Abha Power and Steel Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW Macroeconomic Overview Global Macroeconomic Overview

Global growth is estimated at 3.0% for calendar 2026, moderating from the 3.5% average recorded over 2024-25, with a recovery to 3.4% projected for 2027. The moderation reflects the drag from an energy-market shock (West Asia conflict) on importing economies, partly offset by accelerated investment linked to the global technology cycle.

Amongthemetals-relevantemerging-marketeconomies,Chinasgrowthisprojectedtoslowto4.6%in2026onelevatedenergycostsandstructural headwinds, whileadvancedeconomiesareprojectedtogrowl.7%in2026.Withinthisunevenglobalbackdrop,lndiacontinuestobeflagged bythe IMFasamongthefastest-growingmajoreconomies,ataprojected6.4%forFY2026-27, supported bydomesticconsumptionandservicesratherthan external trade—a relevantdistinction fora domestically-oriented manufacturersuchasAbha, whose order book isoverwhelminglylndia-facing.

This environment has direct relevance for foundry manufacturers, where energy consumption and raw-material inputs such as pig iron, steel scrap and ferro-alloys form an important part of the cost structure. Higher and more volatile input prices can therefore place pressure on manufacturing margins, particularly where increases cannot be fully passed through to customers.

At the same time, continued investment in infrastructure, industrial capacity, transportation and strategic sectors provides a supportive demand environment for engineered metal components. For Abha, the global backdrop therefore presents a mixed operating environment— with resilient industrial demand providing opportunities, while commodity and energy-price volatility requires continued focus on operational efficiency, product mix, capacity utilisation and value-added castings.

Source: International Monetary Fund, World Economic Outlook Update, July 2026 (imf.org); IMF Press Briefing Transcript, July 8,2026.

Indicator	2025	2026	2027
Global GDP Growth	3.5%	3.0%	3.4%
Advanced Economies	1.9%	1.7%	1.8%
Emerging Markets	4.5%	3.8%	4.5%

Indian Economic Overview

Indias real GDP grew 7.7% in FY2025-26, up from 7.1% in FY2024-25, with manufacturingGVA expanding 10.7%, compared with9.3%inFY2024- 25. Q4 FY2025-26 recorded real GDP growth of 7.8%. Manufacturing, along with key services segments, was among the major contributors to the broader expansion in economic activity.

The Reserve Bank of India maintained an accommodative-to-neutral policy environment during FY2025-26 as inflation remained contained, while policy rates were reduced during the year. For FY2026-27, the RBI expects economic growth to moderate from the exceptionally strong FY2025-26 level, with geopolitical developments and monsoon conditions among the factors influencing the outlook.

On the fiscal side, the Union Budget for FY2025-26 provided Til.21 lakh crore of capital expenditure, equivalent to 3.1% of GDP. The Ministry of Defence was allocated T6.81 lakh crore, an increase of 9.53% over FY2024-25 Budget Estimates, including T1.80 lakh crore of capital outlay.

For Abha, the macro backdrop indicates resilient manufacturing and infrastructure activity during FY2025-26

However, the strong headline growth did not translate uniformly into product-level realisations or profitability across the Companys operations, with raw-material costs and pricing dynamics remaining key factors affecting margins.

Indian Railways & Infrastructure

Indian Railways remained a key focus area for public infrastructure investment during FY2025-26, with continued spending on new lines, doubling and multi-tracking, rolling stock augmentation, signalling and safety-related works. The railway network reached 69,439 route km as of March 2025, while 99.1% of the network had been electrified by October 2025. The Government also targeted the addition of 3,500 km of rail network during FY2025-26, reflecting the continued emphasis on capacity expansion and network modernisation.

The railway sectors sustained investment in network expansion, rolling stock, safety systems and modernisation provides a favourable structural backdrop for the railway manufacturing ecosystem. For Abha, this translates into continued opportunities in railway castings and components, particularly as Indian Railways and associated OEMs expand capacity and upgrade existing infrastructure. Flowever, actual business performance remains dependent on order conversion, product realisations and raw-material cost movements.

