Mahamaya Steel Industries Ltd Management Discussions

Global Economy

The global economy displayed resilience in CY2024, though growth rates and patterns varied across regions due to distinct local challenges. While economic activity remained sluggish in parts of Asia and Europe, steady expansion in the United States helped balance overall performance.

In CY2025, advanced economies are expected to experience diverse growth on the basis of domestic demand and differing policy responses. In contrast, emerging markets, including China and India, are expected to maintain a stable growth despite ongoing uncertainties in global markets.

Indian Economy

India is one of the worlds fastest-growing economies, driven by strong domestic demand, a thriving services sector and ongoing structural reforms. However, the recent U.S. tariffs on Indian imports may slow GDP growth, impact key industries and prompt policy adjustments, while pushing India to strengthen trade ties with other partners. In FY 2024-25,

Indias growth slowed to 6.5%, down from 9.2% in FY 2023-24, due to global economic uncertainties, rising geopolitical tensions, tariff issues and ongoing inflationary pressures. Despite this moderation, India maintained steady growth, supported by strong manufacturing, expanding services and increased infrastructure investments. Government initiatives, including those promoting digital transformation, financial inclusion and ease of doing business, further strengthened the economy. The Production-Linked Incentive (PLI) schemes helped boost domestic manufacturing and attract foreign direct investment, particularly in electronics, automotive and renewable energy sectors. Additionally, rising urbanization and a growing middle class fuelled increased consumer spending. Indias economy is expected to grow at 6.5% in FY 2025-26, building on these positive trends.

Global Steel Industry

In CY2024, global crude steel production declined by 0.9% YoY totalling 1,839.4 Million tonnes (MNT), as reported by the World Steel Association. Chinas production in CY2024 reached 1,005.1 MNT, reflecting a 1.7% decrease from the previous year. Japans production fell by 3.4%, totalling 84.0 MNT, while the United States saw a 2.4% reduction, with a production of 79.5 MNT. Russias output was estimated at 70.7 MNT, a decline of 7.0% and South Koreas production declined by 4.7%, totalling 63.5 MNT. Contrarily, Germany reported a 5.2% increase, producing 37.2 MNT and Turkiye experienced a 9.4% rise, reaching 36.9 MNT. Brazils output grew by 5.3%, reaching 33.7 MNT, while Irans production increased by 0.8%, totalling 31.0 MNT.

Indian Steel Industry

The Indian steel industry plays a key role in the countrys economic growth, contributing to industrial expansion and infrastructure development. As the second-largest steel producer globally, India faces growing demand from sectors such as construction, automotive and manufacturing. This demand is expected to continue rising, supported by abundant raw materials and affordable labor. India is poised to become the second-largest steel consumer globally, driven by growth in infrastructure and the automobile and railway sectors.

In FY 2024-25, Indias crude steel production rose by 4.7% YoY to 151.1 MNT, up from 144.3 MNT in the previous year. Pig iron production registered a significant increase of 12.7% YoY, rising from 7.4 MNT in FY 2023-24 to 8.3 MNT in FY 2024-25. Hot metal production also grew by 4.6% YoY, reaching 91.1 MNT in FY 2024-25, compared to 87.1 MNT in 2023-24. In the finished steel category, production stood at 145.3 MNT in FY 2024-25, marking a 4.4% YoY increase from 139.2 MNT. Imports climbed by 14.6% YoY during the year under review to 9.5 MNT from 8.3 MNT, while exports declined sharply by 35.1% YoY, falling to 4.9 MNT from 7.5 MNT. Domestic consumption displayed strong growth of 10.2% YoY, reaching 150 MNT, up from 136.8 MNT in the previous year

Opportunities

Infrastructure investment in India has experienced significant growth, fuelled by both public and private sector contributions. Furthermore, the budget for 2025-26, aligned with the vision of Viksit Bharat by 2047, has allocated Rs.11.21 lakh Crores for the infrastructure sector. As nations prioritize infrastructure development and with the rapid urbanization, the demand for essential raw materials like coal, iron ore and steel is growing. The construction of buildings, transportation networks and manufacturing facilities remains a key driver of consumption for these commodities. With increased investments in large-scale projects across both developing and developed economies, the need for these materials is expected to stay robust.

The global demand for premium iron ore and steel is anticipated to continue increasing, particularly in emerging economies like China, India and other developing nations. These markets are witnessing significant growth in infrastructure and industrial development, which in turn drives the demand for raw materials. This creates a rising opportunity for suppliers to tap into these expanding markets, boosting export growth especially for high-quality products.

Threats

Regulatory Challenges as environmental concerns become more pronounced, governments are tightening regulations related to carbon emissions and environmental impacts, leading to stricter compliance requirements for the industry. These regulations often result in increased operational costs, as businesses must invest in cleaner technologies and processes to meet environmental standards. Noncompliance can also lead to fines or restrictions, which can disrupt the operations.

Global geopolitical tensions, tariff wars, natural disasters continue to disrupt global supply chains. Trade restrictions, transportation bottlenecks and shortages of raw materials can result in delays and increased costs, negatively affecting production schedules and profitability. The reliance on international supply chains for raw materials also exposes the industry to risks from political instability and trade wars.

The commodities market is inherently volatile and fluctuations in the prices of coal, iron ore and steel can create uncertainty for producers and consumers. Demand -supply imbalances, changes in global economic conditions, or shifts in policy can all influence price fluctuations, which can make it difficult for companies to maintain consistent profit margins or pricing strategies.

As energy prices continue to rise, alongside labour and logistics costs, companies in the mining, steel and iron ore sectors are facing increased input costs. This can erode profit margins, particularly for companies that have limited flexibility in passing on price hikes to customers. As the global energy transition continues, traditional energy-intensive industries may find it harder to maintain cost competitiveness.

The rising popularity of alternatives like aluminium, composite materials and other advanced alloys in construction and manufacturing presents a significant challenge to the traditional steel industry. These substitutes may offer better performance or lower environmental impact, thus reducing the demand for traditional steel.

Additionally, increased competition from global players, especially in emerging markets with lower production costs, can lead to price pressure and reduced market share for domestic producers.

Risk and concerns

The key risks the company faces include the global steel demand scenario, economic slowdown, market volatility, escalating financial expenses and the scarcity or significant cost increases in raw materials. While the Company does not anticipate any inherent long-term risks, the following specific challenges

have been identified: The Companys operations, ongoing projects and profitability may face challenges due to delays in approvals and procedures, as well as any unfavourable changes in government policies regarding mining, allocation and tariffs.

Mitigation of Risk /Risk Management

The Board identifies and categorizes risks in the areas of operations, finance, marketing, regulatory compliances and corporate matter. The Company re-views periodically the “List of Risk Area” to identify potential business threats and takes suitable corrective actions. Confirmations of compliance with appropriate statutory requirements are obtained from the respective units/divisions. The Internal Auditor expresses his opinion on the level of risks during the audit of a particular area and reports to the Audit Committee.

The Company also has in place a Risk Management Policy and Procedure for mitigating risks and managing as well as recording them. Further, corrective actions / steps are being taken as and when necessary, in a continuous manner.

Internal Control Systems and their Adequacy

The Company believes in systematic working and placing of proper checks. The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly. The internal auditor of the company conducts audit of various department and areas. The Internal Audit Department reports its findings and observations to the Audit Committee which meets to review the audit issues and to follow up implementation of corrective actions. The statutory auditors also provide assurance on the adequacy of the internal control systems in the Company.

Discussion on financial performance with respect to operational performance.

The Company has been consistently upgrading its facilities and investing in new technologies to meet customer requirements. Continuing its commitment, the company have taken effective steps to improve efficiency reduce energy consumption and enhance product quality. During the year the company has replaced two more old furnaces with new ones, incurring a capital expenditure of approximately ?6 crores. With this, the company has now replaced all our old furnaces with new ones, further solidifying our position in the industry.

Taking in to consideration renewable energy initiatives which will have a significant positive impact on both the environment and saving electricity cost, the company had initially planned to set up a 100 MW solar power plant, but later decided to increase the capacity to 150 MW.

The estimated cost for this project is between ?500-650 crores, requiring a significant portion of land near the 32 KVA line. The Company have started searching for the land and are hopeful that the project will be started within a couple of months. This solar power plant will help to save on electricity costs.

Company is also planning for diversifying and exploring new opportunities!

This year, the company have also planned to develop a logistics park on nearly 85 acres of land behind Companys plant. The project team of our Company has started taking initiatives for this. Once completed, this will open up a new line of business and provide an additional source of income for the Company.

During the year under review the Company had achieved a total revenue from operations Rs. 80176.43 Lacs as against Rs. 78382.88 Lacs in the last Financial Year Further the Profit before tax stood at Rs. 864.99 Lacs as against Rs. 672.36 Lacs in the last Financial Year.

The financial performance of the Company has been discussed better in Directors Report under the heading “Financial Performance and the State of the Companys Affairs”.

Human Resources and Industrial Relations

The Companys Human Resources Department (HRD) is committed to promoting a safe, collaborative and positive work environment that encourages strong relationships between workers and staff. The HRDs core principle is that employees at all levels play a crucial role in achieving the Companys objectives. The Company promotes a culture of continuous improvement and adaptability by regularly conducting training programs to enhance employees skills, knowledge and productivity while keeping them updated on the latest techniques. The Companys senior management ensures they are readily accessible to provide counselling and effectively address any grievances that arise. The HRD continuously strives to nurture harmony and coordination among workers, staff and senior management. Additionally, the Company prioritizes employee safety by ensuring adherence to safe work practices. As of 31^st March 2025, the company had 512 employees and its industrial relations remained peaceful and cordial throughout the year.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations. 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous Financial year) in key financial ratios

The Company has identified the following ratios as key financial ratios:

Cautionary Statement

The Management Discussions and Analysis describe Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.