Chaman Metallics Ltd Management Discussions

The Operating and Financial Review provides managements perspective on the Companys financial and operational performance for the year 2024-25 as well as the outlook for the current financial year. This report should be read in conjunction with the Companys audited financial statements, accompanying schedules, notes, and other relevant disclosures included in the Annual Report including disclaimers etc. This section forms an integral part of the Directors Report.

INDUSTRY STRUCTURE AND DEVELOPMENTS Global Steel Industry:

Production

In 2024, as per world crude steel provisional production data production of crude steel was 1,884.6 million tonnes (mt), slightly down from 1,892.2 MT in 2023. According to the World Steel Associations Short-Range Outlook (SRO) - October 2024, global steel demand is projected to rebound by 1.2% in 2025, supported by infrastructure investments, decarbonisation initiatives, and growth in emerging economies, particularly India.

China remained the largest crude steel producer with 1,005.1 MT, followed by India at 149.4 MT, Japan at 84.0 MT, and the USA at 79.5 MT.

In 2024, global direct reduced iron (DRl) production recorded a moderate increase of 3.89%, reaching 144.1 MT, up from 138.7 MT in 2023. India was the main contributor to this growth, accounting for nearly 96% of the global increase, with DRl output rising by 10.48% to 54.8 MT in 2024 from 49.6 MT in 2023.

Demand

Global apparent steel use (finished steel products) declined by 2.0%, falling to 1,742.4 MT in 2024 from 1,778.1 MT in 2023. The contraction was largely attributable to a steep drop in Chinas steel consumption about 48.5 MT amid prolonged weakness in its real estate sector and subdued manufacturing activity. Major developed economies also reported declines, including Germany -2.3 MT), the United States (-1.4 MT), and South Korea (-4.6 MT), reflecting tighter financing conditions, elevated costs, and weaker demand in housing and manufacturing sectors. These declines were mainly offset by robust growth in India (+15.1 MT), driven by infrastructure expansion, industrial activity, and resilient domestic consumption. Overall, the demand contraction highlights the continuing divergence between mature and emerging steel markets, with emerging economies increasingly driving incremental global demand growth.

Per capita steel consumption is a critical indicator of a countrys industrialisation and infrastructure development. Globally, the average per capita apparent steel use declined from 221.1 kg in 2023 to 214.7 kg in 2024, reflecting subdued demand across major developed economies.

India, however, has continued to demonstrate consistent growth in per capita steel use, rising from 93.0 kg in 2023 to 102.6 kg in 2024, a growth of nearly 10% year-on-year. This increase significantly outpaced the global trend and highlights Indias strong domestic steel demand, driven by rapid expansion in infrastructure, housing, automotive, and engineering sectors.

Outlook

Looking ahead to 2025, global steel demand is expected to rise, marking a return to growth after three years of decline. This recovery will be led by robust expansion in India and other major developing economies, alongside modest rebounds in the developed economies. Key demand drivers include accelerated infrastructure spending, large-scale renewable energy and grid expansion projects, and investments linked to decarbonisation and digital transformation.

Plowever, risks remain, including the uncertain pace of Chinas real estate sector stabilisation, potential volatility in raw material prices, and lingering geopolitical tensions. The industrys long-term growth trajectory will also depend on the speed and scale of adopting low-carbon steelmaking technologies, which are increasingly central to investment strategies worldwide.

Steel demand is projected to increase 1.7% in 2024 reaching to 1,793.1 MT which represents an increase of approximately 30.1 MT. Notably, India is expected to account for nearly one-third of this growth, with its steel consumption forecasted to increase by 8.2% to 144.3 MT. Meanwhile, Chinas steel consumption is likely to remain stable at 895.7 MT. Flowever, it is important to note that the World Steel Association (WSA) highlighted that this expected growth in steel demand indicates a global recovery as economies stabilize.

However, it is important to note that the World Steel Association (WSA) highlighted that this expected growth in steel demand indicates a global recovery as economies stabilize. It suggests that demand for steel is increasing in different regions due to the improving health of the global economy.

Sources:

World Steel Association; worldsteel.org; Note: MT = million tonnes

Indian Steel Industry:

Production

India continues to be the second largest producer of crude steel globally with 151.97 million tonnes (mt) in FY 2024-25 up 5.3% from 144.30 MT in FY 2023-24.