Source: Ministry of Finance, Economic Survey 2025-26; Ministry of Railways; Press Information Bureau, Ministry of Statistics and Programme Implementation (MoSPI), Provisional Estimates of GDP for FY2025-26, June 2026; Reserve Bank of India, Monetary Policy Statements, February 2026 and April 2026; Press Information Bureau, Union Budget FY2025-26 press releases.

Sector Positioning & Structure

Indias foundry industry occupies a critical position within the countrys broader manufacturing and engineering ecosystem, supplying cast components to railways, automotive, mining, steel, cement, power, heavy engineering and general industrial applications. The industry spans a wide range of ferrous and non-ferrous casting processes, with the ferrous segment remaining particularly relevant for heavy-duty applications requiring strength, wear resistance and dimensional integrity. For Abha Power and Steel Limited, the relevant addressable market is the ferrous foundry and customised industrial casting segment, rather than commodity steel production: the Companys portfolio covers SG iron, mild steel, manganese steel, stainless steel, low-and high-alloy, FIRCS and WRCS castings across a wide range of component sizes.

The Companys end-market exposure provides a linkage to several structural growth themes within the Indian economy. Railway modernisation, expansion of mining and mineral-processing capacity, steel and cement capacity additions, power-generation infrastructure and broader industrial capital expenditure all create demand for replacement and application-specific cast components. This diversified end- use exposure is strategically relevant because foundry demand is ultimately derived from the installed industrial asset base and the rate of new capital formation, rather than from steel consumption alone.

For Abha, the relevant read-through is that its opportunity lies in moving beyond volume-led casting towards application-specific and higher-value components where metallurgical capability, quality approvals and customer qualification become more important than headline steel prices alone. The Companys historical shift towards higher-value products, including adapters and other specialised components, is consistent with this strategy. Management has previously indicated that product migration towards higher-value items improved margins even when overall production volumes remained relatively stable.

Indian Foundry Industry

Indias foundry industry is entering a period of expanding demand, supported by growth in manufacturing, infrastructure and industrial investment. Mordor Intelligence estimates the India foundry market at US$28.72 billion in 2026, up from an estimated US$26.28 billion in 2025, and projects it to reach US$46.72 billion by 2031, implying a 10.22% CAGR during2026-31.

Ferrous castings continue to dominate the industry. Ferrous alloys accounted for approximately 84% of Indias foundry-market revenue

in 2025, while sand casting represented 58.82% of the market by casting type. These segments are directly relevant to Abhas manufacturing profile, which focuses on iron and steel castings across multiple grades and customised applications.

Demand is supported by Indias broader industrial and infrastructure investment cycle. The National Steel Policy 2017 identifies construction, urban infrastructure, roads and highways, railways, rural development and manufacturing as important demand-creation areas for steel. The policy projected that construction and infrastructure could account for approximately 59% of Indias steel consumption by 2030-31, compared with around 40% when the policy was formulated.

The opportunity for foundries is therefore linked not only to overall steel consumption, but also to the expansion and modernisation of Indias physical industrial asset base. Railway equipment, mining and mineral-processing machinery, steel and cement plants, power-generation equipment and heavy-engineering applications require cast components with application-specific specifications. This creates opportunities for foundries capable of producing varied grades, component weights and geometries, while meeting customer qualification and testing requirements.

For Abha, this creates an opportunity to leverage its existing SG iron and steel foundries, broad material capability and customer approvals across multiple industrial applications. Its Bilaspur manufacturing facility has an installed capacity of 14,400 MTPA , comprising 7,200 MTPA each for SG iron and steel, and is supported by melting, moulding, heat-treatment, fettling, machining and testing capabilities. The facility is certified to ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 , while the Company holds RDSO Class-A foundry approval and is an approved vendor of ICF and NMDC for specified products .

