Beekay Steel Industries Ltd Management Discussions

Global economic overview

The global economy grew marginally at an 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty.

Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, while emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

Regional growth (%)	2025	2024
World output	3.4	3.3
Advanced economies	1.9	1.8
Emerging and developing economies	4.4	4.3

(Source: IMF, un.org)

Indian economic overview

The Indian economys real GDP grew at 7.7% in FY 2025-26, compared to 7.1% in FY 2024-25. This growth was driven by strong consumption and increasing investments, reaffirming Indias position as the fastest-growing major economy.

Indias Real GDP at Constant Prices was estimated at Rs. 323.12 Lakh Cr in FY 2025-26, compared with Rs 299.89 Lakh Cr in FY 2024-25.

Growth of the Indian economy

Regional growth (%)	FY23	FY24	FY25	FY26
Real GDP growth (%)	7.0*	7.2	7.1	7.7

E: Estimated. Note: FY 2023-24 figure restated under new base year 2022-23. (Source: MoSPI)

* The FY 2022-23 figure (7.0%) is from the old base year series (2011-12) as the new series back-data for FY23 will only be available after December 2026.

Growth of the Indian economy quarter by quarter, FY 2025-26

Regional growth (%)	Q1FY26	Q2FY26	Q3FY26	Q4FY26
Real GDP growth (%)	6.7	8.4	7.8	7.8

Note: Q2 revised upward from 8.2% and Q3 from 7.35% under the new base year 2022-23 series released 27 th February, 2026. Q4 remains an estimate. (Source: MoSPI)

In fiat ion, policy and currency dynamics

Inflation remained benign through much of FY26, with full-year CPI estimated at an exceptionally low 2.1%. This created room for 125 basis points of cumulative rate cuts, supporting consumption and investment.

However, macro stability was accompanied by currency volatility. The Indian rupee depreciated sharply by 9.88% during FY26 - its steepest fall since FY12 - touching Rs. 94.83 against the US dollar. This reflected global capital flows, a strong dollar environment, and geopolitical uncertainties.

Indias growth story

Real Gross Value Added (GVA), which measures economic output excluding taxes and subsidies, grew 7.9% in FY26, compared with 7.3% in FY25. At current prices, nominal GVA rose 9.1% to Rs 314.87 Lakh Cr from Rs 288.54 Lakh Cr a year earlier.

During FY26, financial, real estate, IT and professional services grew by 9.9%, while trade, hotels, transport, communication and broadcasting recorded a strong

10.1% growth, and public administration and other services expanded by 5.8%. The secondary sector grew 9.1%, accelerating from 8.0% in the previous year, driven by manufacturing alongside construction growth of 7.1%. This combination of services-led scale and manufacturing acceleration is shaping a more balanced and resilient economic structure.

Indian steel industry overview

Indias steel market is projected to grow strongly, with total demand expected to increase from 162.23 Mn Tonnes in 2025 to 177.03 Mn Tonnes in 2026, and further expand to 273.88 Mn Tonnes by 2031, reflecting a CAGR of 9.1% over 2026-2031. Notably, in 2025, India emerged as the only top-10 steel-producing nation to register double-digit growth in output, while production in key regions such as China, Japan, and the European Union remained subdued or declined.

This sustained momentum is underpinned by several structural drivers. The Production Linked Incentive (PLI) scheme for specialty steel has spurred private sector investment, although the pace of project execution has been gradual, with less than half of the sanctioned projects operational as of December 2025. This delay is expected to result in a phased capacity addition cycle, supporting price stability in the near term.

The integrated steel producers in resource-rich states such as Odisha, Jharkhand, and Chhattisgarh have strengthened their cost competitiveness through access to long-term iron ore linkages under the revised mining framework. This has enabled them to maintain a strong market position despite increasing scrutiny around carbon intensity.

On the demand side, the governments infrastructure push under the National Infrastructure Pipeline continues to provide a stable consumption base for structural steel and rebar. This is further supported by rising demand for high-strength steel products, driven by metro rail expansion in Tier-2 cities and the ongoing development of the dedicated freight corridor.

During FY 2025-26, India further strengthened its position as a leading global steel producer, with crude steel output reaching approximately 153-154 Mn Tonnes (MT), up from 151.1 MT in FY 2024-25. This corresponds to roughly 8-8.2% of global crude steel output, consolidating Indias share slightly above the 7.6-8% level seen in the previous year. The country also maintained its leadership in direct reduced iron (DRI) based production, with combined hot metal and DRI output growing by around 8-8.5% year on year in the first half of FY 2025-26, supported by higher scrap consumption and capacity additions.

On the domestic front, finished steel demand remained healthy, with real terms consumption expanding in the high single digit to low double digit band (around 9-10%) versus the prior year, reflecting strong demand from infrastructure, housing, and manufacturing. In line with this demand momentum, India transitioned toward a net exporter of finished steel in FY 2025-26: between April 2025 and February 2026, finished steel exports surged by about 36.6% to 6.02 MT, while imports declined by around 37% to roughly 5.6 MT, indicating improved domestic supply and export competitiveness. The sectors performance was underpinned by ongoing capacity expansions, infrastructure linked capex, and policy continuity, further entrenching India as a key node in the global steel value chain.

The National Steel Policy 2017 continues to guide the long term trajectory, targeting 300 Mn Tonnes per annum of crude steel capacity by 2030-31 and per capita steel consumption of about 160 Kg. By FY 2024-25, installed crude steel capacity had already reached around 200 MT, with annual production near 125-130 MT, signalling robust growth but also highlighting the need for accelerated project execution. Per capita steel consumption has climbed to over 100 Kg in FY 2025-26, up from 78 Kg in FY 2024-25 and 61 Kg in FY 2022-23, driven by sustained infrastructure development and rising industrial activity. The construction sector, which accounts for an estimated 60-65% of steel demand, is expected to remain the primary growth driver, propelled forward by the governments continued push on mega infrastructure initiatives such as Bharatmala, Sagarmala, and PM Gati Shakti linked projects.

(Source: Mordor Intelligence, Reuters, The Times of India, Market Research Future, PIB, IBEF, Ministry of Statistics and Programme Implementation (MOSPI))

Sectorial growth drivers

Infrastructure development: Infrastructure remains the primary driver of steel demand in India, accounting for nearly 60-62% of total consumption. Continued government spending under programmes such as Bharatmala, Sagarmala, Dedicated Freight Corridors, and urban metro expansions is sustaining demand for long and structural steel. The National Infrastructure Pipeline (NIP), with an outlay of over US$ 1.4 trillion, continues to provide long-term visibility for steel consumption, supporting the industrys roadmap to achieve 300 MT capacity by 2030-31.

A manufacturing hub: India continues to strengthen its position as a global manufacturing hub, supported by initiatives such as Make in India and the Production-Linked Incentive (PLI) scheme for specialty steel and allied sectors. These initiatives are driving investments in steel-intensive industries including automotive, capital goods, defence, and engineering. India is expected to reach US$ 1 trillion in merchandise exports by 2030, reinforcing demand for value-added steel products.

Urbanisation and real estate growth: Rapid urbanisation remains a key structural driver, with Indias urban population projected to reach 600 Mn by 2030. This is accelerating demand for residential, commercial, and industrial infrastructure. Increasing adoption of prefabricated and steel-intensive construction technologies in high-rise buildings, logistics parks, and industrial corridors is further boosting steel consumption intensity.

Foreign direct investment (FDI): FDI continues to play a pivotal role by bringing in capital, advanced technologies, and global best practices. Cumulative FDI inflows into Indias metallurgical industries have remained strong, reflecting sustained investor confidence. Foreign investments are supporting capacity expansion, modernisation, and decarbonisation efforts, which are critical for achieving Indias long-term steel production and sustainability targets.

