Shah Metacorp Ltd Management Discussions

India stands out for its sustained growth and successful inflation control, while the global economy faces a period of moderate expansion and policy-driven uncertainties. Future economic momentum will depend on both domestic policy responses and the broader international trade and geopolitical landscape.

GLOBAL STEEL INDUSTRY:

The global economy in 2025 is navigating a landscape of modest growth and declining inflation amid policy uncertainties and structural challenges. Global growth is projected at 3.3% for both 2025 and 2026, below the historical average of 3.7%. Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, with advanced economies expected to reach their inflation targets earlier than emerging markets. According to the International Monetary Fund (IMF), the outlook faces medium-term downside risks and requires careful policy management to balance inflation and growth. As per the Report of World steel Association (WSA), after two years of negative growth and severe market volatility since the COVID crisis in 2020, It has been observed as early signs of global steel demand settling in a growth trajectory in 2024 and 2025.

The steel sector has historically been a cornerstone of industrial progress, forming the foundation of economic development. However, the past year presented significant challenges for the industry, as global manufacturing activity remained subdued due to low household and business confidence, leading to cautious spending and investment. High input costs, geopolitical uncertainty, and tighter financing conditions have delayed capital investments. The lingering effects of inflation have further eroded purchasing power and consumer sentiment. Additionally, weak housing construction in major markets such as China, the United States, Europe, and Japan has adversely impacted steel demand. The automotive sector, a major consumer of steel, also experienced slowdown in 2024. However, investment in manufacturing facilities and public infrastructure provided some support to global steel demand. Sustained capital expenditure in these areas by major economies played a key role in offsetting weaker demand from traditional sectors.

While steel demand weakened in China and most developed economies, developing economies like India have demonstrated resilience. Steel demand in the developing world excluding China grew by around 3.5% in 2024, while the developed economies witnessed approximately 2% decline in steel demand in 2024. Exports from China to the rest of the World were at their highest level since 2016, at 111 MT as domestic demand for steel in China decreased significantly, whereas the decline in production was moderate. The high exports from China have resulted in protectionist measures by different countries. Imports into the EU increased from 25.6 MT in 2023 to 27.4 MT in 2024. In India, the imports from China stood at 2.83 million tonnes in FY2024-25, around 12% higher than the previous year.

Global steel demand is projected to grow by 1.2% in 2025, reaching ~1,770 million tonnes. After three consecutive years of decline, steel demand is expected to recover globally (excluding China) in 2025. A stable global economic outlook, coupled with improving financing conditions and real income growth in major economies, is expected to support recovery in private consumption and investments before the tariff impositions. Additionally, a significant recovery in residential construction is also anticipated from 2025 onward, supported by easing financing conditions. However, the tariffs imposed by US administration and reciprocal tariffs by countries has led to increased uncertainty in demand-supply balance and continues to be a major risk to the steel industry.

At a regional level, the downturn in Chinas real estate sector is expected to persist, leading to a 3% decline in steel demand in 2024, followed by an additional 1% decline expected in 2025. However, government intervention and economic support measures could help stabilise demand. In Developing Economies (excluding China), steel demand grew by 3.5% in 2024 and is expected to further accelerate to 4.2% in 2025. Emerging economies in the MENA and ASEAN regions are expected to rebound after experiencing a significant slowdown in 2022 and 2023. In Developed Economies, steel demand declined by around 2% in 2024, with major steel consuming nations including the United States, Japan, South Korea, and Germany experiencing contractions. However, demand is expected to recover by 1.9% in 2025, driven by improving economic conditions.

Steel Demand Projections:

Global steel demand is expected to recover marginally in 2025, with an anticipated growth of about 1.2%, reaching approximately 1,770 Mt. This growth excludes China, where demand is expected to continue its downward trend. Recovery will be supported by improved financing conditions, rising real incomes, and renewed private consumption and infrastructure investment.

Tariffs imposed by the US and reciprocal measures by other countries remain significant risks, adding uncertainty to global steel demand-supply dynamics.

Summary Table of Key Data:

*Developing economies including MENA and ASEAN.

This revised version reflects the most recent market intelligence, emphasizing gradual recovery trends in global steel demand despite regional disparities and geopolitical challenges. Indias steel sector stands out for robust growth, while China faces continued demand weakness and export-driven trade frictions. Tight monetary policies, geopolitical tensions, and tariffs remain major headwinds for the industry.

GLOBAL ECONOMIC OUTLOOK:

The global economy is expected to grow by 2.3% in 2025. The tension around trade and high levels of policy uncertainty are expected to have a significant impact on the economic activity. Global inflation is expected to moderate to 4.3% in 2025 and 3.6% in 2026, approaching central bank targets. While advanced economies are likely to contain inflation more effectively than emerging markets, rise in protectionism and geopolitical tensions around trade will significantly impact prices of domestic products especially in United States. Inflation in the services section in major economies like the United States and the Europe is expected to remain above pre-pandemic levels. The monetary policy remains divergent, with some central banks maintaining caution in their easing cycles. Fiscal policy in advanced economies is expected to tighten in 2025, with developing economies implementing comparatively moderate adjustments. In United States, growth is expected to be 1.5% in 2025, supported by consumer demand, rising incomes, productivity gains, and accommodative financial conditions. However, policies under the new U.S. administration particularly on trade, taxation, immigration, and regulatory changes may have diverse implications on the economy.

In 2024, Europe (‘EU) registered a growth rate of 0.8% supported by monetary easing by European Central Bank. Economic activity in EU is projected to remain flat in 2025, before showing modest recovery in 2026. As per IMF, recovery will be largely driven by improvement in domestic demand along with rising wages. The United Kingdom (‘UK) is expected to register a stable GDP growth of 1.0% in 2025, aided by gradual interest rate declines, steady real income growth, and improving consumer confidence. However, elevated geopolitical uncertainties and structural constraints, such as low productivity and an aging population, will continue to pose challenges for Europe and UK. The Chinese economy continued to grow in 2024, witnessing a growth rate of 5%. Growth is projected to remain stable at 4.5% in 2025 and 2026, though overcapacity, sluggish domestic demand, and structural challenges in the property market remain as concerns. Outcome of governments stimulus on domestic consumption, US - China trade discussions, and export performance will impact the industrial output of China and would be the key watch points in 2025.

INDIAN ECONOMY AND STEEL INDUSTRY IN INDIA:

Indian GDP: India is one of the fastest-growing major economy. It demonstrated a growth rate of 6.5% in FY2024-25. Despite global headwinds, Indias growth is expected to remain rangebound, 6% - 6.5%, in the next couple of years. The economy is expected to be driven by strong domestic consumption, government capital expenditure, and robust expansion in the services and manufacturing sectors.

The Government of India (‘GOI) remains focused on fiscal consolidation, employment generation, and boosting capital investment. The share of capital expenditure in central government spending has continued to rise, playing a critical role in industrial and infrastructure development. Increased capital outlays on infrastructure and asset creation are expected to generate growth multipliers. The PLI scheme has successfully attracted investments and stimulated production across various industries. The Government is exploring further sectoral expansion to enhance domestic manufacturing and develop labour-intensive industries.

Inflation: Inflation is projected to moderate and be rangebound, 4.0 4.5% in the near term, supported by favourable food price trends. Core inflation across goods and services has remained stable, while fuel prices have declined. The moderation in inflation has enabled the Reserve Bank of India to adopt a more accommodative stance, with interest rate cuts anticipated to stimulate consumer spending and credit growth. Foreign Portfolio Investment volatility is expected to subside, while softening crude oil prices will likely support exchange rate stability.

Steel Production, Top 10 Countries as per World Steel Association:

India remains the second-largest producer of steel, producing 149.4 million tonnes (MT) in 2024 an increase of 6.10% YoY from 140.8 MT in 2023, as per the latest World Steel Association data. This makes India a standout performer in the global steel industry. According to the associations Short-Range Outlook, steel demand in India is projected to grow by 8.2% in 2025, significantly outpacing the expected global growth of 1.7%. Growth in Indias construction sector is being driven by sustained government investment in infrastructure as well as a recovery in private capital expenditure. This infrastructure push is also bolstering the capital goods sector. Additionally, the automotive sector is expected to maintain its healthy growth momentum, further boosting steel demand in the country.

Steel imports continue to rise in FY 2024-25, largely driven by a 90% surge in Chinese exports, reaching 2.7 MT. Of Indias total USD 10 billion steel imports, China accounted for USD 2.8 billion, up 35% YoY, despite falling global steel prices. Hot-rolled (HR) coil remained the largest imported product category, nearly doubling to 3 MT. Imports of galvanized plain (GP) sheets and coils rose 41% YoY to 1.3 MT, while HR plate imports tripled to 0.66 MT.

On the export front, India primarily shipped steel to the European Union (EU), with Italy, Belgium, and Spain emerging as the top three destinations.

According to data from the Joint Plant Committee (JPC), Indias domestic finished steel consumption surged by 13.6% to 136.3 MT, driven largely by strong demand from the automotive and infrastructure sectors. Specifically, the automotive industry saw a 12.5% YoY growth in FY 2024-25, boosted by rising adoption of electric vehicles (EVs). Simultaneously, government-funded infrastructure initiatives helped maintain momentum in the construction sector.

This robust growth is aligned with the National Steel Policy, which aims to raise Indias annual steel manufacturing capacity to 300 MT and increase per capita steel consumption to 160 kg by 2030. Currently, per capita consumption stands at 93 kg, underscoring the significant potential for growth.

India continues to be a key driver of both global steel production and consumption. With favorable demographics and government policies encouraging rapid infrastructure development, the country is on track to achieve its 2030 goals of 300 MT capacity, 258 MT production, and per capita consumption of 160 kg. This trajectory highlights Indias accelerating industrialization and cements its position as a major player in the global steel landscape.

GOVERNMENT INITIATIVES:

In FY 2024 25, India has continued to reinforce its position as the second-largest steel producer globally, with crude steel production rising to 149.4 million tonnes (MT) a 6.10% YoY increase. In line with the National Steel Policy, the Government of India remains committed to expanding crude steel production capacity from the current 154 MTPA to 300 MTPA by 2030, not only to ensure self-sufficiency in steel but also to position India as a major global export hub.

To support this ambition, the government has taken several strategic and policy-level steps: i. Domestically Manufactured Iron & Steel Products (DMI&SP) Policy: Effectively promoting the use of domestically produced steel in government procurement, this policy has significantly boosted internal steel demand, strengthening the Make in India agenda. ii. Production Linked Incentive (PLI) Scheme for Specialty Steel: Launched with a proposed investment of 29,500 crore, this scheme targets the addition of 25 MT of specialty steel capacity. Its focus is on reducing import dependence and fostering a globally competitive manufacturing base for specialty steel products. iii. Customs Duty Reforms: The Basic Customs Duty on Ferro Nickel has been reduced to zero, and the duty exemption on ferrous scrap extended to March 31, 2026, as announced in Budget 2024, enhancing competitiveness of Indian producers. iv. Workplace Safety Enhancements: On July 25, 2024, the Ministry of Steel introduced 16 new safety guidelines for both process and workplace operations in the steel sector, expected to reduce accidents and improve overall productivity. v. SIMS 2.0 Launched: The revamped Steel Import Monitoring System (SIMS 2.0) was rolled out on July 25, 2024, to ensure better oversight of imports, especially in light of rising inflows from countries like China. vi. Infrastructure Alignment via Gati Shakti: Initiatives like ‘Make in India and the PM Gati-Shakti National Master Plan are boosting steel usage across key sectors Railways, Defence, Civil Aviation, Roads, and Rural Development through targeted engagement and procurement. vii. Raw Material Access: Inter-ministerial and international coordination efforts are underway to improve access to raw materials like iron ore and coal at more competitive terms. viii. Steel Scrap Recycling Policy: The policy continues to encourage domestic scrap generation and use, reducing dependence on imported raw materials and supporting circular economy goals. ix. Quality Control Orders: A total of 145 steel products have been brought under Indian Standards, ensuring that end-users receive high-quality, certified steel.

