Sagardeep Alloys Ltd Management Discussions

Annexure "C"

Global Economic Environment

The global economy demonstrated resilience during FY 2025 26 despite a challenging operating environment characterised by elevated geopolitical tensions, shifting trade policies, persistent policy uncertainty and uneven economic recovery across regions. Global economic activity was supported by continued privatesector adaptability, resilient domestic demand in several major economies, technologyled investment and gradual easing of financial conditions. However, the pace of growth remained below the prepandemic longterm average, reflecting structural constraints, high public and private debt levels, trade fragmentation and subdued productivity growth.

According to the International Monetary Fund (IMF), global economic growth was estimated at approximately 3.3% in calendar year 2025, with growth expected to remain broadly resilient in 2026. The IMFs January 2026 assessment noted that technology investment, including investment associated with artificial intelligence, together with fiscal and monetary support and improved financial conditions, helped offset the adverse impact of changing trade policies

Growth and Regional Trends

Economic performance remained uneven across major regions. Advanced economies continued to experience relatively moderate growth, reflecting softer labourmarket conditions, demographic pressures and the lagged impact of restrictive monetary policies. The United States economy remained comparatively resilient, supported by domestic consumption, investment and technologyrelated activity. In Europe, growth remained subdued amid weaker industrial activity, structural challenges and continued uncertainty surrounding trade and energy markets.

Emerging markets and developing economies continued to contribute significantly to global growth, although their performance varied considerably. Several Asian economies benefited from resilient domestic demand, manufacturing activity and technologyrelated investment, while a number of developing economies continued to face constraints arising from elevated borrowing costs, fiscal pressures and limited policy space.

The World Bank observed that global growth remained resilient despite persistent trade tensions and policy uncertainty, but cautioned that the 2020s were on course to become one of the weakest decades for global growth since the 1960s. The Bank projected global growth at 2.6% for 2026, reflecting an expected moderation in the temporary boost to trade and supplychain adjustments witnessed during 2025.

Inflation and Monetary Policy

Global inflation continued its broadbased moderation during FY 2025 26, although the pace of disinflation varied across economies. The easing of supplychain pressures and lower inflation in several economies provided greater flexibility to central banks to gradually move towards less restrictive monetary policies.

At the same time, inflationary risks remained significant. Energy prices, geopolitical developments, food prices, wage pressures and the potential passthrough from tariffs continued to create uncertainty around the inflation outlook. Central banks therefore remained focused on balancing price stability with the need to support economic activity.

The IMFs January 2026 outlook projected global headline inflation to decline from an estimated 4.1% in 2025 to 3.8% in 2026, indicating continued progress towards price stability, although inflation remained above the levels prevailing before the pandemic in several economies.

Trade and Global Supply Chains

International trade remained an important driver of global economic activity during the year. However, the global trading environment became increasingly complex as countries introduced or adjusted tariffs, trade restrictions and industrial policies. Businesses responded by diversifying sourcing arrangements, reconfiguring supply chains and bringing forward shipments to mitigate the impact of anticipated policy changes.

The temporary increase in trade activity during 2025 was partly supported by frontloading of shipments and rapid adjustments in global supply chains. The World Bank expects these factors to fade, resulting in softer trade and domestic demand during 2026. UN Trade and Development (UNCTAD) similarly highlighted the growing impact of geopolitical tensions on trade, investment and supply chains. Its 2026 assessment noted that merchandise trade growth, which was relatively strong in 2025, was expected to slow materially in 2026 as temporary tradesupporting factors diminished and geopolitical and policy uncertainties intensified.

Geopolitical and Energy Risks

Geopolitical developments remained a key source of uncertainty for the global economy. Conflicts and tensions in various regions continued to affect energy markets, shipping routes, commodity prices, investment decisions and business confidence. Disruptions to major trade and energy corridors increased the risk of higher transportation and input costs and contributed to volatility in global commodity markets.

For businesses operating across international markets, these developments reinforced the importance of supplychain resilience, geographic diversification, prudent inventory management and active monitoring of commodity and currency exposures.

Technology and Artificial Intelligence

Technology investment emerged as an important source of global economic momentum during FY 2025 26. Rapid investment in artificial intelligence, digital infrastructure, semiconductors, data centers and related technologies supported activity, particularly in North America and Asia.

The IMF identified technologyrelated investment as one of the key factors offsetting the negative effects of tradepolicy uncertainty. At the same time, the increasing concentration of investment in technology and AIrelated sectors has introduced new risks, including the possibility of elevated asset valuations and a sharp reassessment of growth expectations.

Global Economic Outlook

Looking ahead, the global economy is expected to remain resilient but operate in an environment of moderate growth and heightened uncertainty. The key opportunities include continued technological advancement, digitalisation, infrastructure investment, supplychain diversification and the gradual easing of global financial conditions.

