SG Mart Ltd Management Discussions

Global economy: The global economy remains stable, with growth projected at 3.3% in 2025, up slightly from 3.2% in 2024. Broadly applied restrictive monetary policies have helped ease inflationary pressures. Around 50% of advanced economies and roughly 60% of emerging markets have now returned to their central banks inflation targets. Global trade sustained its upward momentum from late 2023, expanding by US$1 Tn to reach nearly US$33 Tn—driven by continued strength in services. Regional performance varied: the US economy grew by 2.8%, supported by resilient consumer spending, whereas the Eurozone recorded modest growth of just 0.7%, weighed down by weak manufacturing activity

Indian economy: India continues to display resilience and stability despite global uncertainties and trade-related disruptions.

In FY25, India consolidated its standing among the fastest-growing major global economies, with real GDP projected to grow by 6.5%, following a robust 9.2% expansion the previous year. Strong macroeconomic fundamentals, sustained domestic demand, and government-led infrastructure investments underpinned the growth momentum throughout the year.

Key economic indicators reflected this continued strength. Rising GST collections, increased e-way bill generation, improved consumer sentiment, and a manufacturing rebound signalled accelerating activity, while steady rural demand and higher household consumption supported broader economic stability.

Manufacturing and services remained robust. The India Composite PMI stayed above the expansion threshold of 50 for a 44th consecutive month, reflecting persistent growth across sectors. In March 2025, it dipped slightly to 58.6—its slowest uptick since November 2024—yet still highlighted the economys prolonged expansionary streak.

Infiation moderated sharply, with retail inflation declining to 4.6% in FY25 from 5.4% the year prior—its lowest level in six years. This was aided by proactive government measures and a favourable harvest that helped ease food prices. March 2025 recorded the lowest year-on-year inflation since September 2019.

The job market remained resilient, bolstered by demand for fresh graduates and tech professionals. The government sustained its reform agenda, driving improvements in ease of doing business, expanding digital public infrastructure (DPI), and advancing production-linked incentive (PLI) schemes.

Outlook: Indias economic outlook for FY26 rests on a careful equilibrium between evolving global trade dynamics and domestic efforts to stimulate consumer demand. The interplay between targeted tax stimulus measures and persistent uncertainties in international trade will likely shape growth.

Recent upticks in key indicators—such as goods and services tax (GST) collections, automobile sales, and fast-moving consumer goods (FMCG) transactions—signal strong underlying economic momentum. A key tailwind bolstering this outlook is the notable decline in global oil prices, which has eased fiscal pressures and supported consumption.

Indias potential growth, projected between 6.2% and 6.7%, is expected to be driven by a robust push in manufacturing and merchandise exports, rising services trade, and accelerated digitalisation—factors poised to enhance productivity and structural efficiency across sectors.

The Delicate Balance

Tax Cuts

The government has announced income tax cuts that will lead to a revenue loss of H1 Tn annually. This move is intended to increase disposable income for middle-class households and drive consumption.

Reciprocal Tari_s

India faces a 10% ad valorem base tari_ on its exports to the US, which adds to the 2023 trade-weighted average Most Favoured Nation (MFN) tari_ rate of 2.2%, making the effective rate 12.2%. An additional reciprocal tari_ of up to 16%--currently paused for three months--could further increase this burden to 28.2% by the end of FY26. Depending on how effectively India navigates the upcoming bilateral agreement, total reciprocal tariffs could range from a high of 26% to a more moderate 10%, or land somewhere in between.

Indias Aim for World-Class Infrastructure

Over the past decade, India has undertaken an ambitious infrastructure development drive to rejuvenate its economy. To catalyse growth and progress, the government has earmarked H11.11 lakh crore for capital expenditure (3.4% of GDP), reflecting a more than fivefold increase since 2014.

Infrastructure has evolved rapidly, marked by a 1.6x expansion of the National Highways (NH) network, 94% electrification of the railways, deployment of 100 high-speed Vande Bharat trains, modernisation of 1,318 railway stations, nearly fourfold expansion of metro networks across 21 cities, activation of 84 airports, and a 70% rise in power generation capacity.

These gains were propelled by strategic initiatives, including the National Infrastructure Pipeline (NIP), with projects worth H111 lakh crore, the National Monetisation Pipeline (NMP), valued at H6 lakh crore, and the PM GatiShakti National Master Plan, aimed at integrated infrastructure planning.

