KIC Metaliks Ltd Management Discussions

Economic Overview

GLOBAL ECONOMIC OVERVIEW

The global economy in F.Y. 2024-25 is set to experience a notable slowdown, with growth projected to decelerate from 3.3% in 2024 to between 2.8% and 2.9% in 2025, marking the weakest expansion since the pandemic. This moderation is attributed to persistent trade policy uncertainty, tighter financial conditions, and subdued condence, with the slowdown most pronounced in the United States, China, and other major economies. Advanced economies are expected to see modest growth—US GDP growth is forecast to fall from 2.8% in 2024 to 1.6% in 2025, while the euro area is projected to inch up from 0.8% to 1.0%. Emerging markets, including India, remain relatively resilient. Meanwhile, global headline ination is anticipated to moderate, with G20 ination easing from 6.2% in 2024 to 3.6% in 2025, although inationary pressures persist in select economies due to tari increases and supply chain disruptions. Labour market growth is also slowing, with global employment growth revised down to 1.5% for 2025, reecting weaker economic momentum.

Looking ahead, the outlook for F.Y. 2024-25 remains clouded by signicant downside risks. Trade tensions, especially between major economies, are expected to continue weighing on global activity and could further disrupt supply chains and labour markets. Ination is forecast to stabilize but may resurge if tari barriers escalate or commodity prices spike. Central banks are likely to maintain a cautious stance, with some easing of interest rates possible if ination continues to moderate, but scal decits are expected to widen as governments support growth. Structural challenges—including demographic shifts, weak productivity, and policy uncertainty—could further constrain medium-term prospects. Policymakers are urged to foster international cooperation, address structural imbalances, and invest in productivity-enhancing reforms to underpin sustainable growth.

Indias economy maintained its position as the fastest-growing major economy in F.Y. 2024-25, with GDP growth estimated at 6.5%, although this marks a deceleration from the previous years 9.2% expansion. The moderation reects the impact of tighter monetary policy, elevated energy prices, and a slowdown in gross xed capital formation and manufacturing, even as private and government consumption remained robust. Construction and manufacturing sectors, in particular, drove growth, with the January-March 2025 quarter registering a strong 7.4% year-on-year increase, outperforming analyst expectations. Ination moderated within the Reserve Bank of Indias target range, allowing for a steady policy stance, while resilient services exports and a rebound in rural demand further supported economic activity.

Looking ahead, Indias economic outlook for F.Y. 2025-26 remains positive, with growth projected between 6.3% and 6.5%, underpinned by resilient domestic demand, strong public investment, and ongoing reforms. While global headwinds such as trade tensions and volatility in commodity prices pose risks, Indias stable ination, robust scal position, and continued momentum in infrastructure and manufacturing are expected to sustain growth. The Reserve Bank of Indias recent shift toward monetary easing and the governments focus on inclusive development and digitalization further strengthen the medium-term outlook, positioning India to outpace most global peers in economic expansion.

Steelremainsthebackboneofindustrialization and urban development, integral to sectors such as construction, automotive, infrastructure, machinery, and energy. Its adaptability and recyclability have kept it at the forefront of material choice for both advanced and emerging economies. In 2025, steels role in supporting global infrastructure, clean energy transition, and manufacturing modernization continues to be indispensable, with new applications emerging in green technologies and digital infrastructure. Global crude steelmaking capacity in 2025 is estimated to have risen by up to 6.7% year-on-year, reaching approximately 2.6 billion tonnes, while actual crude steel output is forecast at 1.846 billion tonnes, down from 1.878 billion tonnes in 2024. Global steel demand is projected at 1,771.5 million tonnes in 2025, a modest increase of 1.2% from 2024, reecting persistent but uneven recovery across region. The gap between capacity and output has widened, intensiF.Y.ing excess capacity pressures and leading to lower capacity utilization rates globally. The marginal increase in steel demand during F.Y. 24-25 is underpinned by divergent regional trends. While ASEAN and MENA regions are experiencing stronger construction and infrastructure-driven growth, Chinas demand continues to decline due to a sluggish property sector and weak manufacturing activity. In OECD economies, demand remains largely at, constrained by high interest rates and subdued industrial output. The global market is also impacted by rising protectionism and trade actions, particularly in response to surging Chinese exports. These factors, combined with excess capacity and muted investment in decarbonization, have kept price growth in check and pressured industry protability

