Rhetan TMT Ltd Management Discussions

- 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 2025-26. 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 2025-26. The Companys financial statements have been prepared in accordance with the Indian Accounting Standards ("Ind AS") notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

GLOBAL ECONOMY

The global economy continued to demonstrate resilience during the Financial Year 2025-26 despite persistent geopolitical uncertainties, elevated interest rates in several advanced economies, inflationary pressures and evolving global trade dynamics. Economic activity was supported by easing inflation in major economies, gradual normalization of supply chains and sustained investments in infrastructure, digital transformation and clean energy. According to the latest assessments of the International Monetary Fund (IMF) and other multilateral institutions, global economic growth remained moderate, while downside risks continued to stem from geopolitical tensions, trade restrictions and fluctuations in commodity and energy prices.

India continued to remain one of the fastest-growing major economies, supported by robust domestic demand, strong government capital expenditure, increasing infrastructure development, expansion in manufacturing activities and favourable policy initiatives under programmes such as Make in India and the National Infrastructure Pipeline. The continued focus on urbanisation, housing, transportation and industrial development is expected to support long-term economic growth and strengthen demand across core sectors, including steel.

The global steel industry continued to operate in a dynamic environment influenced by raw material price volatility, changing trade policies, energy costs and fluctuations in demand across key end-user industries. In India, however, sustained public infrastructure spending, growth in the construction and real estate sectors and rising industrial investments continued to support domestic steel consumption. The Company believes that these structural growth drivers provide a favourable long-term outlook for the Indian steel industry.

- INDIAN ECONOMY:

The Indian economy continued to demonstrate strong resilience during the Financial Year 2025-26 and remained among the fastest-growing major economies globally, supported by robust domestic demand, sustained public capital expenditure, rising private investments and stable macroeconomic fundamentals. Government initiatives aimed at promoting manufacturing, infrastructure development, ease of doing business and digital transformation continued to strengthen economic activity across various sectors.

The Government of India continued to focus on infrastructure-led growth through significant investments in roads, highways, railways, metro projects, ports, airports, affordable housing and urban development. Flagship initiatives such as Atmanirbhar Bharat, Make in India, the Production Linked Incentive (PLI) Scheme, the National Infrastructure Pipeline (NIP) and PM Gati Shakti continued to provide impetus to manufacturing and industrial growth. These initiatives have positively contributed to the demand for steel and allied products, thereby creating significant opportunities for the domestic steel industry.

The Indian steel industry continued to benefit from increasing investments in infrastructure, construction, real estate, engineering and manufacturing sectors. Continued urbanisation, industrialisation and Government spending on capital-intensive projects are expected to support long-term growth in steel consumption. Despite global economic uncertainties and volatility in raw material prices, the long-term outlook for the Indian economy and steel industry remains positive, supported by favourable demographic trends, policy reforms and sustained infrastructure development.

The Company remains optimistic about the long-term growth prospects of the Indian economy and believes that continued policy support, infrastructure expansion and increasing demand for quality steel products will provide significant growth opportunities for its business.

- Indian Iron & Steel Industry

The iron and steel industry continues to play a pivotal role in Indias economic and industrial development. Steel remains one of the most critical raw materials for infrastructure, construction, engineering, automobiles, railways, defence, capital goods and manufacturing industries. Consequently, the performance of the steel sector is widely regarded as an important indicator of industrial growth and overall economic progress.

India continues to be the second-largest producer of crude steel globally and one of the fastest-growing steel-consuming nations. The domestic steel industry has demonstrated remarkable resilience, supported by sustained infrastructure investments, urbanisation, increasing demand from the construction and manufacturing sectors and various Government initiatives aimed at strengthening domestic manufacturing and industrial development.

The Governments continued emphasis on infrastructure development, affordable housing, railways, highways, renewable energy, smart cities and industrial corridors has significantly supported domestic steel demand. Policy initiatives such as Atmanirbhar Bharat, Make in India, PM Gati Shakti and the National Infrastructure Pipeline (NIP) are expected to continue driving steel consumption in the country over the long term.

Despite challenges arising from fluctuations in raw material prices, global trade uncertainties and geopolitical developments, the Indian steel industry remains well positioned for sustainable growth owing to robust domestic demand, favourable demographic trends, expanding manufacturing activities and continued Government support. The long-term outlook for the Indian steel sector remains positive, driven by increasing investments in infrastructure and industrial development.

- INDUSTRIAL STRUCTURE AND DEVELOPMENT:

The Indian construction and infrastructure sectors continued to witness steady growth during the Financial Year 2025-26, supported by rapid urbanisation, increased public infrastructure spending, expansion in housing projects and growing industrial development. Government initiatives such as PM Gati Shakti, National Infrastructure Pipeline (NIP), Smart Cities Mission, Pradhan Mantri Awas Yojana (PMAY) and investments in transportation, logistics and urban infrastructure continued to create significant demand for steel and allied construction materials.

Thermo Mechanically Treated (TMT) bars continue to remain one of the most essential construction materials owing to their superior strength, ductility, weldability and earthquake-resistant properties. Increasing focus on quality construction, sustainability and modern engineering practices has further strengthened the demand for high-quality TMT bars across residential, commercial, industrial and infrastructure projects.

The production and consumption of steel continue to have a significant multiplier effect on various sectors of the economy, including infrastructure, transportation, engineering, manufacturing, automobiles and renewable energy. Consequently, the growth of the steel industry remains closely linked with the overall economic and industrial development of the country.

During FY 2025-26, the Indian steel industry continued to witness healthy growth, supported by robust domestic demand from infrastructure, construction and manufacturing sectors. However, the industry also experienced changing global trade dynamics, with fluctuations in imports and exports of finished steel influenced by global demand, pricing pressures and trade policies. The Government of India continued to take appropriate policy measures to safeguard domestic steel manufacturers and promote sustainable growth of the sector. Looking ahead, continued investments in infrastructure, manufacturing and urban development are expected to support long-term growth in domestic steel consumption.

As a trader and manufacturer of TMT bars, the Company continues to focus on strengthening its market presence by ensuring consistent product quality, efficient supply chain management, timely deliveries and customer-centric services. The Company remains well positioned to benefit from the long-term growth prospects of the Indian construction and infrastructure sectors.

- OPPORTUNITY & THREATS:

Opportunities

- Increasing public and private investments in infrastructure projects.

- Growing demand from housing, commercial construction, and industrial sectors.

- Expansion of urban infrastructure and smart city projects.

- Government emphasis on manufacturing and infrastructure development.

- Rising demand for high-quality and value-added steel products.

- Strengthening dealer and distribution network across various regions.

- Increasing Government capital expenditure on roads, railways, metro projects, ports and other infrastructure initiatives.

- Growing demand from renewable energy, industrial and engineering sectors requiring quality steel products.

Threats

- Volatility in the prices of steel billets, ingots, scrap, sponge iron, and other raw materials.

- Fluctuations in power, fuel, and logistics costs.

- Intense competition from organized and unorganized market participants.

- Changes in government regulations, taxation, and environmental compliance requirements.

- Global economic uncertainties affecting steel demand and pricing.

- Credit risk and working capital constraints.

- Increasing imports of steel products and pricing pressure from domestic and international manufacturers.

- Foreign exchange fluctuations affecting import costs of raw materials and overall profitability.

- COMPETITION

The steel industry continues to be highly competitive, with the presence of both organised and unorganised market participants. Competition is driven by factors such as product quality, pricing, timely delivery, customer relationships, distribution network, operational efficiency and value-added services. The Company continues to strengthen its competitive position by focusing on consistent product quality, customer satisfaction, efficient supply chain management and expanding its market presence through its dealer and distribution network. The Company also endeavours to build long-term relationships with its customers while exploring opportunities in new markets and customer segments. Despite increasing competition and changing market dynamics, the Management remains confident of sustaining its competitive position through operational excellence and a customer-centric approach.

- SEGMENT WISE AND PRODUCT WISE PERFORMANCE:

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

- RISK AND CONCERN:

The Company has established a robust Risk Management Framework to identify, assess, monitor and mitigate various risks that may impact its business operations, financial performance and long-term strategic objectives. Risk management forms an integral part of the Companys business planning, decision-making and corporate governance framework and aims to safeguard the interests of its shareholders and other stakeholders while ensuring sustainable business growth.

