Rathi Steel & Power Ltd Management Discussions

ECONOMIC ENVIRONMENT

The steel industry remains one of the most important basic industries globally because steel is a fundamental input for construction, infrastructure, automobiles, engineering, machinery, energy, railways, defence, shipbuilding and consumer durables.

The global steel industry is currently passing through a period of structural adjustment. Global steel demand has been weak, particularly in China and several developed economies, while substantial new capacity is being added. The OECD estimates that as much as 165 million tonnes of new steelmaking capacity could be added globally during 2025-2027, potentially worsening excess capacity and putting pressure on utilisation and margins.

India, however, presents a substantially more favourable medium- to long-term outlook. India became the world’s second-largest crude steel producer, with crude steel capacity of approximately 200.3 million tonnes in FY2024-25. The Ministry of Steel reports that crude steel production increased to about 168.4 MT in FY2025-26, while finished steel consumption reached approximately 164 MT.

Indias steel demand is expected to remain supported by:

• Infrastructure investment;

• Urbanisation;

• Housing and construction;

• Roads, railways, airports and ports;

• Manufacturing and engineering;

• Automobile production;

• Renewable-energy infrastructure;

• Defence and capital goods;

• Increasing steel intensity of the economy; and

• Rising per-capita steel consumption.

The principal challenges are raw-material costs, imported coking coal, volatile steel prices, Chinese exports, global excess capacity, energy costs, environmental regulations, carbon intensity and the need for technological modernisation.

STEEL SECTOR - INDUSTRY CHARACTERISTICS

Steel is a capital-intensive, energy-intensive and cyclical industry. It has a long investment cycle, substantial fixed costs and significant exposure to commodity-price fluctuations.

The sector broadly consists of the following value chain:

Iron ore / Scrap / Coking coal ^ Coke / DRI / Sinter / Pellets ^ Iron making ^ Steel making ^ Continuous casting ^ Rolling ^ Finishing ^ Fabrication ^ End users

Major production routes

ROUTE	PRINCIPAL RAW MATERIAL	TYPICAL CHARACTERISTICS
BF-BOF	Iron ore + coking coal	Large integrated steel plants
DRI-EAF	Iron ore/pellets + natural gas/coal + scrap	Flexible and increasingly important
DRI-IF	Sponge iron + scrap	Important in Indias secondary steel sector
Scrap-EAF	Steel scrap + electricity	Important for recycling and lower-carbon production
Rolling/re-rolling	Billets/blooms/slabs	Produces finished long/flat products

India has a distinctive steel structure because it has both large integrated producers and a substantial secondary steel industry consisting of sponge-iron plants, induction furnaces, EAFs, re-rolling mills, wire-drawing units and other downstream producers.

GLOBAL ECONOMIC ENVIRONMENT

The steel industry is closely linked with global economic growth. Steel consumption generally increases with:

GDP growth + construction + industrial production + infrastructure investment + manufacturing + capital expenditure.

The global economic environment entering 2026 is mixed.

The IMFs latest assessment indicates that the global economy has remained relatively resilient despite geopolitical tensions, energy-market disruptions, high debt and trade tensions. At the same time, inflation risks and elevated borrowing costs remain concerns.

KEY GLOBAL ECONOMIC FACTORS AFFECTING STEEL INDUSTRY

POSITIVE FACTORS	NEGATIVE FACTORS
Infrastructure investment in emerging economies.	High global debt.
Expansion of renewable-energy infrastructure.	Trade restrictions and protectionism.
Data centres and AI-related infrastructure investment.	Geopolitical conflicts.
Manufacturing investment in selected countries.	Higher energy prices.
Urbanisation in emerging markets.	High interest rates.
Public infrastructure expenditure.	Excess steelmaking capacity.

Consequently, the global steel market is likely to experience modest volume growth but continuing margin and pricing pressure.

GLOBAL STEEL INDUSTRY OUTLOOK

According to the World Steel Association, global steel demand was projected to remain approximately flat in 2025 at 1,748.6 million tonnes, followed by approximately 1.3% growth in 2026 to about 1,771.9 million tonnes.

Global Steel Demand Outlook

PARTICULARS	2025	2026 OUTLOOK
Global Steel Demand	1,749 MT	1,772 MT
Growth	Approximately flat	1.3%
Developed Economies	Weak/modest	Gradual improvement
China	Weak	Structural decline/limited growth
Developing World Ex-China	Stronger	Strong growth
India	Strong	Strong

INDIAN ECONOMIC OVERVIEW

Indias macroeconomic environment remains relatively favourable for steel.

