SG Mart Ltd Management Discussions

Economic Review

Global Economy 1

The global economy demonstrated resilience during CY 2025, despite continued uncertainty in trade, policy and geopolitical conditions. Notwithstanding macro uncertainties, the real global GDP grew at 3.4%. Growth remained uneven across geographies, with advanced economies expanding at 1.9% in CY 2026, while the Emerging Market and Developing Economies (EMDEs) grew at a relatively stronger pace of 4.4% in CY 2026, supported by domestic demand and economic activity. Among advanced economies, the United States recorded 2.1% growth and the Euro Area expanded by 1.4% during the same period.

World Economic Outlook Growth Projections

Global Economy
(in %)
CY 2025	3.4
CY 2026 (P)	3.1
CY 2027 (P)	3.2

Advanced Economies
(in %)
CY 2025	1.9
CY 2026 (P)	1.8
CY 2027 (P)	1.7

Emerging Market and Developing Economies
(in %)
CY 2025	4.4
CY 2026 (P)	3.9
CY 2027 (P)	4.2

(Real GDP, annual percent change - Source – IMF, World Economic Outlook, April 2026)

P – Projection

Outlook 2

The global economy indicates moderated growth, amid persistent geopolitical uncertainties and evolving macroeconomic conditions. Global GDP growth is projected to touch 3.1% in CY 2026, before stabilising at around 3.2% in CY 2027. Advanced economies are expected to witness a gradual moderation in growth from 1.9% in CY 2025 to 1.8% in CY 2026 and 1.7% in CY 2027, reflecting tighter financial conditions and subdued demand, while Emerging Market and Developing Economies (EMDEs) are projected to maintain relatively stronger growth at 3.9% in CY 2026 and 4.2% in CY 2027.

Ongoing conflicts and instability in West Asia, including developments around critical trade routes such as the Strait of Hormuz, pose potential risks to energy supply chains and global trade flows. Any disruption in these routes could lead to volatility in energy prices and impact inflation and economic stability, particularly in energy-importing regions. In this context, global growth prospects remain cautiously optimistic, with continued dependence on coordinated policy responses and stable geopolitical conditions to sustain economic momentum.

Indian Economy

In Financial Year (FY) 2025–26, Indias economic performance remained robust, with Real GDP growing at 7.7%, reaffirming its position among the fastest-growing major economies globally. 3 This growth trajectory was supported by proactive fiscal and structural policy measures undertaken by the Government of India to navigate a challenging global environment marked by geopolitical uncertainties and moderating global trade. Key reforms, including GST rationalisation, continued formalisation of the economy and targeted industrial policies, contributed to strengthening economic activity and improving the overall ease of doing business. Strong domestic demand remained the primary driver of growth, with Private Final Consumption Expenditure (PFCE) maintaining resilience, while Gross Fixed Capital Formation (GFCF) grew at approximately 7.8%, reflecting a sustained investment upcycle. 4

From a supply-side perspective, the industrial sector demonstrated notable strength, with manufacturing GVA recording double-digit growth during the fiscal period, supported by Production Linked Incentive (PLI) schemes and improving capacity utilisation levels. The Union Budget FY 2025–26 reinforced this momentum through a strong push toward capital expenditure, with allocations rising to approximately INR 12.2 lakh crore (about 3.1% of GDP), significantly higher than INR 2 lakh crore in FY 2014–15, reflecting the governments continued focus on infrastructure development. 5 This has accelerated investments across roads, railways and multimodal logistics under initiatives such as PM GatiShakti and the National Infrastructure Pipeline.

Outlook

India is expected to sustain its growth momentum, supported by resilient domestic demand, stable macroeconomic fundamentals and continued policy support. The governments focus on urban development through initiatives such as PMAY-U 2.0, alongside investments in infrastructure and green energy, is likely to drive demand across construction-linked and industrial sectors. Ongoing efforts toward fiscal consolidation coupled with a stable inflation outlook and strengthening external sector resilience, are expected to enhance macroeconomic stability. Additionally, increasing integration into global value chains and continued formalisation of the economy are likely to improve competitiveness and efficiency. Overall, the economic outlook remains optimistic, driven by favourable demography, rising income levels and sustained investments in infrastructure and digital ecosystems.

