Electrosteel Castings Ltd Management Discussions

Management Discussion and Analysis Report

A. INDUSTRY STRUCTURE AND DEVELOPMENT

• Overview

The Company is engaged in the business of manufacturing Ductile Iron (DI) Pipes, Ductile Iron Fittings (DIF) and Cast Iron (CI) Pipes. The Company is the first to set up a Ductile Iron Pipe Plant in India. Today, it is Indias leading pipeline solution provider. It has a strong brand presence around the Globe. Since 1994, the Company has maintained its edge over its competitors. Owing to the high reliability and durability of its products, the Company has always remained the distinct choice for water engineers and domain experts in Ductile Iron Pipes and Fittings.

• Industry Outlook

The Government of India has launched multiple ambitious programs to ensure universal and sustainable access to safe drinking water across rural and urban areas, most notably the Jal Jeevan Mission (JJM) and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT).

While urban areas have relatively higher access, rural regions are rapidly catching up, thanks to the Jal Jeevan Mission. Launched in 2019, this flagship initiative aims to provide functional household tap connections to every rural home by 2024. JJM aims to provide Functional Household Tap Connections (FHTCs) to every rural household, focusing on community-led implementation, source sustainability, and real-time monitoring. The program has already covered around 70-75% of rural households and is on track to meet its target by another 3 years, although sustained operation and maintenance at the local level remain critical. The Union Budget 2024-25 allocated about Rs. 70,000 crore (approx.) for JJM. Funds under JJM are transferred to states based on approved project proposals, progress reports and matching contributions from the states budget.

On the urban front, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), launched in 2015 and upgraded to AMRUT 2.0 in 2021, strives for universal water supply and sewerage coverage in over 500 cities, incorporating SCADA systems, GIS mapping and circular water economy principles to enhance efficiency and reduce water loss. AMRUT 2.0 (from 2021 onwards) is envisioned with a higher outlay and aims for "Water Secure Cities" across all 4,378 statutory towns. AMRUT 2.0 has a total proposed budget of Rs. 2.87 lakh crore, spanning over a five-year implementation period, with additional state and private financing. AMRUT 2.0 focus areas include digital water management, household water tap connections, sewerage networks and reuse of treated wastewater.

Alongside these missions, initiatives like the Swachh Bharat Mission (SBM) and Namami Gange reinforce the water agenda by promoting wastewater management, sanitation and river rejuvenation.

All the above initiatives have provided robust growth for the DI pipe industry in the last few years and will continue to do so in the coming years.

• Demand for Pipes Sewerage

The per capita consumption of pipes for sewerage application in India is much below the global average, and there is good scope for improvement. At present only about 30% of the sewage generated in India gets treated. Meanwhile, with rapid urban expansion, the sewage generation has witnessed an increasing trend. The government has been instrumental in introducing a plethora of initiatives and schemes over the past few years, which are partially funded by the Central Government such as AMRUT 2.0, Swachh Bharat Mission, Namami Gange Programme and Smart Cities Mission. The primary objective of these programmes is to enhance the countrys wastewater and sewerage infrastructure. At present about 800 sewerage projects are on the anvil and many more to come. For sewerage pumping mains DI pipe is the best choice. Even for the gravity collection network, the use of DI pipes with High Alumina cement lining is increasing. So we expect sizable business to be generated in this sector.

• Demand for Water in Irrigation

India receives approximately 4,000 billion cubic meters (BCM) of rainfall annually, although only about 1,100-1,200 BCM is currently considered usable due to geographical constraints, evaporation, and infiltration losses.

Though irrigation in India is still largely done by canal-based irrigation, in recent years, a distinct shift towards piped irrigation is happening in many states. Piped irrigation has many advantages. It increases water efficiency as it reduces water loss due to seepage and evaporation compared to open channels. Water flows more quickly through pipes, improving irrigation speed and timing. Unlike canals, pipes take up less space, preserving more land for cultivation and also reducing the land acquisition problem. Pipes are less prone to weed growth, siltation, and damage from animals or people. Moreover, Pipes can be easily adapted to uneven or hilly landscapes. In many piped irrigation schemes, DI pipes are already used, and this trend is expected to grow further.

• Demand for Water for Industries

Indias industrial expansion—encompassing sectors like manufacturing, power generation and chemical processing—has driven a steady increase in water demand, placing additional pressure on already stressed freshwater sources. In response, many industries are adopting comprehensive water management strategies, including wastewater recycling and zero- liquid discharge systems, both to reduce their water footprint and comply with stricter environmental regulations. This shift toward water efficiency is paralleled by a broader push for renewable energy, as industries seek low-carbon power solutions that minimize their overall environmental impact. Industry needs a reliable and uninterrupted water supply for effective operation and DI pipes perfectly fit there.