Source: Mordor Intelligence - India Foundry Market : Ministry of Steel - National Steel Policy:

Strong Domestic Steel Demand Supports Industrial Casting Applications

Indias finished-steel demand is forecast to materially outperform global demand. The World Steel Associations October 2025 Short Range Outlook projects Indian finished-steel demand at 161.1 MT in 2025 and 175.7 MT in 2026 , representing growth of 8.9% and 9.1% , respectively. In comparison, global finished-steel demand is projected to remain broadly flat in 2025 and grow by 1.3% in 2026 . Indias projected 2026 growth rate is therefore approximately seven times the global rate.

The outlook is supported by continued public infrastructure and industrial investment. The Union Budget 2025-26 provided for ?11.21 lakh crore of capital expenditure , while Indian Railways was budgeted for approximately ?2.65 lakh crore of capital expenditure . Within the railway programme, ?45,530 crore was allocated towards rolling stock, with FY2025-26 targets of 1,700 locomotives and 9,343 coaches .

The implications extend beyond primary steel consumption. Expansion of infrastructure and industrial assets supports demand across machinery, mining, construction equipment, railway equipment and industrial maintenance, creating opportunities for cast components in both new projects and the replacement and maintenance of existing assets.

For Abha, the relevant opportunity spans railway, mining, steel, cement, power and other industrial applications represented within its established product and customer ecosystem. The Companys ability to manufacture iron and steel castings across varied applications positions it to participate in demand arising from Indias ongoing industrial and infrastructure investment cycle.

Source: World Steel Association - Steel Demand Forecasts : Union Budget 2025-26: Ministry of Steel

REGULATORY ENVIRONMENT AND GOVERNMENT SCHEMES

Government policy continues to support domestic steel production, higher-value manufacturing, infrastructure investment and import substitution. The National Steel Policy 2017 targets a technologically advanced and globally competitive steel industry and envisages 300 MT of crude-steel capacity and 160 kg of per-capita steel consumption by 2030-31 . The policy also identifies infrastructure, railways, roads, urban development and manufacturing as important demand-creation channels.

Programme / Policy	Current Status	Relevance to Abha
National Steel Policy 2017	Targets 300 MT crude-steel capacity and 160 kg per-capita finished-steel consumption by 2030-31	Supports long-term expansion of India\u2019s steel and downstream industrial ecosystem
PLI Scheme for Specialty Steel	T6,322 crore scheme; PLI 1.1 launched Jan 2025 and PLI 1.2 launched Nov 2025	Encourages domestic production of higher- value steel and development of downstream applications
DMI&SP Policy 2025	Revised policy provides preference to domestically manufactured iron & steel products in government procurement	Supports domestic sourcing and import substitution across government-funded projects
Railway Capital Expenditure	FY2025-26 railway capital outlay of approximately ?2.65 lakh crore	Supports railway infrastructure, rolling-stock and related equipment demand
Quality Control Orders	QCOs continue to prescribe standards for specified steel and steel products, with amendments continuing in 2026	Raises compliance barriers and can favour qualified manufacturers with testing and process- control capabilities
Steel Scrap Recycling Policy	Promotes organised collection, processing and recycling of steel scrap	Supports development of a more formal domestic scrap ecosystem relevant to secondary steel and foundry operations
Green Steel Initiative	Green Steel Taxonomy notified in 2024; roadmap covers energy efficiency, renewable energy, hydrogen, CCUS and material efficiency	Creates longer-term pressure/opportunity around energy efficiency, renewable power and lower- emission manufacturing
R&D Support for Iron & Steel	Ministry provides financial assistance for R&D in areas including green steel, hydrogen, CCUS, waste utilisation and resource efficiency	Supports technology and process development across the steel ecosystem

Source: Ministry of Steel; Union Budget 2025-26; Ministry of Railways; Government of India PLI documentation.

KEY INDUSTRY TRENDS AND STRUCTURAL SHIFTS

Higher-value and Application-specific Castings

Indias foundry market is projected to grow at 10.22% CAGR during 2026-31, with ferrous alloys accounting for approximately 84% of the market in 2025.

For Abha, the opportunity lies in application-specific, higher-value castings across railways, mining, cement and power. Its portfolio spans multiple grades and casting sizes, while management has indicated a focus on higher-value products such as adapters and specialised components to improve product realisations and margins.

Railway-led industrial demand

Indian steel demand is projected to grow 9.1% in 2026, while railway capital expenditure remains at elevated levels. The railway ecosystem creates demand not only for rolling stock but also for track-related and ancillary components.

Abhas RDSO-related product approvals and railway-oriented casting capabilities provide a direct linkage to this structural opportunity. Automation and capacity utilisation

The foundry industry is increasingly adopting automated moulding, sand-processing, heat-treatment and testing systems to reduce bottlenecks and improve consistency. Abhas own FY26 investment programme is explicitly aimed at addressing downstream manufacturing bottlenecks.

The Companys investor presentation states that an Electric Arc Furnace and 6 MT Heat Treatment Furnace have already been commissioned , while an automated moulding line, 20 MT heat-treatment furnace and additional processing bays were in the final stages of completion. The automated system is designed to increase sand-processing capability from approximately 1,000 kg/hour to 35,000 kg/hour .

Renewable energy integration

Energy remains a structural cost variable for foundries. Abha operates a 3 MW captive solar power plant , which provides an element of protection against conventional power-cost volatility while supporting the Companys environmental objectives.

Import substitution and China+1

Indias foundry ecosystem is benefiting from a broader shift towards supply-chain diversification and domestic manufacturing. The combination of domestic industrial growth, established engineering capabilities and the need for shorter supply chains is creating opportunities for Indian casting manufacturers to substitute imported components and participate in global supply chains.

COMPANY OVERVIEW

Business Model and Revenue Streams

The Companys revenue model is predominantly based on direct sale of manufactured castings and customised industrial components

against customer purchase orders. Revenue is recognised upon satisfaction of the applicable performance obligation and transfer of control of the products in accordance with the Companys accounting policies.

The business is characterised by customer-specific specifications, quality approvals and repeat orders rather than a standardised commodity product model. This allows the Company to participate in specialised applications but also creates exposure to customer-specific pricing, product qualification cycles and raw-material cost movements.

Operational Footprint & Competitive Positioning
Business Area	Current Position	Strategic Relevance
SG Iron Foundry	Part of integrated manufacturing facility	Railway and industrial castings
Steel Foundry	Part of integrated manufacturing facility	Steel, mining, cement, power and heavy engineering
Installed manufacturing capacity	14,400 MTPA	Existing platform for utilisation-led growth
Captive Solar	3 MW	Energy-cost management and sustainability
Manufacturing footprint	~7.32 acres, Bilaspur, Chhattisgarh	Access to central Indian industrial ecosystem
Quality	ISO 9001:2015; RDSO approvals; other customer approvals	Qualification-led entry barriers
Automation upgrade	EAF + 6 MT HT furnace commissioned; automated moulding / 20 MT HT under completion	Removes downstream bottlenecks and supports higher utilisation

POSITIONED FOR THE NEXT PHASE OF INDUSTRIAL GROWTH

The structural evolution of Indias foundry industry is creating an opportunity for manufacturers that can move beyond conventional casting production towards higher-value, technically demanding and application-specific products .

Abha is positioning itself for this transition through a combination of manufacturing modernization, product development and quality infrastructure. Its 14,400 MT annual installed capacity , 1,000+ SKUs, dual SG Iron and Steel Foundry capabilities, NABL-accredited testing laboratory and RDSO Class A approval provide a broad manufacturing and qualification base.

A key differentiator is Abhas NABL-accredited testing laboratory . Accreditation by the National Accreditation Board for Testing and Calibration Laboratories (NABL) provides independent recognition that the laboratory operates against defined standards for technical competence, testing procedures, equipment, calibration and quality systems . For a casting manufacturer, this strengthens the ability to test and validate material properties and product quality in-house , supporting greater consistency, traceability and confidence in meeting stringent customer specifications. This capability is particularly relevant for critical applications such as railways, defence and other engineering-intensive industries , where product qualification and quality assurance are integral to supplier acceptance.

The Companys current expansion is particularly important to this strategy. Management has stated that modernization of the steel plant is expected to enable production of larger and more critical components, with applications spanning railways, oil & gas and defence , while improving production integration and flexibility.

The next phase of Abhas growth is therefore expected to be shaped not only by higher capacity utilisation, but by a gradual shift towards more complex products, stronger customer relationships and a broader end-market mix .

This provides a natural transition into the Companys business model and manufacturing capabilities.

Financial Highlights FY2025-26

• Revenue: T62.22 crore, down 11.3% YoY from T70.18 crore, mainly due to softer realisations, order delivery deferrals and price correction in the Insert segment.

• EBITDA: T5.35 crore, compared with T10.75 crore in FY2024-25; EBITDA margin moderated to 8.6% from 15.3% .

• Profit After Tax: T2.46 crore versus T6.23 crore in FY2024-25; PAT margin stood at 4.0% versus 8.9% previously.

• Raw Material Pressure: Sharp escalation in input costs, driven by supply-chain disruptions, impacted operating profitability, particularly under legacy fixed-price contracts.

• Insert Segment: A key revenue contributor experienced an approximately 20% price correction , further impacting realisations and margins.

• Order Pipeline: Revenue was affected by temporary order delivery deferrals; however, no orders were cancelled , supporting continued visibility of the underlying pipeline.

• Margin Protection: New orders now incorporate automatic raw-material price escalation clauses to improve protection against input-cost volatility.

• Capacity Investment: ?16.39 crore allocated towards manufacturing facility modernisation and upgradation through IPO proceeds was fully utilised by March 31, 2026.

• Operational Upgrade: Automated moulding, additional heat-treatment capacity and processing infrastructure are being added to improve throughput and support higher capacity utilisation.

Ratio :

particular	31-03-2026	31-03-2025	Change %
Current ratios	1.40	3.41	-59.13%
Return on Equity Ratio(%)	4.73%	18.22%	-74.06%
Debt-Equity Ratio	0.37	0.42	-11.48%
Trade receivable turnover Ratio	5.95	7.52	-20.81
Trade payable turnover Ratio	9.73	24.07	-59.59
Inventory turnover Ratio	2.56	3.39	-24.35
Net capital TO ratio	3.66	1.88	94.78
Net profit ratio	3.95	8.87	-55.44
Return on capital employed	6.96	14.40	-51.70
Debt service coverage ratio	0.39	0.70	-44.52

ESG AND SUSTAINABILITY COMMITMENTS

Sustainability in the foundry industry is closely linked to energy consumption, raw-material efficiency, scrap utilisation, process waste and emissions. The shift from conventional manufacturing processes towards electric melting, renewable electricity and improved material recovery is therefore becoming increasingly relevant to the competitiveness of organised foundries.

Abha operates a 3 MW captive solar power plant , which supports the Companys electricity requirements and reduces dependence on conventional power. The Company states that its solar facility helps reduce operating costs and estimates annual CO 2 savings of approximately 3,400 MT .

The Companys FY26 modernisation programme also has an efficiency dimension. The planned automated moulding line incorporates a pneumatic sand-reclamation system designed to reuse approximately 75-80% of moulding sand while reducing additive consumption. The automated system is expected to increase sand-processing capacity from approximately 1,000 kg/hour to 35,000 kg/hour.

These initiatives align with broader industry trends towards energy efficiency, circular material use and lower-emission manufacturing. The Companys environmental positioning can therefore increasingly be linked not only to compliance but also to operating economics through lower energy consumption, improved material recovery and reduced process losses.

For Abha, the sustainability agenda is closely integrated with its operational strategy: renewable power, sand reclamation, automation and improved material efficiency have the potential to simultaneously reduce environmental impact and improve manufacturing economics.