Green Steel, R&D, and Innovation Focus (2024 25):

Indias steel sector is also being transformed through innovation, decarbonisation, and sustainability: i. National Green Hydrogen Mission: The steel sector is a key stakeholder in this ambitious mission by MNRE to replace carbon-intensive fuels with green hydrogen, enabling low-emission steelmaking. ii. 14 Task Forces on Decarbonisation: Collaborative task forces comprising industry, academia, think tanks, and S&T bodies are working on actionable levers to achieve net-zero goals in the steel sector. iii. Japan Collaboration via NEDO Projects: Four energy-efficiency model projects have been implemented: Tata Steel: Hot Stove Waste Gas Recovery & Coke Dry Quenching RINL: Sinter Cooler Waste Heat Recovery SAIL: Energy Monitoring and Management System iv. R&D Support Scheme: The Ministry of Steel continues to support cutting-edge R&D across priority areas such as: Energy efficiency Emissions reduction Steel quality improvement Beneficiation of natural resources Waste utilization and value addition for import substitution. Together, these 2024 25 initiatives reflect the Indian governments proactive approach in nurturing a globally competitive, environmentally sustainable, and technology-driven steel ecosystem. With strong policy backing, accelerating domestic demand, and strategic global positioning, India is firmly on track to achieve its 300 MTPA capacity and 258 MT production target by 2030, reinforcing its critical role in the global steel value chain.

OUTLOOK:

Global economic growth is expected to moderate amid rising geopolitical tensions and trade disruptions. Strategic policy coordination will be essential to balance inflation control with support for investment and consumption. Sustained growth will depend on reinforcing supply chain resilience, advancing structural reforms, and promoting technological innovation. Fiscal discipline, alongside targeted public spending in defense, climate action, and infrastructure, will help economies navigate near-term challenges. Strengthening labor markets, fostering skill development, and encouraging international cooperation to reduce trade barriers will be key to fostering inclusive and stable global progress in the years ahead.

Indias economy continues to demonstrate strong momentum and is projected to remain one of the fastest-growing major economies in 2025 and 2026. Despite global economic headwinds, Indias growth trajectory remains robust, driven by strong domestic demand, sustained public infrastructure investment, and a resilient services sector. However, external risks persist due to weaker global trade, tighter financial conditions, and geopolitical uncertainties. On the domestic front, food inflation remains a concern, particularly due to weather-related risks impacting agriculture. Fiscal policy remains disciplined, with continued investment in infrastructure, digital innovation, and employment generation. The manufacturing sector is expected to benefit from policy incentives and global supply chain shifts, while the services industry, particularly IT and financial services, continues to expand at a healthy pace. Consumer sentiment remains stable, aided by rising urban wages, expanding financial inclusion, and robust digital transformation.

Moving into FY 2025-26, it is expected that the Indian economy will continue to be resilient on the back of strong domestic consumption despite continuing global economic volatility. The FY 2025-26 Union Budget has laid the foundation for the increase in disposable income and higher consumer spending through reduction of personal income tax rates. However, the continuation of government spending on development and the emergence of private expenditure towards capacity augmentation is a metric to look out for in FY 2025-26. RBI is expected to continue its balanced regulatory approach fostering growth while ensuring compliance, maintaining a clear focus on systemic stability. While there was a downtick in the credit cycle in both rural and urban India in FY 2024-25, this is likely to moderate and stabilise over H1 FY 2025-26, while charting a path to growth from H2 FY 2025-26 onwards supported by a lower system-wide leverage.

INDIAN ECONOMIC OVERVIEW:

India has emerged as a bright spot in a global environment marked by economic challenges and geopolitical uncertainties. The nation is on track to become the worlds third-largest economy, with a projected GDP of USD 5 trillion by FY 2027-28. Robust infrastructure development, efforts to accelerate manufacturing, favourable policy reforms, and strong consumer and business sentiments, will be the fundamental drivers of growth, positioning India as a key player in the global economy.

India remains the worlds second-largest steel producer and one of the strongest demand drivers, with steel demand expected to grow by 8% in 2025. Demand is expected to reach 200-210 million tonnes by 2030, driven by strong expansion in steel-intensive sectors such as infrastructure, housing, transportation, power, and renewable energy.

Growth is further supported by rising demand for consumer durables and capital goods. Additionally, government initiatives, including Production-Linked Incentives (‘PLI) schemes and increased investments in infrastructure and manufacturing, have played a crucial role in boosting steel production and consumption. In the Union Budget for FY2025-26, the Government of India (‘GoI) has maintained capital expenditure (capex) as a share of GDP at the same level as 2024, reinforcing its commitment to industrial growth.

While steel demand remains robust in India, steel prices are expected to remain range bound, capped by the threat of Chinese imports. Policy support provided by the Government in the form of a safeguard duty of 12% on April 21, 2025 for 200 days has given a partial relief to the Indian steel industry.

Overall, while the global steel demand is poised for recovery in 2025, the industry remains exposed to geopolitical, economic, and financial risks. India, however, continues to stand out as a high-growth market, supported by strong domestic demand and investment. The long-term outlook for the Indian steel industry remains optimistic, with continued infrastructure development, industrial expansion, and supportive government policies driving its growth. Effective trade policies, price stabilisation measures, and sustained investment will be crucial to maintaining Indias competitive edge in the global steel market.

OVERVIEW OF THE COMPANY AND ITS BUSINESS:

Our Company was originally incorporated as ‘Shreenath Mineral Metal Private Limited on September 29, 1999 under the Companies Act, 1956. Further, the name of the Company was changed to ‘Gyscoal Alloys Private Limited which was later converted into a Public Limited in the year 2006 resulting to change in its name from ‘Gyscoal Alloys Private Limited to ‘Gyscoal Alloys Limited (“GAL”). Subsequently, the name of the Company was changed to ‘Shah Metacorp Limited (“SML”) on June 02, 2023.

Our journey began with trading iron and steel scraps, billets, and steel long products. In 2005, we expanded our operations by acquiring a steel rolling mill, enabling us to manufacture a diverse range of rolled steel products. Further investments led to the establishment of a Steel Melting Shop, increasing our annual capacity from 12,000 MT to 18,000 MT by 2009. Recognizing the potential in stainless steel, Shah Metacorp diversified into manufacturing stainless steel long products ranging from 200 to 400 series grades.

Today, Shah Metacorp Limited stands among the top manufacturers of stainless-steel bars and mild steel products like angle bars, bright bars, and flat bars. Our commitment to quality, innovation, and customer satisfaction is reflected in our ISO 9001:2015 certification and recognition as one of Indias top 100 SMEs by the India SME Forum in 2013.

The company has a product portfolio containing stainless steel long products includes angles, bright round bars, black bars, flats, hexagonal and round corner squares (RCS), channels, sections, pata-patti and rectangles in standard sizes at our manufacturing plant. Our Company also manufactures the above said products on job work basis for third party manufacturers based on their specifications of sizes and shapes. In pursuance of its objectives, the Company is committed to maintain high standards of quality, efficient delivery schedules, and competitive prices.

The company formed a wholly owned subsidiary named “Shah Agrocorp Private Limited” in the year 2024. Further, to diversify the business the company joined hands with “Goldman Hotels and Resort Private Limited” wherein it has a holding of 26%, being its associate company.

The company has demonstrated exceptional financial recovery and growth over the year. This stability is crucial for long-term sustainability and resilience, especially in challenging economic environments. Revenue from operations was Rs. 17,615.60 (in Lakhs) which was approx. 77.20% higher than the consolidated revenue of Rs. 9676.54 (in Lakhs) in the FY 2023-2024. The Consolidated EBITDA of the company was Rs. 3,535.48 (in Lakhs) during the year under review as compared to Rs. 440.48 (in Lakhs) in FY 2023-2024. This signifies the effectiveness of the companys strategies in capturing market opportunities and expanding its business operations.

During the year, Company has invested in Western Urja Private Limited by acquiring 50.01% shares from existing shareholders of Western Urja Private Limited.

Segment wise or Product wise performance

The company is operating in only one segment i.e. S.S. Products. The company mainly manufacture SS Angles, SS Flats & SS Rounds and the % wise breakup of the products of the total turnover of the company is as under: -

During the years Job work carried out in for Pickling, Rolling, Rolling & Straitning, Straitning & Cutting.

RISK & CONCERNS:

The Company faces the following types of risks in its business operations:

I. Market Related Risks as Steel is a cyclical industry and excess volatility in the steel and raw material markets may adversely impact the Companys financial condition. Competition from substitute materials, or changes in manufacturing processes, may lead to a decline in product demand, resulting in loss of market share. Product liability claims could have an adverse impact on the Companys finances.

key mitigation strategies will be Development of value-added products and enhanced services and solutions, Strengthening contractual agreements.

We operate in a highly competitive industry, dominated by a large number of organized and unorganized players. Increased competition from other organized and unorganized manufacturers may lead to a reduction in our revenues, reduced profit margins or a loss of market share.

Our success depends on our ability to anticipate, understand and address the preferences of our existing and prospective clients as well as to understand evolving industry trends and our failure to adequately do so could adversely affect our business.

Other factors that could affect our ability to maintain our levels of revenues and profitability include the development of an operational model similar or superior to ours by a competitor. Our inability to compete effectively could affect our ability to retain our existing clients or attract new clients which may in turn materially and adversely affect our business, financial condition, results of operations, cash flows and prospects.

II. Financial Risks as fluctuation in foreign exchange rates due to volatility in financial markets may impact the Companys debt servicing and create uncertainties in accessing the financial markets. Substantial amount of debt on the balance sheet may have an adverse impact on the Companys ability to raise finance at competitive rates. Changes in assumptions underlying the carrying value of certain assets may result in the impairment of such assets. Key mitigation strategies will be Maximising operational cashflow, Terming out debt and refinancing debt with favorable covenants, Integration of business planning and cashflow projections with liquidity management.

III. Regulatory Risks:

The Equity Shares of our Company are listed on BSE and NSE. We are, therefore, subject to the obligations and reporting requirements prescribed under the SEBI Listing Regulations and we must comply with other SEBI Regulations as may be applicable to us. While our Company endeavours to comply with all such obligations/reporting requirements, in the past, there have been instances of delayed disclosures/ inadvertent incorrect/ inadvertent incomplete factual disclosures under the SEBI Listing Regulations, such as delayed filings under Regulation 23(9) and Regulation 30 of the SEBI Listing Regulations, incorrect categorization of Promoter and Promoter Group in the shareholding pattern filed with Stock Exchanges under Regulation 31 of the SEBI Listing Regulations, discrepancy or variation in the business updates filed with the Stock Exchanges and other delayed compliance under Regulation 74(5) of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018, etc. Such non-compliance is usually subject to penalties, warnings and show cause notices by SEBI and the Stock Exchanges. Any regulatory action or development, which is initiated against us could affect our business reputation, divert management attention, and result in a material adverse effect on our business prospects and financial performance and on the trading price of the Equity Shares. Non-compliance to increasing stringent regulatory environmental norms may result in liabilities and damage to reputation. This risk can be mitigated by Focus on compliance , Dialogue with regulatory authorities for greater clarity and availing legal consultations for timely clearances.

IV. Operational Risks

The steel industry is prone to high proportion of fixed costs and volatility in the prices of raw materials and energy. Limitations or disruptions in the supply of raw materials could adversely affect the Companys profitability. Failure of critical information systems/ servers that control the Companys manufacturing plants may adversely impact business operations. Violation of safety standards, unsafe acts and conditions may lead to Lost Time Injuries (LTIs) or fatalities, resulting in stoppage of operations, loss of personnel, and damage to assets and reputation.

Our manufacturing operations and consequently our business is dependent upon our ability to operate our manufacturing facility at enhanced capacity and manage the manufacturing facility, which is subject to operating risks, including those beyond our control, such as the breakdown and failure of equipment or industrial accidents, localised social unrest and natural disasters. In the event there are any disruptions at our manufacturing facility, due to natural or man-made disasters, workforce disruptions, regulatory approval delays, fire, failure of machinery, lack of access to assured supply of electrical power and water at reasonable costs or any significant social, political or economic disturbances, our ability to manufacture our products may be adversely affected. Key Mitigation Strategies will be Enhancing in-house capability and leveraging from past leanings and expertise and Establishing sources of supplies from alternate geographies. Any contravention of or non-compliance with the terms of various regulatory approvals applicable to the manufacturing facility may also require us to cease or limit production until such non-compliance is remedied to the satisfaction of relevant regulatory authorities. We cannot assure you that we will not experience work disruptions in the future resulting from any dispute with our employees or other problems associated with our employees and the labour involved in our manufacturing facility, which may hinder our regular operating activities and lead to disruptions in our operations, which could adversely affect our business, prospects, financial condition, cash flows and results of operations.