Indias economic growth continues to be supported by:

• Domestic consumption;

• Public infrastructure expenditure;

• Manufacturing;

• Construction;

• Urbanisation;

• Services;

• Capital expenditure;

• Transportation infrastructure; and

• Government-led development programmes.

A recent Reuters poll indicated that Indian GDP growth was expected to remain strong, although growth was projected to moderate from the preceding quarter because of subdued private investment and global uncertainties.

The Economic Survey 2025-26 specifically identifies infrastructure, investment, industrial transformation, strategic resilience, urbanisation and manufacturing as important components of Indias future growth strategy.

INDIAN STEEL INDUSTRY OVERVIEW

Indias steel sector has expanded rapidly over the past decade.

Key indicators

INDICATOR	POSITION
Global crude steel ranking	2nd
Crude steel capacity FY2024-25	200.3 MT
Crude steel production FY2025-26	168.4 MT
Finished steel consumption FY2025-26	164 MT
FY2024-25 finished steel production	146.7 MT
2030-31 crude steel capacity target under NSP	300 MT
2030-31 production target under NSP	255 MT
2030-31 finished steel demand/production target	230 MT

The FY2025-26 Ministry of Steel data show a substantial increase in production and domestic consumption.

Indian Steel Production Trend

Finished steel production has increased substantially:

FINANCIAL YEAR	FINISHED STEEL PRODUCTION
2020-21	96.20 MT
2021-22	113.60 MT
2022-23	123.20 MT
2023-24	139.15 MT
2024-25	146.69 MT

The latest monthly data also demonstrate continuing domestic demand. In April-May 2026, finished steel consumption was approximately 27.36 MT, up 8.7% year-on-year.

Indian Steel Demand Drivers

Infrastructure

Infrastructure is probably the most important structural driver of Indias steel demand.

Major steel-consuming infrastructure segments include:

• highways;

• bridges;

• railways;

• metro systems;

• airports;

• ports;

• transmission infrastructure;

• power plants;

• water infrastructure;

• industrial corridors;

• warehouses;

• logistics parks; and

• urban infrastructure.

Indias infrastructure output grew 5.4% year-on-year in July 2026, with particularly strong growth in cement, coal and iron ore.

Construction and Real Estate

Construction is the largest broad-based consumer of steel.

Steel is used in:

• reinforcement bars;

• structural sections;

• roofing;

• tubes and pipes;

• wire products;

• fabricated structures;

• elevators;

• HVAC systems;

• doors/windows;

• warehouses; and

• industrial buildings.

Increasing urbanisation should raise steel intensity because modern urban infrastructure generally requires more steel per unit of economic output.

Automobile Industry

Automotive demand is an important driver for flat and specialty steel.

Products include:

• automotive sheets;

• high-strength steel;

• electrical steel;

• alloy steel;

• bars;

• forgings;

• tubes; and

• precision products.

Growth in electric vehicles also creates additional steel demand through:

• vehicle structures;

• battery enclosures;

• electrical steel;

• charging infrastructure; and

• renewable-energy equipment.

Railways

Indias railway modernisation programme is a major steel consumer.

Demand arises from:

• rails;

• wagons;

• coaches;

• bridges;

• stations;

• electrification structures;

• Dedicated Freight Corridors; and

• metro systems.

Renewable Energy

Renewable energy is an emerging structural steel-demand driver.

Solar and wind projects consume significant quantities of steel through:

• solar mounting structures;

• towers;

• transmission systems;

• substations;

• wind-turbine towers;

• foundations; and

• associated infrastructure.

Thus, the energy transition creates new steel demand even while it pressures steel producers to reduce their own carbon emissions.

GOVERNMENT POLICIES SUPPORTING STEEL DEMAND

Important government initiatives include:

National Steel Policy 2017

The policy targets by 2030-31:

• 300 MT crude steel capacity

• 255 MT crude steel production

• 230 MT finished steel demand/production

• approximately 158-160 kg per-capita finished steel consumption.

Other important programmes

• Make in India

• PM Gati Shakti

• Bharatmala

• Dedicated Freight Corridors

• Sagarmala

• PM Awas Yojana

• AMRUT

• Jal Jeevan Mission

• railway modernisation

• defence manufacturing

• Production Linked Incentive schemes

• National Infrastructure Pipeline

• National Green Hydrogen Mission

These programmes collectively support steel demand over the medium and long term.

