Rajnandini Metal Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Economy

With stable but modest growth for 2024, the global economy remained on the path of cautious stability. According to the International Monetary Fund (IMF), the global economy grew at a modest rate of 3.3%, matching the previous year but below the historical average of 3.5% from 2000-2019. In January 2025, the IMF expected the global economy to grow at 3.2% for both 2025 and 2026. But escalating trade tensions and tariff implementation by the current US administration have led to significant uncertainty in global economic projections. IMFs April 2025 World Economic Outook reflects some of these concerns, with downward revision to growth estimates at 2.8% and 3% respectively for 2025 and 2026.

Monetary easing and subsiding inflation offer some tailwinds. Still, vulnerabilities persist. Geopolitical conflict, high borrowing costs, and deteriorating trade dynamics remain formidable obstacles. Inflation is projected to fall further to 4.3% in 2025 and 3.6% in 2026, but service sector inflation remains sticky, and trade disruptions could yet spark fresh cost pressures.

Geopolitical tensions, now more durable than episodic, compounded market uncertainty. A more fragmented world economy, shaped by competing spheres of influence and rising trade friction, added further complexity. Yet not all signals were dim. Inflation eased dropping from 6.6% in 2023 to 5.7% in 2024, reflecting tighter monetary policy and a marked softening of supply chain disruptions. Central banks in advanced economies began pivoting away from restrictive stances, making financial conditions more supportive, though not without caution.

Merchandise trade, long the engine of global growth, faces an uncertain future. New tariffs and retaliatory measures risk pulling global trade volumes into contractionary territory. Encouragingly, recent bilateral trade deals suggest that diplomacy is not entirely off the table, even as rhetoric hardens.

The global economic outlook faces significant challenges from escalating trade policy uncertainties, ongoing geopolitical risks, and tariff escalations continue to pose downside risks, particularly for trade-intensive economies.

Indian Economy

Indian economy continues to be the fastest-growing large economy, though the pace of growth has slightly moderated for FY 2024-25. According to the Government Estimates, the economy grew 6.5% in FY 2024-25, compared to 8.2% growth in FY 2023-24. 9.4% growth in the Construction sector and 7.2% growth in the services sector have been the main contributors to GDP growth in FY 2024-25.

India enters the new fiscal year with tailwinds intact and RBI projects the Indian economy to grow at 6.5% for FY 2025-26, with risks well balanced. Consumption is expected to pick up further. Public investment will likely remain a key growth lever, while fiscal consolidation continues. This growth will be achieved on the back of improvements in the manufacturing sector and government impetus to growth through the budget like reduction in direct taxes and investments in infrastructure.

Manufacturing momentum is expected to build, supported by the Production Linked Incentive (PLI) scheme and the new National Manufacturing Mission. Infrastructure will remain a priority, buoyed by initiatives under Gati Shakti, higher allocations for affordable housing, and a renewed push under the Asset Monetisation Plan.

The external sector outlook, though exposed to global turbulence, remains cautiously optimistic. Ongoing trade negotiations and regional partnerships offer a buffer against a volatile trade landscape.

While global financial market volatility, geopolitical tensions, and trade fragmentation pose downside risks, Indias sound macroeconomic fundamentals, robust financial sector, and commitment to sustainable growth position the economy to remain the fastest-growing major economy in 2025-26. Amid a challenging global economic landscape and deteriorating geopolitical conditions, India continues to shine as a bright spot. It is the fourth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy.

The copper rod market is experiencing robust growth owing to the increasing demand from sectors such as power transmission, electronics, and telecommunications. The market is witnessing a surge in investments in infrastructure development projects, further fueling the demand for copper rods. Moreover, the growing emphasis on renewable energy sources is driving the need for copper rods in the production of solar panels and wind turbines.

OPPORTUNITIES

Indian Electrical equipment Industry is set for revival and growth in power sector. This is an opportunity for demand in winding wires & strips, which is one of the principal inputs to electrical machines & electronic equipment. It is expected that customer base will expand and new customer base will be generated. The increasing adoption of electric vehicles presents a significant opportunity for the copper rod market. EVs require a larger amount of copper rods compared to conventional vehicles, as they utilize copper extensively in their electrical systems. Further, various Indian government initiatives on railways, housing, smart cities, telecom and a major focus on the infrastructural sector will lead to a huge opportunity for the industry.

