Oswal Minerals Ltd Management Discussions

a) Industry Structure And Developments and Outlook

The global economy grew by 3.3% in CY 2024 amidst several challenges such as imposition of tariffs and geopolitical conflicts which heightened uncertainty. Emerging and developing economies provided strong support in this regard by registering growth of 4.3% while advanced economies experienced noticeably muted growth of 1.8% even as inflation eased. Global headline inflation dropped from 6.7% in CY 2023 to 5.8% in CY 2024, with falling energy costs being the primary factor. Some developing countries, however, faced sticky inflation on account of currency depreciation and supply chain disruptions. With advanced economies moving closer to target inflation rates, many Central Banks started gradually reducing interest rates in order to support growth. With the manufacturing sector in general holding up, the metals and mining sector played a crucial role in the global economic landscape. Stainless Steel demand remained positive, especially in emerging economies, driven by urbanization and infrastructure development. The Asia-Pacific Region continued to play a central role in the global economy contributing approximately 60% of global growth in CY 2024. The region recorded a GDP growth of 5%, outpacing many other parts of the world, due to strong export activity and steady recovery across several economies. Countries in East Asia - including China, Japan, South Korea and Taiwan saw stronger trade activity driven by investments in semiconductors and green manufacturing along with a 70 bps reduction in inflation to 2.6% in CY 2024.

India remained one of the strongest performing major economies in FY 2024-25 with an estimated GDP growth of 6.5%. The countrys economic expansion was driven by robust growth in private consumption and strong export performance. Higher rural consumption, resulting from improved agriculture output, pushed private consumption growth to 7.6% and contributed 4.3% to overall GDP growth The governments continued investment in infrastructure, logistics, and digital access has played a key role in supporting economic stability. For FY 2024-25, the government allocated INR 11.11 Lakh Crore towards capital expenditure, accounting for around 3.4% of the countrys GDP. Retail headline inflation eased to 4.6% in FY 2024-25, down from 5.4% in FY 2023-24, and aided rebound in consumption. However, the recent tariffs imposed by the United States are likely to push global inflation higher due to supply chain disruptions. In response, India is carefully monitoring global trade developments and planning a measured response. Looking ahead, Indias GDP is expected to grow by 6.5% in FY 2025-26 and FY 2026-27, supported by conducive monetary and fiscal policy, rising rural incomes, and moderating inflation. Moreover, strong growth in GST collections points to the strength and resilience of the Indian economy, which will further get a boost as global uncertainties ease.

Stainless Steel production increased by 7% in CY 2024 over the previous year, reaching a total of 62.6 million metric tonnes. Indias ferro chrome production in CY 2024 stood at 1.42 million tonnes, 6% lower than the previous year on account of raw material constraints and sluggish demand. The stainless steel market experienced noticeable weakness towards the end of the year on account of macroeconomic factors, resulting in downward pressure on ferro chrome prices. Moreover, chrome ore availability was limited which led to production cutbacks primarily by those ferro chrome producers reliant on bought out ore or conversion contracts. Ferro Chrome prices were at their lowest in recent times during the first quarter of CY 2025 and have gradually recovered since bolstered by high chrome ore prices and revival in demand. Rising stainless steel production given the low per capita consumption, urbanisation, and government initiatives to boost the manufacturing sector along with a large outlay on infrastructure are some of the factors propelling the demand for ferro chrome in India.

The manganese ore market is also on an upward trajectory, with its growth closely tied to the steel industry and a rapidly emerging sector: batteries. The market is projected to grow at a healthy compound annual growth rate (CAGR) in the coming years. The global iron ore market is expected to show steady growth in the coming years, driven primarily by strong demand from the construction and industrial sectors in Asia. However, the market is also characterized by significant volatility due to a complex interplay of factors.

The above data are complied from the below sources:

https://www.imf.nrn/en/Piihlicntinns/WEn/lssiies/2n25/n4/22/wnrld-ecnnnmic-mitlnnk-npril-2n25

https://www.adb.nrn/sites/default/files/publicatinn/in44336/asian-develnpment-nutlnnk-april-2n25.pdf

httPs://pib.aov.in/PressReleasePaae.aspx?PRlD=2035558

b) Opportunities and Threats

Opportunities

Construction and Urbanization: Rapid urbanization and infrastructure development, particularly in Asia-Pacific nations like China and India, are the most significant drivers of iron ore demand. These projects require vast amounts of steel, the primary end-product of iron ore.

Industrialization: The expansion of manufacturing industries and the increased need for machinery, equipment, and vehicles, which are predominantly made of steel, are also fueling the demand.

Demand for High-Grade Ore: There is a rising demand for high-grade iron ore and direct-reduction (DR) pellets. This is linked to the global push for decarbonization and the growth of "green steel" production, which requires higher-quality inputs to reduce carbon emissions.

Steel Production: The primary and most significant use of manganese is as an essential alloy in steel production. Manganese enhances the strength, hardness, and durability of steel, and the continued growth of the construction, automotive, and other industrial sectors will ensure a steady demand.

Electric Vehicles (EVs) and Batteries: This is a rapidly growing area of demand for manganese. Manganese-based cathodes are increasingly being used in lithium-ion batteries for EVs. As the world transitions to cleaner energy and the adoption of EVs accelerates, the demand for high-purity manganese for battery applications is expected to rise significantly.

Infrastructure Development: Similar to iron ore, global infrastructure projects, especially in emerging economies, are a major driver of demand for manganese as they rely on steel for construction.

Threats

Geopolitical Tensions and Supply Chains: The iron ore market is heavily concentrated in a few key producing countries, such as Australia and Brazil. This creates supply chain vulnerabilities and makes the market susceptible to geopolitical tensions, trade disputes, and policy shifts.

Price Volatility: Iron ore prices are known for their volatility. They are influenced by a range of factors, including supply and demand dynamics, shifts in currency exchange rates (especially the U.S. dollar), and shipping costs.

Environmental Regulations: Stricter environmental regulations and the global focus on reducing carbon emissions are influencing steel production processes, which in turn affects the demand for different grades of iron ore.

Oversupply and Price Fluctuations: The manganese market can face oversupply issues, which can put downward pressure on prices. For example, the return of major producers to full capacity after disruptions can lead to a glut in the market.

Dominance of Asia-Pacific: The Asia-Pacific region, led by China and India, dominates both the production and consumption of manganese. This concentration can create market imbalances and make it susceptible to regional economic and policy changes. Environmental Concerns: As with other mining operations, there is an increasing focus on sustainable and environmentally friendly practices in the manganese mining industry. Companies are investing in new technologies to minimize their ecological footprint.

c) Segment Wise And Product Wise Performance

The Companys gross revenues in the F.Y 2024-25 was at ^ 2072.82 Crores as against ^ 1,898.85 Crores in the F.Y 2023-24. Further, during the year under review the Company has reported Profit before taxes at ^ 7.23 Crores as against loss of ^ 54.81 in the previous financial year.

The company is engaged primarily in the business of trading in Ferro & Non Ferro Alloys, Metals, Minerals & allied products. Hence, there are no separately reportable segments.

d) Risks And Concerns

The global iron ore market, while driven by long-term growth trends, is subject to significant risks and concerns that can lead to high volatility and unpredictable price swings.

Reliance on Chinas Economic Health: The Chinese steel industry is the single largest consumer of iron ore globally. As a result, the market is highly sensitive to Chinas economic performance, particularly in the property and infrastructure sectors. Any slowdown, shift in government policy, or temporary disruption (such as construction halts for special events) can have an immediate and significant impact on iron ore prices.

Geopolitical and Supply Chain Risks: Iron ore production is highly concentrated in Australia and Brazil. This creates a "supply chain vulnerability" where disruptions from trade disputes, political instability, or even natural disasters in these countries can severely affect the global supply and cause price spikes. The markets reliance on these few producers makes it inherently less resilient. Environmental Regulations and Decarbonization: The steel industry is a major source of global carbon emissions. As countries and companies commit to decarbonization, there is a growing push for "green steel" production. This shifts demand towards higher-grade iron ore and alternative production methods like hydrogen-based direct reduced iron (DRI), which can fundamentally change the market landscape and create a risk of "stranded assets" for producers of lower-grade ore.

Price Volatility and Speculation: Iron ore is a heavily traded commodity, and its prices are subject to speculation. This can lead to irrational price movements that are not always tied to fundamental supply and demand, making it difficult for producers and consumers to manage risk.

The manganese market, while sharing some of the same risks as iron ore, has its own unique set of concerns, particularly given the emerging importance of battery-grade manganese.

Supply Chain Vulnerabilities: A significant portion of the worlds manganese reserves are in a few countries, such as South Africa, Australia, and Gabon. Similar to iron ore, this geographic concentration makes the supply chain vulnerable to political instability, labor strikes, and logistical issues. Weather events, like cyclones, have also been shown to cause significant disruptions to key export operations.

Declining Ore Grades and Rising Costs: Many major manganese mines are facing a consistent decline in the quality of the ore they can extract. This means more energy and resources are required to process the ore to the desired standard, leading to higher operational costs and lower profit margins for producers.

The Balancing Act of Steel vs. Battery Demand: The vast majority of manganese is still used for steel production. However, demand for high-purity manganese for the growing electric vehicle (EV) battery market is a key growth driver. A major risk is that the supply of high-purity manganese cannot keep up with this demand, or that the market overcorrects and leads to oversupply, causing price fluctuations.

Environmental and Social Governance (ESG) Risks: The manganese mining industry faces increasing scrutiny over its environmental and social practices. Concerns about deforestation, water contamination, and labor practices can lead to stricter regulations, higher compliance costs, and opposition from local communities, all of which can disrupt production and increase costs.

Oversupply and Price Pressures: The market can experience periods of oversupply, often from the re-emergence of key producers after a disruption or from a slowdown in downstream demand (especially in Chinas steel sector). This can lead to bearish market sentiment and significant downward pressure on prices, impacting the profitability of mining operations.

e) Internal Control System and its adequacy

The Companys Corporate Governance Policy guides our conduct of affairs and the Management, including financial and accounting policies, systems and processes. This policy delineates the roles, responsibilities and authorities at each level of the Companys threetiered governance structure and the key functionaries involved in governance. The Corporate Governance Policy and the Code of Conduct stand widely communicated across the Company at all times. The Company uses ERP system as a business enabler and also to maintain the business books of account The SOPs, in tandem with transactional controls built into the ERP systems, ensure appropriate segregation of duties, tiered approval mechanisms and maintenance of supporting records. The Company has

implemented proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all the assets are safeguarded, transactions are authorised, recorded and reported properly, applicable statutes and corporate policies are duly complied with.

The Company has followed the Indian Accounting Standards (Ind-AS) for drawing-up its accounts as prescribed by the Institute of Chartered Accountants of India, in the preparation of financial statements. There are no audit qualifications in the Companys financial statements for the year under review.

The Companys IT systems are very robust and are running seamlessly to lend support to people working from anywhere. The IT processes of the Company are accredited to ISO 9001:2015. The Company has an Audit Committee with majority of Independent Directors as members. The committee periodically reviews significant audit findings, adequacy of internal control and compliance with Accounting Standards, amongst others. The management duly considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Independent Audit Committee of the Board of Directors. During the year, due care has been exercised by the Company with respect to all the requirements of the Company Law and Listing Regulations.

f) Material Developments in Human Resources / Industrial Relations, Including Number of People Employed

The Company strives to provide a conducive work environment that empowers people to excel. The human resource team implemented several programmes such as learning and development, employee engagement, performance management and talent retention. The Company aims at fostering an ecosystem that provides long-term professional development scope while catering to individual career building goals at all levels. The Management of the Company believes in encouraging teamwork and a self-motivating corporate atmosphere. The Company prioritises safety, health and overall wellbeing of all employees including the contract workforce. Awareness programs conducted regarding hygiene, social distancing, and masks among employees and stakeholders. The Company recruits judiciously through Industry contacts, job portals and consultants. The Company maintained harmonious relationship with all its workers and there were no strikes or lockouts during the year under review. There were 154 (One hundred Fifty Four) permanent employees on the rolls of company as on 31st March, 2025. The Companys continued focus on improving diversity has shown positive result with increase in women employees in the workforce. Industrial relations during the year were harmonious. Employees have contributed significantly towards the growth of the organization.

g) Significant Changes in 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 sector-specific financial ratios. The Company has identified the following ratios as key financial ratios:

Sl.No Particulars	2024-25	2023-24	% Change
1. Debtors Turnover	2.6040	2.2294	16.80
2. Inventory Turnover	7.4019	5.8430	26.68
3. Interest Coverage Ratio	1.3939	-1.8855	173.92
4. Current Ratio	1.0544	1.4260	-26.06
5. Debt Equity Ratio	4.4828	7.4059	-39.47
6. Operating Profit Margin (%)	2.13	-1.88	-213.30
7. Net Profit Margin (%)	1.01	-2.88	-135.12

Ratios where there has been a significant change from fiscal 2024 to fiscal 2025:

Change in Inventory turnover ratio: Due to increase in closing stock.

Change in Net Profit Margin: Due to the profit during the year.

Change in Interest Coverage Ratio: Due to profit and increase in sales during the year, Operating income has increased compared to PY also finance cost is reduced due to reduction in borrowings.

Change in Current Ratio: Due to increase in short-term borrowings and trade payables during the year.

Change in Debt Equity Ratio: Due to profit in the CY and reduction in borrowings.

Change in Operating Profit Margin f%): Due to profit during the year.

Change in Return on Net Worth as Compared to the Immediately Previous Financial Year along with a detailed Explanation thereof:

Sl. No Particulars	2024-25	2023-24	% Change
1 Return on Net Worth (Profit Before Tax)	0.0935	-0.9705	109.63
2 Return on Net Worth (Profit After Tax)	0.2717	-0.9697	128.02

Return on net worth computed on Profit before tax and profit after tax for the financial year 2024-25 is Increased in comparison to financial year 2023-24 due to increase in net profit for the current year.

Statutory Compliance

The Company has in place with adequate systems and processes to ensure that it is in compliance with all applicable laws. The Managing Director makes periodic declarations regarding the compliance with provisions of various statutes after obtaining confirmation from respective department head. The Company Secretary, being the Compliance Officer, ensures compliance with the relevant provisions of the Companies Act and SEBI regulations.

h) Cautionary Statement

Certain statements in the Management Discussion and Analysis Report describing the Companys objective and predictions may be "forward-looking statements” within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates new regulations and government policies that may impact the Companys business as well as its ability to implement the strategy. The Company doesnt undertake to update the statement.