The global economy in 2025 remains on an uneven recovery path, with persistent geopolitical tensions, high interest rates, and trade policy uncertainty weighing on industrial output. For the steel industry, these conditions translate into subdued demand growth, excess capacity, and heightened competition. While emerging markets, especially India continue to drive incremental demand, developed economies are still hampered by weak construction and manufacturing activity. Steel prices are expected to remain relatively stable, with only modest upside as protectionist measures and supply-side adjustments begin to counterbalance weak demand.

Chinas steel industry, which accounts for more than half of global output, saw crude steel production exceed 1 billion tonnes in 2024 after a stronger-than-expected Q4, but is forecast to fall below this threshold in 2025 as Beijings policy guidance and weak construction activity curb output. Chinese steel demand is projected to decline by about 1% in 2025, with the property sectors stagnation and limited infrastructure stimulus weighing on consumption. Export volumes have surged, prompting a wave of trade actions globally. Looking ahead, Chinas steel industry faces structural headwinds, with future growth dependent on successful transition to higher-value products, decarbonization, and domestic economic rebalancing.

In the ASEAN region, steel demand is expected to recover in 2025, buoyed by government-led infrastructure projects and manufacturing expansion, despite ongoing trade friction and anti-dumping duties. MENA is set for a 3.5% increase in steel demand, supported by energy sector investments and construction activity. These regions are also expanding steelmaking capacity, contributing to the global overcapacity challenge.

The European Union steel sector continues to struggle, with apparent steel consumption forecast to contract by 0.9% in 2025 for the fourth consecutive year, following a 1.1% decline in 2024. Persistent economic uncertainty, high energy costs, and new taris have dampened recovery prospects, with no signicant rebound expected before 2026. Other developing nations, particularly India, remain a bright spot—Indias steel demand is forecast to rise by 8% in 2025, driven by infrastructure and manufacturing, while Latin America and Africa are expected to see moderate gains as industrialization and construction activity pick up.

The global iron ore market in 2025 is characterized by stable but pressured prices, reecting a balance between robust supply and subdued demand, especially from China. As of May 2025, iron ore futures on the Dalian Exchange were trading at around $99.73/t, with the Singapore Exchange close behind at $98.25/t. Prices have largely remained within the $95–105/t range throughout the spring, supported by steady supply from major exporters like Australia and Brazil, who continue to expand output—Australias production reached 866 million tons (+1.4% y/y) and Brazils 390 million tons (+2.6% y/y). However, persistent weakness in Chinas construction sector, steel production cuts, and a broader shift toward electric arc furnaces (EAFs) and scrap-based steelmaking are dampening demand. Analysts and agencies including Moodys and World Steel

Insights project iron ore prices to remain in the $80–100/t range over the next 12–18 months, with a gradual downward trend expected as new supply from projects in Africa and Brazil comes online and Chinese demand continues to soften. Iron ore prices are expected to remain under pressure for the rest of 2025, with forecasts converging around $80–100/t as supply growth outpaces demand. The long-term trajectory points downward, with projections of $78/t by 2034, driven by

Coking coal markets in 2025 have experienced volatility, but prices remain elevated compared to pre-pandemic levels. As of May 2025, metallurgical (met) coal prices were forecast to gradually correct down to $167/t by December, having traded in the $170–180/t range earlier in the year. The market is shaped by supply chain disruptions, weather events in Australia, and uctuating demand from Asian steelmakers. While Chinese demand for coking coal has softened in line with lower steel production, India and Southeast Asia have partially oset this with rising consumption for new steelmaking capacity. Coking coal prices are expected to remain volatile but trend slightly lower through 2025 as supply normalizes and demand growth slows. New supply from Australia and Africa, along with the global steel industrys gradual shift toward lower-carbon production methods, will likely weigh on prices. However, any signicant weather disruptions or logistical constraints could trigger short-term price spikes