Large-scale sectoral programmes, including Bharatmala, Sagarmala, UDAN Regional Connectivity Scheme, Dedicated Freight Corridors, High-Speed Rail, Railway Station Redevelopment, BharatNet, Jal Jeevan Mission, AMRUT, and Smart Cities Mission, have significantly fast-tracked progress.

The bulk of this capital expenditure surge has occurred in the past five years, with a compound annual growth rate of 27%. The governments commitment to high-quality, world-class infrastructure is underscored by the growing share of the Centres capex towards infrastructure, from 28% in FY14 to nearly 60% in FY25.

Looking ahead, the government is set to maintain its focus on infrastructure over the next five years, backed by strong fiscal support alongside other strategic priorities.

Indias latest Union Budget reflects a forward-looking vision under the newly elected administration, reinforcing infrastructure as a cornerstone of national development. Reafirming its growth strategy, the government highlighted infrastructure as a key driver of economic transformation.

Budget 2025–26, central to the Viksit Bharat @ 2047 roadmap, allocates H11.21 lakh crore towards infrastructure. To facilitate greater private sector participation, the government announced targeted policy reforms. Tax and policy measures reinforce its resolve to build a progressive and resilient India.

As India strides forward in its quest for economic growth and modernisation, steel will remain at the heart of its infrastructure revolution. Whether it is constructing airports, laying down rail networks, revamping railway stations or building power generation assets, steels crucial role is undeniable.

Sources: https://kpmg.com/in/en/blogs/2024/07/transforming-indias-infrastructure-a-futuristic-roadmap-through-budget-2024-25.html https://www.ey.com/en_in/insights/infrastructure/unleashing-india-s-infrastructure-potential-ey-roundtable-insights

Indias Robust Construction Industry

Indias construction sector is a cornerstone of the nations economic strategy, pivotal in addressing critical infrastructure needs and providing substantial employment opportunities. Infrastructure construction and real estate assets like offices, retail, housing, and data centres have been the governments and private sectors major focus areas.

Indias construction industry is projected to be a major economic force by 2030, with the market expected to reach US$2.134 Tn (from an estimated US$884.72 Bn in 2023), growing at a 12.6% CAGR between 2024 and 2030. Increasing infrastructure investments, urbanisation, and government initiatives fuel this growth. The sector is also expected to create millions of new jobs and contribute significantly to Indias GDP. The construction sector is vital to Indias economic strategy, enhancing infrastructure, supporting urbanisation, and promoting growth. Its development significantly influences the nations economic landscape. Current initiatives such as PMAY-U and HRIDAY, along with considerable investments, a commitment to sustainability through green building, and improvements in logistics and warehousing, ensure the sector addresses todays infrastructure needs while laying the groundwork for long-term economic stability and sustainable urban development throughout the country.

Sources: https://www.investindia.gov.in/sector/construction https://www.nextmsc.com/report/india-construction-market

Real Estate in India

Indias real estate sector has undergone significant transformations with investor-friendly FDI policies, increased transparency and various regulatory measures. These initiatives have attracted global and domestic investments. Major metropolitan areas such as Delhi NCR, Mumbai, Pune, Bengaluru and Chennai dominate real estate construction. At the same time, Tier-II and III cities have substantial growth potential, largely driven by demand for affordable housing and infrastructure development. The real estate sector contributes 7.3% to Indias GDP, which is expected to reach 13% by 2025 and 15.5% by 2047. The sectors projected value of US$1,000 Bn by 2030 underscores its crucial role in the countrys economic growth. Beyond financial impact, the real estate sector plays a pivotal role in job creation, government revenue and the growth of interconnected industries. Indias real estate sector has demonstrated remarkable resilience and growth potential in recent years, propelled by market forces and government policies. The sector is anticipated to evolve into a trillion-dollar market by 2030, with an emphasis on investment and innovation. Initiatives aimed at enhancing a_ordability have catalysed the expansion of the residential segment, ensuring that housing solutions are accessible to a broader demographic. Concurrently, in the commercial sphere, the flexible office model has emerged as a transformative force, adapting to the changing preferences of consumers. Cities such as Mumbai, Pune, Hyderabad, and NCR serve as dynamic hubs that are driving demand in both the residential and commercial segments.

