Riddhi Steel & Tube Ltd Management Discussions

Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2025.

1. GLOBAL ECONOMIC OVERVIEW:

Following an unprecedented series of shocks in the preceding years, global growth was stable yet underwhelming through 2024, However, the landscape has changed as governments around the world reorder policy priorities. a series of new tariff measures by the United States and countermeasures by its trading partners have been announced and implemented, ending up in nearuniversal US tariffs on April 2 and bringing effective tariff rates to levels not seen in a century. This on its own is a major negative shock to growth. The unpredictability with which these measures have been unfolding also has a negative impact on economic activity and the outlook and, at the same time, makes it more difficult than usual to make assumptions that would constitute a basis for an internally consistent and timely set of projections.

The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity. Under the reference forecast that incorporates information as of April 4, global growth is projected to drop to 2.8 percent in 2025 and 3 percent in 2026—down from 3.3 percent for both years in the January 2025, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (200019) average of 3.7 percent.

In the reference forecast, growth in advanced economies is projected to be 1.4 percent in 2025. Growth in the United States is expected to slow to 1.8 percent, a pace that is 0.9 percentage point lower on account of greater policy uncertainty, trade tensions, and softer demand momentum, whereas growth in the euro area at 0.8 percent is expected to slow by 0.2 percentage point. In emerging market and developing economies, growth is expected to slow down to 3.7 percent in 2025 and 3.9 percent in 2026, with significant downgrades for countries affected most by recent trade measures, such as China. Global headline inflation is expected to decline at a pace that is slightly slower than what was expected in January, reaching 4.3 percent in 2025 and 3.6 percent in 2026, with notable upward revisions for advanced economies and slight downward revisions for emerging market and developing economies in 2025.

2. INDIAN ECONOMY:

Despite global uncertainty, India has displayed steady economic growth. Indias real GDP growth of 6.4 per cent in FY25 remains close to the decadal average. From an aggregate demand perspective, private final consumption expenditure at constant prices is estimated to grow by 7.3 per cent, driven by a rebound in rural demand. Notes that agriculture growth remained steady in first half of FY25, with Q2 recording a growth rate of 3.5 per cent, marking an improvement over the previous four quarters. Industrial sector grew by 6 per cent in first half of FY25, and is estimated to grow by 6.2 per cent in FY25. Q1 saw a strong growth of 8.3 per cent, but growth moderated in Q2 due to three key factors. First, manufacturing exports slowed significantly due to weak demand from destination countries, and aggressive trade and industrial policies in major trading nations. Second, the above average monsoon had mixed effects while it replenished reservoirs and supported agriculture, it also disrupted sectors like mining, construction, and, to some extent, manufacturing. Third, the variation in the timing of festivities between September and October in the previous and current years led to a modest growth slowdown in Q2 FY25.

Despite various challenges, India continues to register the fastest growth in manufacturing PMI, stated the Survey. The latest Manufacturing PMI for December 2024 remained well within the expansionary zone, driven by new business gains, robust demand, and advertising efforts.

The services sector continues to perform well in FY25, A notable growth in Q1 and Q2 resulted in 7.1 per cent growth in first half of FY25. Across subcategories, all the subsectors have performed well.

Indias services export growth surged to 12.8 per cent during AprilNovember FY25, up from 5.7 per cent in FY24.

Gross Foreign Direct Investment inflows recorded a revival in FY25, increasing from USD 47.2 billion in the first eight months of FY24 to USD 55.6 billion in the same period of FY25, a YoY growth of 17.9 per cent, Foreign portfolio investment (FPI) flows have been volatile in the second half of 2024, primarily on account of global geopolitical and monetary policy developments.

3. GLOBAL STEEL INDUSTRY:

The steel sector has long been a cornerstone of industrial progress, forming the backbone of economic development. Over the past year, however, the industry has faced considerable challenges. Global manufacturing activity remained muted as low household and business confidence led to cautious spending and investment. Rising input costs, geopolitical uncertainty, and tighter financing conditions further delayed capital expenditure, while the lingering effects of inflation eroded both purchasing power and consumer sentiment.

Weak housing construction in key markets—including China, the United States, Europe, and Japan— also weighed heavily on steel demand. The automotive sector, another major consumer of steel, experienced a slowdown in 2024. Even so, investments in manufacturing facilities and public infrastructure offered some support to global steel demand. Continued capital spending in these areas by major economies helped offset the weaker demand from more traditional sectors.

While steel demand weakened in China and most developed economies, developing economies such as India showed resilience. In 2024, steel demand in the developing world (excluding China) grew by around 3.5%, whereas developed economies recorded a decline of approximately 2%. Chinas exports to the rest of the world reached their highest level since 2016, totaling 111 MT. This surge was driven by a significant fall in domestic steel demand, while production declined only moderately. The sharp increase in Chinese exports has triggered protectionist measures in several countries. In the European Union, steel imports rose from 25.6 MT in 2023 to 27.4 MT in 2024. Similarly, Indias imports from China increased to 2.83 million tonnes in FY202425, about 12% higher than the previous year.

Global steel demand is projected to grow by 1.2% in 2025, reaching ~1,770 million tonnes. After three consecutive years of decline, steel demand is expected to recover globally (excluding China) in 2025. A stable global economic outlook, coupled with improving financing conditions and real income growth in major economies, is expected to support recovery in private consumption and investments before the tariff impositions. Additionally, a significant recovery in residential construction is also anticipated from 2025 onward, supported by easing financing conditions. However, the tariffs imposed by US administration and reciprocal tariffs by countries has led to increased uncertainty in demand supply balance and continues to be a major risk to the steel industry.

At a regional level, the downturn in Chinas real estate sector is expected to persist, leading to a 3% decline in steel demand in 2024, followed by an additional 1% decline expected in 2025. However, government intervention and economic support measures could help stabilise demand. In Developing Economies (excluding China), steel demand grew by 3.5% in 2024 and is expected to further accelerate to 4.2% in 2025. Emerging economies in the MENA and ASEAN regions are expected to rebound after experiencing a significant slowdown in 2022 and 2023. In Developed Economies, steel demand declined by around 2% in 2024, with major steel consuming nations—including the United States, Japan, South Korea, and Germany—experiencing contractions. However, demand is expected to recover by 1.9% in 2025, driven by improving economic conditions.

In Europe, apparent steel consumption experienced another drop of 2.3% in 2024. Output growth in the steelusing sectors is expected to remain low in 2025 due to continued low investments following from the high interest rates. In 2025, apparent steel consumption is projected to recover at a gradual pace of 2.2%, based on a positive industrial outlook and easing global tensions, though they are unpredictable now.

Growth is further supported by rising demand for consumer durables and capital goods. Additionally, government initiatives, including ProductionLinked Incentives (‘PLI) schemes and increased investments in infrastructure and manufacturing, have played a crucial role in boosting steel production and consumption. In the Union Budget for FY202526, the Government of India (‘GoI) has maintained capital expenditure (capex) as a share of GDP at the same level as 2024, reinforcing its commitment to industrial growth.

While steel demand remains robust in India, steel prices are expected to remain range bound, capped by the threat of Chinese imports. Policy support provided by the Government in the form of a safeguard duty of 12% on April 21, 2025 for 200 days has given a partial relief to the Indian steel industry.

4. INDIA STEEL INDUSTRY:

India remains the worlds secondlargest steel producer and one of the strongest demand drivers, with steel demand expected to grow by 8% in 2025. Demand is expected to reach 200210 million tonnes by 2030, driven by strong expansion in steelintensive sectors such as infrastructure, housing, transportation, power, and renewable energy.

Growth is further supported by rising demand for consumer durables and capital goods. Additionally, government initiatives, including ProductionLinked Incentives (‘PLI) schemes and increased investments in infrastructure and manufacturing, have played a crucial role in boosting steel production and consumption. In the Union Budget for FY202526, the Government of India (‘GoI) has maintained capital expenditure (capex) as a share of GDP at the same level as 2024, reinforcing its commitment to industrial growth.

While steel demand remains robust in India, steel prices are expected to remain range bound, capped by the threat of Chinese imports. Policy support provided by the Government in the form of a safeguard duty of 12% on April 21, 2025 for 200 days has given a partial relief to the Indian steel industry.

Overall, while the global steel demand is poised for recovery in 2025, the industry remains exposed to geopolitical, economic, and financial risks. India, however, continues to stand out as a highgrowth market, supported by strong domestic demand and investment. The longterm outlook for the Indian steel industry remains optimistic, with continued infrastructure development, industrial expansion, and supportive government policies driving its growth. Effective trade policies, price stabilisation measures, and sustained investment will be crucial to maintaining Indias competitive edge in the global steel market.

5. OPPORTUNITIES & THREATS:

Opportunities

We believe that our growth in other states in the country can fetch us new business expansion and opportunities. Our emphasis is on scaling up of our operations in other markets which will provide us with attractive opportunities to grow our client base and revenue.

Threats

• Rise in cost of material and cost of transportation may affect the margin

• Changes in Government Policies

• Intense competition may reduce profitability

• Act of God

• Client Dissatisfaction

• Customers inability to pay

6. SEGMENTWISE PERFORMANCE:

The Companys main business activity is Manufacturing of Steel Pipe.

7. OUTLOOK:

The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise.

8. RISK & CONCERNS:

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Key business risks and mitigation strategy are highlighted below:

Business Risk

To mitigate the risk of high dependence on any one business for revenues, the Company has adopted a strategy of launching new products/services, globalizing its operations and diversifying into different business segments. The strategy has yielded good results and the Company therefore has a diversified stream of revenues. To address the risk of dependence on a few large clients, the Company has also actively sought to diversify its client base.