Indias steel industry is a vital pillar of the countrys economic development, ranking as the worlds second-largest crude steel producer. The sector is deeply integrated into infrastructure, construction, automotive, engineering, and manufacturing, and is central to Indias ambitions of becoming a global manufacturing hub. Government initiatives such as the National Steel Policy, "Make in India," and the National Infrastructure Pipeline have provided a robust foundation for growth. In 2025, the industry is also navigating challenges like import surges and global price volatility, while capitalizing on opportunities in infrastructure, housing, and green steel.

In F.Y. 2024-25, Indias total installed steel production capacity reached 205 million tonnes, up from 186 million tonnes the previous year. Crude steel output is estimated at 151.14 million tonnes, a 4.7% increase year-on-year, while nished steel production reached 145.31 million tonnes (provisional). Steel consumption surged to 150.23 million tonnes, up 10.2% from the previous year, marking the best-ever performance for the sector in a single scal year. This growth is underpinned by strong demand from construction, infrastructure, and automotive sectors, as well as government mandates for Indian steel in public projects.

The sharp increase in steel demand during F.Y. 24-25, estimated at 8–9% growth was primarily driven by accelerated government infrastructure projects, rapid urbanization, and the rollout of housing schemes like PM Awas Yojana. The Gati Shakti Master Plan and rising investments in roads, railways, ports, and airports further spurred consumption. Additionally, a rebound in manufacturing and construction, increased per capita steel usage, and a shift toward metal-intensive construction all contributed to the sectors robust performance. The governments policy of mandating domestic steel in public works and the push for "zero import, net export" also played a key role.

The Union Budget for F.Y. 2025-26 has allocated a record 11.11 lakh crore (approximately $134 billion) for infrastructure, a 16% increase over the previous year. This unprecedented investment is expected to directly benet local steel players by driving demand for steel in highways, railways, ports, airports, and smart cities. The governments continued emphasis on "Make in India" and mandatory use of domestic steel in all public procurement will further support the sectors growth and capacity utilization.

However, the industry faces challenges from increased dumping of cheap steel by global players, particularly China, amid global overcapacity and weak international demand. In response, the Indian government has imposed a temporary safeguard duty of up to 12% on certain steel imports for 200 days starting April 21, 2025, and is considering further measures, including a potential 25% safeguard duty, to protect domestic producers.

Existing anti-dumping measures have already provided some relief, but further steps—such as stricter import monitoring, faster implementation of quality controls, and incentives for green steel production—are needed to sustain growth and competitiveness. Continued policy support, investment in technology, and public-private collaboration will be crucial as India pursues its goal of becoming the worlds largest steel producer by 2047.

Pig iron is a fundamental intermediate product in the iron and steel industry, produced by smelting iron ore in blast furnaces or through direct reduction processes. It serves as a primary raw material for steelmaking and foundry industries, with applications ranging from the production of steel and cast iron to use in engineering and manufacturing sectors. There are two main types: blast furnace pig iron and direct reduced iron (DRI), with merchant pig iron traded globally as an important feedstock for electric arc furnaces and foundries.

Between April 2024 and March 2025, global pig iron production capacity remained steady at around 1.4–1.5 billion tonnes per year. Actual global pig iron output in 2024 was 1.391 billion tonnes, a 1.3% decrease from 2023, while output for the rst four months of 2025 reached approximately 463.6 million tonnes, indicating a marginal year-on-year increase of 0.08%. In March 2025 alone, global pig iron production was 120.8 million tonnes, up 2.4% year-on-year, with China (288.85 million tonnes, +0.8% y/y), India (50.7 million tonnes, +7% y/y), and Russia (20.09 million tonnes, +0.1% y/y) as the top producers. Global demand for pig iron is closely linked to steel production trends and is estimated to have matched output levels, with merchant pig iron market size valued at $86.1 billion in 2025. Prevailing market prices during this period showed regional variation: Brazilian pig iron averaged $430/t FOB Ponta da Madeira by February 2025, Indian pig iron stabilized at $362/t FOB East Coast, and Russian pig iron was oered at $335/t FOB Black Sea. Italian prices reached $372/t FOB Marghera by the end of February 2025.

The global pig iron industry is expected to see moderate growth in the coming years, supported by the recovery in steel production and robust demand from the construction and automotive sectors. The merchant pig iron market is projected to grow at a CAGR of 8.7% from 2025 to 2034, reaching nearly $199 billion by 2034, with Asia Pacic and North America leading demand due to urbanization, infrastructure expansion, and increased use in electric arc furnaces. However, the industry faces challenges from volatile raw material prices, energy costs, and environmental regulations. Regional price disparities are likely to persist, inuenced by local supply-demand balances, export trends, and logistical factors. The outlook remains positive as global infrastructure spending and industrialization continue to drive demand, but the industrys growth will be shaped by its ability to adapt to evolving steelmaking technologies and sustainability requirements.

Indias pig iron industry continued its growth trajectory in F.Y. 2024-25, underpinned by robust demand from the domestic foundry and steel sectors. Pig iron, a key intermediate product in the steel value chain, is primarily used for producing castings in the foundry industry and as a raw material for steelmaking in basic oxygen furnaces. India remains one of the worlds leading producers and exporters of merchant pig iron, with a well-developed manufacturing base concentrated in states like Chhattisgarh, Jharkhand, Odisha, and West Bengal.

During the period from April 2024 to March 2025, Indias pig iron production registered a notable increase of approximately 10% year-on-year. According to industry data, total pig iron output crossed 7.2 million tonnes in F.Y. 2024-25, compared to around 6.5 million tonnes in the previous scal. This growth was driven by higher capacity utilization in major integrated steel plants and merchant pig iron producers, as well as increased demand from the domestic foundry sector and steady export orders (Source: Steel Insights, May 2025). Prevailing market prices for pig iron in India during this period reected both domestic and global trends. In April 2024, pig iron prices averaged around 38,000–40,000 per tonne ex-plant. Prices remained relatively stable through the rst half of the scal year, with some volatility in the latter half due to uctuations in coking coal and iron ore costs. By March 2025, pig iron prices were reported in the range of 32,500–35,000 per tonne, supported by strong demand from the foundry sector and limited supply from merchant producers

Looking ahead, the Indian pig iron industry is expected to maintain its growth momentum in F.Y. 2025-26, supported by rising demand from the foundry sector, government infrastructure spending, and continued expansion in steelmaking capacity. Policy support for infrastructure, "Make in India" initiatives, and export opportunities are likely to further buoy the sector. However, the industry will need to monitor input cost volatility, particularly in coking coal and iron ore, and address environmental compliance as part of the transition to greener production methods. Investments in technology and capacity expansion, along with continued government support, will be key to sustaining growth and enhancing Indias role as a major global supplier of pig iron.

• Robust Infrastructure and Urbanization Demand: Indias ambitious infrastructure pipeline, including the Smart Cities

Mission, Gati Shakti, and large-scale housing and transport projects, is driving sustained demand for steel and pig iron. The governments continued high budget allocations for infrastructure are expected to support annual steel demand growth of 8–10%, the fastest among major economies.

• Export Market Expansion: Strategic trade agreements and partnerships, such as FTAs with the EU, UK, and UAE, oer Indian producers opportunities to diversiF.Y. export markets, especially as Chinas steel output plateaus and global buyers seek alternatives.

• Value-Added and Specialty Steel: There is signicant potential to move up the value chain by focusing on high-strength, specialty, and green steel products, which can help domestic players dierentiate from low-cost imports and meet evolving global standards.

• Public-Private Partnerships and Technology: Collaboration between public sector giants and private players, along with investment in R&D, digitalization, and green steel technologies, can enhance competitiveness and operational eciency.

• Raw Material Security: Indias large iron ore reserves and growing production (289 million tons in F.Y. 2024-25) oer a foundation for self-reliance, while investments in mining and logistics can further strengthen supply chains.

• Import Surge and Dumping: The industry faces persistent threats from cheap imports, particularly from China, Korea, and Russia. Such dumping can depress domestic prices and hurt margins, despite safeguard duties and anti-dumping measures.

• Global Protectionism and Trade Barriers: The rise of trade barriers, such as the EUs Carbon Border Adjustment Mechanism (CBAM) and US taris, threatens Indias export competitiveness and could limit access to key markets.

• Raw Material Volatility and Supply Chain Risks: Overdependence on imported coking coal and logistical ineciencies expose the industry to price shocks and supply disruptions, potentially impacting both steel and pig iron production.

• Environmental and Regulatory Pressures: The steel sector is highly carbon-intensive and faces increasing scrutiny over emissions. Indias reliance on coal-based steelmaking and informal scrap recycling could lead to export restrictions or penalties under global climate regimes, such as CBAM, and threaten long-term competitiveness if green transition lags.

• Cost Competitiveness of Green Steel: Transitioning to low-carbon steel production is 30–50% more expensive, and without strong policy support, Indian producers may struggle to compete globally, especially as major buyers demand cleaner steel.

• Market Volatility and Global Uncertainty: The sector remains vulnerable to global economic slowdowns, commodity price swings, and geopolitical disruptions, which can impact demand, investment, and protability.

Indias iron & steel and pig iron industries are poised for strong growth, supported by infrastructure investment, export opportunities, and technological advance-ments. However, they must navigate signicant threats from import surges, global protectionism, raw material volatility, and the urgent need for decarbonization. Strategic policy actions, investment in green technologies, and supply chain strengthening will be critical for sustainable and competitive growth.

K I C Metaliks Limited, headquartered in Kolkata, is a prominent pig iron manufacturer in West Bengal with its manufacturing facility located in Durgapur. With a legacy spanning over 35 years, the company has established a strong reputation for quality and reliability, serving a diverse customer base through the adoption of advanced technology and operational excellence. The companys equity shares are listed and actively traded on the Bombay Stock Exchange Limited, reecting its commitment to transparency and corporate governance. The financial statements of K I C Metaliks Limited for F.Y. 2024-25 have been prepared in accordance with Indian Accounting Standards ("Ind AS") as prescribed by the Ministry of Corporate Aairs pursuant to Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), and other applicable provisions. For the year ended March 2025, the Company reported a standalone net loss of 609.36 lakhs, compared to a net prot of 228.48 lakhs in the previous year, with total sales declining by 16.03% to 71,723.22 lakhs from 85,418.42 lakhs in F.Y. 2023-24. The decline in revenue and protability was primarily attributed to demand decline in price and production loss during the plant shut down. Despite the shut down of MBF from February 6th ,2025 to April 19th ,2025 for rectication work on MBF and accessories and other challenges, K I C Metaliks maintained healthy capacity utilization levels and continued to focus on operational eciencies and sustainability initiatives to mitigate adverse market conditions

Financial Ratios, alongwith detailed explanations thereof including:

The Company has established robust internal financial controls that are commensurate with the nature, size, and complexity of its operations. These controls are designed to ensure the accuracy and integrity of financial reporting, safeguard assets, and prevent and detect frauds and errors. The internal financial controls in place with reference to financial statements have been assessed and found to be adequate and operating eectively during the year under review.