The principal risks include an escalation of geopolitical tensions, renewed commodityprice volatility, fragmentation of global trade, elevated public debt, tighterthanexpected financial conditions and a sharperthananticipated correction in technologyrelated investment and asset valuations. The global economic outlook will therefore continue to depend significantly on the evolution of trade policies, geopolitical developments, inflation and monetary policy.

The Company remains cognisant of these global developments and their potential implications for demand, input costs, financing conditions, foreign exchange movements and supply chains. The evolving global environment also presents opportunities for businesses with diversified markets, resilient operating models, strong balance sheets and the ability to adapt rapidly to technological and structural changes.

Overall, while the global economic environment remains challenging, the underlying resilience of economic activity, continued technological progress and gradual improvement in financial conditions provide a foundation for sustainable growth. The Company will continue to monitor global macroeconomic developments closely and remain focused on operational resilience, disciplined capital allocation and longterm value creation.

Indian Economic Environment

The Indian economy maintained a strong growth trajectory during FY 2025 26 despite a challenging global environment marked by geopolitical tensions, tradepolicy uncertainties and volatility in commodity markets. Indias real GDP is estimated to have grown by 7.7% in FY 2025 26, compared with 7.1% in FY 2024 25, while real GVA is estimated to have grown by 7.9%. Real GDP growth in Q4 FY 2025 26 was estimated at 7.8%, reflecting the continued resilience of domestic economic activity.

The broadbased nature of economic growth, coupled with continued investment in infrastructure, manufacturing, transportation, urban development and energy, provided a supportive environment for metals and materials industries. Manufacturing recorded strong growth during the year and emerged as one of the important contributors to Indias economic performance. The revised national accounts also indicate that both private consumption and gross fixed capital formation grew by more than 7% during FY 2025 26. (Source: Press Information Bureau)

Indias continued emphasis on infrastructure development, domestic manufacturing and supplychain localisation is particularly relevant to the stainless steel industry. Stainless steel, owing to its corrosion resistance, durability, hygiene, recyclability and long service life, is increasingly being used in infrastructure, railways, transportation, construction, food processing, healthcare, engineering, energy, water management and consumer applications.

Stainless Steel Industry in India

India has emerged as one of the worlds important stainless steel markets and producers, with domestic demand benefiting from the countrys economic expansion and structural transformation. The Indian stainless steel industry has experienced sustained growth over the past several years, supported by infrastructure development, urbanisation, rising incomes, industrialisation and increasing applications of stainless steel across both traditional and emerging sectors.

Industry estimates indicate that domestic stainless steel consumption reached approximately 4.8 million tonnes in FY 2024 25, representing an increase of around 84% over the preceding five years. Percapita stainless steel consumption also increased from approximately 2.5 kg to 3.4 kg during this period. Industry projections indicate the potential for domestic demand to reach around 6.8 million tonnes by FY 2030, reflecting significant headroom for longterm growth.

The growth in stainless steel consumption is being supported by a combination of economic and structural factors rather than by any single enduse sector. Indias relatively low percapita consumption compared with mature economies provides considerable scope for further penetration as income levels rise and modern infrastructure expands. (Source: The Economic Times).

Manufacturing and Industrial Growth

Indias manufacturing expansion provides another important avenue for stainless steel demand. Growth in engineering, automotive components, capital goods, industrial equipment, food processing, pharmaceuticals, chemicals and other manufacturing industries increases the requirement for materials offering strength, corrosion resistance and hygienic properties.

The Governments focus on Make in India, domestic value addition, manufacturing competitiveness and integration into global supply chains is expected to support investment in manufacturing capacity. The strong performance of the manufacturing sector during FY 2025 26 further reinforces the potential for increased consumption of valueadded steel products. (Source: Press Information Bureau)

For the stainless steel industry, this creates opportunities not only in conventional flat products but also in specialised grades, precision products, fabricated components and applications requiring higher technical specifications.

Energy Transition and New Applications

Indias energy transition is creating new opportunities for stainless steel. Renewableenergy infrastructure, hydrogenrelated applications, electrical equipment, energy storage, water treatment and associated infrastructure can require stainless steel because of its durability and resistance to demanding operating environments.

The development of renewable energy capacity, expansion of transmission infrastructure and increasing focus on cleaner industrial processes are expected to generate incremental demand for corrosionresistant materials over the medium to long term.

Outlook for the Indian Stainless Steel Industry

The medium to longterm outlook for Indias stainless steel industry remains favourable. Indias relatively strong economic growth, expanding infrastructure, increasing manufacturing activity, urbanisation and rising percapita consumption provide a structural foundation for sustained demand growth.

The expected expansion of railways and metros, airports, construction, water infrastructure, food processing, healthcare, energy and industrial applications should continue to broaden the addressable market for stainless steel. At the same time, increasing awareness of lifecycle costs, sustainability, recyclability and durability is likely to strengthen the materials value proposition. However, the industry will continue to face challenges, including volatility in nickel and other alloyingelement prices, energy costs, currency movements, import competition, global overcapacity, tradepolicy developments and fluctuations in domestic steel prices. Managing these factors will require continuous focus on operational efficiency, product differentiation, supplychain resilience and prudent financial management.

ForwardLooking Outlook

The outlook for the Indian stainless steel industry remains positive, supported by strong domestic demand, infrastructure development, manufacturing growth and increasing urbanisation. Domestic stainless steel consumption increased by 84% over FY21 FY25 to 4.8 million tonnes, while percapita consumption increased from 2.5 kg to 3.4 kg during the same period. Industry estimates project consumption to reach approximately 6.8 million tonnes by FY30, implying a mediumterm growth rate of around

7 8% annually. Key growth drivers are expected to include railways and metros, infrastructure, construction, process industries, renewable energy, water infrastructure, green hydrogen, automobiles and consumer applications. The relatively low percapita consumption compared with the global average provides further headroom for growth. However, the industry is expected to face continued pressure from lowpriced imports, global overcapacity and rawmaterial volatility, particularly nickel and scrap. Recent market developments also indicate increasing competition from Chinese steel in India and tighter trade restrictions in major export markets. Indian steelmakers are shifting focus to the domestic market to counter falling exports, as Europe and the UK tighten steel import regulations. These regions, which collectively receive twothirds of Indias steel exports, are expected to reduce purchases by up to 40% in the current fiscal year due to new import restrictions and the EUs carbon tariffs. Simultaneously, lowcost Chinese steel priced $52$63 per ton below Indian steel has created stiff local competition, further squeezing margins for Indian producers.India exported 6.6 million metric tons of finished steel in FY2026, but exports dropped sharply to 0.5 million tons in May 2026. In response, the Indian government has launched antidumping investigations into imports of hotrolled steel from China,

Japan, and Russia. Despite these challenges, India remains a strong market for steel consumption, supported by rapid economic growth and infrastructure projects. Domestic steel capacity is set to expand significantly with a target of 400 million tons by 203536. Major producers like Tata Steel and JSW Steel are investing heavily in India, although profit margins are unlikely to rise without higher import duties. Companies are also exploring alternative markets in East Asia and the Middle East.

The strategic focus for Indian stainless steel manufacturers is therefore expected to remain on cost competitiveness, highervalue products, domestic market penetration, rawmaterial security, operational efficiency and sustainable manufacturing. The proposed US$350 million SAIL Krakatau Steel stainlesssteel slab project, with planned capacity of 0.5 million tonnes per annum, also highlights the growing importance of securing nickel and strengthening rawmaterial supply chains. Indias staterun Steel Authority of India (SAIL) and Indonesias Krakatau Steel plan to jointly invest up to $350 million in a stainless steel slab plant in Indonesia. The facility, expected to have an annual capacity of 500,000 metric tons, is projected to become operational within three to four years. A preliminary joint venture agreement was signed during Indian Prime Minister Narendra Modis recent visit to Indonesia. SAIL will send a technical team to conduct a feasibility study, after which the equity structure and government approvals will be finalized. The collaboration will allow SAIL to access cheaper nickel critical for stainless steel given Indonesias significant global nickel production. SAIL plans to consume the full output of the new plant at its Salem facility in Tamil Nadu, India, to produce finished products primarily for domestic use, with some exports to the Middle East and Europe. The venture aligns with Indias strategy to expand its steel sector, secure raw materials, and boost exports in response to changing global trade dynamics. SAIL was the countrys thirdlargest steel producer as of fiscal year 2025, while domestic steel consumption has surged 55% over the past five years.

Overall, the industry outlook remains favourable on demand, with profitability expected to depend increasingly on cost efficiency, product differentiation and effective management of import and rawmaterial risks.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

(j) details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof: In comparison with the last year Return on Networth ratio there is minor changes in Return on Networth ratio in the current Financial Year

CONCLUSION:

In conclusion, the fiscal year 2026 was a period of significant achievements for Sagardeep Alloys Limited. We achieved strong financial results, and demonstrated our dedication to sustainability and ESG principles. Despite the challenges posed by the industrys inherent risks, we have managed to position ourselves favorably for the future. As we continue to navigate the evolving landscape of the copper business, we remain focused on delivering sustainable growth and value to our shareholders, employees, and communities.

Thank you for your continued support and trust in SAGARDEEP ALLOYS LIMITED We look forward to seizing new opportunities and achieving even greater success in the coming years.