• Demand Drivers for DI Pipes

The following are the key demand drivers for Ductile Iron (DI) pipes:

1. Central schemes like Jal Jeevan Mission, AMRUT 2.0 and Smart Cities Mission are boosting pipeline investment across rural and urban India. This large-scale infrastructure push is fueling demand for durable, long-life ductile iron pipes.

2. The move to 24x7 urban water supply is driving replacement of ageing, leak-prone infrastructure with high strength, corrosion resistant DI pipes to improve reliability and cut non-revenue water.

3. Under its 2.0 phase, AMRUT focuses on universal water supply and adequate sewerage infrastructure for statutory towns. This mandate necessitates extensive high-diameter DI networks to meet demand.

4. Municipalities and water boards across India increasingly focus on non-revenue water (NRW) or unaccounted-for water (UFW) reduction which can be achieved by replacing of older cast iron, asbestos cement or PVC networks with DI pipes.

5. States expanding pipe-based irrigation systems for gravity or pumped distribution prefer DI pipes for mains and branches due to their robustness specially for large-scale irrigation.

6. Rapid industrialisation across factories, refineries and power plants is increasing need for high-strength, corrosion- resilient piping. DI pipes with cement-mortar or epoxy lining are ideal for pressurised process and cooling water lines.

7. Adoption of industrial wastewater recycling systems create demand for piping that can handle partially treated or chemically treated water. DIs strength and chemical resistance makes it a preferred choice.

8. Few river interlinking projects are being planned to transfer water from water-surplus regions to water-deficient regions, requiring durable, large-diameter pipelines over long distances. DI pipes are well-suited for such infrastructure scale.

9. Restrained-joint technologies like Electrosteels Electrolock are gaining popularity, reducing reliance on concrete thrust blocks. These innovations enhance the stability and installation speed of DI pipe systems.

A. FY 2024-25 vs. FY 2023-24

The Companys Revenue from Operations was reported at Rs. 6745.88 Crore during the year under review as compared to Rs. 6938.01 Crore reported in the previous year. There was a decrease of around 8.74% in Export Sales from Rs. 1241.20 Crore in the FY 2023-24 to Rs. 1132.69 Crore in the FY 2024-25. The Companys profit in the FY 2024-25 was Rs. 712.12 Crore as against profit of Rs. 736.05 Crore in the FY 2023-24.

B. PRODUCT WISE PERFORMANCE

• Ductile Iron (DI) Pipes

The Ductile Iron Pipe Plant, produced 732,004 MT of DI Pipes during the year 2024-25 compared to 744,958 MT in 202324. During the year while our Khardah Plant has achieved highest ever Production, Shrikalahasti Plant faced stabilization issues in MBF which impacted production by 13% over last year.

The Production decreased due to stabilization issues in Pipe Plants as well as reduced demand in Quarter 3 and 4.

The main raw materials used in the production of DI Pipes are Iron Ore and Coke. Iron Ore for Eastern India operation is mainly procured from Odisha and Jharkhand whereas, for Southern India, Iron ore is mainly procured from Karnataka. Coke is captively produced at Haldia for Eastern India operation and captively produced at Srikalahasthi unit for Southern India operation. Coking coals are imported mainly from Australia. The DI Pipes produced by the Company are sold in India and globally to over 110 countries spreadover 5 continents.

• Blast Furnace

The Blast Furnace has produced liquid metal of 752,500 MT during the FY 2024-25 compared to 728,338 MT in the FY 2023- 24.

• Cast Iron (CI) Pipes

The Cast Iron Pipe Plant, with a total capacity of 90,000 TPA produced 41,431 MT of CI Pipe during the Financial Year 2024-25 compared to 33,769 MT in the Financial Year 2023-24. Improved performance is due to favorable order book and market situation. The capacity utilisation was higher compared to previous year because of higher demand and unhindered condition for production.

The main raw material used in the production of CI Pipe is Pig Iron, which is obtained from domestic sources. The CI Pipe produced by the Company is sold mainly to the states in Southern India.

• DI Fittings & Accessories

The Company produced 22,568 MT of DI Fittings in the Financial Year 2024-25 as against 18,919 MT in the Financial Year 2023-24.

• Power Plant

The Companys newly installed 5 MW capacity Turbo generator at its Haldia Works using the potentials of generation of steam from the waste gases of Coke Oven Plant is functioning well and providing cheaper power support to enhance performance of Ferro Alloy Products at Haldia Works and is establishing overall environment & energy conservation improvement. In 2024-25, the new power plant has generated 32.29 million units (19.16 million Units in 2023-24).

With old 12 MW power plant & new 5 MW Power Plant together, Haldia has generated 128.95 million units of power, out of which 21.05 million units were transmitted to SEB grid in 2024-25 as against 110.68 million units generation and transmission of 18.01 million units in 2023-24.

Khardah plant generated 28.57 Million units in 2024 -25 against 23.93 million units in 2023 -24.

During the year under review, at Srikalahasthi Unit, the power generation from both 12.0 MW and 7.5 MW CPPs put together was 157.99 million units as against 144.25 million units in the FY 2023-24.

• Captive Coke Oven Plant

The Coke Oven Plant, with a total capacity of 2,25,000 TPA at Haldia, produced 159,459 MT of Metallurgical Coke in 202425 against 148,158 MT in 2023-24, mainly for captive consumption in Blast Furnace at Khardah Works.

The Coke Oven Plant at Srikalahasthi unit, has produced 230,637 MT of Metallurgical Coke in 2024-25 against 211,998 MT in 2023-24, mainly for captive consumption in Blast Furnace.

• Ferro Alloy Plant

The Companys Ferro Alloy Plant at Haldia Works has produced Prime Silicon Manganese of 14,725 MT in 2024-25 against 13,847 MT in 2023-24. The production increased mainly due to power availability.

Ferro Alloy Plant at Srikalahasthi Unit has produced Prime Ferro Silicon of 13,294 MT in 2024-25 against 15,791 MT in 2023-24.

• Cement Plant

Cement Plant has produced Portland Slag Cement of 45,196 MT in 2024-25 compared to 56,620 MT in 2023-24. Due to sluggish market conditions particularly for Slag Cement and consequent lower contribution, cement production has been lowered down during the year under review. Ground Granulated Blast Furnace Slag (GGBS) has been produced by utilising the cement mills.

GGBS Production in 2024 -25 is 36,312 MT against 38,242 MT in 2023-24.

• Raw Materials Management

The Companys manufacturing facilities are spread across six locations in India. The Company sources over 60% of its essential materials such as iron ore lumps, fines, pellets, limestone, and manganese ore, directly from government- regulated mines. This ensures full visibility, traceability, and adherence to environmental and labour regulations throughout the supply chain.

The Company employs efficient in-plant raw material processes across its integrated facilities to enhance cost efficiency and quality control. The manufacturing facilities are also equipped with Waste heat recovery systems, which harnesses waste heat from the Coke Oven and Sponge Iron plants to generate electricity.

• Exports

In the FY 2024-25, the export market was under pressure due to various uncontrollable external factors including geo political crisis due to Russia - Ukraine war, instability in the Middle East, etc., leading to higher ocean freight and longer transit time and a general rise in protectionist policies worldwide.

Despite these headwinds, the Company and its brand maintained a strong reputation in the market, resulting in repeat orders from existing customers. This loyalty enabled the Company to navigate the difficult global environment effectively.

The Company is also focusing on breaking into new markets to compensate lower activities in the existing markets.

• Quality and Approvals

For over three glorious decades and counting, your Company has been steadfastly devoted to delivering products and services that embody world-class quality. This commitment is not just a principle—its a promise. Guided by the philosophy of "Quality Right the First Time; the organization passionately pursues excellence to meet the expectations of stakeholder. The Companys products are certified by globally renowned and respected certifying bodies, like, BSI (UK), DVGW (Germany), UL (USA), FM (USA), BV (Italy), OVGW (Austria), IGH (Croatia), SASO (Saudi Arabia), SVGW (Switzerland), MEWRE & MPW (Kuwait), etc.

Esteemed auditors from across the globe, routinely grace your manufacturing units, conducting rigorous inspections as part of their surveillance audits. Most recently, representatives from BSI (UK), UL (USA), FM (USA), MPA NRW (Germany), OFI (Austria), and BV (Italy) scrutinized your facilities. We are delighted to announce that the organization, emerged from each audit triumphantly, with our systems and products reaffirmed as paragons of quality.

The Company is committed to ensure long term sustainability of the global system including environmental, social, economic and qualitative aspects over the entire life cycle of its products and services. Over the years, the Company proudly upholds maintenance of its Quality management system in accordance with ISO 9001, Environmental Management System as per ISO 14001, Energy Management System as per ISO 50001, Occupational Health and Safety as per ISO 45001 and complies Social Accountability requirements as per SA 8000. These systems are continuously validated by esteemed international auditing organisations.

OPPORTUNITIES AND THREATS m Opportunities

• Ongoing government mega programs—AMRUT 2.0, Jal Jeevan Mission, 24x7 Water Supply and NRW reduction upgrades—continue driving demand for DI pipelines in urban and rural areas.

• Industrial growth, SEZs and irrigation modernization opened new markets for DI pipes in process cooling, wastewater reuse and pressurized water distribution.

• Export opportunities are expanding into Africa and Southeast Asia as Indian DI pipes gain global credibility.

• Technological innovation—push on/restrained joint systems and advanced linings-enhance DI viability in seismic, high pressure and specialized environments.

• Sustainable and ESG-aligned production (recycling, lower lifecycle carbon, certifications) strengthens both domestic and export competitiveness.

• Established brands like Electrosteel benefit from legacy, scale, backward integration and a strong presence across India and abroad.

• Threats

• Volatile raw material (iron ore, coke) and energy prices can sharply erode margins.

• Competition from lower-cost and lighter alternatives such as PVC, HDPE, MS, and concrete pipes, especially in small diameter or cost-sensitive applications, is rising.

• Project delays due to procurement, funding, logistics and global supply chain disruptions, can hinder sales momentum.

• Increasing environmental compliance and carbon/effluent regulations could raise capital and operating costs.

• Economic slowdowns, budget tightening or export market weakness may reduce infrastructure investment and external demand.

• Market saturation and capacity expansion by competitors threaten existing producers market share.

C. RISKS AND CONCERNS

This has been dealt with separately in the section on "Risk Management".

D. FINANCIAL PERFORMANCE

The highlight of the operations for the year ended 31 March, 2025 and 31 March, 2024 are as under:

a) Financials

		(Rs. in Crore)
Particulars	Year ended 31 March, 2025	Year ended 31 March, 2024
Gross Sales & Income from Operations	6745.88	6938.01
Profit before Interest, Depreciation & Exceptional Items	1116.00	1245.87
- Finance Expenses	141.81	201.86
- Depreciation	127.47	114.32
Profit before Tax	846.72	929.69
Tax Expenses	134.60	193.64
Profit after Tax	712.12	736.05

b) Companys Sales mix

		(Rs. in Crore)
Particulars	Year ended 31 March, 2025	Year ended 31 March, 2024
Revenue from sale of Products
D.I. Spun Pipes	5342.06	5631.56
Ferro Products	181.60	203.47
D.I. Fittings	322.15	278.64
C.I. Spun Pipes	308.76	212.03
Cement	0.51	1.92
Others	563.77	580.02

Other Financial Matters

During the year:

1. Net Worth of the Company increased to Rs. 5637.17 Crore as at 31 March, 2025 from Rs. 4991.89 Crore as at 31 March, 2024.

2. Gross Fixed Assets including Work in Progress & Capital Advances as at 31 March, 2025 increased to Rs. 4156.06 Crore from Rs. 4004.52 Crore as at 31 March, 2024.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of operations. It ensures the efficiency of the operations, financial reporting and statutory compliances. These systems are reviewed through risk control matrix, various MIS wherever considered necessary. Apart from the internal control system, an Independent Internal Auditor also reviews all activities in a systematic and structured manner. The Audit Committee regularly reviews scope, observations and suggestions of the Internal Auditors and takes the necessary corrective actions.

F. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company strongly believes that to achieve continual success, a dedicated and devoted workforce is very much required to get high performance and improved productivity. This has been endlessly encouraged by evolving human resource management systems and processes of the Company. The Company has left no stones unturned for enhancing the capabilities of employees across all levels of the Organisation through engagement and continuous learning and development programs. Further, the Company is strongly focused towards utilization of its manpower to the optimum level.

Cordial relationship and belief between the Management and Unions has resulted in smooth industrial relations during the year under review. The relationship has developed over the years and has played a significant role in smooth running of the Company. Not a single man day has been lost over decades because of any IR issue. Any issues/grievances are peacefully addressed and amicably settled through different processes, like, discussion across the table, counselling, workers participation and collective bargaining on mutually acceptable terms. The Company sincerely strives to enhance and value knowledge capital by improving the competence of its employee and their prospective and optimum usage. The Company has been accredited with Social Accountability 8000 certification from British Standard Institute (BSI). The SA 8000:2014 second & third surveillance audit was conducted successfully by BSI during the Financial Year 2024-2025 and recommended for continuation of the Certificate. The Company is taking initiatives to maintain TPM excellence on a continuous basis.

The total number of employees as on 31 March, 2025 is 3015.

• Safety & Health

Occupational Health and Safety (OH&S) Management System is a core priority in our Company to ensure a safe and healthy workplace. Our existing management system aligns with statutory compliance and proactively works to eliminate hazards, minimize OH&S risks, and achieve zero accidents and zero health impairments.

The system is consistently reviewed and improved through regular analysis, incorporating advancements in processes and technologies. Monitoring and compliance are ensured through MIS on a regular basis.

Key Initiatives by the Company:

> Hazard Identification and Risk Elimination:

A structured process has been established for identifying accidental hazards (HIRA) on a routine and proactive basis for both routine and non-routine activities. Safe Operating Procedures (SOPs), Kaizen, OPL and Poka-Yoke methodologies are utilized to reduce or eliminate risk levels.

> Workplace Risk Management:

A departmental/contractor-level safety risk register has been implemented to identify and eliminate workplace hazards. Safety committee meetings are conducted with the involvement of relevant departments for quick mitigation of high-level risks.

> Performance Monitoring:

The Company monitors all key OH&S performance indicators through a defined schedule. Outcomes are reviewed with concerned departments and corrective actions are taken accordingly.

