Scoda Tubes Ltd Management Discussions

1 Industry Overview Global And Indian Macroeconomic Environment

Global economic growth in 2025 reached 3.2%, driven by infrastructure investments and capital cycles. Emerging markets expanded faster at 3.9% compared to advanced economies at 1.8%, reflect ing divergent growth trajectories. Middle East disruptions continue to elevate energy prices, creating in ationary pressures in energy-intensive sectors, including petrochemicals and re ning, which are critical end-use markets for seamless pipes.

India has emerged as the worlds fastest-growing major economy. Real GDP growth reached 7.5% in FY2025-26, with Q1 FY2026 achieving 7.8%, the fastest pace in ve quarters, driven by services, manufacturing, and government capital expenditure. The RBIs supportive monetary stance at 5.0% repo rate, combined with controlled in ation at 2.5%, creates an enabling environment for capital-intensive industrial projects. Indias export performance has strengthened substantially, reaching USD 825 billion in FY2025, representing 76% growth over the past decade and advancing the nation from 20th to 17th position globally in merchandise exports. The Union Budget 2025-26 increased capital expenditure allocation to Rs. 11.21 lakh crore (USD 131 billion), up 10.1% from the previous year, reinforcing government commitment to infrastructure-led growth. This sustained capex expansion directly supports demand for industrial materials including seamless steel tubes.

Indias Position In Specialty Steel

India is the worlds second-largest crude steel producer, a position achieved through decade-long investments in capacity and technology. Output reached 151.14 MT in FY2025-26 with finished steel production of 145.30 MT. Steel production capacity stands at 200.33 MT, with government targets to expand to 300 MT by FY2030 through Make in India initiatives and domestic industry investments.

Domestic steel demand growth is estimated at 9-10% in 2025, driven by accelerating infrastructure projects, automotive electrification, and railway modernisation. Secondary steel plants and MSMEs represent 47% of crude steel capacity, reflect ing Indias decentralised manufacturing ecosystem that provides cost efficiency and supply chain flexibility . Per-capita steel consumption reached 100 kg in FY2026, substantially below the National Steel Policy target of 160 kg by FY2031, indicating significant structural headroom for demand expansion.

Indian seamless tube manufacturers benefit from integrated cost advantages. Access to low-cost captive iron ore, domesticated specialty alloy production, and cost-effective skilled labour combine to provide 15-25% cost leadership versus European and Japanese competitors without compromising quality certi cation standards (API, ASME, DIN).

Recent Developments

Natural Gas Infrastructure Expansion

Indias energy security strategy targets natural gas share to rise from 6% to 15% by 2030, reflect ing commitment to cleaner fuel adoption. The Pradhan Mantri Urja Ganga pipeline programme represents the largest infrastructure project driving seamless tube demand, expanding the natural gas network by 10,805 km by 2027-28. This multi-state expansion requires specialty-grade seamless pipes (316L, 316LN stainless steel) engineered for sustained operating pressures of 70-100 bar, creating consolidated, multi-year demand visibility with stringent certi cation requirements.

The pipeline programmes scale and phased execution model provide predictable demand trajectory for manufacturers with API and ASME certi cations. This infrastructure-driven demand is policy-backed and non-discretionary, providing superior demand stability compared to cyclical industrial demand.

Re ning Capacity Expansion and Petrochemical Demand

Indias re ning capacity has reached 258.1 MMTPA in FY2025, positioned to expand to 309.5 MMTPA by 2028, representing 51.4 MMTPA net addition. This capacity expansion is driven by rising domestic petroleum consumption, with India emerging as the worlds third-largest oil consumer. The re ning capacity addition creates substantial demand for seamless tubes in crude distillation units, thermal cracking furnaces, hydrocracking reactors, and product recovery systems operating at extreme conditions: 400-500 degrees Celsius with corrosive hydrogen sulphide environments. Duplex and super-duplex stainless steel tubes (grades 2205, 2507, 6Mo) are increasingly specified for these sour-service applications. Indias petroleum product exports reached 64.7 MT in FY2025-26, demonstrating robust refining capabilities and global market positioning, with re ning margins remaining healthy despite commodity volatility.

Heat Exchanger Market - Fastest-Growing Application Segment

Indias heat exchanger market, valued at USD 856.4 million in FY2024, is expanding at 9.2% CAGR and projected to reach USD 1,428.4 million by 2033. Heat exchangers represent the most technically demanding application for seamless tubes, requiring precision-drawn specifications with ±0.05 mm tolerances, Ra 0.4-0.8 micrometers surface nish, and mandatory eddy-current testing certi cations. These stringent specifications command premium pricing of 30-50% above commodity seamless tubes.

The global heat exchanger market is projected at USD 32,961 million by 2033 from USD 19,724 million in FY2025-26 (6.9% CAGR), driven by industrial expansion, HVAC demand from urbanisation, and power plant modernisation. Indias heat exchanger market growth rate of 9.2% CAGR exceeds global growth, reflect ing faster industrialisation and infrastructure development in India.

Petrochemical Market Expansion

The global petrochemicals market is projected at USD 973.10 million by 2030 from USD 641.01 million in FY2025-26, expanding at 7.3% CAGR. Asia-Paci c commands 46.9% market share, with India positioned as a high-growth market. Seamless stainless steel tubes are critical components in heat exchanger bundles, furnace tube coils, and distillation columns within petrochemical facilities. Rising demand for specialty chemicals and polymers drives consumption of high-performance seamless tubes in corrosive and high-temperature environments.

Global Seamless Pipes Market

The global seamless pipes and tubes market is projected at USD 137.5 billion by 2035, rising from USD 69.9 billion in FY2025-26 at a 7.0% CAGR. Seamless stainless steel commands 2-3x price premium over welded alternatives due to superior mechanical properties, dimensional accuracy, and metallurgical uniformity essential in extreme operating conditions. Capital-intensive industrial sectors increasingly prioritise seamless stainless steel tubes over commodity welded alternatives due to regulatory pressure, lifecycle cost optimisation, and zero-tolerance failure standards mandated in critical infrastructure.