Further, India has retained its position as the world leader in Direct Reduced Iron (DRl) production, DRl production in India reached 55.65 MT in FY 2024-25, up 7.9% year-on-year from 51.56 MT in FY 2023-24, with the coal-based route accounting for nearly 84% of production.

The total finished steel production in FY 2024-25 was 146.56 MT, up by 5.3% from 139.15 MT in FY 2023-24.

Demand

Indias domestic finished steel consumption saw a significant increase in FY 2024-25 at 152 MT up significantly by 11.5% from consumption of 136.29 MT in FY 2023-24. Driven by sustained growth in infrastructure, construction, and manufacturing, Indias steel demand is projected to grow 8.5% in 2025, outpacing the global growth forecast of 1.2%. Sponge iron, being a vital feedstock for electric arc furnaces and induction furnaces, is playing an increasingly strategic role in meeting this rising steel demand, especially in the non-flat products segment like bars and rods.

Over the past five years, sponge iron production in India has demonstrated consistent growth:

2020- 21: 34.38 MT

2021- 22: 39.2 MT

2022- 23: 43.62 MT

2023- 24: 51.56 MT

2024- 25: 55.65 MT

Looking ahead, Indias total steel demand is expected to reach 230 MT by FY 2030-31. This long-term growth will be driven primarily by the building and construction sector (rising urbanisation rates and increasing steel intensity in housing and commercial spaces) and the infrastructure segment (investments in roads, railways, airports, and logistics corridors, alongside growing steel usage in energy and water projects).

Given the ongoing emphasis on energy efficiency, raw material security, and decarbonisation, sponge iron manufacturing especially through coal-based and emerging gas-based technologies remains critical to Indias steel sector growth and global competitiveness.

Outlook

Indias steel sector is expected to maintain its growth trajectory in FY 2025-26, supported by robust domestic demand, government infrastructure spending, and capacity expansions across the value chain. The National Steel Policy 2017 target of 300 MT crude steel capacity by 2030-31 continues to guide both public and private investments, while the Production Linked Incentive (PLl) Scheme for Specialty Steel is encouraging the production of higher-value steel grades to reduce import dependence.

Finished steel consumption, which grew by 11.5% in FY 2024-25 to 152 MT, was projected to rise a further 8.5% in 2025, outpacing the global growth forecast of 1.2%. This expansion will be driven primarily by infrastructure projects under the Gati Shakti Master Plan, continued housing demand, growth in engineering goods, and a revival in automotive production.

Sponge iron will remain a critical enabler of this growth with 55.65 MT produced in FY 2024-25, up 7.9% year-on-year, and accounting for nearly 50% of global DRl output, India is well-positioned to meet the raw material requirements including requirements of its expanding electric arc furnace (EAF) and induction furnace (if) capacities. The dominance of the coal-based route (84% of production) is expected to continue in the short term. Flowever, medium- to-long-term strategies are shifting toward gas-based and hydrogen-based DRl to align with decarbonisation goals and reduce C0₂ intensity.

Over the past five years, sponge iron production has risen from 34.38 MT in 2020-21 to 55.65 MT in 2024-25, reflecting both capacity expansions and higher utilisation rates. With continuing government support for energy efficiency, raw material linkages, and technology adoption, Indias sponge iron industry is expected to see steady capacity additions and modernization efforts in the coming years.

Sources:

JPC; jpcindiansteel.nic.in, *provisional; Note: MT - million tonnes Indian Steel Industry: April 2025 - A Trend Report Worldsteel Short Range Outlook October 2024

Indian Iron Industry:

India is the fourth-largest iron ore miner and production of iron ore of 289.4 million metric tonne (MMT) in 2024-25 has broken the record of 276.75 MMT in 2023-24, registering growth of 4.57% year-on-year increase, according to provisional data released by the Ministry of mines. Iron ore accounts for 70% of the total mineral production by value.

In FY 2024-25, iron ore production maintained its upward trajectory, fuelled by rising domestic demand and expanded mining activities. Key mining states, including Odisha, Karnataka, and Chhattisgarh, have played a crucial role in driving overall production volumes.

The growing significance of pellets in Indias iron-making industry is reflected in their rising share in both blast furnace and sponge iron production. The share of pellets in hot metal production has increased from 31% to 41%, underscoring their expanding role in the blast furnace process. Likewise, in the DRI sector, pellets now account for 41-61 MMT, highlighting the sponge iron industrys clear shift toward higher-quality, value-added raw materials. This transition is aligned with the broader industry focus on cleaner, more efficient production technologies and reduced emissions.

