Hariom Pipe Industries Ltd Management Discussions

GLOBAL ECONOMY

The global economy registered a GDP growth of 3.3% in 2024, maintaining the pace observed in the previous year. While this stability signaled resilience, the growth remained below long- term trends due to enduring headwinds such as elevated inflation, restrictive monetary policies, and geopolitical disruptions. Performance across regions was uneven, with emerging economies, particularly in Asia, demonstrating stronger momentum compared to advanced economies.

The modest growth was underpinned by sustained domestic demand in key emerging Asian economies, while advanced economies saw slower momentum due to declining exports, weak investment cycles, and cautious consumer spending. Central banks, while gradually easing from peak interest rates, maintained a cautious stance in response to inflationary risks and volatile commodity markets.

The global labor market stabilized, with unemployment and job vacancy rates nearing pre-pandemic levels. Employment growth stood at 1.7% in 2024 and is projected to marginally ease to 1.5% in 2025. Inflationary pressures moderated over the year but remained elevated relative to historical norms. Global inflation stood at 4.3% in 2024, and is expected to decline to 3.6% by 2026, though unevenly across regions.

The global GDP growth forecast has been revised downwards to 2.8% in 2025, from earlier estimates of 3.3%, primarily due to heightened trade tensions, policy uncertainty, and subdued investment sentiments. The forecast for 2026 indicates a marginal recovery to 3.0%, though still below the long-term historical average of 3.7%.

Advanced economies are expected to register slower growth of 1.4% in 2025, led by a cooling US economy and weak performance in the Euro Area and Japan. In contrast, emerging and developing economies continue to anchor global growth, supported by resilient domestic demand and structural reforms.

INDIAN ECONOMY

Indias economy posted a robust real GDP growth of 6.5% in FY 2024-25, positioning the country as the fourth-largest economy globally in nominal terms. This momentum was supported by healthy private consumption—particularly in rural areas— improving manufacturing indicators, and continued strength in the services sector.

The government allocated Rs.11.21 Lakhs Crores (3.1% of GDP) towards capital expenditure in the Union Budget for FY 2025-26, underlining its focus on long-term infrastructure development. Fiscal prudence was maintained, with the fiscal deficit estimated at 4.8% of GDP in FY 2024-25, expected to ease to 4.4% in FY 2025-26.

Retail inflation moderated to 4.6%, within the RBIs tolerance range, reflecting effective monetary policy and improved supply- side conditions. At the same time, job creation gained momentum, as reflected in the EPFOs provisional data, with net addition of 14.58 Lakhs members in March 2025, a 1.15% increase over the previous year.

The agriculture sector expanded by 3.8%, supported by a favorable monsoon and strong reservoir levels. Kharif food grain production reached a record 1,647.05 LMT, which was 5.7% higher than the previous year and 8.2% above the five-year average.

INDUSTRY OVERVIEW

Global Steel Industry Overview

The global steel industry continued to demonstrate resilience in 2024, with production levels holding steady amid shifting economic and geopolitical conditions. Global crude steel output was largely in line with previous year, reflecting both resilience and stabilization across major economies. While China continued to lead global production, India has steadily strengthened its position as the second-largest steel producer, reinforcing its growing role in meeting domestic and regional demand.

Despite geopolitical pressures and sectoral challenges, the long- term fundamentals of the global steel industry remain intact. The focus has now shifted to targeted recovery and consumption revival, particularly in regions where infrastructure and industrial investment is gaining momentum. A moderate uptick in global steel demand is anticipated in the coming year, supported by policy- driven growth in emerging economies.

Global Crude Steel Production (Top 10 Countries)

Country	2024 (MT)	2023 (MT)	% Change
China	1,005.1	1,028.9	(1.7)%
India	149.6	140.8	(6.3)%
Japan	84.0	87.0	(3.4)%
United States	79.5	81.4	(2.4)%
Russia	70.7	76.0	(7.0)%
South Korea	63.5	66.7	(4.7)%
Germany	37.2	35.4	5.2%
Turkey	36.9	33.7	9.4%
Brazil	33.8	32.0	5.3%
Iran	31.4	30.7	0.8%
World

Source: World Steel Association Production Trends and Forecasts

While global output has remained stable, forecasts indicate varied momentum across regions. India continues to lead growth, reinforcing its position as a key pillar of future steel demand and production.

Crude Steel Production Forecasts by Country (in million tonnes)

Country	2023	2024 (f)	2025 (f)	YoY% 2023	YoY% 2024 (f)	YoY% 2025 (f)
China	895.7	868.8	860.1	(3.3)%	(3.0)%	(1.0)%
India	132.8	143.4	155.6	14.4%	8.0%	8.5%
United States	90.5	89.2	91.0	(4.2)%	(1.5)%	2.0%
Japan	53.3	52.2	53.1	(3.0)%	(2.1)%	1.7%
South Korea	52.4	50.4	50.1	2.2%	(3.8)%	(0.6)%
Russia	44.6	44.2	43.3	7.0%	(1.0)%	(2.0)%
Turkey	38.1	36.0	35.5	17.2%	(5.5)%	(1.4)%
Mexico	29.0	29.3	29.5	16.2%	0.8%	0.6%
Germany	28.2	26.2	27.7	(13.5)%	(7.0)%	5.7%
Brazil	24.0	25.2	25.9	1.9%	5.0%	3.0%

Outlook

As the sector gradually transitions into a phase of recovery, expectations remain moderate yet optimistic. Stabilizing inflation and improving macroeconomic conditions are likely to support incremental demand across construction, automotive, and manufacturing sectors globally.

India stands out with its continued emphasis on infrastructure development, housing, and industrial growth. This is expected to translate into sustained domestic demand for steel and allied products. Despite a relatively lower per capita steel consumption, the countrys structural potential remains high, driven by urbanization, policy support, and capacity expansion.

Indian Steel Industry

India has emerged as a critical pillar of global steel dynamics, not just as the second-largest producer of crude steel but also as a rapidly expanding market for steel consumption. The countrys steel sector continues to gain momentum, driven by widespread infrastructure development, industrial diversification, and policy- led growth in core sectors. In FY 2024-25, Indias finished steel production reached 146.56 Million tonnes, up 5.3% year-on-year, while consumption surged by 11.5% to 152.00 Million tonnes — reflecting robust downstream activity.

Government initiatives like the National Infrastructure Pipeline (NIP), Gati Shakti, and continued investments in railways, roads, renewable energy, and affordable housing are fueling broad-based demand. Additionally, targeted efforts under the National Steel Policy (NSP) 2017 continue to guide long-term capacity building and self-reliance in steel production, in alignment with the Make in India vision.

Steel Industry Performance in India (April-March)

Item	2024-25 (MT)	2023-24 (MT)	% Change
Crude Steel Production	152.0	144.3	5.3%
Hot Metal Production	91.3	87.0	4.9%
Pig Iron Production	8.3	7.4	13.2%
Sponge Iron Production	55.7	51.6	7.9%
Total Finished Steel Production	146.6	139.2	5.3%
Finished Steel Import	9.6	8.3	14.8%
Finished Steel Export	4.9	7.5	(35.1)%
Finished Steel Consumption	152.0	136.3	11.5%

Growth Drivers

• Public Infrastructure Push: Increased capital expenditure in railways, metro projects, roads, airports, and ports is generating sustained demand for long and flat steel products.

• Urban Development and Affordable Housing: Government schemes like PMAY and Smart Cities Mission are boosting construction steel consumption.

• Manufacturing and Auto Sector Growth: Incentives under PLI schemes and recovery in the automotive sector are spurring usage of value-added steel.

• Renewable Energy Expansion: Solar and wind energy sectors are creating fresh demand for structural steel and galvanised products.

• Logistics and Warehousing: Rapid growth in e-commerce and logistics infrastructure is increasing steel usage in prefabricated buildings and storage facilities.

• Rural Infrastructure: Projects under schemes like PMGSY and Jal Jeevan Mission continue to support steel demand in semi- urban and rural India.

