Kataria Industries Ltd Management Discussions

Overview

The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the FY2025-26. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Annual Report and 22nd Annual Accounts of the Company for FY2025-26. The Companys financial statements have been prepared in accordance with Accounting Standards (AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

II. External Environment

1. Global Economy

In 2025, the global economy grew at an estimated rate of 3.4% despite significant turbulence. The year was marked by record increases in U.S. tariffs and heightened trade policy uncertainty, a raft of trade deals the impact of which is yet to play out, and a surge in AI linked investments. Key factors impacting economic activity included the weaponisation of trade, and the ongoing transition towards technology-driven growth, particularly in North America and Asia. Geopolitical risks intensified during the year, with escalating conflict in the Middle East. These developments heightened uncertainty across energy markets and global trade corridors, increasing volatility in commodity prices and disrupting cross-border logistics. These challenges and uncertainties are continuing into FY2026-27.

Economic Outlook

Global economic growth is projected to slow down with a growth rate of 3.1% in 2026 before recovering to 3.2% in 2027. Advanced economies are expected to grow by 1.8% in 2026, while growth in emerging market and developing economies is projected at 3.9%. Global headline inflation is projected to increase to 4.4% in 2026 and 3.7% in 2027, pausing its previous decline due to higher energy and food prices.

However, these forecasts assume an early end to the disruptions caused by the Middle east conflict. In reality, the pace of disinflation remains vulnerable to energy price shocks. Elevated oil and gas prices could reintroduce costpush inflationary pressures, complicate monetary easing paths and increasing input cost volatility for industrial sectors.

In the United States, growth is projected at 2.3% in 2026, supported by fiscal stimulus from the Big Beautiful Bill and an AI-related capex surge. However, high public debt (125% of GDP) remains a critical risk; such elevated debt levels may constrain future global infrastructure spending as fiscal space tightens, bring about upward pressure on long-term interest rates, and dampen the investment appetite for capital-intensive sectors. The Euro area is expected to see a 1.2% growth in 2026, driven by German fiscal easing, though structural drags like aging demographics persist. The United Kingdom is forecast to grow by 1.1% in 2026, supported by rate cuts amidst a softening labour market. The Chinese economy is projected to grow by 4.4% in 2026, aided by a trade truce with US and domestic stimulus measures. This truce represents a stabilisation of broad bilateral relations, yet it coexists with rising sector-wise protectionism as nations seek to protect domestic industries from surplus capacity. Global trade volume growth is projected to reach to 2.8% in 2026 and 3.8% in 2027, reflecting adjustments in trade linkages.

2. Indian Economy

India remained one of the fastest-growing major economies, with a growth rate of 7.5% in FY2025-26. For FY2026-27, real GDP is projected to expand by 6.7%. Headline CPI inflation is projected to rise to the RBIs target of 4% in FY2026-27 from a record low of 2.2% in FY2025-26. Despite this rise, the RBI is expected to maintain current policy with the repo rate settling at 5.0%. This suggests that while nominal rates may stay low to support growth, the narrowing gap between inflation and interest rates will require careful management to ensure real interest rates continue to stimulate consumer spending in the auto and housing sectors.

Public capex remains high at over 5% of GDP, focusing on infrastructure and defence. The sustained investment in steel-intensive projects, such as those under the National Infrastructure Pipeline (NIP 2.0), ensures positive steel demand.

Continued blockades at the Strait of Hormuz, shortages of fuel and elevated energy costs are a key risk to the Indian economy. Given its import reliance, India risks a widening current account deficit, pressure on public finances, consequent tightening in fiscal spend, higher than anticipated consumer inflation and eventual demand erosion, if the blockade continues.

3. Global Steel Industry

Steel demand remained subdued across major developed markets, particularly due to prolonged weakness in housing construction in China, Europe, Japan and parts of

North America. The automotive sector also experienced uneven momentum amid cost pressures and cautious consumer spending. At the same time, sustained public infrastructure spending across several major economies provided some support to steel demand, partly offsetting weakness in traditional consumption segments.