The Internal Auditor, who reports independently to the Chairman of the Audit Committee, monitors and evaluates the eciency, adequacy, and compliance of the Companys internal control systems with established operating procedures and policies. The scope and authority of the internal audit function are clearly dened in the Companys internal control policies. Audit ndings and signicant observations are presented to the Audit Committee on a quarterly basis, and appropriate follow-up actions are undertaken.

To further strengthen internal controls, the Company has implemented detailed procedural manuals and policies covering all critical functions to ensure proper authorization, accurate recording, and reliable reporting of transactions. These also provide safeguards against asset loss and support compliance with applicable regulations.

The Audit Committee actively engages with both internal and statutory auditors to review their reports and recommendations. It provides oversight on corrective actions and risk mitigation measures and keeps the Board informed of key audit ndings and control improvements. The Internal Auditor is a standing invitee to all Audit Committee meetings, ensuring transparent and continuous communication.

M/s B. N. Agrawal & Co. Chartered Accountants have been appointed as the Internal Auditors of the Company. Their audit reviews are aligned with the Companys risk prole and business operations, focusing on the adequacy of controls and risk management practices. The Statutory Auditors, M/s Agarwal Maheswari & Co., Chartered Accountants , have audited the financial statements and issued an attestation report on internal financial controls in accordance with Section 143 of the Companies Act, 2013.

The Board arms that the internal financial controls relating to the financial reporting of the Company are adequate and have been operating eectively throughout the financial year. Risks and Concerns – KIC Metaliks Limited

Your Company faces several business and operational risks that could impact its performance and sustainability. We reported a signicant decline in net sales, prot before tax, and prot after tax for the year ending 2024-2025, with operating prot margins reaching their lowest point in ve quarters. This indicates ongoing challenges in maintaining operational eciency and protability, as earnings per share also turned negative during the period.

Key risks include persistent volatility in raw material prices, particularly for iron ore and coking coal, which can erode margins and increase inventory holding costs. The companys exposure to cyclical demand in the pig iron and steel sector means that broader economic slowdowns, geopolitical tensions, and uctuations in end-user industries such as construction and automotive can directly aect sales volumes and pricing power.

Furthermore, increased competition from both domestic and international players, potential dumping of low-cost imports, and regulatory changes, especially those related to environmental compliance pose ongoing threats.To remain competitive your company is continuinously investing in technology and sustainability, and adopting measures to manages risk associated with capacity utilization, supply chain disruptions to achieve operational excellence. The company must also manage risks associated with capacity utilization, supply chain disruptions, and the need for continuous investment in technology and sustainability to remain competitive. Adaption to markets (ever volatile pig iron global and domestic ) and rapidly changing environmental and regulatory dynamics will be the company answer to looming risk and concerns.

At K I C Metaliks Limited, we believe our people are our greatest asset and the cornerstone of our sustainable growth. Human capital is not just a resource, it is the strategic driver of our business success. We have built a strong, inclusive, and empowered culture where employees at all levels are aligned with our growth objectives and encouraged to take ownership of their roles.

Our people philosophy is rooted in continuous learning, career progression, and empowerment. We go beyond compensation to provide best-in-class development opportunities, fostering a work environment that promotes innovation, agility, and digital transformation. Leadership development, talent retention, and employee engagement remain top priorities.

Recognizing that internal talent mobility and successionplanningareessentialforlong-term success, we focus on grooming high-potential individuals to take on higher responsibilities. This not only ensures business continuity but also strengthens our organizational culture and enhances retention by aligning individual aspirations with the companys growth trajectory.

As of 31st March 2025, the Company had [358] employees on its payroll.

The Company continues to invest in upgrading its Information Technology infrastructure as a critical enabler of operational excellence and future-readiness. With a commitment to digital integration, all key business systems have been consolidated and customized through robust, enterprise-level software solutions. These advancements have enhanced operational eciency, ensured data integrity, and supported agile decision-making across the organization.

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could dier materially from those expressed in the statement or implied due to the inuence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modiF.Y. or revise any forward-looking statements on the basis of any subsequent developments.