Outlook

Indias medium-to-long-term prospects for steel remain strong, underpinned by demographic advantage, rising income levels, urbanization, and consistent policy support. With per capita finished steel consumption at around 102.6 kg significantly below the global average of 214.7 kg there remains ample room for expansion.

The National Steel Policy aims to reach 300 million tonnes of installed capacity and increase per capita consumption to 160 kg by 2030. As domestic demand continues to outpace exports, Indian producers are expected to prioritize local market needs while strengthening value-added and high-grade production capabilities.

Indian Steel Tubes and Pipes Market

The Indian steel tubes and pipes segment is witnessing strong momentum, driven by robust infrastructure demand and sectoral tailwinds from construction, water supply, agriculture, and renewable energy. As steel consumption grows across both urban and rural India, this category is expected to see sustained expansion in the years ahead.

In FY 2023-24, domestic production of steel tubes and pipes stood at approximately 10.65 Million tonnes, while consumption reached 9.64 Million tonnes. This upward trajectory is projected

to continue, with production estimated to rise to 14.07 Million tonnes and consumption to 12.68 Million tonnes by FY 2028-29, indicating a healthy demand outlook and capacity ramp-up across the value chain.

Segment Composition and Demand Drivers

The consumption profile of steel tubes and pipes in India reflects the dominant role of mild steel (MS) tubes and pipes, which continue to be the preferred choice across infrastructure, agriculture, industrial, and construction sectors. Galvanized pipes and coils are also widely used, particularly in water supply systems, solar installations, and fencing applications due to their durability and corrosion resistance. Galvanized Iron (GI) pipes hold significance in plumbing and residential usage, while scaffolding materials cater to the needs of real estate and civil construction. The remaining share includes a diverse range of products tailored to specialized and emerging use cases.

Raw Material and Trade Dynamics

Indias consistent increase in sponge iron, CR coil, and HR coil production underpins the growth of downstream products like tubes and pipes. In FY 2023-24, production of HR coils rose to 51.56 Lakhs tonnes, while sponge iron and CR coil production also showed consistent increases, ensuring stable supply for pipe manufacturing.

On the trade front, India continues to be a net exporter of steel tubes. Exports increased to 1.538 Million tonnes in FY 2023-24, compared to 696 thousand tonnes of imports, indicating global competitiveness and rising international demand for Indian pipes, especially in the Middle East, Southeast Asia, and Africa.

Export and Import of Steel Tubes from India (000 Tonnes)

Year	Export	Import
FY20	1,149	814
FY21	989	501
FY22	1,192	504
FY23	1,294	529
FY24	1,538	696

Outlook

The steel tubes and pipes industry in India is poised for accelerated growth over the medium-term, supported by:

• Rising public and private sector infrastructure investments

• Increased focus on water and sanitation projects under Jal Jeevan Mission

• Strong rural and agricultural demand for irrigation and borewell pipes

• Expansion in renewable energy installations requiring structural pipes

• Growing export opportunities due to competitive cost structures

As demand diversifies across sectors and geographies, the industry is expected to benefit from greater capacity utilization, value-added production, and policy-driven expansion.

Company Overview

Hariom Pipe Industries Limited (HPIL) is integrated manufacturer of iron and steel products with a strong and expanding presence across South and Western India. The Company produces a diversified range of products portfolio, including Mild Steel (MS) Billets, Hot Rolled (HR) and Cold Rolled (CR) Pipes, Galvanized (GP) and Galvanized Iron (GI) Pipes, HR and CR Coils, Pre-Galvanized (GP) Coils, and Scaffolding systems.

Leveraging its backward-integrated manufacturing capabilities and an expanding product portfolio, HPIL continues to cater to diverse end-use sectors like infrastructure, housing, agriculture, and fabrication. With strategically located manufacturing facilities in Telangana, Andhra Pradesh and Tamil Nadu, HPIL has maintained its focus on operational sustainability and efficiency, cost control, and quality, supported by a strong dealer network and customer reach across key states.

