Mangalam Alloys Ltd Management Discussions

Your directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2025.

GLOBAL ECONOMIC OVERVIEW

The financial year 2024-25 was characterized by a complex global economic environment shaped by persistent geopolitical tensions, logistical disruptions, and cautious policy recalibrations by central banks. The prolonged conflict between Israel and Hamas and continued attacks by the Houthi militia on commercial vessels in the Red Sea significantly disrupted global trade routes, particularly affecting oil transportation and container shipping. These events contributed to elevated energy prices and supply chain bottlenecks, impacting both advanced and developing economies.

India, despite external challenges, continued to demonstrate strong macroeconomic fundamentals and remained among the fastest-growing major economies in the world. The countrys growth was supported by resilient domestic consumption, sustained government capital expenditure, and improved investor confidence. Strategic initiatives in infrastructure, renewable energy, digital innovation, and manufacturing under the Make in India programme contributed positively to economic momentum. Nevertheless, India faced some spillover effects from global uncertainties. Rising shipping and fuel costs led to inflationary pressures, and regional security concerns necessitated increased defense vigilance. However, these factors were effectively managed through prudent fiscal and monetary policies.

On a broader scale, businesses globally, including in India, adapted to emerging megatrends such as artificial intelligence (AI), energy transition, digitalization, and supply chain diversification. These themes are expected to continue shaping the global economic landscape in the coming years.

In summary, while the global economy in FY 2024-25 navigated multiple headwinds, the Indian economy remained resilient, well-supported by structural reforms, strong fundamentals, and a forward-looking policy environment

GDP GROWTH

Global GDP growth is projected to slow in 2024-2025. The global economy is expected to grow at a slower pace, with projections indicating a slowdown from 3.3% in 2024 to 2.9% in both 2025 and

2026. This deceleration is largely attributed to factors like trade policy uncertainty, geopolitical tensions, and inflation divergence.

INFLATION

UNDERLYING INFLATION PRESSURES REMAIN HIGH

In 2025, global inflation is projected to decline to 4.5%, down from a 5.9% estimated annual average in 2024.

The IMF stressed that trade policy disruptions, particularly tariff uncertainty and protectionism, could reignite inflation pressures and complicate the disinflation process. The IMF emphasized the importance of predictable trade frameworks and maintaining central bank autonomy to manage inflation expectations effectively. The IMF has revised its global inflation forecast for 2026. It anticipates an inflation is expected to decline steadily to approximately 4.2% in 2025, further easing to 3.6% in 2026, indicating gradual anchoring of price expectations globally.

INDIAN ECONOMY

The Indian economy in 2024-25 is estimated to have grown by 6.5%, maintaining its position as one of the fastest-growing major economies globally. Nominal GDP (at current prices) is estimated to have reached Rs.330.68 lakh crore, reflecting a growth of 9.8%. Several factors contributed to this growth, including strong performance in the manufacturing and services sectors, increased exports, and government spending.

GDP GROWTH FOR FY 2024-25

Indias growth story continues to draw global attention, backed by strong fundamentals and consistent performance. Real GDP, which measures the economys output after removing the effects of inflation, expanded by 6.5 per cent in 2024-25. The Reserve Bank of India expects this pace to continue into 2025-26. Other projections echo this optimism, with the United Nations forecasting growth of 6.3 per cent this year and 6.4 per cent next year, while the Confederation of Indian Industry places its estimate slightly higher at 6.40 to 6.70 per cent.

THE ECONOMIC PROJECTIONS—WHAT LIES AHEAD

India remains the fastest-growing major economy in the world. Despite global headwinds— including geopolitical tensions, volatile commodity prices, and restrictive monetary policies— Indias economy continues to demonstrate resilience, underpinned by strong domestic demand, infrastructure investment, and structural reforms. The outlook for FY 2024-25 and beyond is optimistic, with projected GDP growth above 6%, declining inflation, and a sustained reform momentum. Further, to achieve future roadmap we adopt below business strategies ^•

• Focus on value added products instead of low value added products.

• Expanding geographical footprint by targeting underserved domestic regions and enhancing exports through compliance with international quality standards and trade certifications.

• Deploying Industry 4.0 technologies, including smart sensors, ERP systems, and data analytics for real-time process monitoring, predictive maintenance, and improved productivity.

• Upskilling workers in metallurgy, equipment handling, safety standards, and digital tools to build a competent and safety-conscious workforce for modern steel operations.

• We believe in customer satisfactions in terms of Quality and Delivery Commitment.

• We believe in zero waste philosophy (as in Mother Nature there is no waste). Zero waste includes Zero solid waste (recycling 100%) and Zero liquid waste (recycle liquid discharge by STP).

• We are continuously doing R&D on our products, process improvement and develop new grades. We have achieved in Manufacturing of rare grades in our melting unit which are substitute of imports. We are continuously working on Improving our process by minimizing cost i.e. indirectly generating revenue, which will increase our bottom line.

