Vardhman Special Steels Updates EGM Notice, Confirms ₹384.9 Crore Preferential Allotment to Aichi Steel

Vardhman Special Steels Limited (VSSL) has issued an official clarification and corrigendum to its earlier Extraordinary General Meeting (EGM) notice, eliminating references to unspecified purposes in the explanatory statement regarding a major preferential allotment to Aichi Steel Corporation (ASC). This preferential share issue, valued at ₹384.9 crore, aims to fund a new greenfield steel manufacturing plant in Ludhiana, Punjab, and address other capital requirements.

Background of the Preferential Issue

On 18 June 2025, VSSL had issued a Corrigendum to the EGM notice scheduled for Wednesday, 25 June 2025, at 10:30 a.m. The original explanatory statement to Item No. 1 in the notice contained a clause that mentioned usage of the funds for “such other purposes as agreed between the Company and ASC.”

The corrigendum formally deletes this vague phrase to provide greater clarity and focus to the fund utilisation plan, aligning with SEBI's best practices for transparency in disclosures.

Revised Objective of the Preferential Issue

As per the new clarification provided in the revised explanatory statement, the fund raised from the share issue will be strictly used for:

• Capital expenditure for setting up a greenfield steel manufacturing plant in Ludhiana, Punjab

• Capital expenditure needs of the existing plant

• Repayment of working capital borrowings

The company plans to issue and allot 1,47,70,100 equity shares of face value ₹10 each to Aichi Steel Corporation, on a private placement basis, totalling an aggregate value of ₹3,849,088,060 (₹384.9 crore).

Details of the Share Issue

• No. of shares: 1,47,70,100 equity shares

• Face value: ₹10 per share

• Aggregate issue size: ₹384.9 crore

• Investor: Aichi Steel Corporation (ASC), a global steel manufacturing leader

• Mode of issue: Preferential allotment on private placement basis

This share issue is being executed in compliance with applicable SEBI regulations and will be a key item of discussion at the upcoming EGM.

Importance of the Revision

Removing ambiguous language like “such other purposes” from corporate resolutions is an important step towards transparency and regulatory clarity. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, especially under Regulation 30, require companies to disclose detailed and clear rationale for fund utilisation in any capital raise.

This updated language ensures that shareholders and regulators are clear about how the funds from this significant ₹384.9 crore investment will be deployed.

Strategic Implications

The investment from Aichi Steel Corporation comes at a strategic time for Vardhman Special Steels, which is working on expanding its manufacturing capacity and strengthening its financial health.

1. Greenfield Plant in Ludhiana

The company plans to utilise a large portion of the raised capital to establish a greenfield manufacturing facility in Ludhiana. This move is expected to:

• Enhance production capacity

• Support product diversification

• Strengthen the company’s regional presence

2. Upgradation of Existing Facility

The fund will also be used to meet capital expenditure needs of the existing steel plant, including:

• Technology upgrades

• Energy efficiency improvements

• Compliance with modern environmental norms

3. Working Capital Management

Another key use of the proceeds will be to repay working capital loans, thereby:

• Reducing interest costs

• Improving cash flows

• Strengthening balance sheet metrics

Investor Confidence and Corporate Governance

The clarification issued by Vardhman Special Steels enhances its credibility among investors, both domestic and international. By ensuring that all preferential allotments have clearly defined objectives, the company is seen as compliant, responsible, and shareholder-focused.

This also boosts confidence in the corporate governance standards adopted by the firm, especially when dealing with foreign investors like Aichi Steel Corporation.

Regulatory and Compliance Note

This announcement was made to both BSE Limited and National Stock Exchange of India (NSE) under Regulation 30 of SEBI (LODR) Regulations, 2015, which mandates timely disclosure of material developments.

All information, including the corrigendum and updated EGM notice, has been shared on the company’s website:
www.vardhmansteel.com

About Vardhman Special Steels

Vardhman Special Steels Limited, based in Ludhiana, Punjab, is part of the Vardhman Group, a conglomerate with interests in textiles, steel, threads, garments, and fibres. The steel division focuses on automotive-grade special and alloy steels, serving both domestic and international OEMs.

Conclusion

The ₹384.9 crore preferential allotment to Aichi Steel Corporation marks a transformational funding round for Vardhman Special Steels. The deletion of ambiguous language in the explanatory statement ensures that the purpose of this capital raise is fully transparent and aligned with regulatory expectations.

With a clear focus on manufacturing expansion, infrastructure upgradation, and debt reduction, this move positions Vardhman to scale its operations and increase its competitive edge in India’s dynamic steel sector.

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