Shree Marutinandan Tubes Ltd Management Discussions

1. Economic Overview Global Economy

The global economy during the year continued to navigate a mixed environment of moderating inflation, elevated but gradually easing interest rates and uneven regional growth. Global steel demand remained broadly stable, with softness in the developed economies and in China being offset by resilient consumption in India and other emerging markets. The global steel pipes and tubes industry remained firm, underpinned by demand from the infrastructure, energy, water and construction sectors. Seamless and welded steel pipes continue to form the backbone of the industry, and the Asia-Pacific region remained the largest market, accounting for the majority of global consumption. The global steel pipes and tubes market is estimated to be in excess of US$ 135 billion and is expected to grow at a compound annual rate in the region of 6% over the medium term, led by infrastructure and industrialisation across emerging economies.

India retained its position as one of the fastest-growing major economies in the world during the Financial Year 2025-26. As per the estimates released by the National Statistical Office, Indias real Gross Domestic Product is estimated to have grown by about 7.6% to 7.7% in FY 2025-26, with nominal GDP crossing the level of Rs. 345 lakh crore. The manufacturing sector recorded double-digit growth and the services sector remained buoyant, while sustained public capital expenditure on infrastructure, roads, railways, housing, water supply and urban development continued to be the principal engine of growth. This macroeconomic backdrop of strong domestic demand, stable inflation and continued reform momentum provided a supportive environment for steel-consuming sectors and, in turn, for the Companys business.

India is the worlds second-largest producer of crude steel. The Indian steel industry recorded a strong performance during FY 2025-26. As per data released by the Ministry of Steel, crude steel production is estimated to have grown by about 10.7% year-on-year to approximately 168 million tonnes, while domestic finished steel consumption rose by about 7-8% to around 164 million tonnes, driven by increased activity across the infrastructure, construction, railways and manufacturing sectors. Finished steel exports rose sharply and imports declined, enabling India to regain its position as a net exporter of finished steel during the year. Indias total steelmaking capacity continued to expand during the year and is projected to reach around 300 million tonnes by 2030, while per-capita steel consumption is rising steadily towards the National Steel Policy target of 160 kilograms by FY 2030-31. After a subdued price trend over the preceding years, domestic steel prices witnessed a recovery in early 2026, supporting realisations across the value chain.

The steel pipes and tubes segment, in which the Company principally operates, is a large and growing part of the Indian steel value chain, with a market size estimated at around US$ 18 billion and expected to grow at a healthy single-digit to high single-digit compound annual rate over the coming years. Growth in this segment is being driven by investments in oil and gas pipelines, water supply and sanitation programmes, irrigation, real estate and housing, solar and renewable energy structures, and the broader push towards infrastructure creation. Galvanized and structural pipes, in particular, are benefiting from demand from agriculture, public-health engineering, solar mounting structures and general construction. Tightening quality norms, including mandatory BIS standards for steel pipes and tubes, are gradually consolidating demand towards organised and compliant players.

During the year under review, the Company diversified into the fire protection systems business through its Joint Venture, “Shree Maruti & Associates Fire Protection Systems”. The Indian fire protection and fire-safety systems market is an attractive and fast-growing adjacency. The broader fire and safety equipment market in India is estimated at about US$ 2 billion, and the domestic fire protection systems market is expected to add close to a further US$ 1.9 billion of incremental size over the period 2025 to 2030, growing at a compound annual rate of around 6%. Growth in this sector is being propelled by the stringent enforcement of the National Building Code and State fire-safety regulations, rapid urbanisation, the proliferation of high-rise residential and commercial buildings, the expansion of industrial corridors and warehousing, and the growing adoption of smart, IoT-enabled detection and suppression systems. The Company believes that this diversification will open up a new revenue stream, leverage its existing relationships in the construction and infrastructure ecosystem, and reduce its dependence on a single product line over time.

The Company, Shree Marutinandan Tubes Limited, established in 2013, has evolved into a trusted name in the steel industry. The Company specialises in the trading of a wide array of steel pipes, including Galvanized, ERW MS, Black and Solar Structural Pipes, catering to diverse sectors such as agriculture, oil, public health, housing and engineering. By adhering to stringent quality standards and customer-focused values, the Company has built a strong reputation for reliability. During the year, the Company also diversified into the fire protection systems business through its Joint Venture as described above, and commenced investment in its own manufacturing infrastructure. The Companys well- established distribution network ensures the widespread availability of its products, primarily reaching wholesalers and distributors in the domestic market, while robust supplier relationships enable the procurement of quality inventory in substantial volumes and competitive pricing for customers. The major products of the Company are:

• Galvanized Pipes;

• Black Pipes;

• MS ERW Pipes (square and rectangular hollow sections);

• Solar Structural Pipes;

• Fire protection products and systems (through the Joint Venture).

Until the previous financial year, the Company did not have any subsidiary, associate or joint venture, and accordingly prepared and presented only Standalone Financial Statements. During the Financial Year 2025-26, consequent to the Company acquiring an interest in the Joint Venture “Shree Maruti & Associates Fire Protection Systems” (a partnership firm) which is jointly controlled by the Company, the Company is, for the first time, required to prepare Consolidated Financial Statements.

The Consolidated Financial Statements for the year ended March 31,2026 have been prepared in accordance with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. Being an interest in a jointly controlled entity, the Companys share (98%) of each of the assets, liabilities, income and expenses of the Joint Venture has been combined on a line-by-line basis with the corresponding items in the financial statements of the Company, using the proportionate consolidation method prescribed under Accounting Standard (AS) 27 — “Financial Reporting of Interests in Joint Ventures”, read with the requirements of Section 129(3) of the Companies Act, 2013. Intra-venture balances and transactions, and unrealised profits, if any, have been eliminated to the extent of the Companys interest in the Joint Venture.

The Companys share of the total assets of the Joint Venture as at March 31, 2026 was Rs. 44.28 lakh and its share of revenue from operations for the year then ended was Rs. 39.58 lakh, as drawn up by the management of the firm. The net assets of the Joint Venture attributable to the Company stood at Rs. L57 lakh (0.04% of the consolidated net assets) and its share of profit considered in consolidation was Rs. 0.57 lakh (0.16% of the consolidated profit). A statement containing the salient features of the financial statements of the Joint Venture in the prescribed Form AOC-1 is annexed to the Directors Report as “Annexure C”. As a result of the above, the Total Revenue on a consolidated basis for the year stood at Rs. 14,981.87 lakh (standalone: Rs. 14,942.86 lakh), while the Consolidated Profit After Tax was Rs. 357.74 lakh, in line with the standalone Profit After Tax, the incremental contribution of the Joint Venture in its first period of operation being modest. Members may refer to both the Standalone and the Consolidated Financial Statements, together with the respective Auditors Reports thereon, forming part of this Annual Report.

• Experienced promoter and management team;

• Quality products and a diversified product range;

• Locational advantage in Gujarat, a key industrial and pipe-manufacturing hub;

• Established sales and distribution network across India;

• New growth avenue through diversification into fire protection systems;

• Strengthened balance sheet following the preferential issue of share warrants.

• Working-capital intensive nature of the trading business;

• Exposure to volatility in steel prices and margins;

• Limited geographical reach at present;

• Sensitivity to changes in government policy and regulation.

• Sustained infrastructure, housing, water and irrigation spending in India;

• Rising demand for galvanized, structural and solar pipes;

• Fast-growing fire protection and fire-safety systems market;

• Consolidation of demand towards organised, BIS-compliant players;

• Forward integration into manufacturing and enhancement of operational efficiency and scale.

• Fluctuation in steel prices and input costs;

• Intense competition from organised and unorganised players;

• Interest-rate and working-capital pressures;

• Cyclicality of end-user demand and technological change;

• Concentration of trade receivables and the associated credit risk.

The Company delivered robust growth and improvement in both the top line and the bottom line on a standalone basis during the year under review, as summarised below:

(Rs. in lakh)

On a standalone basis, Total Revenue grew by about 29.76% to Rs. 14,942.86 lakh (previous year: Rs. 11,515.15 lakh) and Profit After Tax grew by about 27.71% to Rs. 357.74 lakh (previous year: Rs. 280.13 lakh). The Earnings Per Share (basic and diluted) for the year stood at Rs. 10.34, as against Rs. 8.10 in the previous year. During the year, the Company also strengthened its balance sheet through the preferential issue of 47,57,280 Fully Convertible Warrants, against which 25% of the issue price aggregating Rs. 1,225.00 lakh was received, strengthening the Companys shareholders funds and reducing its reliance on borrowings. The net worth of the Company (share capital and reserves and surplus, excluding the money received against share warrants) stood at Rs. 2,551.49 lakh as at March 31,2026, as against Rs. 2,193.76 lakh as at March 31,2025.

In accordance with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Schedule III to the Companies Act, 2013, the details of significant changes (i.e. changes of 25% or more as compared to the immediately previous financial year) in the key financial ratios, along with the explanations therefor, are given below:

Notes:

(i) Save for the Interest Coverage Ratio at Sr. No. 12, which is not separately disclosed in the audited financial statements and has been computed as earnings before interest and tax divided by finance costs (subject to the Companys confirmation), the ratios above are as disclosed in the audited standalone financial statements for the financial year ended March 31,2026; the corresponding ratios on a consolidated basis are disclosed in the notes forming part of the Consolidated Financial Statements,

(ii) Earnings Before Interest and Taxes (EBIT) for the Return on Capital Employed has been computed by adding the finance cost to the profit before tax.

(iii) The Net Profit Ratio is computed as Profit After Tax to Turnover,

(iv) Members may refer to the notes forming part of the audited financial statements for the detailed computation.

The Company is engaged in a single reportable business segment, namely the trading of pipes and agricultural machinery and equipment, and accordingly no separate segment information is presented in the financial statements in terms of Accounting Standard (AS) 17 — “Segment Reporting”. The product-wise composition of the revenue from operations for the year is set out below:

(Rs. in lakh)

The revenue attributable to the fire protection systems business, carried on through the Joint Venture, is not included in the standalone figures above; the Companys share of the revenue from operations of the Joint Venture for the year was Rs. 39.58 lakh, which is included in the Consolidated Financial Statements.

The Company expects the demand environment for steel pipes and tubes to remain supportive over the medium term, underpinned by sustained public and private capital expenditure on infrastructure, water supply and irrigation, housing, and solar and renewable energy structures, and by the progressive consolidation of demand towards organised and BIS-compliant suppliers. Against this backdrop, the Companys priorities for the coming year are

(i) the completion and commissioning of the manufacturing infrastructure in respect of which capital work-in-progress of Rs. 632.50 lakh stood capitalised as at March 31,2026, thereby enabling a measure of forward integration and margin improvement;

(ii) the scaling up of the fire protection systems business through the Joint Venture and the leveraging of the trade secrets, technical know-how and business contact networks acquired during the year;

(iii) the widening of the geographical footprint of the distribution network; and

(iv) the continued strengthening of the balance sheet, including through the conversion of the outstanding Fully Convertible Warrants. The Company will continue to monitor steel-price volatility, working-capital intensity and the concentration of trade receivables, which remain the principal risks to this outlook.

The Company has in place a proper system of internal control which is commensurate with the size and nature of its business. The Company has an Audit Committee headed by an Independent Director, inter alia, to oversee the Companys financial reporting process, the disclosure of financial information and the review of the performance of the auditors. The internal control systems are periodically reviewed and strengthened to ensure the reliability of financial reporting, the safeguarding of assets, compliance with applicable laws and the orderly conduct of business. The Statutory Auditors have expressed an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting as at March 31,2026.

The Company considers its employees to be its most valuable asset and recognises that its people have been the driving force behind its growth and expansion. The Company had 45 permanent employees on its rolls as at March 31, 2026, and continues to invest in creating opportunities and building capability without compromising on meritocracy. The employee benefits expense for the year increased to Rs. 129.11 lakh on a standalone basis, from Rs. 76.46 lakh in the previous year, reflecting the expansion in the workforce. During the year, the average increase in the remuneration of employees other than the managerial personnel was approximately 29.84%, and the median remuneration of employees rose by approximately 19.42% on account of the change in the composition of the workforce during the year. Industrial relations during the year under review remained cordial.

The contents of this Management Discussion and Analysis may contain “forward-looking statements” including, but without limitation, statements relating to the implementation of strategic initiatives and other statements relating to the Companys future business developments and economic performance. While these forward-looking statements indicate the Companys assessment and future expectations concerning the development of its business, several risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from these expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, commodity and steel-price movements, competitive pressures, technological developments and other key factors that could affect the Companys business and financial performance. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect future or likely events or circumstances.