1.0 ECONOMIC OVERVIEW
1.1 GLOBAL ECONOMY
STEADY BUT DIVERGENT GROWTH AMID UNCERTAIN TIMES
GLOBAL GDP GROWTH
In the past few years, the global economy has been subject to major external shocks. However, among these uncertain situations, global economy has shown steady growth. In 2024, global economic landscape presented a cautiously optimistic picture, shaped by moderating inflation, easing financial conditions and evolving geopolitical tensions. After continuously enduring multiple shocks in previous years - including geopolitical conflicts such as the Russia-Ukraine conflict, conflict in middle east, pandemic aftereffects, and supply chain disruptions - the global economy demonstrated steady & resilient growth. Global GDP growth is estimated to have grown by 3.3% in 2024.
Despite the overall robust performance, significant disparities persist across regions and countries and the outlook remains clouded by considerable downside risks and uncertainties. Rising trade tensions and protectionist measures, the uncertainty in resolution of geopolitical conflicts and weaker consumer sentiments in some countries are emerging as key concerns.
World economy is estimated to have grown by 3.3% in 2024 as against the growth of 3.5% in 2023. USA has continued its growth momentum with 2.8% in 2024 as against 2.9% in 2023. Euro area Y-o-Y GDP growth improved but it remained one of the weakest among the major economies with growth of 0.9% in 2024 as against 0.4% in 2023. India remained the fastest growing large economy of the world with a growth of 6.5% in 2024 as against 9.2% in 2023. China on the other hand, although faced growing headwinds from its real estate crisis as it maintained its growth rate of 5% in 2024 as against 5.2% in 2023.
GLOBAL INFLATION OVERVIEW
Global inflation in 2024 is one of cautious relief mixed with persistent challenges. After peaking in 2022 and remaining stubbornly high through 2023, inflation finally began to cool off at the start of 2024. Several factors contributed towards this shift including the unwinding of supply chain disruptions during pandemic, falling energy prices and effect of interest rate hikes started taking shape. At the beginning of 2024, global headline inflation was still elevated, hovering around 6%. Central banks in advanced economies kept monetary policy tight to firmly anchor inflation expectations.
As a result, consumer demand cooled, supply chains normalized further and commodity markets stabilized, leading to a steady decline in prices through mid-2024 resulting in global inflation to reach ~5.7% by the end of 2024.
In advanced economies, inflation approached central bank targets faster than anticipated. Meanwhile, emerging markets saw slower disinflation, hampered by currency pressures and higher food and import prices.
GLOBAL CREDIT RATES
The global monetary policy landscape experienced a cautious pivot from the aggressive tightening in 2023 towards a more of balanced stance by the end of 2024 as inflation moderated and growth concerns surfaced across economies. Central banks across the world recalibrated their approaches in response to shifting macroeconomic conditions, such as waning consumer demand, easing price pressures, and persistent geopolitical uncertainty. While the year began with elevated policy rates in most major economies, by mid-2024, inflation had begun to retreat towards target levels. This disinflation trend allowed policymakers more flexibility in shifting their stance from inflation containment to growth stabilization.
Both US Federal Reserve and European Central Bank initiated rate cuts in the second half of 2024. Notably, Federal Reserve lowered interest rates for the first time in last four years. In China, the central bank pursued monetary stimulus through both rate reductions and targeted liquidity injections, responding to deflationary pressures and weak domestic demand.
Marking a significant policy shift, the Bank of Japan (BOJ) ended eight years of negative interest rates in March 2024, raising its benchmark rate by 15 basis points to 0.05%. This decision was driven by factors such as prolonged Yen depreciation among others.
In essence, 2024 marked a year with strategic rebalancing aimed at ensuring soft landings amid complex trade-offs between inflation, growth and financial stability.
GEOPOLITICAL & TRADE DEVELOPMENTS
The geopolitical and trade landscape of 2024 was marked by significant volatility, as regional conflicts, geopolitical shifts and protectionist trade policies led to economic uncertainty and supply chain disruptions. Conflicts in Eastern Europe and the Middle East, especially the ongoing war in Ukraine and the escalation of violence between Israel and Gaza, injected instability into energy markets and elevated global investor anxiety. The Russian invasion of Ukraine continued to impact global trade, with sanctions and export controls complicating business operations, while tensions in the Middle East disrupted global shipping, particularly through key choke points like the Red Sea and the Suez Canal.
This period of heightened geopolitical risk, compounded by drought conditions that restricted Panama Canal traffic, led to broader shifts in global trade dynamics. The stress on traditional global shipping routes fostered a push towards supply chain diversification, with businesses increasingly looking to reshore critical industries and reduce their dependency on specific regions. The fragmentation of trade networks became more evident as countries sought to insulate themselves from rising protectionism and trade wars.
Despite these challenges, the global trade system showed resilience. According to UNCTAD data, global trade value reached an all-time high of $33 trillion in 2024, representing a 3.7% increase from the previous year. This growth was largely driven by services trade, which grew by 9%, contributing $700 billion or 60% of the total trade growth. Conversely, goods trade grew at a slower pace of 2%, contributing $500 billion.
The U.S.-China trade war, which began in earnest in 2018, took a new turn in 2024 when the U.S. escalated tariffs on Chinese goods. By May 2024, these tariff increases marked deepening decoupling between the two economies, as the U.S. added new tariffs on a broader range of imports. In response, China ramped up diplomatic and economic engagements with its key partners, including the EU, ASEAN, Japan and South Korea, positioning itself as an open market in contrast to the protectionist stance of the U.S.
As the U.S. expanded tariffs in 2025, affecting not only Chinese goods but also imports from Canada, Mexico and other global partners, businesses were forced to navigate higher operational costs, disrupted supply chains, and increased inflationary pressures.
In conclusion, 2024 was a year that reshaped global geopolitics and trade, driven by conflicts, shifting alliances and changing trade policies. The dynamics of these shifts are likely to continue into 2025, as countries face the challenge of maintaining global cooperation while navigating national interests. The key for businesses and policymakers will be to avoid the deep fragmentation of global trade, ensuring long-term economic growth despite the pressures of protectionism and geopolitical risk.
The global economy will need to strike a balance between securing domestic interests and maintaining an open, interconnected trading system that supports mutual prosperity.
CLIMATE POLICIES
In 2024, COP 29 - UNs annual climate change conference focused on mobilizing climate finance for developing countries. One of the key outcomes included the establishment of an UN-backed body to regulate international carbon credit trading under Article 6.4 of the Paris Agreement, aiming to facilitate regulated carbon markets and unlock billions in climate finance for developing countries.
EUs Carbon Border Adjustment Mechanism (CBAM), seek to align international trade with climate goals by imposing additional tariff on imported goods based on their carbon footprint. The aim is to encourage lower-emission practices globally and prevent
"carbon leakage," where companies shift operations to countries with more lenient emissions policies. In 2024, EU mandated submission of CBAM quarterly reports for applicable commodities (Iron & Steel being one of them) imported into EU.
On the other hand, United States withdrew for second time from Paris Agreement in January 2025 and rolled back green incentives raising concerns about the USAs changing stance towards climate action. Experts warned that these policies could jeopardize funds for green energy projects and make fossil fuels more economically attractive due to falling oil and gas prices.
OUTLOOK: UNCERTAIN TIME LEADING OUTPUT TO GROW BUT AT A SLOWER PACE!
Tariff wars & Inflationary pressures will decide the direction
As of April 2025, the global economic outlook for 2025 has become more cautious, with major institutions revising growth forecasts downward due to escalating trade tensions and policy uncertainties. The IMF projects global GDP growth at 2.8% for 2025, a reduction from the previous estimate of 3.3%. This downgrade is attributed to the adverse effects of increased U.S. tariffs and resulting trade tensions, particularly with China.
For advanced economies, growth is projected to at 1.4% in 2025 and 1.5% in 2026. In the US, growth is projected to increase at 1.8% in
2025 and then at 1.7 % in 2026.
Growth in the euro area is projected to maintain similar level of growth rate of 2024 i.e. 0.8 % in 2025 which is further expected to improve to 1.2% in 2026. Key factors supporting the economic growth in 2025 &
2026 would be continued recovery driven by private spending. However, right mix of inflation & interest rates would play a pivotal role in achieving these growth rates.
Economic growth in the UK is projected to be at 1.1% in 2025 & 1.4% in 2026 primarily because of increased government spending, monetary easing. The bulk of government additional expenditure would go towards wages and employment, bolstering household consumption and demand.
Growth in China is projected to slow at 4% in 2025 and 2026 amid escalated tariff wars.
Growth in India is projected to remain strong at 6.2% in 2025 and 6.3% in 2026, on account of robust domestic demand and possible increase in manufacturing activities due to ongoing tariff wars between China & US.
Key Factors Influencing the Outlook
TRADE TENSIONS:
The resurgence of protectionist policies, notably the U.S. imposing tariffs as high as 145% on certain imports, has led to retaliatory measures from trading partners like China. These actions have disrupted global trade flows and increased economic uncertainty, increased volatility in financial markets, affecting investment and economic activity worldwide.
INFLATION AND MONETARY POLICY:
While global inflation is expected to decline, it remains elevated in some regions. Such increased level of Inflation may complicate monetary policy normalization affecting financial stability in respective regions or countries.
1.2 INDIAN ECONOMY
CONTINUED TO BE REMAIN AS FASTEST GROWING LARGE ECONOMY
Amid economic environment including slowdown in manufacturing, geopolitical conflicts, and protectionist trade policy measures, India displayed steady economic growth. With its sustained GDP growth momentum, it has solidified its position as a frontrunner in the global economic race. Indian economy is estimated to have grown by 6.5% in FY 2025 and emerged as the fastest growing major economies in the world consistently.
Gross value added (GVA) at basic prices is estimated to have increased by 6.4% in FY 2025 as against 8.6% in FY 2024. Indias economic growth in FY 2025 has been principally led by Gross Fixed Capital Formation (GFCF). GFCF, a measure of investment in fixed capital, increased by 6.1%, Private Final Consumption Expenditure (PFCE) which has the highest contribution to GDP has increased by 7.6% & Government Final Consumption Expenditure (GFCE) increased by 3.8% in FY 2025.
Gross Value Added (GVA) for Construction sector continued to grow at remarkable rate at 8.6% reflecting heightened infrastructure, housing activities growth in the country whereas Manufacturing has increased by just 4.3% in FY 2025 as against 12.3% in FY 2024.Agriculture sector supported rise in GVA by an increase of 4.6% in FY 2025 as against 2.7% in FY 2024.
Trade Balance Increased by 21% in FY 2025
Despite global economic challenges, the countrys exports of merchandise and services are estimated to have increased by 6% to reach $821 billion in FY 2025 while imports have increased by 7% to reach $915 billion. This resulted in widening of trade balance. Notably, in FY 2024, India had decreased its trade balance by ~36% but in FY 2025, trade balance increased by 21%.
Out of 30 key sectors, 20 sectors exhibited positive growth in Merchandise exports. Most notable among these sectors are Electronics goods exports which registered a growth of ~32.5%. On Merchandise import side, 8 sectors registered a negative growth. Most significant among these sectors being Pearls, precious & semi-precious stones at ~ -24% followed by Coal, Coke & briquettes; Project Goods; and Silver at ~-20%, ~ -19% & ~-11%.
Indias Top 5 export destinations along with their annual growth in FY 2025 include US (11.6%), UK (12%), Japan (21.1%), UAE (2.8%), France (11.4%) whereas Top 5 import sources in FY 2025 include UAE (32.0%), China (11.5%), Thailand (44.0%), USA (7.4%) & Russia (4.4%). FY 2025 observed quite a few challenges which affected global shipments movements including conflicts affecting key sea routes and infrastructural challenges such as drought in Panama Canal. Notably, Iron & Steel sector registered a decrease of 35% in exports due to global demand weakness.
Healthy levels of Manufacturing & Services PMI in FY 2025
Throughout FY 2025, Indias manufacturing purchasing managers index (PMI) remained above 50, signaling continuous expanding output reaching at its maximum in a year at 58.8 in Apr 2024. While Services PMI observed continuous decline in over FY 2025 and touched its highest level at 62 in Apr 2024. The sector showed robust performance, particularly in the first half.
Inflation has subdued over time
In FY 2025, inflation was mainly driven by higher food inflation ranging between 2.7% to 10.9% while the headline inflation rate remained between 3.3% to 6.2%. Sharp increase in Oct 2024 was due to unseasonal rains & adverse weather conditions which increased the vegetable & fruits prices by up to 36% & 7% respectively.