Process industries account for 25.5% of global demand, followed by oil and gas at 16.0%, heat exchangers at 17.5%, and power generation at 13.2%. Asia-Paci c dominates the global market with China and India as dominant contributors. India represents a high-potential market backed by Make in India initiatives and growing domestic manufacturing across oil and gas, steel, automotive, and railways sectors.

Indian Seamless Stainless Steel Tubes Market

Indias seamless stainless steel tubes market is positioned for accelerated growth. Domestic demand is projected to grow at 8-10% CAGR through FY2027, outpacing global seamless pipes growth of 7.0% CAGR. This above-market growth trajectory reflect s infrastructure acceleration, energy security mandates, manufacturing sector expansion, and strong domestic capex cycle.

Indian manufacturers possess decisive competitive advantages in global markets. Cost leadership of 15-25% versus European and Japanese competitors is achieved through access to low-cost captive iron ore, domesticated specialty alloy production, cost-effective skilled labour, and localised manufacturing ecosystems. Importantly, this cost advantage is not achieved through quality compromise. Indian seamless tube manufacturers have established strong certi cation credentials (API, ASME, DIN, ISO 9001:2015) and serve global customers across demanding applications.

India is emerging as the preferred supplier geography in Asia-Paci c, MENA, and African markets. Post-pandemic supply chain diversi cation, rising protectionism in developed markets (EU CBAM, US Buy American), and geopolitical tensions are systematically directing multinational corporations and engineering rms toward Indian sources. Indian companies like Jindal SAW, Maharashtra Seamless, and ISMT have built strong presence and customer relationships in export markets.

Export Opportunity And Competitive Positioning

Asia-Paci c, MENA, and African regions witness robust demand for seamless pipes driven by oil and gas infrastructure development and industrial capacity additions. India is positioned as the preferred supplier geography due to multiple converging factors: access to low-cost raw materials, certified manufacturing capabilities, supply chain resilience, and proven track record of meeting international standards in large-scale project execution.

Major infrastructure projects in MENA and Africa generate consolidated bulk orders for seamless tubes where delivery reliability and quality consistency are critical. Indian manufacturers combination of cost competitiveness, scale capability, and technical certi cation enables capture of large project-based opportunities. The addressable export market for Indian seamless tubes stands at approximately 9.6 million tonnes annually, with India positioned to capture 12-18% share across key regions through differentiation in high-end applications (heat exchangers, petrochemicals) and advanced alloy expertise.

Raw Material Sourcing And Supply Chain Dynamics

Raw material costs comprise 60-70% of seamless tube manufacturing costs. Cost competitiveness and margin sustainability depend critically on strategic alloy sourcing, efficient procurement, and commodity price hedging. Supply chain resilience is essential given geopolitical disruptions, energy price volatility, and concentrated production of key alloying elements in geopolitically sensitive regions.

Iron Ore

Seaborne iron ore prices in FY2025-26 averaged USD 102.37/DMT, ranging from USD 92.75 to USD 109.50/DMT. New supply from Simandou (West Africa, 120 MMTPA capacity, 65% Fe concentrate) commenced January 2026, reducing supply concentration risk. Australia and Brazil shipments expanded 3% and 7% year-on-year in 2025, supporting price stability.

Indias domestic iron ore reserves support 700 MT/year production capacity, providing structural cost advantage and supply security unmatched by import-dependent competitors. This domestic availability of low-cost, high-quality iron ore forms the foundation of Indian manufacturers cost leadership.

Nickel And Specialty Alloying Elements

Nickel prices remain volatile due to geopolitical supply concentration (Indonesia, Philippines account for majority of global production). A 10% nickel price increase translates to 3-5% cost increase in 316/316L stainless steel billets, directly impacting pro tability of seamless tube manufacturers.

Indias value-chain integration for specialty stainless grades through localised alloy production and blending reduces exposure to global nickel spot price volatility. Domestic capability to produce specialty alloys inhouse provides cost ef ciency and supply security advantages.

Coking Coal

Prime Hard Coking Coal averaged USD 192.0/MT in FY2025-26, ranging from USD 166 to USD 218/MT, with Q4 disruption-driven spike to USD 250/MT. A sustained 20% PHCC price increase elevates production energy costs by 5-8%, materially impacting pro tability. Australias exports projected at 150 MT

FY2025-26, 161 MT FY2026-27. Seamless tube manufacturing requires high-energy processes (heating to 1,200 degrees Celsius for piercing, hot rolling at 1,000-1,100 degrees Celsius, annealing at 900-1,100 degrees Celsius), making energy cost management a critical competitive factor.

Flux and Energy Security

Flux sourcing (calcium uoride, bauxite-based compounds) faces geopolitical risks from Middle East disruptions. Q4 FY2025-26 experienced supply disruption from Middle East sources. Mitigation strategies include transition to domestic sourcing and South

Asian regional suppliers (India, Sri Lanka), reducing dependence on geopolitically vulnerable supply chains. Diversi ed ux sourcing provides cost stability and supply security superior to competitors reliant on single-region sourcing.

Regulatory Environment And Government Support

Production Linked Incentive Scheme

PLI scheme for specialty steel has mobilised 25 companies to commit Rs. 17,000 crore (USD 1.98 billion) for high-end domestic steel production. Seamless tube manufacturers gain capital subsidies on capex, production-linked incentives on eligible output (12-15% of sales), and reduced tax burden on investments. This policy framework directly supports capacity expansion and technology upgrade initiatives.

PLI Scheme 1.1, launched January 6, 2025, carries Rs. 6,322 crore (USD 733.4 million) outlay, covering ve key product categories with direct application to seamless tube manufacturing. The scheme explicitly targets high-end steel products, including specialty stainless grades and duplex/super-duplex seamless tubes.

