Steel Authority of India Ltd Management Discussions

In terms of the Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management of Steel Authority of India Limited (SAIL) presents its Analysis Report covering the performance and outlook of the Company.

A. INDUSTRY STRUCTURE & DEVELOPMENTS

World Economic Environment

The international economic landscape in Calendar Year (CY) 2025 was heavily influenced by the trade policies of the United States. A series of escalating tari_ measures announced by the U.S. administration, followed by swift countermeasures from major global trading partners, resulted in near-universal U.S. tariffs by April, 2025. The unpredictability of these trade interventions introduced significant volatility, dampening global economic activity and obscuring the macroeconomic outlook. Consequently, the International Monetary Fund (IMF) in its April, 2025 forecast downgraded its Global GDP growth projection from 3.3% to 2.8%.

A period of targeted bilateral renegotiations followed this initial friction. In July, 2025, the U.S. and the European Union (EU) signed a trade accord that established a 15% tari_ ceiling on most EU exports, down from the previous 25% baseline. In return, the EU lowered selected tari_ barriers for U.S. goods and committed to executing investments valued at USD 600 billion within the U.S. by 2029.

Conversely, trade relations between the U.S. and China experienced more severe friction. By April, 2025, U.S. tariffs on designated Chinese categories peaked at 74%, which prompted China to implement retaliatory tariffs reaching up to 125%. This impasse was partially resolved in October, 2025 through a bilateral trade agreement that initiated reciprocal tari_ reductions.

Despite these widespread trade disruptions, the Global economy demonstrated stronger structural resilience throughout CY2025 than initial risk models predicted. Acknowledging this steady momentum, the IMF revised its CY2025 global economic growth estimate upward to 3.5% in its July, 2026 World Economic Outlook Update. In parallel, the Organisation for Economic Co-operation and Development (OECD) confirmed CY2025 global growth at 3.4% in its June, 2026 reporting, reflecting robust underlying macroeconomic fundamentals.

Global Real GDP Growth Projections (%)

	CY2025	CY2026	CY2027
	(Actual)	(Projected)	(Projected)
IMF Outlook	3.5	3.0	3.4
OECD Outlook	3.4	2.8	3.1

During CY2025, the U.S. economy expanded by 2.1%, the Euro Area generated a modest 1.4% GDP expansion, and China recorded a 5.0% growth rate.

	Actual	Projections
	2025	2026	2027
World Output	3.5	3.0	3.4
Advanced	1.9	1.7	1.8
Economies
United States	2.1	2.3	2.2
Euro Area	1.4	0.9	1.2
Japan	1.1	0.6	0.7
Emerging Market	4.5	3.8	4.5
and Developing
Economies
China	5.0	4.6	4.1
India#	7.7	6.4	6.7
Brazil	2.3	2.4	2.2
Russia	1.0	1.1	1.1

#For India, figures are on FY basis, with FY25-26(starting in April-25) shown in 2025 column

The escalation of military conflict in West Asia during February-March 2026, created new disruptions across the global economy. The temporary closure of the Strait of Hormuz directly threatened global energy shipping, as the corridor handles approximately 20% of global lique_ed natural gas (LNG) and crude oil supplies. Asian economies face direct exposure to these energy shocks; historical data from 2024 indicates that 84% of the crude oil and 83% of the LNG moving through the strait was destined for Asian markets.

The resulting rise in global energy prices increased shipping costs and led to sharp corrections across international equity markets. According to the IMF World Economic Outlook Update published in July 2026, global GDP growth for 2026 is projected at 3.0%, down slightly from the previous 3.1% forecast. This moderate slowdown reflects the negative impacts of the West Asia conflict, which are being partially offset by strong, technology-driven momentum from artificial intelligence investments and enterprise adoption. Concurrently, global headline inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026, indicating that the steady disinflation trend observed since early 2024 has stalled. However, the global financial system has navigated these shocks more effectively than initially feared. Large spikes in energy prices were mitigated by strategic inventory drawdowns, expanded production from non-Gulf oil-producing nations, and proactive demand-management policies. While global financial conditions tightened sharply in April 2026, capital markets have since stabilized. The balance of risks remains tilted to the downside, with prolonged conflict in West Asia presenting ongoing risks of commodity price volatility, supply chain disruptions, and tighter credit conditions.

Indian Economic Environment

According to the Economic Survey of India 2025-26, the domestic economy maintained strong real growth momentum, supported by stable core inflation and solid macroeconomic indicators. Indias foreign exchange reserves remained well-positioned, and export volumes showed resilience, despite the imposition of U.S. tariffs.

This strong performance led to sovereign credit rating upgrades from three international rating agencies during 2025. Notably, S&P upgraded Indias long-term sovereign rating from BBB- to BBB in August, 2025, marking the Countrys first major rating upgrade in nearly two decades. Following a revised GDP growth rate of 7.1% in FY2024-25, Indias real GDP expanded by a strong 7.4% to 7.7% during

FY2025-26, driven by domestic capital expenditure and industrial performance.

Sectoral performance on a Gross Value Added (GVA) basis at constant prices highlights balanced growth across the economy:

• Primary Sector: Encompassing Agriculture, Livestock, Forestry, Fishing, and Mining & Quarrying, the sector expanded by 3.2%, maintaining an 18% share of total GVA.

• Secondary Sector: Driven by Manufacturing, Electricity, Gas, Water Supply, and Construction, the sector grew by 8.8%, supported by an 8% structural contribution from infrastructure development.

• Tertiary Sector: Led by Trade, Hotels, Transport, Financial Services, Real Estate, and Information Technology, the services sector grew by 9.3%, remaining a primary engine of economic activity.

However, the Reserve Bank of India (RBI) noted that the escalation of the West Asia conflict poses risks to this high-growth, low-inflation "Goldilocks" phase. Citing Indias structural dependence on Crude Oil and Natural Gas imports and the vulnerability of the Strait of Hormuz, the RBI lowered its FY 2026-27 real GDP growth projection from 6.9% to 6.6%. This adjustment accounts for elevated energy prices, global supply chain disruptions, and weather-related factors. Crucially, the central bank emphasized that India entered this period of external volatility from a position of relative macroeconomic strength.

To insulate domestic consumption from external trade friction, the Government of India implemented a structural rationalization of the Goods and Services Tax (GST) framework. Further, in a major statutory update to domestic industrial governance, the Central Government fully implemented the Four Uni_ed Labour Codes on November 21, 2025. This reform consolidated 29 legacy central labour statutes into four streamlined legal frameworks: the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. In the Union Budget for FY 2026-27, Government of India, increased the capital expenditure to Rs.12.2 lakh crore from Rs.11.2 lakh crore earlier, underscoring the continued focus on infrastructure-led growth.

Domestic inflation moderated steadily throughout the year, with the Consumer Price Index (CPI) touching a historical low of 0.3% in October, 2025, well below the RBIs 4.0% midpoint target. This price stability provided room for monetary intervention. In December, 2025, the RBI reduced the Policy Repo Rate by 25 basis points to 5.25%. This adjustment balanced emerging risks—including elevated Crude prices, Currency pressure, and a variable Monsoon forecast—against the strategic need to support industrial growth. The Policy Repo Rate has been maintained at this level through subsequent oversight cycles.

Performance across Indias core industrial sectors remained moderate during the year. The Index of Industrial Production (IIP) grew by 4.1% in FY2025–26, compared to 4.0% in the prior fiscal year. However, growth across the eight core infrastructure industries moderated to 2.9%, down from 4.4% in the previous year, reflecting localized execution timelines.

Indias total exports (merchandise & services) in FY 2025-26 were US$ 860.1 bn., up by 4.2%, while total imports (merchandise & services) were US$ 979.4 bn. up by 6.4%. This led to total trade deficit of US$ 119.3 bn. which was up by 26.0% y-on-y. Share of Services in total exports increased from 47% in FY 2024-25 to 48.6% in FY 2025-26.

A wider trade deficit, capital outflows, and geopolitical disruptions caused the Indian Rupee to depreciate to INR 94.82/USD by March 29, 2026, down from INR 85.49/USD in March, 2025. To support the currency, the RBI implemented stabilization measures in June, 2026. These included expanding Foreign Portfolio Investor limits in Government Securities, easing Investment Guidelines for Non-Resident Indians (NRIs), and streamlining External Commercial Borrowing (ECB) frameworks.

Indias total Foreign Exchange Reserves reached USD 701.4 billion by January 16, 2026, up from USD 668.3 billion at the end of March, 2025. This increase occurred despite global interest rate differentials and capital flow volatility. This reserve base provides an 11-month import cover for goods and represents approximately 94% of outstanding external debt as of September, 2025, offering a solid external liquidity bu_er. Growth in the reserve base was supported by rising international gold values, stable Foreign Direct Investment (FDI) inflows, targeted RBI currency swap operations, and a balanced current account position.

World Steel Environment

Now coming to the World Steel Industry, Global Crude Steel production fell 2.0% year-on-year in CY2025 to 1,803.8 million tonnes (MT), down nearly 100 MT from the 1,904 MT recorded in CY2023. Chinas total Crude Steel output followed a similar trend, declining to 960.8 MT in CY2025, which represents a 68.1 MT reduction compared to CY2023 levels.

In June25, USA increased tariffs on all Steel imports to 50% from the earlier 25%, without any exception. Thereafter, in August25, USA further expanded its trade measures, imposing a 50% tari_ on 407 additional product categories containing Steel and Aluminum, leading to increase in US domestic steel prices, though demand remained stable. European Unions Steel industry experienced a protracted crisis caused by high energy prices, weak demand, cheap imports and tari_ disputes with US, which led to closure of number of its Steel mills. However, full implementation of the CBAM from January26 restricted Steel imports and supported prices, though demand remained poor. Moreover, from July 1, 2026, EU has implemented new measures under which total annual steel import quota volume is set at 18.34 MT which is approx. 50% of the earlier volumes, with a 50% out-of-quota duty which is double the existing duty rate of 25%. The melt-and-pour requirement will be implemented with the European Commission needing to adopt rules by 31^st August. Many EU Steel producers have plans to restart operation following EU Govt.s protectionist measures.

During CY2025, Chinese steel producers faced lower domestic infrastructure and construction demand. Fixed asset investment in Chinas real estate sector fell 17.2% over the year. Furthermore, capital allocations into regional infrastructure projects declined by 2.2%, while manufacturing investment grew by a modest 0.6%, providing limited support for domestic steel consumption.

According to the World Steel Association (WSA) April 2026 Short Range Outlook, Chinese domestic steel demand fell 7.1% year-on-year to 796 MT. This internal supply imbalance drove Chinese steel exports to a record 119 MT in CY2025. Export prices for Chinese Hot Rolled Coil (HRC) touched a five-year low of USD 445 per tonne by late May 2025. To manage high outbound volumes and stabilize international prices, the Chinese government introduced mandatory Export Licensing requirements for 300 steel product classifications, effective January 1, 2026. Beijing also committed to formal capacity limits to curb excess supply and stabilize heavy manufacturing

Global steel prices rose primarily due to government trade protections rather than an expansion in underlying demand. Supply chain pressures from the West Asia conflict in early 2026 added further upward pressure to international prices. The OECD noted that Global excess steel capacity rose to 640 MT in CY2025, with total Global steelmaking capacity reaching a new high of 2.445 billion tonnes. The largest capacity increases occurred outside OECD member countries, primarily concentrated in India, Southeast Asia, and the Middle East. The OECD Steel Committee confirmed that global steel demand has declined for four consecutive years, noting that while member trade protections are shifting volumes, their long-term impact faces challenges from tari_ circumvention. Re_ecting these rising trade frictions, 75 anti-dumping and countervailing duty investigations were initiated across the steel sector in 2025 alone.

