MOIL Ltd Management Discussions

Preface

The Management Discussion and Analysis Report (MDAR) aims to elucidate the developments in the business environment, performance of the company in comparison to last report and the future outlook. MDAR is a part of the Boards Report. The performance of a company is linked with various factors including demand, supply, climatic conditions, economic conditions, political conditions, Government regulations and policies, taxation, pandemic and natural calamities, which are beyond the control of the company and could make a significant difference to the Companys operations. Owing to this, certain statements made in this report pertaining to projections, outlook, expectations, estimates, etc., may eventually differ from actuals.

A. Industry structure and market scenario

Over 95% of the worlds production of manganese is utilized in steel making to increase strength of steel, abrasion resistance, hardenability, etc. During Financial Year 202425, Indian Steel sector has demonstrated unprecedented performance, achieving its highest levels of production and consumption as compared to analogous periods in previous financial years.

The production of crude steel was 151.14 million tonnes (MT), while finished steel production reached 145.31 MT, and consumption of finished steel stood at 150.23 MT during FY 25, indicating a growth of about 5%, 4%, and 10% respectively over the preceding financial year. In FY 24, India was a net importer of steel with imports exceeding exports by 0.83 million tonnes, which substantially increased to 4.7 million tonnes in FY25. Indias steel imports increased due to a combination of factors including strong domestic demand, particularly from the infrastructure and automotive sectors, and increased global trade and price fluctuations. While domestic production also rose, it wasnt sufficient to meet the burgeoning demand, leading to a surge in imports.

Indias manganese ore industry hit a new stride in FY25, recording an impressive 11% y-o-y increase in production to 3.75 million tonnes (Mnt) compared to 3.38 Mnt in FY24. As one of the key raw materials in steelmaking, manganese plays a silent yet critical role in infrastructure and industrial development. Driven by robust alloy demand, favourable global pricing, intensified exploration, and operational expansion, Indias manganese ore sector advanced notably. Enhanced mechanisation and streamlined clearances further strengthened production, positioning the industry

for long-term efficiency, resilience, and strategic mineral self-reliance as reported by BigMint.

During the FY 25, import of manganese ore was about 6.58 million tonnes in comparison of 5.59 million tonnes in 2023-24, registering an increase of about 18% as per DGFT. Growth in imported manganese ore was because of increase in alloys production and export, higher crude steel production, decline in global manganese ore prices and inadequate domestic production to meet rising demand as reported by BigMint.

Indias crude steel production surged 5% y-o-y in FY25 reaching 151.14 million tonnes. Growth in steel output naturally boosted demand for manganese alloys much needed in final steel production for churning out grades that meet stringent quality specifications. Rise in steel demand boosted consumption of manganese alloys and ore. Manganese ore consumption has been on the ascendant over the last few years on higher domestic crude steel production and increased production and exports of manganese alloys.

World crude steel production stood at 1884.6 Mnt in 2024, registering a decline of 1.0% y-o-y, according to World Steel Association. China remained the leader in world crude steel production with an output of 1,005.1 Mnt in 2024, registering a decline of 1.7% in output compared with 2023. India was the 2^nd largest producer of crude steel with an output of 149.4 Mnt in 2024, marking a 6.2% growth over 2023. The country accounted for 8% of world crude steel production during the year. This growth highlights Indias resilience and continued strength in steel production despite global fluctuations.

Important policies and initiatives of Government of India:

Steel is a de-regulated sector. The Governments role is that of a facilitator which lays down the policy guidelines and establishes the institutional mechanism/structure for creating conducive environment for improving efficiency and performance of the steel sector.

In this role, the Government has released the National Steel Policy (NSP) 2017, which has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31.

National Steel Policy of India, 2017 seeks to create a globally competitive steel industry in India with 300

MnTPA steelmaking capacity and 158 kg per capita steel consumption by FY 2030-31. This would translate into additional consumption of steel making raw material including iron ore, coking coal, manganese, coal, lignite etc. Similarly, ferro alloys are one of the important inputs in the manufacture of steel and the growth of the ferro alloy industry is, thus, linked with development of the iron and steel industry. With abundant resources, there is good potential of growth in manganese ore and ferro alloy industry in India.

National Steel Policy covers all aspects of steel sector such as steel demand, steel capacity, raw material security, infrastructure and logistics, Research & Development (R&D) and energy efficiency. Overall projections of domestic crude steel capacity, production and per capita finished steel consumption value envisaged in the National Steel Policy (NSP) 2017 are shown below: -

mt - Million Tonnes

Government of India is implementing a Production-linked Incentive (PLI) Scheme for Specialty Steel. It is expected that the specialty steel production will reach 42 MnT by the end of 2026-27.

Indias crude steel capacity was 198.5 Mnt in 2024-25 (provisional). As per available indicators, the Steel Industry in India is expected to continue posting robust growth in the coming years which will definitely create demand for manganese ore.

B. SWOT analysis

MOILs competitive strengths

• Largest producer of manganese ore with market share of ~48% in the country with large reserves of manganese ore. ^•

• Holding majority of total demonstrated reserves of high/medium grade manganese ore in the country.

• Strong financials with high net worth and zero debt.

• Availability of qualified technically skilled manpower with excellent work culture and peaceful industrial relations.

• Manganese reserves are in Central Indian Manganese belt, with deposits being in general, of regular shape.

• Company has got logistical advantage, as all its mines are well connected with State/ National Highways. Most of its mines are located with railway network of South East Central Railway and are provided with railway sidings.

• MOIL continues to be an efficient and environment friendly mining Company.

Weaknesses

• Delay in obtaining fresh mine leases resulting delay in commissioning of new mines, affects companys expansion/investment plans.

• As the Company is largely a single product company, any adverse impact on the manganese ore industry will hit the profitability of the Company.

• MOILs mines have narrow ore body and hence, full mechanization is relatively difficult.

• The cost of production will also rise due to increasing depth of deposits, revision in wages of regular employees as well as revision in minimum wages for contractual employees.

• Limited reserves of high grade manganese ore compared to global players.

• Major production of MOIL comes from underground mines, where the cost of production is higher than opencast mines and cost is on increasing trend, the major portion of cost being manpower cost. Any increase in the cost of UG mining would adversely impact margins.

• Uncertain geomorphology resulting in delay in execution of projects.

Opportunities

• The Government is committed to attract investments in Indian steel sector from both domestic and foreign sources and facilitate speedy implementation of investment intentions on board, so as to reach desired crude steel capacity level to meet the domestic demand fully and also to ensure easy availability of vital inputs and necessary infrastructure to achieve a projected production as per National Steel Policy.

• India has set capacity target of 300 million tonnes of crude steel by 2030-31 which will create high demand of manganese ore. This will require about 11.00 million tonnes of manganese ore.

• Large demand supply gap in Indian Manganese Ore market presents an opportunity for import substitution.

• During FY25, consumption of manganese ore in the country reached about 9 MnT whereas production is 3.75 MnT (increased by about 11% over previous year). This provide ample opportunity to domestic manganese ore industry to grow.

• Strong financials, i.e., good cash reserves provide opportunity to go for major investment plans. MOIL has already planned large investments for development of its existing mines as well as to acquire new mines which will increase the production and productivity to meet the future requirements of manganese ore.

• MOIL is expanding into other states by signing Memorandum of Understanding with State government so as to acquire more area for exploration of possibilities of Manganese Mining. MoUs have already been signed with Gujarat, Madhya Pradesh, Chhattisgarh, and discussions with Maharashtra are underway and with the other States also.

• The Government of India has announced new Exim policy vide Notification no. 60/2023 dated 13^th February2024 and designated MOIL as a State Trading Enterprise(STE) for export of Manganese ore from India, replacing MMTC Ltd. Accordingly, MOIL has put in a place a mechanism for export of offered manganese ore from India for inviting e-bids from international markets through an online platform. MOIL has also floated global tenders for export of Manganese ore in FY25 based on the offers received from the Indian suppliers. The company is also exploring the option to export the manganese ore grades available with MOIL.

Threats

• Being a mining Company, MOIL is subjected to extensive regulations surrounding health and safety of the people and environment. With constant evolution of regulatory standards and community expectations, the Company is exposed to increased compliance cost and unforeseen environmental remedial expenses.

• Decline in the import price of manganese ore is the biggest threat as it leads to erosion in the profit margin of the company. The international prices are largely dependent on Chinese demand and availability scenario.

• Chinas deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions may also impact the business. ^•

• High dependency on only one sector i.e. steel industry.

• Any delay in regulatory approvals, may also impact long term growth of the company.

C. Outlook

The demand for manganese ore and ferro alloy products depends on the outlook of the steel industry which in turn is dependent on growth of overall economy. The use of manganese in steel is very less in terms of percentage, however, over 95% of the worlds production of manganese is utilized in steel making to increase strength of steel, abrasion resistance, hardenability, etc. Accordingly, demand for manganese ore and ferro alloys would increase with production of steel going up.

World Steel Association (WSA) in its Short Range Outlook (SRO) for 2024 and 2025 forecasts that steel demand will see a 1.2% rebound to reach 1,772 Mt in 2025. After three years of decline, they expect to see a broad-based recovery in the world excluding China in 2025. The ongoing downturn in the Chinese real estate sector is expected to dominate steel demand in China, resulting in a 3.0% decline in 2024 and a further 1.0% in 2025.

As per WSA, steel demand in the developing world excluding China is projected to grow by 4.2% in 2025, driven by Indias robust growth and a rebound in other major emerging economies. The developed world is projected to experience a growth of 1.9% in world steel demand. This anticipated recovery is driven by the long-awaited upturn in steel demand in the EU, and modest recoveries in the US and Japan.

India has emerged as the strongest driver of steel demand growth since 2021, and this trend is set to continue. WSA is maintaining robust growth projections for India, anticipating an 8.0% increase in steel demand over 2024 and 2025. This expansion is fuelled by growth across all steel-consuming sectors, especially by continued strong growth in infrastructure investments.

Manganese ore demand outlook is very positive considering huge gap between demand and supply. Higher crude steel production and domestic alloys capacity expansion are the factors driving manganese ore demand. Domestic requirement of manganese ore has increased substantially to meet not only the increased domestic production of steel but also the export of manganese based alloys. This has continuously made India a net importer of manganese ore and provide an opportunity to grow. As per BigMint, Indias manganese ore imports rise by over 20% y-o-y in FY25. It is expected to increase slightly amid rising steel production. Additionally, it is expected that imported manganese ore prices might ease in the near term, which could boost import volumes.

In order to meet the requirement of manganese ore in future and maintain market leadership, MOIL has drawn a Strategic Management Plan-2030 (SM P-2030). As per the revised strategic plan, the Company has planned to enhance its production to 3.50 million tonnes by 2030. In this direction, the company is focusing on development and mechanization of its existing mines, sinking new shafts and also adding new leases so that the targeted production can be achieved.

With its current resource base of 121.97 million MT of manganese ore, MOIL is very well positioned to contribute to the Indias Steel demand growth given its dominant position, medium to high grade ore reserves, centrally located mines and strong customer ties. In order to meet the requirement of manganese ore in future, MOIL is exploring opportunities to get manganese ore mines in different states of the country besides making all possible efforts to covert Prospecting Leases to Mining Leases in already reserved manganese ore bearing areas.

D. Risks and Concerns

Manganese ore industry is linked with steel Industry which is cyclic in nature and has impact on demand of manganese ore. Any slowdown in the demand of steel market and over supply from international market at cheaper rates will adversely affect the Indian steel industry. MOIL is a labour intensive organization. Though the industrial relations have been excellent in the Company, the risk factors associated with labour may always play significant role on its production performance.

