Beekay Steel Industries Ltd Management Discussions

(Source: MoSPI, Financial Express)

(Source: The Hindu, National Statistics Office)

Manufacturing activity was subdued in FY 2024-25, with growth at 4.5%, which was lower than 12.3% in FY 2023-24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is anticipated to have slowed to 3.8% in FY 2024-25, compared to 8.1% in FY 2023-24.

The agriculture sector grew at 4.6% in FY 2024-25 (1.4% in FY 2023-24).

Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in FY 2024-25 (6.3% in FY 2023-24). The Nifty 50 and SENSEX recorded their weakest annual performances in FY 2024-25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of US$3,070 per ounce, the highest increase since FY 2007-08, indicating global uncertainties. Total assets managed by the mutual fund (MF) industry jumped 23% or Rs 12.3 Lakh Cr in fiscal 2025 to settle at Rs 65.7 Lakh Cr. At close of FY 2024-25, the total number of folios had jumped to nearly 23.5 Cr, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to Rs 24,113 Cr.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately US$20 Bn by year-end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

India is expected to remain the fastest-growing major economy. Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY26.

Tari_-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential (Source: Niti Aayog).

Union Budget FY 2024-25: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating Rs. 11.21 Lakh Cr for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to Rs. 12 Lakh annually will be fully exempt from income tax. Economists estimate that the resulting Rs. 1 Lakh Cr in tax savings could boost consumption by Rs. 3-3.5 Lakh Cr, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current Rs. 200 Lakh Cr.

Free trade agreement: In a post-Balance Sheet development, India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewellery sectors. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years. Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook. Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, raising hopes of further repo rate cuts by the Reserve Bank of India.

Deeper rate cuts: In its February 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 25 basis points, reducing it to 6% in its first meeting of FY 2025-26. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

The India steel market size is estimated at 148.28 Mn tonnes in 2025, and is expected to reach 230.03 Mn tonnes by 2030, the market is expected to grow during 2025-2030 at a CAGR of 9.18%. During FY 2024–25, India continued to consolidate its position as a global steel powerhouse. The country produced approximately 151.1 Mn tonnes (MT) of crude steel, up from 144.3 MT in the previous year, accounting for around 8% of global crude steel output, up from 7.6% in FY 2023–24. India also retained its leadership in direct reduced iron (DRI) production, contributing an estimated 54.8 MT, which represents about 40–43% of global DRI output, an increase from 49.3 MT in the previous year.

On the domestic front, steel consumption remained robust, with finished steel consumption rising to 150.2 MT, registering a strong growth of 10.2% over FY 2023–24s 136.3 MT. This growth in consumption outpaced crude steel production, indicating strong demand from infrastructure, housing, and manufacturing sectors. India also remained a net importer of

finished steel, with imports touching approximately 9.5 MT, reflecting high domestic appetite and relatively lower exports during the year. The sectors performance was supported by capacity expansions, infrastructure development, and continued investment interest, positioning India as a key player in the global steel value chain.

The National Steel Policy of 2017 outlined a long-term vision for Indias steel industry, aiming to increase crude steel production capacity to 300 Mn tonnes (MT) by 2030-31 and raise per capita steel consumption to 160 kg. As of 2025, Indias crude steel production capacity has reached approximately 160 MT, with an annual production of around 125 MT, indicating significant growth but also highlighting the need for accelerated efforts. Per capita steel consumption has increased to 78 kg in FY 2024-25, up from 61 kg in 2022-23, driven by rising infrastructure development and industrial activities. The construction sector, which accounts for 62% of steel demand in India, is expected to drive demand further, fuelled by the governments ongoing investment in infrastructure projects such as Bharatmala and Sagarmala.

(Source: Modern Intelligence, Fast Markets, Market Research Future, PIB, IBEF, Ministry of Statistics and Programme Implementation (MOSPI))

Infrastructure: Infrastructure development directly fuels steel demand by boosting the construction sector. With India aiming to become a US$5 Trn economy, sustained investments in infrastructure will act as a key growth driver for the steel industry, helping it reach the National Steel Policys target of 300 Mn tonnes capacity by 2030.

India as a manufacturing hub: India is the third most sought-after manufacturing destination in the world and has the potential to export goods worth US$ 1 Trn by 2030. The Indian governments initiatives, such as ‘Make in India and Production-Linked Incentive schemes, are attracting investments in steel-intensive sectors like automotive, defence, and heavy machinery.