Year	World Apparent Finished Steel Consumption (MT)
2021	1843.1
2022	1778.3
2023	1778.1
2024	1742.4
2025	1718.2

 

		Top 10 Crude Steel Producing Countries
Rank	Country	2025 (MT)	2024 (MT)	% Change
1	China	960.8	1005.1	(-)4.4
2	India	164.9	149.4	10.4
3	U.S.	82.0	79.5	3.1
4	Japan	80.7	84.0	(-)3.9
5	Russia	67.8	71.0	(-)4.5
6	S. Korea	61.9	63.6	(-)2.7
7	Turkey	38.1	36.9	3.3
8	Germany	34.1	37.2	(-)8.3
9	Brazil	33.3	33.8	(-)1.5
10	Iran	31.8	31.4	1.3
11	World	1803.8	1884.6	(-)4.3

Among major steel-producing nations, India achieved the highest growth rate in Crude Steel production, expanding output by 10.4% during CY2025.

Outlook for Steel Industry

According to the World Steel Associations April, 2026 Short Range Outlook, Global steel demand is projected to grow by a modest 0.3% in 2026 to reach 1,724 MT, before accelerating by 2.2% in 2027 to reach 1,762 MT.

The report indicates that Global steel demand is establishing a cyclical bottom over the 2025-2026 period, following a challenging phase of Global structural adjustments that has suppressed demand since 2022. The Global market is transitioning toward a modest recovery profile in 2026, with more pronounced growth projected for 2027, driven by changing regional dynamics.

In China, the rate of demand contraction is expected to slow in 2026, while consumption growth across key developing economies—led by India—remains strong. However, the ongoing conflict in West Asia is expected to lead to a sharp contraction in Middle Eastern steel demand for 2026, disrupting a region that was otherwise positioned for growth.

Steel Demand Forecasts SRO April26 Finished Steel Products

	Million T			Y-o-Y % Growth Rates
	2025	2026(f)	2027(f)	2025	2026(f)	2027(f)
EU(27) & UK	144.9	146.7	151.2	3.8	1.3	3.0
Other Europe	46.8	48.8	49.1	3.3	4.4	0.5
Russia & CIS	53.6	53.5	54.5	(-) 9.5	(-) 0.1	1.7
USMCA	128.4	131.1	134.1	(-) 1.0	2.1	2.2
Central and S. America	50.5	49.8	50.8	7.8	(-) 1.3	2.0
Africa	45.0	46.7	48.8	10.4	3.8	4.6
Middle East	61.8	57.3	62.2	3.8	(-) 7.4	8.6
Asia and Oceania	1187.2	1190.1	1211.4	(-) 3.5	0.2	1.8
World	1718.2	1724.1	1762.0	(-) 1.9	0.3	2.2
China	796.0	784.1	784.1	(-) 7.1	(-) 1.5	0

Indian Steel Outlook

India continued to lead Global growth in steel demand during FY2025-26. World Steel Association metrics confirm that India remains the worlds fastest-growing major steel market, with demand projected to expand by 7.4% in 2026 and accelerate by 9.2% in 2027. This positive outlook is supported by broad-based demand across core steel-consuming sectors. Consumption is driven by infrastructure-led construction and a growing automotive market fuelled by freight demand. Furthermore, a stable capital expenditure cycle supports demand for capital goods, while nationwide rail network expansions and demand for consumer durables provide additional structural momentum.

WSA SRO April26 - India Finished Steel Consumption

2025	2026(f)	2027(f)	2025	2026(f)	2027(f)
(MT)	(MT)	(MT)	% chg. y-on-y	% chg. y-on-y	% chg. y-on-y
159.8	171.6	187.4	8.0	7.4	9.2

FY 2025-26 marked a milestone for the Indian Steel industry, with Finished Steel Production reaching 160.94 million tonnes (MT) and Finished Steel Consumption touching 163.74 MT despite global challenges, reflecting year-on-year growth of 9.7% and 7.6%, respectively. In addition to this, the year also witnessed Finished Steel Imports reducing by 31.7% to 6.52 MT, while Finished Steel Exports rising by 35.9% to 6.60 MT.