INDIAN STEEL INDUSTRY STRUCTURE

The Indian industry can broadly be divided into:

A. Integrated steel producers
Typically Route	Iron ore ^ sinter / pellet ^ coke ^ blast furnace ^ BOF ^ casting ^ rolling
Advantages:	• economies of scale; • captive mines;
	• integrated operations;
	• lower unit costs at high utilisation;
	• broad product portfolios.
B. Secondary steel producers
Typically Route	Scrap / DRI ^ IF / EAF ^ billet ^ rolling
Advantages:	• Induction furnace operators;
	• EAF producers;
	• Sponge-iron plants;
	• Re-rolling mills;
	• Wire-drawing units;
	• Long-product manufacturers.

The secondary sector is particularly important in Indias long-steel market.

KEY INDUSTRY DRIVERS

The major steel-sector drivers can be classified as follows:

DRIVER	IMPACT	OUTLOOK
Infrastructure spending	Very High	Positive
Construction	Very High	Positive
Urbanisation	High	Positive
Manufacturing	High	Positive
Automotive	High	Positive
Railway expansion	High	Positive
Defence	Medium/High	Positive
Renewable energy	High	Positive
Per-capita steel consumption	High	Positive
Export demand	Medium	Mixed
Chinese exports	High	Negative risk
Coking coal prices	Very High	Volatile
Energy prices	High	Volatile
Environmental regulation	High	Increasing
Interest rates	Medium	Normalising / volatile
Global excess capacity	Very High	Negative

OVERALL SECTOR ASSESSMENT

Classification of the Indian steel industry are as follows:

FACTOR	ASSESSMENT
Domestic demand	Strong
Infrastructure demand	Very Strong
Long-term growth	Very Strong
Global demand	Moderate
China risk	High
Raw-material risk	High
Pricing visibility	Moderate/Volatile
Government support	Strong
Technology opportunity	High
Green-steel opportunity	Very High
Export opportunity	Moderate/High
Competitive intensity	High
Human-resource requirement	High
Safety importance	Very High
Overall Indian sector outlook	Positive

SUMMARY

The global steel industry is entering a period of modest demand growth, excess-capacity pressure and increasing decarbonisation requirements. The OECDs assessment of significant new capacity additions and weak global demand highlights the possibility of continued pressure on international prices and producer margins.

India has a unique features including relatively strong economic growth, large infrastructure programme, urbanisation, manufacturing expansion, rising automobile production and low per-capita steel consumption create a structurally favourable long-term steel-demand environment.

The most important opportunity is therefore not simply increasing steel production, but producing steel efficiently, competitively, safely and with progressively lower carbon intensity.

Low cost + assured raw materials + high capacity utilisation + product quality + value-added products + automation + energy efficiency + green steel + strong distribution + financial discipline.

Indian Sources

1. Ministry of Steel, Government of India ? production, consumption, capacity, imports, exports, policy, raw materials and industry statistics. Ministry of Steel?Annual Reports

2. Ministry of Steel - Overview of Steel Sector ? global and Indian industry statistics and sector overview.

3. Economic Survey of India 2025-26 ? GDP, inflation, investment, infrastructure, manufacturing, external sector and macroeconomic environment. Economic Survey of India

4. Joint Plant Committee (JPC) ?The Ministrys steel reports identify JPC as the source of the production/consumption series.

5. Press Information Bureau (PIB) ? latest government announcements and monthly/annual steel-sector performance.

6. National Steel Policy 2017 ? long-term capacity, production, demand, raw-material and technology framework. National Steel Policy 2017

International Sources

7. World Steel Association (worldsteel) ? global production, consumption and steel-demand forecasts. World Steel Association ? World Steel in Figures

8. OECD - Steel Outlook ? global capacity, excess capacity, trade, subsidies and demand outlook.

9. IMF - World Economic Outlook ? global and Indian GDP, inflation, interest rates and macroeconomic outlook.

10. World Bank - India Development/Economic Updates ? Indian growth, investment and macroeconomic conditions.

Sustainability / Environment

11. Ministry of Steel - Green Steel Initiative ? Indian green-steel taxonomy, decarbonisation roadmap, hydrogen and CCUS. Ministry of Steel ? Green Steel Initiative

12. World Steel Association - Sustainability & Safety Reports ? global steel-sector sustainability, emissions, safety and workforce indicators.

PRESENT SCENARIO OF STAINLESS STEEL LONG PRODUCT IN INDIAN ECONOMY

India is the world’s second-largest producer and consumer of stainless steel. Within the domestic market, long products (bars, wire rods, rebars, and structural sections) represent roughly 35% to 40% of the total stainless steel landscape, with flat products accounting for the remainder.

