NMDC Steel Ltd Management Discussions

Company Overview

NMDC Steel Limited is a listed Central Public Sector Undertaking (CPSU) under Ministry of Steel, Government of India. Among the major players in the Indian steel sector, the organisation is engaged in the production of quality steel and adding to the countrys manufacturing potential. The Company operates a state-of-the-art integrated steel plant with a production capacity of 3 million tonnes per annum (MTPA), located at Nagarnar in Bastar, Chhattisgarh. Developed as a strategic initiative of the Government of India, the Plant enhances the countrys domestic steel production.

Economic Overview Global Economy

Global growth in 2024 remained steady but underwhelming, continuing the pattern of subdued growth observed in recent years. IMF projects that this sluggish pace is likely to persist. With the abrupt escalation of trade tensions, most notably the sweeping US tariffs announced on April 2, 2025, followed by swift retaliatory measures from major trading partners. These actions have pushed global tariff levels to their highest in a century, injecting a wave of uncertainty across markets and clouding the near-term outlook.

This represents a major negative shock to growth. As a result, global growth projections have been downgraded to 2.8% for 2025 and 3.0% for 2026, compared to earlier estimates of 3.3% for both years. Meanwhile, global headline inflation is expected to decline from 6.8% in 2023 to 4.3% in 2025 and 3.6% in 2026¹.

Indian Economy

Amid global economic uncertainty, India continues to play a leading role in global growth, supported by robust macroeconomic fundamentals and careful policy management. In FY 2024-25, Indias real GDP growth is estimated at 6.5%, with the Reserve Bank of India expecting the pace to continue into FY 2025-26³. Strong domestic demand is driving sustained growth, with rising rural and urban consumption, increasing private investment, and capacity expansion by businesses. Public infrastructure spending remains high, supported by stable borrowing conditions.

Inflation in India has eased sharply, with average CPI inflation for FY 2024-25 at ~4.6%⁴, marking the lowest full year financial rate since FY 2018-19. Food prices, which have a big impact on overall inflation have seen downtrend trend and are expected to stay stable due to robust crop production. The Reserve Bank aims for a medium-term inflation target of ~4%. Indias strong external sector, marked by rising foreign exchange reserves, a manageable current account balance, and steady foreign investment inflows, positions the country well to navigate global uncertainties.

India remains a leading destination for global investment, supported by a liberal and business-friendly FDI framework. The country permits 100% foreign ownership in most sectors through the automatic route, encouraging investor confidence. As a result, foreign direct investment (FDI) inflows reached USD 81.04 billion in FY 2024- 25—an increase of 14% from USD 71.28 billion in the previous fiscal year.

Indias export performance continues to highlight the resilience and expansion of its economy, particularly in high-value manufacturing and services. The country has consistently broadened its presence in global trade. This progress is driven by improved industrial capabilities, rising service-sector competitiveness, and the emergence of strategic industries such as defence manufacturing and electronics. In FY 2024-25, total exports climbed to a record USD 824.9 billion, registering a 6.01% rise from USD 778.1 billion in FY 2023-24—and significantly higher than the USD 466.22 billion recorded in 2013-14, underscoring a decade of strong export growth.

The Union Budget 2025-26 introduced a "National Manufacturing Mission" to strengthen the Make in India initiative by focusing on five key pillars: improving the ease and cost of doing business, developing a future- ready workforce aligned with emerging job demands, fostering a dynamic MSME ecosystem, promoting access to advanced technologies, and ensuring high-quality production standards.

India continues to be the worlds fastest-growing major economy and is well-positioned to sustain this momentum. This resilience stems from its sound macroeconomic fundamentals, a stable and robust financial system, and a strong commitment to sustainable and inclusive growth—despite facing global challenges such as financial market volatility, geopolitical tensions, trade disruptions, supply chain vulnerabilities, and climate-related risks.

Industry Overview Global Steel Industry

Global crude steel production remained subdued in 2024 at 1,885 million tonnes⁵, ~4% below the peak global output of 1,963 million tonnes⁶ in 2021. Key producers— including China, Japan, the US, Russia, and South Korea- recorded declines, in contrast to Indias resilient output.

The global steel market was impacted by the growing steel exports from China and declining demand in key markets. In 2024, Chinas steel exports increased by 24%, reaching 117 million tonnes from 94 million tonnes in 2023⁷. Global apparent steel use has declined from 1,778 million tonnes in 2023 to 1,742 million tonnes in 2024⁸. Building and infrastructure sector contributed 52% to the global steel use, followed by mechanical equipment at 16%, and automotive at 12%⁹.