	Finished Steel
Parameters	(MT) FY25-26	% change y-on-y
Gross Production	160.94	9.7
Imports	6.52	(-)31.7
Exports	6.60	35.9
Consumption	163.74	7.6

Domestic steel prices declined through CY2025 due to regional oversupply, high commercial inventory levels, and lower global price references, which occurred despite lower import volumes and domestic GST reductions. By the end of CY2025, domestic price indicators approached five-year lows. To address the dumping of low-cost imports and protect domestic manufacturing margins, the Government of India extended its provisional safeguard measures in December 2025, converting them into a definitive three-year duty framework. The rationalized duty structure establishes the following parameters:

• April 21, 2025 to April 20, 2026: A stable 12.0% safeguard duty baseline.

• April 21, 2026 to April 20, 2027: Adjusted down to 11.5%.

• April 21, 2027 to April 20, 2028: Concluding at 11.0% threshold.

This regulatory intervention helped stabilize domestic steel prices, which rose further in March 2026 due to supply concerns and panic buying related to the West Asia conflict, reaching a three-year high by the end of that month.

However, the regional conflict created operational challenges for domestic producers. Small and medium-sized steel enterprises relying on natural gas and scrap faced localized resource shortages. Primary integrated steel producers experienced fewer raw material disruptions due to their reliance on domestic iron ore and coal supply chains. In down-stream operations, galvanized steel producers faced temporary propane shortages. At the same time, global shipping disruptions and the depreciation of the Rupee increased landing costs for imported coking coal.

Under the "Viksit Bharat" vision, Indias Steel Policy for 2047 targets a structural production capacity of 500 MT by 2047, with an intermediate capacity milestone of 300 MT by FY2030–31. The policy emphasizes sustainable, green steel production through automation, targeted decarbonization, and reducing reliance on imported coking coal. This long-term demand is supported by the FY2026–27 Union Budget, which focuses on high-speed rail networks, inland waterway corridors, and sustained public capital expenditure.

To reinforce local supply chains, the government introduced a revised Domestically Manufactured Iron & Steel Products Policy in July 2025, mandating local sourcing preferences in state-funded procurement contracts. To encourage higher production of value-added steel, the government launched the third phase of the Specialty Steel Production-Linked Incentive (PLI) Scheme in November 2025. This phase covers 22 product sub-categories across five key segments, including strategic steel grades, commercial grades, and coated wire profiles.

Looking ahead, Indian steel exports face potential headwinds in traditional international markets. The U.S. maintains a 50% import tari_ structure under Section 232, while the full implementation of the EUs Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026, is expected to alter export economics.

Trade assessments by the Global Trade Research Initiative (GTRI) suggest that Indian exporters may need to adjust pricing by 15% to 22% to offset CBAM compliance costs for EU buyers. Furthermore, the EUs decision to lower tari_-free quotas by 47% to 18.3 MT annually and double out-of-quota duties to 50% creates additional export barriers, while the conflict in West Asia limits near-term shipping volumes to the Middle East.

To address raw material vulnerabilities, the Ministry of Coals ‘Mission Coking Coal initiative aims to double domestic coking coal production to 140 MT by FY2029–30. Coal India Limited plans to establish eight new coking coal washeries with a combined processing capacity of 21.5 million tonnes per annum (MTPA), representing an estimated capital investment of INR 3,300 crore.

Additionally, the government designated coking coal as a "Critical and Strategic Mineral" under the Mines and Minerals (Development and Regulation) Act of 1957, prioritizing regulatory approvals to strengthen the domestic steel supply chain.

During CY2025, the Russian Federation remained a primary source of Pulverized Coal Injection (PCI) supplies for India, while Australia maintained its position as a major supplier of premium hard coking coal. Domestic steel producers continue to diversify their raw material sourcing to mitigate single-supplier concentration risks.

B. RISKS AND CONCERNS

Regulatory and Operational Risks

Your Company continues to encounter a complex set of regulatory and operational challenges across its mining assets, impacting raw material security, project execution timelines, and revenue generation capabilities.

• Pending Closure of Show Cause Notices–Chiria & Gua Leases (Jharkhand) Six Show Cause Notices issued in May, 2020 for alleged violations of lease conditions, carrying a risk of lapsing are still pending, even though hearings were completed during 2021 – 2024, and final orders are yet to be issued. Production from the Topailore Lease (Gua Mines), though fully compliant, remains on hold, affecting supply to SAILs Steel Plants. The Jhillingburu-I Lease (Gua Mines), which is important for Manganese production and for setting up infrastructure for the proposed 10 MTPA Gua iron ore project, is also yet to receive final regulatory closure. The Company is continuously following up and engaging with the Government of Jharkhand to resolve the matter.

