar. Good morning, everyone. On behalf of Choice Equity Broking, welcome to the Q3 and 9 months FY '24 Post Results Conference Call of Vardhman Special Steels Limited. I also take this opportunity to welcome the senior management team. On today's call, we have with us Mr. Rajendar Kumar Rewari, Executive Director; Ms. Soumya Jain, Executive Director; Mr. Sanjeev Singla, CFO. Kindly refer to the safe harbor statements on the second slide of the earnings presentation. I will now invite the management for the opening remarks to be followed by Q&A session. Thank you, and over to you, sir.
Yes. Thank you. Good morning, everyone, and thank you for joining us on our earnings call for the quarter and 9 months ended 31st December, 2023. On call with me is Ms. Soumya Jain, who is our Executive Director and daughter of Mr. Sachit Jain; Mr. Sanjeev Singla, our CFO; Mrs. Sonam Dhingra, our Company Secretary and Compliance Officer. And we regret to inform you that Mr. Sachit Jain, because of some business engagements, will not be able to join this call, and we will answer all your questions. Thank you. Now the quarter which has -- and 9 months, which has gone by, overall quarter went very well in terms of operations. During this quarter, we had 2 shutdowns, one 5-day shutdown for our furnace. That means from the steel melting shop, and 13 days shutdown in the rolling mill. The purpose of taking this shutdown in the rolling mill was to add 2 additional stands, which are the equipments for rolling. And with the installation of these 2 stands, we will be able to increase our rolling production by about 10,000 tonnes per annum.
So it was a first step for our revamping activities on our rolling mill to increase our production. In the second phase, we will be putting up another bigger reheating furnace and KOCKS mill. Those will take another 12 to 18 months to come forward. All these 3 activities are for the revamping of rolling mill, increasing our -- taking our production to the next level and also giving the quality assured rolled bars to the market. So this was about the production activity. As Sachit-sir has informed you -- informed investors number of times that we are increasing our capacity to 260,000 tonnes per annum of our steelmaking. So in order to achieve that, we have already undertaken some initiative. Rather, I will say we have executed some initiatives during the month of January and the progress is quite good. And hopefully, we will be -- from next year onwards, we will be achieving the higher target of SMS production. The other important thing for you to note is on our ESG initiatives. In our earlier communication, everywhere we have said that our carbon footprint is 0.82 metric ton per tonne of steel, emission of carbon diode while we make steel. It has come down to another low level of 0.68 because government has changed some standard of calculating the footprint. So this is -- I'm going to say from the ESG point of view, it's a good development, whereas we informed in our Board meeting also, we have executed power purchase agreement of solar power plant on 16th December, '23. Ongoing capacity expansion, which we envisaged by adding the new equipment, is going on as per plan. And we -- as we targeted about 800 tonnes per month, we have already achieved around 700 tonnes per month. And in the subsequent month, it will further stabilize. Our collaboration with the Aichi team is going on well. All activities are -- their participation and our understanding about the product quality, safety, et cetera, is going on as per our schedule. Their engineers, their experts are here with us. Everything is going on as per our plan. As I said earlier, the quarter 3, it went well as per our budgeted plan. But however, quarter 3 is always a little bit subdued because of various shutdowns being taken by the automobile manufacturers and forging plants. So therefore, we had lost some tonnage in the sales, about 6% I think our sale was less, but we are hopeful that in the times to come, we will cover up that, and we will be able to achieve our annual target of around 200,000 tonnes. So this is all about general overall scenario is looking good. Our sales, everybody knows, is upbeat, manufacturers are upbeat. It looks good. So now I request Mr. Singla to go through the financial performance with you. Thank you.
Thank you, sir. In terms of financial performance for the quarter 3, it is almost -- in terms of tonnage and in terms of revenue, same as was in Q3 of the corresponding year -- corresponding quarter of last year. Actual tonnage we have achieved is 46,400, which is 0.17% marginally higher than the Q3 of last year. And revenue from operations is almost same as in the Q3 last year. In terms of EBITDA, though on the face it is appearing to be lower, but I would like to say that this Q3 of last year was not comparable because of 2 reasons. One was that we have accounted INR 6.6 crores of GST refund in Q3 last year, which was pertaining to Q1 and Q2. And secondly, the price reduction of INR 1,700, which was pertaining to Q3 was decided in Q4. And accordingly, the price decrease was also factored in Q4. So in last year, we have said that Q3 and Q4 is to be considered in total because Q3, some figures were booked in Q4. Overall EBITDA per ton. In Q3 this year, it is INR 8,900, well within our stated range. And after all, our PAT for this quarter is INR 22 crores. And as far as -- as Rewari-sir has already said that we are lagging a little behind in terms of our overall sales for the 9 months, and which we are trying our best to meet our annual target of 200,000 tonnes. So that's all on our financial performance. Now I request for the question-and-answer session.