Indian GDP Growth Trend

(in %)

FY 2024-25	7.1
FY 2025-26	7.7
FY 2026-27 (P)	6.6 6

Industry Overview

Indias Construction Industry 7

Indias construction industry exhibits a strong structural growth, driven by sustained government capital expenditure and rising urbanisation. The sector was valued at USD 685 billion in FY 2025 and is estimated to reach around USD 1,245.7 billion by FY 2034, reflecting a CAGR of 6.8% over the period. Growth is being supported by increased investments in infrastructure such as roads, railways, metro projects and energy, along with continued momentum in residential and commercial construction. The sector remains a key contributor to economic activity, given its strong linkages with core industries including steel and cement.

The industrys expansion is further supported by favourable demographics, increasing urban migration and rising housing demand across Tier I, Tier II and smaller towns. Government initiatives such as the National Infrastructure Pipeline (NIP), Smart Cities and affordable housing, continue to provide demand visibility. While increasing participation from organised players and adoption of modern construction technologies are improving execution efficiency.

Outlook

The domestic construction industrys growth trajectory remains positive, driven by continued infrastructure spending, housing demand and expansion in industrial and renewable energy projects. Steel consumption, a key indicator of construction activity, is projected to increase significantly, supporting demand for construction materials. While short-term challenges such as input cost volatility and cyclical demand fluctuations may persist, the industry is expected to benefit from long-term structural drivers, including urbanisation, formalisation and increased capital investment. Over the medium to long term, improved project execution, digital integration and a shift towards value-added construction solutions are likely to enhance productivity and support sustained sectoral growth.

Indian Real Estate Industry 8

The Indian real estate sector continues to witness strong structural momentum, supported by policy reforms, increasing institutional participation and sustained urbanisation. The industry was valued at approximately USD 532.6 billion in 2025 and is projected to reach around USD 1.26 trillion by 2034, registering a CAGR of 10%, reflecting robust long-term growth visibility. The real estate segment remains a critical contributor to economic activities, driven by its linkages with core industries such as construction materials, infrastructure and manufacturing. Continued strengthening of regulations, enhanced transparency and increasing consolidation towards organized and financially strong developers are improving investor confidence and driving formalisation across the value chain.

Growth in the sector is being driven by a combination of infrastructure development, urban expansion and evolving consumer preferences. Government-led initiatives in transportation, smart cities and housing continue to create demand visibility, while rising income levels and access to housing finance are supporting residential demand. The residential segment alone was valued at approximately USD 265.7 billion in 2025, with steady growth expected over the medium term.

Additionally, the commercial real estate segment is witnessing strong expansion, driven by demand from IT and other emerging sectors, with the market expected to grow significantly from USD 59.7 billion in 2025. A notable structural shift is the increasing traction in Tier II and Tier III cities, supported by affordability, infrastructure upgrades and improved connectivity, leading to a more geographically diversified demand base.

Outlook

The outlook for the Indian real estate sectors growth remains positive, underpinned by sustained infrastructure investments, rising urban population and increasing preference for organized and value-driven developments.

While near-term factors such as input cost volatility and demand fluctuations may impact growth in certain segments, the sector is expected to benefit from long-term structural drivers including urbanisation, digital adoption and increased capital inflows.

The growing focus on sustainable construction, premium housing and integrated developments, along with continued expansion in Tier II and Tier III markets, is expected to support stable growth and enhance sector resilience over the medium to long term.

Real Estate in Tier 2 and Tier 3 cities 9

The real estate sector in Tier II and Tier III cities is witnessing accelerated growth, aided by expanding urbanisation, rising affordability and increasing institutional participation. Investment activities in these markets have gained momentum, with capital inflows exceeding USD 0.9 billion during the year, reflecting robust investor interest and a broadening of development beyond metropolitan centres.

This trend is further supported by government-led initiatives such as PM Awas Yojana (Housing for All), Smart Cities Mission, AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and the development of City Economic Regions (CERs), which aim to enhance urban infrastructure, connectivity and planned urban expansion. In addition, policy measures focused on infrastructure development, logistics integration under PM GatiShakti and increased allocation towards urban capex are facilitating the emergence of these cities as new growth centres.

Improved connectivity, availability of land, lower cost structures and rising demand for residential and commercial spaces continue to drive real estate development, supporting a more balanced and broader sectoral expansion.