Real Estate in Tier 2 and 3 cities

Tier 2 and Tier 3 cities in India are rapidly emerging as new growth, enticing both homebuyers and real estate developers looking for prospects beyond the overcrowded metro regions. Their growing attractiveness stems from a mix of a_ordability, enhanced infrastructure, and changing urban lifestyles. With property prices escalating in metropolitan areas, buyers are more frequently attracted to the larger and budget-friendly housing choices available in these developing cities.

As per a CREDAI-Liases Foras research report on the real estate sector of 60 Indian cities, as many as 44% of the 3,294 acres of land acquired by real estate developers in 2024 were concentrated in the emerging hubs of Indias Tier-2 and Tier-3 cities. Post-pandemic, the rise of remote and hybrid work models has significantly influenced homebuyer preferences, driving demand for larger homes in Tier 2 and 3 cities. Professionals are prioritising spacious residences with better amenities, seeking a balance between work and lifestyle away from the congestion of metros.

Also, homebuyers today dont just look at property prices; they want a holistic lifestyle, and Tier 2 cities offer exactly that. The fresh air, scenic beauty, and balanced pace of life make it an attractive choice for families, retirees and professionals. Tier 2 cities are now at the centre of Indias real estate transformation. With rising property values in metros, investors and homebuyers alike are shifting to these high-growth markets. These cities are grabbing headlines due to better a_ordability, infrastructure expansion, and improved job opportunities they offer. Besides, developers are responding with premium projects, bringing the same luxury and lifestyle as metros.

Thus, the shift of real estate toward Tier 2 and 3 cities is more than just a trend—its a fundamental transformation in how and where people choose to live and invest. With rapid infrastructure expansion, rising disposable incomes, and changing lifestyle preferences, these cities are emerging as the next big growth hubs. As a_ordability, connectivity, and luxury converge, Tier 2 cities are no longer secondary choices; they are the future of real estate in India, offering unmatched opportunities for homebuyers and investors.

Source: https://www.financialexpress.com/money/why-tier-2-amp-3-cities-are-becoming-indias-new-real-estate-hotspots-3802065/

Indian B2B Market for Building Materials

The building material market in India is on the cusp of rapid expansion, driven by a confluence of factors such as infrastructure and real-estate development, urbanisation, technological innovation, and increasing consumer awareness. The governments strong emphasis on housing and infrastructure, coupled with the rising aspirations of consumers, is creating significant opportunities for both domestic and international building products manufacturers in the sector. The building materials industry is estimated at a staggering US$ 100 Bn and is expected to grow rapidly in the coming years. B2B marketplaces are experiencing significant growth and are increasingly becoming the go-to platforms for business-to-business transactions.

Indias Progress in the Renewable Energy Sector (FY25)

India has demonstrated remarkable progress in the renewable energy sector, with solar power emerging as the dominant contributor. As of March 2025, solar energy accounts for over 61.29% of the countrys total renewable energy capacity, excluding large hydroelectric projects. This growth is driven by declining solar panel costs, technological advancements, robust government initiatives, and increasing public awareness of the environmental and economic benefits of clean energy.

During the financial year 2024–25, India added 23,832.89 MW of new solar capacity, representing approximately 83% of the total renewable energy capacity installed in the same period.

Notably, in March 2025 alone, the country installed 3.08 GW of solar power, a 29% increase compared to March 2024.

By the end of March 2025, Indias total renewable energy capacity (excluding large hydro) reached 172.368 GW, with solar and wind energy together contributing 155.684 GW, accounting for over 90% of the nations renewable energy mix.

Indias Renewable Energy Vision and Commitments

In accordance with its commitment at COP26, the

Government has established an ambitious target of attaining 500 GW of non-fossil-based electricity generation capacity by the year 2030. This objective is consistent with the nations broader vision to transition towards a low-carbon economy and enhance energy security.

In support of this transition, the Government of India has introduced a comprehensive plan amounting to H9,22,866 crore (equivalent to US$ 109.50 Bn), to enhance power infrastructure, addressing the anticipated electricity demand of 458 GW by 2032, improving transmission systems, and facilitating the substantial integration of renewable energy sources. This investment is projected to unlock significant untapped potential within the energy sector. Additionally, India has declared its commitment to achieving net-zero carbon emissions by 2070 and to ensuring that 50% of its electricity needs are fulfilled through renewable energy sources by 2030. These objectives highlight Indias dedication to climate action, energy sustainability, and its leadership role on the global environmental stage.