Indias Iron ore consumption expected to rise to 350 MMT by FY2030 while production is expected to grow by over 50% by FY2030 to 425-430 MMT.

On the supply side, Indias major iron ore producing states are projected to scale up significantly by FY 2030. Odisha, which contributes over 50% of Indias iron ore output, is expected to increase production to 200 MT, compared to 156 MT in the last fiscal year. Chhattisgarh is likely to expand from 44-45 MT currently to 70-75 MT, while Karnataka is projected to rise from 37-38 MT to 60-65 MT. These expansions will be crucial to meeting Indias growing steel demand, projected at -230 MT by FY 2030-31, while also supporting the increasing use of pellets in both BF and DRI routes.

The strengthening role of pellets not only ensures better efficiency in steelmaking but also supports Indias transition toward sustainable, low-emission iron and steel production, in line with the governments decarbonisation roadmap.

Indias iron ore and pellet sector has experienced pronounced price volatility in recent years, shaped by a combination of domestic, global, and policy-driven factors. On the domestic front, fluctuations in mining output-often tied to monsoonal disruptions, labour availability, and state-level regulatory changes have had a direct impact on supply and pricing. Strong demand from the steel sector, supported by initiatives such as the National Infrastructure Pipeline and Make in India, has further tightened the supply-demand balance, exerting upward pressure on prices.

Globally, demand surges from major importers like China, shifts in geopolitical dynamics, supply chain realignments, and trade restrictions have influenced international price benchmarks, which in turn affect Indian market pricing. Additional volatility arises from factors such as the imposition or removal of export duties, currency fluctuations, and variations in freight costs. Collectively, these dynamics keep iron ore and pellet prices closely linked to both macroeconomic trends and policy developments, making the sector highly sensitive to market signals at home and abroad.

Sources: PIB- Ministry of Steel - Press Release

https:/ /www.biamint. co /events /all-india-steel-conclave-2.0 /bloa /indias- iron-ore-demand-to- surge-50- bv-2030-d riven-bv-expandina-steel-production

https://www.reuters.com/markets/commodities/indias-iron-ore-imports-trend-hiaher-its-no-china- russell-2025-06-03/

Outlook

Indias iron ore sector is expected to maintain steady growth, supported by rising steel demand, expanded mining activities, and greater adoption of pellets in both blast furnace and sponge iron production. The increasing role of pellets underscores a shift toward higher-quality raw materials, efficiency, and cleaner production technologies, aligning with the industrys decarbonisation goals. However, the sector remains sensitive to price volatility driven by domestic supply fluctuations, global demand shifts, and policy interventions, making raw material security a key focus for sustaining growth.

OPPORTUNITIES

Increasing Steel demand in India:

Indias iron and steel sector is poised for sustained growth, driven by robust demand fundamentals, supportive government policies, and increasing global relevance. Key opportunities include:.

Major opportunities in the Steel Sector Infrastructure, Construction and Urbanization Boom

The Indian government has earmarked a record capital expenditure of jfll.ll lakh crore in the Union Budget 2024-25, emphasising infrastructure expansion. Over 65% of Indias steel consumption is driven by the infrastructure and construction sectors, with around 25-30% catering directly to government initiatives like roadways, bridges, housing, and smart city projects. This trend positions steel more particularly sponge iron and DRI as critical enablers of growth. The National Infrastructure Pipeline (NIP) with an outlay of fflll lakh crore and ongoing projects under PM Gati Shakti, smart cities, housing, and logistics will create strong demand for steel-intensive products. Rising urbanization (expected to cross 40% by 2030) will further accelerate demand in construction, real estate, and allied sectors.

Specialty Steel & Import Substitution

The Indian government has earmarked !fl7,000 crore to produce high-end steel domestically, reducing reliance on imports for products like auto-grade, transformers, and advanced engineering steel. Combined with the PLI Scheme for Specialty Steel, this offers strong incentives for upgrading capacities and producing value-added steel domestically.

Green Steel & Sustainable Manufacturing

Rising global demand for low-carbon steel creates rich opportunities for early movers. While pellet usage and DRI routes aid cleaner consumption, India is also exploring hydrogen-based steelmaking, carbon capture, and other decarbonisation technologies.

