Prakash Steelage Ltd Management Discussions

The Management of Prakash Steelage Limited, presents its analysis report covering performance and outlook of the Company. The core business of the Company is manufacturing and exporting stainless steel tubes and pipes. It has its Registered O3ce located in Mumbai, Maharashtra and plant located at Silvassa (UT – Dadra & Nagar Haveli). The Management accepts responsibility for integrity and objectivity of the Financial Statements of the Company.

THE GLOBAL ECONOMY OVERVIEW

After enduring a prolonged and unprecedented series of shocks, the global economy appeared to have stabilized, with steady yet underwhelming growth rates. However, the landscape has changed as governments around the world reorder policy priorities and uncertainties have climbed to new highs. Forecasts for global growth have been revised markedly down compared with the January 2025 World Economic Outlook (WEO) Update, reflecting e3ective tari3 rates at levels not seen in a century and a highly unpredictable environment. Global headline inflation is expected to decline at a slightly slower pace than what was expected in January.

Intensifying downside risks dominate the outlook, amid escalating trade tensions and financial market adjustments. Divergent and swiftly changing policy positions or deteriorating sentiment could lead to even tighter global financial conditions. Ratcheting up a trade war and heightened trade policy uncertainty may further hinder both short-term and long-term growth prospects. Scaling back international cooperation could jeopardize progress toward a more resilient global economy.

(Source: IMF, World Economic Outlook,April 2025).

THE INDIAN ECONOMY OVERVIEW:

Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. Nominal GDP for FY25 is estimated at Rs. 33.10 lakh crore (US$ 3.8 trillion) with growth rate of 9.9%, compared to Rs. 30.12 lakh crore (US$ 3.5 trillion) in FY24. Strong domestic demand for consumption and investment, along with Governments continued emphasis on capital expenditure are seen as among the key driver of the GDP in the second half of FY25. In FY25, Indias exports stood at Rs. 37.31 lakh crore (US$ 433.56 billion), with Engineering Goods (26.88%), Petroleum Products (13.86%) and electronic goods (8.89%) being the top three exported commodity. Rising employment and increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Future capital spending of the government in the economy is expected to be supported by factors such as tax buoyancy, the streamlined tax system with low rates, a thorough assessment and rationalisation of the tari3 structure, and the digitization of tax filing.

In the medium run, increased capital spending on infrastructure and asset-building projects is set to increase growth multipliers. The contact-based services sector has demonstrated promise to boost growth by unleashing the pent-up demand. The sectors success is being captured by a number of HFIs (High-Frequency Indicators) that are performing well, indicating the beginnings of a comeback.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

(Source: - www.ibef.org/economy/indian-economy-overview)

INDUSTRIAL STEEL INDUSTRY OVERVIEW: 1. Introduction Global Scenario

• In 2024, the world crude steel production reached 1,882.6 million tonnes (MT) as per provisional data released by World Steel Association. World Steel Association in its Short-Range Outlook, October 2024 forecasts that steel demand will grow by 1.2% year-on-year in 2025 and reach 1,771.5 MT after contracting 0.9% y-o-y in 2024 to 1750.9 MT.

• India is the second largest producer of crude steel. China was worlds largest crude steel producer in 2024 (1,005.1MT) followed by India (149.4 MT), Japan (84.0 MT) and the USA (79.5 MT).

(Source: World Steel Association and the data is provisional)

• Per capita finished steel consumption in 2023 was 221 kg for world and 635 kg for China as per provisional data released by World Steel Association. The same for India was 97.7 kg in 2023-24 (Source: JPC).

Domestic Scenario

• 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 e3ciency and performance of the steel sector.

• In this role, the Government has released the National Steel Policy 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.

• 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 MT by the end of 2026-27.

• Indias crude steel capacity was 179.5 mt (provisional) in 2023-24 .

2. Performance of Steel sector

• Production of pig iron, sponge iron and total finished steel (alloy/stainless + non-alloy) are given in table below for last five years and current year:

Table 1: Indian Steel Industry : Production (in Million Tonnes)

Category	2019-20	2020-21	2021-22	2022-23	2023-24	Apr-Jan 2024-25*
Pig Iron	5.42	4.88	6.26	5.86	7.36	6.97
Sponge Iron	37.10	34.38	39.20	43.62	51.56	46.28
Total Finished	102.62	96.20	113.60	123.20	139.15	120.43
Steel

Source : Joint Plant committee : *Provisional

• Performance of Steel sector during 2023-24 has been the best ever of any fiscal year. Cumulative production and consumption of steel during the last five financial years are given in the following table and graph below:

Table 2 : Production and consumption in Million Tonnes

Category	2019-20	2020-21	2021-22	2022-23	2023-24	Apr-Jan 2024-25*
Crude Production	109.14	103.54	120.29	127.20	144.30	125.49
Finished Steel Production	102.62	96.20	113.60	123.20	139.15	120.43
Consumption	100.17	94.89	105.75	119.89	136.29	125.42

Source : Joint Plant committee : *Provisional

3 The month-wise production and consumption indicates month-on-month fluctuations. Broadly speaking it has shown an increasing trend after 2020-21, during which production and consumption was adversely a3ected by Covid-19 pandemic. The production of crude Steel, finished steel and consumption since April, 2022 may be seen from Graph Below:

3 The global production of crude steel declined by 0.8% to 1882.6 MT in 2024 (provisional) against 1897.9 MT in 2023. Among the top 10 countries, China, Japan, the USA, Russia and South Korea reported fall in crude steel production in 2024. The remaining five countries, including India, reported growth in output.

3 Turkey reported a spectacular 9.4% growth in production. It was followed by India and Brazil, showing 6.3% and 5.3% growth, respectively. Country wise share of crude steel production in 2024 may be seen from the following graph :

3. International Trade of Steel

3 During last five years, India was a net exporter of total finished steel in all the years barring only 2023-24 and April-January 2024-25 when it turned net importer. The Table below contains the details:

	Table 3 : Exports and Imports (Th. Tonnes)
Category	2019-20	2020-21	2021-22	2022-23	2023-24	Apr-Jan 2024-25*
Export	8355	10784	13494	6716	7487	3994
Imports	6768	4752	4669	6021	8320	8369
Net Exports/ Imports	1588	6031	8824	695	833	4374

Souce : Joint Plant Committeel; *Provisional

3 Month-wise data of last three months of 2023-24 and the current year (provisional) indicates that India alternated its status between net importer and exporter during the period. Barring February and March 2024, the country was a net importer of finished steel in all the remaining months. The table and graph below contain the details.

Table 4 : Month-wise* Imports & Exports of Finished Steel in Th. Tonnes

Item	Jan 24	Feb 24	Mar 24	Apr 24*	May 24*	Jun 24*	Jul 24*	Aug 24*	Sep 24*	Oct 24*	Nov 24*	Dec 24*	Jan 25
Import	847	854	571	585	722	636	812	962	1017	1033	814	842	944
Export	846	1026	842	505	430	343	295	343	396	442	400	446	395
Net Exports/ Imports	1	172	271	80	292	294	517	620	621	591	414	396	549

Souce : Joint Plant Committeel; *Provisional

4. Steel Prices

• Price regulation of iron & steel was abolished on 16.1.1992. Since then, domestic steel prices are determined by the interplay of market forces.

• Domestic steel prices are influenced by trends in raw material prices, demand – supply conditions in the market, international price trends among others.

• As a facilitator, the Government monitors the steel market conditions and adopts fiscal and other policy measures based on its assessment.

• The fluctuations in retail prices of steel (TMT, HRC and CRC) may be seen from the following graph:

• Iron ore prices showed wide fluctuations during the last two years. Prices showed a declining trend between April 2022 and December 2022, followed by an upward move till May 2024. Iron ore prices again witnessed a declining trend since June 2024 to September 2024, following by an upward move till December 2024. Thereafter prices dipped at the start of 2025 as may be seen from the graph below:

5. Important Policies and initiatives of Governments of India

• Steel is a de-regulated sector, Government acts as a facilitator, by creating conclusive policy environment for development of the steel sector. Government of India has notified National Steel Policy, 2017 which envisages development of a technologically advanced and globally competitive steel industry that provides environment for attaining self su3ciency in steel production by providing policy support and guidance to steel producers. 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 e3ciency. 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: -

S. No. Paramater	Projection (2030-31)
1 Total Crude Steel Capacity	300 mt
2 Total Crude Steel demand/Production	255 mt
3 Per Capita Finished Steel Consumption	158 kg
Sources: National Steel Policy (NSP) 2017	mt: Million Tonnes

• Production Linked Incentive (PLI)Scheme for Specialty Steel was launched by the Union Cabinet on 29.07.2021, with financial outlay of Rs.6,322 crore to promote the manufacturing of Specialty Steel within the country by attracting capital investment, generate employment and promote technology up-gradation in the steel sector. On 17.03.2023, Ministry of Steel signed Memorandum of Understanding (MoU) with 27 selected companies having 57 applications. The scheme is in force since 1st April, 2023 and FY 2024-25 is the first year of incentive disbursement. At present the scheme has 44 active MoUs with committed investment of about Rs. 27,100 Crore and downstream capacity addition of 23.8 million tonnes. Second round of Production Linked Incentive Scheme for Specialty Steel (PLI 1.1) was launched on January 6th 2025 with a tenure from 2025-26 to 2029-30. Applications received from 37 companies are being processed.

3 Steel Quality Control Order (QCO): Ministry of Steel has introduced Steel Quality Control Order (QCO) thereby banning sub-standard/ defective steel products both from domestic & imports to ensure the availability of quality steel to the industry, users and public at large. As per the Order, it is ensured that only quality steel conforming to the relevant BIS standards are made available to the end users. As on date 151 Indian Standards stands notified under the Quality Control Order covering carbon steel, alloy steel and stainless steel have been notified under the QCO. Inclusion of 21 additional BIS Standards in the QCO have been initiated.

3 Research & Development (R&D): Ministry of Steel is providing financial assistance for pursuing Research & Development to address the technological challenges faced by the Iron & Steel sector. The thrust areas for providing

financial assistance under the R&D Scheme, are development of new alternate processes & technologies to address the burning issues faced by the Iron & Steel Sector such as climate change (green steel production, H2 based steel production, CCUS etc.), waste utilization, resource e3ciency, etc. The yearly budget allocated for the scheme is around Rs 5-10 crore per year. Out of the 35 R&D projects completed under the scheme, Process/Knowhow developed have been adopted by the Industry in six projects and Process/Knowhow Developed at lab scale in 23 projects. In six projects the outcome was not successful. Presently 23 R&D projects are in progress which are in various stages of completion.

3 In 2024-25, the Ministry of Steel has sought R&D Project proposals in joint collaborative mode from reputed Academic Institutions, Research Laboratories and Steel Companies for pursuing R&D projects on the identified thrust areas, for providing financial assistance under the R&D Scheme. In response to the above, 73 R&D proposals were received from the stakeholders out of which 13 R&D proposals have been approved for funding under the scheme based on the evaluation of the proposals.

3 Steel Import Monitoring System (SIMS) SIMS, introduced in 2019, provides detailed data related to imports of steel in India. Based on industry feedback, the Ministry has revamped the portal to develop a more e3ective SIMS 2.0. It is a significant step forward in monitoring steel imports and promoting the growth of the domestic steel industry. Availability of such detailed data not only provides input for policy making but also signals areas for production and growth to the domestic steel industry.

SIMS 2.0 features API integration with multiple government portals, enhancing quality control and streamlining processes for improved e3ciency and e3ectiveness. The portal boasts a robust data entry system, ensuring consistent and authentic data, which promotes transparency and accountability. Integration of various databases enable stakeholders to locate areas of risk and, thereby, permit better risk management. Accurate monitoring of steel imports through SIMS is expected to help in taking informed policy decisions to counter surge in steel imports, driving growth, and attracting sustained investment in Indias steel industry.

(Source: -https://steel.gov.in/en/overview-steel-sector)

OPPORTUNITIES AND THREATS:

OPPORTUNITIES

• Stainless steel is a versatile material resistant to corrosion and high temperatures. This makes it ideal for various applications, including in the oil and gas, chemical and food processing industries. The demand for stainless steel pipes and tubes is expected to grow in the coming years, which is a positive sign for Prakash Steelage.

• Governments around the world are investing heavily in infrastructure development projects. This creates a demand for pipes and tubes for water treatment plants, power plants and other infrastructure projects.

• Removal of export duty on steel is seen as a positive. Steel companies can sell their products overseas at competitive prices without the export duty, potentially boosting their profits.

THREATS

• Prakash Steelage supplies a variety of industries, which can mitigate risk somewhat, but a downturn in any one sector, like power or oil and gas, could still hurt sales.

• The Company needs a lot of cash to cover its day to-day operations, limiting its financial flexibility.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate Internal Financial Controls with reference to financial statements and such Internal Financial Controls are operating e3ectively. Your company has adopted policies and procedures for ensuring the orderly and e3cient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial statements.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

On the operational front, the Company on standalone basis has recorded net revenue of Rs. 7,801.92 Lakhs compared to Rs. 12,680.55 Lakh of previous year. The Company has earned a profit before tax and exceptional item Rs. 196.64 Lakhs as compared to previous years Profit before tax and exceptional item of Rs. 2,353.51 Lakhs. The Company has gained net profit after tax Rs. 129.57 Lakhs as compared to previous years net profit after tax of Rs. 5,788.73 Lakhs. The Earning per Share (EPS) stood at Re. 0.07.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

As on 31st March 2025, the number of permanent employees in the Company is 73 at various levels. Talent management has always been the crucial factor for the Company, as your Company believes that its continued success will depend on its ability to attract and retain key personnel with relevant skills and experience. The attrition rate among the Top Management of the Company has been negligible in last many years. The Company has robust process of human resource development. The Company has a HR Policy in place and encouraging working environment. The Company has continued to focus on various aspects like employee training, welfare and safety thereby maintaining a constructive relationship with employees. The Management had taken all required e3orts for implementation of terms and conditions laid down by Ministry of Home A3airs of Central Government of India for prevention of outbreak at work places through detailed Standard Operating Procedure and Human Resource Department had taken e3ort in its implementation at all the sites.

CAUTIONARY STATEMENT

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified/non identified risks and uncertainties that could cause actual results to di3er materially. In addition to the foregoing changes in the macro environment, Russias war in Ukraine could escalate, and tighter global financing conditions could worsen debt distress. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based, are also subject to change accordingly. These forward looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS.

The change in the key financial ratios as compared to previous year is stated below:

Ratios	Financial year ended 31-03-2025	Financial Year ended 31-03-2024	Changes (%)	Reason for change
Debtors Turnover Ratio	6.476	9.47	-31.61	Downward trend is consistent with the decline in sales observed during the year.
Inventory Turnover Ratio	3.455	5.17	(33.24)	Decrease due to lower in production in FY 2024-25 which resulted into declined in the overall Cost of Goods Sold.
Interest Coverage Ratio	21.17	121.94	(82.64)	Decreased due to lower operating profit & Interest Expenses reduced to half in the current year as compare to Previous Year.
Current Ratio	1.105	1.04	6.66	Increased due to Repayment of Liabilities.
Debt Equity Ratio	0.438	0.02	22347.72	Primarily due to a rise in borrowings from INR 13.82 lacs to INR 3.90 crores. while shareholders equity saw a modest increase of 15% as compared to previous year.
Operating Profit	2.70	18.67	(85.56)	Decrease due to decrease in the
Margin (%)				Operating Profit and lower sales volume in the current year as compare to previous year.
Net Profit Margin (%)	1.69%	54.73%	(96.91%)	Decrease due to lower other income and no exceptional income during the current year.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

The Return on Net Worth for Financial Year 2024-25 was 14.55% as against 750.14% for Previous Year. The return on net worth has reduced by 98.06% in the current Financial year, due to decrease in net profit as compared to net profit for Financial Year 2023-24.

For and on Behalf of the Board of Directors

Prakash Steelage Limited

Sd/-

 

	Prakash C. Kanugo
Date: 11th August, 2025	Chairman & Managing Director
Place: Mumbai	DIN: 00286366