E. Segment-wise/product-wise sales performance

During the year 2024-25, net sales of manganese ore increased by 9% to H 1584.94 crores against H 1449.42

crores in the previous year. During the year 2024-25, the company sold 15.87 lakh MT of manganese ore in comparison to 15.36 lakh MT in the previous year.

Turnover from manufactured products, i.e., Ferro manganese (including slag) and electrolytic manganese di-oxide, during 2024-25 was at H 123.89 crores as against H 82.98 crores in 2023-24 showing a growth of 49%. This is mainly due to rising demand of Ferro manganese driven by significant growth of crude steel production in India in FY25. Sales of Ferro manganese has increased from 8,385 MT to 12,942 MT whereas sales quantity of EMD has decreased from 937 MT in the year 2023-24 to 737 MT in the year 202425. The demand of EMD from the battery sector was not encouraging in FY2024-25.

F. Production

During 2024-25, MOIL has produced 18.03 lakh MT of various grades of manganese ore as against 17.56 lakh MT in previous year. The production of EMD was 1,350 tonnes as against the 1,413 tonnes during the previous year. The production of Ferro manganese was 12,000 MT as against the 10,163 MT in the previous year. The wind turbine generators have generated 251.25 lakh KwH units during the year 2024-25 as compared to last years 283.95 lakh KwH units.

G. Internal control systems and their adequacy

MOIL has put in place all the necessary internal controls and they are found to be adequate. The Board of the company has also laid down proper internal financial controls. The company is ensuring internal financial controls through SAP, delegation of responsibilities and powers, SOPs, internal audit, internal checks, vigilance, etc.

H. Discussion on financial and operational performance

Despite pressure on the prices of Manganese ore globally, MOIL recorded excellent performance in the F.Y. 2024-25. The company has achieved highest ever production, sales of Manganese ore and record turnover during the F.Y. 2024-25.

• Financial performance . .

(H in crores)

The Company has recorded total income of H 1696.32 crore during F.Y. 2024-25 as compared to H 1542.96 crore in previous year. Total turnover of the company in FY 2024-25 at H 1584.94 crores registered an increase of 9.35% in comparison to previous years turnover of H 1449.42 crores. Profit before tax (before exceptional item) for the year increased by 25.78% to H 486.78 crore in comparison to previous years PBT of H 387.00 crore. Similarly, the Company has earned a profit after tax (PAT) of H 381.64 crore as against H 293.34 crore in the previous. The operating profit has also increased from H 293.47 crore in the year 2023-24 to H 375.41 crores in the year 2024-25.

EBITDA margin to turnover of the company has been at 40.31% during the year in comparison to last years margin of 36.65%. Other income including interest and profit on redemption of mutual funds was H 111.38 crore as against H 93.54 crore of previous year.

• Key financial ratios

(H in crores)

• Operational performance

During F.Y. 2024-25, MOIL has achieved production of 18.03 lakh MT as against 17.56 lakh MT in last year, recording an increase of 2.67%. Sales quantity of manganese ore was 15.87 lakh MT in the F.Y. 2024-25 in comparison to 15.36 lakh MT in F.Y. 2023-24. EMD production has decreased by 4.46% to 1,350 MT from 1,413 MT during the previous year and that of ferro manganese increased by 18.08% to 12,000 MT as against 10,163 MT in the previous year. During the year, average sales realization increased from H 8,849 per MT to H 9,164 per MT. The operating profit was H 375.41 crore in F.Y. 2024-25 in comparison to H 293.46 crores in the year 2023-24. Return on Net worth has increased to 14.99% in FY 2024-25 as against 12.49% in previous year.

I. Material developments in human resources, industrial relations front, including number of people employed

MOIL employees are very dedicated and loyal to the Company. The employees in general have remained with the Company through thick and thin. On the part of the management, it is ensuring all-round comfort levels to its employees, including the required training at all levels based on the need.

It is worth highlighting that industrial relations have been cordial all along during the year. Issues, if any, are sorted out through bipartite discussions at appropriate forum. The company also received cooperation and support of workmen represented by the employees Unions.

As on 31^st March 2025, total employee strength is 5250. Details in this regard are in the Boards report.