Output of 8 core industries has grown by just 4.4% in FY 2025
The index of eight Core Industries (ICI) measures combined & individual performance of eight core industries viz. Coal, Crude Oil, Natural gas, Petroleum & refinery products, Fertilizers, Steel, Cement and Electricity.
For the period, FY 2025, growth rate in core sectors like Coal, Steel, Cement, & Electricity have exhibited substantial reduction in growth rate as against a negative growth in Natural Gas, Crude Oil & marginally lower growth in Refinery products & Fertilizers as compared with FY 2024.
Overall, the output of 8 core industries have grown by 4.4% (provisional) in FY 2025 as against a 7.6% growth in FY 2024.
Y-o-Y Growth Rates
| Sector | FY 2023 | FY 2024 | FY 2025 (Prov.) |
| Coal | 14.8 | 11.8 | 5.1 |
| Crude Oil | -1.7 | 0.6 | -2.2 |
| Natural Gas | 1.6 | 6.1 | -1.2 |
| Refinery Products | 4.8 | 3.6 | 2.8 |
| Fertilizers | 11.3 | 3.7 | 2.9 |
| Steel | 9.3 | 12.5 | 6.7 |
| Cement | 8.7 | 8.9 | 6.3 |
| Electricity | 8.9 | 7.1 | 5.1 |
| Total | 7.8 | 7.6 | 4.4 |
Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2123185
OUTLOOK: BUILDING ON THE ECONOMYS STRENGTHS IS KEY TO SUSTAINING MOMENTUM
Over the past few years, Indian economy has withstood the global economic shocks whether it is Pandemic induced supply chain related disruptions or geopolitical conflicts triggered protectionist policy measures. However, recent tariff wars initiated by USA with its trading partners particularly China would probably redefine the entire global business landscape.
As discussed earlier, manufacturing output growth has remained at a relatively lower level which is a cause of concern. In fact, in addition to lower growth in manufacturing widening of trade balance has further deteriorated the overall performance of the economy. Nevertheless, some sectors have shown positive momentum including Electronics goods, Defence etc.
However, among all the challenges & difficulties, Indian economy has shown remarkable resilience led primarily by private consumption & government consumption along with large demographic dividend creating strong inhouse demand.
Government led infrastructure push is expected to continue even in 2025 which would increase the highways, railway infrastructure, ports, airports, economic corridors & urban mobility developments such as Metro services among others would further fuel the economic output of the nation.
On a positive note, inflation levels seem to be within target levels allowing RBI to keep interest rates at lower level which would further propel the private consumption. Domestic economic activity is expected to remain resilient,
backed by strong investment and positive business and consumer sentiments particularly in industrial sector.
Headline inflation has come down to 3.34% in Mar25; however, inflationary pressures on food prices due to adverse weather conditions, geopolitical tensions induced uncertainties, trade tensions could disrupt the inflation levels. In the event of persistent inflation rates, RBI may be forced to further tighten the monetary policy which might affect the private investments due to increased borrowing costs.
To summarize, Indian economy in FY 2026 is navigating a complex landscape of domestic strengths and external challenges. While the nation is expected to remain among the fastest-growing major economies, achieving sustainable growth will require addressing structural issues, enhancing investment activity and mitigating external risks. The governments focus on inclusive growth, coupled with supportive monetary policies, will be crucial in steering the economy through these turbulent times.
In latest forecast, various agencies worldwide have projected a growth rate in the range of 6.1% to 6.7% for India.
2.0 STEEL INDUSTRY OVERVIEW
2.1 GLOBAL STEEL INDUSTRY
STABLE OUTPUT OUTSIDE CHINA, GROWING EXPORTS
In 2024, the global steel industry faced a marginal decline of nearly 1% in production, shaped by subdued activity in developed markets, resilient output in China and steady growth in developing economies. The industry demonstrated resilience amid persistent macroeconomic challenges and shifting global demand patterns.
Production outside China remained broadly stable through the year. In developed markets such as Canada, the European Union, and the United States, output remained steady. Persistent challenges, including sluggish economic growth, high inflation and cautious infrastructure spending, weighed on steel demand across these mature economies.
In contrast, developing economies outside China offered a measure of resilience keeping world ex-China steel output largely unchanged from 2023 levels.
Chinas role remained central to the global narrative. Steel production in China was little volatile, supported by targeted government stimulus focused on infrastructure projects.
With domestic steel demand weakening, Chinese net steel exports surged in 2024, putting pressure on global steel pricing. Chinese mills increasingly turned to overseas markets to absorb the domestic surplus, altering trade flows and influencing supply-demand balances worldwide. Declining consumption, a slowing economy and structural problems forcing Chinese steel producers to expand exports. However, this strategy, while effective in the short term, poses serious risks to the global steel industry, which is already suffering from volatile demand and overproduction.
· Top 10 Steel producing countries (Million tonnes)
Source: World Steel Association data
The EU steel industry is facing a prolonged crisis driven by a combination of adverse factors. Relatively higher energy costs, sluggish steel demand and financial struggles among several companies have resulted in widespread production shutdowns. It is estimated that more than 9 million tonnes of annual capacity have been suspended or partially suspended.
Although, few countries in the EU showed improved production results in 2024, capacity utilization in key producing countries, including Germany, Italy, Spain and France, did not exceed 75% exerting pressure on the margins.
Decarbonization of steel industry
The global shift towards decarbonization gained momentum, with increased focus on investing into green steel and low-carbon emission technologies. However, these efforts remained in the early stages, with limited immediate impact on production volumes.
In 2024, EU mandated submission of CBAM quarterly reports for applicable commodities (Iron & Steel being one of them) imported into EU. Under CBAM, if a steel is taxed in the origin country, then it will be taxed only to the extent of differential tax in EU. This ensures a level playing field and encourages countries to adopt low carbon emission technologies within the country.
On these lines, many countries have been working on designing their own national Emission Trading System (ETS) on the similar lines to that of CBAM. China launched national ETS in 2021, however, in Mar 2025, Iron &
Steel sector has officially been included in the national ETS. Only direct emissions (scope 1), while indirect carbon emissions (scope 2) are excluded from the ETS.
In Phase 1 (till 2026), companies covered will be encouraged to familiarize themselves with the national ETS and enhance the quality and management of their carbon emissions data. The first compliance of the trading scheme is scheduled for late 2025. In Phase 2 (starting 2027), the ETS and relevant requirements will be tightened and improved. The methodology for allocating free allowances will be more scientific and transparent, with free allowances reduced gradually. Overall emission quotas will be reduced gradually.
2.1.1. INPUT PRICES
Iron Ore
Iron ore is the key raw material for steelmaking. During the year 2024, iron ore prices were seen quite volatile. From USD 135/MT in Jan 2024 then reducing to USD 111/MT in Apr 2024, further dropping to USD 94/MT in Sep 2024 before marginally recovering and becoming steady subsequently till Mar 2025 to USD 102/MT. Key reason for such fluctuation can be attributed to Chinas weak steel demand during Apr-Sep24 period led by weakened demand in real estate sector.
The prices recovered again in from Oct24 and remained at steady level following Chinese government stimulus package aimed to revitalize the construction and property sectors. Stimulus measures included interest rate cuts, reduced mortgage rates and increased liquidity for developers. Following announcement of stimulus on 24th Sept 2024, iron ore prices up ticked from again.
Although, stimulus package provided a short-term boost to iron ore prices by stimulating steel demand. However, the long-term effects will depend on the sustained impact of the stimulus measures and the resolution of underlying economic challenges.
Coking Coal
Coking Coal prices continued a downward trend through 2024 till Sep 2024 primarily due to weaker steel demand in China. Similar to iron ore prices, coking coal prices increased following the Chinese stimulus package announcement in Sep 2024 and it remained steady in the range of USD 203-216/MT. During Jan to Mar 2025 period, China imposed retaliatory tariff of 15% on coking coal imported from USA as against 10% by USA which was later increased to 20%. Such duty on US coking coal just ended the trade between the China & US for Coking coal.
During year 2024, China imported ~5.7 mn tonnes of coking coal. Retaliatory tariffs, led to a surplus of US coal that needed to find alternative markets, increasing competition and exerting downward pressure on global prices.
Further, global coking coal markets faced an oversupply situation during Jan - Mar 2025 period, with increased production from major exporters like Australia, Russia and Mongolia leading to reduction in prices.
India, one of the largest importers of coking coal and coke put restrictions on metallurgical coke imports from Jan 2025 to encourage domestic met coke production. This would have upward price pressure on Coking coal prices in the near term.
HRC Prices
HRC prices, a key indicator for steel prices globally, exhibited a similar trend to that of key raw materials Iron Ore & Coking coal. Prices continue to decline through Sep 2024 following which prices increased in Oct 2024 to become relatively at a steady level thereafter.
Realizing weaker domestic steel demand, Chinese steel players have increased exports to avoid the production cuts. This led to oversupply in the market leading to reduction in steel prices globally. However, recent tariff wars initiated by US particularly on China would jeopardize the intentions of Chinese players.
In the wake up of tariffs, Chinese steel players are looking at various trade partners to sell the surplus steel which would put increased pressure on local prices.
OUTLOOK: CAUTIOUS GROWTH EXPECTED AMID UNCERTAIN CONDITIONS OF TARIFFS
The global steel industry, a fundamental driver of industrial growth and infrastructure development, is expected to experience moderate growth in 2025 after navigating a series of challenges in 2024.
The World Steel Associations latest forecast (Oct 2024) indicates that global steel demand will increase by 1.2% in 2025, reaching approximately 1,772 million tonnes (Mt). This recovery is expected after a period of subdued demand in 2024, driven by slower-than-expected economic growth in major steel-consuming nations.
China:
As the largest global consumer of steel, Chinas demand is projected to decline slightly by 1% in 2025. The continued contraction in the real estate sector, along with efforts to decarbonize the economy, will weigh on steel consumption. However, growth in infrastructure and manufacturing sectors is expected to mitigate this decline.
India:
In contrast, India is expected to be a significant driver of global steel demand, with an anticipated 8% growth in 2025. This surge is primarily attributed to strong infrastructure development and expansion in manufacturing, bolstered by governmental policies to support industrialization and urbanization.
Europe:
European steel demand is projected to see a steady recovery, with growth estimated at 5.3% in 2025. This rebound is driven by increased investment in industrial production, aided by economic stabilization across the EU. The regions demand for steel is expected to pick up as construction and automotive industries regain momentum.
United States:
The U.S. steel market is poised for a moderate recovery, with demand growth expected in the range of 3-4% due to increased investments in manufacturing and infrastructure. The U.S. governments focus on infrastructure projects and industrial rejuvenation is a key factor supporting this demand growth.
However, this outlook may be impacted due to imposition of tariffs by the US particularly on China & after-effects/trade negotiation deals.
The key determinants of the global steel demand outlook for 2025-2026 will be the progress made in the stabilization of Chinas real estate sector, effectiveness of interest rate adjustments in spurring private consumption and business investment and the trajectory of infrastructure spending dedicated to decarbonization and digital transformation across major global economies.
2.2 INDIA STEEL INDUSTRY
ROBUST GROWTH IN STEEL PRODUCTION
The Indian steel industry in FY 2025 continued its trajectory of robust growth, firmly establishing itself as a key engine of national development and global relevance. Crude steel production for the year is estimated to have surpassed 151 million tonnes (MT), reflecting a 7.2% Y-o-Y increase despite headwinds in the global economy.
The industrys momentum was significantly supported by the Government of Indias unwavering commitment to infrastructure expansion through initiatives like the National Infrastructure Pipeline (NIP) and PM Gati Shakti Master Plan, which targeted multi-modal connectivity and accelerated project execution. Large-scale investments in highways, airports, metro rail projects and rural housing programs led to a tangible rise in demand for long and flat steel products.
In 2024, India took significant steps toward formalizing a Green Steel Taxonomy to accelerate the decarbonization of its steel
industry in alignment with its Net Zero by 2070 commitment. As per the taxonomy, "Green Steel" shall be defined in terms of percentage greenness of the steel, which is produced from the steel plant with CO2 equivalent emission intensity less than 2.2 tonnes of CO2e per tonne of finished steel (tfs). The greenness of the steel shall be expressed as a percentage, based on how much the steel plants emission intensity is lower compared to the 2.2 t-CO2e/tfs threshold. Based on the greenness, the Green steel shall be rated as follows:
• Five-star, green-rated steel:
Steel with emission intensity lower than 1.6 t-CO2e/tfs
• Four-star, green-rated steel:
Steel with emission intensity between 1.6 and 2.0 t-CO2e/tfs
• Three-star, green-rated steel:
Steel with emission intensity between 2.0 and 2.2 t-CO2e/tfs
Crude Steel Capacity
According to provisional data compiled by BigMint, Indias crude steel production capacity expanded by over 10% in FY 2025, reaching 205 million tons, up from 186 million tons in FY 2024. Over the past decade, capacity has nearly doubled from 109 million tons in FY 2015, reflecting the sectors dynamic growth trajectory. This remarkable increase is closely linked to Indias rapid economic expansion, accelerated urbanization, substantial government investment in infrastructure and improved levels of raw material self-sufficiency.