• Mining Restrictions-Chiria Iron Ore Leases

Nearly 1.4 billion tonnes of Iron Ore at Chiria remain locked as the leases (except the broken-up area of Dhobil) continue to be classified as a "No Mining Zone" under MoEFCCs approved Management Plan for Sustainable Mining of Saranda Forest Division. In-spite of sustained efforts by SAIL and Ministry of Steel, including multiple high-level engagements with MoEFCC during 2025-26, no progress has been achieved in permitting mining operations. This restriction, unchanged since 2018, renders about 40% of SAILs total iron ore reserves inaccessible, significantly impacting long-term raw material security and operational sustainability.

• Commercial Sale of Dump Fines-Gua Mines (Jharkhand)

While captive use of low-grade fines was permitted in October, 2023, commercial sale clearance is still awaited. This limits opportunity for monetisation of Gua dump fines, representing untapped financial potential and suboptimal resource utilization.

• Ramanadurga Forest Range Lease Delay (Karnataka)

Despite reservation of 150 acres in 2019 for SAIL/VISL, execution of the lease has been delayed due to procedural issues, including disinvestment-related uncertainties and pending statutory clearances. With the one-time extension till Feb, 2025, a fresh extension request was submitted with the intervention of the Ministry of Steel. In October, 2025, the Government of Karnataka sought clarification/directions from Ministry of Mines regarding extension of LOI/Lease Execution period. Further details were subsequently sought from Ministry of Mines to Karnataka State Government in December, 2025. Any further lapse, could affect long-term Iron Ore sourcing for VISL, critical for ensuring raw material security.

• Delay in operationalization of Rowghat Rail Line

The Rowghat Rail Line was targeted for completion in March, 2026 for dispatch of iron ore from Rowghat Station Siding to Dalli Rajhara. However, the rail line is yet to be made operational and there is no clarity on any definite time schedule for commencement of iron ore loading from the Rowghat Railway Siding. Delay in operationalization of the Rowghat Rail Line could significantly impact the targeted 5 MTPA production and disrupt iron ore supply, thereby, affecting iron ore availability for Bhilai Steel Plant.

• Proposed declaration of Saranda Wildlife Sanctuary and Sasangdaburu Conservation Reserve within the Saranda Forest Region, West Singhbhum, Jharkhand

In accordance with the judgement of Honble Supreme Court in November, 2025 to the State of Jharkhand to notify certain areas as a Wildlife Sanctuary within three months from the date of judgement, ancillary activities of SAIL are permissible. However, future operations are dependent on the formal notification of the Saranda Wildlife Sanctuary to be issued by the Government of Jharkhand.

The above risks reiterate the growing interdependence between mining, regulatory clearances, logistics, and operational planning. SAIL, is proactively engaging with multiple stakeholders viz. Central Ministries, State Authorities, Courts, and Contractors, to ensure risk mitigation, raw material continuity, and project alignment. However, persistent delays and regulatory unpredictability may continue to pose a material impact on the Companys production strategy, financial outcomes, and long-term sustainability.

Market and Revenue Risks

• Global Steel Price Volatility

Global overcapacity, driven primarily by excess Chinese production, continues to suppress international steel prices and threatens domestic realisations, particularly for Flat products. While India turned a net exporter of Finished Steel in FY 2025–26 (exports: 6.60 MT, up 36%; imports: 6.52 MT, down 32%), this balance remains contingent on trade-protective measures. Any withdrawal of Safeguard or Anti-dumping duties, or capacity additions in competing economies, could reintroduce import pressure. SAIL will continue tracking import flows, advocating on trade policy, and deepening its value-added product mix to reduce exposure to commodity price cycles.