Significant divergence persists across regions. While steel demand in China is expected to continue declining in the near term- albeit at a slower pace- developing economies excluding China are projected to record robust growth. India, in particular, is expected to remain a key growth driver, supported by broadbanded expansion across infrastructure, construction and manufacturing. Emerging regions such as parts of ASEAN, MENA and Africa are also witnessing renewed momentum in steel consumption.

Meanwhile, elevated excess capacity and high exports from China have intensified competitive pressures in global markets, resulting in rising trade protection measures across geographies. Overall, while medium term demand prospects show early sign of stabilisation, the global steel industry continues to be marked by structural imbalances, trade tensions and uneven regional recovery.

4. Indian Steel Industry

India continues to be a global leader in steel demand growth, with consumption expected to grow at a healthy rate of 7-8% in FY2026-27. Apparent Steel Use is projected to reach 176-178 MT in FY2026-27, driven by the National Infrastructure Pipeline and emerging segments like data centres, defence, and renewable energy. Government commitment remains strong, with public infrastructure spending remaining robust. While production is expected to outpace demand growth due to massive capacity, India is transitioning toward becoming a sizeable net exporter. This growth trajectory is underpinned by several powerful domestic factors:

Infrastructure Investment: Ongoing massive investments in roads, railways, urban infrastructure (metros), ports, and power generation continue to create significant demand for steel.

Urbanisation: Rapid urbanisation and associated housing and commercial construction activities fuel sustained demand.

Manufacturing Expansion: A growing manufacturing sector, supported by government initiatives and increasing domestic consumption, drives steel usage across various downstream industries.

Despite this buoyant domestic outlook, the Indian steel ecosystem will need to navigate an increasingly complex global operating environment. Excessive exports out of China and distortions in trade flows due to protectionist measures will influence domestic price cycles. Furthermore, with the roll out of carbon border mechanisms in Europe and increase in customer demand for low-emission steel, Indian export competitiveness will be impacted.

measures will influence domestic price cycles. Furthermore, with the roll out of carbon border mechanisms in Europe and increase in customer demand for low-emission steel, Indian export competitiveness will be impacted.

To maintain its cost competitiveness and sustain export capabilities, the Indian steel industry will require continued policy support in terms of infrastructure build, access to competitively priced energy and raw materials, and an accelerated adoption of cleaner production technologies in India. Strategic focus on enhancing productivity, upgrading product mix to higher value-added segments, and fostering innovation will be crucial for the industry to maintain its competitiveness in the evolving global steel landscape.

III. Our Business

The Company operates primarily in the infrastructure products manufacturing sector and is engaged in the production and supply of Low Relaxation Pre-Stressed Concrete (LRPC) Strands and Steel Wires, Post-Tensioning (PT) Anchorage Systems comprising Anchor Heads, Anchor Cones and Wedges, HDPE Single Wall Corrugated (SWC) Sheathing Ducts, Mechanical Couplers, and Aluminium Conductors. These products play a critical role in modern infrastructure development and find extensive application across roads, bridges, flyovers, metro rail projects, railways, high-rise buildings, atomic reactors, LNG storage tanks, power transmission and distribution networks, industrial projects, and other strategic infrastructure developments.

The infrastructure sector continues to be one of the key drivers of economic growth, supported by sustained government investments in transportation, urban development, energy, housing, and industrial corridors. Increased focus on smart cities, metro rail expansion, renewable energy transmission infrastructure, logistics parks, and affordable housing projects is expected to create significant opportunities for the Companys products.

In addition to its manufacturing business, the Company has expanded its object clause to undertake real estate development, construction, redevelopment, infrastructure development, project management, and related consultancy services. The Indian real estate sector continues to witness growing demand across residential, commercial, industrial, warehousing, and mixed-use developments, supported by urbanization, favorable demographics, increasing disposable incomes, and policy initiatives promoting housing and infrastructure development.

Segment-wise or Product-wise performance

The Company is engaged in Wire, Cable/Conductor and Accessories. The details of Segment wise or product wise performance is provided in Note No. 37 of Financial Statement of the Company, forming part of this annual report.

1 Policies like Pradhan Mantri Awas Yojana and Pradhan Mantri Gram Sadak Yojana are driving growing demand for steel in rural India.