INDUSTRY OVERVIEW

Our Company is having a unique integrated stainless steel, special steel & alloys steel melting and further processing unit i.e. up to bright bar fasteners. Our Company is a stainless steel unit manufacturing SS Ingots, Round Bar, RCS, Bright bar, different sections/profiles like square, hex, angle, patti, etc, forging and making fasteners. Our Company is having integrated stainless steel manufacturing unit covering 40,000 sq. meters land with an installed capacity of 25,000 TPA with a revenue of Rs. 43,147.00 Lakhs in the financial year ending on 31 March 2025. Having situated in Gandhinagar, Gujarat, the fastest growing city of India and the third in the world, the location of the Company is one of the primary factors of its growth.

GLOBAL IRON AND STEEL, CLOSURE MARKET SIZE, 2022-2032 (IN BILLION US$)

Substantial increases in steelmaking capacity of up to 6.7% (165 million metric tonnes [mmt]) are planned worldwide from 2025 to 2027, which, if realised, will exacerbate global excess capacity. Asian economies are expected to account for 58% of the new capacity, led by substantial increases in the Peoples Republic of China (hereafter "China") and India. Cross-border investment is involved in about 16% of the total tonnage to be added from 2025 onward, with China playing a leading role in such investment. With demand growth expected to be sluggish at best, capacity utilisation could once again decline towards 70%, putting enormous pressure on even highly competitive steelmakers. Already, steel prices have declined from their 2021 peak to historically low levels, although they appear now to be bottoming out. Profitability has experienced a similar trajectory, falling sharply from the relatively strong 2021 level.

Indias domestic steel demand is estimated to grow by 9-10% in FY25 as per ICRA. Indias steel production is estimated to grow 4-7% to 123-127 MT in FY24.The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to Indias manufacturing output. The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels. According to a Deloitte report the demand for steel in India is projected to grow significantly over the next decade, with annual growth rates expected to range from 5% to 7.3%.

Further, Steel is used in every important industry: energy, construction, automotive and transportation, infrastructure, packaging and machinery. By 2050, steel use is projected to increase by around 20% compared to present levels in order to meet the needs of our growing population. Skyscrapers are made possible by steel. The housing and construction sector is the largest consumer of steel today, using more than 50% of steel produced. Also, Steel is the main material used in delivering renewable energy: solar, tidal, geo thermal and wind.

BREAKUP BY PRODUCT TYPE:

GLOBAL OTHER STEEL MARKET BY MARKET VALUE SHARE, BY PRODUCT TYPE (IN %)

BREAKUP BY REGION:

GLOBAL STAINLESS STEEL MARKET SHARE, BY REGION

SWOT Analysis Strengths

- Unique integrated stainless steel and higher alloys long product manufacturing unit.

- Availability of quality raw material both in import and indigenous in bulk quantity.

- Well connected by road, rail and airport.

- Factory is very near to the metro city Ahmedabad.

- Various products available at one place for customers like: Bright Bars, Angles, Hexagonal Bars, Square Bars, Fasteners and forging from 3 MM to 400 MM in size.

- Company have ONGC gas connection which contributes in green energy and enviroment friendly.

- Low Manufacturing Cost as in Small Medium Sector.

- Rich experience of Promoters.

- Continuous power supply (24x7)

Weakness

- High cost of energy/power

- Higher Cost of Debt.

Opportunities

- Potentially huge domestic demand from stainless steel intensive investments like engineering sector, defense, and medical equipment, consumer durables etc.

- Further backward integration by putting AOD.p>

- Good, consistent increasing domestic demand.

- Huge potential for productive foreign collaboration.

Threats

- Dumping by competitors.

- High manpower requirement.

- Change in foriegn policy.

SEGMENT -WISE PERFORMANCE

The Companys main business activity is manufacturing of various types of Steel products in more than 15 international grades and in size range from 3mm to 400mm Black Round Bars, SS RCS, Forging, Hexagonal & Square, Bars, Steel Ignots, Bright Round Bar, Fasteners, Flat Bars, and Angle Bars.

OUTLOOK

The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise.

RISK & CONCERNS

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Key business risks and mitigation strategy are highlighted below.

Supply Chain Risk

The Company may face challenges in maintaining a stable and efficient supply chain, particularly in the face of global disruptions, such as trade restrictions, raw material shortages, or vendor dependency.

Mangalam Alloys Limited has taken proactive measures to strengthen its supply chain by diversifying its supplier base, forging long-term relationships with reliable partners, and maintaining strategic inventory levels.

Business Risk

The Company is exposed to the risk of over-dependence on a few business segments, products, or large clients for revenue generation. Additionally, external market disruptions or shifts in demand could adversely impact business performance.

To mitigate the risk of dependency on any single revenue stream, Mangalam Alloys Limited has implemented a strategy focused on diversifying its portfolio.

Legal & Statutory Risk

The Company faces the ongoing challenge of maintaining strict compliance with evolving legal and regulatory frameworks. Any lapses in compliance, particularly with respect to new laws could result in legal liabilities, reputational damage, or penalties.

Mangalam Alloys Limited maintains a dedicated legal and compliance function, which closely monitors and ensures compliance with statutory requirements across all jurisdictions.

Human Resource Attrition Risk

High employee attrition in a competitive market could result in a loss of key talent, impacting productivity, innovation, and business continuity.

The Company places significant emphasis on employee retention through competitive compensation, robust career development programs, and a positive work environment.

Macroeconomic Risks

Fluctuations in the macroeconomic environment, including changes in government policies, taxation, and global economic uncertainties, can impact the Companys operations and profitability. Rising raw material costs, exchange rate volatility, and geopolitical tensions are additional factors that may pose a risk.

The Company actively monitors economic trends and maintains a flexible operational structure that allows it to adapt quickly to changes. Furthermore, the geographical and operational diversification strategy reduces dependency on any one market, enabling better risk management.

Climate change and Environmental risks

Strict environmental regulations, increasing awareness about sustainability, and the potential for climate-related disruptions pose significant risks to operations, including fines, reputation damage, or operational halts due to non-compliance with environmental standards.

The Company has prioritized environmental sustainability by continuously investing in cleaner technologies, reducing its carbon footprint, and ensuring compliance with environmental laws. In addition, all new projects undergo a comprehensive environmental impact assessment, with carbon-adjusted Internal Rate of Return (IRR) being a critical consideration in capital allocation.

Others

The Company is exposed to risks & fluctuations of foreign exchange rates, raw-material prices and overseas investments exposures.

AUDIT AND INTERNAL CONTROL SYSTEM

One of the key requirements of the Companies Act, 2013 is that companies should have adequate Internal Financial Controls (IFC) and that such controls should operate effectively. Internal Financial Controls means the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. Your Companys process of assessment ensures that not only does adequate controls exist, but it can also be evidenced by unambiguous documentation. The process involves scoping and planning to identify and map significant accounts and processes based on materiality. Thereafter, risk is identified and their associated controls are mapped, else remediation is implemented. These controls are tested to assess operating effectiveness. The auditor performs independent testing of controls. The Auditors Report is required to comment on whether the Company has adequate IFC system in place and such controls are operating effectively. Your Companys Internal Control System is robust and well established. It includes documented rules and guidelines for conducting business. The environment and controls are periodically monitored through procedures/ processes set by the management, covering critical and important areas. These controls are periodically reviewed and updated to reflect the changes in the business and environment.

RAW MATERIAL PRICES

The prices of basic major raw materials used in our manufacturing process viz. stainless steel scrap /flats of various grades doesnt affect much, as we are working in open market scenario.

FINANCIAL PERFORMANCE

During the year under review, the Company has generated total revenue of ^4,33,51,69,232/- (Previous Year ^3,05,12,41,184/-). The net profit before exceptional items and taxes is ^21,03,88,334/- (Previous Year ^8,02,85,418/-). The net profit after taxes resulted into the profit for the year at ^13,35,54,157/- (Previous Year ^11,47,01,046/-).

MATERIAL DEVELOPMENTS IN HR / INDUSTRIAL RELATION / NUMBER OF PERSON EMPLOYED

Our Company believes that the human capital is key to bring in progress. The Company believes in maintaining cordial relation with its employees, which is one of the key pillars of the Companys business. The Companys HR policies and practices are built on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on 31^st March, 2025, the total employees on the Companys rolls stood at 205 and on contract basis 94.

ACCOUNTING POLICIES

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis. The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein.

DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT

The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.

DETAILS OF SIGNIFICANT CHANGES (I.E. 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:

Sr. Particular No s	2024 -25	2023 -24	Change s	Reason
1 Debt Service Coverage Ratio	1.88	1.14	64.52	Due to significan t increase in profit and decrease in term loan DSCR ratio gets improve.
2 Inventory Turnover Ratio	3.23	1.61	100.88	Due to increase in sales due to which inventory
				is also gets increase.
3 Trade Receivabl e Turnover Ratio	4.70	3.38	38.96	To increase the sales the company has offer additiona l credit period to its customer s.
4 Trade Payable Turnover . Ratio	4.14	2.83	46.22	Due to increase in holding period of debtors and Inventory so, holding period of creditors is also increased

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

Sr. Particular No s	2024 -25	2023 -24	Change s	Reason
1. Return on Net Worth (%)	9.33	8.81	5.90%	The marginal increase is mainly attributable to the profit earned during the year, adjusted for other comprehensiv e income and routine accounting adjustments.

CAUTIONERY STATEMENT

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.