Bajaj Steel Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

Indian Economy Review

Indias economy demonstrated strong resilience in FY 2024-25, achieving a real GDP growth rate of 6.5%, thereby retaining its position as the worlds fastest-growing major economy. The country remains firmly on track to emerge as the fourth-largest economy globally. This robust performance was primarily driven by resilient domestic demand, with private final consumption expenditure recording steady growth-reflecting a revival in rural sentiment and consumer confidence.

Despite global headwinds, India maintained steady economic momentum. Key sectors such as agriculture and services remained growth pillars. A record Kharif crop supported rural incomes, while the services sector continued to operate at or above pre-pandemic levels. However, the manufacturing sector experienced some softness due to muted global trade. Even so, the overall growth trajectory remains anchored in strong structural domestic drivers and a broad-based sectoral recovery.

Outlook

Indias economy is projected to grow between 6.3% and 6.8% in FY 2025-26. A favourable monsoon forecast is likely to boost agricultural output and stabilise food inflation, thereby supporting rural consumption. The Reserve Bank of Indias accommodative monetary policy and continued liquidity support are expected to fuel both investment and consumer spending.

However, challenges persist. Geopolitical tensions, volatile global trade dynamics, and macroeconomic uncertainty may pose external risks. To sustain momentum, it will be critical to maintain a sharp focus on structural reforms, infrastructure expansion, and digital transformation. These efforts will be central to deepening Indias economic resilience and propelling long-term growth.

Industry Review

With world-class manufacturing facilities in and around Nagpur, Bajaj Steel Industries Limited has emerged as a diversified engineering company with a strong global presence. It is Indias largest and most modern manufacturer of cotton ginning and pressing machinery, and uniquely, the only company worldwide offering all ginning technologies-Double Roller, Saw Gin, and Rotobar-as well as all pressing systems, including Down Packing, Up Packing, and Horizontal Packing. The Company also manufactures delinting and decorticating machinery, intelligent electrical panels, precision-engineered components, mechanical and pneumatic conveying systems, dust and waste handling units, hydraulic cylinders, and structural fabrications.

The Company executes turnkey engineering and steel building construction projects and is known for its high- quality machining, fabrication, and custom manufacturing capabilities. With a consistent focus on innovation and product expansion, it continues to add new offerings year- on-year, reinforcing its leadership in cotton processing and industrial engineering solutions.

Opportunities for various sectors

Cotton Ginning Machinery

• Global modernisation of cotton processing plants, especially in Africa, South America, and Central Asia.

• Government support for agri-mechanisation in India and abroad.

• Demand for energy-efficient, high-capacity machines as cotton production scales.

• Opportunities in after-sales services, automation, and IoT integration for real-time monitoring and control.

Infrastructure (Pre-Engineered Buildings - PEBs)

• Surge in warehousing, logistics, e-commerce, and industrial manufacturing projects.

• Government infrastructure push (e.g., PM Gati Shakti, Bharat Mala) is driving construction demand.

• Shift toward modular and faster construction methods, boosting PEB adoption.

• Potential in international turnkey projects, including SEZs and export zones.

Electrical Panels

• Rising industrial automation, renewable energy projects, and smart grids are increasing demand for advanced panels.

• Scope for value-added offerings like SCADA- enabled, intelligent motor control centers (IMCCs).

• Government initiatives for manufacturing and electrification (e.g., Make in India, Digital India).

• Strong potential in being a preferred OEM supplier to global brands via partnerships (Schneider, ABB).

Heavy Engineering

• Growth in steel, cement, mining, and power sectors demanding custom-built structural equipment.

• Airport modernisation and expansion boosting demand for aerobridges and ground support structures.

• Renewable energy (e.g., biomass pellet and torrefaction units) opening new niche markets.

• Export potential for large-scale fabrication contracts through global collaborations.

Diversified Industrial Products

• Demand for fire safety systems across commercial and industrial segments due to stricter norms.

• Increasing urban infrastructure creates needs for steel doors, ducting systems, and HVAC solutions.

• Growth in intralogistics and automation driving need for custom conveyors and power transmission products.

• Scope for scaling these high-margin, specialised solutions both domestically and internationally.

Company Overview

Bajaj Steel Industries Limited (BSIL), established in 1961, is a globally recognised engineering company with over six decades of expertise. Headquartered in central India, BSIL operates one of the most modern manufacturing facilities, spread across 42 acres with over 50,000 sq. mt of built-up area-and is in a phase of ongoing expansion.

Equipped with high-definition fiber laser cutting machines, advanced CNC systems, and modern sheet metal and fabrication shops, BSIL delivers precision and efficiency at scale.

