Rajnandini Metal Ltd Management Discussions

ANNEXURE-4

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economy

The global economic outlook is shaped by two opposing forces: a negative supply shock from the Middle East conflict and a positive technology shock driven by accelerated advancements in artificial intelligence. The global economy maintained its trajectory through 2025 despite elevated tariffs, policy uncertainty, and geopolitical tensions. The impact of tariff measures was less severe than projections had suggested, and growth across major economies remained broadly stable.

World trade expanded faster than anticipated in 2025, as demand for AI-driven capex offset the effects of trade policy uncertainty and higher tariffs. The volume of world merchandise trade grew by 4.6%, compared to a forecast of 2.4%. For the second consecutive year, Asian economies were the largest contributors to total world trade volume growth, accounting for 3.2 percentage points of the 4.6% total or 71% of the overall increase.

Trade in 2025 was also supported by investment in AI infrastructure, demand in emerging markets, fiscal and monetary expansion in advanced economies, and frontloading of imports in North America ahead of anticipated "reciprocal" tariffs from the United States. The outbreak of conflict in the Middle East on February 28, 2026, along with the partial closure of the Strait of Hormuz and damage to energy production facilities, introduced a supply shock to the global economy.

In 2026, global GDP growth is projected at 3.1%, as per IMF estimates, indicating a moderation in macroeconomic momentum. Growth in the US is expected to soften to 2.3%, reflecting policy uncertainty, trade tensions, and weaker demand. Chinas growth is also projected to moderate from 5.0% in CY2025 to 4.4% in CY2026, primarily due to continued weakness in the property sector. In contrast, India is expected to remain a key growth driver, with GDP projected at 6.5%. Overall, advanced economies are likely to grow at 1.8%, while emerging economies are expected to expand at 3.9%.

Despite these uncertainties, several supportive factors are helping sustain global economic activity. These include the lagged effects of earlier interest rate cuts in the United States and the Euro area, continued robust investments in the technology sector that promise productivity gains, and broadly supportive fiscal policies. Specifically, tax incentives in the US, increased infrastructure and defense spending in Europe, and fiscal stimulus from Japans government are working to dilute the negative impacts of the war and stabilize the broader economic outlook. (Source: IMF World Economic Outlook - July 2026)

Indian Economy

Against a challenging global backdrop marked by US tariff escalations and mounting trade policy uncertainty, the Indian economy demonstrated remarkable resilience during FY 2025-26. Real GDP growth accelerated to 7.6%, up from 7.1% in FY 2024-25, cementing Indias position as the fastest-growing major economy globally. This performance reaffirms Indias position as the fastest growing major economy for the fourth consecutive year, driven primarily by domestic demand and supportive macroeconomic fundamentals.

This performance was underpinned by robust domestic demand, low inflation, and a broad pro-growth reform agenda. On the demand side, private consumption grew 7.7% year-on-year, supported by income tax reductions and rationalisation of GST rates.

Economic activity was broad-based. On the supply side, manufacturing gained momentum, driven by the automobile and fast-moving consumer goods sectors. The services sector benefited from demand in retail trade, hospitality, transportation, and real estate. India also made progress in containing inflation, with the headline rate averaging 2% in FY 2025-26, down from 4.7% the previous year.

Indias economic prospects for FY 2026-27 carry both opportunities and risks. Growth is projected at 6.6% by RBI, marginally revised down due to the effects of the Middle East conflict, which has pushed up global energy prices and disrupted shipping through the Strait of Hormuz. India nonetheless remains among the fastest-growing major economies globally.

Indias refined copper consumption continues to witness healthy growth, supported by expansion in the power, electrical equipment, renewable energy, electric vehicles, railway electrification and infrastructure sectors. Government initiatives under Make in India, PM Gati Shakti and increasing investments in transmission and distribution networks are expected to drive sustained demand for copper products over the medium to long term.

Private consumption is expected to remain the primary driver of growth, though elevated global oil prices are likely to feed into domestic inflationary pressures. The GST rate reductions introduced in September 2025 are expected to partially offset this impact. Investment is projected to continue, supported by government capital expenditure, improved trade access through recently concluded free trade agreements, and a stable financial sector.

Indias macroeconomic position, including foreign exchange reserves, a narrowing current account, and a path of fiscal consolidation, provides some buffer against external shocks. The pace of the renewable energy transition, the credibility of fiscal policy, and the implementation of newly concluded trade agreements will be factors that determine the trajectory of growth in the coming years.

Despite potential near-term headwinds in FY27, cumulative policy reforms such as GST rationalization and regulatory simplification alongside structural advantages like urbanization, demographics, and an expanding middle class, keep India firmly on track toward the vision of Viksit Bharat. (Source: Economic Survey 2025-26)

OPPORTUNITIES

Indias copper demand is poised for significant growth, fueled by a positive outlook for industrial and infrastructure expansion. Government initiatives such as the power sector thrust, smart cities, housing for all, renewable energy integration, electric vehicles (EVs), and the Atmanirbhar Abhiyan are major catalysts. Consequently, Indias per capita copper consumption is projected to rise from 0.6 kg to 1 kg, pointing to substantial long-term market potential as it catches up with global averages.

Globally, copper is recognized as an essential "green metal" driving the transition toward net-zero emissions. Demand is intensifying due to worldwide EV adoption, associated charging infrastructure, and decarbonization pushes by the US and the European Union. Furthermore, the rapid expansion of data centers, AI-enabling infrastructure, cooling systems, and renewable energy grids requires massive quantities of copper and aluminum, which could trigger short-term supply strains and push prices higher.

The Indian electrical equipment industry is also poised for sustained growth, driven by increased investments in transmission and distribution infrastructure, industrial automation, consumer electronics, and electrical machinery. This is expected to create substantial demand for copper rods, winding wires, conductors, transformers, motors, and other electrical applications.

THREATS

Despite strong demand, the base metals market faces severe vulnerabilities from supply shocks and geopolitical risks. Production of metals like copper, aluminum, nickel, and tin is geographically concentrated, leaving markets exposed to labor disputes, extreme weather, and conflicts at critical mines. Additionally, export restrictions, trade tensions, and potential policy shifts such as the U.S. Department of Commerces review of refined copper imports threaten to fragment supply chains, increase volatility, and drive prices above baseline forecasts.

The industry also faces challenges arising from processing bottlenecks and disruptions in the supply of key inputs. In India, the non-ferrous metals industry continues to rely significantly on imported copper scrap and other raw materials. Any disruption in imports, fluctuations in foreign exchange rates, or changes in government policies may increase procurement costs and affect the availability of raw materials. Although the development of organised recycling infrastructure presents a long-term opportunity, the industry currently remains exposed to supply-side risks. (Source: Ministry of Mines / Commodity Markets Outlook).

The Company also operates in a highly competitive market, with competition from both domestic and international manufacturers, including large integrated global players. Intense competition may lead to pricing pressure and margin contraction.

In addition, fluctuations in copper prices, which constitute the principal raw material for the Company, continue to be a significant concern. Rising production costs, including increases in wages, power, transportation, and other operating expenses, coupled with stringent delivery schedules, changing fiscal and trade policies, and a shortage of skilled technical manpower, may adversely affect the Companys profitability and operational performance.

Availability of adequate working capital and timely access to banking facilities remain critical for sustaining production and business operations. The Company continues to monitor these risks closely and adopts appropriate procurement, pricing, inventory management, and operational strategies to mitigate their potential impact on its business.

OUTLOOK

The long-term outlook for the Indian copper industry remains positive, supported by sustained economic growth, increasing urbanization, and continued investments in infrastructure and industrial development. Government initiatives such as Make in India, PM Gati Shakti, the National Infrastructure Pipeline (NIP), Smart Cities Mission, expansion of renewable energy capacity, and modernization of the power transmission and distribution network are expected to drive demand for copper and copper-based products.