DRI Production
India remained the world leader even in 2024 for the DRI production at 55.6 million tons with a share of 44% in global DRI production.
However, the reliance on coal-based DRI processes poses environmental challenges. Globally, few steel makers are experimenting about Green Hydrogen based DRI production. To establish the technology in India, MNRE under National Green Hydrogen Mission launched funding support for pilot projects to produce low carbon emission steel projects. In Oct24, three pilot projects were sanctioned in the area:
• Pilot project to produce DRI using 100% Hydrogen using vertical shaft,
• Use of Hydrogen in Blast Furnace to reduce coal/coke consumption and
• Injection of Hydrogen in vertical shaft based DRI making unit.
These projects will receive a total of Rs 347 Cr from the government of India. These pilot projects are expected to be commissioned in the next three years. Results of these pilot projects would be very important for entire steel industry for learning, adopting & establishing emerging technology within the country.
2.2.1 MAJOR DRIVERS OF GROWTH
In FY 2025, Passenger Vehicles (PV) sales reached at its all-time high at 5.07 mn vehicles as against 4.89 mn vehicles sales in FY 2024 registering a growth of ~4%. Notably, export share within the PV sales stood at 15%. Similarly, Commercial Vehicles (CV) sales remained at a similar level to that of previous year at 1.03 mn vehicles. Two Wheelers (2W) sales registered growth of 11% in FY 2025 at 23.8 mn vehicles which is closer to pre-pandemic sales of 24.4 mn. Three Wheelers (3W) sale crossed 1.04 mn as against a 0.99 mn in FY 2025 registering a growth of mere 5%. Except PV all other types of vehicles are yet to catch up to the pre-covid level.
The robust performance & demand of Automotive industry against persistent challenge of higher borrowing cost & stringent NBFC borrowing norms, increased cost of ownership, is a major growth driver of Indian Steel industry.
Government of India allocated a record Rs 11.21 lakh crore towards capital expenditure (capex) in the Union Budget for FY 2026, accounting for 3.1% of GDP. This marks a strong step-up from the Rs 10.18 lakh crore revised estimate for FY 2025, reinforcing the governments commitment to high-impact investment.
The expanded capex framework targets transformative sectors including infrastructure modernization, Defense capability enhancement and state-led development projects facilitated through interest-free loans. Positioned as a catalyst for sustainable growth, job creation and competitiveness, this strategic push in public investment is set to lay the foundation for a more resilient and future-ready India.
The industrial segment includes heavy engineering and manufacturing industries that use steel to build machinery, equipment and factories. As India aims to boost its manufacturing capabilities with initiatives like Make in India, the demand for steel & specialty steel as a key raw material is expected to rise.
Capital goods assets consisting of Dies, Moulds, Plastic Machinery, Earthmoving & Mining Machinery, Metallurgical machinery, Process plant equipment etc. account for about 1.9% of Indias GDP. It contributes to ~12-15% of Indias finished steel demand.
National Capital Goods Policy aimed at enhancing competitiveness of Indian Capital Goods sector would further help the sector to grow at a faster pace.
As India bolsters its industrial activity, the steel demand from industrial sector is expected to remain a key driver.
Government of India allocated a record Rs 11.21 lakh crore towards capital expenditure (capex) in the Union Budget for FY 2026, accounting for 3.1% of GDP. This marks a strong step-up from the Rs 10.18 lakh crore revised estimate for FY 2025, reinforcing the governments commitment to high-impact investment.
The expanded capex framework targets transformative sectors including infrastructure modernization, Defense capability enhancement and state-led development projects facilitated through interest-free loans. Positioned as a catalyst for sustainable growth, job creation and competitiveness, this strategic push in public investment is set to lay the foundation for a more resilient and future-ready India.