Further many other risks such as People Risk, Strategies Risk, Strategic Risk etc. The management continuously assesses the risks and monitors the business and there are Risk Management Policies to minimize the risk.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company has a robust internal control system which is supervised periodically by competent professional managers and Directors of the Company. Periodically, the systems are reviewed and aligned with the growing needs of the Company. Both external and internal auditors, who have access to all records and information about the company, regularly inspect the companys internal control systems.

Internal Financial Control that encompasses the policies, processes and monitoring systems for assessing and mitigating operational, financial and compliance risks and control over related party transactions, substantially exist. Your Company has appropriate internal control system for business processes, with regards to efficiency of operations, financial reporting, compliance with applicable laws and regulations. In the Company, the Board of Directors is responsible for ensuring the adequacy and effective monitoring of internal financial controls. The Internal Audit Program is designed in consultation with the Statutory Auditors to ensure accuracy and reliability of accounting data and is monitored by the Audit Committee. Audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of the said recommendations. The Companys internal audit team also carries out extensive audits throughout the year, across all functional areas.

INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT:

The Company believes that human resource is the most important assets of the organization. It is not shown in the corporate balance sheet, but influences appreciably the growth, progress, profits and the shareholders values. During the year your company continued its efforts aimed at improving the HR policies and processes to enhance its performance. The vision and mission of the company is to create culture and value system and behavioral skills to insure achievement of its short- and long-term objectives.

The Company as at year end has 96 employees on its role and continues to attract talent from within India to further its business interests. Industrial relations continue to be cordial. Company takes safety measure for people working on plant.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Key Financial Ratio

Details of significant changes in key financial ratios:

During the financial year 2024 25, the company witnessed significant improvements across several key financial ratios, reflecting robust operational performance and strengthened financial health. The significant variance in ROE is due to profitability of the company and correspondence decrease in negative balance of reserves and surplus. Return on Net Worth (RONW) Improved from 4.61% in FY 2023 24 to 0.29% in FY 2024 25. Although modest in percentage terms, the positive return reflects stabilization after earlier periods of stress, supported by higher sales volumes and repayment of credit facilities. The substantial rise in the Current Ratio from 2.09 to 13.79 was driven by capital raised through preferential issues. Likewise, the Debt-Equity Ratio improved from 0.64 to 0.10 due to Preferential issue of Equity shares and a reduction in borrowings, alongside enhanced profitability. Return on Capital Employed, though marginally positive at 0.06%, Optimum utilization of manufacturing capacity has lead to improvement in the returns of the company. The companys Earnings Per Share (EPS) increased from 0.11 to 0.29, despite equity expansion, indicating improved profitability. Inventory Turnover increased significantly from 8.36 to 14.37, driven by increased the operations, the cost of material consumed is almost twice as compared to last year leading to increase in the ratio. The decline in Debtors Turnover from 2.27 to 1.89 is attributable to extended credit periods to support volume growth and maintain market competitiveness. The Net Profit Margin and Operating Profit Margin remained stable at 4.41% and 457% respectively, highlighting consistent profitability. A notable enhancement in working capital, resulting from repayment of borrowings and capital inflows, contributed to a lower Net Capital Turnover Ratio. Overall, the company has demonstrated strong growth in revenue and EBITDA, successfully transitioning from previous losses to sustained profitability, underpinned by effective cost control and optimal use of manufacturing capacity.

FINANCIAL PERFORMANCE OF THE COMPANY:

Total Revenue:

Standalone: the Revenue from Operations amounted to Rs. 17,380.81 lakh, as against Rs. 9,622.48 lakh in the previous financial year, registering a growth of approximately 80.66%. The Standalone EBITDA for the year was Rs. 3,503.95 lakh, compared to Rs. 434.75 lakh in FY 2023 24. Consolidated: Similarly, the Revenue from Operations stood at Rs. 17,615.60 lakh, reflecting an increase of approximately 82.06% over the previous years revenue of Rs. 9,676.54 lakh. The EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) for the year was Rs. 3,535.48 lakh, as compared to Rs. 440.48 lakh in FY 2023 24, representing substantial year-on-year growth. This significant growth indicates improved operational efficiency, increased business volumes, and effective cost management during the year under review.