Urbanisation: Indias rapid urbanization is expected to propel steel demand, with the urban population projected to reach 600 Mn by 2030. This growth will drive the need for residential, commercial, and industrial buildings, which in turn will boost steel consumption. The increasing adoption of steel-intensive construction methods, such as prefabricated structures, in high-rise buildings and industrial parks is expected to further fuel steel demand.

Foreign direct investments: FDI plays a crucial role in driving Indias steel industry by providing capital, technology, and global market access while supporting infrastructure expansion and sustainability. As India targets 300 Mn tonnes of steel production by 2030, continued foreign investment will be vital for growth and competitiveness. In the past year, FDI in the sector surged by 42%, reaching US$42.13 Bn, up from US$29.73 Bn, highlighting strong investor confidence and the industrys promising future.

Industrial expansion: Indias steel demand is estimated to grow by 8-10% annually in 2024-2025. The steel industry plays a vital role in Indias economic growth, contributing around

2% to the countrys GDP and having a significant output multiplier effect of 1.4 on GDP. As the Indian economy continues to expand, the demand for steel is expected to rise concurrently. Plans are underway to increase steel production capacity to 300 Mn tonnes by 2030, thereby supporting industrial growth and meeting both domestic and international demands.

Demand for affordable housing: Indias growing affordable housing demand is estimated to reach Rs 67 Trn. As of 2025, the Indian affordable housing market is poised for significant growth, with estimates suggesting a substantial increase in demand. The market is expected to expand from approximately around 45 Mn households by 2030, driven by rising urbanization, income growth, and government initiatives to promote affordable housing.

(Source: Economic Times, Economic Times, Wave-city, ET Realty, Business Standard, Economic Times)

The Companys revenues increased by 7.58% to reach Rs. 1076.35 in FY 2024-25; the Companys EBITDA stood at Rs. 161.14 compared to Rs. 185.54 Cr in the previous year. Further, interest outflow was Rs. 17.20 Cr in FY 2024-25 compared to Rs. 11.51 Cr in FY 2023-24. The Company reported a post-tax profit of Rs. 90.74 Cr in FY 2024-25 compared to a post-tax profit of Rs. 132.96 Cr in FY 2023-24.

The internal control and risk management system is structured and adapted based on the principles and criteria outlined in the organisations corporate governance code. As an integral component of the Companys overall structure, it involves various personnel working in a coordinated manner to fulfil their respective roles. The Board of Directors oversees strategy and guides Executive Directors and management, with support from committees. The control and risk committee and the audit head report to board-appointed Statutory Auditors.

Funding risk: Insufficient funding for capital expenditures may hinder the Companys performance, as it may struggle to invest in necessary growth initiatives and maintain cost competitiveness.

Mitigation: The Company reduced its debt-equity ratio to 0.29 times in FY 2024-25 from 0.26 times in FY 2023- 24; the interest cover stood at 9.36 as of 31st March, 2025.

Currency volatility risk: Adverse forex fluctuations can negatively impact the profitability of product exports.

Mitigation: The Company minimized risk by promptly and efficiently hedging its receivables.

Competition risk: The emergence of new competitors could pose a challenge to the Companys market share.

Mitigation: Variations in the Companys B2B operations could influence overall profitability. To counter this potential risk, the Company has diversified its presence by expanding into new countries, onboarding new customers, and deepening engagements with existing clients to drive sustained growth.

Employee risk: Attracting skilled professionals remains a challenge for the steel industry, hindered by high attrition rates and operational inefficiencies. Mitigation: The employee strength of the Company in FY 2024-25 stood at 2450. More than 50% of the employees were employed with the Company for more than 5 years; retention of senior management executives was 75% in FY 2024-25.

Beekay Steel attributes its competitive edge to its talented and experienced team members. They bring a unique blend of cross-industry expertise, technological know-how, and domain knowledge, enabling the Company to stay ahead in the industry. At Beekay Steel, we prioritize our employees growth and well-being. Our HR culture emphasizes innovation, competitiveness, and work-life balance. We strive to create a harmonious work environment, making decisions that align with our employees professional and personal goals. As of 31st March, 2025, our dedicated team consisted of 2,500 employees, including contract labours.

This statement made in this section describes the Companys objectives, projections, expectations and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.