Aditya Ispat Ltd Management Discussions

A. Overview

The following discussion and analysis is intended to convey the Managements perspective on the financial and operating performance of the Company at the end of Financial Year 2024-25. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS) complying with the requirements of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (‘SEBI).

This report is an integral part of the Directors Report. Aspects on industry structure and developments, outlook, risks, internal control systems and their adequacy, material developments in human resources and industrial relations have been covered in the Directors Report.

B. Economic Overview

1. Global Economy

The global economy was resilient over the last year, stabilising from the shocks witnessed in the beginning of the decade, amid the continued overhang of geopolitical risks. As per IMF estimates, world GDP growth eased to 3.3% in 2024 from 3.5% in 2023, with the slowdown seen in EMDEs (Emerging Markets and Developing Economies).According to the IMF, average inflation in advanced economies fell from 4.6% in 2023 to 2.6% in 2024. This was helped by the normalisation of supply chain pressures, from elevated levels after the outbreak of the Russia-Ukraine war.

Despite positive trends like reducing inflation and monetary easing in several countries, geopolitical risks around trade policy uncertainty, and ongoing conflicts continued to weigh on global economic sentiment. The economy globally is projected to continue to grow in 2025. While there is a reducing intensity in tariffs globally, developments in this area including trade agreement between major blocks like United States of America, United Kingdom, European Union, China among others, and a ceasefire deal between Russia and Ukraine will be key factors impacting the economic activity. The global economy is expected to grow by 2.3% in 2025. The tension around trade and high levels of policy uncertainty are expected to have a significant impact on the economic activity.

Global inflation is expected to moderate to 4.3% in 2025 and 3.6% in 2026, approaching central bank targets. While advanced economies are likely to contain inflation more effectively than emerging markets, rise in protectionism and geopolitical tensions around trade will significantly impact prices of domestic productsespecially in United States. Inflation in the services section in major economies like the United States and the Europe is expected to remain above pre-pandemic levels. The monetary policy remains divergent, with some central banks maintaining caution in their easing cycles. Fiscal policy in advanced economies is expected to tighten in 2025, with developing economies implementing comparatively moderate adjustments.

In United States, growth is expected to be 1.5% in 2025, supported by consumer demand, rising incomes, productivity gains, and accommodative f inancial conditions. However, policies under the new U.S. administration- particularly on trade, taxation, immigration, and regulatory changes-may have diverse implications on the economy.

In 2024, Europe (EU) registered a growth rate of 0.8% supported by monetary easing by European Central Bank. Economic activity in EU is projected to remain flat in 2025, before showing modest recovery in 2026. However, elevated geopolitical uncertainties and structural constraints, such as low productivity and an aging population, will continue to pose challenges for Europe and UK.

The Chinese economy continued to grow in 2024, witnessing a growth rate of 5%. Growth is projected to remain stable at 4.5% in 2025 and 2026, though overcapacity, sluggish domestic demand, and structural challenges in the property market remain as concerns. Outcome of governments stimulus on domestic consumption, US -

China trade discussions, and export performance will impact the industrial output of China and would be the key watchpoints in 2025.

2. Indian Economy

India is one of the fastest-growing major economy. It demonstrated a growth rate of 6.5% in FY2024-25. Despite global headwinds, Indias growth is expected to remain rangebound, 6% - 6.5%, in the next couple of years. The economy is expected to be driven by strong domestic consumption, government capital expenditure, and robust expansion in the services and manufacturing sectors.

Inflation is projected to moderate and be rangebound, 4.0-4.5% in the near term, supported by favourable food price trends. Core inflation across goods and services has remained stable, while fuel prices have declined. The moderation in inflation has enabled the Reserve Bank of India to adopt a more accommodative stance, with interest rate cuts anticipated to stimulate consumer spending and credit growth. Foreign Portfolio Investment volatility is expected to subside, while softening crude oil prices will likely support exchange rate stability.

On the sectoral front, the services sector has demonstrated resilience, with financial services, real estate, professional services, public administration, and defence driving growth. Exports in the services sector have also recorded strong performance. Construction activities and utility services have supported industrial growth, while high value-added manufacturing exports-particularly in electronics, semiconductors, and pharmaceuticals- have shown robust momentum. Agricultural production has remained strong, underpinning rural consumption, and contributing to steady economic activity in rural markets.

The Government of India (GoI) remains focused on fiscal consolidation, employment generation, and boosting capital investment. The share of capital expenditure in central government spending has continued to rise, playing a critical role in industrial and infrastructure development. Increased capital outlays on infrastructure and asset creation are expected to generate growth multipliers. The PLI scheme has successfully attracted investments and stimulated production across various industries. The Government is exploring further sectoral expansion to enhance domestic manufacturing and develop labour-intensive industries.

Despite Indias strong economic momentum, certain downside risks persist. Towards the end of 2024, economic activity moderated due to weaker private and foreign investment flows, impacting industrial output. The rupees depreciation, coupled with uncertaintiessurrounding cross border conflicts, global trade policies and supply chain disruptions, could pose a few challenges.

Overall, Indias economic outlook remains strong, driven by robust domestic demand, policy support, and sectoral resilience. Improving trade relations with the developed economies will provide the requisite impetus to the economy. The India - UK trade agreement is a positive development in this direction. By leveraging its domestic strengths and implementing strategic reforms, India is well-positioned to navigate global challenges and maintain its trajectory as a leading global economic powerhouse.

C. INDUSTRY STRUCTURE AND DEVELOPMENTS :

Aditya Ispat Limited (Aditya) is one of the leading manufacturers of Bright Bars and Wire at Hyderabad and has produced 1819.150 Tons as compared to previous year production of 3441.398 Tons of Bright Bars and Wire. However this output is slated to grow with maximum production capacity utilization in the coming years.

i. Outlook – Global steel Industry

World finished steel demand and crude steel production declined marginally by 2% and 1%, respectively, in 2024. In the last five years, global steel demand has moved sideways. However, these global numbers hide wide variations across different markets.

The steel sector has historically been a cornerstone of industrial progress, forming the foundation of economic development. However, the past year presented significant challenges for the industry, as global manufacturing activity remained subdued due to low household and business confidence, leading to cautious spending and investment. High input costs, geopolitical uncertainty, and tighter financing conditions have delayed capital investments. The lingering effects of inflation have further eroded purchasing power and consumer sentiment. Additionally, weak housing construction in major markets such as China, the United States,

Europe, and Japan has adversely impacted steel demand. The automotive sector, a major consumer of steel, also experienced slowdown in 2024. However, investment in manufacturing facilities and public infrastructure provided some support to global steel demand. Sustained capital expenditure in these areas by major economies played a key role in offsetting weaker demand from traditional sectors.

While steel demand weakened in China and most developed economies, developing economies like India have demonstrated resilience. Steel demand in the developing world excluding China grew by around 3.5% in 2024, while the developed economies witnessed approximately 2% decline in steel demand in 2024. Exports from China to the rest of the World were at their highest level since 2016, at 111 MT as domestic demand for steel in China decreased significantly, whereas the decline in production was moderate. The high exports from China have resulted in protectionist measures by different countries. Imports into the EU increased from 25.6 MT in 2023 to 27.4 MT in 2024. In India, the imports from China stood at 2.83 million tonnes in FY2024-25, around 12% higher than the previous year.

Global steel demand is projected to grow by 1.2% in 2025, reaching ~1,770 million tonnes. After three consecutive years of decline, steel demand is expected to recover globally (excluding China) in 2025. A stable global economic outlook, coupled with improving financing conditions and real income growth in major economies, is expected to support recovery in private consumption and investments before the tariff impositions. Additionally, a significant recovery in residential construction is also anticipated from 2025 onward, supported by easing f inancing conditions. However, the tariffs imposed by US administration and reciprocal tariffs by countries has led to increased uncertainty in demand-supply balance and continues to be a major risk to the steel industry.

At a regional level, the downturn in Chinas real estate sector is expected to persist, leading to a 3% decline in steel demand in 2024, followed by an additional 1% decline expected in 2025. However, government intervention and economic support measures could help stabilise demand. In Developing Economies (excluding China), steel demand grew by 3.5% in 2024 and is expected to further accelerate to 4.2% in 2025. Emerging economies in the MENA and ASEAN regions are expected to rebound after experiencing a significant slowdown in 2022 and 2023. In Developed Economies, steel demand declined by around 2% in 2024, with major steel consuming nations-including the United States, Japan, South Korea, and Germany- experiencing contractions. However, demand is expected to recover by 1.9% in 2025, driven by improving economic conditions.

In Europe, apparent steel consumption experienced another drop of 2.3% in 2024. Output growth in the steel-using sectors is expected to remain low in 2025 due to continued low investments following from the high interest rates. In 2025, apparent steel consumption is projected to recover at a gradual pace of 2.2%, based on a positive industrial outlook and easing global tensions, though they are unpredictable now

ii. Outlook – Steel Industry in India.

India remains the worlds second-largest steel producer and one of the strongest demand drivers, with steel demand expected to grow by 8% in 2025. Demand is expected to reach 200-210 million tonnes by 2030, driven by strong expansion in steel-intensive sectors such as infrastructure, housing, transportation, power, and renewable energy.

Growth is further supported by rising demand for consumer durables and capital goods. Additionally, government initiatives, including Production-Linked Incentives (PLI) schemes and increased investments in infrastructure and manufacturing, have played a crucial role in boosting steel production and consumption. In the Union Budget for FY2025-26, the Government of India (GoI) has maintained capital expenditure (capex) as a share of GDP at the same level as 2024, reinforcing its commitment to industrial growth.

While steel demand remains robust in India, steel prices are expected to remain range bound, capped by the threat of Chinese imports. Policy support provided by the Government in the form of a safeguard duty of 12% on April 21, 2025 for 200 days has given a partial relief to the Indian steel industry.

Overall, while the global steel demand is poised for recovery in 2025, the industry remains exposed to geopolitical, economic, and financial risks. India, however, continues to stand out as a high-growth market,

supported by strong domestic demand and investment. The long-term outlook for the Indian steel industry remains optimistic, with continued infrastructure development, industrial expansion, and supportive government policies driving its growth. Effective trade policies, price stabilisation measures, and sustained investment will be crucial to maintaining Indias competitive edge in the global steel market.

The trend of rising public capex on infrastructure is expected to continue. The central government has budgeted a capex of Rs. 11.2 trillion in FY 2025-26. Long-term interest-free loans for capex purposes to state governments would boost their capex spending.

Modernisation of railways and development of high-speed highway corridor projects are thrust areas in the development of transport infrastructure. Residential real estate launches are expected to accelerate in FY 2025-26, with reduced inventory of units. Commercial real estate is witnessing strong traction, helped by the rapid growth of Global Capability Centres and Data Centres.

The public housing programme has received a renewed thrust with the extension of the PM AawasYojana (PMAY) with a target of building 2 crore additional houses over five years. Guidelines under the extended phase of PMAY were finalised last year, and the schemes implementation is expected to gather momentum in FY 2025-26.

D. OPPORTUNITIES, THREATS, RISKS AND CONCERNS OPPORTUNITIES: OPPORTUNITIES:

• The demand of Bright Steel Bars is increasing and the company has opportunity to expand its capacities.

• Demand can be increased by spreading the areas of operations into other parts of the South and Western States.

THREATS:

• The Company is facing competition from small players.

• The Company is facing demand crunch due to global recession in Steel Industry.

RISKS & CONCERNS:

• The Company is mainly dependent for its raw material requirement on R.I.N.L (a public sector undertaking). The pricing and availability of raw material is completely dependent on government policies.

• The competition from the small players from the unorganized sector posed a threat to its margins.

E. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY :

The Company has adequate internal control procedures with all safeguards for protection of assets and that all transactions are authorized, reported and recorded properly. The internal control procedures stem from continuous perusal of records and procedures by the Internal Auditors and the Audit Committee of Directors, who meet regularly. There is adequate Budgetary control mechanism established and practiced by the Company. The Code of Conduct also plays an effective role in utilization of energies of people involved.

F. PERFORMANCE OF THE COMPANY

During the year 2024-25, the Company has posted a net turnover of Rs.4393.06 lakhs which is lower by 29.16% over last year (Rs. 6200.95 lakhs in the F.Y. 2023-24).The engineering sector, automobile sector, electric fan sector were in the grip of slow down during the year. The net loss before tax was Rs.142.30 lakhs compared to previous years loss of Rs 266.44 Lakhs. The decrease was due to price volatity of raw material. and the further sale of the company was effected during the election of the central which was held during the financial year.

G. HUMAN RESOURCES

The Company has under its employment, 15 officers and workmen as on 31st March, 2025.Increase in value of Human Capital through development of individual and collective skills and knowledge is essential to any Company for its growth. The Company lays great emphasis on building a motivated work force, which can participate

constructively in the growth of the Company. Innovative ideas are regularly received from the officers and staff of the Company, many of which were implemented for improvement in areas of quality, cost savings and increased productivity.

H. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE FINANCIAL INFORMATION

Sales: The Company has generated sales revenue of Rs. 4393.06 lakhs from manufacturing and trading revenues which is lower than last fiscal. The engineering sector, automobile sector, electric fan sector was in the grip of slow down during the year. The net loss before tax was Rs.142.30 lakhs compared to previous years lossof Rs.266.44 lakhs. The decrease was due to steep fall in prices of raw material and the further sale of the company was effected during the election of the central which was held during the financial year.

Your Company continues to take steps to optimize costs of production which contributed to the profitability of the Company. The cost saving exercise is an ongoing one with emphasis on savings in energy consumption and cost,and reduction of wastes.

J. FINANCIAL ANALYSIS

Balance Sheet:

• Net worth decreased to Rs. 780.12 lakhs as on 31st March 2025 compared to Rs.854.85 as on 31st March 2024.

• Long Term Borrowings for FY 2024-25 stood at Rs. 1241.01 lakhs compared to Rs. 1385.27 lakhs during FY 2023-24.

• Total Non-current Assets for FY 2024-25 stood at Rs. 2149.47 lakhs compared to Rs2345.47 lakhs in FY 2023-24.

• Current Assets as on 31st March 2024 stood at Rs. 1566.40 lakhs as compared to Rs. 2247.33 lakhs as on 31st March 2024.

• Current Liabilities stood at Rs.1686.44 lakhs as on 31st March 2025 compared to Rs.2308.41 lakhs as on 31st March 2024.

Profit and Loss Statement:

• Revenue from operations decreased by 26.16% to Rs.4393.06 lakhs as compared to Previous Year of Rs. 6200.95 lakhs.

• Total expenses for FY 2024-25 stood at Rs.4910.89 lakhs as compared to Rs. 6534.17 for FY 2023-24.

• Depreciation and Amortization stood at Rs. 148.32 lakhs in FY 2024-25 compared to Rs. 149.52 lakhs in FY 2023-24.

• EBITDA increased to Rs. 242.63 lakhs in FY 2024-25 compared to Rs. 181.62 lakhs in FY 2023-24.

Key Financial Ratios:

Reasons for Variance:

* Due to increase in the profitability, the fall in price of raw material and the further sale of the company was effected during the election of the central which was held during financial year, resulted in the above said ratios.

K. STATUTORY COMPLIANCE

The Managing Director makes a declaration at each Board Meeting regarding compliance with provisions ofvarious statutes. The Company Secretary ensures compliance with the SEBI regulations and provisions of theListing Agreement. The Compliance Officer ensures compliance with the guidelines on insider trading for prevention of the same.

L. CAUTIONARY STATEMENT :

Statement made in Management Discussion and Analysis report which seeks to describe the objectives, projections,estimates, predictions may be considered to be forward looking statements and are stated as required by applicable laws and regulations. Actual results could differ from those expressed or implied and are determined by many factors including global and domestic demand – supply conditions, process, raw materials availability, tax laws, governmental policies and other statutes which may affect actual results which may be different from what the Directors envisaged in terms of future performance and outlook.

Your Company continues to take steps to optimize costs of production which contributed to the profitability of the Company. The cost saving exercise is an ongoing one with emphasis on savings in energy consumption and cost, and reduction of wastes.