Legal & Statutory Risk

The Company has no material litigation in relation to contractual obligations pending against it in any court in India or abroad. The Company Secretary, compliance and legal functions advice the Company on issues relating to compliance with law and to preempt violations of the same. The Company Secretary submits a quarterly report to the Board on the Companys initiatives to comply with the laws of various jurisdictions. The Company also seeks independent legal advice wherever necessary.

Human Resource Attrition Risk

Riddhi Steel and Tube Limited key assets are its employees. In a highly competitive market, it is a challenge to address the attrition. Riddhi Steel and Tube Limited continues to accord top priority to manage employee attrition by talent retention efforts and offering a competitive salary and growth path for talented individuals.

Macroeconomic Risks

Companys business may be affected by changes in Government policy, taxation, intensifying competition and uncertainty around economic developments in Indian and overseas market in which the Company operates.

Mitigation Strategy

The Company has well defined conservative internal norms for its Business. The Company ensures a favourable debt/equity ratio, moderate liquidity, strong clientele with timely payment track record, appropriate due diligence before bidding and focus on expanding presence in newer markets to minimize the impact in adverse conditions. The Company has geographically and operationally diversified into multiple countries and business segments thereby reducing its dependency on one country or market.

Operational Risks

The Companys operations and financial condition could be adversely affected if it is unable to successfully implement its growth strategies. Competition from others, or changes in the products or processes of the Companys customers, should reduce market prices and demanding for the Companys products, thereby reducing its cash flow and profitability. Product liabilities claims may adversely affect the Companys operations and finance.

Mitigation Strategy

The Company does strict monitoring of prices and adopts appropriate strategies to tackle such adverse situations. The Company also adopts technological innovations to bring about operational efficiency in continuous basis to remain competitive.

Others

The Company is exposed to risks & fluctuations of foreign exchange rates, rawmaterial prices and overseas investments exposures.

9. INTERNAL CONTROL SYSTEMS & THEIR ADEQUEACY:

One of the key requirements of the Companies Act, 2013 is that companies should have adequate Internal Financial Controls (IFC) and that such controls should operate effectively. Internal Financial Controls means the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. Your Company process of assessment ensures that not only does adequate controls exist, but it can also be evidenced by unambiguous documentation. The process involves scoping and planning to identify and map significant accounts and processes based on materiality. Thereafter, risk is identified and their associated controls are mapped, else remediation is implemented. These controls are tested to assess operating effectiveness. The auditor performs independent testing of controls. The Auditors Report is required to comment on whether the Company has adequate IFC system in place and such controls are operating effectively. Your Companys Internal Control System is robust and well established. It includes documented rules and guidelines for conducting business. The environment and controls are periodically monitored through procedures/ processes set by the management, covering critical and important areas. These controls are periodically reviewed and updated to reflect the changes in the business and environment.

The Audit Committee periodically reviews the internal controls systems and reports their observations to the Board of Directors.

The Directors have appointed M/s. C. P. Shah & Associates, Chartered Accountants as the Internal Auditors of the Company for the FY 202425 on 27/05/2025.

10. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year, the Company has generated turnover of Rs. 39,113.34/ Lakhs as compared to Rs. 32,757.39/ Lakhs in the previous year. The net profit before exceptional items and taxes is Rs. 1,019.99/ Lakhs as compared to Rs. 654.76/ Lakhs in the previous year. The Company has made net profit after taxes of Rs. 758.65/ Lakhs as compared to Rs. 479.73/ Lakhs of the previous year for the year ended 31^st March, 2025.

11. MATERIAL DEVELOPMENTS IN HR / INDUSTRIAL RELATION / NUMBER OF PERSON EMPLOYED:

Our Company believes that the human capital is key to bring in progress. The Company believes in maintaining cordial relation with its employees, which is one of the key pillars of the Companys business. The Companys HR policies and practices are built on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on 31^st March, 2025, the total employees on the Companys rolls stood at 116.

The Company continues to run an inhouse training programmer held at regular intervals and aimed at updating their knowledge about issues.

12. ACCOUNTING POLICIES:

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical cost convention on an accrual basis. The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein.

13. DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT:

The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.

14. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS:

There has been no significant changes in key financial ratios.

15. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Sr. No. Particulars	202425 202324	Changes	Reason
1. Return on Net Worth (%)	10.53 10.45	0.08	Due to a proportionately higher growth in profit after tax as compared to the increase in average net worth during the year. The improvement reflects efficient utilization of shareholders funds and better operational performance, though the change remains minimal.

16. CAUTIONERY STATEMENT:

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forwardlooking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.

PLACE: AHMEDABAD By Order of the Board

DATE: 05.09.2025 For, RIDDHI STEEL AND TUBE LIMITED

Sd/ Sd/

Rajeshkumar R Mittal Preeti Rajeshkumar Mittal

Managing Director Director & CFO

DIN: 00878934 DIN: 01594555

Registered Office: 83/84, Village Kamod,

Piplaj Pirana Road, Post Aslali, Ahmedabad 382427 Tel: (079)29700922 Website: www.riddhitubes.com CIN: L27106GJ2001PLC039978

ANNEXURE II