Government initiatives

The Government of India has introduced several policy measures and reform-driven initiatives that create a conducive environment for investment, expansion, and innovation in the steel sector. These initiatives open up multiple opportunities for both integrated and secondary steel producers, including sponge iron manufacturers:

National Infrastructure Pipeline (NIP):

The Indian governments focus on infrastructure development, highlighted by initiatives such as the National Infrastructure Pipeline (NIP) with an authorized investment of fflll lakh crores is set to drive significant growth. The NIP, which spans a 5-year period ending in 2025, is expected to create a robust and stable demand for steel through extensive projects across various sectors including transportation, energy, water supply, sanitation, and urban development.

Out of the total NIP of Rs 111 lakh crore, Rs 44 lakh crore (40%) worth of projects are under implementation, Rs 34 lakh crore (30%) worth of projects are at the conceptualization stage, and Rs 22 lakh crore (20%) worth of projects are under development. Information regarding project stage are uncategorized for projects worth Rs 11 lakh crore (10%).

The Steel and Steel Products (Quality Control) Order, 2024:

The Steel and Steel Products (Quality Control) Order, 2024 makes it mandatory for all specified steel products in India to conform to the Bureau of Indian Standards (BIS) certification and carry the BIS Standard Mark, thereby ensuring product quality, safety, and compliance with Indian standards across the steel sector. Presently, 151 BIS standards ensures that only certified, high-quality steel products are available in the domestic market.

Revamped Steel Import Monitoring System (SIMS) enhances transparency in imports, safeguarding domestic industry competitiveness.

Green Steel Initiative:

Green hydrogen offers an avenue for fossil-free steelmaking. At present, the available technology for hydrogen-based production of green steel is not commercially viable in the country. Hence, the Government is supporting pilot projects for the use of Green Hydrogen in the steel sector.

Ministry of Steel has awarded two pilot projects to produce DRI using 100% Hydrogen in a vertical shaft and one pilot project to use hydrogen in an existing Blast Furnace to reduce coal/coke consumption under the National Green Hydrogen Mission launched by the Ministry of New and Renewable Energy (MNRE).

Various initiatives are also being undertaken by the Private Sector. Renewable energy sources like solar and wind are key to producing green hydrogen, making the shift to sustainable practices more feasible for the steel industry. The adoption of renewable energy in green hydrogen production is expected to accelerate the transition to a low-carbon economy.

The Ministry of Steel has formalized a Green Steel Taxonomy, a crucial mechanism to define and distinguish low-carbon steel, enabling the development of markets and investment flows toward cleaner technologies.

Star Rating System:

To standardise and encourage the transition toward low-emission steelmaking, a star-rating mechanism has been established:

• Five-Star Green-Rated Steel

-Emission intensity lower than 1.6 t-C0₂e/tfs.

-Represents best-in-class sustainable steelmaking practices, aligned with international green benchmarks.

• Four-Star Green-Rated Steel

-Emission intensity between 1.6 - 2.0 t-C0₂e/tfs.

-Reflects advanced adoption of cleaner technologies and partial decarbonisation.

• Three-Star Green-Rated Steel

-Emission intensity between 2.0 - 2.2 t-C0₂e/tfs.

-Recognised as transition-ready steel, eligible for green classification but requiring further improvements.

• Not Eligible for Green Rating

-Steel with emission intensity above 2.2 t-C0₂e/tfs will not qualify as green-rated steel.

Review Mechanism:

The threshold limits and star-rating benchmarks will be reviewed every three years, ensuring alignment with evolving technologies, international best practices, and Indias decarbonization roadmap.

Budget Allocation for Capital Expenditure in Infrastructure:

Substantial investments by the Central Government in building and upgrading infrastructure have created a powerful multiplier effect on the economy, significantly driving steel demand. Committed to sustaining robust fiscal support for infrastructure over the next five years, the government has allocated 511,11,111 crore for capital expenditure in the Budget 2024-2025, announced by the finance minister on July 23, 2024. This allocation, representing 3.4% of GDP, underscores the governments dedication to infrastructure development, further bolstering the demand for steel and creating ample growth opportunities for the sector.

National Steel Policy, 2017:

The National Steel Policy aims to boost Indias per capita steel consumption from 97.7 kg to 160 kg by 2030-31. To achieve this goal, the policy targets countrys domestic crude steel production capacity to 300 million tonnes per annum (MTPA) and setting a sponge iron production target of 80 MTPA. This ambitious expansion will open up significant growth opportunities for major Indian steel players, driven by rising demand and evolving regulatory standards, thereby fostering increased domestic steel production.

Scrap Recycling Policy, 2019:

This policy ensures scrap segregation (quality wise), collection, processing, and recycling. The policy is to provide a framework for carrying out the activities in a scientific manner to have assured and regular supply of processed scrap for the downstream industry.

Domestically Manufactured Iron and Steel products (DMI&SP) Policy:

The Government had notified on 8^th May, 2017 and revised in December, 2020 a Policy for providing preference to domestically manufactured iron & steel products in Government procurement (DMI&SP Policy). The amended policy now mandates to provide preference to Domestically Manufactured iron & Steel Products (DMI&SP) with a minimum of 20%-50% (increased from earlier 15%-50%) value addition in Government Procurement. Each Ministry or Department of Government and all agencies/entities under their administrative control will be under the purview of the DMI&SP order as notified by the Ministry of Steel, to provide preference to Domestically Manufactured Iron & Steel Products (DMI&SP) in government procurement. The policy is applicable for projects where the procurement value of iron and steel is above 55 lakh, (reduced from earlier 5 25 crore). The Mandates to Provide Preference to Domestically Manufactured Iron & Steel Products (DMI&SP) aim to boost the Indian steel industry by prioritizing local steel in government procurement. This policy supports domestic manufacturers by increasing market access, reducing import reliance, and driving quality and innovation. Benefits include job creation, revenue growth for local producers, and cost savings on imports. Implementation involves clear policies, regulatory oversight, and ongoing evaluation to ensure effectiveness and compliance.

Production linked Incentive (PLl) Scheme for Speciality Steel:

The PLl scheme, a vital initiative in Indias industrial growth trajectory, was notified in July 2021 for fostering investments and enhancing capacities in the specialty steel segment. The PLl is a government initiative aimed at boosting domestic production and reducing imports of specialty steel by attracting major capital investment.

The PLl scheme for specialty steel covers five broad categories and 19 sub-categories. The initiative ensures that only companies registered in India and engaged in end-to-end steel production are eligible for incentives.

This Scheme will attract an investment commitment of Rs. 29,530 Crore with capacity addition of 24,780 thousand tonne in five years. As on 31st December, 2024, 44 Molls are active and have achieved an investment of about 18,850 crore and employment generation of about 8930.

Based on the feedback from industry, the Union Ministry of Steel launched PLI Scheme 1.1 on January 6, 2025, with a Rs. 6,322 crore (US$ 733.40 million). The scheme eases norms to reduce imports, enhance domestic manufacturing, and improve energy efficiency, with applications were open until January 2025.

Under the second round of the Production Linked Incentive scheme (PLl) for specialty steel, 25 companies committed Rs. 17,000 crore (US$ 1.98 billion) to produce high-end steel domestically, aiming to reduce imports and boost self-reliance. The scheme targets five key steel product categories with applications across various industries like automobiles and transformers.

Impact of Urbanization on Steel Demand:

Rapid urbanization is leading to increased demand for steel in the construction of residential and commercial buildings, roads, bridges, and other urban infrastructure.

Technological Advancements in Steel Productions:

Investing in modern, energy-efficient technologies can reduce production costs and environmental impact.

Raw Material Availability and its Impact:

India has abundant reserves of iron ore and coal which are first line raw materials for steel industry. Utilizing local resources can reduce costs and ensure a steady supply of raw materials.

THREATS

Despite the various steps taken by the government, the steel industry has various challenges to face that can impact its growth and stability. Following are some key threats:

Demand Dynamics:

The steel industry faces significant threats due to its strong dependence on end-use sectors like real estate, automotive, and construction, making it highly vulnerable to economic cycles. Any slowdown in these industries directly reduces steel demand, creating cascading effects across the value chain. The situation in China, where a prolonged slump in the real estate and manufacturing sectors has led to oversupply and aggressive steel exports, highlights the risks of demand imbalances and global price volatility. Coupled with sluggish growth in developed economies, this oversupply pressure and weakening consumption trends pose a major challenge to sustaining stable demand and profitability in the global steel industry.

