Rhetan TMT Ltd Management Discussions

ANNEXURE-C TO THE BOARDS REPORT

> OVERVIEW

The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during Financial Year 2024-25. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report and Annual Accounts 2024-25. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Report.

> GLOBAL ECONOMY

The global economy is projected to experience moderate growth, influenced by technological advancements, geopolitical uncertainties, and shifting economic policies. According to estimates from the International Monetary Fund (IMF) and the World Bank, the global GDP growth rate is expected to be between 2.5% and 3.2%, depending on economic stability, trade relations, and monetary policies worldwide. While major economies aim for recovery, inflationary concerns, supply chain disruptions, and policy decisions will play a crucial role in shaping global economic performance. India remains the fastest-growing major economy, with GDP expected to exceed 6%, driven by manufacturing, IT services, and domestic consumption. Latin America will benefit from commodity exports, but economic instability and fiscal deficits remain concerns. Africas growth will be led by infrastructure projects, digitalization, and foreign direct investments (FDI).

> INDIAN ECONOMY:

The Indian economy is poised for strong growth in 2025, with GDP expected to expand at a rate of 6-7%, making it one of the fastest-growing major economies in the world. Indias economic trajectory will be driven by robust domestic demand, industrial expansion, digital transformation, and infrastructure development. The governments focus on self-reliance (Atmanirbhar Bharat), increased foreign direct investment (FDI), and policy reforms will further support growth across key sectors.

Indias Make in India and Production-Linked Incentive (PLI) schemes will drive manufacturing expansion. The semiconductor, automobile, and electronics sectors are expected to grow significantly due to global supply chain diversification. Demand for steel, cement, and construction materials will rise due to infrastructure development. Indias IT and software services industry will continue to be a major contributor to GDP, driven by AI, cloud computing, and cyber security while fintech, e-commerce, and digital banking will strengthen Indias digital economy. Government initiatives like Digital India and 5G expansion will enhance connectivity and economic participation. Large-scale investments in roads, railways, airports, and smart cities will boost employment and economic output. Increased agri-tech adoption, farm mechanization, and irrigation improvements will enhance productivity. Government support through minimum support prices (MSP), rural credit programs, and farm subsidies will ensure stability.

Indias economy in 2025 will be defined by strong domestic consumption, industrial expansion, and digital transformation. Despite global uncertainties, policy support, infrastructure development, and innovation will ensure that India remains a key driver of global economic growth.

> Indian Iron & Steel Industry

One of the primary forces behind industrialization has been the use of metals. Steel has traditionally occupied a top spot among metals. Steel production and consumption are frequently seen as measures of a countrys economic development because it is both a raw material and an intermediary product. Therefore, it would not be an exaggeration to argue that the steel sector has always been at the forefront of industrial progress and that it is the foundation of any economy. The Indian steel industry is classified into three categories - major producers, main producers, and secondary producers.

India is the worlds second-largest producer of crude steel, with an output of 125.32 MT of crude steel and finished steel production of 121.29 MT in FY23.

Indias domestic steel demand is estimated to grow by 9-10% in FY25 as per ICRA.

Indias steel production is estimated to grow 4-7% to 123-127 MT in FY24.

The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to Indias manufacturing output. The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels. According to a Deloitte report the demand for steel in India is projected to grow significantly over the next decade, with annual growth rates expected to range from 5% to 7.3%.

> INDUSTRIAL STRUCTURE AND DEVELOPMENT:

The construction industry in India has witnessed significant growth over the past few decades, driven by rapid urbanization, infrastructure development, and government initiatives like Smart Cities and Housing for all. Amidst this growth, TMT steel bars have emerged as an essential component in modern construction, offering unmatched strength, flexibility, and durability. As the industry evolves, the future of TMT steel bars in India looks promising, with advancements in technology and growing demand for quality materials shaping the landscape. In this blog, well explore the future of TMT steel bars in the construction industry in India, highlighting their benefits, market trends, and the role of leading TMT bars manufacturers in India. As the market for TMT steel bars grows, the role of TMT bars manufacturers in India becomes increasingly important. Leading manufacturers are investing in research and development to produce bars that meet the evolving needs of the construction industry. The term TMT bars has become the industry staple for constructing any structure, starting from bridges, flyovers, dams, hydel power plants, industrial structures, high-rise buildings, rapid transport systems, and more. TMT or Thermo Mechanically Treated bars uses Quenching and tempering technology during production, obtaining their unique strength from that process. One of the primary forces behind industrialization has been the use of metals. Steel has traditionally occupied a top spot among metals. Steel production and consumption are frequently seen as measures of a countrys economic development because it is both a raw material and an intermediary product. Therefore, it would not be an exaggeration to argue that the steel sector has always been at the forefront of industrial progress and that it is the foundation of any economy. The Indian steel industry is classified into three categories - major producers, main producers, and secondary producers. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour.