Source: Ministry of Steel; PLI Scheme Guidelines 2024-25; Department for Promotion of Industry

National Steel Policy 2017 and Capacity Expansion Targets

National Steel Policy 2017 envisions 300 MT production capacity and 160 kg per capita consumption by 2030-31, providing the strategic framework for industry expansion. This policy explicitly supports specialty steel development

Source: National Steel Policy 2017; Ministry of Steel Annual Report 2024-25 and advanced manufacturing capabilities. Ministry of Steel is facilitating setup of Steel Research and Technology Mission of India (SRTMI) with Rs. 200 crore corpus to spearhead R&D in iron and steel industry.

Trade Protection and Import Safeguards

The 12% provisional safeguard duty on seamless pipe imports elevates landed cost of European and Japanese tubes by 12-15%, providing significant price protection for domestic producers and supporting pro tability. The Directorate General of Trade Remedies (DGTR) implemented this measure to address import surge concerns and protect domestic manufacturers during the capacity expansion phase.

Steel Import Monitoring System 2.0 (SIMS 2.0), launched July 25, 2024, improves data transparency, quality control, and integration with government portals to support sector growth and better import management. This system provides real-time visibility into steel imports and domestic production, enabling evidence-based policy making.

Carbon Border Adjustment Mechanism (CBAM) Opportunity

EUs Carbon Border Adjustment Mechanism imposes carbon costs on imported steel products. This creates competitive opportunity for low-carbon producers investing in sustainable manufacturing. Adoption of induction melting, electric arc furnaces, and renewable energy-powered production enables access to premium-priced segments in Europe,

MENA, and CBAM-compliant markets. First-mover advantage in ESG-certi ed seamless tube manufacturing provides differentiation and pricing power in global markets, particularly valuable in process industry and oil & gas applications where customer sustainability requirements are increasingly stringent.

Technology And Sustainability Trends

Advanced Alloy Expertise and Precision Manufacturing

Manufacturers developing expertise in duplex, super-duplex, and nickel-based superalloys (Inconel 625, Hastelloy C, 6Mo) command premium pricing of 20-40% above commodity grades. These specialty grades serve hydrogen sulphide-rich, extreme-temperature, high-pressure environments in petrochemicals and offshore oil & gas, creating technical differentiation and customer lock-in through eld performance validation.

Precision manufacturing demands tolerance capability of ±0.05 mm, surface nish of Ra 0.4-0.8 micrometers, and eddy-current testing certi cation. Investment in automated quality control, real-time process monitoring, and data analytics optimises yield, reduces energy consumption, and enables faster customer speci cation response. These capabilities are non-discretionary for heat exchanger applications where failure tolerance is zero.

Sustainability and Green Manufacturing

Electric arc furnace (EAF) melting, scrap metal recycling, and renewable energy-powered operations increasingly represent industry standard practice. Manufacturers adopting these capabilities gain ESG credentials valuable in global markets and access to green financing at reduced cost of capital. Scope 1, 2, and 3 emissions reduction, supply chain transparency, and traceability protocols address emerging customer and investor expectations for sustainable manufacturing.

Source: Sustainability Standards; Green Steel Initiatives; ESG Reporting Frameworks

Recent Developments

FDI In flows and Industry Con dence

FDI in flows to Indian metallurgical industries reached Rs. 1.60 lakh crore (USD 18.67 billion) between April 2000 and June 2025, reflect ing strong and sustained investor con dence in Manufacturing Momentum HSBC India Manufacturing PMI rose to 59.3 in August 2025 (from 59.1 in July), marking the strongest improvement in operating conditions in 17 years. This momentum indicates robust demand absorption, Indias steel and specialty metals sectors. This capital in ux supports capacity expansion, technology upgrade, and ecosystem development across the industry.

improved business con dence, and sustained manufacturing growth across industrial sectors. Output and new orders expanded robustly, reflect ing strong underlying demand traction.

Industry Outlook

Indias seamless stainless steel tubes market converges on multiple structural tailwinds over the medium-term (3-5 years). GDP growth trajectory of 6.7-7.5% CAGR, infrastructure investment exceeding 5% of GDP, 10,805 km natural gas pipeline expansion by 2027-28, re ning capacity growth to 309.5 MMTPA by 2028, and heat exchanger market expansion at 9.2% CAGR through 2033 create compounding demand drivers.

Domestic demand is projected to grow at 8-10% CAGR through FY2027, outpacing global seamless pipes expansion of 7.0% CAGR. Government support through PLI schemes, safeguard duties, and National Steel Policy creates a supportive regulatory ecosystem. Export opportunities in Asia-Paci c, MENA, and Africa expand as global corporations systematically diversify sourcing away from concentrated European and Japanese supply bases.

Over 3-5 years, Indias seamless stainless steel tubes market is expected to grow at high single-digit rates (8-10% CAGR), supported by policy-backed demand visibility from infrastructure, energy security, and industrial expansion. Long-term structural tailwinds (per-capita consumption gap of 60 kg versus developed economies, urbanisation acceleration, manufacturing sector expansion) suggest sustained growth trajectory through 2030s, creating substantial shareholder value opportunity for manufacturers with scale, technology, and cost competitivene

Company Performance

Scoda Tubes Limited has established itself as a globally respected and dependable manufacturer of specialized stainless-steel seamless and welded tubes and pipes. Rooted in a culture of integrity and engineering excellence, the Company has the Company has consistently expanded its manufacturing capabilities, geographic footprint, and industry accreditations, ensuring long-term value creation for stakeholders.

Operational Milestones & Capacity Expansion

The Companys highly integrated manufacturing facility, spanning 37,156 square meters in Gujarat, serves as the cornerstone of our operational strength. We have successfully forti ed our competitive moat through strategic capacity expansions and backward integration:

Backward Integration: Commissioned an in-house hot piercing mill with a 20,000 MTPA capacity for producing mother hollows.

Seamless Production: Achieved an installed capacity of 20,068 MTPA across 33 production lines.

Welded Expansion: Currently operating at 1,020 MTPA, with ongoing strategic expansion targeting 21,150 MTPA.

Capital Market Debut: Successfully listed on the NSE and BSE in 2025, raising 220 crores to fuel expansion.

Capital Investments & Operational Cost Savings

To insulate our operations from global power cost volatility and systematically enhance margins, the Company executed major climate-tech and clean energy capital investments:

Seamless Division Solar Project:

Commissioned a 3.9 MW (AC) / 4.99 MW (DC) captive project with a capital expenditure investment of 18.0 crores, generating 7,740,738 kWh annually and delivering an estimated annual operational cost savings of 4.9 crores.

Welded Division Solar Project: Commissioned a 3.0 MW (AC) / 3.8 MW (DC) captive project with a capital expenditure investment of 13.7 crores, generating 5,964,100 kWh annually and delivering an estimated annual operational cost savings of 3.8 crores.

Rooftop Solar Integration: Activated an additional 1 MW of solar panels directly on facility rooftops to feed clean energy straight into core manufacturing lines.

Global Reach & Quality Accreditations

The Company has deliberately curated a strategic export plan, leveraging an extensive distributor network to cater to 349 clients across 32 countries. Our unwavering commitment to metallurgical excellence is validated by an extensive portfolio of global approvals: System Certification s: ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018.

International Standards: DNV (Germany), Norsok M650 (Norway), PED 2014/68/EU, and AD 2000-Merkblatt-W0. Sector-Speci c Approvals: SABIC, ADNOC, JSRS, Lloyds Marine, and IBR (India).

Commitment to Sustainability

Balancing industrial progress with environmental stewardship remains a core strategic pillar. The Company has successfully commissioned an 8.79 MW (DC) / 6.9 MW (AC) captive rooftop solar power plant, generating over 13.7 million kWh annually. This infrastructure significant ly reduces our conventional energy dependence, insulates us from power cost volatility, and advances our Zero Waste to Land ll objective.

Business Performance & Outlook Indias seamless stainless-steel tubes and pipes industry is supported by multiple structural growth drivers over the medium term. GDP growth, infrastructure investments, expansion of the natural gas pipeline network, rising re ning capacity and increasing demand for heat exchangers are expected to support demand for stainless-steel tubes and pipes. Domestic demand is projected to grow at 8 10% CAGR through FY2027, supported by infrastructure development, energy security and industrial expansion. Government initiatives, including PLI schemes, safeguard duties and the National Steel Policy, are expected to provide further support to domestic manufacturers, while export opportunities across Asia-Paci c, MENA and Africa are expected to increase as global customers diversify their sourcing base.

The Company operates an integrated manufacturing facility spread across 37,156 square metres in Gujarat out of the available land parcel of 74,699 sq. mts. and continues to strengthen its manufacturing capabilities through backward integration and capacity expansion. The Company has commissioned an in-house hot piercing mill with a capacity of 20,000 MTPA for manufacturing mother hollows, reducing dependence on external suppliers. Its seamless manufacturing capacity stands at 20,068 MTPA across 33 production lines, while welded manufacturing capacity currently stands at 1,020 MTPA and 2 production lines. The Company is undertaking further expansion of its welded manufacturing capacity, with the combined capacity targeted to reach 21,150 MTPA. During the year, the Company continued to invest in renewable energy infrastructure to reduce dependence on conventional sources of power and mitigate exposure to power cost volatility. The seamless division commissioned a 3.9 MW AC / 4.99 MW DC

captive solar project with a capital expenditure of 18.0 crores, expected to generate approximately 7.74 million kWh annually and deliver estimated annual operational cost savings of 4.9 crores. The welded division commissioned a 3.0 MW AC / 3.8 MW DC captive solar project involving a capital expenditure of 13.7 crores, expected to generate approximately 5.96 million kWh annually and deliver estimated annual operational cost savings of 3.8 crores. In addition, the Company has installed an additional 1 MW of rooftop solar capacity to support its manufacturing operations.

The Company continues to expand its presence across international markets through its export network and established customer relationships, catering to 349 clients across 32 countries. Its manufacturing capabilities are supported by certi cations including ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018, along with international standards and approvals including DNV, NORSOK M650, PED 2014/68/EU and AD 2000-Merkblatt-W0. The Company also holds sector- specific approvals and registrations including SABIC, ADNOC, JSRS, Lloyds Marine and IBR, enabling it to participate in specialised applications and serve customers across diverse end-use industries and geographies.

The Company remains focused on balancing industrial growth with environmental responsibility. The renewable energy infrastructure is expected to reduce dependence on conventional energy sources, mitigate energy cost volatility and support the Companys objective of achieving Zero Waste to Land ll. Over the medium to long term, increasing industrialisation, urbanisation, manufacturing activity and the relatively lower per-capita consumption of steel compared with developed economies are expected to provide sustained growth opportunities for the Company.

Geographic expansion of our customer base

We have exported to 32 countries since inception, with our international presence continuing to expand across key markets including Germany, the United States, Italy, the Netherlands, Spain and other geographies. Export revenues increased significant ly to 179.5 cr in FY26 from 129.1 cr in FY25, with exports contributing 34.6% of our revenue from operations, compared with 26.6% in FY25.

We have continued to strengthen our presence across Europe, the Americas, the Middle East and other international markets, leveraging our extensive distributor network, product approvals, registrations, wide product portfolio and domain expertise. Our diversi ed geographic presence helps reduce exposure to sector or geography- specific risks while supporting the continued expansion of Scoda Tubes as a quality stainless-steel tubes and pipes brand globally.