We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Angad from Sameeksha Capital.
Sir, my question was on the blended realization. Over the past 5, 6 years, we have seen the blended realization has improved from INR 55,000 level to around INR 85,000 level. You've mentioned FY '24 this year will be a year of consolidation on volume side. So can you just give us some trajectory on the blended realization? How do we look at it? Is this current level sustainable? And can you give us a perspective?
So current level because of this INR 85,000 is basically decided by the market. Mostly, it is driven by the raw material prices. And as you will see that in the past 2, 3 years after COVID, the raw material prices increased to a level which never -- which was never expected. And this INR 85,000 figure was even more than INR 95,000 also. As of now, we see this revenue figure of INR 85,000 is more or less stable from the last, I will say, 1 year. And going forward also, we don't see much change in these figures.
Okay. And 1 more question on the capacity levels. Since we'll hit the peak capacity in '26 and till the greenfield capacity comes, what are your plans to incremental improvements on sales and volume front?
As we have already explained that we are -- first, we are doing various improvements in our process flow, we are increasing our own capacity, which we said that will be 260,000 metric tons per annum, which can also -- we have a scope to increase it further. We will do that. Our own rolling mill is also we are increasing the capacity. And once we add the -- do the full revamp, then that capacity will also go up. So I think that way, we will be able to meet the requirement of the market.
Okay. And sir, I just wanted to understand on the frequency of the negotiations on the price level with OEMs. So is it like quarterly? Or like what's the frequency level? And how do you implement the new price? Is it decided from the first stage? Like can you just throw some light on that?
Normally, the price is quarter-wise. And you know that we have to negotiate with the OEMs. So broadly, it is based on the raw material price and a few other -- if we are selling a lower steel than the price of nickel, moly, et cetera. But it happens -- it has to happen quarterly, but sometimes there is always a lag between the finalization and the realized -- start of realization of that price. But to make it simple, it is based on the raw material prices. Raw material has few indices to note, it can be taken from various steel mills and other sites where it is declared, like shredded as well as the ingot price available in the Mandi Gobindgarh. So these are the influencing factors.
[Operator Instructions] The next question is from the line of [ Naman ], an individual investor.
A couple of questions. First is if we are aware of that there is...
Can you speak loudly, please, Naman?
Yes, sure. Okay, I'll speak a little louder. Okay, my question #1 is if we are aware that the plant is under maintenance or we are lagging behind target. But there's additional things which we always hear that we are building up the capacities of plants. So what I mean to say is why we are not so proactive in managing this? Because that means we are aware of the situation that our margins or our sales or we are not meeting the target. So why we not make up additional plants or capacity? Or why we are only doing it in a period where we are getting hit? And number 2 is, every year, we talk about Aichi and the future prospects there. But we -- every year, we see the figures of exports are very negligible, 3% to 5%. So these couple of things are not summing up. So that's the question on it. Or you can provide some detailed numbers or projections how the capacity of the plant, how the projections will lead us to a good number because that's what I've been expecting something to build up in the near future. And when we are talking about new capacities of plants, I'm sure I remember we talked earlier also something about NOCs are going up with the Ministry of Environment and all those things [Technical Difficulty]. I'm sure management would have taken those considerations, too. But just want to know how things are at the current status and what's the projection?
Yes. Thank you very much, Naman. We appreciate your concerns. First of all, let me assure you that nothing is happening abruptly. Everything is well planned. As I explained, all -- every shutdown is well planned, and we start building up our inventories to create the market, and we have not suffered any market share or any sales because of our planned shutdown. Number two, I will emphasize that in order to bring in improvement in the existing steel plant, it is almost imperative to have shutdowns. Otherwise, you know it is a hot metal. We cannot -- we can do some projects offline, but many of these activities have to be undertaken while taking the shutdown. The shutdown of furnace for 5 days is almost as an annual or once 1 in 2 years' time when we have to overhaul the furnace. That is also in the interest of capacity and it's a planned maintenance activity to avoid future breakdowns. So this was the first part of your question. Second part was...
Exports.
Exports. Exports are building up, and we are glad to inform you that in the last quarter also, it is one of the highest exports we have there about -- how much is the...
10%.
It has now reached 10%. And in a couple of years' time, we want to reach to 25% to 30% of the total this thing. The -- in steel for automobile, it is -- there is a little longer system. We have to first make the steel, then send the bars for approval, after that, once that is approved, then the parts are forged and then sent for approval. So it is -- the lead time is in terms of a couple of years when we finally get approval. And to assure you that today, we have approval from all major automobiles, right, from Suzuki Maruti, Toyota, and many other leading manufacturers, we have in their approved list. Things will be moving and are moving as per our plan. There is nothing to worry. We are not going back to back on anything. Everything is happening. About -- you said about Aichi. We have also started supplying to Aichi and the Aichi, the way of doing business is that it will slowly build up. Maybe in the next year, we will see the higher figures of export to Aichi also. And ultimately, it will reach up to 30,000 tonnes of steel in a couple of years time, 20,000 to 30,000 tonnes per annum, which will increase our export element. However, this export will not appear as an export because we have to give it to a trading partner of the Aichi, who will buy from us in India and then we'll export. So Naman, be assured that everything is going on as per plan. We will try to do as a team to better that. But this is -- I think this is the normal way of progressing. I hope I have been able to answer your questions. If still any point, please let us know.
Yes, that great. That's very helpful. And the last one, about the new -- whatever we are talking about new additional capacities of plants. I hope all is done as per the government approvals, NOCs, PCB and all, Ministry of Environment...
Yes, we have -- as per the Ministry of Environment clearance, everything is clear. We have been able to fulfill all the conditions laid down by the Pollution Control Board. All actions have been taken from our side. A lot of CapEx has also gone into that. But we are now fully complied up to 300,000 tonnes of billet production, steel melting shop production.
Congrats for that. So I think, yes, we are looking forward to, I think, in the, hopefully, coming years, this export figures moving up, as you mentioned, and your Aichi partnership will really show some results.
Thank you.
[Operator Instructions] The next question is from the line of [ Chetan Parekh ], an individual investor.
Am I audible?
Yes, please go ahead.
Yes. Sir, my first question is, so how do you look at the industry at this moment? And -- so how is the demand for the auto industry at the same point?
At this moment, as I said, the last quarter was a little bit subdued because of the shutdowns. This quarter is looking normal. However, there is the news every day in the media that automobile sector is growing. So we hope that if it grows, it will also be boost to the steelmakers for this segment, but it looks, I would say, normal to us.
Okay, sir. Sir, my next question is, as you mentioned earlier that we have started mass production for Aichi Steel. So could you just throw a bit of light and update on the progress of the same?
Yes. Last year, in February, we have started the mass production, you are right. And as per our plan this year, we targeted that we will be doing exports to Aichi Forge in Southeast Asia about 7,000 to 8,000 tonnes. So that is also in line. And accordingly, we will do that much of exports in the current year. And going forward, next year, our plans is that we will be doing about 13,000 to 15,000 tonnes of exports. So gradually, it will increase. And as Rewari-sir has earlier said also that our exports are also increasing. But this sales to this Aichi Forge in Southeast Asia is getting merged in our domestic sales because we are selling to their trading partner in India. So our exports, including this trading partner, will grow beyond 20% in the next 2 to 3 years.
Okay. The last question I would like to ask, is there any new expansion plan like -- with peers? And how are we going to fund the CapEx?
As of now, the CapEx which we have planned like KOCKS block or this reheating furnace, so all this announced CapEx will get completed by mid of next financial year. And as conveyed earlier also, so we will be funding this from our internal accruals only. Marginally, maybe we will have to go for some funding. But as of now, we don't have any such plans. So mostly, it will be funded through internal accruals. As far as the [Technical Difficulty] that we are still to decide. Things are on the drawing board only.
And the next question is from the line of [ Radha ].
[Technical Difficulty] was 5%, and in this quarter, you said it's 10%. So could you give some insights on whether it was due to new customers or you saw a higher share of business with the existing customers, how is it?
Can you please repeat? We -- your voice was cut in between. You lost.
Sir, I said that exports in the last quarter was at 5%. And this quarter, if I heard it correctly, you mentioned that it's 10%. So could you please give us some insight as to whether it was due to new customer wins or increasing your share of business from existing customers?
It was a blend of that. There were new customers also and the existing customer also. So it is a blend of that. And I think, as I said earlier, that new business comes on the basis of approval. So we are getting some approvals. As the approvals come then comes the demand. So it is blend, both the -- mostly from both new customers also and the existing ones also.