Policy and Regulatory Uncertainty:

Frequent changes in export duties, import restrictions, and quality control norms create uncertainty for the steel industry, impacting both domestic operations and global competitiveness. Sudden export duty revisions can reduce access to overseas markets, while shifting import restrictions affect raw material supply and costs. At the same time, stricter quality control norms, though beneficial for standards, increase compliance requirements and operational expenses. Such policy volatility hampers long-term planning, discourages investment, and undermines Indias ability to compete in international steel markets.

Environmental and Decarbonisation Pressures:

The push for green steel and stricter emission norms requires significant investments in cleaner technologies, which can strain the financial position of producers.

Raw Material Price Volatility and Supply Chain Risks:

The steel industry is heavily reliant on raw materials like iron ore and coking coal and scrap, which are subject to significant price fluctuations. While iron ore and coal are available domestically, India also relies on imported coking coal, primarily sourced from Australia. Disruptions in the global supply chain, influenced by factors like geopolitical tensions and supply-demand imbalances, which contribute to the instability in their supply. These disruptions and imbalances can lead to significant volatility in their prices. Consequently, increased raw material costs drive up production expenses, compress profit margins, and create financial uncertainty for steel producers.

Demand prediction:

Another significant challenge facing the steel industry is fluctuating demand. The variability in demand patterns makes it difficult for steel manufacturers to accurately forecast and align production levels. This unpredictability can lead to inefficiencies, such as overproduction or underproduction, which in turn delays returns on investment and affects overall profitability. Managing these demand fluctuations requires agile strategies and robust forecasting methods to minimize financial risks and optimize production schedules.

Downtime and Potential Utilization:

All the challenges outlined contribute to a significant issue i.e. low capacity utilization. Reports indicate that Indian steel plants often struggle to achieve even 80% of their potential capacity due to a range of obstacles. These hurdles include fluctuating raw material prices, supply chain disruptions, and unpredictable demand, all of which hinder optimal operational efficiency and productivity. As a result, steel producers face diminished output and increased operational costs, impacting their overall profitability and competitiveness.

Addressing these threats effectively involves strategic planning, investment in new technologies, and adaptive management to ensure the steel industrys resilience and long-term success.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The major and material activities of the Company are restricted to only one geographical segment i.e., India, hence the segment wise disclosures are not applicable.

As on 31st March, 2025, the Company was only manufacturing of Sponge Iron as its single segment in which the company operates; hence no reportable segments or product wise performance disclosures is applicable.

OUTLOOK

Given the current governments focus on infrastructure development coupled with political stability, the overall outlook for the industry is positive. Our company is well-positioned to capitalize on these opportunities. The Indian steel industry is performing robustly, and this momentum is expected to continue in the coming years. To align with this growth, our company is strategically expanding in phases, including the expansion of our existing sponge iron plant, the installation of an induction furnace for manufacturing M.S. billets (SMS plant), a new power plant, and a submerged arc furnace for producing ferro alloys.

RISK AND CONCERNS

Risk is a fundamental aspect of nearly every business. We systematically measure, assess, and manage risks. Regardless of the risk type or the activity that generates it, our fundamental approach to risk management remains consistent: we identify and quantify risks, apply a deep understanding of our business and competitors, and respond with flexibility in managing and mitigating these risks.

The Key risks include the global steel demand scenario, non-availability or undue increase in the cost of raw materials such as iron ore, coal, and labour, as well as market fluctuations. While the company does not apprehend any inherent long-term risks, it does acknowledge some primary concerns that impact the industry generally. The Company recently completed a major expansion project aimed at enhancing capacity and operational efficiency. While this expansion strengthens the Companys long-term growth prospects, it also brings certain risks and concerns that management continues to closely monitor.

Cost Overruns and Financial Stress:

The project witnessed higher-than-estimated costs, primarily due to making changed necessary for efficient production, involving higher infrastructure and environmental compliance costs. These overruns have increased the overall project cost, putting temporary pressure on cash flows and returns on investment.

Leverage and Funding Risks:

Additional financing requirements arising from the cost escalation have resulted in higher debt levels. This increases interest burden and exposes the Company to risks from fluctuating borrowing costs, especially in a high-interest rate environment.

Operational Ramp-Up Risks:

As the expanded facilities are stabilized, risks exist around timely commissioning, achieving rated capacity utilization, and maintaining cost efficiencies in the initial ramp-up phase.