Copper continues to play a critical role in the transition towards clean energy due to its superior electrical conductivity and extensive application in electric vehicles (EVs), renewable energy projects, battery storage systems, transmission infrastructure, consumer electronics, and electrical equipment. Growing investments in these sectors are expected to result in sustained demand for copper rods over the medium and long term.

The Indian wire and cable industry, which is a major consumer of copper rods, is also expected to witness healthy growth driven by increasing electrification, expansion of the real estate sector, industrial automation, railway electrification, telecom infrastructure, and rising capital expenditure by both the Government and private sector. While the industry continues to face challenges arising from fluctuations in copper prices, foreign exchange volatility, supply chain disruptions, and global economic uncertainties, the long-term demand outlook remains encouraging. The Company will continue to focus on operational excellence, cost optimization, quality enhancement, efficient working capital management, and strengthening customer relationships to improve its competitiveness and profitability.

With improving demand fundamentals and a favourable policy environment, the management remains optimistic about the Companys growth prospects and is committed to creating sustainable value for all stakeholders while maintaining high standards of governance and operational efficiency.

The management remains focused on strengthening liquidity, improving operational efficiencies, optimizing working capital, enhancing customer relationships and restoring normal business operations, while continuing to pursue sustainable long-term growth.

RISKS AND CONCERNS

The Company operates in a dynamic business environment and is exposed to various business risks that may affect its operational and financial performance. The management continuously monitors these risks and adopts appropriate mitigation measures to minimize their impact. The key risks and concerns include:

Liquidity risk arising from constraints in working capital financing and availability of credit facilities. Volatility in copper and other raw material prices, which may impact production costs and profit margins. Supply chain disruptions arising from geopolitical conflicts, wars, trade restrictions, or logistics bottlenecks. Changes in government policies, customs duties, taxation, environmental regulations, and Free Trade Agreements (FTAs). Intense competition from domestic and international manufacturers, leading to pricing pressure and margin contraction. Fluctuations in foreign exchange rates affecting the cost of imported raw materials. Rising energy, transportation, and labour costs, which may adversely affect manufacturing costs. Global oversupply or dumping of copper products, resulting in pricing pressure in the domestic market. Increasing environmental and sustainability compliance requirements, including carbon emission norms and ESG-related regulations. Availability of quality raw materials and uninterrupted power supply for efficient manufacturing operations.

The Company has established appropriate risk management practices and internal control systems to identify, assess, and mitigate these risks. The management remains committed to strengthening operational efficiency, optimizing costs, diversifying its customer base, and ensuring sustainable growth while effectively managing the evolving business environment.

During the year, the Company experienced liquidity constraints and certain regulatory proceedings which have been appropriately disclosed elsewhere in this Annual Report. The management continues to address these matters through appropriate operational, financial and legal measures. No other material risks, apart from those discussed above, are expected to threaten the Companys long-term sustainability. Our proactive approach to risk management continues to strengthen our operational resilience and strategic flexibility.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has a robust Internal Control System commensurate with the size, scale and complexity of its operations. The framework covers operational, financial reporting, regulatory and compliance controls, and is supported by Standard Operating Procedures across functions, periodic reviews by independent internal auditors, and oversight by the Audit Committee.

Internal audit is an integral part of the control framework and is conducted by an independent internal auditor appointed by the Audit Committee and Board. The internal audit function is supported by a dedicated Assurance & Control team with domain expertise. A risk based internal audit plan is followed, with a stringent grading mechanism to monitor audit observations and implementation of corrective actions. Internal auditors periodically present audit findings, including the status of follow up actions, to the Audit Committee, which reviews these observations and provides necessary directions. Periodic reviews of finance, procurement, sales, and plant operations were carried out by the internal audit function. Recommendations have been substantially implemented, with progress reported to the Audit Committee.

During the reporting year, there were no significant changes in the Companys internal financial controls that have materially affected or are reasonably likely to materially affect the internal financial control framework. Overall, the internal control system is considered adequate and operating effectively in managing business risks, safeguarding assets and enhancing shareholder value. The Company continues to strengthen its compliance monitoring framework, particularly with respect to indirect taxation and statutory compliances.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

Training to employees at all levels is provided regularly to develop the knowledge and skills. The management is fully committed to the development of its human resources. Your company aims at providing in class training to each employee. The Company has taken steps for safety of employees and implemented regular safety audit, imparted machine safety training, wearing protective equipment etc. The Company has also implemented ISO 45001:2018 standard.

Functional and developmental training is provided from time to time to all employees to enhance their skills and productivity. The management provides continuous support for the development and upskilling of human resources.

The Company believes in empowering its employees through greater knowledge, team spirit and developing greater sense of responsibility. On the job training and management development programme series on skill upgradation has been attended by functions like Sales, Finance & Accounts, Purchase, Secretarial and HR. The leadership team is also playing the role of mentors in order to support knowledge transfer, skill building and career growth for their respective teams, fostering a supportive work culture across the organization. There were 93 regular employees as at March 31, 2026.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements have been prepared in accordance with the requirement of the Companies Act, 2013 and applicable Accounting Standards.

Particulars	Year Ended 31.03.2026	Year Ended 31.03.2025
	(Rs. in Lakhs)	(Rs. in Lakhs)
Revenue from operations	26,333	1,03,358
Other income	141	8
Total Income	26,474	1
Expenses
Cost of Material consumed	15,168	1,03,371
Purchase of Stock in trade	11,851	-
Change in inventories of Finished goods,	(2,124)	(3670)
work in progress and stock-in-trade
Employee Benefit Expenses	423	732
Finance Cost	314	1
Depreciation and amortization	118	1
Other Expenses	710	2
Total Expenses	26,460	1
Profit/(Loss) before exceptional item and tax	14	(272)
Exceptional Item	4	-
Profit Before tax	10	(272)
Less: Tax expenses
(i) Current Tax	71	18
(ii) Deferred Tax	(29)	(73)
Total Tax expenses	4
Net Profit for the Year	(32)	(217)
Add: Other Comprehensive Income	2	9
Total Comprehensive Income	(3)	(215)

During FY 2025-26, the significant decline in revenue from operations was primarily attributable to the recall of the Companys working capital facilities by its lending bank(s). Due to the severe constraints on the availability of working capital, the Company experienced a significant reduction in production activities, resulting in a reduced capacity to execute existing customer orders and undertake new business. The consequential decline in production and sales led to a significant reduction in revenue from operations from Rs. 1,034 crores in FY 2024-25 to Rs. 263 crores in FY 2025-26.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The significant changes in the key financial ratio of the Company, as compared to the previous year are as given below-

Sl. No.	Particulars	FY 2025-26	FY 2024-25	Change (%)	Explanations
1.	Current Ratio (In times)	1.80	1	. 30.56%	Due 3 to reduction 8 in current borrowings
2.	Debt Equity Ratio (In times)	0.07	0	.	6 1
3.	Return on Equity (ROE) (In %)	(0.57%)	(3.84%)	(85.29%)	Due to reduction in loss during the year
4.	Debt Service Coverage Ratio (In times)	1.06	0	.	3 4 EBIDTA
5.	Trade receivables turnover ratio (In times)	36.22	57.41	(36.91%)	Due to reduction in trade receivables
6.	Trade payables turnover ratio (In times)	6.33	48.26	(86.89%)	Due to increase in trade payables
7.	Net profit ratio (In %)	(0.12%)	(0.21%)	(42.26%)	Due to reduction in loss during the year
8.	Return o n capital employed (ROCE) (In %)	4.71%	10.38	(54.60%)	Reduction in EBIDTA margin
9.	Inventory Turnover Ratio	2.84	10.51	(72.95%)	Due to higher inventory levels and reduction in sales
10.	Net capital turnover ratio (In times)	6.24	34.08	(81.70%)	Due to reduction in sales