Driven by national infrastructure modernization and a shift toward life-cycle costing, stainless steel long products have moved from niche industrial materials to mainstream civil and structural engineering.

Key Macro Drivers in the Indian Economy

• Coastal and Critical Infrastructure (SS Rebar):

Public infrastructure projects under MoRTH, NHAI, and Indian Railways increasingly specify stainless steel reinforcing bars (primarily 550D / austenitic & duplex grades) for coastal bridges, sea links, and port structures to counter marine corrosion and prevent catastrophic spalling.

• Railways and Mass Transit:

The expansion of Vande Bharat trainsets, regional metro rail networks, and modern station redevelopments has escalated procurement for SS bright bars, structural structural sections, fasteners, and interior suspension rods.

• Automotive, Fasteners, and Capital Goods:

The engineering sector consumes substantial volumes of bright round bars and cold-drawn wire rods for fasteners, pump shafts, engine exhaust mounts, and automotive steering components.

• Export-Oriented Manufacturing:

Unlike flat products?which face substantial pressure from imported sheets and coils?Indian stainless steel long products (especially bright bars, flanges, and wire rods) command strong export competitiveness in Europe, North America, and Southeast Asia.

Industry Capacity & Structure

METRIC	ESTIMATE / STATUS	PRIMARY SIGNIFICANCE
Total Domestic SS Capacity	7.4 - 7.7 MT	Covers both flat and long product segments across all mills.
Long Products Capacity	2.7 MT	Centered around western and northern Indian industrial hubs.
Overall Capacity Utilization	50% - 60%	Suppressed by raw material bottlenecks and import displacement.
Dominant Alloy Grades	300 Series ( 55-60%), 200/400 Series, rising Duplex	Shift occurring toward lean duplex for high-strength rebar and structural jobs.

Structural Challenges & Trade Friction

1. Scrap and Raw Material Import Dependence:

Indian mills rely heavily on imported stainless steel scrap (sourcing only ~25-30% domestically) and ferroalloys (nickel, molybdenum), exposing long product rerollers to sharp currency shifts and import duties.

2. Import Pressures & Quality Control:

Duty-free or low-tariff finished imports from Southeast Asia and China continue to challenge domestic furnace operators. In response, the Ministry of Steel has stepped up enforcement of Bureau of Indian Standards (BIS) Quality Control Orders (QCOs) to prevent substandard imports from entering infrastructure channels.

3. Advocacy for a Dedicated Policy:

Industry bodies like ISSDA are actively lobbying for a standalone national stainless steel policy to mandate life-cycle costing in public tenders and improve raw material security.

Indian Stainless Steel Development Association

GROWTH PROSPECTUS OF STAINLESS STEEL LONG PRODUCT IN INDIAN ECONOMY

The growth prospectus for stainless steel (SS) long products in the Indian economy is robust, positioned to significantly outpace global averages over the next decade. Driven by massive capital expenditure in infrastructure, a transition toward Life Cycle Costing (LCC), and industrial modernization, long products (wire rods, bright bars, rebars, angles, and profiles) are transforming from niche engineering materials into core industrial commodities.

Macroeconomic Backdrop & Market Metrics

• Rising National Consumption:

India is the second-largest consumer of stainless steel globally. The Indian Stainless Steel Development Association (ISSDA) notes that total domestic stainless steel consumption reached approximately 4.8 million metric tonnes (MT) in FY25, sustaining a 7% to 9% year-on-year growth trajectory.

• Headroom for Per-Capita Expansion:

India’s per-capita stainless steel consumption stands at roughly 3.4 kg, compared to the global average of over 6 kg and advanced industrial economies at 15-30 kg. Long products account for roughly 40-45% of total steel form consumption globally, but hold a smaller base in India (where flat products dominate cookware and white goods), indicating substantial room for catch-up growth.

• Capacity Distribution:

Of Indias ~7.5 MT stainless steel melt and finishing capacity, long products represent approximately 2.7 MT of domestic capacity.

Key Demand Drivers in the Indian Economy

1. Infrastructure & Coastal Longevity (SS Rebar)

• Coastal Infrastructure & Bridges:

Conventional carbon steel rebar suffers severe chloride-induced corrosion in coastal corridors. With over 7,500 km of coastline, national bodies like NHAI and the Ministry of Road Transport & Highways (MoRTH) are increasingly mandating stainless steel rebar (e.g., SS 2205 Duplex and SS 304/316) for bridges, port jetties, breakwaters, and elevated sea-link expressways.