The Company has formulated a Risk Management Policy, which provides a structured approach for identifying, evaluating, monitoring and mitigating various business risks. The Risk Management Committee periodically reviews the effectiveness of the Risk Management Framework and oversees the implementation of the Risk Management Policy. The Committee monitors key business risks, evaluates the adequacy of mitigation measures and, wherever necessary, places appropriate recommendations before the Board of Directors. The Committee also keeps the Board informed of significant risk exposures and the actions taken to effectively manage such risks.

The Company periodically reviews its risk management practices to identify both internal and external risks affecting its operations. Risks are assessed based on their likelihood of occurrence and potential impact on the business, and suitable mitigation measures are implemented to minimise their adverse impact. The Management continuously monitors the effectiveness of the Risk Management Framework to ensure that emerging risks are identified and addressed in a timely manner.

The Company closely monitors various business risks, including volatility in raw material prices (such as billets, ingots, scrap and other inputs), fluctuations in steel prices, power, fuel and logistics costs, changes in Government policies and regulatory requirements, environmental compliance obligations, supply chain disruptions, technological developments, increasing competition, availability of skilled manpower, fluctuations in interest rates and macro-economic conditions. The Company adopts proactive procurement, production planning, cost optimisation and operational efficiency measures to mitigate the impact of such risks on its business performance.

The Companys risk management philosophy is guided by the following principles:

- Protection of the interests of shareholders and other stakeholders.

- Ensuring the health, safety and well-being of employees.

- Compliance with all applicable laws, statutory requirements and corporate governance standards.

- Continuous improvement in operational efficiency, internal controls and business processes.

- Sustainable and profitable long-term growth through prudent risk management practices and responsible business conduct.

- INITIATIVES BY THE COMPANY:

During the Financial Year 2025-26, the Company continued to focus on strengthening its operational capabilities and enhancing long-term stakeholder value through various strategic initiatives. The key initiatives undertaken by the Company include:

1. Continuous focus on cost optimisation through efficient procurement, process improvements and effective resource utilisation.

2. Enhancing operational efficiency by strengthening manufacturing processes, supply chain management and overall business operations.

3. Expanding market presence by strengthening the dealer and distribution network and improving customer relationships.

4. Maintaining consistent product quality through continuous quality assurance and adherence to applicable standards.

5. Improving overall profitability and creating long-term value for shareholders through sustainable business growth and prudent financial management.

6. Strengthening internal controls, operational discipline and effective risk management practices to support long-term business sustainability.

Company remains committed to improving operational excellence, maintaining high product quality, strengthening its market presence and achieving sustainable and profitable growth through continuous improvement and customer-centric business practices.

- NEW INITIATIVES BY THE COMPANY:

Subsequent to the close of the Financial Year 2025-26 and before the approval of this Annual Report, the Company achieved certain significant milestones which are expected to strengthen its operational capabilities and support its long-term growth strategy.

The Company successfully established a 1 MW (AC) / 1.25 MW (DC) Captive Solar Power Project, pursuant to obtaining the necessary approvals from Gujarat Energy Transmission Corporation Limited (GETCO) and registration under the applicable renewable energy framework. The project is expected to reduce energy costs, improve operational efficiency and reinforce the Companys commitment towards environmentally sustainable manufacturing practices. The Company has made the necessary disclosures to the Stock Exchange from time to time under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the project.

Further, during the year, the Company also received Bureau of Indian Standards (BIS) certification/licence for manufacturing Fe500D, Fe550 and Fe550D grade Thermo Mechanically Treated (TMT) Bars. The certification enables the Company to expand its product portfolio, cater to higher-grade market requirements and strengthen its presence in infrastructure, industrial and construction projects requiring BIS-compliant products.

The Management believes that these initiatives will enhance the Companys operational capabilities, improve cost efficiencies, strengthen its competitive position and contribute to sustainable long-term growth and value creation for all stakeholders.

- OUTLOOK:

The outlook for the Indian steel industry remains positive over the medium to long term, supported by continued Government focus on infrastructure development, capital expenditure, urbanisation, affordable housing, railways, roads, renewable energy projects and manufacturing growth under various policy initiatives. Sustained investments in these sectors are expected to drive demand for steel and TMT bars across the country.

The Company remains focused on strengthening its operational capabilities through continuous improvement in manufacturing efficiency, product quality, cost optimisation, customer service and supply chain management. The Company also intends to enhance its market presence by expanding its dealer and distribution network while maintaining prudent financial discipline and effective risk management practices.