The production and consumption of steel have a significant multiplier effect on other sectors of the economy like infrastructure, transportation, automobiles etc. Steel is also an essential material for the energy sector, as it is used in the production of wind turbines and oil rigs. Furthermore, the steel industry is a key player in international trade.

In FY 2024-25, the Indian steel industry witnessed robust growth, producing around 151 million tonnes of crude steel and meeting a domestic demand of approximately 150 million tonnes, driven by infrastructure and industrial expansion. However, the sector faced shifting trade dynamics, with finished steel imports rising by 24.5% to 9.5 million tonnes and exports falling 35.1%, making India a net importer for the second consecutive year. To protect domestic producers, the government imposed a 12% safeguard duty on select steel products. Looking ahead, demand is expected to grow steadily, with production capacity increases aiming to restore Indias net exporter status amid fluctuating global market conditions. The companys role is crucial in bridging the gap between steel manufacturers and consumers, ensuring timely delivery and competitive pricing while managing inventory and logistics efficiently.

> OPPORTUNITY & THREATS:

The Company believes that niche opportunities exist in the Global arena which we are targeting to exploit resulting in positive growth. The Company has accordingly built a business model tapping these opportunities and is also aligning its strategies to utilize opportunities in the domestic market.

The steel industry faces both opportunities and threats, including increased demand due to infrastructure development and urbanization, but also challenges like market volatility, raw material costs, and environmental regulations.

Various initiatives are taken by the Government such as Steel Scrap Recycling Policy to reduce import, levy of export duty on iron or to ensure supply to domestic steel industry, focus on infrastructure and restarting road projects aiding the demand for steel etc. These will generate a lot of opportunities for the Company which will ultimately lead to achieve the organisations set goals. Besides this, huge infrastructure demand, rapid urbanization and increasing demand for consumer durables also generate a lot of opportunities for the Company.

• Potentially huge domestic demand from stainless steel intensive investments like engineering sector, defense, consumer durables etc.

• Good, consistent increasing domestic demand.

• Huge potential for productive foreign collaboration.

> COMPETITION

Competition in the market has intensified and forced the players to adopt aggressive marketing strategy and promotional campaigns to capture and protect their market shares, the Company has the plans to penetrate better in to market, especially through the customer retention and business development in the regions which have not been tapped. However, new entrants with innovative approaches or niche focus can still disrupt the market.

> SEGMENT WISE AND PRODUCT WISE PERFORMANCE:

The Company operates in a single segment i.e. manufacturing of TMT Bars.

> RISK AND CONCERN:

The Company recognises, assesses, and manages risks by placing suitable mitigation measures against each identified risk. The Company is engaged in formulating and recommending an appropriate Risk Management Policy to the Board on a continuous basis. The Risk Management Committee ensures (a) that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company (b) monitoring and oversee implementation of the risk management policy, including evaluating the adequacy of risk management systems. (c) Periodically review the risk management policy (d) to keep the board of directors informed about the nature and content of its discussions, recommendations and actions to be taken.

The company has Robust Risk Management framework that identifies and evaluates business risks and opportunities to protect the interest of stakeholders and shareholders with a view to achieve the business objective effectively. The Risk Management System in the company is an integral part of the comprehensive planning, controlling and reporting systems. Risk assessment is undertaken based on likelihood of occurrence and possible impact on the functioning of the company. It reviews, assesses the quality, integrity and effectiveness of the Risk Management plan and systems and ensures that the risk policies and strategies are effectively managed by the management.

The company closely monitors the potential risks and opportunities that arise from Political, Economic & Regulatory environment, the global recessionary trend, economic slowdown, increase in financial charges, non availability (or undue increase in cost) of raw materials, such as, steel and labour ,shortage of labour, rising manpower and material Cost, Technology Changes, Environment and Competition. We also countered the economic risks with proactive production planning, structural adjustments and cost flexibility.

The risk appetite of the organisation is aligned to the Rhetan Vision. Risk Appetite is driven by the following:

• Health and safety of our employees and the communities in which we operate are our prime concern and our operating strategy is focused on the above objective.

• All business decisions are aligned to the Code of Conduct of Rhetan TMT Limited.

• Management actions are focused on continuous improvement.

• The long-term strategy of the Company is focused on generating profitable growth and sustainable cash flows that creates long-term stakeholder value.

> INITIATIVES BY THE COMPANY:

The Company has taken the following initiatives:

1. Concentration on reduction of costs by undertaking specific exercise in different fields.

2. Concentration on Operational Efficiency and strategic expansion.

3. Concentration in Increase of Shareholders Wealth and Profit of the Company.

The Company is quite confident that the overall productivity, profitability would improve in a sustainable manner, as a result of this strategy.

Focus is laid on marketing and branding of the product. Management continuously endeavours to maintain the quality of the product.

The Company is quite confident that the overall profitability would improve in a sustainable manner, as a result of this strategy.

> NEW INITIATIVES BY THE COMPANY:

The Company has received connectivity approval from GETCO (Gujarat Energy Transmission Corporation Limited).Additionally Company has received technical feasibility report approval from GETCO (Gujarat Energy Transmission Corporation Limited) for a 1 MW (AC) - 1.25 MW (DC) Capacity. Currently, the project status is under process. The Company had filed detailed updates with the Exchange under Regulation 30 of SEBI (LODR), Regulations, 2015, for the same.

The Company is quite convinced that the overall productivity, profitability would improve in a sustainable manner, as an outcome of this strategy.

> OUTLOOK:

The profit margins in the industry are under pressure. The Company is confident to meet the challenges with its strength in marketing network, its strategic planning, Research & Development, productivity improvement and cost reduction exercise.

> INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has established an internal control system commensurate with the size and nature of its operations. These controls are designed to provide reasonable assurance regarding the accurate recording of transactions, the reliability of financial and operational information, compliance with applicable laws and regulations, and the safeguarding of the Companys assets.

The responsibility for establishing and maintaining adequate internal controls for financial reporting rests With the Management. The statutory auditors have evaluated the Companys internal control systems, including those related to financial reporting. Based on their review, they have confirmed that the systems are adequate and appropriate, considering the size and nature of the Companys business. Further, the statutory auditors have issued a report on internal financial controls over financial reporting, as required under Section 143 of the Companies Act, 2013.

The Companys Board of Directors operates an extensive system of internal control. It includes the organisations plans and policies to ensure orderly and efficient business conduct. The Board has also set-up appropriate processes to monitor the relevant external and internal risks affecting the companys growth.

> HUMAN RESOURCE:

The Company values its human resources as its most important asset and focuses on their training, development and wellbeing in the workplace. The Management believes that business cannot expand without utilizing the potential of its workforce. The Board of Directors and the Management acknowledge the contributions of all employees towards the growth of the Company. Training programmes are regularly conducted to update their skills and apprise them of latest techniques. Senior management is easily accessible for counselling and redressal of grievances. The HR department continuously strives to maintain and promote harmony and coordination among workers, staff and members of the senior management.

> HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

The people are the greatest asset, and their safety, health, and well-being is of utmost importance to us. The Company endeavours to provide a safe, conducive and productive work environment by undertaking various measures at its manufacturing facilities to ensure no injury or accident. Several other measures have been taken by the Company to ensure health and safety of its employees. The Companys ethos of environment protection by development of environment friendly processes for effective usage of resources is based on the belief that nature is a precious endowment to humanity.

> DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

In terms of financial performance, Financial Year 2024-25 has been a reasonable year. Company is focussed on the task on hand in terms of better reliability of operations and more focussed market efforts. Our total revenue is Rs. 3,873.92 Lakhs and the Company has earned a profit of Rs. 494.90 Lakhs. Cash and cash equivalents at the end of year stood at Rs. 29.78 Lakhs.

> KEY RATIOS:

> CAUTIONARY STATEMENT:

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward looking statements within the meaning of applicable securities laws and regulations. Forward- looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments.

> DISCLOSURE OF ACCOUNTING TREATMENT :

The Financial statements have been prepared in compliance with the Indian Accounting Standards (Ind AS) issued by The Institute of Chartered Accountants of India (ICAI) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules), of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention.