Prakash Industries Ltd Management Discussions

Industry Structure & Developments

Despite the headwinds faced by the steel industry globally, the Indian steel sector demonstrated resilience along with strong demand in FY2026. India has continued to retain its position as worlds second largest steel producer since 2018. The Finished steel consumption grew by ~7.6% to 163.7 MT in the year 2026, driven by infrastructure, construction, urbanization, automotive and manufacturing demand. The domestic steel capacity hit 220 MTPA, swiftly moving towards its ambitious goal of achieving 300 MTPA by 2030. The Indian Government has imposed safeguard duty in the range of 11% - 12% on certain steel imports starting late 2025 to curb a surge in low-priced imports and to protect the domestic steel producers Further, key government initiatives for Indias steel industry like Production Linked Incentive (PLI) Scheme for specialty steel and strict import monitoring via SARAL-SIMS portal also focus on boosting domestic production, enhancing quality, encouraging green technologies, and decreasing import reliance.

Opportunities and Threats

The Indian steel industry is experiencing robust growth, with crude steel output rising by 9.1% in FY 2026. The key opportunities for the domestic steel sector continue to be massive infrastructure projects, green steel adoption, specialty steel production, and rising export potential. Significant investments in roads, railways, including proposed bullet trains and smart cities will drive the demand for steel in the country. Since India has huge potential for export of high-quality steel, the Indian government is playing an essential part in supporting exports by implementing policy initiatives and programs for the development of trade. In FY2026, although Indias per capita steel consumption has increased to ~100 kg, there is significant potential for growth in steel consumption in the long run considering the global average per capita consumption of 230 kgs.

The key threats to the Indian steel industry continue to be volatility in the prices of key inputs like iron ore and coal due to erratic supplies, surge of cheaper imports at predatory prices, high financing costs and logistic constraints.

However, your Company has insulated itself against these possible threats as the Company has an operational iron ore mine and coal mine to take care of its iron ore and coal requirements in steel making. In

addition, the Company also has in place coal linkages from Coal India Ltd. As regards the competition from cheap steel imports, the government has imposed safeguard duty on certain steel products to take care of the interest of the domestic steel players.

Outlook

The Indian steel industry is expected to witness robust growth in future. The sector is positioned as a global bright spot with ~9.1% cumulative growth in FY26, aiming for 300 million tonnes (MT) capacity by 2030 and 500 MT by 2047 at the back of focused governments thrust on housing and infrastructure sectors along with strong demand from engineering, automotive and other segments. Steel being a deregulated sector, the government is playing a facilitative role by fostering a conducive policy framework for its growth and development. The focus on r ising exports and expanding specialty steel output are further reinforcing Indias global position. With clear pathways for green steel and decarbonization, the industry is aligning with long term sustainability goals. Together, these steps are building a resilient, future ready steel ecosystem that will support Indias growth in the years ahead.

Risks and Concerns

Businesses face critical risks such as strategic, operational, financial, and compliance related risks that threaten their profitability and survival. Proactive risk management is essential to timely identify and mitigate these risks to ensure long term sustainability along with safeguarding the interest of all the stakeholders of the business entity. The Company has a Risk Management Committee to detect the risks and suggest the methods to mitigate them. The Committee ensures that all the probable risks are adequately identified, measured, estimated and controlled.

Raw material price volatility, disrupted supply chain, high energy prices and environmental regulations continue to be key business concerns in our industry. The Company has significantly insulated itself against the volatility in raw material prices and supplies with its operational iron ore and coal mine. In addition, the Company has also in place coal linkages from Coal India Limited for supply of Coal at a stable price. As regards energy requirement, the Company has captive power plant at its Integrated steel plant in Chhattisgarh which takes care of its power requirement in steel making.

Internal Control System and their Adequacy

Internal control systems are policies, procedures, and technologies aimed at achieving organizations objectives, specifically in financial reporting, operational efficiency, and legal compliance. The Company has an adequate internal control system to manage the business operations effectively and efficiently. The Company has an independent professional firm for conducting Internal Audit at regular intervals and to monitor the compliance of all operations with prescribed business standards. Any variance from the budget is flagged off to the senior management which advises modification to ensure strict adherence to compliances. The audit team supervises all internal processes and recommends the changes to ensure quick remedy of deviations, wherever required.

Discussion on financial performance with respect to operational performance

During the year under review, the Company recorded Net Sales of ?3,478.66 crores, compared to ?4,014.35 crores in the previous financial year. Despite the moderation in top-line revenue, the Company maintained strong operational efficiency, resulting in a steady EBITDA of ?542.75 crores (against ?544.99 crores in the previous year). Consequently, the EBITDA margin witnessed a healthy expansion, improving to 15.6% from 13.6% in the previous year. After accounting for interest, depreciation, and tax, the Profit After Tax (PAT) stood at ?333.14 crores (previous year: ?355.45 crores), yielding an Earnings Per Share (EPS) of ?18.60.

During the year the Company has achieved targeted extraction of ~1 million tonnes of coal from its Bhaskarpara Coal Mine.

Material Developments in Human Resource/Industrial Relations

The aim of human resources and industrial relations is to effectively and successfully manage an organizations most critical resource, its people. Cordial industrial relations ensure better productivity from the employees, reduces the wastage of machinery, materials, and manhours, minimizing the labor turnover rate /accretion and safeguarding the workers economic and social interests. Maintaining constructive industrial relations is vital for organizational stability, workplace fairness, and macroeconomic growth It is important that all the aspects related to the employees like recruitment, training, compensation, employee development and compliance of labour laws are adequately managed to ensure healthy work and constructive relationship with the employees. The Company has a well designed and timely approach to address the key aspects of human resources. The Company maintained healthy and cordial industrial relations during the year.

RATIO ANALYSIS

S. No.	Particular	Units	FY 2026	FY 2025
1	Debt-Equity Ratio	Times	0.08	0.03
2	Current Ratio	Times	1.71	1.26
3	Operating Profit Margin	%	14.76	12.94
4	Net Profit Margin	%	9.51	8.87
5	Interest Coverage Ratio	Times	12.31	11.76
6	Debtors Turnover Ratio	Times	18.80	31.23
7	Inventory Turnover Ratio	Times	4.31	7.23

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT