SRU Steels Ltd Management Discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

Global Growth:

• The world economy grew at an estimated 2.6% in FY 2024-25, according to the latest World Bank and IMF projections.

• Advanced economies registered subdued expansion of about 1.5%, while emerging market and developing economies grew by 4% on average.

• Chinas growth moderated yet remained solid, while the U.S. and Eurozone were slow, reflecting persistent global headwinds and elevated interest rates.

• Global trade volumes remained weak, and cross-border investment decelerated amid ongoing trade tensions and policy uncertainties.

Inflation:

• Global inflation continued its declining trend, falling to about 5.9% in 2024, though still above pre-pandemic averages. Advanced economies saw faster declines in inflation, approaching central bank targets sooner than emerging and developing economies.

• Tight monetary policy and unwinding of supply bottlenecks contributed to lower inflation readings in major economies, but core inflation, especially in the service sector, eased only gradually.

Risks & Policy Backdrop:

• Resuming geopolitical pressures, high interest rates, and frequent policy shifts contributed to global economic fragility and moderated growth momentum.

• The World Bank described the 2024-25 global environment as a “precarious moment,” though resilience persisted with no systemic financial crisis.

• Governments in advanced and large developing economies remained focused on price stability and prudent fiscal management through late FY 2024-25.

B. INDIAN ECONOMY OVERVIEW (FY 2024-25)

• India retained its position as the fastest-growing major economy in the world.

• GDP growth for FY 2024-25 was estimated between 6.4% and 7.0%.

• The IMF and official estimates placed growth at the upper end, revising earlier forecasts upward as domestic demand outperformed expectations.

• Growth was bolstered by strong public investment in infrastructure, rebounding rural consumption, robust services exports, and a pickup in private spending.

• Inflation fell sharply, reaching 2.8% in May 2025 (lowest since 2019), well within the RBIs comfort zone.

• Exports hit a record $824.9 billion in FY 2024-25, despite a subdued global environment.

• The fourth quarter (Jan-Mar 2025) saw an acceleration to 7.4% annual growth, even as the full-year rate moderated compared to the post-pandemic rebound.

• The countrys expansion was broad-based, led by construction (up 10.8% in Q4), public administration, and a strong winter harvest.

• Weakness persisted in manufacturing and private investment, but rising government expenditure and rural demand helped offset softness in urban consumption.

C. EXTERNAL ENVIRONMENT & RISKS (FY 2024-25)

• Global conditions remained fragile: trade tensions, higher energy prices, policy uncertainty, and slowdowns in major advanced economies weighed on sentiment and cross-border investment.

• India stood out as an outperformer due to its resilient domestic demand, proactive reform agenda, and export competitiveness, even as many countries experienced the slowest growth since the pandemic.

• Risks for the year ahead include US and EU monetary tightening, supply shocks to food and energy, and continued volatility in global commodity markets.

Key Table: FY 2024-25 Economic Summary

E conomy/Region	FY 2024-25 GDP Growth (%)	Inflation (%)
World	2.6	5.9
Advanced Econ.	1.5	3.0-3.2
EM & Dev. Econ.	4.0	7.0+
United States	2.0	2.7-2.9
Eurozone	1.0	2.5-2.8
China	4.8-5.0	2.0-2.3
India	6.4-7.0	2.8-5.3

D. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations are “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates; changes in the Government regulations; tax laws and other statutes and incidental factors.

INDIAN STEEL INDUSTRY

One of the primary forces behind industrialization has been the use of metals. Steel has traditionally occupied a top spot among metals. Steel production and consumption are frequently seen as measures of a countrys economic development because it is both a raw material and an intermediary product. Therefore, it would not be an exaggeration to argue that the steel sector has always been at the forefront of industrial progress and that it is the foundation of any economy. The Indian steel industry is classified into three categories - major producers, main producers, and secondary producers.

India is the worlds second-largest producer of crude steel, with an output of 125.32 MT of crude steel and finished steel production of 121.29 MT in FY23. Indias domestic steel demand is estimated to grow by 9-10% in FY25 as per ICRA.

Indias steel production is estimated to grow 4-7% to 123-127 MT in FY24. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour.

Consequently, the steel sector has been a major contributor to Indias manufacturing output.

The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels.

According to a Deloitte report the demand for steel in India is projected to grow significantly over the next decade, with annual growth rates expected to range from 5% to 7.3%.

MARKET SIZE

In the past 10-12 years, Indias steel sector has expanded significantly. Production has increased by 75% since 2008, while domestic steel demand has increased by almost 80%. The capacity for producing steel has grown concurrently, and the rise has been largely organic.

In April-December 2024, crude steel production in India stood at 110.99 MT.

In April-December 2024, finished steel production stood at 106.86 MT.

In FY25 (April-December), the consumption of finished steel stood at 111.25 MT.