Indian B2B Market for Building Materials

The Indian B2B building materials market is undergoing a structural shift in FY 2025-2026, fuelled by a massive capital expenditure push and rapid industry formalisation. With the national construction market valued at ~ USD 685 billion in 2025 and projected to grow at a CAGR of 6.8%, the demand for key inputs, like steel, cement and non-metallic mineral products, has witnessed robust growth. 6 The infrastructure and construction goods segment recorded a double-digit growth of 13.7%. 10 This momentum is supported by large-scale projects under the Smart Cities Mission and expanded industrial corridors, which have moved the procurement landscape from fragmented local sourcing to organized, high-volume supply chain networks.

Simultaneously, the sector is seeing a rapid digitalisation, with e-commerce now accounting for nearly 30% of contractor order volumes, making significant increase from previous years. Business buyers are transitioning from manual spreadsheets to unified digital platforms that offer real-time logistics tracking and GST-compliant invoicing. This consumerisation of B2B trade means that modern procurement functions now prioritise transparency in pricing and the ability to manage multi-warehouse inventory through a single portal.

As the industry advances towards the USD1.2 trillion mark by 2034, the focus has pivoted toward premiumisation, where high-performance composites, modular pre-engineered components and sustainable, low-carbon materials are becoming the standard for urban development and high-speed infrastructure across India.

Indian Renewable Energy Sector

Indias renewable energy sector continues to witness strong structural momentum, with the country ranking among the leading global markets and achieving the milestone of over 50% non-fossil fuel installed power capacity ahead of its 2030 targets. 11

Total non-fossil fuel capacity reached 283.46 GW, including 274.68 GW from renewable sources, with a record addition of 55.29 GW during FY 2025–26, driven primarily by solar and wind capacity expansion. 12 Solar energy remained the key growth driver, while wind capacity additions stood at 6.05 GW, reflecting a significant year-on-year increase.

Growth has been supported by policy initiatives such as rationalisation of GST on renewable energy devices, extension of Basic Customs Duty exemptions for key components and the implementation of the Production Linked Incentive (PLI) scheme, along with the National Green Hydrogen Mission.

The sector is further supported by the expansion of distributed renewable energy, which contributed approximately 16.3 GW to annual capacity additions and continued investments in transmission infrastructure under the Green Energy Corridor Phase-II, with an allocation of _24,176.68 crore. 7 Additionally, initiatives such as the Renewable Energy Equipment Import Monitoring System (REEIMS) are enhancing transparency and strengthening domestic supply chains, supporting the countrys transition towards its long-term clean energy targets.

Indian Steel Industry

The Indian steel industry demonstrated robust growth during the year, supported by strong domestic demand, capacity expansion and policy interventions. Crude steel production reached 168.4 million tonnes during FY April 2025–March 2026, registering a growth of 10.7% over the previous year, while finished steel production stood at 160.9 million tonnes, up by 9.7%. Consumption remained resilient at 163.7 million tonnes, reflecting a growth of 7.6%, driven by demand across infrastructure, construction and manufacturing sectors. The industry also witnessed improved trade dynamics, with exports strengthening and imports moderating, resulting in India emerging as a net exporter of steel during the year.

The sector continues to benefit from policy support and structural initiatives aimed at enhancing domestic capacity, promoting specialty steel production and improving ease of doing business. Ongoing measures, including production-linked incentives and regulatory reforms, are expected to support capacity augmentation, technology upgradation and long-term demand visibility. These developments, coupled with sustained infrastructure spending and industrial growth, position the Indian steel industry for steady expansion over the medium term.

India Ranks third globally in Renewable Energy Installed Capacity

Company Overview

SG Mart Limited an Indias Integrated Building & Infrastructure Materials Platform with an integrated presence across sourcing, processing and distribution. During its initial phase of operations, the Company evaluated multiple trading-led models across metal and non-metal segments. Based on operating experience, these approaches were found to have inherent limitations, including supply-side constraints and relatively higher cash intensity, impacting scalability and returns. The insights derived from this phase have informed the Companys current strategic direction.

The Company has since transitioned towards a more structured and margin-oriented operating model, with a focus on supply chain integration, disciplined product selection and operational efficiency. Its pan-regional network of warehouses and service centres supports efficient logistics and timely fulfilment. The product portfolio comprises primary metals such as hot-rolled coils, steel billets and zinc ingots, along with downstream and value-added offerings including TMT bars and structural solutions. In addition, the Company is expanding into application-led segments such as solar structures and steel profiles, while undertaking backward integration initiatives, including zinc coating, to enhance value realisation.

