Sagardeep Alloys Ltd Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS

GLOBAL ECONOMY

The global economy is navigating a delicate and uncertain phase. This can largely be attributed to the escalating concerns ov er the rising tariff uncertainty. The recent increase in US tariffs, coupled with growing policy uncertainty, has introduced signif icant risks to global inflation and dampened both business confidence and investor sentiment. Following a remarkably resilient CY 2024 characterized by stability across developed and emerging markets and robust private consumption, CY 2025 has commenced on a more cautious footing. This shift in tone is largely attributable to apprehensions surrounding the trade and economic policie s of the Trump administration, which have raised widespread concerns about their long-term implications for global economic momentum and the overall investment climate.

The increasingly volatile geopolitical environment has prompted several multilateral institutions to revise their global grow th projections downward. The Organization for Economic Cooperation and Development (OECD)1 has lowered its forecast for global GDP growth in CY 2025 to 3.1%, down from its earlier estimate of 3.3%. For CY 2026, the OECD currently projects growth at 3.0%, compared to its previous forecast of 3.3%. Similarly, Fitch Ratings has reduced its global growth outlook for CY 2025 from 2.6% to 2.3%, citing heightened macroeconomic uncertainty and the adverse impact of rising trade tensions. Global melt shop production of stainless steel surged by 4.6% year-on-year, to 58.44 million tones according to the World Stainless Steel Association report. The industrys ongoing commitment to innovation and sustainability coupled with investments in new technologies has been instrumental in this growth. The prospects for the stainless-steel look promising as production is expected to increase on the back of demand from sectors like infrastructure, wind power, and electric vehicles.

Chinese stainless-steel producers maintained their output through most of 2023 but, with domestic demand languishing, this compelled them to priorities exports which went up by around 30%. According to Polaris Market

Research Report, the global stainless-steel market was valued at $ 121.72 billion in CY2023 and is projected to grow at 8.5% CAGR during the period 2024-2032. According to the World Steel Organization, stainless steel is poised to become increasingly prevalent in future applications such as suspension systems, chassis, fuel tanks, bodywork, and catalytic converters. Moreover, demand from the construction sector is also expected to grow.

The real Gross Domestic Product (GDP) grew in the United States, the European Union, and major emerging markets and developing economies in 2022. The United States (US) economy is showing improvement with real GDP growth at 2.1% in 2022. The European economy recorded 2.7% growth in 2022. However, the large negative terms-of-trade fallout from the Russia-Ukraine war and associated economic sanctions in Europe impacted the growth of the automotive industry. The Emerging Market and Developing Economies (EMDE) grew at an annual rate of 4.0% in 2022.

INDIAN ECONOMY

India continues to stand out in the global stainless-steel industry with demand projected to surge by 7.7% in 2024, significantly outpacing the global growth rate of 1.9%. This optimistic forecast made by the World Steel is based on robust expansion in In dias construction sector which is bolstered by government infrastructure spending and a rebound in private investments.

According to a Future Market Insights study, the stainless-steel industry in India has attained a value of $17.45 billion in 2024 and is poised for significant growth on the back of a rapidly growing economy. By 2034, Indias stainless-steel industry is projected to achieve revenues of USD 31,905.2 million, reflecting a growth of over 1.8 times its current level.

The installed capacity of the stainless-steel industry in India is estimated to be 6.6 - 6.8 million tonnes and a wide array of products are manufactured although overall capacity utilisation has been sub-optimal. Projections from a CRISIL Research Report indicate a strong growth trajectory for stainless steel demand culminating in volumes reaching 4.6 - 4.6 million tonnes by 2025. As the Indian economy grows, so too will stainless steel demand with sectors like infrastructure, construction, and manufacturing contributing the most; consequently, demand for ferrochrome too will rise. Source: Future Market Insights, Mordor intelligence report, and Joint Plant Committee Report.

INDUSTRY STRUCTURE & DEVELOPMENT

Copper is the third-most-consumed metal in the world. It is also known as a highly electrically conductive material. The properties of copper include good electrical conductivity, excellent thermal conductivity, corrosion resistance, high ductility, recyclability, and non-magnetic nature. The copper market is segmented by end-user industry (automotive and heavy equipment, construction, electrical and electronics, industrial and other end-user industries). Copper is the most widely used metal in energy generation, transmission infrastructure, and energy storage. It is the next most used metal after aluminum and steel in the construction, telecommunications, transportation, and automobile manufacturing sectors. The size of Indian copper industry (consumption of refined copper per annum) is around half a million tones which constitutes only 3 percent of the world copper market. India, a major exporter of refined copper till a few years ago, is set to become a net importer in recent years due to disturbance of production in various plants because of various environmental concerns.

FORWARD-LOOKING INFORMATION

Indias rise as an economic power will have a positive impact across the spectrum of economic activity; however, driven by large outlays for government capex in particular which stood at a record H 11.11 trillion in 2024-25 as well as a rebound in private investment, the metals and alloys sector is expected to benefit substantially. Your company is well placed to benefit from the broad macroeconomic trend both by way of expanding its core business as well as by venturing into areas where its managerial capabilities and strong financials can be appropriately leveraged.

This MD&A contains certain forward-looking statements and information relating to the Company that is based on the beliefs of its management as well as assumptions made by and information currently available to the Company. When used in this document, the words "anticipate", "believe", "estimate", "expect" and similar expressions, as they relate to the Company or its management, are intended to identify forwardlooking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, and the estimated cost and availability of funding for the continued exploration of the Companys properties. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties, and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Aside from factors identified in the interim MD&A, additional, important factors, if any, are identified here.

SEGEMENT WISE PERFORMANCE

Our Companys operations belong to a single segment and therefore no segment wise performance given.

OPPORTUNITIES AND THREATS

Our success as an organization depends on our ability to identify opportunities and leverage them while mitigating the risks that arise while conducting our business. Due to this, electronics production was halted temporarily in many countries. Also, the mining of metals, including copper, slowed down in 2024-25. Also due to Russian-Ukraine war, there has been major reduction in demand for copper. These factors negatively impacted the copper market.

However, now with increasing demand from construction, electronics, and telecommunication industries is boosting the markets growth. During the financial year 2024-25, the Company started to expand the product base in copper and copper alloy products and also to increase its production capacity in Copper Busbar. However due to frequent ups-downs in industry for demand of copper products, there has been no surge in margin and profitability of the company. During the year, the import of Copper also get affected due to disturbances worldwide because of the pandemic and such disturbances resulted into price rise of main raw material i.e. copper scrap of the Company and increased the working capital requirement of the Company. Price rise in copper scrap also affected the price of our products and buyers waited for their Orders and these all affected the financial performance of the Company. Looking to the present improvements in industrial sentiments in India and Worldwide, the Management is very optimistic in positive improvement of turnover and profit margin in current as well as coming years. The Company is continuously exploring all available opportunity to expand its market reach in products relating to Copper and Copper Alloy.

The Management see risk in raising price of metals including copper which can affect the profitability of the Company. Price rise in copper will also result into increase in working capital cost and slow growth in sales and lower capacity utilization.

OUTLOOK, RISKS & CONCERNS

Our Outlook, risks and concerns are as follows:

• Looking ahead, we remain optimistic about the future of Sagardeep Alloys Limited in the copper industry. As global demand for copper continues to grow, we are well-positioned to capitalize on market opportunities. Our expansion plans, coupled with ongoing operational enhancements, will enable us to meet the rising demand while maintaining our commitment to sustainability and responsible business practices. We foresee a positive outlook for the copper market and are confident in our ability to deliver sustainable value to our stakeholders.

• We are seeing very good business opportunity for Metal Sector in coming Years and this will also result into positive improvement of our Company.

• During the year, the Company started commercial production of Copper Sulphate however it did not lead to improvement of turnover and profitability and thus the company has discontinued its commercial production.

• As with any business, Sagardeep Alloys Limited faces various risks that could impact our operations. We actively monitor and manage these risks to safeguard our business and stakeholders interests. Market volatility, regulatory changes, geopolitical uncertainties, and environmental factors are among the key risks we continually assess and address. Our risk management strategies aim to ensure resilience and adaptability in dynamic market conditions.

• A large part of our revenue depends on our top clients and loss of any one of major client may lead to negative impact on our business.

• Our success depends on our top management and key personnel and our ability to attract and retain them.

• The Management see risk in current ongoing pandemic and any future outbreaks will affect the financial positions and growth opportunity of the Company.

• Price volatility of metal sector including copper can affect the performance of the Company negatively.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has an adequate internal control system commensurate with its size and the nature of its business in order to achieve efficiency in operation and optimum utilization of resources. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information.

FINANCIAL AND OPERATIONAL PERFORMANCE

Financial and Operational performance is provided in Board of Directors Report and same can be referred in point no 1 of the director report.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The industrial relations remained cordial throughout the year. The employees of the Company have extended a very productive cooperation in the efforts of the management to carry the Company to greater heights. Continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees and workmen of the Company. The Management took this opportunity to thank all of its employees including laborers for their continuing support in this pandemic and helped Company to continue its business operation in this odd time period.

CAUTIONARY STATEMENT

Statement in this report describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the companys operations include economic conditions affecting demand / supply and price condition in the domestic markets in which the company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.

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:

Particulars of Ratio	As at 31.03.2025	As at 31.03.2024
1. Debtors Turnover	13.52	11.18
2. Inventory Turnover	44.29	20.59
3. Interest Coverage Ratio	3.82	2.03
4. Current Ratio	3.14	2.39
5. Debt Equity Ratio	0.10	0.23
6. Debt service Coverage ratio	0.00	0.00
7. Operating Profit Margin (%)	1.22	1.17
8. Net Profit Margin (%)	1.74	0.89
9. Net capital Turnover Ratio	9.36	9.90
10. Trade payable Turnover Ratio	227.58	46.98

(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 Net-worth ratio there is minor changes in Return on Net-worth ratio in the current Financial Year

CONCLUSION:

In conclusion, the fiscal year 2025 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.

Regd Office:	By Order of the Board of
Plot No. 2070, Rajnagar Atiya ,	Directors For, Sagardeep
Santej Khatraj Road , Santej	Alloys Limited
Kalol, Gandhinagar -382721	Sd/
Date : 02.09.2025	- Satishkumar Mehta
Place : Santej	Chairman & Managing
	Director
	(DIN: 01958984)