> Emergency Preparedness:

On-site emergency plans and mock drills are conducted regularly. Evaluations are done post-drill to improve future emergency responsiveness.

> Health Check-ups:

Periodic, pre-employment and follow-up health check-ups are arranged for all employees as per statutory norms. Health camps are also organized for ECL families and local communities under CSR initiatives.

> Fall Protection:

A lifeline system has been installed and implemented at the crane bay, on top of the shed and at the pipe stack. This initiative aims to protect personnel from falls while working at height, thereby fostering greater confidence among employees in a safe working environment.

> Family Members Connect:

A "Family Members Connect" program has been initiated to enhance safety awareness among employees families. This program aims to empower family members to guide and remind their relatives to maintain safety in the plants work areas.

> Safety Training Programs:

Extensive training (induction/shop floor/in-house/external) is conducted to improve safety skills and awareness. Training effectiveness is assessed via feedback mechanisms.

> Plant Inspection Systems:

Includes daily inspections, electrical and fire safety checks and scheduled safety walks by top management and OH&S teams. Any deviation from the standard is reported and reviewed in monthly safety meetings and MIS.

> External Safety Audits:

Safety audits by competent external authorities are conducted to assess the safety management system and feedback is implemented for continuous improvement.

> Additional Measures & Employee Engagement:

Employees families are encouraged to participate in awareness programs and counselling sessions. Efforts are made to increase their awareness about health, hygiene and safety.

> Motivation of Employees:

Regular motivation and communication efforts are taken to align employees with the goal of a safe workplace.

> Safety Infrastructure Work:

Initiatives have been taken to improve safety infrastructure, such as the installation of handrails at the crane bay, tray stand and pipe stand modifications. These actions aim to create a safer work environment and build safety confidence among employees.

Being an ISO 45001:2018 and SA 8000:2014 certified company, the Company is always maintaining good practices of OH&S system and always trying to improve to it in every sphere.

• Environment

The Company has transitioned from a conventional Environmental Management System (EMS) to Sustainable EMS. In response to the evolving environmental requirements at both national and international levels-including increasing regulations on greenhouse gas emissions, biodiversity protection, optimal use of natural resources and more-the Company has adapted its approach.

The Company has also updated its environmental policy by taking into consideration the changing global environmental scenario including climate change.

Key initiatives include:

• All operational activities are assessed through a detailed aspect-impact analysis, with mitigation plans in place for processes that have significant environmental implications.

• Air Pollution Control Systems are installed at all dust-generating points to comply with prescribed stack and fugitive emission standards. These systems are cleaned, inspected and monitored on timely basis to ensure optimal performance.

• Waste Heat Recovery System is implemented across various operations to improve energy efficiency and reduce fossil fuel consumption.

• 24x7 Continuous Emission Monitoring System (CEMS) is installed at key process stacks to monitor emission levels.

• Dust Suppression Measures to control airborne dust using mobile water tankers within the plant premises and on nearby roads is done regularly.

• Periodic Stack and Fugitive Emission Monitoring is carried out through NABL accredited laboratories recognized under the Environment (Protection) Act, 1986 to ensure emissions remain within permissible limits.

• Ambient noise levels are monitored in compliance with the statutory requirement, with results analysed to guide corrective actions.

• The Company has taken a target to achieve Zero Liquid Discharge from the plant premises, ensuring that all waste water is treated, recycled and reused within the plant. Effluent Treatment Plant (ETP) is being augmented accordingly.

• Infrastructure has been developed for rain water harvesting at different plants, supporting long-term water sustainability.

• Life Cycle Analysis (LCA) has been conducted on a gate-to-gate basis to identify environmental stress points and improve resource efficiency.

• Suitable Operational Control Procedures (OCP) have been developed to ensure safe handling and storage of hazardous and non-hazardous materials.

• Green Initiatives like year-round sapling plantation within and around the factory premises are taken up to enhance the green cover. Green belt of native plant species acts as a natural barrier to dust and noise. A biodiversity park has been developed at Khardah Works to preserve local flora and fauna.

• Regular environmental training programmes are conducted, ensuring employee awareness in Environmental Management practices and regulatory compliance.

• Environmental Awareness Events such as World Environment Day, World Earth Day and World Water Day are celebrated with employee and community engagement activities like quiz, drawing competition and plantation drives.

• A comprehensive energy management framework as per ISO 50001:2018 standard - Energy Management System is in place to improve energy efficiency, reduce fossil fuel dependency and control greenhouse gas emissions. This aligns with the UN Sustainable Development Goals (SDGs) and Indias National Determined Commitments.

m Waste Minimisation

The Companys Waste Management Cell is dedicated to ensuring effective waste handling, storage and disposal, strictly in

accordance with statutory regulations and in collaboration with Pollution Control Board (PCB) approved vendors.