In April-December 2024 exports of finished steel stood at 3.60 metric tonnes (MT), while imports stood at 7.28 MT.

In FY23, the production of crude steel and finished steel stood at 125.32 MT and 121.29 MT, respectively.

In FY24, the production of crude steel and finished steel stood at 143.6 MT and 138.5 MT, respectively.

In FY23, crude and finished steel production stood at 125.32 MT and 121.29 MT, respectively. In July 2023, crude steel production in India stood at 11.52 MT.

In FY24, the consumption of finished steel stood at 135.90 MT. The per-capita consumption of steel stood at 86.7 kgs in FY23.

In FY22, the production of crude steel and finished steel stood at 133.596 MT and 120.01 MT, respectively. The consumption of finished steel stood at 105.751 MT in FY22. In FY23, the consumption of finished steel stood at 119.17 MT. In April-July 2022, the production of crude steel and finished steel stood at 40.95 MT and 38.55 MT, respectively.

In FY23, exports and imports of finished steel stood at 6.7 MT and 6.02 MT, respectively. In FY22, India exported 11.14 MT of finished steel. In April 2024 exports of finished steel stood at 5.1 lakh metric tonnes (LMT), while imports stood at 5.9 LMT.In FY24, the exports and imports of finished steel stood at 7.49 MT and 8.32 MT, respectively.

The annual production of steel is anticipated to exceed 300 million tonnes by 2030-31. By 2030-31, crude steel production is projected to reach 255 million tonnes at 85% capacity utilisation achieving 230 million tonnes of finished steel production, assuming a 10% yield loss or a 90% conversion ratio for the conversion of raw steel to finished steel. With net exports of 24 million tonnes, consumption is expected to reach 206 million tonnes by the years 2030-1931. As a result, it is anticipated that per-person steel consumption will grow to 160 kg.

• The steel industry and its associated mining and metallurgy sectors have seen major investments and developments in the recent past.

• According to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT), between April 2000-September 2024, Indian metallurgical industries attracted FDI inflows of Rs. 1,10,062 crore (US$ 18.06 billion).

• In FY22, demand for steel was expected to increase by 17% to 110 million tonnes, driven by rising construction activities.

Some of the major investments in the Indian steel industry are as follows:

• India and Japan held the third Steel Dialogue on Feb 4, 2025, in New Delhi, discussing economic trends, steel trade, and industry developments. India highlighted policy initiatives, green steel efforts, and investment opportunities for Japan.

• In February 2025, during the Bengal Global Business Summit, about 50% of the Rs. 26,000 crore (US$ 3.02 billion) investment proposals received by Jharkhand government in Kolkata pertain to the steel sector.

• In February 2025, JSW Group announced a Rs. 1,00,000 crore (US$ 11.60 billion) investment to set up a 25 MT steel plant in Maharashtras Gadchiroli district over seven to eight years. The project, expected to be the worlds largest and most eco-friendly, will drive economic growth and job creation in Vidarbha.

• In February 2024, The JSW Group is set to build a steel plant in Jagatsinghpur, Odisha, with an investment of US$ 7.8 billion (Rs. 65,000 crore). The plant will have a production capacity of 13.2 million tons of steel per year and is expected to create 30,000 jobs.

• In February 2024, JSW Steel plans to establish a joint venture with Japans JFE Steel Corporation in a 50:50 partnership to invest US$ 661.9 million (Rs. 5,500 crore) in setting up a plant in Karnataka.

• In January 2024, according to Mr. Lakshmi Mittal, Gujarat will host the worlds largest steel manufacturing site by 2029 at the Vibrant Gujarat Summit.

• In November 2023, Steel Secretary Mr. Nagendra Nath Sinha said that Indias steel capacity has crossed 161 million tonnes (MT), and the industry is poised for continuous growth.

• In October 2023, Government e-Marketplace, the national public procurement platform, signed a memorandum of understanding (MOU) with the Indian Steel Association (ISA). This partnership intends to bring all ISA members onto the GeM platform as sellers, promoting a diverse business environment regardless of their size.

• In July 2023, Union Minister Mr. Jyotiraditya Scindia announced that Japan is eager to invest ? 5 trillion (US$ 36 billion), in various sectors in India, including steel.

• As announced in May 2023, INOX Air Products will invest Rs. 1,300 crore (US$ 157.5 million) to set up two air separation units having a capacity of 1,800 tonnes a day each at Tata Steels plant in Dhenkanal, Odisha.

• In May 2023, the industry body Indian Steel Association (ISA) announced signing an agreement with the ASEAN Iron and Steel Council (AISC) to unlock new avenues of growth and sustainability in the steel sector.

• Mr. Jyotiraditya M. Scindia, the Union Minister of Steel, and Mr. Nishimura Yasutoshi, the Minister of Economy, Trade, and Industry of Japan, held a bilateral meeting on July 20, 2023, in New Delhi to discuss collaboration in the steel sector and issues relating to decarbonisation.