• Life Cycle Costing (LCC) Mandates:

While stainless rebar has higher initial material costs, its 100+ year service life without cathodic protection or rebar repair makes it cheaper on an LCC basis.

2. Railways & Mass Rapid Transit (Bright Bars, Structurals & Fasteners)

• High-Speed & Metro Rail:

The rapid expansion of Vande Bharat trainsets, regional rapid transit systems (RRTS), and metro networks requires stainless structural long products (tie rods, bogie components, safety bars) and bright bars for precision mechanical linkages and undercarriage frameworks.

• Station Modernization:

Under the Amrit Bharat Station Scheme, structural profiles, architectural angles, and stainless wire mesh are used extensively for long-lasting platforms and pedestrian overpasses.

3. Automotive, Fasteners & Engineering (Wire Rods & Bright Bars)

• Industrial Fasteners:

High-tensile stainless steel wire rod is the foundation for screws, bolts, and riveted joints used in automotive engines, exhaust mounts, and solar PV panel mountings.

• Precision Machining & Hydraulics:

Centerless ground bright bars (ferritic and martensitic series like 410, 420, and 431, along with austenitic 304/316) are seeing consistent demand from domestic pump, valve, and precision shaft manufacturers.

4. Energy Transition & Process Industries

• Green Hydrogen & Renewables:

High-pressure valve blocks, fittings, and instrumentation lines require high-integrity forged stainless rounds and duplex sections.

• Oil & Gas and Desalination:

Deep offshore drilling and coastal desalination plants heavily favor duplex (2205) and super-duplex round bars for high tensile strength and resistance to stress corrosion cracking.

Sector Headwinds & Structural Challenges

• Scrap & Raw Material Import Dependence:

Long product producers depend heavily on imported stainless scrap and ferro-nickel. Scrap import volumes face global export restrictions, creating volatility in input margins.

Indian Stainless Steel Development Association

• Surge in Low-Cost Imports:

The domestic capacity utilization rate hovers around 55-60%, partially weighed down by lower-cost long and flat imports from ASEAN and China via free trade routes, prompting calls by ISSDA for tightened Quality Control Orders (QCOs) and countervailing duties.

• Price Sensitivity in Construction:

General commercial builders remain reluctant to absorb the 2.5* to 3* upfront cost difference between carbon steel TMT bars and stainless rebar, requiring continued standardisation push from the Bureau of Indian Standards (BIS).

Strategic Outlook (2026-2030)

Driven by India’s $1.4+ trillion infrastructure pipeline, government capital spending, and the expansion of the Production Linked Incentive (PLI) Scheme for Specialty Steel, stainless long products are shifting from traditional hardware applications to specialized structural and precision roles.

High-performance grades?specifically duplex steels and low-nickel ferritics?are expected to lead volume gains, making long products one of the fastest-growing niches in the Indian secondary steel ecosystem.

Primary Industry & Data Sources

• Indian Stainless Steel Development Association (ISSDA):

• Ministry of Steel, Government of India:

• India Brand Equity Foundation (IBEF):

• Grand View Research / Tech Sci Research / Future Market Insights:

• Joint Plant Committee (JPC) / Steel Mint:

SWOT ANALYSIS OF STEEL INDUSTRY

SWOT analysis of industry The chemistry of steel comprises a mixture of carbon and iron and it amplifiers the resistance and strength of the alloy. Experts at other types of material chromium to make the steel resistance to oxidation and corrosion.

Steel has a lower cost and high tensile strength, and that’s why manufactured employ steel in the production of various industries. Some of the main uses of steel are as follows:

> Weapons

> Electrical appliances,

> Machinery,

> Bicycles,

> Cars,

> Train

> Ships

> Ships

> Tools,

> Infrastructures

> Buildings,

The facts and figures about the steel industry are explained above. Some of the top steel industries are as follows:

> Angang Steel - China

> HBIS Group - China

> Jef Steel Corp - Japan

> Hunan Valin Steel Co - China

> Tata Steel Ltd - India

> Nucor Corp - USA

> Baoshan Iron & Steel Co - China

> Nippon Steel Corp - Japan

> POSCO Holding Inc - South Korea

> Arcelor Mittal SA - Luxembourg

KEY STRENGTHS OF STEEL INDUSTRY

1. Easy Access to Raw Material

Iron and carbon are the key ingredients of steel, and you can easily find them on the earth’s ground. Easy access to and availability of raw materials plays a significant role in the growth and success of the steel industry. However, some other types of industries says the challenge of scarcity of resources; the raw metal is not available or costly access to it. But the steel industry has got easy access and availability to the raw material.

