Nova Iron & Steel Ltd Management Discussions

This report is an integral part of the Board Report. The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities, and internal control systems and their adequacy in the Company during the Financial Year 2025-26

Industry Structure and Development

In 2025, world crude steel production reached 1,850.2 million tonnes (MT), as per data released by the World Steel Association (worldsteel). worldsteels Short Range Outlook (April 2026) forecasts global steel demand to grow by 0.3% in 2026 to reach 1,724 MT, followed by an accelerated growth of 2.2% in 2027 to reach 1,762 MT, as global steel demand bottoms out over the 2025-26 period following a protracted phase of structural adjustment. India retained its position as the worlds second largest crude steel producer in 2025 with 164.9 MT, and continues as the worlds fastest-growing major steel market, with demand projected to expand by 7.4% in 2026 and accelerate further to 9.2% in 2027.

Indias Real GDP is estimated to have grown by 7.4% in FY 2025-26, as compared to 6.5% in FY 2024-25, driven by buoyant growth in the services sector (Real GVA growth of 7.3%) and a manufacturing and construction growth rate of 7%. Nominal GDP is estimated to have grown by 8% in FY 2025-26, reaching approximately Rs. 357.14 lakh crore.

Indias steel sector recorded its best-ever performance in FY 2025-26: crude steel production reached 170.15 MT (up from 152.18 MT in FY 2024-25), finished steel production reached 162.47 MT, and finished steel consumption reached 164.36 MT, as per Joint Plant Committee (JPC) data. Indias total crude steelmaking capacity reached approximately 220 MTPA during the year, keeping the industry on track towards the National Steel Policy target of 300 MTPA by 2030.

The Company had obtained various approvals from MoEFCC and CECB for its earlier expansion plans. In view of the ongoing transfer of assets to lenders, the Company is taking all necessary measures to mitigate the impact of challenges facing its business, including structural cost reduction, xed-cost rationalisation and close monitoring of its supply chain.

Opportunity and Threat

The Ministry of Steel continues to provide financial assistance through its R&D Scheme to address technological challenges in the Iron & Steel sector, including thrust areas such as green steel production, hydrogen-based steelmaking, carbon capture, utilisation and storage (CCUS), and resource efficiency . The Production Linked Incentive (PLI) Scheme for Specialty Steel, with a financial outlay of Rs. 6,322 crore, continues to promote domestic manufacturing capability, with a second round (PLI 1.1) launched for the period 2025-26 to 2029-30.

India remains the strongest driver of global steel demand growth, backed by robust construction, infrastructure, and manufacturing activity, alongside continued Government capital expenditure. Indias GDP growth for FY 2025-26 at 7.4% rea rms the countrys position as the fastest-growing large economy in the world.

Globally, steel demand is expected to see a modest rebound of 0.3% in 2026, with a more pronounced recovery of 2.2% projected for 2027 as developed economies including the EU, US, Japan, and Korea are expected to post positive growth. Chinas rate of demand contraction is decelerating, though the ongoing conflict in the Middle East poses a downside risk to regional steel demand in 2026.

Volatility in raw material and consumable prices, particularly from China (the largest producer of steelmaking consumables), continues to pose a risk to input costs. Changes in statutory and sustainability norms in importing/exporting countries, along with global trade tensions and tari measures, remain a threat to supply chain reliability and export competitiveness.

The Company proposes to enter the trading of metals and steel products, leveraging its long experience in the industry. Safeguard and anti-dumping duties on imported steel have supported domestic prices and demand for domestically produced steel, which is an opportunity for trading within India. At the same time, volatile steel and raw material prices, global oversupply, changes in trade and tari measures, and working capital and credit requirements remain risks to trading margins. The Company will take up trading in a calibrated manner, keeping in view market conditions.

Segment wise performance

The Company is engaged in the manufacturing/trading of Iron & Steel, which is considered its only business segment. The turnover (Revenue from Operations) of the Company was Rs. 466.66 crore during the year ended 31 March 2026, as against Rs. 416.91 crore in the previous year.

Outlook

The Company proposes to enter into the trading business of metals and steel. Drawing on its extensive experience in the iron and steel industry, the Company intends to diversify and expand its revenue-generating activities and pursue market opportunities as they arise, subject to the approval of the Members.

The Company continues to focus on structural cost reduction, including reduction of xed costs, and closely monitors its supply chain to ensure smooth business operations. The Company is in the process of transferring its assets to the lenders in compliance with the Award dated 24.11.2025, with a view to reducing its debt liabilities and supporting the long-term sustainability of the Company.

Others:

For Risk and Concern, Internal Control System and their Adequacy, Financial Performance with respect to operation performance, Material Development in Human Resources/Industrial Relations front, including number of people employed please refer to Board Report.

CAUTIONARY STATEMENT

The above Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a differ ence to the Companys operations include external economic conditions affect ing demand/supply in uencing price conditions in the market in which the Company operates, changes in Government regulations, tax laws, and other incidental factors.