And sir, Q2 quarter that Mr. Jain has mentioned that we had -- we are yet to receive approvals from Yamaha and Musashi as our customers in the exports market. So -- and does this -- in this quarter, have you seen sales as a result of approvals that we have received from them?
No, no, not -- they are -- all approvals are in progress, but we have still not received any approval and any sales demand accordingly. It will take maybe a quarter more to -- yes. There's sufficient progress in this matter.
And sir, in terms of geographies, we are exporting to Thailand and Saudi. Anywhere -- anything I'm missing other than these reasons?
I think at this moment, our major export is in Thailand only because Thailand has lot many -- it's a forging hub. So that is our first target. Plus our partner, Aichi, has a major forging plant in Thailand, Indonesia, so in this region only. However, now we are making efforts and exploring the markets of Europe also. But at this moment, we are concentrated in Thailand because Thailand is offering us the opportunity to grow.
Okay. Sir, lastly, you mentioned that some new projects are on the drawing board. So would that be in the specialty steel sense or anything else you're looking for?
At the moment, our vision is to focus towards automobile segment only. However, while we travel ahead, whatever opportunity comes in our way shall be evaluated and accordingly, sufficient other required steps will be taken in that segment. But at this moment, we are automobile-centric manufacturer.
And the next question is from the line of Angad from Sameeksha Capital.
Sir, 2 small bookkeeping questions. Sir, what is our electric and nonelectric volume mix for this quarter and also for the 9 months FY '24? And if you could just give us the vehicle category figures as well, the passenger vehicle, commercial and 2-wheeler split, that will be helpful.
Angad, as discussed in our earlier various meetings also, our overall -- in case you will ask me the share, our overall share, about 40% goes into the passenger vehicles and about 32% to 34% is in the 2-wheelers. And the rest is to the commercial vehicle and the various other types of vehicles and some share is also going to Tier 1s for which we are not aware about where they are supplying. So those Tier 1s are having the approvals from their own OEMs. So it is a broad, I will say, bifurcation of our revenue. That mostly it is to the passenger vehicle and the 2-wheelers.
And you asked about the electrical and non-electrical. Our electrical supply to EVs should be around 5% or 6% of the total sales. And at this moment, we are only 5% to 6% level only.
Very helpful, sir. And sir, 1 small question. The other income for this year, so how do we look forward in terms of the other income since it includes the GST refunds, electricity incentives, like how many years will this continue going forward? And what is the sustainable number?
Yes. Mr. Singla will answer this. But I can tell you that it is based on the government policies we calculate, and then only we take cognizance of that. But as per my understanding, it will go past -- 10 years' time, it will continue accruing.
Mr. Singla, if you want to add something to it?
Yes. Sir, you are right that it will continue for 10 years in terms of electricity duty exemption and 7 years of GST refund. And we have a second application also for the benefits for the expansion which we have undertaken for our rolling mill. And from the completion of that expansion, again, we will be getting this additional sanction of 7 years and 10 years. So going forward, we can say that it will continue up to '32 to '35, financial year '32 to '35.
And the next question is from the line of Ritwik Sheth from One Up Financial.
Sir, 2 questions from my end. Firstly, what is the pricing negotiation that we are currently undertaking with the auto OEMs?
Sorry, say it again?
What are the pricing negotiations that we are undergoing with the auto OEMs?
So as you are aware that it is mostly -- earlier, it was on half yearly. But from last 2, 3 years, it is on a quarterly basis. From October '23, we have received a price increase of INR 3,600 from some of the OEMs. And further, there is a decrease also agreed from 1st of January, '24 of INR 1,700. And 1 or 2 OEMs still, the discussion is going on. So most probably, we are -- the same will be settled within February or March.
Okay. So Q3, we saw. And it takes time. You know how it happens with the OEMs.
Right. Okay. And what is the raw material like versus the last 3 to 6 months? How has the raw materials, mainly the scrap, behaved in the last 3 to 6 months for us?
Raw material prices have come down. If we see, at our cost, I must say we have -- our prices have gone down by approximately 2% in the raw material cost in absolute terms. It looks -- I must say, the raw material market looks calm. It has not been so volatile in the last 6 months, and this is stable towards downward side.
Yes. Okay. Got it. And just a follow-up on the previous question on the electricity and the GST incentive that we are receiving. So for electricity, you mentioned for 10 years. So this will be in the range of INR 5 crores to INR 6 crores per quarter. So close to INR 20 crores per year for 10 years, right?
Yes. Taken together, GST and electricity is about INR 5 crores to INR 6 crores, INR 5 crores, INR 5.5 crores in a quarter.
Okay. Combined, it is INR 5 crores to INR 6 crores in a quarter. Okay.
Yes.
[Operator Instructions] The next question is from the line of Hiten Boricha from Sequent Investment.
Sir, my question is on the volume side. As you mentioned that some of the reports are suggesting that the demand in the auto sector is coming back, especially in like Q3-end or January or so. So just wanted to understand how confident we are to achieve this volume of 2 lakhs because we have done only around 142,000 kind of volume in 9 months, and so we had to do around 57,000 tonnes kind of volume. So how confident we are to achieve this kind of volume? This is my first question, sir.
We are quite confident that we will achieve this volume. And the first indication is January, so our sales in January is as per our plan. And we shall complete the rest of 2 months or so to be in the vicinity of 200,000 tonnes sales volume. So we are confident.
Okay. And my second question is on the volume for next year, sir. So as you also spoke about increase in exports and other markets, Aichi volume is also going to come back. So just wanted to understand what kind of volume we are targeting next year, sir? And also, you can throw some light on EBITDA per ton.
As far as next year is concerned, I think, as I said that the effect of 2 stands in the rolling mill will give us an increase of 10,000 tonnes per annum. So that 10,000 tonnes will surely come. And if we were able to push that, that I think maybe I foresee sure shot 10% increase in the sales for next year if it is -- 8% to 10% if it goes well, that will happen.
With similar kind of EBITDA, right, sir?
EBITDA is, you know it depends on various things. Our normal guidance remains that our EBITDA will remain between INR 7,000 to INR 10,000 per ton. It will remain same. And could be at a mean level or higher of the mean level we wish.
And the next question is from the line of [ Aniket Redkar ] from investor.
Sir, I have a couple of questions. So I just want to understand how does the company ensure environmental sustainability and responsible manufacturing practices in its operation?
The sustainability is our one of the main objective. As I said, we will be -- probably in the large steel company, we proactively got our carbon footprints calculated from the CIA. So once the figures came to us, as we have said a number of times, it was 0.82 tonnes of carbon dioxide per tonne of steel making. And then we understood while we undertook this study, various factors, and the first action was envisaged by Mr. Sachit Jain, our Vice Chairman, to go in for solar. So because most of the carbon footprints are coming from the usage of electricity, which is normally based on coal. So he has already -- as a company, we have already executed the agreement to get about 25 to 30-megawatt of solar power into the system for usage of our steelmaking. So 40% of our power will be the solar power from -- the project will be completed by the end of December, maybe the benefit will accrue to us on next year. Secondly, we are also doing, with the help of Aichi, various improvements in our manufacturing. By virtue of it, we are -- we will be able to save some of the electricity, which will also add to the carbon footprint. So this is 1 part of the carbon footprint. And we, as a company, Mr. Sachit Jain is also spearheading the circular economy.
Circular economy is that we will buy the scrap from, let's say, to -- just to give you an example that if we are supplying steel to Maruti, we will buy -- we will sell this steel to Maruti and scrap will be purchased by us to reuse for making this steel for Maruti. So these kind of discussions are -- is undergoing and maybe in 6 months' time onward, we shall be able to formulate some such policy.
And also the -- under the -- we are also in the process of increasing the green areas. In our plant and outside our plant also, we are planting Miyawaki forest. This Miyawaki forest is a process by virtue of which, it is Japanese technology, the forest grows very fast. So that way, we have already undertaken the forest activity for about 10 acres by now, and we have a very large objective in this. So this is what we are doing on the sustainability front. Anything, Mr. Singla, you want to add?
That's okay.
Great. And sir, how does the company stay competitive in the market considering the dynamic nature of the steel industry?
Staying competitive in the market, first is the -- having the confidence of customers by giving the good quality steel and customer service given in time. So we are ensuring that our relationship is maintained, our product quality is also maintained, and it serves the purpose. With the help of Aichi, we are constantly trying to improve our quality as well and we are also doing a lot of product developments with our existing customers. So all these things will always bring us closer to the market through our vendors. And we know what is happening following the trends. As I said, sustainability is 1 of the big buzz for today in the OEMs. We are following that direction also. And following the Aichi's culture of safety first, quality second, cost and -- productivity third, and cost fourth. So we are following that line of direction, all of which is giving us good results. We are growing with each customer, wherever we are, in terms of volume. And also, we are adding customers in the market.