Business Overview

The Company has established itself as a manufacturer and supplier of specialized infrastructure products catering to diverse sectors. The Companys product portfolio includes:

Low Relaxation Pre-Stressed Concrete (LRPC) Strands > Steel Wires > Post-Tensioning (PT) Anchorage Systems > Anchor Heads, Anchor Cones and Wedges > HDPE Single Wall Corrugated (SWC) Sheathing Ducts > Mechanical Couplers > Aluminium Conductors

These products support critical infrastructure projects and are designed to meet stringent quality, durability, and performance requirements.

The Company also intends to capitalize on opportunities in real estate development, township projects, commercial complexes, industrial parks, warehousing facilities, hospitality projects, educational institutions, healthcare infrastructure, and urban infrastructure development. The expanded business scope provides an avenue for diversification and long-term value creation.

Opportunities and Outlooks

With increasing capacity addition in the automotive industry, demand for steel from the sector is expected to be robust.

Corporate Indias capex is expected to grow and generate greater demand for steel.

Due to rising investment in infrastructure the demand for steel products would increase in the years ahead.

More and more modern and private airports are expected to be setup.

Introduction of high-speed bullet trains and metro trains will increase steel usage.

Indias primary energy consumption of oil and gas is expected to increase to 10 mbpd and 14 bcfd, respectively, by 2040. This would lead to an increase in demand of steel tubes and pipes, providing a lucrative opportunity for the steel industry.

India aims to boost non-fossil fuel electricity generation to over 5,00,000 MW by 2030, with a transmission plan for integrating 5,00,000 MW of renewable energy capacity by the same year. This will lead to enhancement in both transmission and distribution capabilities, thereby raising steel demand from the sector.

The Company remains focused on leveraging its engineering expertise, industry relationships, and execution capabilities to capitalize on these opportunities.

Risks and Concerns

Kataris Industries operates in a dynamic global environment characterised by evolving regulatory and environmental requirements, heightened geopolitical uncertainty, and rapid technological advancements. These factors pose material risks across the organisations value chain. Kataris Industries maintains a robust Risk Management (RM) framework to holistically assess and manage these exposures, supporting informed decision-making. Information regarding Key Risk facing Kataris Industries is given below:

Fluctuations in commodity markets due to trade uncertainties, exacerbated by geopolitical instability, currency exchange rate volatility also significantly influences the cost of capital and overall financial performance.

In FY2025-26, the global economy operated in a challenging environment shaped by persistent geopolitical tensions and heightened trade policy risks. Ongoing conflicts, particularly in the Middle East, contributed to volatility in energy and freight markets, elevated supply-chain risks, and shifts in cross border trade flows. A more restrictive trade regime, including wider use of tariff measures and the initial implementation of the European Unions Carbon Border Adjustment Mechanism (CBAM), further increased compliance complexity and costs for steel producers.

The global steel market continued to face pressure from structural imbalances, most notably the prolonged weakness in Chinas property sector, which constrained domestic steel consumption and resulted in elevated export volumes. Increased steel availability in seaborne markets intensified competition and weighed on benchmark prices across regions.

Global geopolitical instability including the escalating Middle East conflict and ongoing Russia-Ukraine tensions continues to impact energy markets, freight routes, and trade flows, contributing to volatility in steel prices and input costs.

Kataris Industries operates within a complex and rapidly evolving regulatory environment across India. Its diverse activities exposes it to key risks related to environmental regulation, ESG disclosures, competition law, labour and safety compliance, and cross-border trade controls.

Environmental and climate-related regulations represent the most significant global risk. Critical areas include air emissions, water pollution, hazardous waste management, climate transition requirements, and community health impacts.

The steel sector is increasingly exposed to a broad spectrum of risks. Extreme weather events disrupt global supply chains, while shifting regulations and persistent logistics challenges strains operational efficiency. Cybersecurity vulnerabilities pose serious threats to digital infrastructure, amplifying the need for robust defence. Internally, aging equipment, unexpected breakdowns, and delayed maintenance heighten the risk of costly downtime. Moreover, interruptions in critical utilities-such as electricity, water, and gas-can significantly impede production processes, reducing output and impacting overall performance.

The steel industry operates in an environment where workforce health and safety remain critical priorities. Hazards are inherent to processes, and risks often stem from lapses in compliance with safety protocols, regulatory standards, or operational guidelines posing threats to business continuity. As companies expand geographically, the complexity intensifies with diverse, location-specific safety laws and requirements that demand rigorous adherence and proactive management.

Kataria Industries remains committed to enhancing community well-being, with a strong focus on improving the quality of life for vulnerable groups near its operations. The Company actively aligns resources to meet evolving societal expectations, recognising that failure to do so could impact reputation, social license to operate, and business continuity.

Financial Performance

Particulars	FY 2025-26	FY 2024-25	Change
Revenue from Operations	33,103.82	35,060.74	\u2193 5.58%
Other Income	152.82	139.20	\u2191 9.78%
Total Income	33,256.64	35,199.94	\u2193 5.52%
Profit Before Tax (PBT)	1,635.12	1,330.09	\u2191 22.93%
Profit After Tax (PAT)	1,212.46	1,095.57	\u2191 10.67%
EPS (Basic & Diluted)	5.63	5.09	\u2191 10.63%

(En Lakhs)

Particulars	31-Mar-2026	31-Mar-2025
Net Worth (Share Capital + Reserves)	12,123.24	10,910.78
Total Assets	15,303.54	13,650.16
Short-term Borrowings	2,255.59	1,696.22
Inventories	3,768.98	3,348.33
Trade Receivables	3,653.53	3,088.00

Revenue from operations for the financial year ended March 31, 2026 stood at 33,103.82 lakh as compared to 35,060.74 lakh in the previous financial year, reflecting a decline of 5.58%.

Despite the moderation in revenue, the Company reported a healthy improvement in profitability. Profit Before Tax increased to 1,635.12 lakh from 1,330.09 lakh in the previous year, registering a growth of 22.93%. Profit After Tax stood at 1,212.46 lakh as against 1,095.57 lakh in FY 2024-25, representing a growth of 10.67%.

The Companys net worth increased to 12,123.24 lakh as on March 31, 2026 from 10,910.78 lakh as on March 31, 2025, supported by retained earnings and improved financial performance.

Internal Financial Control Systems and their Adequacy

Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal

audit programmes adopted by the Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management.

The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.

Material Developments in Human Resources / Industrial Relations Front, Including Number of People Employed

The Company believes in establishing and building a strong performance and competency driven culture amongst its employees with greater sense of accountability and responsibility. The Company has taken various steps for strengthening organizational competency through the involvement and development of employees as well as installing effective systems for improving their productivity and accountability at functional levels. The Company acknowledges that its principal asset is its employees. Ongoing in-house and external training is provided to the employees at all levels to update their knowledge and upgrade their skills and abilities. As on March 31, 2026, the Company had total 140 full time employees. The industrial relations have remained harmonious throughout the year.

employees at all levels to update their knowledge and upgrade their skills and abilities. As on March 31, 2026, the Company had total 140 full time employees. The industrial relations have remained harmonious throughout the year.

Cautionary Note

Cautionary NoteStatements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

Details of Significant Changes in Key Financial Ratios

Particulars	F.Y. 2025-26	F.Y. 2024-25	Variance	Reasons
Debtors Turnover	9.06	11.35	-20.20%	Decrease in sales and increase in closing trade receivables during the year.
Inventory Turnover	8.78	10.47	-16.12%	The decrease in the ratio is mainly due to lower sales and comparatively higher inventory maintained during the year.
Interest Coverage Ratio	16.71	5.45	2.06	The interest coverage ratio increases due to reduction in bank borrowing resulting lower finance cast
Current Ratio	3.77	3.65	3.29%	Increase in trade receivables, inventory and short-term advances during the year
Debt Equity Ratio	0.19	0.16	19.68%	Increase in total debt relative to shareholders equity.
Operating Profit Margin (%)	0.07	0.06	0.11%	The operating margin ratio Increase as compared in previous year due to Lower operating cost & Higher margin realization
Net Profit Margin (%)	0.04	0.03	17.21%	Increase in net profit due to improved profitability during the year
Return on Net Worth	0.10	0.10	0.00%	No variation