(Sources:https://solarquarter.com/2025/04/10/india-adds-24-gw-solar-in-fy-2024-25-reinforces-global-green-leadership-as-wind-power-surpasses-50-gw-mark-in-march-2025/, https://www.ibef.org/ industry/renewable-energy)

About the Company

SG Mart is Indias leading B2B one-stop destination for construction solutions from top brands. Backed by deep industry expertise, a robust logistics network, and strategically located warehouses across Pune, Bangalore, Dujana, and Raipur, SG Mart ensures seamless access and efficient product distribution. Its customer-centric approach and diverse portfolio consistently deliver value to the infrastructure sector, reinforcing its position as the most trusted platform for building material requirements.

SWOT Analysis

Strengths

Established Industry Presence

The Groups longstanding presence in the steel downstream space enables it to maintain robust ties with steel manufacturers, ensuring reliable and efficient raw material procurement.

Scale & Capital Advantage

The Companys expansive distribution capabilities and a trading volume which is 20x higher than other distributors / dealers underscore its market dominance. Strong funding access enables continued strategic expansion.

Consistent Quality and Transparent Pricing

SG Marts commitment to consistent product quality and transparent pricing fosters customer trust and reinforces its brand credibility.

Integrated Offering

SG Mart provides a uni_ed platform for all construction material requirements, offering builders a seamless and convenient sourcing experience.

Order Flexibility

SG Mart addresses the needs of small-scale buyers by offering flexible purchase options, allowing them to procure only what is needed without bulk constraints.

Opportunities

Scaling for Growth

Indias path to a US$10 Tn economy hinges on becoming a manufacturing powerhouse. This requires moving beyond fragmented trading models toward large-scale trading houses.

Infrastructure Push by the Government

Government-led programmes such as the National Infrastructure Pipeline and Smart Cities Mission are accelerating the demand for building materials, stimulating sectoral growth and contributing to job creation and economic upliftment.

Rising Urbanisation and Affordable Housing Push

With rapid urban population growth and ongoing affordable housing initiatives, the demand for construction materials remains constant. This trend highlights the importance of infrastructure in enabling inclusive urban development and addressing evolving housing needs.

Rising Steel Consumption

With Indias steel production capacity set to rise by 50% by December 2025 and projected to double by 2030, large producers will increasingly rely on organised, large-scale trading houses to efficiently absorb and distribute this growing output.

Weaknesses

Brand Visibility Challenge

As a new entrant, SG Mart must actively enhance market awareness of its offerings and operating model to accelerate customer acquisition and business growth.

Logistical Limitations

Timely and consistent delivery to geographically dispersed areas remain a key operational challenge, requiring robust logistics planning to maintain customer trust.

Threats

Economic Downturns

The construction materials industry is sensitive to economic contractions, which can lead to project delays, reduced spending, and lower material consumption.

Logistical Disruptions

Interruptions in the supply chain—stemming from geopolitical events, transportation delays, or local challenges—may affect material flow and timely fulfilment.

Compliance and Policy Risk

Frequent changes in construction-related regulations pose a risk to operational stability and can have financial implications if not proactively managed.

Operational Performance

SG Marts consistent operational excellence has reinforced its leadership in the B2B construction materials space. Focused initiatives on process efficiency, portfolio expansion, and have yielded measurable performance gains. With a diverse product mix and value-driven pricing, the Company is well-positioned to serve a growing customer base and scale its platform for future growth and onboarding needs.

Financial Performance

In its first full year of operations, SG Mart delivered a strong performance, marked by consistent growth in business volumes and profitability. The Company achieved sequential improvements across all four quarters, underscoring its operational resilience and focused strategic execution. This momentum was driven by rising demand, supported by an expanded product portfolio and a responsive, efficient distribution network.

Revenue for the year reached _58.56 Bn, more than double the previous years figure, propelled by a sharp uptick in volumes across the service centre network and B2B verticals. EBITDA rose to _1,031 Mn in FY25 from _618 Mn in FY24, reflecting gains in operating efficiency. Net Profit also increased significantly—from _609 Mn in FY24 to _1,034 Mn in FY25.

EBITDA margin moderated slightly to 1.8% in FY25 from 2.3% in FY24, primarily due to lower steel prices and an increase in overall expenses associated with business expansion.