Key waste minimisation strategies include::

• 4R Strategy (Reduce, Reuse, Recycle, Recover): A core principle of the Companys sustainable waste management practices.

• Packaging waste materials are reused and recycled across various operational applications.

• Kitchen Waste is composted or converted into biogas for utilization.

• The Company has completely banned the use of Single Use Plastics (SUP) and plastic carry bags below 120 microns within plant premises. Awareness campaigns are conducted regularly to ensure compliance, in line with the Plastic Waste Management Rules, 2016.

• Process waste recycling for by-products such as iron ore fines, coke fines and lime fines are segregated & reprocessed through agglomeration, reducing the need for virgin raw materials.

• Technological upgradation by continuous innovation and investment in technology enhance waste reusability and recycling.

• Awareness campaigns such as posters and communication material are displayed throughout the premises to promote responsible waste handling and discourage the use of harmful plastic materials.

Being an ISO 14001:2015 certified organisation, the Company upholds a structured and systematic approach to environmental protection, ensuring sustainable development in balance with socio-economic needs.

• Corporate Social Responsibility (CSR)

In recent times, companies are expected to engage in responsible business conducts. CSR activity, for Electrosteel, is a setup of planned activities, taking into consideration the capabilities of the Company with a target on the significant impact to inspire its local community and near vicinities. The initiative of the Company is to strengthen its operating foundation and being engaged in ongoing efforts to contribute to the society by enhancing corporate values.

The Company takes into account issues of concern related to external stakeholders and also various range of programs that aim at Social & Environmental topics. The Companys code of conduct anchors its Ethics & Compliance affairs. It also creates and implements community-based initiatives to solve issues in areas like education for children, environmental conservation and external cooperation keeping in mind the local culture & society.

• Electrosteel Initiatives

• Setting up of Drinking water kiosks in local area during the summer season.

• Providing assistance to promote local culture and festivals.

• Carrying out development work in local Schools & Sports Clubs to promote education & sports activities.

• Providing medical help through the Charitable Medical Centers.

• Motivating local poor but bright students and distribution of educational kits amongst school children.

• Arranging regular Blood Donation and Medical Camps through agencies and helping local people with Blood Cards as and when required.

• Distribution of Clothes/Blankets amongst poor people of local area.

• Providing financial help to needy people against their appeals.

• Engaging Employees through various Competitions, Sports Activities and Cultural programs.

The Company conducts its CSR activities based on the feedback from its employees, stakeholders, customers and the local community.

• Information Technology

The Company has further improved its security posture to mitigate information security risks by implementing Identity Threat Protection which safeguards the organizations user identities by detecting, preventing and responding to identity- based threats such as credential theft and account compromise. It leverages advanced analytics and AI-driven monitoring to identify suspicious activities in real time. This proactive approach strengthens access controls, reduces unauthorized access risks and enhances overall cybersecurity resilience.

The Company is implementing location wise "End Point Backup Solution" for desktops/laptops in phased manner which ensures business continuity by protecting critical data on employee devices from loss due to accidental deletion, theft or ransomware attacks. It enhances data security, supports compliance and enables fast recovery, reducing downtime and protects user data thereby avoiding productivity loss.

G. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Debt Service Coverage ratio has improved from 1.20 times in the FY 2023-24 to 3.81 times in FY 2024-25, i.e., an improvement of 217% due to a decrease in interest cost on account of proper utilisation of funds and scheduled repayment of long term loans.

Interest Coverage ratio has improved from 6.15 times in FY 2023-24 to 7.10 times in FY 2024-25, i.e., an improvement of 15% due to reduction in interest cost of the Company.

Operating profit margin has reduced from 16.38% in FY 2023-24 to 14.71% in FY 2024-25, i.e., a reduction of 10% due to a marginal increase in raw material cost and decline in sales volume.

Net Profit Margin (%) witnessed a marginal decrease from around 10.66% in the FY 2023-24 to around 10.60% in the FY 2024-25, i.e., a decrease of 1%.

Return on Net Worth (%) witnessed a decrease from around 15.89% in FY 2023-24 to around 13.40% in FY 2024-25, i.e., a decrease of 16% on account of decline in sales volume.

No significant changes were noted in the other key financial ratios during the year.

	FY 2024-25	FY 2023-24	Variation
Debtors Turnover	4.10	4.81	-15%
Inventory Turnover	3.71	4.03	-8%
Current Ratio	1.73	1.63	6%
Debt Equity Ratio	0.32	0.40	-20%

H. OUTLOOK

Water security has emerged as a national priority in India, driven by rapid urbanization, population growth and growing concerns over water scarcity and quality. In response to the staggering challenge of ensuring universal access to clean drinking water, the Government of India launched Jal Jeevan Mission (JJM) — the largest water supply initiative ever undertaken globally. The mission aims to provide piped water connections to every rural household across the country and over 14 crore households have reportedly received tap connections. Parallelly, the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) initiative focuses on augmenting urban water supply and sewage management systems. To meet this surging demand for infrastructure, the Indian pipe and fittings market has witnessed robust growth, expanding at a compound annual growth rate (CAGR) of 10-12% for over a decade.