*Includes Estonia, Italy, UK, Denmark, Romania, Czech Republic, Brazil, Sweden, Australia, Saudi Arabia, Poland, and Qatar

Strengthen our brand value

We market our products under the brand name Scoda Tubes Limited and remain focused on strengthening brand recognition and positioning Scoda as a provider of quality products. To enhance our visibility among key market participants, including stockists, engineering, EPC and industrial companies, we regularly participate in domestic and international trade exhibitions and industry events. Our key international exhibitions include Stainless Steel World, Maastricht (Netherlands), Wire & Tube, Dusseldorf (Germany), UK Metal Expo (United Kingdom), and Heat Exchanger World (Rotterdam and the United States). In India, we have participated in prominent industry events such as the Global Stainless Steel Expo, Chemtech and Stainless Steel Expo, among others.

Going forward, we intend to continue strengthening our brand presence and visibility among targeted customers by enhancing customer service, participating in domestic and international trade exhibitions and undertaking additional marketing initiatives, including digital marketing. These efforts are expected to strengthen our brand positioning and recall and support our overall growth strategy.

Participation in Exhibitions & Expos

Chemtech Mumbai GSSE Mumbai

Stainless Steel World - Maastricht, Netherlands Tube & Wire - Dusseldorf, Germany Heat Exchanger World - Rotterdam, Netherlands Heat Exchanger World - Houston, Texas, USA Stainless Show, Brno, Czech Republic

Trademarked Scoda Tubes Limited to build brand equity, increase market recognition, and protect IP

20 personnel in quality check and customer servicing team to further improve brand positioning and brand recall value, supporting overall growth strategy

SWOT Analysis

Strength

Specialised production of Stainless-Steel tubes and pipes

The company specializes in the manufacturing of seamless and welded tubes and pipes in a single metal category, i.e., stainless steel. This high emphasis on a single metal category for catering to the pipe requirements of both domestic and international customers has, over time, improved the expertise of the company in terms of manufacturing process, inventory management and sales of products.

With vast experience in the designated product segment, the company has achieved an ability to accurately assess and respond to customer preferences in this segment. This has helped the company to be able to offer various specialized stainless-steel tubes and pipes products in terms of length, bending, thickness and grades as required or preferred by our customers.

Thus, the specialized focus of the company on the stainless-steel segment of tubes and pipes has well positioned it in attracting and retaining customers to cater to their requirements of customized, specialized and high-quality stainless-steel tubes and pipes across the world.

Plants strategic location and integrated operations

The companys current manufacturing facility is strategically located in the state of Gujarat to enable easy and seamless access to key ports and junctions for efficient flow of products.

The plant is in close proximity, approximately 360 kilometres, from the Mundra port, a key port for exports, and 23 kilometres from an Inland Container Depot, that ensures sound access and connectivity to the company. The strategic location of the manufacturing plant, hence, helps the company in reducing its logistics costs and improving its margins. Currently, the company possesses 20 production lines for its products (18 production lines of seamless tubes and pipes, 2 production lines of welded tubes and pipes). As of FY26, the company owns a land area of 74,699 square meters, out of which the plant facility is built upon 37,156 square meter area. The extra land gives the company an opportunity to expand its manufacturing capacity in the near or long term.

The companys plant is fully integrated with sizable production facilities. For example, the company has stainless steel seamless tubes and pipes manufacturing capacity of 20,068 metric tonnes per annum. The company also possesses a 1,020 metric tonnes per annum manufacturing capacity of stainless-steel welded tubes and pipes. As a result of the high capacity, the company garners benefit s such as the economies of scale and produces its nal products at competitive prices. The company is fully committed to continue to invest in its production facilities to increase the quantum of edge over its competitors in the long term.

In FY23, the company completed the setup of a brand-new piercing mill for the production of mother hollow (annual capacity of 20,000 metric tonnes per annum), which is the principal raw material for its seamless products. This new facility of the company makes its overall pipes manufacturing operations a highly backward integrated one. Apart from getting benefit s such as lower raw material related costs and reduced supply side risks owing to low reliance on the raw materials suppliers, the company also gets the flexibility to easily accommodate changes in its product portfolio as per the market dynamics to cater to requirements of its wide spectrum of customers.

Customer and Geography Diversi cation

The company sells its products to diversi ed end-user markets, both domestically and internationally. In the domestic market, it sells products to end-users, fabricators, EPC contractors as well as stockists.

In the United States market, the company supplies its products through one exclusive distributor, while in the Italy, Germany, Austria and Eastern Europe markets, it supplies its products through its hired sales/marketing representatives to end-users, fabricators and EPC contractors.

The company, thus, has a solid end-user base in a wide range of industrial sectors, such as oil & gas, petroleum, fertilisers, chemicals, defence & aerospace, pharmaceutical, power, automobile industry, etc. Some of the key customers of the company are described below:

The company has received approvals from various esteemed organizations such as Laxmi Organic Industries Limited, Gujarat Narmada Valley Fertilizers & Chemicals

Limited (GNFC), Krishak Bharati Cooperative Limited (KRIBHCO), Triveni Turbine, Hindustan Petroleum Corporation Ltd. (HPCL), Bharat Heavy Electricals Limited (BHEL), etc.

Further, the company has supplied its products to major domestic public sector clients such as Western, Central, Eastern and Northeastern Railway, Modern Coach Factory (MCF), Rail Coach Factory (RCF), Department of Atomic Energy, etc

The company exported its products to over 32 countries in FY26, the share of exports in the companys overall revenues have remained over 20% for the last three years.

This diversi cation with respect to industries and the market regions helps the company garner revenue diversi cation and sustainable operations in the medium and long term. This also helps the company to hedge its business operations from concentration risks and other sector- or geography- specific risks.

Valuable Experience, Quali cations, and Industry Relations of the Promoters

The promoters of the company, namely, Jagrutkumar Patel, Ravi Patel, Samarth Patel, Saurabh Patel, and Vipulkumar Patel have experience of over 10 years in the pipe industry, which gives the company a strong and healthy relationship with suppliers and customers.

The promoters have high expertise in marketing, procurement, nance, accounting and customer relationship management.

The companys senior management team comprises professionally qualified members with experience and knowledge in the pipe industry and regulatory environment. Their experience and their understanding of the industry has enabled and will continue to enable the company to take advantage of both current and future opportunities. Since a large number of senior management personnel have worked with the company for a significant period of time, it will result in effective operational coordination and continuity of business strategies.

This extensive experience and understanding of the business has played a huge role in customer satisfaction, which brings repeat business and new-client referrals for the company.

Extensive and Effective Quality Control

All the products manufactured by the company adhere to national and international standards and go through extensive quality control procedures by trained and experienced personnel.

The company has a dedicated quality control team which takes care of quality standards during all the manufacturing stages including raw material processing, cold rolling, pipe manufacturing and dispatching, etc. Some of the quality testing and inspection facilities in the company include Positive material identi cation (PMI) test, Hydrostatic test, Chemical test, Tensile test, Mechanical test, Micro test, Hardness test, Eddy current test, Ultrasonic test, Intergranular Corrosion (IGC), practice A C and E tests, air under water test, dye penetrant test, impact test, and Boroscopic examination.

The companys quality team is responsible for different aspects of the manufacturing process, such as monitoring the parameters of equipment, checking the strength of materials, reporting any irregularities in the manufacturing process and making adjustments accordingly.

The company has a low production rejection rate. On an average annual basis, approximately 3% and 2% of the companys products are rejected by its quality control systems and its customers, respectively. The high focus of the company towards maintaining quality standards helps it cater to large sections of the end-use industry, both domestically and internationally, while keeping its brand image intact.

International Accreditations and product approvals

The company follows international standard manufacturing practices, and its manufacturing facility benefit s from the quality benchmarking certi cations, including ISO 9001:2015, 14001:2015 and 45001:2018. Further, the company is certified with TUV SUD South Asia Private Limited and Pressure equipment directive (PED), Norsok M650, and DNV.

The products sold to the European market are certified under PED 2014/68/EU and ADW/AD 2000 Merkblatt W0 from TUV Nord.

The company also holds accreditation from the Indian Boiler Regulation for manufacturing and supply of stainless steel seamless and welded pipes, tubes and Utubes, DNV-CP-0252 certi cation for steel pipes and steel pipe tting and DNV marine certificate for application in ship building and marine industry.

The companys products also comply with relevant standards stipulated by Engineers

India Limited in the domestic scenario. In the international context, the companys products comply with DNV(Germany), Norsok (Norway), ASTM (US) & ASME (US), EN (Europe), Lloyds Marine (UK). Additionally, the Company has applied for certi cation from Bureau Veritas Marine (France) and Rina Marine (Italy) and further the Company has applied for renewal of its BIS licence for stainless steel seamless pipes and tubes for general service. The domestic and international accreditations have enabled the company to supply its products across sectors including oil & gas, petroleum, fertilisers, chemicals, defence & aerospace, pharmaceutical, power & atomic, automobile industry, etc. These certi cations, along with the industrial expertise that the company possesses, favourably position it to service client requirements across all segments of the stainless-steel seamless and welded tubes and pipes market.

Financial Position of The Company

The companys financial performance has demonstrated consistent improvement over the last four years. Its operating revenues increased year-on-year by 57%, 31%, 21% and 7% in FY23, FY24, FY25 and FY26, respectively, reaching 518.7 crore in FY26. Further, the companys gross profit margin improved from 30.6% in FY25 to 31.9% in FY26, while profit after tax increased by 22.4% year-on-year to 38.8 crore. Consequently, the PAT margin improved from 6.5% in FY25 to 7.5% in FY26. The companys improving financial performance reflect s the benefit s of operational ef ciencies, backward integration, disciplined cost management and sustained investments in capacity expansion, strengthening its financial position and supporting its long-term growth prospects.

Opportunities

Governments Supportive Policies

The governments policies to boost local production and increase the competitiveness of Indian industries through Make in India and Aatma Nirbhar Bharat initiatives would pave a way of opportunity for the stainless-steel pipe manufacturing sector. Further, government policies, announcements, high budgetary allocations towards railways, roads, civil aviation, gas pipelines for affordable housing are expected to drive demand for steel products including stainless steel tubes and pipes. Additionally, the policies such as Production Linked Incentive (PLI), Jal Jeevan Mission, PM Jivan Yojana targeting development in various sectors like infrastructure and housing development pose a unique opportunity for the stainless-steel tubes and pipes sector.

Further, in light of Indias decision in 2022 to impose anti-dumping duty on stainless steel seamless tubes and pipes imports from China for ve years would also present an opportunity to the domestic stainless-steel tubes and pipes manufacturing industry. This policy has historically resulted in increase in the capacity utilization rates of domestic stainless-steel tubes and pipes manufacturers, and is expected to continue to provide benefit s to the domestic players in terms of operational efficiencies and margins.

Additionally, in September 2024, the government extended the anti-subsidy duty, initially imposed in 2019, on the imports of welded steel tubes and pipes from China and Vietnam to India. The government has imposed a 29.88% duty on goods falling under 7304 covering all tubes, pipes and hollow pro les, seamless, of iron (other than cast iron) or steel). 30% of import duty is expected to keep a check on the steel tubes and pipes that are imported at predatory prices and hence, will support the growth in domestic steel tubes and pipes industry.

Infrastructure Development

Private and public sectors are increasingly focusing on infrastructure development in the areas of transportation, water supply, energy, chemical and manufacturing industries, and the residential and commercial real estate.

Additionally, big infrastructure development projects like the Baltic Pipe Project and the discovery of new natural gas sources are expanding the global market for natural gas, and in turn will increase demand for pipeline network growth.

Growth in Oil & Gas Industry

Increasing offshore exploration and production and digital transformation of the oil and gas industry are expected to boost the oil and gas sector, supporting the demand growth for stainless steel welded and seamless tubes and pipes. Further, on the global front, the demand for natural gas is rising owing to its eco-friendly nature, its consumption in a variety of sectors like transportation and power generation, and its growing need for energy security in places like the Middle East, Africa, and Asia-Paci c. As a result, the infrastructure for gas pipelines is set to grow.

Additionally, the demand for the natural gas pipeline network is anticipated to rise on the back of an anticipated growth in the worldwide liqui ed natural gas (LNG) trade. The incorporation of cutting-edge security technologies in the pipeline distribution network to make the global operations secure, cost-effective, and productive would also support the oil and gas infrastructure industry. The governments push towards increasing the usage of compressed natural gas (CNG) and LNG as substitute fuels for petrol and diesel to minimize carbon footprints and greenhouse gas emissions, will also support the natural gas infrastructure industry.

Threats & Weaknesses

Fluctuations in the prices of key raw materials, particularly stainless-steel round bars and stainless-steel scrap, may adversely impact the companys operating margins. However, the company follows a disciplined procurement strategy by booking raw materials on a back-to-back basis and generally passes on changes in raw material prices to customers, thereby mitigating the impact of price volatility. Further, the companys backward integrated mother hollow facility helps reduce dependence on external suppliers and provides greater flexibility in managing raw material requirements.

The manufacturing of stainless-steel seamless tubes and pipes is energy intensive and dependent on the uninterrupted availability of industrial gas. Any disruption in gas availability or sustained increase in energy prices may adversely impact production schedules, operating costs and pro tability.

Fluctuations in crude oil and natural gas prices may influence capital expenditure by customers in the oil & gas industry and increase the companys energy and logistics costs. Since the oil & gas sector continues to be one of the key end-user industries for stainless steel tubes and pipes, any slowdown in investments or project execution may impact demand for the companys products.

Geopolitical con icts, supply chain disruptions, trade barriers, changes in import-export regulations and other international trade restrictions may adversely affect the availability and pricing of raw materials, increase freight and logistics costs, disrupt export operations and limit access to new markets.

Lower-priced imports of stainless-steel tubes and pipes may pose a challenge to the companys sales volumes and margins. However, the company continues to focus on product quality, operational ef ciency, customer relationships and value-added products to strengthen its competitive positioning.

Changes in government policies, customs duties, environmental regulations and other statutory requirements may affect the operating environment of the stainless-steel tubes and pipes industry and influence the companys cost structure and business operations.

Ratio	FY26	FY25	FY24	Note
Debtors Turnover	4.3	5.1	5.7	Declined to 4.3x in FY26 from 5.1x last year, reflect ing higher receivables alongside revenue growth.
Inventory Turnover	2.0	2.6	2.5	Declined to 2.0x in FY26 from 2.6x last year, reflect ing higher inventory levels during the year.
Interest Coverage Ratio	3.1	2.9	2.4	Improved from 2.9x to 3.1x, supported by higher profit before tax and operating earnings despite nance costs costs increasing.
Current Ratio	1.8	1.3	1.1	Improved to 1.8x in FY26 from 1.3x last year, primarily driven by current assets increasing from 308.6 crore to 444.5 crore, led by higher inventories, trade receivables and cash balances, while current liabilities increased at a slower pace.
Debt Equity Ratio	0.3	1.1	2.8	Declined significant ly from 1.1x to 0.3x, primarily due to the substantial increase in equity capital and reserves following the IPO, alongside a reduction in borrowings.
Operating Pro t Margin	14.7%	16.1%	14.7%	Declined from 16.1% to 14.7%, reflect ing moderation in EBITDA margin despite revenue increasing by 7.0%.
Net Pro t Margin	7.5%	6.5%	4.6%	Improved from 6.5% to 7.5%, supported by higher profit after tax, which increased from 31.7 crore to 38.8 crore.
Return on Net Worth	9.9%	21.1%	28.8%	Declined from 21.1% to 9.9%, primarily due to the substantial increase in the equity base following the IPO.

Internal Control Systems & Their Adequacy

Scoda Tubes Limited has implemented a comprehensive internal control framework aimed at safeguarding its assets, ensuring the accuracy and reliability of financial reporting, and promoting accountability across the organisation. The control framework is supported by documented policies, divisional guidelines and Standard Operating Procedures (SOPs), which are periodically reviewed and updated in line with evolving business requirements.

The Company utilises an Enterprise Resource Planning (ERP) system to streamline operations and strengthen transaction-level controls. Key processes incorporate segregation of duties, layered approval mechanisms and mandatory supporting documentation, ensuring that transactions are appropriately authorised, accurately recorded and properly reported.

The internal control environment is further strengthened through comprehensive internal audits, periodic management reviews and ongoing monitoring of key risks. Collectively, these measures provide reasonable assurance regarding the reliability of financial reporting and operational efficiency, while helping safeguard the Companys assets against unauthorised use or loss.

Scoda Tubes Limited maintains a strong and highly effective internal control framework designed to safeguard our assets, ensure the reliability of financial reporting, and uphold strict accountability across all operations.

System-Driven Checks - We continue to leverage our Enterprise Resource Planning (ERP) platform to drive operational ef ciency. This system embeds critical transactional checks, strict segregation of duties, and a tiered approval mechanism to ensure every transaction is properly authorized and recorded.

Audits and Governance- Our control environment is actively reinforced by regular internal audits, periodic management reviews, and continuous monitoring of potential risk areas. Standard Operating Procedures (SOPs) and divisional guidelines are continuously updated to reflect our evolving business needs and post-IPO compliance standards.

Human Resources and Industrial Relations

At Scoda Tubes, our human resources strategy is foundational to our operational success and sustainable growth. Our human resource policy outlines the principles and guidelines that govern the employment practices, benefit s, and workplace conduct within the organization. It is fundamentally designed to ensure fair treatment, promote a positive work environment, and support the professional growth and well-being of our employees.

Equal Employment Opportunity and Diversity

Scoda Tubes Limited is highly committed to providing equal employment opportunities to all individuals.

All employment practices are conducted without regard to race, color, religion, sex, national origin, age, disability, genetic information, sexual orientation, gender identity, or any other protected status as defined by applicable laws and regulations.

The Company continuously strives to maintain a diverse and inclusive workplace.

Recruitment, Selection, and Employment Relationship

Merit-Based Hiring: The Company recruits and selects candidates based entirely on their quali cations, skills, and abilities relevant to the job requirements.

Unbiased Process: All hiring decisions are made without bias or discrimination, and the recruitment process strictly adheres to applicable laws and regulations.

Employment Classi cation: Employees are classified as regular full-time, regular part-time, or temporary, based on their agreed-upon work schedule and duration of employment. The specific terms and conditions of employment are clearly communicated in writing.

Probationary Evaluation: New employees may be subject to a probationary period, during which their performance and overall suitability for the role will be evaluated. During this probationary timeframe, the organization reserves the right to terminate employment with or without cause.

Work Authorization: All employees must provide proof of their eligibility to work in accordance with local laws and regulations.

Workplace Conduct, Safety, and Privacy

Disciplinary Framework: The Company maintains an Employee Disciplinary Policy that speci es the standards and procedures for the expected conduct of employees in the workplace and the consequences for breaking those standards. The primary goal of this policy is to maintain a productive and harmonious work environment by clearly de ning acceptable behavior and misconduct, while helping to consistently execute rules without any discrimination among employees.

Prevention of Sexual Harassment (POSH): Scoda Tubes Limited enforces a

Annual Report 2025-26 strict POSH Policy used to raise awareness among employees and other personnel about the Sexual Harassment of Women at Workplace. The core purpose of this policy is to provide a safe, secure, and enabling environment, free from sexual harassment to every woman.

Employee Privacy Policy: The Company has rules and procedures for gathering, using, and transferring the personal data of former, current, or future employees. This policy ensures that employees know about their rights and the relevance mechanisms in place to protect their personal data.

Compensation and Benefit s

Competitive Structure: We have established a fair and competitive compensation structure that is driven by market trends, specific job responsibilities, and individual performance.

Periodic Reviews: Compensation structures are reviewed periodically and adjusted when necessary to ensure they remain equitable and competitive within the industry.

Disclosure of Accounting Treatments

Estimates and Judgements- The preparation of financial statements requires management to make estimates and assumptions that impact reported assets, liabilities, revenues, and expenses. Critical estimates involve defined benefit obligations, provisions, taxes, expected credit losses, and the net realisable value of inventories.

Revenue Recognition- Revenue is recognised upon the transfer of control of promised goods to customers. It is measured using the transaction price, adjusted for trade discounts, cash discounts, rebates, and returns. Revenue from services is recognised when the contracted activity is performed.

Tax Expense- Tax expense comprises both current and deferred tax. Current tax is based on taxable income for the period, while deferred tax accounts for temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Property, Plant and Equipment (PPE)- PPE is stated at historical cost less accumulated depreciation and any impairment losses. Depreciation is calculated using the Straight-Line Method (SLM) over the useful lives prescribed in Schedule II of the Companies Act, 2013.

Intangible Assets- Intangible assets, such as computer software, are measured at cost less accumulated amortisation. They are amortised over an estimated useful life of 3 years using the written down value method.

Inventories- Inventories are valued at the lower of cost or net realisable value, with cost ascertained on a weighted average basis. Cost includes purchase price, duties, transport, and handling expenses.

Financial Instruments- Financial assets are initially recognised at fair value and subsequently measured at amortised cost, fair value through other comprehensive income, or fair value through profit and loss, depending on the business model. The company applies a simpli ed expected credit loss (ECL) model to assess impairment on trade receivables.

Employee Benefit s- Contributions to defined contribution plans (like the provident fund) are expensed as the related service is provided. Defined benefit plans (like gratuity) are provided for based on actuarial valuation using the projected unit credit method, with actuarial gains or losses recognised in other comprehensive income.

Leases- For arrangements where the company acts as a lessee, it recognises a Right-of-Use (ROU) asset at cost and a corresponding lease liability measured at the present value of unpaid lease payments. Short-term and low-value leases are expensed on a straight-line basis over the lease term.

Foreign Currency Transactions- Foreign currency transactions are translated at exchange rates prevailing on the transaction date. Monetary assets and liabilities are translated at the reporting dates exchange rate, and resulting differences are recognised in profit or loss.

Provisions and Contingent Liabilities-

Provisions are recorded for present obligations arising from past events when a reliable estimate can be made and an out flow of resources is probable. Contingent liabilities are disclosed for possible obligations whose existence depends on uncertain future events beyond the companys control.

12 Risk Management

At Scoda Tubes, we view risk management as an integral part of our sustainable growth. We maintain a proactive approach to identifying and mitigating risks that could impact our financial stability or operational goals.

Our key focus areas include:

To navigate global economic cycles and raw material price volatility, we rely on a broad product portfolio and strategic booking practices to ensure steady material availability. We actively reduce external supply chain dependencies through backward integration and protect our critical systems with rigorous preventive maintenance.

Exchange rate volatility is managed through a structured hedging mechanism, which is strongly supported by natural offsets from our balanced import and export activities.

We hedge against demand fluctuation s and business execution risks by continuously diversifying our end-use applications and steadily ramping up production across multiple geographic markets.

We stay competitive by investing consistently in R&D, focusing on product differentiation, and maintaining exceptional customer service.

We mitigate talent retention risks and potential labor disruptions through structured employee development programs and active engagement initiatives.

We strictly ensure regulatory compliance through vigilant internal oversight and regular external expert reviews.

We address growing environmental expectations by investing heavily in renewable energy and resource-ef cient manufacturing practices across our facilities.

We support our ongoing expansion plans by maintaining a conservative approach to leverage and practicing highly prudent cash flow management.