Operational and Financial Performance Operational Highlights

FY 2024-25 was a year of operational expansion and continued emphasis on value-added products. Building on the momentum of FY 2023-24, the Company further strengthened its backward integration, streamlined production processes, and optimized inventory and logistics operations, ensuring efficient resource utilization. Capacity enhancement projects undertaken in FY 2023-24 started yielding results during the year, aiding volume growth.

• Installed capacity remained at 7,01,232 MTPA, with sustained capacity utilization levels.

• Value-added Products contributed approximately 97% to total volumes, compared to 92% in FY 2023-24.

• The Company continued to focused on enhancing productivity and reducing material handling losses across its units.

Financial Highlights

HPIL registered a strong financial performance in FY 2024-25, building on its best-ever topline and profitability achieved in FY 2023-24. While revenue growth moderated due to pricing normalization in steel products, the Company sustained robust margins by leveraging operational efficiencies and a higher share of value-added product sales.

Particulars	FY25	FY24	YoY Change
Total Income (Rs. Lakhs)	1,35,994.35	1,15,838.47	17%
EBITDA (Rs. Lakhs)	17,832.07	14,379.14	24%
PAT (Rs. Lakhs)	6,172.60	5,679.95	9%
Revenue per MT (Rs.)	55,284	57,944	\u2014
Cost per MT (Rs.)	48,019	50,719	\u2014
EBITDA per MT (Rs.)	7,265	7,225	\u2014
EBITDA Margin (%)	12.93%	12.02%	\u2014
PAT Margin (%)	4.54%	4.90%	\u2014

The Company sustained healthy profitability despite macroeconomic headwinds in input costs and steel pricing volatility.

Cash Flow and Capital Allocation

In FY 2024-25, the Company maintained positive Operating Cash Flow, reflecting its consistent focus on working capital optimization and prudent capital deployment.

• Operating Cash Flow stood at Rs.7,863.26 Lakhs in FY 2024-25 vs.Rs.495.54 Lakhs in FY 2023-24.

• Capex during the year was directed toward maintenance, modernization, and de-bottlenecking initiatives.

Particulars	FY25	FY24
Operating Cash Flow (Rs.Lakhs)	7,863.26	495.54
Investing Cash Flow (Rs.Lakhs)	(8,571.64)	(18,159.02)
Financing Cash Flow (Rs.Lakhs)	3,131.69	7,437.18

Balance Sheet Metrics and Financial Ratios

HPIL continued to maintain a strong balance sheet with stable leverage and adequate liquidity.

Particulars	FY25	FY24
Net Working Capital (Rs.Lakhs)	23,371.50	19,502.09
Total Debt (Rs.Lakhs)	40,032.19	37,088.54
Total Outside Liabilities (TOL) (Rs.Lakhs)	62,429.77	41,612.48
Cash and Equivalents (Rs. Lakhs)	2,601.28	177.97
Net Worth (Rs.Lakhs)	57,267.42	46,411.75
Current Ratio	1.45	1.68
Interest Coverage Ratio	2.85	3.38
Debt to Equity Ratio	0.70	0.80
RoCE (%)	19.2%	18.8%
RoE (%)	10.8%	12.2%

SWOT Analysis

Strengths

• Integrated Operations: From sponge iron to MS Pipe enabling control over quality and cost.

• Diverse Product Mix: Catering to a wide range of industrial and infrastructure applications.

• Established Distribution Network: Strong presence across South and West India through Strong Dealers and B2B network.

• Operational Efficiency: Energy savings through solar power, optimized furnace usage, and low conversion cost.

• Prudent Financial Management: Limited debt-led expansion and adequate internal accruals.

Weaknesses

• Exposure to Volatile Raw Material Prices: Especially sponge iron and scrap, impacting margins.

• Regional Concentration: Majority of revenue comes from Southern and Western India.

• Relatively Smaller Scale: Compared to larger national steel players, limiting pricing power.

Opportunities

• Value-added Products: Increased share can improve margins and reduce commodity-linked volatility.

• Market Diversification: Expansion into Northern and Eastern India or exports.

• Government Capex Push: Infrastructure, water, and housing projects can drive long-term demand.