Cash Flow from Operations turned negative, driven by a rise in current assets. Debtors grew in line with the substantial increase in Revenue from Operations. Additionally, an advance payment of _1,507 Mn was made to steel suppliers towards the end of March 2025 for bulk raw material procurement, ahead of the implementation of import tariffs. This rise in current assets was offset during the first quarter of the current fiscal year.

As of March 31, 2025, the Companys net worth stood at _12,081 Mn, up from _10,870 Mn a year earlier. The Companys Zero Net-Debt position reflects a robust Balance Sheet and ample capacity to support future strategic growth initiatives.

Particulars	FY25	FY24	Y-o-Y change	Reasons
Current ratio	1.89	3.46	(45.52)%	Due to increase in short term borrowings during the year
Debtors turnover	29.06	62.15	(53.24)%	Due to increase in trade receivables during the year.
Inventory turnover	36.07	75.31	(52.11)%	Due to an increase in inventory during the year.
Debt equity ratio	NA	NA	NA	NA
Interest coverage ratio	4.13	18.35	-77.50%	Due to increase in short term borrowings.
Operating profit margin (%)	3.04%	2.84%	6.99%	Due to increase in Operating profit during the year.
Net profit margin (%)	1.77%	2.27%	(22.25)%	Due to decrease in net profit during the year.
Return on net worth	9.01%	11.09%	(18.72)%	Due to an increase in shareholders funds during the year.

H 2,553 Mn to be received on warrant conversion in FY26

*Operating Cash Flow is negative primarily due to an advance payment of Rs. 1,507Mn made to steel suppliers towards the end of FY25 for bulk procurement of raw materials ahead of implementation of import tariffs

Internal Control & Its Adequacy

The Company has implemented a robust internal control framework, tailored to the scale and complexity of its operations. Clearly defined policies and procedures, supported by integrated IT systems, facilitate effective business performance monitoring and ensure operational efficiency across all functions.

Independent audits are conducted regularly to evaluate the adequacy of internal controls, compliance with policies, and adherence to regulatory standards. These reviews encompass both accounting accuracy and operational efficiency.

Internal auditors report their findings and monitor the implementation of recommendations, which are periodically reviewed by the Audit Committee. The Committee plays a crucial role in assessing the effectiveness of the internal control system and provides strategic oversight to strengthen governance and enhance risk management practices.

Human Resources

At SG Mart, employees are regarded as the foundation of its success. The Company firmly believes that a motivated, skilled, and engaged workforce is essential to achieving strategic goals and sustaining long-term growth.

Over the past year, SG Mart reinforced its talent acquisition framework, enhanced employee retention initiatives, and fostered a culture rooted in continuous learning, inclusivity, and development. By investing in its people, the Company not only supports individual growth but also strengthens overall organisational performance.

The Company prioritises fair work practices, offering competitive compensation, comprehensive health and safety programs and well-being initiatives. By sustaining its investment in our people, SG Mart creates a win-win situation, fostering employee well-being and driving overall company success.

SG Marts commitment to progressive human resource practices continues to position it as an employer of choice and a workplace of excellence. As of March 31, 2025, the Company has 156 permanent employees.

SG Marts cordial industrial relations fostered trust, transparency, and collaboration, sustaining operational excellence. Inclusive practices and proactive grievance management minimised disruptions, boosted productivity, and strengthened ethical governance. This synergy between management and workforce remains central to SG Marts resilience, agility, and continued growth.

Risk Management

Risk Types	Mitigation measures
Increasing Competition
Rising competition from emerging B2B platforms may challenge market share and pricing flexibility.	Maintain active surveillance of market and competitor developments to ensure SG Mart remains strategically positioned and responsive to change.
Technological Disruption
Over reliance on technology poses threats from potential system failures, cyber-attacks and IT infrastructure breakdowns.	The IT team proactively monitors systems, implements regular updates, and conducts audits to safeguard against cyber threats. Backup protocols and a disaster recovery plan ensure business continuity.
Logistical And Supply Chain Disruption
Any breakdown in transport, warehousing, or vendor supply can disrupt operations and affect service levels.	The Company maintains a strong supplier base across geographies to minimise dependence on any single source and ensure supply continuity.
Operational Bottlenecks
Poor coordination in inventory and logistics processes can lead to delivery delays and service lapses, ultimately impacting business continuity.	Investments in modern inventory management and logistics technologies support smooth operations, and focus on service quality ensures a consistent and positive customer experience.