Regulatory and Environmental Compliance:

The rising emphasis on green steel and emission reduction norms requires additional investments in cleaner technologies. Any delay in adaptation could affect competitiveness and market positioning.

Mitigation Measures

Prudent Financial Management:

The Company has managed the cost overrun through group companies and promoter directors assistance and is pursuing fund raising options and a balanced capital structure strategy to ease interest burden and manage debt effectively.

Operational Efficiencies:

Focus on cost optimisation, process automation, and productivity improvements will support early stabilisation of expanded capacity and strengthen margins.

Raw Material Security:

Long-term supply contracts and backward integration initiatives are being explored to reduce dependence on spot markets and minimise raw material volatility.

Phased Ramp-Up:

A carefully sequenced ramp-up plan for the expanded facilities will ensure stable operations, reduced downtime, and improved asset utilisation.

With these measures, the Company is confident of mitigating near-term risks and realising the long-term benefits of its capacity expansion, supported by strong domestic steel demand and favourable government infrastructure initiatives.

Moreover, Risk Management is an integral part of our Companys business strategy. We have a dedicated team that works closely with senior management to ensure effective oversight. This team reviews compliance of risk policies, monitoring risk tolerance limits, and analyses exposure related to specific issues and provides oversight of risk across the organization. Their role includes maintaining a healthy and independent risk management function to prevent any kind of potential misappropriations within the ompany.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an adequate system of internal control commensurate with its size and nature of business. The system provides a reasonable assurance in respect of providing financial and operational information, complying with applicable statutes, safeguarding of assets of the Company and ensuring compliance with corporate policies.

The Company has availed the services of independent professional firm for Internal Audit, which checks the effectiveness of the internal controls with an objective to provide an independent, objective and reasonable assurance of the adequacy and effectiveness of your Companys risk management and control processes. The scope and authority of the Internal Audit activity are approved by the Audit Committee.

The Audit Committee reviews report as submitted by Internal Auditors and provides its suggestions and recommendations. The Statutory Auditors of the Company audited the Financial Statements included in this Annual Report and issued a Report on the Internal Controls over Financial Reporting (as defined under section 143 of the Companies act, 2013).

Adequacy of controls of the key processes is reviewed by the Internal Audit team. Suggestions to further strengthen the process are shared with the process owners and changes are suitably made. Significant findings, along with management response are periodically shared with and reviewed by the Audit Committee. It ensures adequate internal financial control exist in design and operation.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

Your Companys HR Vision is to cultivate a high-performing organization where every employee is empowered and inspired to reach their fullest potential. We view our people as our greatest asset and have cultivated an open, transparent, and performance-driven culture to nurture and leverage this valuable resource. By maintaining a positive work atmosphere and nurturing constructive relationships with all employees, we remain committed on driving productivity and enhancing overall efficiency.

Talent Management is a key part of our people planning strategy that help us identify, select, develop, and retain top talent within our organization. We have successfully managed attrition rates, keeping them below industry benchmarks, and have established a robust system for handling grievances effectively.

Health and safety of all employees are our top priorities. We are dedicated to ensuring that all employees and contractual workers are well-informed about our safety practices and procedures. We also ensure that all work is carried out with the appropriate safety and protection devices in place.

The manpower strength of the Company as on 31st March, 2025 was 108. The Company maintained harmonious industrial relations during the period.

FINANCIAL AND OPERATIONAL PERFORMANCE

The financial & operating performance of the Company during the year under review is summarised as follows:

FINANCIAL PERFORMANCE

Total Revenue from Operations for the year has decreased by 8.84% to 517,218.41 Lakhs from 518,887.39 Lakhs as compared to previous Financial Year.

EBITDA for the year has decreased by 16.17% to 51,716.64 Lakhs as compared to EBITDA of 52,047.88 Lakhs achieved in previous Financial Year.

Profit after Tax (PAT) has decreased by 21.94% to 5977.61 Lakhs as compared to net profit of 51,252.44 Lakhs in previous Financial Year.

Operating Expenses has decreased by 8.02% to 51,716.64 Lakhs as compared to Operating Expenses of 52,047.88 incurred in previous Financial Year.

The Company EPS has decreased by 21.97% to 54.05 from 55.19.

The Company has faced a decline in revenue from operations this year compared to the previous financial year. The sponge iron industry in India experienced a downturn in revenue for FY 2024-25, driven by several factors including decreased demand, fluctuating sale prices, and overall market volatility.