• Technology and Automation: Efficiency gains through modernization and digital integration.

Threats

• Industry Cyclicality: Sensitive to broader economic trends.

• Competitive Intensity: From organized players and fragmented MSMEs.

• Regulatory Risks: Environmental norms, trade policy changes, and taxation reforms.

• Input Cost Fluctuation: Affecting pricing decisions and working capital.

Risk Management

The risk management process at our organization involves identifying both current and potential internal and external events that could influence strategy and objectives. The Risk Management Committee of the Company reviews and oversees the comprehensive risk assessment to evaluate the level of risk, nature, likelihood, velocity, and impact of these risks. The committee is also responsible for risk treatment, which includes selecting appropriate management options, evaluating existing controls, and developing new treatment plans to ensure their effectiveness. Internal controls ensure timely and accurate information, enabling proactive risk management. Risk mitigation includes implementing policies, procedures, and processes to address potential future events. Continuous risk control and monitoring involve analyzing trends, tracking changes, and conducting quarterly reviews by the functional department to update risk profiles and treatment plans.

Risk Mitigation

At Hariom Pipes, mitigating business operational risks is achieved through a well-defined organizational structure, ensuring role clarity, and maintaining proper systems for inventory management of raw materials and key spares. We emphasize technology selection, process standardization, and clear SOPs, complemented by training and asset upkeep. Our strategic initiatives include tracking micro and macroeconomic data, market trends, and forecasts by expert agencies, as well as developing alternative sources for uninterrupted raw material supply. We closely monitor competitor dynamics and implement cost-control initiatives to enhance operational efficiency. Additionally, the Company has established a dedicated transport group to manage logistics, continuously evaluates technological obsolescence, and maintains a robust disaster risk management plan, including insurance coverage and safety training.

Financial Risks: Financial risks are managed by maintaining a low credit risk profile, with timely realization of trade receivables and a strong assessment system for customer creditworthiness.

Liquidity Risk: Liquidity risk is mitigated through prudent financial planning, maintaining sufficient cash, and securing funding via sanctioned credit facilities. Detailed annual and quarterly budgets are discussed at senior levels, with regular monitoring of cash flows.

Market Risks: Market risks are addressed by reviewing interest rate movements, ensuring adequate liquidity, and avoiding foreign currency exposure. The Company remains committed to high standards of corporate governance, compliance with evolving laws, and preventing corporate accounting fraud through rigorous internal controls and a whistleblower mechanism.

HR Risks: Human resource risks are managed by assigning the right jobs, maintaining a proper recruitment policy, and fostering employee welfare and development.

Environmental Risks: Environmental risks are mitigated through efficient operation of environment protection systems, and legal risks are managed by relying on professional guidance to ensure total compliance with laws and regulations.

For more details: https://www.hariompipes.com/investor-relations- policies.php

Human Resources

With strong leadership and a people-focused approach, we ensured business continuity while prioritizing our workforces health, safety, and engagement. We foster an inclusive environment that promotes growth and innovation, attract top talent through comprehensive recruitment, and empower employees with ongoing training. Committed to meritocracy and employee welfare, we build a motivated workforce that drives our organizations sustainable growth and success. As on March 31, 2025, the Company has 1,241 employees.

Internal Control Systems

The Company has established robust internal control systems to ensure operational efficiency, reliability of financial reporting, and compliance with applicable laws and regulations. These systems include well-defined policies and procedures that facilitate the timely availability of accurate information, thereby enabling proactive risk management. Regular internal audits and reviews are conducted to assess the effectiveness of these controls, ensuring that any deviations are promptly addressed. The Audit Committee and Board of Directors of the Company oversees the internal control framework, ensuring its adequacy and alignment with the organisations strategic objectives, thereby fostering a disciplined and constructive control environment across all levels of the organization.

Cautionary Statement

Statements in this report describing the Companys objectives, projections, estimates, expectations or predictions may be forward- looking statements and are based on certain assumptions and expectations of future events. Actual results could however differ materially from those expressed or implied based on reasonable assumptions. The Company assumes no responsibility in respect of forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information and events.