Kritika Wires Ltd Management Discussions

ECONOMIC OVERVIEW

Global Economy

During FY 2025 26, the global economy witnessed a broadly stable trajectory in the initial quarters, supported by easing inflation and calibrated monetary policy measures by major central banks. However, the final quarter of the year was severely disrupted by an escalation of geopolitical tensions, particularly the conflict between the United States and Iran, which triggered a sharp spike in crude oil prices and broader commodity markets, creating significant uncertainty across global economies.

Global trade, which had been recovering steadily through most of the year supported by improved supply chain efficiencies and increased infrastructure spending across developing economies, was adversely impacted in Q4 FY 2025 26. The escalation of the US Iran conflict led to a surge in energy costs and metal prices, disrupting supply chains and dampening demand in both domestic and international markets. The resultant risk aversion led to reduced business activity and a pullback in investment sentiment globally.

Emerging economies, particularly in Asia, which had been outperforming through most of FY 2025 26 driven by strong domestic demand, digital transformation, and sustained capital inflows, also felt the impact of the global crisis in the last quarter. The sharp rise in commodity prices weighed on manufacturing costs and margins across sectors, including the steel and wire industry.

India continued to demonstrate strong economic resilience through the first three quarters of FY 2025 26, with GDP growth estimated at approximately 7.7%. Growth was driven by robust domestic consumption, sustained government capital expenditure, and gradual recovery in private sector investment.

The Union Budget maintained its focus on infrastructure development, with increased allocations to railways, roads, power, and urban infrastructure. Key government initiatives such as PM Gati Shakti, Production-Linked Incentive (PLI) schemes, and Make in India continued to strengthen the manufacturing sector.

The steel and wire industries benefitted from increased demand in power transmission, renewable energy, telecom infrastructure, and construction sectors through the first three quarters of the year. However, the global crisis emanating from the US Iran conflict in the final quarter of FY 2025 26 impacted the overall Indian economy as well, with commodity prices rising sharply, demand conditions softening both domestically and in export markets, and business sentiment turning cautious. Typically, the fourth quarter is the strongest period for the industry; however, the geopolitical disruption reversed this trend, resulting in a notable contraction in business volumes during Q4 FY 2025 26.

The Indian steel wire and galvanized wire industry continued to play a crucial role in supporting infrastructure development, power transmission, construction, and industrial manufacturing. Demand for high-strength and corrosion-resistant wire products remained robust across sectors.

During FY 2025 26, the industry benefited from strong government focus on infrastructure through initiatives such as PM Gati Shakti, National Infrastructure Pipeline (NIP), and Revamped Distribution Sector Scheme (RDSS). These programs significantly boosted demand for steel wires used in transmission lines, railway electrification, fencing, and structural applications.

Investments by public sector undertakings and increasing private participation in renewable energy and urban infrastructure projects further supported demand growth through the first three quarters of FY 2025 26.

However, the industry faced significant headwinds in Q4 FY 2025 26 due to the global geopolitical crisis arising from the US Iran conflict. Metal prices, particularly steel and zinc, surged sharply during this period, leading to a contraction in margins and a decline in overall business volumes. The demand environment, which is typically at its peak in the fourth quarter, weakened materially, impacting revenue and profitability across the industry. Despite these near-term challenges, the long-term structural outlook for the industry remains positive, underpinned by Indias sustained infrastructure investment thrust.

During FY 2025 26, the Company reported total revenue of 69,795.90 Lakhs (Rs. 698 Crores approx.) as compared to 76,035.50 Lakhs (Rs. 760 Crores approx.) in the previous year, registering a decline of approximately 8.2%. This decline was primarily attributable to the sharp deterioration in business conditions during Q4 FY 2025 26, triggered by the global geopolitical crisis arising from the US Iran conflict. The fourth quarter, which is traditionally the strongest period for the industry, was significantly impacted by a surge in metal prices and a consequent weakening of demand in both domestic and international markets.

Profit After Tax (PAT) for the year stood at 619.42 Lakhs (Rs. 6.19 Crores) as compared to 1013.48 Lakhs (Rs. 10.13 Crores) in the previous year, reflecting a significant decline of approximately 38.8%. The fall in profitability was primarily driven by the impact of the global geopolitical crisis in Q4 FY 2025 26, which resulted in elevated input costs and compressed margins. Earnings per Share (EPS) for the year decreased to 0.23 from 0.38 in the previous year.

The Company performed satisfactorily through the first three quarters of FY 2025 26, supported by steady demand across its key markets. However, the global geopolitical crisis in Q4 FY 2025 26, arising from the escalation of the US Iran conflict, materially disrupted business operations in the final quarter. The sharp increase in metal prices impacted procurement costs, while demand from key end-user segments softened considerably during this period.

The Company focused on improving operational efficiencies, optimizing costs, and managing working capital prudently to navigate the challenging environment. No major expansion or diversification initiatives were undertaken during the year.

The industry structure remained stable, with demand driven by infrastructure, power transmission, railways, and construction sectors. Government policies and continued capital expenditure provided a supportive growth environment. However, competitive intensity remained high due to the presence of unorganized players and pricing pressures in tender-based businesses. Cost volatility continued to be a key concern for industry participants, and was significantly exacerbated in Q4 FY 2025 26 by the surge in global commodity prices arising from the US Iran geopolitical conflict.

- Increased government spending on infrastructure and electrification

- Rising demand from renewable energy and transmission sectors

- Opportunities in government tenders and PSU projects

- Expansion potential in export markets

- Volatility in raw material prices (steel, zinc)

- Rising energy and logistics costs

- Competition from low-cost and unorganized players

- Regulatory and compliance challenges

- Geopolitical risks and global commodity price shocks, as evidenced by the US Iran conflict impact in Q4 FY 2025 26

The Company continues to monitor and manage the following risks:

- Raw material price volatility impacting margins

- Fluctuations in energy and fuel costs

- Increasing regulatory compliance requirements

- Market competition and pricing pressure

- Geopolitical risks causing sudden spikes in commodity and energy prices, adversely impacting input costs and demand conditions Appropriate mitigation strategies have been implemented to address these risks. The Company continues to monitor global developments, particularly in commodity markets, to proactively manage supply chain and cost risks.

The Company maintains adequate internal control systems commensurate with its size and nature of operations. These systems ensure efficient operations, safeguarding of assets, and accuracy of financial reporting.

Detailed discussion on financial performance in relation to operational performance is provided in the Boards

Report.

The Company maintained stable industrial relations during FY 2025 26. Employee engagement, safety, and retention remained key focus areas. The workforce remained consistent, with no major changes during the year.

The Company continued to comply with the provisions of Section 135 of the Companies Act, 2013. CSR initiatives were carried out in line with statutory requirements.

Notwithstanding the challenging conditions witnessed in Q4 FY 2025 26 on account of the global geopolitical crisis, the Company remains cautiously optimistic about its growth prospects for the coming year. The structural drivers of demand sustained government infrastructure spending, increasing investments in power transmission and distribution, and growth in construction and industrial sectors remain intact. As global commodity markets stabilize and the geopolitical situation normalizes, the Company expects a recovery in both volumes and margins. The Company will continue to focus on enhancing operational efficiency, cost optimization, prudent working capital management, and strengthening its market presence across key customer segments.

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be forward-looking in nature. Actual results may differ materially due to economic conditions, market developments, regulatory changes, and other external factors beyond the Companys control.