Okay. And sir, one last question. Any guidance for top line and bottom line for FY '24 and '25?
I think we normally don't give any guidance, but it should be in the same level as we are today. As I said that some improvement can be with the extra sales. And the effect of that will follow to the bottom line as well is what we hope.
FY '24, as Rewari-sir has already confirmed, that we are targeting to achieve earlier last year figure of 200,000 tonnes because this was a consolidation year. And going forward, he has also confirmed that we are expecting -- we are targeting and budgeting 7% to 10% increase over volumes in the next year.
And the next question is from the line of [ Rohan Mehta ], an individual investor.
Sir, as you mentioned to the previous person that guidance for this coming year. So out of this, would you be able to guide in terms of what the share of exports might be for FY '24? Or even a ballpark figure for the next whole year as well?
I think for the current year, we shall be closing around 10% of this Q3...
On -- as a whole, for the full financial year, we are expecting 7% to 8% of the total turnover will be the exports, including what we are exporting to Aichi Forge through their trading partners.
Right, right. Right, sir. Okay. So that is still higher than earlier?
Yes, it is growing. And in the next 2, 3 years, we have an objective to reach 25%.
Okay. So this 20% to 25% would be around in how many years, sir?
By FY '27.
Okay. All right, sir. And sir, a few -- over the last couple of quarters, Sachit-ji has also mentioned that our association with Aichi should open up access to Southeast Asian markets as well. So is there any visibility on that, sir?
Yes, I think with the help of Aichi, we have got foot in the door everywhere wherever we have found or whatever market or customers we are trying to aim at. Definitely, it is giving us good help and good assistance. As I said, it is a little long process to get approvals and other formalities. So it takes 1 year to 2 years' time. So I think in the next year, some positive outcome, we will be glad to share with you.
All right, all right. Okay, sir. And sir, I think our billet capacity has increased to over 2 lakhs -- almost 260,000 tonnes. So if you could throw some light on how this was achieved? And also, what the rolling mill capacity is going to look like, sir?
The steelmaking capacity is increasing because of various factors. One is that we are improving our scrap. So scrap mix has improved. The second is that at the operation level, we are reducing our power-on time and power-off time. Power-on time is when furnace is on to melt the steel, and power-off time is when we will be ready for the next heat. So those results are quite encouraging. By virtue of that, we will get more operative time from the furnace, and if we get more operative time from the furnace, then we will get more number of heats every day. So that's how we are achieving. That is of the steel melting shop, and I have already explained that the rolling mill, we are revamping our rolling mill. And in 2, 3 phases, we will be able to increase the capacity there also.
Understood, sir. Understood. So for the billet capacity, we can take the current utilization levels as the standard going forward. Is that correct, sir?
Yes, we will improve on that surely in the next year. From next year, there will be improvement.
Okay. Sir, just last couple of questions. Any production benefit that we can expect by our last couple of recent plant shutdowns that we did?
Yes. We have already said that the major shutdown was from the rolling mill and that we envisaged the excess production of about 800 tonnes per month. We have already achieved up to 700 tonnes. As it is stabilizing, we will achieve that. So that is -- you can say that is mission almost accomplished.
Okay. Okay. And last, sir, any plans of a greenfield expansion on the horizon longer term?
Yes, but I don't have any firm news to share at this moment. Things are still in the thinking phase.
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to management for closing comments.
Overall -- first of all, thank you very much for joining us. Overall, I think we feel that the situation -- the market conditions are normal, and rather we feel encouraged by the -- as I said, by the sales of automobile sector, everything is going up. So we are quite optimistic. But as far as the EBITDA levels are concerned, those are also appear to be under our control and raw material is also supporting our EBITDA. So by and large, things are going on well. Our relationship with Aichi is also getting stronger and stronger. Our efforts on our ESG are improving, and we will sharpen this in future. All planned acts have been envisaged, acts has been taken -- positive action has been taken on that in terms of solar power or various other things. So by and large, financial position of your company is also good. So overall, I think we stay positive for future. I will ask Mr. Singla to add.
So thank you all for joining us on the conference call. And as Rewari-sir has said, we are all optimistic and are all in line with our targets and plans. So thank you, thank you, all.
Ms. Soumya-ma'am, will you like to say something?
Hello, sir, Soumya-ma'am maybe disconnected. So should we conclude?
Okay.
Okay. Yes, we shall conclude.
On behalf of Choice Equity Broking Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.