2. Cheap labour.

If you look at the top 10 world’s leading steel industries; roundabout eight steel companies are in Asia, and the other two are in Europe and America. The main reason for the growth of the steel industry in China, India, and other Asian countries is because of the ability of cheap labour. However, the labour cost is very high in Europe and America.

3. Quality operations,

Manpower and workforce play a significant role in the production and manufacturing of steel; because the steel industry demands intense labour work. The reason the steel industry successfully conducts operations is because of the easy availability of labour

4. Shipping and transport.

The steel industry has got a highly developed network of supply chain and distribution channels. It allows the company to have the access to the raw material so that the company could manufacture the steel and meet the customer demands.

5. Community focus.

According to an estimate, the street industry contributed roundabout, 98% (comprising $1.663 billion) of its revenue back into society in 2019. It was in form of building hospitals, schools, transport and roads. Involvement of the steel industry in healthcare factories is very high in up. Along with the committee focus, the company is also creating job opportunities and employing people in its industries.

6. Green economy.

Steel is 100% recyclable material; decomposes into its various building and become part of nature again after sometime. Nowadays, the global economy is moving towards dream project for the safety of the environment and nature. But the steel industry was no threat to the environment due to its recycling nature.

WEAKNESSES OF STEEL INDUSTRY

1. High capital investment.

It is no doubt, Steel industry is highly profitable and falls under the category of words leading industries. But launching and establishing a steel industry requires a huge capital investment in the form of the place, equipment, machinery, and workforce. And ordinary businessmen investor can’t start the industry without funding from banks and other investors.

2. Deficiencies and risk.

The steel industry demands intensive labour work. The workforce is dealing with extremely hot and pressurise material. Overall, the environment in the production and manufacturing facility of the steel industry is very high and it causes a lot of health and other risk factor.

3. Limited productivity

Natural resources and it takes a lot of time to iron from the ground. The demand for steel in the market has its limits and it can’t go beyond. That’s the growth and productivity of the steel industry are very compared to its size and investment.

4. Expensive material

The raw material “ iron” from the production of steel is also expensive, because of the labour and carriage. Sometimes, steel manufacturers have to pay double in the form of carriage and transportation cost; it increase the production cost and decrease the companies profitability.

5. Limited budget for research and development.

The owner in the industries invest a very limited, almost none in research and development. In fact, there are following the decades-old methods and processes at their Productions and manufacturing units without employing technology or robots.

OPPORTUNITIES AVAILABLE TO STEEL INDUSTRY

1. Infrastructure

If they are still in industry could invest in development of infrastructure like supply chain, routes, and distribution channel; then it would speed up the process increases overall efficiency and effectiveness

2. Merger and acquisition.

Merger and acquisition is also a great option for steel manufacturers. Small businesses should join their strength and focus on increasing their growth and productivity. It is good for them in terms of profitability and growth; it would allow them to deal with the industry issues and challenges collectively.

3. High demand and export.

The steel industry and the construction industry are complimenting each other. High investment in the construction industry is increasing the demand for steel. The steel manufacturer should take advantage of the growing demand in the market, and increase their profitability and revenue by producing more.

THREATS TO STEEL INDUSTRY

1. Price conscious

The price of steel is a high sensitive matter in the steel industry and it could badly impact the demand and sale of steel. When the production and carriage cost becomes higher due to interruption and various other factors, then it decreases the profitability for investors and owners.

2. Tech development

High tech technological development is focusing on finding new ways to build houses and infrastructure that don’t involve a lot of steel. It is decreasing the demand for a steel in the customer market and it is not good news for manufacture and owners because they have invested a lot of resources in the steel industry.

3. Limited growth.

The demand, production, and says office Steel in the market have their limits and they can’t go beyond that. The limited growth is kicking out the small investor because they can’t survive the market recession.

Source: https://swotandpestleanalvsis. com/swot-analvsis-of-steel-industrv/

RISKS AND CONCERNS

Like every business, the Company faces risks, both internal and external, in the undertaking of its day-to-day operations and in pursuit of its longer-term objectives. A detailed policy drawn up and dedicated risk workshops are conducted for each business vertical and key support functions wherein risks are identified, assessed, analyzed and accepted / mitigated to an acceptable level within the risk appetite of the organization. The risk registers are also reviewed from time to time.

Credit Risk

Company does its own research of clients’ financial health and project prospects before entering into an agreement with them. Timely and rigorous process is followed up with clients for payments as per schedule. The company has suitably streamlined the process to develop a focused and aggressive receivables management system to ensure timely collections.

Interest Rate Risk

The Company has judiciously managed the debt-equity ratio. It has been using a mix of loans and internal cash accruals. The Company has well managed the working capital to reduce the overall interest cost.

Competition Risk

Like in most other industries, strong scope of opportunities come with intense competition. We face different levels of competition in each of our operating categories, from domestic as well as multinational companies. We counter this risk with the quality of our infrastructure, our customer-centric approach, value-added services and our ability to innovate customer specific solutions, focusing on pricing and aggressive marketing strategy, disciplined project executions, along with prudent financial and human resources management and better control over costs. Thus, we expect to be significantly insulated from this risk.

Macroeconomic risks

Overcapacity and oversupply in the global steel industry and high levels of imports may negatively affect steel prices and demand thereby reducing the Companys profitability. Developments in the competitive environment in the steel industry, such as consolidation among the Company’s competitors, could have a material adverse effect on the Company’s competitive position. This could potentially impact the Company’s business, financial condition, results of operations and future prospects. Any downgrading of India’s sovereign rating by independent agencies may harm the Company’s ability to raise finance.

Financial risks

The Company has manageable amount of debt, which may potentially adversely affect its cash flow and its ability to operate the business. Any changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions, could result in impairment of such assets.

Regulatory risks

The Company faces regulatory risk from predatory pricing and surge in steel imports. The Company may benefit from certain protective trade restrictions, including anti-dumping laws, countervailing duties and tariffs, which if not available, may adversely affect its operations and financial condition. The Company’s business could be affected by potential regulatory and judicial actions.

Operational risks

The industry is highly cyclical and a decrease in steel prices may adversely impact its financial condition. The Company’s operations and financial condition could be adversely affected if it is unable to successfully implement its growth strategies. The Companys business is prone to high proportion of fixed costs and volatility in the prices of raw materials and energy. Mismatches between trends in prices of raw materials and steel, as well as limitations on or disruptions in the supply of raw materials, could adversely affect its profitability.

Market related risks

Competition from other materials, or changes in the products or manufacturing processes of the Company’s customers who use steel products, could reduce market prices and demand for the Company’s products, thereby reducing its cash flow and profitability. Product liability claims may adversely affect the Company’s operations and finance.

Labour risk

The Company’s success depends on the continued services of its senior management team and business and prospects could suffer if it loses one or more key personnel or if it is unable to attract and retain its employees. Any labour unrest could adversely affect the Company’s operations and financial condition.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has adequate internal control system and well laid-down policies and procedures for all its operations and financial functions. The procedures are aligned to provide assurance for maintaining proper accounting controls, monitoring efficient and proper usage of all its assets and reliability of financial and operational reports. The internal control system is ably supported by the Internal Audit Department which carries out extensive audit of various functions throughout the Company. The Companys Board has an Audit Committee which comprises of three members, all of whom are Independent Directors. The Audit Committee reviews significant findings of the internal audit.

FINANCIAL PERFORMANCE -

During the year under review, the Company has achieved total revenue of Rs. 716.49 Crore as against Rs 505.43. Crore in the previous year.

Financial Summary

PARTICULARS	FOR THE FINANCIAL YEAR ENDED MARCH 31, 2026 (Rs in Lakh)	FOR THE FINANCIAL YEAR ENDED MARCH 31, 2025 (Rs in Lakh)
Total Revenue	71,649.32	50,543.39
*EBIDTA (Before Exceptional / Extraordinary Items)	2,889.80	2,431.10
Interest / Finance Charges	742.06	550.26
Depreciation	861.25	956.89
Exceptional / Extraordinary Items	0.00	(471.48)
Profit before tax (PBT)	1,286.49	1,395.43
Tax (including adjustment of previous years)	0.00	0.00
Profit after tax	1,286.49	1,395.43
Other Comprehensive Income (Net)	9.72	10.59
Net Profit available for appropriation	1,296.21	1,406.02
Appropriations:
Dividend per share	0.00	0.00
Earnings per share [equity share of Rs. 10]
-Basic earnings per share (in Rs.)	1.49	1.62
-Diluted earnings per share (in Rs.)	1.49	1.62

* Includes other income

Company operated in the single segment i.e., steel and steel related products.

KEY FINANCIAL RATIOS / INDICATORS

> (i) Debtors Turnover Ratio:

Debtor Turnover Ratio for the FY 2024-25 was 24.52 and the same for the current financial year stood at 17.61 .This is in line with industry standard.

> (ii) Inventory Turnover

Inventory Turnover Ratio for the FY 2024-25 was 11.95 and the same for the current financial year stood at 12.81. A relatively low inventory turnover ratio is due to planned shutdown of the unit for the modernization project as well as cost optimization project.

> (iii) Interest Coverage Ratio

Interest Coverage ratio(after considering exceptional/extraordinary items) stood at 5.27 for FY 2024-25 and 3.89 for FY 2025-26. Interest Coverage ratio (before considering exceptional/extraordinary items) stood at 4.42 for FY 202425 and 3.89 for FY 2025-26. Interest coverage ratio is quite comfortable for the Company

> (iv) Current Ratio

Current Ratio for the FY 2024-25 was 0.80 and the same for the current financial year stood at 1.04. current ratio improved this year as compared to the last financial year.

> (v) Debt Equity Ratio

Debt Equity Ratio for the FY 2025-26 stood at 0.30 as against 0.28 for the FY 2024-25

> (vi) Operating Profit Margin (%)

Operating Profit Margin Ratio for the FY 2024-25 was 4.60% and the same for the current Financial Year (202526) stood 3.97% which mainly due to cost optimistaion project executed by the Company.

> (vii) Net Profit Margin (%)

Net Profit (including exceptional/extraordinary items) Margin Ratio for the FY 2024-25 was 2.76% and the same for the current Financial Year (2025-26) stood 1.80 %.Net Profit Margin(excluding exceptional/extraordinary items) stood at 1.83% for FY 2024-25and same for the current financial year (2025-26) stood at 1.80%. lower price in the steel market as well as the sales / production of TMT Rebars increase the profit in absolute numbers but reduced the margin.

> (vii) Return on Net worth (%)

Return on Net worth for the FY 2024-25 was 0.10 and the same for the current Financial Year (2025-26) stood 0.09 mainly due to increase in the Equity Capital due to conversion of OCRPS into Equity Shares.

Company has maintained the accounts as per IND-AS and there is no change in accounting standard / treatment.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Various Human Resource initiatives are taken to align the HR Policies to the growing requirements of the business. The Company has a structured induction process and management development programmes to upgrade skills of managers. Technical

and safety training programmes are given periodically to workers. Industrial relations in the organization continued to be cordial during the year under review.

As on 31^st March, 2026 the total employee strength was 260

OUTLOOK:

During the year the Company initiated work on modernization and cost optimization projects other than normal capital expenditure, to maintain and enhance the plant.

The modernization project as well as Cost Optimization project has been completed and yielding positive result and gives us confidence to manufacture high margin earning grades and also expand our customer base.

Rathi Steel and Power Limited is well-positioned to leverage the positive growth opportunities in the steel industry. With its established reputation for exceptional product quality and customer-centric approach, the company is well-equipped for the near to medium-term future. Rathi Steel’s expanding product line, which includes stainless steel reinforcement bars, FE550 Series Reinforcement bars, other downstream products (under planning stage) demonstrates the companys commitment to addressing the diversified needs of its customers. By collaborating with recognized downstream stainless steel manufacturers and a large number of recognize dealers / distributors among others, the company ensures access to well-established brands which are leaders in their segments.

Following the cost optimization project, Rathi became the first Indian company, and among the few players globally, to adopt hot charging of SS billets to make wire rods. The Company benefits from its existing integrated facility in Ghaziabad which has melting unit and rolling mill. Hot charging reduces the need for manpower and machines, for handling and charging of billets in furnace. It also reduces fuel cost in reheating and loss of scale, leading to lower carbon emissions. This translates into cost savings, better control over pricing, and improvement in margins.

Rathi Steel has demonstrated tremendous resilience in terms of a financial turnaround over the last year. The Company has significantly improved its net worth, managed debt and resumed banking relationships with debt to fund future growth initiatives.

In terms of industry trends, the steel industry is predicted to have continued increase in demand from a variety of sources, including infrastructure, automotive, and affordable housing. Rathi Steel and Power Ltd is poised to gain from these developments, given its ability to meet rising steel demand. Furthermore, the governments focus on infrastructure development, Smart Cities initiatives, and the new Vehicle Scrappage policy will provide additional impetus to the steel industry, creating favourable conditions for growth.

The Company’s optimistic outlook is enhanced by its focus on boosting operational efficiency through continuous process improvement, such as technological development and modernization of loading and unloading, quality control operations, customer service, and consistency in quality, which results in optimal production levels.

Overall, the company is well-positioned to seize market opportunities, drive development, and deliver sustainable value to its stakeholders.