Industrial expansion and economic growth: Indias steel demand is expected to grow at 7-9% annually in FY 2025-26, broadly in line with economic growth. The steel sector contributes approximately 2% to Indias GDP and has a strong multiplier effect on industrial output. Expansion in sectors such as capital goods, railways, renewable energy, and automobiles continues to underpin steel demand growth.

A_ordable housing demand: Affordable housing remains a significant demand driver, supported by government initiatives such as Pradhan Mantri Awas Yojana (PMAY). Indias housing demand is estimated at 45 Mn units by 2030, driven by rising urbanisation, income growth, and favourable policy support. This is expected to sustain demand for construction-grade steel, particularly long products.

(Source: Steel.gov.in, IBEF, Infrastructure India.gov, Niti.gov.in, Dpiit.gov.in)

Sectorial growth drivers

The Companys revenues increased by 9.17 % to reach Rs. 1,175.04 crores in FY 2025-26; the Companys EBIDTA stood at Rs. 116.60 Cr compared to Rs. 161.14

Cr in the previous year. Further, interest outflow was Rs. 23.45 Cr in FY 2025-26 compared to Rs. 17.20 Cr in FY 2024-25. The Company reported a post-tax profit of Rs. 37.98 Cr in FY 2025-26 compared to a post-tax profit of Rs. 90.74 Cr in FY 2024-25.

Risk management

Funding risk: Insufficient availability of funds for capital expenditure may impact the Companys ability to pursue growth initiatives and sustain cost competitiveness.

Mitigation: The Company continues to maintain a prudent capital structure, with a debt-equity ratio of 0.31x as of FY 2025-26 as compared to 0.29x as of FY 2024-25. A strong interest coverage ratio of 4.04x as of 31 st March, 2026, reflects healthy financial stability and debt-servicing capacity.

Currency volatility risk: Fluctuations in foreign exchange rates may adversely affect the profitability of export operations.

Mitigation: The Company actively manages forex exposure through timely and efficient hedging of receivables, thereby minimising the impact of currency volatility.

Competition Risk: Intensifying competition, including the entry of new players, may impact the Companys market share and pricing power.

Mitigation: The Company continues to diversify its B2B operations by expanding into new geographies, onboarding new customers, and strengthening relationships with existing clients to drive sustained and balanced growth. Employee Risk: The ability to attract and retain skilled talent remains a key challenge for the steel industry, given rising attrition levels and operational complexities.

Mitigation: The Company focuses on building a stable and experienced workforce. As of FY 2024-25, total employee strength stood at approximately 3100. Over 50% of employees have been associated with the Company for more than 5 years, while retention of senior management remained strong at 80%, reflecting organisational stability and continuity. Quality risk: A decline in product quality can negatively affect the Companys brand and revenue.

Mitigation: The Companys operations are in line with the stringent quality norms stated by customers or quality agencies and certifications (ISO 9001:2015 and ISO TS 16949).

SWOT analysis

Strengths

Abundance of Iron Ore & other minerals for steel.

Skilled manpower and low unit labour costs.

Growing infrastructure needs and industry expansion drive demand for steel products.

Weakness

High cost of capital

Low labour productivity

High cost of some basic inputs like power, coal, fuel etc.

High social costs.

Distribution network.

Opportunities

Low per capita consumption.

Positive growth of Indian Economy .

Unexplored rural market & Govt thrust on Infrastructure development.

Low export market penetration

Threats

Slow industry growth.

Poor R&D and threat of technological obsolescence in a large part of the market.

Substitution by Aluminum, plastics.

Recession in other countries resulting in dumping of material

(Source: Research Gate. net)

Internal control systems and their adequacy

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.

Human resources and industrial relations

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 31 st March, 2026, our dedicated team consisted of 3,100 employees.

Human resources and industrial relations

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.