THREATS

Increasing competition from domestic and foreign players could lead to margin contraction due to pricing pressure. Some of the larger global players are already present in India. Highly fluctuating price of copper, which is the principal input to the winding wire Industry, continues to be of serious concern. The rising cost of production, especially due to wage increase and rise in prices of other materials & services, short & stringent delivery schedule by customers in the background of highly volatile copper prices, Fiscal policy of government encouraging imports of inputs which are detrimental to Indian Electrical Industry, competition from other leading winding wire manufacturers, global trade barriers, a shortage of skilled local technical labor etc. continue to threaten the profitability of your Company.

OUTLOOK

The outlook for FY 2025-26 remains optimistic. The copper demand projected to increase due to EV adoption, power grid modernization, and infrastructure investment. The global refined copper demand is projected to grow by 2.8% in CY 2025, led by China at 3.4%, while the rest of the world is expected to see growth at 1.8%. In India, demand is likely to reach 920 KT in FY 2025-26. The copper market is expected to shift into a deficit in CY 2025, primarily due to constrained mine supply and the absence of major new project additions, though some capacity expansion is anticipated in China, Indonesia, and the Congo. Additionally, smelter production is being impacted by declining TC/RC observed in late CY 2024 and early CY 2025, prompting miners to cut production. While ongoing US-China trade tensions and LME price volatility continue to be uncertain in short-term, the longterm demand outlook for copper remains robust. The Copper Concentrate market remains tight, leading to a decline in spot TC/RC terms.

With copper demand projected to increase due to EV adoption, power grid modernization, and infrastructure investment, the Company plans to strengthen backward integration and procurement efficiency and invest in R&D and sustainability initiatives, especially waste heat recovery and recycled copper usage.

Domestic copper demand is also driven largely by rods, which is the downstream product for the copper business. Companys strategy of enhancing capacity through copper rods which will help it gain a larger market share and meet the growing demand for copper in the domestic market.

RISKS AND CONCERNS

In the winding wire business, the global demand and supply of copper and its prices plays a vital role and could significantly affect your Companys turnover. Your company is fairly exposed to the domestic and global political and economic risks. The prices advanced on rapidly increasing demand for copper from China, India and the other emerging economies of Asia. Your company also continuously keeps working on getting approvals from new and renowned customers to increase its market share commensurate with its capacity. Intense competition in the market could affect our cost advantages and result in decreased turnover. Failure to complete fixed price, fixed time frame deliveries could result in lower revenues of the company.

The business of your company could suffer if we fail to anticipate and develop new products and enhance existing range to keep pace with the rapid changes in the winding wire industry. Your companys manufacturing facilities are based in India. Any changes in the legal, fiscal and other regulatory regimes of our country could affect our performance. It also has a wide customer base and changes in the legal, fiscal or regulatory regimes can also affect the competitiveness of our product and affect your companys performance.

During the year, no major risks were identified that might threaten the Companys existence. Our proactive approach to risk management continues to strengthen our operational resilience and strategic flexibility.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has adequate internal control systems and procedures designed to effectively control the operations at its Head Office. The internal control systems are designed to ensure that the financial and other records are reliable for the preparation of financial statements and for maintaining assets. The Company has well designed Standard Operating Procedures.

Independent Internal Auditors conduct audit covering a wide range of operational matters and ensure compliance with specified standards. Planned periodic reviews are carried out by Internal Auditors. The findings of Internal Audit are reviewed by the top management and by the Audit Committee of the Board of Directors.

Based on the deliberations with Statutory Auditors to ascertain their views on the financial statements including the Financial Reporting System and Compliance to Accounting Policies and Procedures, the Audit Committee was satisfied with the adequacy and effectiveness of the Internal Controls and Systems followed by the Company.

HUMAN RESOURCE DEVELOPMENT

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. Every new recruit receives complete safety training and on the job training from his colleagues/supervisor. Functional and developmental training is provided from time to time to all employees to enhance their skills and productivity. There is an all-round support from the management to the development 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.

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.

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-