With a strong emphasis on operational excellence, sustainable business practices and customer satisfaction, the Management remains confident of achieving steady growth and creating long-term value for its shareholders and other stakeholders.

- INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has established an adequate system of internal controls commensurate with the size, scale and nature of its business operations. The internal control framework is designed to provide reasonable assurance regarding the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, reliability of financial reporting and compliance with applicable laws, regulations and internal policies.

The Management is responsible for establishing and maintaining adequate Internal Financial Controls over Financial Reporting (IFC). The Companys internal control systems are periodically reviewed to ensure their effectiveness and to identify opportunities for continuous improvement. Appropriate corrective actions are undertaken wherever considered necessary.

The Statutory Auditors have issued their report on the adequacy and operating effectiveness of the Companys Internal Financial Controls over Financial Reporting as required under Section 143(3)(i) of the Companies Act, 2013. The report forms part of the Independent Auditors Report forming part of this Annual Report.

The Board of Directors, through appropriate governance mechanisms, oversees the adequacy and effectiveness of the Companys internal control framework and periodically reviews key financial, operational and compliance risks to ensure that appropriate risk mitigation measures remain in place.

- HUMAN RESOURCE:

The Company firmly believes that its employees are its most valuable asset and play a vital role in achieving sustainable business growth. The Company is committed to fostering a safe, inclusive and performance-driven work environment that encourages learning, innovation, teamwork and continuous improvement.

The Company focuses on enhancing employee capabilities through regular training and skill development programmes, enabling its workforce to keep pace with changing technologies, operational requirements and industry practices. Equal emphasis is placed on employee engagement, workplace safety, ethical conduct and compliance with applicable labour laws and organisational policies.

The Management recognises and appreciates the dedication, commitment and contribution of its employees at all levels towards the Companys growth and success. Cordial industrial relations prevailed throughout the year and the Company continues to maintain a positive work culture that promotes mutual trust, transparency and collaboration across the organisation.

- HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

The Company considers the health, safety and well-being of its employees as one of its highest priorities and remains committed to providing a safe, healthy and conducive working environment across its operations. Appropriate safety measures, operational controls and preventive practices are implemented to minimise workplace hazards and ensure compliance with applicable health and safety regulations.

The Company continuously promotes a strong safety culture through employee awareness, training programmes and adherence to established safety procedures. The Management remains committed to preventing workplace accidents and ensuring that employees perform their duties in a safe and secure environment.

The Company is equally committed to environmental protection and sustainable business practices. It endeavours to utilise natural resources responsibly, improve operational efficiency and adopt environmentally responsible processes wherever feasible. Through continuous improvement initiatives, the Company strives to minimise its environmental impact while complying with all applicable environmental laws and regulations.

- DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the Financial Year 2025-26, the Company delivered a strong financial performance supported by improved operational efficiency, prudent cost management and effective utilisation of resources. The Company continued to focus on strengthening its manufacturing operations, maintaining product quality and enhancing customer satisfaction while exercising financial discipline.

During the year under review, the Company recorded Revenue from Operations of Rs. 2,444.07 Lakhs and Total Income of Rs. 3,295.72 Lakhs. The Company reported a Profit After Tax of Rs. 1,029.78 Lakhs, reflecting a significant improvement in its financial performance over the previous year. The Companys profitability was supported by effective cost optimisation, operational efficiencies and higher other income during the year.

The Company continued to maintain adequate liquidity to support its business operations. Cash and Cash Equivalents as at 31st March, 2026 stood at Rs. 30.24 Lakhs.

The Management remains committed to improving operational efficiencies, strengthening profitability and creating sustainable long-term value for its shareholders through disciplined execution of its business strategy.

- KEY RATIOS:

- CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may constitute "forward-looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions, expectations of future events and information presently available to the Management.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to various factors including, but not limited to, changes in economic conditions, Government policies, taxation laws, market demand, raw material prices, competitive environment, foreign exchange fluctuations, regulatory changes and other factors beyond the control of the Company.

The Company does not undertake any obligation to publicly update, amend or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable laws or regulations.

- DISCLOSURE OF ACCOUNTING TREATMENT :

The Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, and other accounting principles generally accepted in India.

The Financial Statements have been prepared on the accrual basis of accounting under the historical cost convention, except for certain financial instruments which are measured at fair value, wherever applicable, in accordance with the applicable Indian Accounting Standards.