The company manufactures a diverse range of products including Cotton Ginning & Pressing Machinery, Cotton Seed Delinting & Decorticating Equipment, Pre-Engineered Buildings, Electrical Panels (LT & HT), Specialty Conveyors, Hydraulic Systems, Heavy Engineering Equipment, Power Transmission Products, Industrial Fans, Fire Fighting Systems, Steel Safety & Fire-Resistant Doors, and custom- machined components.

Business Segments

Cotton Processing Machinery Division

The Company partners with CIRCOT (ICAR, Govt. of India) to drive technological innovation and has established itself as a global leader with a 35-40% global market share, 50% domestic market share, and presence in over 60 countries. Notably, more than half of its revenue comes from exports. Recognised by the Ministry of Textiles, Bajaj Steel Industries Limited is acclaimed as Indias largest and most modern cotton ginning machinery manufacturer.

With an order book of Rs.471 crore as of March 31, 2025, the division continues to benefit from its advanced technological capabilities. The acquisition of Continental Eagle (USA) in 2012 added Saw-Ginning and Roto-Bar Ginning technologies to its portfolio, making Bajaj Steel Industries Limited the only company in the world to offer all four ginning technologies—Single Roller, Double Roller, Saw-Ginning, and Roto-Bar. Its machines, custom-built for high capacity, can process up to 200 bales per hour, the highest globally. Bajaj is also a leading supplier of IMPCO Delinting Equipment, known for its robust construction and superior engineering.

The Cotton Processing Machinery Division has demonstrated consistent growth, with revenue increasing from Rs.163 crore in FY22 to Rs.385 crore in FY25. This performance is supported by a healthy EBITDA margin of 15-17%. The division operates through four wholly owned subsidiaries in the USA, Uganda, and Brazil, reflecting its strong international presence.

Infrastructure Division

The Infrastructure Division specialises in the design, fabrication, and erection of Pre-Engineered Buildings (PEBs), industrial sheds, warehouses, K-houses, and solar mounting structures. Its core strength lies in executing turnkey projects for prominent clients such as Indian Oil Corporation Ltd., Maharashtra State Warehousing Corporation, Nuclear Fuel Complex, and various Maha-Metro projects. The division adheres to stringent compliance standards, with all structures designed according to IS (Indian) and AISC (American) seismic and wind-load codes.

Over the years, it has delivered a diverse range of projects, including automotive showrooms, commercial buildings, cotton ginning plants, and industrial sheds. The division has completed over 600 projects and operates with a manufacturing capacity of 35,000 MTPA. It reported consistent revenue growth, with figures rising from Rs.36 crore in FY22 to Rs.86 crore in FY25, supported by a stable EBITDA margin of 12-14% and a healthy average asset turnover of 3.0x-4.0x. As of March 31, 2025, the division holds an order book worth Rs.66 crore, reflecting continued client confidence and strong execution capabilities.

Electrical Panel Division

The Electrical Panel Division manufactures and markets a comprehensive range of electrical panels, including Power and Motor Control Centers (PCC & MCC), APFC, RTPFC, Hybrid Panels, LT & HT Panels, Intelligent MCC (IMCC), Drive Panels, PLC & SCADA Panels, AMF and Synchronization Panels, Lighting Panels, Control Panels, Power Distribution Boards, and customized panel cabinets.

It also offers advanced systems such as Bus Trunking Systems, Intelligent Motor Control Centres, and SVGR Systems for harmonic control. All products comply with stringent quality standards, holding certifications like IEC 61439 (Part 1 and 2), UL, and IS 8623.

The division has established strategic partnerships as a channel partner of Mitsubishi for HVAC solutions and ABB for electrical panels. Over the years, it has built a strong client base across sectors. Revenue increased from Rs.24 crore in FY22 to Rs.54 crore in FY25, backed by an EBITDA margin of 16-18% and a healthy average asset turnover ratio of 3.0x to 4.0x. As of March 31, 2025, the order book stands at Rs.22 crore, reflecting growing demand and sustained customer trust.

Heavy Engineering Division

The Heavy Engineering Division specialises in customised fabrication and structural solutions for OEMs across the steel, cement, mineral, and power sectors. Leveraging its in-house heavy fabrication and design capabilities, the division has also diversified into manufacturing aerobridges and passenger boarding systems, successfully delivering 57 units for airports in India and overseas as of December 31, 2024.

It further contributes to the renewable energy space with the production of biomass pellets. The division is trusted by reputed international partners such as 3D Bukaka (Indonesia) and Adelte (Spain), highlighting its global credibility. With a manufacturing capacity of 12,000 MT, the division operates with an EBITDA margin of 15-17% and maintains a strong average asset turnover of 3.0x to 4.0x. As of March 31, 2025, it holds an order book worth Rs.17 crore, underscoring its niche capabilities and growing customer demand.

Other Products

The "Other Products" portfolio encompasses a diverse range of industrial and commercial solutions, including firefighting systems, steel doors (for fire safety, hospitals, commercial establishments, and high-durability applications), duct systems and cyclone separators, power transmission products, hydraulic powerpacks and cylinders, industrial fans and impellers, and specialty conveyors. The division also caters to infrastructure and office requirements through the production of modular office furniture. These offerings complement the companys core divisions, showcasing its capability to deliver comprehensive, customised engineering solutions across multiple sectors.

Financial Review

The Companys Financial Performance (Standalone & Consolidated) for the FY 2024-25 is summarized below;

				(Rs. In Lakhs)
	Standalone		Consolidated
Particulars	31.03.2025	31.03.2024	31.03.2025	31.03.2024
Net Revenue from Operation (Including Other Income)	54,501.33	50,837.28	59,720.70	56,660.56
Less : Expenditure	45,214.07	42,899.78	49,267.13	47,155.01
Operating Profit (PBIDT)	9,287.26	7,937.50	10,453.57	9,505.55
Less: Interest	418.81	355.48	418.81	355.48
Depreciation	1,443.30	1,149.33	1,493.67	1,189.53
Profit before Tax & Exceptional item	7,425.15	6,432.69	8,541.09	7,960.54
Add: Exceptional Item	2,652.33	-	2,652.33	-
Profit/Loss Before Tax	10,077.48	6,432.69	11,193.42	7,960.54
Provision for Taxation :
Current Year:	2,286.87	1,630.76	2,592.32	2,007.99
Deferred Tax:	175.80	51.44	167.68	51.04
Profit/Loss for the year	7,614.81	4,750.49	8,433.42	5,901.51
Other comprehensive income/ Loss for the year	(58.16)	13.53	(58.16)	13.53
Profit/Loss after other comprehensive income	7,556.65	4,764.02	8,375.26	5,915.04
EPS (Basic & Diluted)(*)	36.33	22.90	40.27	28.44

*Notes:

1. "EPS of current and previous financial years are restated to account for the 3:1 bonus issue during the year."

2. The Company has received a sum of USD 31,83,528 (Equivalent to Rs.2652.33 Lakhs) in the form of dividend from one of its Wholly owned Subsidiary "Bajaj Coneagie LLC, Alabama, USA" during the quarter ended June 24. The same is shown as Exceptional Items in above consolidated results for the year ended March 31, 2025, so that the same are in consonance with the Standalone results.

Ratios on Standalone Basis	FY 2024-25	FY 2023-24
Net Profit Margin (%)	13.97	9.34
Debt Equity Ratio (x)	0.17	0.19
Interest Coverage Ratio (x)	2.19	1.55
Return on Equity (%)	23.00	18.00
Current Ratio (x)	1.96	1.62

Opportunities and Threats Opportunities

Product expansion through Research and Development

The Company sees significant growth potential driven by its focus on product expansion through research and development. Recent R&D initiatives include the development of a cotton seed dryer, a gin moisture management system, and a cotton classifier designed to detect and reduce moisture content in raw cotton.

These innovations have yielded measurable benefits such as improved cotton seed procurement capacity, enhanced quality and quantity of by-products like oil and cake, and a reduction in free fatty acids. Furthermore, the successful manufacture and supply of passenger boarding bridges-essential airport infrastructure facilitating seamless boarding-has marked the Companys entry into a new segment, broadening its market presence and contributing to diversified revenue streams.

Technology

On the technology front, the Company manufactures ginning machinery using proprietary designs as well as technology acquired from Continental Eagle Corporation, USA. It also maintains a technical collaboration with the Central Institute for Research on Cotton Technology (CIRCOT), enabling continuous innovation and product improvement. This strategic alignment has helped the Company secure a competitive edge in both domestic and international markets. The adoption of advanced and industry-compliant technologies across its other product lines further reinforces its leadership. The Company has successfully exported machinery and equipment to numerous countries, including developed markets like the USA, Greece, and Australia, as well as emerging economies such as Uzbekistan, South Africa, Brazil, Benin, Burkina Faso, and Mali-demonstrating its global technological credibility.

Government Policies

In addition, the industry benefits from supportive government policies at both the central and state levels, aimed at promoting the overall development of the textile sector in India. These favourable initiatives are expected to create a conducive environment for the Companys continued growth and expansion.

Threats

Foreign Exchange Volatility

As a predominantly export-driven organisation, the Company is significantly exposed to fluctuations in foreign currency markets. Unpredictable forex movements-driven by global trade tensions, economic instability, or diplomatic shifts-can adversely impact revenue and profitability, making currency risk a key concern.

Geopolitical and Transit Risks

Operating across diverse geographies, the Companys global shipments traverse major commercial corridors via air and sea routes. These logistics operations are susceptible to disruptions from geopolitical conflicts, international trade disputes, maritime piracy, or security breaches-posing risks to supply chain efficiency and timely deliveries.

Risk of Technological Obsolescence

Rapid technological advancements can render existing systems and manufacturing processes outdated. To remain competitive, the Company must continuously invest in research and development. Without sustained innovation, theres a risk of losing technological relevance in key markets. Proactive R&D initiatives are essential to stay ahead of evolving industry standards.

Dependence on Cotton Production

The performance of the cotton ginning division is closely tied to the annual cotton harvest, which is vulnerable to climatic variability and agricultural conditions. Poor crop yields or unfavorable weather patterns can directly impact raw material availability, disrupting production and affecting business continuity.

Cotton Price Volatility

Cotton prices are highly sensitive to weather patterns, global demand-supply dynamics, and international market trends. Sudden and sharp fluctuations in cotton prices can lead to margin pressures and unpredictable operational costs, challenging the profitability and financial stability of the ginning and pressing segment. Effective risk mitigation strategies and real-time market monitoring are critical to managing this volatility

Risk and Concerns

Like all industries, the Company is subject to various business risks such as procurement, financial, and market- related uncertainties. Proactive steps are taken to identify, evaluate, and mitigate these risks to safeguard business continuity. Given the current economic environment and market outlook, no significant risk, threat, or concern has been identified for FY 2024-25.

The Company has established a comprehensive risk assessment, mitigation, and management framework.

The Board is regularly apprised of the risk management strategies to ensure ongoing evaluation and improvement.

Material Development in Human Resources

The Company remains committed to strengthening its workforce by enhancing employee skills through a structured Learning and Development calendar and assigning intellectually challenging projects that encourage innovation and growth beyond conventional thinking.

To support the Companys expanding business operations, the HR team has focused on strengthening the leadership pipeline and further digitising HR processes to improve speed, efficiency, and transparency.

The Company also maintained harmonious employee relations throughout the year, resulting in zero disruptions to business operations due to staff-related issues.

Outlook

The global economy is expected to grow at a modest pace, with continued challenges stemming from economic softness in China and Europe. However, emerging markets are projected to perform relatively better, with growth likely reaching around 4% in 2025 and beyond. Despite this, key concerns persist, including rising consumer price inflation and escalating geopolitical tensions.

In India, government initiatives like Atmanirbhar Bharat and Make-in-India have stimulated demand for heavy and industrial engineering products, especially in transportation and institutional sectors. Capitalising on this momentum, the Company is actively expanding into a multi-product engineering enterprise. It is strengthening its presence in international markets, particularly for its machinery division, and expects significant growth in turnover over the next three to five years through innovation, diversification, and strategic geographic expansion.

Internal Control Systems and Adequacy

The Company has a well-established internal control system designed to support structured and efficient operations. It follows a systematic approach by formulating comprehensive business plans annually, which include revenue and capex budgets for each quarter. These plans are closely monitored, and actual performance is reviewed against the budget. Any deviations identified are promptly addressed to ensure alignment with business objectives.

To further strengthen governance, the Company has implemented an internal audit system appropriate to its scale and complexity. This audit program encompasses all key functions and activities, ensuring thorough oversight. A dedicated statutory compliance audit team is also in place to assess adherence to regulations across all departments and report findings to the management, enabling timely corrective actions.

In addition, the Audit Committee of the Board of Directors meets quarterly to review both Internal and Statutory Audit reports. These reviews help ensure the integrity of the Companys financial reporting and its compliance with applicable laws and standards.

Environment, Health and Safety

The Company recognises its responsibility in safeguarding the environment and is committed to minimising its environmental impact through the adoption of sustainable practices and technologies. Certified under ISO 14001:2015, the Company adheres to established environmental standards. It actively undertakes plantation drives across all industrial divisions to mitigate the environmental impact of its operations and to preserve the surrounding ecosystem.

Cautionary Statement

The Management Discussion and Analysis Report may include forward-looking statements relating to the Companys objectives, projections, estimates, and expectations. These statements are made in accordance with applicable laws and regulations but are inherently subject to uncertainties. Actual results may differ materially from those expressed or implied due to several influencing factors. These include economic developments within the country, industry-specific demand and supply dynamics, changes in government regulations and tax policies, as well as legal proceedings and industrial relations. Such factors may significantly impact the Companys performance.