Total Income:

Standalone: Total income grew from 9,622.48 Lakhs to 17,380.81 Lakhs. Consolidated: Total income rose from 10,111.80 Lakhs to 17,917.93 Lakhs.

Both figures align with the increased operational revenue, reflecting overall growth in business scale.

Expenditure:

Total Expenses of Standalone increased from 9,187.72 Lakhs to 16,359.06 Lakhs and of Consolidated increased from 9,671.32 Lakhs to 16,864.65 Lakhs. The companys expenses have risen sharply across various categories, particularly in the cost of materials, purchases of stock-in-trade, and other expenses, which align with the overall expansion in operations and revenue. The substantial growth in both cost and income demonstrates that the business is scaling successfully. The reduction in finance costs is a positive sign, pointing to efficient capital management. Overall, the increase in expenses is justified by the parallel rise in revenue and operational scale.

Employee benefit expenses:

During the year under review, the Employee benefit expenses increased by 8.34% from Rs. 131.72 Lakhs in FY 2023-24 as compared to Rs. 142.71 Lakhs in the current financial year. The increase in employee benefit costs indicates workforce expansion, salary adjustments, or additional benefits offered. This is consistent with an expanding business and greater operational requirements.

Finance Cost:

The finance cost is significantly increased from INR 1.43 Lakhs in FY 2023-24 to INR 3.59 Lakhs in FY 2024-25. The increase in finance costs could be due to borrowing, resulting in increased interest expenses.

Net Profit/ (Loss):

During the year company earned Profit which increased from 420.59 Lakhs to 3,236.42 Lakhs in Standalone, and in Consolidated Profit increased from 426.32 Lakhs to 3,260.00 Lakhs. This growth in profitability demonstrates solid operational performance and effective tax management. This substantial increase indicates improved profitability at an operational level, showcasing enhanced efficiency and business health.

Total Comprehensive Income of the company in Standalone Increased from 427.69 Lakhs to 3,235.78 Lakhs and in Consolidated Increased from 433.42 Lakhs to 3,259.81 Lakhs. The comprehensive growth in income reflects an overall improvement in the companys financial health across various sources of income.

Earnings Per Share:

The EPS for both basic and diluted earnings in was 0.61 in FY 2024-25 compared to 0.11 in FY 2023-24. The increase in EPS due to the substantial increase in net income (profitability), rising from 420.59 Lakhs to 3,236.42 Lakhs.

Non-Current Assets:

The non-current assets have increased by 6.37% from INR 4,629.09 Lakhs in FY 2023-24 to 4,924.20 in FY 2024-25.

Current Assets:

The current assets have been increased by 65.32 % from INR 8,687.96 Lakhs in FY 2023-24 to INR 14,363.36 in FY 2024-25.

Non-Current Liabilities:

The non-current liabilities have been decreased by 52.64% from INR 3,665.53 Lakhs in FY 2023-24 to INR 1,735.93 Lakhs in FY 2024-25.

Current Liability:

The current liabilities have been decreased by 73.39% from INR 3,914.83 Lakhs in FY 2023-24 to INR 1,041.64 Lakhs in FY 2024-25.

The Company demonstrated robust top-line growth, significantly higher profitability, stronger liquidity, and lower leverage during FY 2024 25. The combination of rising revenues, cost discipline, and capital infusion has positioned the Company on a stronger financial footing for sustained future growth.

Financial Performance of the Company:

( in Lakhs)

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements are prepared in accordance with an Accounting Standard and details of the same is provided in the notes of financial statements.

CAUTIONARY STATEMENT:

Certain statements made in this Report relating to the Companys outlook, estimates, predictions etc. may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results may differ from such estimates, whether express or implied. Several factors that could make a difference to Companys operations include climatic conditions and economic conditions affecting demand and supply, changes in Government regulation tax regimes, natural calamities, etc. over which the Company does not have any direct control.

FOR AND ON BEHALF OF THE BOARD OF SHAH METACORP LIMITED