7,200+

SKUS

7

Operational Service Centre

SWOT

Analysis

Strengths

Established Industry Linkages- Strong relationships with steel producers ensure reliable sourcing and supply continuity across cycles.

Integrated Business Model- Presence across trading, service centres, distribution and renewables provide better value chain control and customer stickiness.

Scale and Financial Strength - Strong capital base supports expansion of service centres, capacity addition and working capital needs.

Diversified Product Portfolio - Expansion into downstream and renewable structures reduces reliance on pure trading and enhances revenue mix.

Growing Customer and Supplier Network - Platform-led approach improves market reach, demand visibility and sourcing efficiency.

Weaknesses

Evolving Brand Visibility - As an emerging organised platform, continued focus on strengthening brand recall and market presence is required.

Working Capital Intensive Model - Inventory-led operations and supplier advances may impact return ratios if not tightly managed.

Margin Sensitivity in Trading - Core trading business remains exposed to price fluctuations and competitive pressures.

Opportunities

Scale-led Industry Formalisation- Shift from fragmented markets to organised trading platforms presents significant growth potential.

Service Centre Expansion - Ongoing addition of service centres across geographies is expected to improve volumes and operating leverage.

Renewables & Structures Growth - Increasing adoption of solar and infrastructure solutions provides a high-growth, higher-margin opportunity.

Infrastructure and Urbanisation Push - Government-led investments and urban growth continue to drive demand for construction materials.

Shift Towards Value-added Offerings- Increasing contribution from processing and structures business expected to improve margins and reduce volatility.

Threats

Cyclical Demand Environment - Demand linked to construction and infrastructure spending remains sensitive to economic conditions.

Supply Chain Disruptions – Logistical inefficiencies or geopolitical factors may affect timely material availability and delivery.

Regulatory Changes- Changes in trade policies, duties, or sector regulations may impact cost structures and operations.

Operational Performance

During the period under review, operations remained resilient across key business areas, supported by stable performance in the B2B metal trading and service centre businesses. The Company maintained a selective presence in downstream distribution products, with a calibrated approach towards volume expansion in these segments. In parallel, the renewables and structures segment witnessed a gradual scale-up, supported by a healthy order pipeline and increasing traction in application-led offerings such as solar structures and steel profiles.

The Company continued to expand its service centre network and optimise its product portfolio, strengthening its reach across customers and geographies. This was accompanied by a strategic rebalancing of the business mix, with increasing contribution from higher-margin and value-added segments.

While margins were impacted during the period due to softness in demand and correction in steel prices, overall execution remained on track. The focus remained on improving realisations, enhancing operational efficiencies and progressively increasing the share of value-added and application-driven segments within the overall portfolio.

Financial Performance

(Rs. in Mn)

	FY26	FY25
Net Revenue	63,153	58,562
Business EBITDA	1,367	1,031
Other Income	691	802
Net Profit	1,111	1,034

Ratio Analysis

Particulars	FY26	FY25	Change (%)	Reasons
Current Ratio (Times)	2.8	1.9	48.70%	Due to decrease in short term borrowings during the year.
Debtors\u2019 Turnover (Times)	21.7	29.1	-25.23%	Due to Increase in trade receivables during the year.
Inventory Turnover (Times)	22.7	35.0	-35.25%	Due to increase in average inventory during the year.
Debt-Equity Ratio (Times)	NA	NA	NA	Debt to Equity ratio is not applicable as we are a net cash company
Interest Coverage Ratio (Times)	3.8	4.1	-8.01%	The decline was mainly due to an increase in finance costs relative to operating earnings during the year.
Operating Profit Margin (%)	2.2	1.8	22.22%	The improvement was driven by better operating efficiencies, improved product mix and disciplined cost management.
Net Profit Margin (%)	1.8	1.8	-0.42%	The margin remained the same YoY
Return on Net Worth (%)	7.9	9	-12.22%	Due to increase in the Company\u2019s average net worth during the year

Company Outlook

The business outlook remains strong, supported by sustained growth in infrastructure, construction and industrial activity, which continues to drive demand for metals and building materials. Expansion in real estate across Tier II and Tier III cities, increasing investments in renewable energy infrastructure and ongoing government focus on capital expenditure are expected to provide steady demand visibility.

The Company is well positioned to capitalise on these opportunities through its integrated supply chain, diversified product portfolio and technology-enabled operating model, enabling efficient procurement and distribution across regions. Continued focus on expanding the product mix, strengthening vendor relationships and enhancing supply chain efficiencies is expected to support operational performance in the near to medium term.

Risk Management

The Company is exposed to various risks and has implemented robust systems, review mechanisms and procedures to identify and effectively manage these risks.

Risk	Description	Mitigation Strategy
Increasing Competition	The B2B ecosystem of construction materials remains highly fragmented with increasing participation from organised platforms and digital aggregators, potentially exerting pressure on market share, pricing power and customer retention.	Continuous monitoring of competitive dynamics and pricing benchmarks is undertaken, alongside strengthening supplier relationships and expanding the customer base across geographies. Focus on differentiated offerings such as standardised pricing, quality assurance and integrated supply solutions enhances competitive positioning.
Technological Disruption	Dependence on digital platforms and IT infrastructure exposes operations to risks such as system failures, cyber threats and data integrity issues, which could disrupt business continuity and stakeholder trust.	Implementation of robust IT governance frameworks, periodic system upgrades, cybersecurity protocols and real-time monitoring mechanisms. Regular audits, data backup systems and disaster recovery planning ensure resilience and uninterrupted operations.
Supply Chain & Logistics Disruptions	The business model relies on seamless procurement and distribution of steel and construction materials. Disruptions due to transportation constraints, supplier concentration, or geopolitical factors may impact delivery timelines and operational efficiency.	Diversification of supplier base across regions, development of an integrated logistics network and expansion of service centre footprint support supply continuity. Strategic inventory planning and alternate sourcing arrangements mitigate dependency risks.
Operational Bottlenecks	Rapid expansion of service centres, product lines and geographies may lead to inefficiencies in inventory management, coordination challenges and execution risks, impacting service levels and margins.	Deployment of advanced inventory management systems, process standardisation and continuous monitoring of operational KPIs ensure efficiency. Investments in logistics infrastructure and workforce capability building support scalable operations.
Volatility in Steel Prices	Fluctuations in steel prices can lead to inventory losses, margin pressure and earnings volatility, particularly given the working capital-intensive nature of operations. As highlighted in recent performance, sharp corrections impacted EBITDA due to inventory holding cycles.	Adoption of dynamic pricing strategies, reduction in inventory holding cycles and increasing contribution from higher-margin segments such as service centres and renewable structures help stabilize margins. Diversification across business verticals reduces dependence on trading spreads.
Digital Disruption to Traditional Trading Model	Gradual shift in industry towards digital procurement platforms and organized marketplaces may reduce reliance on conventional trading models, impacting long-term growth trajectory.	Gradual shift in product mix towards value-added segments such as processing, distribution and specialty products reduces dependence on pure trading. Strengthening platform-led capabilities and integrated offerings enhances long-term sustainability.
Regulatory & Compliance Risk	The Company operates in a regulated environment requiring adherence to SEBI (LODR), taxation and other statutory norms. Non-compliance may result in penalties and reputational impact.	Strong internal controls, compliance monitoring systems and periodic audits ensure adherence to regulatory requirements. The Company maintains a proactive approach to evolving regulatory frameworks.

Human Resources

During the year under review (FY 2025-26), the Company continued to build on its human capital foundation, recognising employees as a key driver of growth and operational efficiency. The focus remained on strengthening talent acquisition in line with business expansion, while enhancing workforce capabilities through structured training and development initiatives.

The Company maintained a performance-driven and inclusive work culture supported by fair practices, employee engagement and well-defined policies. Strong industrial relations and effective grievance redressal mechanisms contributed to a stable and productive work environment. Continued emphasis on workforce development and employee well-being is expected to support the Companys long-term growth trajectory.

As of March 31, 2026, the company had a total of 177 employees.

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.

Cautionary Statement

This document contains statements about expected future events and financials of SG Mart Limited (the Company), which are forward-looking. By their nature, forward-looking statements involve assumptions and are subject to inherent risks and uncertainties. There is a possibility that the assumptions, predictions and other forward-looking statements may not prove accurate. Readers are cautioned not to place undue reliance on forward-looking statements, as various factors could cause actual future results and events to differ materially from those expressed herein. Accordingly, this document is subject to this disclaimer and is qualified in its entirety by the assumptions, qualifications and risk factors detailed in the Management Discussion and Analysis section of this Annual Report.