Ahmedabad Steelcraft Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW AND OUTLOOK

The global economy entered FY 2025-26 amid heightened macroeconomic uncertainty arising from escalating trade tensions, geopolitical conflicts, policy divergence among major central banks and continued fragmentation of global supply chains. According to the International Monetary Fund (IMF), global real GDP growth is projected to moderate to 3.4% in 2025 from 3.3% in 2024, before recovering modestly to 3.1% in 2026. The downward revision primarily reflects the impact of higher tariffs, elevated trade policy uncertainty and weaker cross-border investment flows.

Global headline inflation is expected to decline from 5.7% in 2024 to 4.3% in 2025 and further to 4.4% in 2026 and 3.7% in 2027, supported by easing commodity prices, normalisation of global supply chains and restrictive monetary policies adopted over the past two years. Nevertheless, inflation remains above the long-term targets of several advanced economies, prompting central banks to maintain a cautious approach towards monetary easing.

The global economy remained resilient during FY 2025-26 despite continued geopolitical tensions, trade policy uncertainties, evolving monetary policies and persistent challenges in global supply chains. Global economic activity was supported by gradual moderation in inflation, improving financial conditions and resilient domestic demand across several major economies. However, divergent growth trends across regions, elevated fiscal and debt levels, geopolitical conflicts and uncertainty surrounding international trade policies continued to pose downside risks to the global economic outlook. Going forward, the global economy is expected to remain on a moderate growth trajectory, with the pace of recovery likely to remain uneven across advanced and emerging market economies.

Emerging Market and Developing Economies (EMDEs) are projected to grow by 3.7% in 2025 and 3.9% in 2026, continuing to account for the majority of global economic expansion. Chinas economic growth is forecast at approximately 4.8% in 2025 and 4.2% in 2026, reflecting persistent weakness in the real estate sector, subdued household consumption and slower export growth amid rising global trade restrictions.

Global trade growth is expected to remain below its historical average due to increasing protectionist measures, tariff escalation and the ongoing diversification of global supply chains. Financial markets have remained relatively resilient despite elevated volatility, supported by improving corporate earnings, moderating inflation expectations and the gradual easing of financial conditions in several economies. However, downside risks continue to emanate from geopolitical conflicts, higher fiscal deficits, elevated sovereign debt levels and uncertainty surrounding global trade policies.

Overall, while the global economy continues to demonstrate resilience, the growth outlook remains moderate. The expected decline in inflation, gradual normalisation of monetary policy and sustained economic expansion across emerging markets are likely to support global economic activity over the medium term. However, businesses are expected to continue operating in an environment characterised by heightened policy uncertainty, geopolitical risks and evolving global trade dynamics.

INDIAN ECONOMIC OVERVIEW AND OUTLOOK

India continued to demonstrate resilience and strong economic fundamentals during FY 2025-26 despite global geopolitical uncertainties, trade-related disruptions and evolving global financial conditions. According to the National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), According to the Provisional Estimates released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), Indias real GDP is estimated to have grown by 7.7% during FY 2025-26, compared with 7.1% in FY 2024-25. The growth was supported by sustained domestic demand, strengthening economic activity across key sectors, continued public capital expenditure and the resilience of the services sector. Going forward, Indias growth prospects are expected to remain supported by favourable domestic demand, infrastructure development, investment activity, structural reforms and continued expansion of the services and manufacturing sectors. Nevertheless, global geopolitical developments, trade policy uncertainties, commodity price movements and external economic conditions remain key factors that may influence the growth trajectory.

Domestic demand remained the primary driver of economic growth, supported by rising urban and rural consumption, healthy corporate profitability and improving labour market conditions. The manufacturing sector benefited from the Governments Production Linked Incentive (PLI) schemes, while continued digitalisation and expansion of the services sector contributed significantly to economic

activity. Indias Purchasing Managers Index (PMI) remained consistently above the expansion threshold of 50, reflecting sustained strength in manufacturing and services throughout the year.

Inflationary pressures moderated considerably during the year. Retail inflation, measured by the Consumer Price Index (CPI), eased to around 3.3% during the first half of FY 2025-26, remaining comfortably within the RBIs medium-term inflation target of 4% ? 2%. Softer food prices, stable energy costs and improved supply-side conditions contributed to the moderation in inflation. In response to the evolving inflation and growth outlook, the Reserve Bank of India reduced the policy repo rate to 5.50% in June 2025. The monetary policy environment was expected to support domestic economic activity.

The Government continued its focus on infrastructure-led growth through sustained public investment. The Union Budget 2025-26 provided a capital expenditure allocation of approximately ?11.21 lakh crore, with significant investments directed towards roads, railways, metro projects, logistics, airports, renewable energy, urban infrastructure, affordable housing, defence and digital infrastructure. According to CRISIL, Indias cumulative infrastructure investment is expected to reach approximately ?143 lakh crore during the period FY 2024-25 to FY 2029-30, driven by continued participation from both the public and private sectors.

Indias external sector remained relatively resilient despite global trade headwinds. Foreign exchange reserves continued to remain at comfortable levels, providing a strong buffer against external volatility, while banking sector asset quality further improved with Gross Non-Performing Assets (GNPA) declining to multi-year lows. Strong tax collections, formalisation of the economy through GST, continued digital payment adoption and expanding financial inclusion further strengthened macroeconomic stability.

Looking ahead, Indias medium-term growth prospects remain robust. Supported by favourable demographics, rapid urbanisation, increasing manufacturing capabilities, structural reforms, digital transformation and sustained infrastructure development, India is expected to remain one of the fastest-growing large economies globally. According to CRISIL, the Indian economy is projected to record an average annual growth rate of approximately 6.7% between 2025 and 2031, positioning the country to become the worlds third-largest economy by the end of the decade. Despite global geopolitical uncertainties and evolving trade dynamics, Indias strong macroeconomic fundamentals, prudent fiscal management and policy reforms are expected to sustain long-term, inclusive and resilient economic growth.

INDUSTRY STRUCTURE AND DEVELOPMENTS TRANSMISSION POWER INDUSTRY

Overview

The transmission system plays a critical role in ensuring the efficient delivery of power to consumers by serving as a crucial link between generating stations and the distribution network. In India, energy resources such as coal, hydro, and renewables are distributed unevenly across the country. Coal reserves are predominantly found in the Central and Eastern regions, while hydro energy resources are concentrated in the Himalayan regions of the North and Northeast. Renewable energy sources, like wind and solar, are primarily located in states such as Tamil Nadu, Andhra Pradesh, Karnataka, Rajasthan, Maharashtra, Gujarat, and Ladakh. The major demand centres are situated in the central part of the country, spanning the Northern, Western, and Southern regions. This uneven distribution of resources has necessitated the development of a robust transmission system, including the creation of inter-regional corridors, to facilitate the seamless transfer of power from areas with surplus energy to those with deficits.

Indias power transmission sector is undergoing significant expansion to accommodate rising electricity demand, increasing renewable energy integration and the strengthening of the national grid. India has one of the worlds largest electricity markets, with continued growth in generation capacity and electricity demand. As of March 2026, Indias total installed power generation capacity had crossed 532 GW. The continued expansion of generation capacity, particularly from renewable and other non-fossil sources, is expected to necessitate corresponding investments in transmission infrastructure, grid strengthening and inter-regional connectivity. These developments are likely to create sustained opportunities for companies engaged in power transmission and related infrastructure development.

The Government of India has prioritised grid modernisation and inter-regional transmission capacity expansion, targeting 1,42,940 MW by 2026-27. Renewable energy integration remains a focus, with transmission planning for 613 GW of renewable capacity by 2032. The inter-regional transmission capacity is set to expand from the current 119 GW to 143 GW by 2027 and further to 168 GW by 2032.

Power demand in India is expected to grow at a CAGR of over 7%, driven by emerging factors such as electric vehicles, data centres and increased industrial electrification. The expansion of transmission and distribution networks, along with renewable energy generation, will be crucial in ensuring a resilient and efficient power infrastructure for the future.

The National Electricity Plan (Transmission), developed by CEA in consultation with various stakeholders, outlines a comprehensive strategy to achieve the Indian governments energy transition goals. It details the transmission infrastructure required to support 500 GW of RE capacity by 2030, increasing to over 600 GW by 2032. Further, implementation of CERC General Network Access (GNA) Regulations is expected to facilitate non-discriminatory open access to inter-State transmission system and provide flexibility to Discoms to procure higher component of power from IPPs across India.

Challenges

The power transmission sector continues to face challenges relating to timely augmentation and strengthening of transmission infrastructure, right-of-way and land-related issues, obtaining statutory and regulatory approvals, project execution and availability of adequate financial and technical resources. The increasing integration of renewable energy into the power grid also requires enhanced transmission capacity, grid flexibility, energy storage solutions and effective system planning to manage the variability of renewable generation. In addition, fluctuations in the prices of key inputs, supply-chain constraints, evolving regulatory requirements and increasing competition may impact project costs, execution timelines and operating margins. Addressing these challenges through effective project planning, technological advancement, efficient execution and continuous strengthening of transmission infrastructure will remain important for the sustainable development of the sector.

Outlook

Indias electric transmission tower market is set to experience notable growth, fuelled by several key factors. The markets expansion is primarily driven by the ongoing enhancement and modernization of the countrys power grid infrastructure. As India continues to pursue ambitious goals in increasing its renewable energy capacity and ensuring reliable electricity supply across diverse regions, the demand for new transmission towers and the upgrading of existing infrastructure will rise. Government initiatives such as RDSS, Green Energy Corridors, National Electricity Plan, renewable, integration/transmission schemes, storage and grid-modernisation initiatives aim to improve the transmission and distribution network, particularly in rural and underserved areas. These programs are designed to boost electricity access, reduce transmission losses, and support the integration of renewable energy sources into the grid.

Technological advancements also play a critical role, with innovations in tower design, materials, and construction techniques enhancing efficiency and resilience. The focus on smart grid technology and digital monitoring systems is expected to influence the market, driving demand for advanced transmission infrastructure.

Company overview

The Company is trusted name in the steel and industrial materials industry, with a legacy spanning over five decades. The Company is primarily engaged in the trading and distribution of steel and engineering products, catering to infrastructure, construction, and industrial sectors and in, supplying, and erecting power transmission and distribution infrastructure, including high-voltage transmission lines and substations.

RENEWABLE INDUSTRY

Overview

India continues to strengthen its position as one of the worlds fastest-growing renewable energy markets, driven by increasing electricity demand, favourable government policies, and its commitment to achieving 500 GW of non-fossil fuel installed power capacity by 2030 and Net Zero emissions by 2070. The renewable energy sector remains a key pillar of Indias energy transition strategy and is attracting significant domestic and foreign investments.

During FY 2025-26, India recorded another year of strong renewable energy growth. As on 31 March 2026, the country had installed approximately 274.68 GW of renewable energy capacity (including large hydro) and 283.46 GW of total non-fossil fuel capacity, with renewable energy accounting for an increasing share of the nations electricity generation. India also maintained its position as the third-largest renewable energy market globally in terms of installed renewable energy capacity.

Solar energy continued to dominate capacity additions during the year, supported by utility-scale projects, rooftop solar installations, hybrid renewable projects and government initiatives such as the PM Surya Ghar Muft Bijli Yojana. Wind energy also witnessed healthy capacity additions, while the Government continued to promote battery energy storage systems, pumped hydro storage, green hydrogen, transmission infrastructure and domestic manufacturing under the "Make in India" initiative to facilitate large-scale renewable integration.

The sector continues to benefit from supportive regulatory reforms, increasing corporate demand for green power, competitive renewable tariffs and growing investor confidence. These developments are expected to provide long-term opportunities for companies engaged in EPC services, infrastructure development and renewable energy projects.

Challenges

Despite strong growth prospects, the renewable energy sector continues to face several operational and structural challenges.

Project execution remains dependent on timely land acquisition, environmental and statutory clearances, transmission connectivity and availability of skilled manpower. Volatility in commodity prices, particularly steel, aluminium and copper, along with global supply chain disruptions, may affect project costs and execution timelines.

Grid integration of large-scale renewable energy also requires substantial investments in transmission infrastructure and energy storage solutions to address the intermittent nature of solar and wind power generation. Financing costs, policy changes, delays in power purchase agreements, and evolving regulatory frameworks continue to influence project viability.

In addition, increasing competition within the EPC and renewable energy segments places pressure on margins, requiring companies to continuously improve operational efficiency, technological capabilities and project execution standards. Nevertheless, continued policy support and infrastructure investments are expected to mitigate many of these challenges over the medium to long term.

Outlook

Indias renewable energy sector is expected to maintain strong growth momentum over the coming years, supported by sustained government initiatives, rising power demand, increasing private sector participation and global commitments towards decarbonization.

The Government continues to accelerate investments in renewable energy parks, transmission networks, battery energy storage systems, green hydrogen, offshore wind projects and domestic manufacturing capabilities. Increasing adoption of renewable energy by commercial and industrial consumers, coupled with advancements in energy storage technologies and digital grid management, is expected to create significant opportunities across the renewable energy value chain.

The continued expansion of solar, wind and hybrid renewable projects is expected to generate substantial demand for engineering, procurement and construction (EPC) services, project management and infrastructure development. Companies with strong execution capabilities, sound project management practices and technological expertise are likely to benefit from the sectors long-term growth trajectory.

With supportive policy initiatives, improving investment climate and increasing emphasis on sustainable development, the Indian renewable energy industry is well positioned to remain one of the fastest-growing segments of the countrys infrastructure sector, providing significant business opportunities in the years ahead.

COMPANY OVERVIEW

Ahmedabad Steel Craft Limited ("ASCL" or "the Company") is engaged in the trading and distribution of steel and engineering products, with a growing presence in the power infrastructure sector through Engineering, Procurement and Construction (EPC) activities.

The Company serves the infrastructure, construction, power and industrial sectors through a diversified product portfolio comprising structural steel items (beams, channels, flats, rounds and plates), engineering tools, machinery, hardware, equipment and other industrial products.

As part of its strategic expansion, the Company has developed EPC capabilities in power transmission and distribution infrastructure, undertaking engineering, procurement, supply, erection, testing and commissioning of transmission lines, substations and associated electrical infrastructure on a turnkey basis, covering the complete project lifecycle from design to commissioning.

The Company continues to focus on strengthening its execution capabilities, supply chain reliability, and quality and safety standards, while building a diversified and sustainable business platform aimed at long-term value creation for its shareholders and other stakeholders.

During FY 2024-25, Mr. Rohit Pandey and Mr. Sunil Dutt Pandey acquired control of the Company pursuant to the applicable provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Consequently to the change in control, the management of the Company was reconstituted.

They have an experience of 14 years of Business Experience, in the sector of Power transmission and Power distribution and engaged in the construction of Transmission and Distribution Power lines and substations up to 800 KV level. They are leading Turnkey service provider in the sector of Power Transmission/Distribution Lines & substations construction sector with wide experience and proven expertise in the execution of height-raising and utility shifting of 800KV/765KV/400KV/220KV/132 kV transmission lines and many major infrastructure projects.

Their expertise in transmission & distribution of power translates into a grand vision to operate in challenging ventures across the globe.

Brief financial performance is given below:

Particulars	Year ended March 31, 2026	Year ended March 31, 2025
Revenue from Operations	22127.56	17188.22
EBITDA	2,528.38	1,207.06
EBITDA (%)	11.48%	7.01%
PAT	1864.34	1,070.39
PAT Margin (%)	8.43%	6.21%

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILS EXPLANATION THEREOF:

Ratios	2025-26	2024-25	% Change and Reason
Debtors Turnover (Days)	349.34	260.07	34.33% Due to higher trade receivables and collection timing.
Inventory Turnover (Days)	NA	NA	NA
Interest Coverage Ratio (Times)	259.01	NA	Due to availed borrowings during the FY 2025-26
Current Ratio (Times)	2.51	3.57	-29.61% (Increase in liabilities during the year 2025-26)
Debt Equity Ratio (Times)	0.02	NA	Due to Increase in borrowings during the year 2025-26
Operating Profit Margin (%)	11.33	7.26	56.06% (Due to increase in revenue during the FY 2025-26)
Net Profit Margin (%)	8.43	6.23	Increase in sales and margin during the year 2025-26
Return on Net Worth (%)	16.80	18.88	-11.00%

RISKS AND CONCERNS

The Company operates in the Engineering, Procurement and Construction (EPC), power transmission and distribution infrastructure and related sectors and is exposed to various business and operational risks. Key risks include project execution and completion risks, delays in obtaining statutory and regulatory approvals, right-of-way and land-related issues, fluctuations in the prices of key raw materials, supply-chain disruptions, working capital and receivables management, availability of skilled manpower, customer and order concentration, competitive pressures and changes in government policies and regulatory requirements. The Companys operations may also be affected by financing and liquidity requirements, changes in market demand and the evolving requirements of the power transmission, distribution and renewable energy sectors.

The Company continuously monitors the business environment and key operational and financial risks and takes appropriate measures, as considered necessary, to mitigate their potential impact. These measures include effective project planning and monitoring, prudent working capital management, strengthening operational capabilities, maintaining appropriate internal controls and closely monitoring regulatory and market developments. The Company remains focused on enhancing its execution capabilities, maintaining financial discipline and responding proactively to emerging risks and opportunities. While the Company seeks to manage and mitigate identified risks through appropriate measures, no assurance can be given that all risks can be completely eliminated.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established and maintained an adequate system of internal controls commensurate with the size, scale and nature of its business operations. The internal control framework is designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, prevention and detection of errors and irregularities, compliance with applicable laws and regulations, and the efficient conduct of business operations.

The Companys internal control systems include appropriate policies, procedures and authorisation mechanisms covering key operational and financial activities, including procurement, project execution, revenue and receivables management, payments, accounting and financial reporting. The controls are supported by appropriate segregation of duties, review mechanisms and periodic monitoring to ensure that transactions are undertaken with due authorisation and are appropriately recorded.

The adequacy and effectiveness of internal financial controls are reviewed periodically by the management and are subject to review by the Statutory Auditors as part of their audit in accordance with the applicable provisions of the Companies Act, 2013. The Company continues to strengthen its internal control framework in line with its evolving business requirements and the applicable regulatory environment. Based on the assessment carried out during the year, the Company believes that its internal control systems were adequate and operating effectively for the purposes for which they were established.

INFORMATION TECHNOLOGY

The Company recognizes Information Technology as an important enabler for improving operational efficiency, strengthening internal controls and enhancing business processes. Continuous efforts are made to leverage technology for streamlining project execution, financial reporting, regulatory compliance and communication across the organization.

The Company remains focused on adopting appropriate digital solutions and strengthening its IT infrastructure to improve productivity, ensure data security and support informed decision-making. Regular measures are undertaken to safeguard information assets against cyber threats and ensure business continuity through robust security and backup mechanisms.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Human resources continue to be one of the Companys most valuable assets. The Company believes that a competent, motivated and engaged workforce is fundamental to achieving sustainable business growth and operational excellence. As on March 31, 2026, the total number of employees of the Company stood at 12. During FY 2025-26, the Company remained focused on maintaining an efficient and capable workforce and on developing the skills and capabilities required for its evolving business operations. The Company endeavours to provide a safe, inclusive and conducive work environment and encourages professional development and performance excellence. Industrial relations remained cordial throughout the year under review and the Company did not experience any material disruption on account of employee relations.

CAUTIONARY STATEMENT

Statements contained in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, plans or predictions may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events and involve known and unknown risks and uncertainties.

Actual results may differ materially from those expressed or implied due to various factors including changes in economic conditions, government policies, regulatory developments, market demand, competitive pressures, fluctuations in raw material prices, project execution risks, availability of finance, changes in tax laws, foreign exchange movements and other factors beyond the Companys control.

The Company undertakes no obligation to publicly update, amend or revise any forward-looking statements to reflect subsequent events or circumstances, except as required under applicable laws and regulations.