• AMNS India is planning to spend US$ 7.4 billion on expanding capacity and increasing its value-added investments in both its upstream and downstream capacities and enhancing its iron ore capabilities.

• In May 2023, JSW Steel and JFE Steel, signed an agreement to set up a JV company to manufacture the entire range of cold rolled grain-oriented electrical steel (CRGO) products at Vijaynagar in Karnataka.

• In April 2023, AMNS India, a joint venture between ArcelorMittal and Nippon Steel, received approval from Indias regulatory body (NCLT) to acquire Indian Steel Corporation.

• Tata Steel in April 2023 informed that it has signed an agreement with A&B Global Mining to harness new business development opportunities and deliver mine technical services. The steel major will closely work with ABGM India which will interface with their South African entity to explore business opportunities in India and abroad besides utilising each others technical and strategic strengths to deliver projects across the mining and metals, including the steel value chain.

• 67 applications from 30 companies have been selected under the Production Linked Incentive (PLI) Scheme for Specialty Steel. This will attract committed investment of Rs. 42,500 crore (US$ 5.19 billion) with a downstream capacity addition of 26 million tonnes and employment generation potential of 70,000.

• In September 2022, Steel Authority of India Limited (SAIL), a Maharatna PSU, supplied 30,000 tonnes of the entire DMR grade specialty steel for the nations first indigenously built Aircraft Carrier INS Vikrant.

• In August 2022, Tata Steel signed an MoU with Punjab Government to set up a steel scrap based electric arc furnace steel plant.

• In May 2022, Tata Steel announced a CAPEX of Rs. 12,000 crore (US$ 1.50 billion). GOVERNMENT INITIATIVE

Some of the other recent Government initiatives in this sector are as follows:

• The Union Ministry of Steel launched PLI Scheme 1.1 on January 6, 2025, with a Rs. 6,322 crore (US$ 733.40 million) outlay to boost specialty steel production and attract investments. Covering five key product categories, the scheme eases norms to reduce imports, enhance domestic manufacturing, and improve energy efficiency, with applications open until January 2025.

• In February 2024, the government has implemented various measures to promote self-reliance in the steel industry.

• In October 2021, the government announced guidelines for the approved specialty steel production- linked incentive (PLI) scheme.

• In October 2021, India and Russia signed an MoU to carry out R&D in the steel sector and produce coking coal (used in steel making).

• In July 2021, the Union Cabinet approved the Production Linked Incentive (PLI) scheme for specialty steel. The scheme is expected to attract investment worth ~Rs. 400 billion (US$ 5.37 billion) and expand specialty steel capacity by 25 million tonnes (MT), to 42 MT in FY27, from 18 MT in FY21.

• In June 2021, Minister of Steel & Petroleum & Natural Gas, Mr. Dharmendra Pradhan addressed the webinar on Making Eastern India a manufacturing hub with respect to metallurgical industries, organised by the Indian Institute of Metals. In 2020, Mission Purvodaya was launched to accelerate the development of the eastern states of India (Odisha, Jharkhand, Chhattisgarh, West Bengal, and the northern part of Andhra Pradesh) through the establishment of an integrated steel hub in Kolkata, West Bengal. Eastern India has the potential to add >75% of the countrys incremental steel capacity. It is expected that of the 300 MT capacity by 2030-31, >200 MT can come from this region alone.

• In June 2021, JSW Steel, CSIR-National Chemical Lab (NCL), Scottish Development International (SDI) and India H2 Alliance (IH2A) joined forces to commercialise hydrogen in the steel and cement sectors.

• Under the Union Budget 2023-24, the government allocated Rs. 70.15 crore (US$ 8.6 million) to the Ministry of Steel.

• In addition, an investment of Rs. 75,000 crore (US$ 9.15 billion) (including Rs. 15,000 crore (US$ 1.83 billion) from private sources) has been allocated for 100 critical transport infrastructure projects for last and first mile connectivity for various sectors such as ports, coal, and steel.

• In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India-Japan Steel Dialogue.

• The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as it intends to create a globally competitive steel industry in India. NSP 2017 envisage 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.

• The Ministry of Steel is facilitating the setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs. 200 crore (US$ 30 million).

• The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.

AGRICULTURE INDUSTRY

INTRODUCTION

India is one of the major players in the agriculture sector worldwide and it is the primary source of livelihood for ~55% of Indias population. India has the worlds largest cattle herd (buffaloes), the largest area planted for wheat, rice, and cotton, and is the largest producer of milk, pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. The agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the countrys population. Thus, farmers become an integral part of the sector to provide us with a means of sustenance.

The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food processing industry accounts for 32% of the countrys total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

MARKET SIZE

According to Inc42, the Indian agricultural sector is predicted to increase to US$ 24 billion by 2025. Indian food and grocery market is the worlds sixth largest, with retail contributing 70% of the sales. The first advance estimate for FY25 indicated a food grain production of around 165 million metric tons. In FY24, India produced over 332 million metric tons of food grains.

The total Kharif foodgrain production for 2024-25, according to the First Advance Estimates, is projected at 1647.05 Lakh Metric Tonnes (LMT), marking an increase of 89.37 LMT from the previous year and 124.59 LMT above the average Kharif foodgrain production.

Rabi crop area has from 709.09 lakh hectares in 2022-23 to 709.29 lakh hectares in 2022-23.

In 2022-23 (as per the second advance estimate), Indias horticulture output is expected to have hit a record 351.92 million tonnes (MT), an increase of about 4.74 million tonnes (1.37%) as compared to the year 2021-22.

The Agriculture and Allied industry sector witnessed some major developments, investments, and support from the Government in the recent past. Between April 2000-September 2024, FDI in agriculture services stood at Rs. 26,836 crore (US$ 3.11) billion.

ccording to the Department for Promotion of Industry and Internal Trade (DPIIT), the Indian food processing industry has cumulatively attracted a Foreign Direct Investment (FDI) equity inflow of about Rs. 1,11,831 crore (US$ 12.96 billion) between April 2000-September 2024. This accounts for 1.83% of total FDI inflows received across industries.

During 2024-25 (April-May), processed vegetables accounted for US$ 122.91 million, miscellaneous processed items accounted for US$ 302.07 million and processed fruits & juices accounted for US$ 143.51 million.

Indias exports of agricultural and processed food products rose by more than 11% YoY to Rs. 1,54,314 crore (US$ 17.77 billion) during April-December of FY25.

Rapid population expansion in India is the main factor driving the industry. The rising income levels in rural and urban areas, which have contributed to an increase in the demand for agricultural products across the nation, provide additional support for this. In accordance with this, the market is being stimulated by the growing adoption of cutting-edge techniques including blockchain, Artificial Intelligence (AI), geographic information systems (GIS), drones, and remote sensing technologies, as well as the release of various e-farming applications.

In terms of exports, the sector has seen good growth in the past year. Indias agricultural exports stood at US$ 26.41 billion in FY25 (April-December).

INVESTEMENT

Some major investments and developments in agriculture are as follows:

• In December 2023, NBCC signed an MoU with the National Cooperative Development Cooperation (NCDC) and NABARD for the construction of (1,469-grain storage units) the worlds largest grain storage plan in the cooperative sector.

• India to host the 27th WAIPA World Investment Conference in New Delhi from December 11-14, 2023.

• In December 2023, Tata-owned Rallis India launched NAYAZINC fertilizer.

• In December 2023, NITI Aayog and IFPRI signed a Statement of Intent to strengthen policy frameworks for agricultural transformation and rural development.

• In November 2023, India signed deals to export 5,00,000 tons of new season basmati rice in Europe and the Middle East.

• In October 2023, the President of India launched the Fourth Krishi Road map of Bihar.

• In October 2023, Coal India, partnered to invest Rs. 3,095 crore (US$ 371.69 million) in fertiliser JV to boost output.

• Government has set up a special fund called the Food Processing Fund (FPF) of approximately US$ 265 million in the National Bank for Agriculture and Rural

Development (NABARD) for extending affordable credit to designated food parks and food processing enterprises in the designated food parks.

• In June 2023, Mother Dairy invested Rs. 400 crore (US$ 48.33 million) to set up a unit in Nagpur.

• In 2022, the Government of India is planning to launch Kisan Drones for crop assessment, digitization of land records, and spraying of insecticides and nutrients.

• In October 2022, Prime Minister Mr. Narendra Modi inaugurated PM Kisan Samman Sammelan 2022 and released PM-KISAN Funds worth Rs. 16,000 crore (US$ 1.93 billion).

• In August 2022, a Special Food Processing Fund of Rs. 2,000 crore (US$ 242.72 million) was set up with National Bank for Agriculture and Rural Development (NABARD) to provide affordable credit for investments in setting up Mega Food Parks (MFP) as well as processing units in the MFPs.

• In August 2022, Mr. Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare inaugurated 4 new facilities at the Central Arid Zone Research Institute (CAZRI), which has been rendering excellent services for more than 60 years under the Indian Council of Agricultural Research (ICAR).

• Consumer spending in India will return to growth in 2022 post the pandemic-led contraction, expanding by as much as 7%.

• The organic food segment in India is expected to grow at a CAGR of 10% during 2015--25 and is estimated to reach Rs. 75,000 crore (US$ 9.1 billion) by 2025 from Rs. 2,700 crore (US$ 386.32 million) in 2015.

GOVERNMENT INITIATIVES

Some of the recent major Government initiatives in the sector are as follows

• The budget for Department of Agriculture and Farmers Welfare increased to Rs. 21,933.50 crore (US$ 2.53 billion) in 2013-14 and further advanced to Rs. 1,22,528.77 crore (US$ 14.13 billion) in 2024-25, reflecting the governments commitment to agricultural development.

• In the Union Budget 2024-25, a provision of Rs. 1.52 lakh crore (US$ 18.26 billion) has been made for agriculture and allied sector.

• As per the Economic Survey 2024-25, for FY25, the MSP for arhar and bajra has been increased by 59% and 77% over the weighted average cost of production, respectively. Moreover, the MSP for Masur has risen by 89%, while rapeseed has seen an impressive increase of 98%.

• As per the Economic Survey 2024-25, since FY16, the government has implemented the Per Drop More Crop initiative under PMKSY, covering 95.58 lakh hectares by December 2024 with Rs. 21,968.75 crore (US$ 2.57 billion) released to states for micro-irrigation, offering 55% subsidy to small/marginal farmers and 45% to others. From 2018 to 2024, loans worth Rs. 4,709 crore (US$ 551 million) were approved under the Micro Irrigation Fund (MIF), with Rs. 3,640 crore (US$ 426.5 million) disbursed, supported by a 2% interest subvention to states.

• In January 2024, The Ministry of Food Processing Industries has approved the following under the corresponding component schemes of PMKSY: 41 Mega Food Parks, 399 Cold Chain projects, 76 Agro-processing Clusters, 588 Food Processing Units, 61 Creation of Backward & Forward Linkages Projects, and 52 Operation Green projects.

• In the Union Budget 2023-24:

o Rs. 1.24 lakh crore (US$ 15.9 billion) has been allocated to the Department of Agriculture, Cooperation and Farmers Welfare.

o Rs. 8,514 crore (US$ 1.1 billion) has been allocated to the Department of Agricultural Research and Education.

• Through several Digital Initiatives, such as the National e-Governance Plan in Agriculture (NeGP-A), the construction of Digital Public Infrastructure (DPI), digital registries, etc., the government has taken a number of steps to ensure access to IT across the nation.

• The Soil Health Card site has been updated and connected with a Geographic Information System (GIS) system, allowing all test results to be captured and shown on a map. Samples are now being gathered using a mobile application as of April 2023 under the new system.

• The Agricultural Technology Management Agency (ATMA) Scheme has been implemented in 704 districts across 28 states and 5 UTs to educate farmers. Grants-in-aid are released to the State Government under the scheme with the goal of supporting State Governments efforts to make available the latest agricultural technologies and good agricultural practices in various thematic areas of agriculture and allied sector.

• Since its inception, i.e. from 01.04.2001 to 31.12.2022, a total of 42,164 storage infrastructure projects (Godowns) with a capacity of 740.43 Lakh MT have been assisted in the country under the Agricultural Marketing Infrastructure (AMI) sub-scheme of the Integrated Scheme for Agricultural Marketing (ISAM).

• The Centre has granted permission to 5 private companies to conduct cluster farming of specified horticulture crops on approximately 50,000 hectares on a trial basis, with a total investment of Rs. 750 crore (US$ 91.75 million). The 5 companies chosen through a bidding process for the pilot cluster farming program are Prasad Seeds, FIL Industries, Sahyadri Farms, Meghalaya Basin Management Agency.

• 27,003 Loans have been sanctioned in the country under credit linked subsidy component of the PM Formalisation of Micro Food Processing Enterprises Scheme (PMFME).

FOOTWEAR INDUSTRY INDIA FOOTWEAR MARKET OVERVIEW

The India footwear market has been witnessing robust growth, driven by rising urban demand and the increasing middle class. India is the second-largest producer and consumer of footwear globally, with a projected production of nearly 3 billion units by 2024. Brands like Bata and Liberty lead the way in eco-friendly innovations and increasing product offerings. Footwear consumption per capita has increased from 1.7 pairs in 2016 to 2.3 pairs in 2021, reflecting growing demand. Indias major production hubs, including Tamil Nadu, Uttar Pradesh, and Maharashtra, ensure a steady supply to meet the demand. MSMEs make up over 95% of production units, contributing significantly to employment. With a workforce of approximately 1.10 million people in the footwear manufacturing industry, India is well-positioned as a global leader. The countrys footwear exports, including casual shoes, sandals, boots, and moccasins, constitute a large share of global trade, with major markets in the USA, Germany, and the UAE. The Indian government has played a crucial role in stimulating market growth through policies like de-licensing and de-reservation, which have allowed for modern production capabilities. Additionally, initiatives such as 100% Foreign Direct Investment (FDI) in the footwear sector and the establishment of Footwear Complexes and Component Parks have bolstered competitiveness, attracting external investments and enhancing the countrys cost advantage.

Indias Footwear Revolution: From Production Powerhouse to Export Giant

India is a key player in the global leather and footwear industry, ranking as the second-largest producer and consumer of footwear and the fourth-largest exporter of leather goods. The country contributes approximately 13% of global leather production, with 3 billion square feet produced annually. Indias leather sector benefits from access to 21% of the worlds cattle and buffalo, providing a steady supply of raw materials. Employment in the industry is significant, with over 4 million workers, including a large percentage of women in leather product manufacturing.

Indias footwear production is expected to reach nearly 3 billion units by 2024, growing at an 8% CAGR. Non-leather footwear is expanding, contributing 90% to the India footwear market. The

India Footwear industry is dominated by MSMEs, with key production hubs in Tamil Nadu, Andhra Pradesh, and West Bengal. In 2023-24, Indias leather and footwear exports totaled USD 4.68 billion, with footwear accounting for 47% of this share. Major export markets include the USA, Germany, and the UAE, reflecting Indias increasing footprint in the global market.

In January 2023, footwear production decreased by 2.6% compared to January 2022, with 17.43 million pairs produced. February 2023 also saw a 5% decline in production year-over-year, with 17.17 million pairs produced. Cumulatively, from April to February 2023, total footwear production decreased by 10.5%, amounting to 178.22 million pairs. The production trend over the past five financial years shows consistent declines, reflecting broader challenges in the industry. Key market factors contributing to this reduction may include supply chain disruptions and shifts in consumer demand in the India footwear market.

The Rise of Indias Footwear Industry: Investment Insights and Market Trends

The India footwear sector is witnessing significant growth, fuelled by reforms such as de-licensing and de-reservation, which have enabled expansion through modern production facilities and advanced machinery. The Indian government has permitted 100% Foreign Direct Investment (FDI) in the footwear sector, attracting global players.

For instance, Taiwans Pou Chen Group has pledged an investment of Rs.2,302 crores to establish a manufacturing facility in Tamil Nadu, creating 20,000 job opportunities over the next 12 years. Additionally, the Hong Fu Group has invested Rs.10 billion in the region. These foreign investments reflect the sectors robust growth, with an increasing number of ongoing projects between 2018 and 2023, Signaling a positive outlook for the India footwear industry and the Indian economy. This trend positions India as a growing global leader in footwear production and export.

Investment Trends in Indian Footwear Industry in the last 5 years

Year	Projects under implementation		Projects outstanding
	Cost Rs. Million	Project Count	Cost Rs. Million	Project Count
2018-19	250	1	852.8	3
2019-20	1,213.20	2	1,463.20	3
2020-21	1,813.20	2	5,313.20	3
2021-22	313.2	1	24,113.20	9
2022-23	20,313.20	4	80,402.50	16

Challenges and Growth Barriers in Indias Footwear Industry

The Indian footwear markets on the brink of major growth, but several challenges may hinder its potential. One key challenge is the stagnation in production capacity, presently at around 2.2 billion pairs annually. This stagnation is mostly due to policies that prioritize SME businesses, combined with a heavy tax burden on the organized industry, which has suppressed the industrys growth. This issue poses a possible threat to the exchequer, as Indias existing production capacity is insufficient to meet future demand. As demand for footwear increases, India could become heavily reliant on imports, mainly from China, which benefits from a well-organized industry, ample production capacity, and low production costs. If Indias per capita demand for footwear scopes the current average of developed markets by 2032, domestic production at present levels would only be able to meet 25 per cent of the demand, possibly resulting in an annual forex loss of around USD 55 billion due to imports.

Rising Trends and Opportunities in the Indian Footwear Market

Footwear market in India has been experiencing dynamic growth focused by various emerging trends and opportunities. One major trend is the rise in demand for athleisure and sports footwear, as consumers progressively prioritize health, comfort, and style. This shift is inducing brands to expand their product helps and innovate with technology-driven features, like fitness tracking. Another significant trend is the rising prominence on sustainability, with consumers obtaining ecofriendly and properly produced footwear. This shift presents opportunities for brands to adopt environmental practices, use recyclable materials, and accelerate transparency in their supply chains. Additionally, growing digital platforms is transforming how consumers shop for footwear, indicating to increased online sales and the need for a strong digital presence. As disposable incomes rise and growth go faster, there is also a growing India Footwear market for premium and fashion-forward footwear. Brands that can essentially capitalize on these trends by focusing on sustainability, innovation, and digital engagement are well-positioned to follow in the increasing Indian footwear market.

CONSTRUCTION INDUSTRY

Indias construction sector stands as 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 major focus areas for both the government and the private sector. Logistics and warehousing have emerged as critical components within Indias construction sector, driven by rapid urbanization and the need for efficient supply chain networks. According to NAREDCO and Knight Franks Report, Indias warehousing market is expected to see potential demand for 159 Mn square feet by 2047, with an annual compound growth rate of 4%. The e-commerce and manufacturing industries fuel this growth by driving investments in logistics parks, industrial corridors, and modern warehousing facilities across the country. Indias real estate sector is also set to expand significantly, with projections indicating it could reach $5.8 Tn by 2047, contributing 15.5% to the total economic output.

In the fiscal year 2024-25, the government has bolstered its capital expenditure by 11.1% to $133 Bn, equivalent to 3.4% of the GDP. Such investments are poised to catalyze growth within the construction sector, fostering the development of modern infrastructure nationwide.

Furthermore, government initiatives like the Pradhan Mantri Awas Yojana-Urban (PMAY-U) have marked significant progress by sanctioning 1.18 Cr houses, with 86.6 lakh completed and 1.15 Cr grounded for construction as of September 10, 2024. This initiative aims not only to alleviate urban housing shortages but also to enhance living standards across the country.

Sustainable development remains a key focus within Indias construction sector, with government entities and private developers increasingly adopting green building practices and energy-efficient technologies. Initiatives like promoting green buildings aim to reduce environmental impact, enhance energy efficiency, and foster sustainable urban development. These practices not only contribute to environmental conservation but also align with global climate goals.

Indias construction sector is poised for substantial growth, supported by significant government initiatives, robust investments in logistics and warehousing infrastructure, and a steadfast commitment to sustainable development. The sectors role in enhancing infrastructure, facilitating urbanization, and driving economic growth underscores its critical importance in Indias broader economic strategy. The trajectory of Indias construction sector reflects its integral role in shaping the countrys economic landscape. With ongoing initiatives like PMAY-U, HRIDAY, etc. substantial investment commitments, a focus on sustainability through green building practices, and advancements in logistics and warehousing infrastructure, the sector is not only meeting current infrastructure demands but also setting the stage for long-term economic resilience and sustainable urban development across the nation.

OPPORTUNITIES IN STEEL INDUSTRIES

Railways	Oil and gas	Power	Rural India
> As on January 2023, 41 indigenously designed, semi-high speed Vande Bharat Express trains are in operation In 20242025, the goal is to upgrade 40,000 conventional rail bogies to meet the Vande Bharat standards.	> Indias primary energy consumption of oil and gas is expected to increase to 10 mbpd and 14 bcfd, respectively, by 2040.	> India aims to boost non fossil fuel electricity generation to over 500,000 MW by 2030, with a transmission plan for integrating 500,000 MW of renewable energy capacity by the same year.	> Policies like Pradhan Mantri Awa Yojana and Pradhan Mantri Gram Sadak Yojana are driving growing demand for steel in rural India.
> Introduction of high-speed bullet trains and metro trains will increase steel usage.	> This would lead to an increase in demand of steel tubes and pipes, providing a lucrative opportunity for the steel industry.	> This will lead to enhancement in both transmission and distribution capabilities, thereby raising steel demand from the sector.	> In FY21, per capita consumption of steel in rural India was estimated to be between 21.5 kgs.
> Gauge conversion, setting up of new lines and electrification would drive demand for steel.	> According to OPEC, Indias oil demand in 2024 is projected to be at 5.59 million barrels per day (b/d), up from 5.37 million b/d in 2023, resulting in a growth of 4.1%.
> The Indian Railways is planning to procure over 11 lakh tons of steel from the Steel Authority of India Limited (SAIL) for track renewal and laying new lines across the country

OPPORTUNITIES IN AGRICULTURE, CONSTRUCTION AND FOOTWEAR INDUSTRIES

Agriculture Industry	Construction Industry	Footwear Industry
1. Agri-tech adoption - Precision farming and IoT	1. Urban infrastructure boom - Government	1. Rising middle-class demand - Increased
can boost productivity and reduce costs.	projects fuel demand for construction services.	disposable income boosts branded footwear sales.
2. Export growth - Rising global demand for organic and processed farm products.	2. Affordable housing need - Growing urban population drives low-cost housing projects.	2. E-commerce growth - Online platforms expand market reach and customer base.
3. Government support - Subsidies and schemes improve farmer income and infrastructure.	3. Public-private investments - PPPs open new avenues for large-scale development.	3. Manufacturing shift to Asia - Global brands source more from India and Southeast Asia.
4. Sustainable farming - Ecofriendly practices attract funding and global interest.	4. Green building trends - Demand rises for energy- efficient, sustainable construction.	4. Sustainable fashion - Ecoconscious consumers drive demand for green products.

THREATS IN STEEL, AGRICULTURE, CONSTRUCTION AND FOOTWEAR INDUSTRIES

Steel Industry	Agriculture Industry	Construction Industry	Footwear Industry
1. Raw material price volatility - Fluctuating iron ore and coal prices impact profitability.	1. Climate risks - Unpredictable weather patterns reduce crop yields.	1. Raw material cost hikes - Volatile prices of cement and steel squeeze margins.	1. Intense market competition - Heavy discounting and new entrants erode margins.
2. Global overcapacity - Excess production from countries like China creates pricing pressure.	2. Price instability - Volatile commodity prices impact farmer earnings.	2. Approval delays - Bureaucratic red tape slows project execution.	2. Import reliance - Raw material shortages and costs rise with global disruptions.
3. Environmental regulations - Stricter emission norms increase compliance costs and cap output.	3. Land fragmentation - Small holdings hinder modern farming techniques.	3. Labor shortages - Skilled labor scarcity affects productivity and timelines.	3. Counterfeit goods - Fake products damage brand image and reduce revenue.
4. High energy consumption - Energy-intensive processes lead to higher operating costs and carbon penalties.	4. Monsoon dependence - Lack of irrigation infrastructure increases crop failure risk.	4. High interest rates - Costly financing reduces buyer affordability and demand.	4. Fast-changing trends - Rapid style shifts cause inventory risks and markdowns.

RISK AND CONCERNS STEEL, AGRICULTURE, CONSTRUCTION AND FOOTWEAR INDUSTRIES.

Steel Industry	Agriculture Industry	Construction Industry	Footwear Industry
1. Raw material supply risk - Dependency on imported iron ore and coking coal poses supply and cost challenges.	1. Weather dependency - Monsoon failure or extreme climate events can cause severe crop loss.	1. Project delays - Land acquisition, regulatory approvals, and supply chain issues slow execution.	1. Changing consumer preferences - Rapid fashion trends require agile production and inventory control.
2. Environmental compliance - Stricter pollution norms may require costly technology upgrades.	2. Market price fluctuations - Unstable commodity prices affect income and planning for farmers.	2. Cost escalation - Sudden increase in material or labor costs can lead to budget overruns.	2. Brand dilution - Counterfeits and parallel imports can damage brand reputation and trust.
3. Cyclical demand - Steel demand fluctuates with economic cycles, impacting capacity utilization.	3. Input cost inflation - Rising prices of seeds, fertilizers, and pesticides reduce profitability.	3. Credit and liquidity risks - Dependence on external funding exposes companies to interest rate and cash flow pressures.	3. Supply chain disruptions - Delays or cost hikes in raw material imports can affect production schedules.
4. Global trade tensions - Antidumping duties and tariffs in export markets may limit growth.	4. Lack of infrastructure - Poor storage, transport, and irrigation facilities hamper efficiency.	4. Safety and compliance issues - Accidents, environmental violations, or regulatory noncompliance can halt projects	4. Margin pressure - Intense price competition, especially online, compresses profit margins.

SEGMENT WISE PERFORMANCE

The Company is engaged in four business segments i.e. Trading of different type of steels, Construction machinery, footwear and agriculture commodities. Further, the Company is mainly operative in the cities of Gujarat and Delhi and does not operate at any other place and therefore all the revenue and income has been generated from these geographic areas only.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Company believes in systematic working and placing appropriate internal control systems and checks. Proper checks and systems are in place and regular reviews are held by the Head of Department and Senior Management to check that the systems and controls are adhered. The reviews also prescribe changes wherever required.

SRU STEELS OPERATIONS

The Company operates four business segments i.e. Trading of different type of steels, Construction machinery, footwear and agriculture commodities. At present, the Company is trading in various types of steel products, Construction machinery, footwear and agriculture commodities as well as

sale of products on Commission basis. These sectors are witnessing intense competition from numerous players in the country.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES /INDUSTRIAL RELATIONS FRONT, INCLUDING THE NUMBER OF PEOPLE EMPLOYED.

Human resource has always been one of the most valued stakeholders and a key differentiator for SRU Steels Limited. The underlying principle is that workers and staff at all levels are equally instrumental for attaining the Companys goals. The Company strongly believes in the policy of hiring the right talent for the right position at the right time, with a focus to improve employee productivity.

SRU believes that people are the backbone of the company. The Company has meritocratic culture and provides a conducive workplace for all. Occupational health and safety of employee is ensured at all times. The company focuses on the learning and professional development of its employees. Training programmes are regularly conducted to update their skills and apprise them of latest techniques. To enable the organization to attain its full potential, it is imperative for us to create and maintain an ideal work culture thus creating an engaged and skilled workforce capable of delivering on the commitments to our stakeholders and in the process, making us ‘Future Ready- structurally, financially and culturally. Senior Management is easily accessible for counseling and redressal of grievances if any. The HR Department strives to maintain and promote harmony and co-ordination amongst Workers, Staff, and Members of the Senior Management.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANTION THEREOF

Particulars	Year 2024-25(in %)	Year 2023-24(in %)
Debtor Turnover Ratio	6.39	16.69
Inventory Turnover Ratio	7..06	7.98
Debt Equity Ratio	NA	NA
Current Ratio	116.72	20.66
Net Profit Margin Ratio	-1.81	1.77
Return on Net Worth	-1.25	2.39