3. BUSINESS REVIEW
OPERATIONAL PERFORMANCE
FY 2025 was largely driven by external global shocks including Chinas policy measures induced volatile commodity & raw material prices, fluctuating demand etc. However, tight focus & vigilance on global markets helped Kalyani Steels Limited to continue its profitable journey.
The Company achieved Total Income of ?20,336 Million, consisting of Revenue from Operations of Rs 19,819 Million and Other Income of Rs 517 Million. Revenue from Operations includes Manufacturing Revenue of Rs 18,474 Million, Trading Revenue of Rs 1,097 Million and other Operating Revenue of Rs 248 Million.
Profit before taxation for FY 2024-25 stood at Rs 3,427 Million as against Rs 3,327 Million in FY 2023-24 registering a growth of 3%.
Manufacturing Revenue consists of sale of Rolled Products, As Cast Blooms, Pig Iron and Foundry Coke and BF Coke. The Company sold 218,709 tonnes of Rolled Products aggregating Rs 16,345 Million, 16,860 tonnes of As Cast Blooms aggregating ?1,404 Million, 2,542 tonnes of Pig Iron aggregating to Rs 97 Million and 19,391 tonnes of Foundry Coke and BF Coke aggregating to Rs 628 Million.
Key Financial Ratios are as follows:
| Sr. No. Particulars | 2024-25 | 2023-24 | Change (%) |
| 1 Debtors Turnover | 4.59 | 4.67 | (1.75) |
| 2 Inventory Turnover | 5.50 | 4.26 | 28.95* |
| 3 Interest Coverage Ratio | 22.87 | 17.03 | 34.33** |
| 4 i Current Ratio | 1.79 | 1.62 | 10.30 |
| 5 Debt Equity Ratio | 0.23 | 0.35 | (34.81)*** |
| 6 Operating Profit Margin (%) | 18.23 | 18.23 | |
| 7 Net Profit Margin (%) | 12.93 | 12.82 | 0.82 |
| 8 Net Worth | 19,044 | 16,914 | 12.59 |
| 9 Return on Net Worth (%) | 13.29 | 14.63 | (9.18) |
*Due to reduction in average inventory.
**Increase in profits due to lower cost of production and finance charges.
***Due to repayment of ECB loan and increase in Net Worth.
4. INTERNAL CONTROL & HUMAN RESOURCES
Internal Control Systems and their adequacy
Internal control systems are an integral part of any organisation to safeguard its assets & interests and the company always puts greater emphasis on strengthening and reviewing its control systems in place for continuous improvement.
The company has well established and effective system of internal controls corresponding to its size, nature of business & complexity of operations. The internal control systems comprise of clearly defined authority and responsibility levels across a well-defined organizational structure. The system is backed by comprehensive documented policies, guidelines and procedures governing the operations of respective business areas and functions. These controls have been designed to safeguard the assets and interests of the Company & its stakeholders and to ensure compliance with policies, procedures and applicable regulations.
The internal control system is supplemented by internal audits and its review by the management on a periodic basis. In-house internal audit function is supported by external audit firms to conduct comprehensive risk focused audits. Such audits ensure and evaluate the effectiveness of the internal control structure on a regular basis. The audit covers the key processes across the functions, including plants, depots and other establishments. Suggestions to further strengthen the processes or make them more effective are shared with the Audit Committee of Directors along with status of action thereon.
Human Resources
The company believes that human capital is a critical factor of success and hence constantly strives to strengthen its work ethics, work culture and align the workforce towards the common goal. Current workforce of the company is rightly poised to navigate through the current Volatile, Uncertain, Complex situation and to always maintain industry leading quality standards while maintaining the highest service levels.
The company continues to focus on upgrading knowledge and skill levels among its employees through various Learning & Development, training activities to enable them to move up the ladder. The company has well defined HR policies in place which enables it to build a strong performance-oriented culture, belongingness to work and commitment to work.
As on March 31, 2025, the Company has 105 employees and 20 workers on its role and 234 workers on contract basis.
Hospet Steels Limited, a Company formed with the specific purpose of managing and operating the composite steel making facility at Ginigera, Karnataka in terms of Strategic Alliance between the Company and Mukand Limited, has 1,125 employees on its role and 1,272 workers on contract basis.
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+91 9892691696
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