Going forward, India, Southeast Asia, and the Middle East are expected to be the major growth driving regions in global steel output to 2030, led by new production capacity projects. By process, BF-BOF route of steelmaking is forecasted to make about 60-70% of new capacity in Asia¹⁰. Modest growth is expected in European and US steel sectors, owing to modest recoveries in regional construction and automotive sectors. Japan and South Korean steel production is expected to remain relatively flat. In China, further productions cuts are anticipated following the March 2025 announcement to promote restructuring to achieve production cuts¹¹. Exports have played a key role in Chinas steel sector amid declining production levels. However, disruptions from global trade sanctions, such as the US announced 25% steel tariff from March 2025, could reshape the global steel production dynamics.

3 https://www.pib.gov.in/PressNoteDetails.aspxRsNoteId=154840&ModuleId = 3

4 Ministry of Statistics and Programme Implementation

5 6 7 8 WSA

9The remaining consumption came from other sectors which include metal products, electrical equipment, domestic appliances and other transport. Source: WSA

10 11 Resources and Energy Quarterly

Country	Crude Steel Production	Crude Steel Production
	2024 (MT)	2023 (MT)
China	1,005	1,029
India	149	141
Japan	84	87
United States	80	81
Russia	71	76
South Korea	64	67
Germany	37	35
Turkiye	37	34
Brazil	34	32
Iran	31	31
Others	293	292
World Total	1,885	1,904

Source: WSA

Indian Steel Industry

Indias steel sector has witnessed robust growth, marked by consistent rise in per capita steel consumption which reached ~103 kg in 2024¹². Finished steel consumption grew by ~10% from ~136 MT in FY 24 to ~149 MT in FY 25 while the crude steel production witnessed a growth of ~5% i.e. from 144 MT in FY 24 to ~152 MT in FY 25¹³. Indias crude steel production capacity has also increased, reaching 205 million tonnes in FY 25¹⁵, up from 186 million tonnes in the previous year. Despite the progress, Indias per capita steel consumption remains around half the global average ~215 kg¹⁶, highlighting a considerable scope for future growth.

Indias iron ore production reached 289 MT in FY25¹⁷ against the previous years 277 MT in FY24, growing in line with the increased demand from the steel sector, owing to the commissioning of auctioned greenfield blocks and the expansion of existing mines. Prices of key raw materials for steel production, such as iron ore and coking coal, declined in FY25. Iron ore prices averaged USD ~105 per tonne¹⁸ in FY 25, declining from USD ~119 per tonne in FY 24. Coking coal prices also witnessed a steep decline, for instance Steel Grade-I representative prices for coking coal declined by ~34% from INR 25,579 per tonne in April 2024 to INR 16,908 per tonne in March 2025. This drop provided much-needed relief to steelmakers, easing pressure on their stretched profit margins.

Looking ahead, substantial capacity additions, predominantly via blast furnace technology, are expected to drive Indias crude steel production beyond 200 MT by 2030, more than doubling the output since the start of the decade. This growth will be supported by large- scale infrastructure initiatives including the PM Gati Shakti National Master Plan, PM Awas Yojana, and the Jal Jeevan Mission, all of which are poised to bolster domestic steel demand.

On the trade front, India remained a net importer in FY25, with ~10 MT of finished steel imports and ~5 MT of exports¹⁹. In response to rising imports and to safeguard domestic producers, the government imposed a 12% safeguard duty on certain non-alloy and alloy steel flat products in April 2025. Strategic efforts are underway to enhance the global competitiveness of Indian steel, with an ambitious goal of becoming a net exporter of steel, with targets to attain 25 million tonnes of steel exports²⁰. Additionally, the per capita consumption is expected to rise up to 160 kg by 2030²¹ alongside an expansion of production capacity to 300 million tonnes by 2030 and 500 million tonnes by 2047.

Achieving these milestones will require focused efforts across key areas such as technology upgradation, raw material security, infrastructure enablement, and stronger global partnerships. Enhancing production efficiency and sustainability through advanced technologies, securing reliable access to essential raw materials, improving logistics and supporting infrastructure, and expanding Indias presence in global markets will be critical. Backed by coordinated policy support and active private sector participation, these measures will collectively position India to emerge as a global steel powerhouse.

Opportunities and Challenges Opportunities

Specialty Steel

The Government of India, Ministry of Steel, is encouraging the growth of specialty steel through the implementation of various strategic steps. One of these steps is the Production Linked Incentive (PLI) Scheme introduced in July 2021.

The scheme aims to scale up the domestic production of high-value specialty steel utilised in critical sectors, such as defence and automotive. The goal is to reduce import dependency and advance the broader selfreliance agenda of Atmanirbhar Bharat. The initial phase had 44 projects from 26 firms with an investment of an estimated Rs27,106 crore committed and the development of 24 million tonnes of downstream capacity. The second phase, PLI Scheme 1.1, was launched in January 2025 with eased norms.²³

Raw material security

The nation has sufficient reserves of iron ore and noncoking coal to meet the current needs of the domestic steel industry. However, coking coal continues to be imported since the domestic availability of high-quality (low-ash) coal is scarce in relation to the demand of integrated steel producers.

Digitalisation

The Ministry of Steel promotes the utilisation of AI and digital technologies to augment efficiency, reduce costs and enhance sustainability. Major Public Sector Undertakings (PSUs) are adopting solutions, such as drone-based mineral exploration, fleet management systems, simulators for HEMM operator training, drill and blast optimisation, smart HEMM, real-time stockpile management, UMLMS, automated sampling, business intelligence, ICCC, CCTV surveillance and smart metering and AI-based prediction models in blast furnaces to optimise processes and facilitate data-driven decision-making.

Sustainability

Decarbonisation remains a central priority for the global steel industry. In line with India commitment to reduce its carbon intensity by more than 45% by 2030 and attaining net-zero emissions by 2070, the Ministry of Steel has embarked on a transition towards producing low-carbon steel with streamlined approaches.

Challenges

Energy Price Volatility

Elevated energy prices in the European Union contributed to inflationary pressure and prompted the European Central Bank to increase interest rates. Tighter financing conditions weighed heavily on demand in steelconsuming sectors such as construction and automobile. Although energy prices eased in 2024, high interest rates continued to suppress demand.

Limited Scrap Availability

The structure of Indias steel sector remains distinct from that of developed economies, which benefit from higher scrap availability and affordable access to low-carbon fuels such as natural gas. In comparison, India lacks scrap resources and natural gas prices are significantly higher.

Demand Slowdown

The contraction in Chinese steel demand is a result of anticipated structural change in its model of growth, i.e., from having high investment rates to increased consumption. This structural change is expected to reduce the steel intensity of Chinas GDP. This could continue to pressure the international price of steel, impacting domestic producers margins.²⁴

Segment-wise Performance

Operational Performance

The Company operates in single segment i.e. Steel Plant and the details of the actual production for FY 2024-25 are given below:

Items	2024-25	2023-24 (from 31.08.2023 to 31.03.2024)*
Hot Rolled Coils	14,38,646	4,93,503
Liquid Steel	15,07,543	5,17,862
Hot Metal	20,00,077	9,66,469
Pig Iron	4,11,690	3,08,085
Gross Sinter	29,89,798	13,73,880
Gross Coke	12,45,987	6,52,523

* The Company started commercial production on 31.08.2023.

Financial Overview

Particulars	FY 2024-25	2023-24 (from 31.08.2023 to 31.03.2024)
A INCOME
1 Sale of HR Coils	6,528.30	1,731.10
2 Other Sales	1,974.75	1,317.89
3 Total Revenue from Operations	8,503.05	3,048.99
4 Other Income	71.51	119.06
5 TOTAL INCOME	8,574.56	3,168.08
B TOTAL EXPENDITURE	11,896.28	5,369.07
C Profit Before Tax (PBT)	(3,321.72)	(2,201.02)
D Taxes	(947.94)	(640.70)
E Profit/Loss after Tax	(2,373.78)	(1,560.32)

Key Ratios

Key Financial Ratios

Ratio	2024-25	2023-24
Debtors Turnover Ratio	72.52	164.78
Inventory Turnover Ratio	2.52	1.34
Interest Coverage Ratio	(4.10)	(3.98)
Current Ratio	0.59	0.99
Debt Equity Ratio	0.45	0.43
Operating Profit Margin (%)	(20.19)	(43.20)
Net Profit Margin (%)	(27.92)	(51.18)
EPS (Diluted) (Rs)	(8.10)	(5.32)

Risk Management Financial Risk

The Company faces potential financial loss if counterparties default on receivables, bank deposits, or loans. The Board pre-empts this by having a robust capital base to support business growth and investor trust. The Board monitors financial health through return on capital (operating activities / total shareholders equity). Risk of failing to meet financial obligations as they fall due. Management maintains adequate liquidity in both normal and stress scenarios to prevent loss or damage to reputation.

Macro-economic Risk

Global economic slowdown may weigh on domestic investor sentiment and dampen demand for steel products. Impact of an uncertain macroeconomic environment, including implementation of tariffs on iron and steel can result in price fluctuation of steel and its raw materials, affecting producers margins. The Company is well-positioned to navigate the upcoming challenges with enhanced resilience, supported by strong macroeconomic fundamentals and a robust financial system.

The launch of the National Manufacturing Mission, with its focus on improving ease of doing business and nurturing a dynamic MSME ecosystem, will further strengthen the Companys commitment to sustainable and inclusive growth.

Forex Risk

Due to import of coking coal (key raw material) through Usance Letters of Credit since the start of commercial operations (August 31, 2023), the Company is exposed to the risk of exchange rate fluctuations and has adopted a Foreign Exchange Hedging Policy in order to overcome this variance risk.

Supply Chain Risk

Geo-political disturbances can result in global supply chain disruptions, potentially leading to delays in operations and elevated cost of raw materials.

Digitisation

In its digital transformation journey, NMDC Steel Limited has integrated several digital advancements. A Facial Recognition system, integrated with Gate Pass System is currently employed for automated attendance recording of contract labour. A CCTV surveillance system has been installed in the pig iron loading area to heighten security and safety. In addition, the organisation has an automated gate pass system which is updated bi-annually to support strong security protocols.

Safety and Certifications Safety

Safety Training

NSL has a dedicated, state-of-the-art safety induction training facility for general and workplace safety requirements. Permit-to-work procedures and electrical safety are some of the areas where refresher and job- specific safety training sessions are organised to enhance employees skills. Overall, these efforts are aimed at nurturing a zero-accident workplace culture.

Safety Committees

Safety committees have been constituted in all the major departments as mandated by the Chhattisgarh Factories Rules, 1962. These committees meet on a monthly basis to discuss safety matters, incidents and effect corrective measures. A two-level monthly safety review system exists, where senior officials from NSL and contractual staff are involved.

Safety Audit

Cross-functional groups perform internal safety audits of operations and maintenance. In addition, external safety audits are conducted at NSL.

Safety Inspection

Apex-level safety inspections are regularly conducted to bolster safety surveillance. Statutory inspections and testing of lifting equipment and pressure vessels are also implemented to ensure compliance with the Factories Act, 1948.

Integrated Management System

NSL has adopted the ISO 45001:2018 Integrated Management System in order to bring its occupational health and safety practices at par with global standards.

Safety Circle

NSL established seven Safety Circle teams in 2024. Selected teams participated in a quality circle convention and their case study presentations earned gold, silver and bronze medals.

Certification

Integrated Management System & Certification

NSL Steel Plant at Nagarnar received Integrated Management Systems (IMS) Licenses from the Bureau of Indian Standards (BIS), becoming Indias first integrated steel plant to be issued four ISO Licenses at the same time for Quality (ISO 9001), Environment (ISO 14001), Occupational Health and Safety (ISO 45001) and Energy (ISO 50001) management systems.

Conformite Europeenne (CE) Certification

In an effort to diversify its market base, NSL has moved towards Conformite Europeenne (CE) certification for its product portfolio, a mark necessary to sell products in the European Economic Area (EEA).

Outlook

The Company is targeting financial sustainability by stabilising crude steel production and enabling a steady output of Hot Rolled Coils (HRC). Critical operational constraints encompassing the challenges in logistics and availability of required raw materials such as lime, are being addressed to facilitate seamless production. Parallel infrastructure investments continue to strengthen operational capacity and improve efficiency. The Company remains committed to utilising sustainable practice and is focused on environmental responsibility and energy-efficient operations. Meanwhile, it is also exploring expansion into new market segments to generate growth and reduce over reliance on existing markets. The Company holds BIS certifications for over six HRC grades and has been recommended for different ISO certifications, such as quality, environment, occupational health and safety and energy management systems.

Internal Control Systems and their Adequacy

Necessary disclosure in respect of Internal Control Systems and their adequacy has been made in Annexure-A to the Independent Auditors Report dated 27^th May, 2025 which forms part of the Annual Report.

Human Resource

NMDC Steel Limited has 201 female workers who make up 7.60% of the total workforce. Equity of opportunity at every level is ensured and womens presence in higher management positions is promoted. The Company ensures that all eligible women employees are provided with statutory maternity benefits, including paid maternity leave, nursing breaks, and protection against dismissal during maternity leave, separate toilets, washrooms etc.

As of March 31, 2025, the total number of employees was 2,644, with 139 employees belonging to Scheduled Castes, 483 belonging to Scheduled Tribes and 629 belonging to Other Backward Class.

The NSL Vigilance Department has promoted transparency and effectiveness by adopting preventive checks and system reforms. During the financial year 2024-25, it carried out 84 preventive checks, resolved 49 grievances as per CVC guidelines and organised training in many key areas. Procurements worth more than Rs1 crore are under an Integrity Pact and usage of electronic procurement platforms is encouraged. Vigilance Awareness Week 2024 was celebrated to create a culture of integrity.