Under JJM, the government has committed an investment of Rs. 3.60 lakh crores by 2024. As of now, approximately Rs. 3.10 lakh crores have already been spent. However, several states still lag in providing universal household tap connections, indicating the need for continued and increased government investment in the near future. To address urban water supply needs, AMRUT 2.0 was launched on October 1, 2021, with a mission duration of five years (FY 2021-22 to 2025-26). This phase targets 500 AMRUT cities and 4,378 statutory towns, aiming to make them water secure by ensuring water connections for all urban households. This second phase aims to make 500 major cities and 4,378 statutory towns water

secure, ensuring 100% household water connections. The total financial outlay for AMRUT 2.0 stands at Rs. 2.99 lakh crores.

Driven by these nationwide programs, the Indian pipe and fittings industry has experienced sustained growth of 10-12% annually for over a decade. However, of late, the steady release of Government funds has not been as expected due to various reasons, including the recent geopolitical scenario. As a result there is a slow progress in both rural and urban infrastructure projects, which has decelerated the growth we had seen in the last five years. However we expect it to be a temporary phase and anticipate that the funding situation will become normal again. Given the gap between targets and achievements, further government funding and accelerated implementation efforts are anticipated in the next few years.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys estimates, predictions and expectations may be "forward-looking" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods in which the Company operates, input availability and prices, changes in government regulations, tax laws and other statutes, economic developments within the country and the countries within which the Company conducts business and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forwardlooking statements on the basis of subsequent developments, information or events.

Risk Management

The Company has proper Risk Management and Control System to ensure that the risks of the Company are identified early and managed effectively. The risk and mitigation measures are weaved into strategic plans, backed by strong internal control system and are reviewed periodically. Values and Business Principles are important foundations of the internal environment for risk management. The main objective of Risk Management is to make sure that varied internal & external risks are managed & mitigated appropriately to protect the interest of all stakeholders which encompass, among others, proper compliances with applicable laws and regulations and ensuring overall safety in the organisations.

The Company has already undertaken an extensive Risk Management initiative that includes introducing Risk Management Manual, compiling a comprehensive profile of the key risks to the Company, identifying significant gaps in managing those risks and developing initial action plans to address those risks. The worldwide activities of the Company are exposed to varying degrees of risk and uncertainty, quite a few of which are external in nature. The Company has identified and categorised the risks associated with its business into Economic Risk, Competitor Risk, Industrial Risk, Environmental Risk, Foreign Exchange Risk, Payment Risk and Interest Rate Risk.

• Economic Risk

Economic risk can be described as the likelihood that the output of each plant will not produce adequate revenues for covering the relevant operating costs and servicing the debt obligations. The causes can be many, for instance, the hike in the price for raw materials, failure to accomplish delivery deadlines, disruptions in a production process, the change in political & geopolitical environment, change of Industrial/Government policies, litigation related issues, regulatory pronouncements, natural disasters, etc.

To counter this, the Company has already taken various steps to achieve higher operational efficiency by integrating its facilities including backward integration through brownfield expansions, (e.g., Sinter Plants, Sponge Iron Plants, Coke Oven Plants, Power Plants from waste heat recovery, Ferro Silicon Plants) and working on upgradation of equipment and technology to reduce the costs and increase the margins which includes upgradation and expansion of manufacturing capacities, exploring alternate sources for procurement of critical raw materials, managing resources to meet financial obligations more efficiently and increasing efforts on research and development. In addition, various cost control measures are being implemented as ongoing process.

To moderate the adverse effect of price volatility for critical items, the Company enters into bulk quantity contracts as well as keeps on exploring alternate sources of supply.

• Competitor Risk

The DI pipe domestic market is gradually becoming competitive with capacity expansions by both existing and the new entrants. The new capacity additions with new technology will have competitive cost advantages and may pose challenges at marketplace. The Company may face constraints in maintaining and growing its market share, particularly with substitute product like OPVC pipes.

However, the Company constantly evaluates the position of competitors from both marketing and strategic perspectives through the assessment of the strengths/weaknesses of each competitor. The commitment to ensure the highest quality of products, product enhancement efforts and global presence through its subsidiaries, have established the Company as the most preferred brand among the customers. With rising competition and narrowing demand-supply gaps, price wars are intensifying. ECL counters this by closely monitoring competitors, interacting with customers, focusing on innovation, cost optimization and using advanced technologies. As a pioneer and trusted brand in DI pipes, the Company enjoys strong customer preference and premium positioning with top contractors. Despite growing competition, strong government focus on water infrastructure and increasing demand in areas like piped irrigation gives the Company, the confidence in maintaining and increasing the sales volume and margins.

• Industrial Risk

The Company ardently believes in recognising its peoples talent & their potentials as one of the major elements required for achieving success in this competitive market. In order to achieve this, the Company continues to pay earnest attention on human resource development by evolving a continuous learning human resource base to help them in improving their potentials and fulfilling their aspirations. It is essential to have employees engagement in various spheres to create a congenial, conducive and healthy work culture. In the process, the Company gives utmost priority to community services, sports, education and medical services to the employees as well as to the locality.

The Company undertakes development programme to enhance the competency of the employees by imparting required training to make them multi-skilled in their job.

The critical factors in smooth operation of the plant calls for inter alia maintaining good public relations and liaisoning with statutory bodies, labour unions, community and opinion makers. The Company, through its highly professional team of managerial personnel has been successful in maintaining an excellent industrial relationship over the years. As a consequence, the Company has been reaping the benefits by leaps and bounds over the years and expects continuing to do so over the coming years.

The Company is optimistic that with a team of loyal, devoted and dedicated workforce, the labour relationship will continue to strengthen further and play an important role in the growth and success of the Company.

• Environmental Risk

Environmental risk implies the probability of harm or adverse effects on environment resulting from human activities or natural phenomena. The risk encompasses a wide range of factors including pollution, deforestation, climate change, loss of biodiversity, depletion of natural resources, pandemic, etc.

The Company manages its environmental risks by implementing an effective Environment Management System as per ISO 14001:2015 standard.

Risk arising from the key characteristics of the environmental parameters like air emission, quality of effluent discharge, generation of high noise, spillage of chemicals causing for land and water contamination are well tackled by advanced mechanism of engineering techniques not only to mitigate the risk level but also to comply with the statutory requirements. To mitigate these risks further, new initiatives have been taken during the year for installation of continuous monitoring system for process stack emissions and ambient air quality.

Major actions were taken during the year to reduce water footprint of the organization; thus, reducing depletion of ground water resources.

The pathway mechanism for identification of environmental risk is done by determination of Environmental Risk Priority Number (ERPN) through aspect impact analysis which includes failure to detect, severity and consequence of occurrences arising from activities. Environmental Management system has a priority to reduce the risk level and also to explore potential benefit with implementation of new technology.

In conclusion, environmental risk brings a critical challenge in the recent times, threatening the health of ecosystems and societies worldwide. Addressing these risks require a paradigm shift towards sustainable development, with a focus on conserving natural resources, reducing pollution, mitigating climate change, and building resilience to environmental hazards. By embracing innovation, collaboration, and collective responsibility, we can chart a course towards a more sustainable and resilient future, where environmental risks are minimized, and the well-being of present and future generations are safeguarded and committed to make the earth a better place for our future generations.

• Foreign Exchange Risk

Foreign Exchange Risk (also known as exchange rate risk or currency risk) is a financial risk posed by an exposure to unanticipated changes in the exchange rate between two currencies. Multinational businesses exporting or importing goods and services are faced with an exchange rate risk, which can have severe financial consequences if not managed appropriately. Considering the large volume of export of finished products and import of raw materials, the Company is exposed to the risk of fluctuation in the exchange rates while natural hedging plays a major counter-balancing role.

The Company has adopted a comprehensive risk management policy wherein it actively hedges its foreign exchange exposures within defined parameters, through use of hedging instruments, such as, forward contracts, options and swaps to minimize currency fluctuation risks. The Company periodically reviews its risk management initiatives and also takes expert advice on regular basis on hedging strategy.

• Payment Risk

Payment risk refers to the possibility of cash flow shortage on account of non-receipt or delayed or part receipt of payments from customers. For example, in case of inadequate or delayed payments, there are costs arising from transferring funds back, interest charges, replacement costs and other types of charges. In case of not receiving or receiving partial payments, there will be a principal loss including loss of reputation to the organization.

Due to the fact that major water infrastructure projects are either funded by the government or aided by foreign sources, the risk of cash flow shortage is relatively low. Moreover, stringent evaluation of creditworthiness of customers has reduced the risk of payment default. Also, the Company mitigates its risk through credit insurance, which covers the risk of non-receipt of export receivables, excluding from marketing subsidiaries. Notwithstanding, the Company has very limited history of customer default and considers the credit quality of trade receivables that are not past due or impaired to be good and closely monitors the credit cycle.

• Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companys exposure to the risk of changes in market interest rates relates primarily to its long-term and short-term borrowings with floating interest rates. The Company constantly monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile and financing cost.

	For and on behalf of the Board of Directors
	Umang Kejriwal	Sunil Katial
Place: Kolkata	Managing Director	Whole-time Director and CEO
Date: 10 May, 2025	DIN :00065173	DIN :07180348