We are pleased to report that despite all these challenges, the Companys performance has remained satisfactory and the Company is closely focused on Cost Control and Working Capital Management. These efforts are expected to drive an increase in both turnover and profitability. We are confident that, with the support of all stakeholders, the Company will achieve higher profits in the coming financial years.

OPERATIONAL PERFORMANCE

During the year under review, production volumes was as follows:

Products/ Division	Installed Capacity	Production in FY 2024 (in MT)	Production in FY 2023 (in MT)	Year on year growth
Sponge Iron	72,000	58,403	61,455	(4.96%)

Production and sales i. Production

Sponge Iron :

The Companys Sponge Iron Plant operated efficiently at around 81% capacity and achieved the production volumes of 58,403 Metric Tonnes (MT). The Company has also completed installation of additional 1,15,500 MTPA of Sponge Iron capacity which commenced later after the closure of FY 2024-25, which has increased the total production capacity to 1,87,500 MTPA. The reduction in production is due to maintenance shutdowns, which are planned to prevent issues before they occur and improve quality of product, thereby minimizing unexpected breakdowns and ensuring smoother operations.

Captive Power:

The Company is in the process of installing a 30 MW power plant, comprising 12 MW from WPIRB (Waste Pleat Recovery Boiler) and 18 MW from AFBC (Atmospheric Fluidized Bed Combustion). This new power plant will generate electricity for captive use, replacing the high-cost power currently purchased from the grid.

		FY 2025	1	1	FY 2024
Product	Sales (MTs) Quantity	Net sales (Rs. inLakhs)	Sales Realization (Per Ton)	Sales Realization (Per Ton)	Net sales (Rs. in Lakhs)	Sales Realization (Per Ton)
Sponge Iron	57,955.65	16,848.62	29,072	61,204.36	18,525.23	30,268
Others		336.55			362.16
TOTAL		17,185.17			18,887.39

In fiscal 2024-25, the Company achieved Revenue from Operations of 517,185.17 Lakhs as compared to Revenue from Operations of 518,887.39 Lakhs achieved during previous year registering decrease of 9.01%. The decrease in turnover is primarily due to lower realisation. The average realisation of the Sponge iron reduced from 530,268 to 529,072 per metric ton as a result of which the profitability of the Company has been affected.

SIGNIFICANT CHANGES IN FINANCIAL RATIOS

There was significant change (i.e., change if 25% or more as compared to the previous year)

r Particulars	As at 31-03-2025	As at 31-03-2024	% Variance	1 Reasons
Debtors Turnover (No. of Days)	111.89	29.92	273.97	The Debtors Turnover Ratio has improved significantly during the year, primarily due to faster realization of receivables and a higher proportion of cash/advance sales resulting in lower average trade debtors outstanding at year-end.
Inventory Turnover (No. of Days)	37.24	62.13	(40.06)	The decrease in inventory turnover is due to the planned buildup of raw materials for our upcoming project expansion. This ensures smooth commencement and uninterrupted operations, supporting future growth.
Interest Coverage Ratio	9.23	12.22	24.25	?
Current Ratio	1.12	1.49	(24.83)	The current ratio has decreased primarily due to an increase in creditors for capital goods during the year, which resulted in higher current liabilities. This has led to a marginal decline in the current ratio position.
Debt Equity Ratio	3.60	1.44	149.32	Due to rise in debt in current financial year for the expansion of project.
Operating Profit Margin (in %)	14.66	15.44	5.05	?
Net Profit Margin (in %)	5.68	6.63	(14.38)	?
Debt Service Coverage Ratio	7.23	8.20	(11.74)	?
Net Capital Turnover Ratio	14.39	12.70	13.30	?
Return on Net Worth (in %)	9.83	13.97	29.63	The Return on Net Worth has decreased mainly due to lower profitability during the year arising from increased operating and finance costs along with comparatively lower rates during FY 2024-25

CAUTIONARY STATEMENT

The above Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include external economic conditions affecting demand/supply influencing price conditions in the market in which the Company operates, changes in Government regulations, tax laws, and other incidental factors.

For and on behalf of Board of Directors

Chetan Kumar Agrawal	Keshav Kumar Agrawal
Chairman & Managing Director	Joint Managing Director & CFO
DIN: 00748916	DIN: 02460958
Place: Raipur
Date: 25th August, 2025