• Export Market and CBAM Risk

SAILs export revenue faces headwinds from elevated freight costs, suppressed Global benchmark prices, and the EU Carbon Border Adjustment Mechanism (CBAM), which will require Plant-wise, Product-wise emission disclosures. The halving of Indias Tari_ Rate Quota in the EU from 1^st July, 2026 adds further pressure. Your company is pivoting towards geographically proximate markets, Nepal, Bhutan, South-East Asia (slabs), and Europe (PM Plates), while building CBAM-compliant emission datasets in coordination with the Environment Management Division.

• Domestic Overcapacity and Margin Compression

With all major domestic steel producers simultaneously expanding capacity, aggregate supply could outpace consumption growth, exerting downward pressure on domestic prices. For SAIL, this risk coincides with increasing interest and depreciation charges from its Rs.1 lakh crore Capex programme. Robust project monitoring via Digital Project Management System (now operational across all Integrated Steel Plants), active debt reduction and working-capital discipline will be the primary bu_ers.

• Evolving Product and Customer Requirements

Rapid changes in customer quality specifications, grades, and lead-time expectations, particularly in auto, defence, and railways, may outpace SAILs product development velocity. Twenty-eight new products were developed in FY 2025–26, with special-quality sales growing ~9% year-on-year. In FY 2026–27, the cross-functional CMO–RDCIS–Plant team will continue to drive commercialisation and stabilisation of new grades, with tighter customer feedback integration.

• Revenue Realisation and Debtor Risk

Delays in collections, arising from customer disputes, economic stress, or seasonal liquidity constraints—remain a working-capital risk. Overall debtor levels have been brought down through regular monitoring and Channel Finance coverage. SAIL is in the process of on-boarding onto two additional TReDS platforms (M1xchange and RXIL) to supplement the existing Invoicemart arrangement, and will continue SAMADHAN-linked resolution of MSME vendor disputes to contain interest and penalty exposure.

• Coking Coal Supply Chain Risk

Vendor concentration and geographic overdependence in imported coking coal procurement remain a material operational and cost risk. Expression of Interest (EOIs) for Hard, Soft, and PCI Coking Coal are open, and diversification across Australia, USA, Russia, Indonesia, and Mozambique is ongoing. In FY 2026-27, SAIL will intensify outreach to Canadian, Columbian, and additional Mozambican suppliers, and will update freight-route contingency mapping to reduce single-origin exposure.

• Logistics and Evacuation Risk

Railway wagon availability constraints and warehouse handling limitations can delay steel evacuation and defer revenue recognition. FASTag-based access, two RTG Cranes at Dankuni, completed hard-stand works at Chennai, and LTE-based road despatch infrastructure are in place. In FY 2026-27, pending warehouse projects will be completed and rail-road modal mix optimisation will be actively managed.

• IT, Cybersecurity and Systems Risk

Evolving cyber threats and the transition to SAP S/4HANA pose risks to continuity of sales, billing, and despatch operations. The Trinetra security solution has been deployed and the centralised Security Operation Centre is near completion. The new LAN at Corporate Office is fully operational from 1^st April, 2026. Business continuity planning for the S/4HANA cutover period will be embedded in the ERM framework for FY 2026-27.

C. SWOT ANALYSIS

Strengths	Weakness	Opportunity	Threat
• Geographic and Logistical	• Raw Material	• Public Capital	• Predatory Import Dumping:
Diversification: The Companys multi- location production network provides logistical flexibility, enabling efficient regional service delivery and optimized distribution costs.	Volatility: High structural dependence on imported coking coal exposes the company to global commodity price swings and currency fluctuations.	Expenditure Pipeline: The Governments increased public infrastructure allocation of Rs. 12.2 lakh crore provides sustained demand for structural steel.	Structural steel overcapacity in regional markets, particularly China, creates ongoing risks of product dumping that can pressure domestic prices.
• Extensive Marketing Infrastructure: Operating one of the most comprehensive distribution networks in India, backed by 37 branch offices and over 1,500 dealers, the Company maintains deep retail and commercial reach across urban and rural markets.	• Fixed Cost Overheads: Elevated manpower costs and lower per- capita productivity metrics present challenges when competing with leaner, private sector operators.	• Low Per Capita Consumption Baseline: Indias low per capita steel consumption relative to the global average highlights long-term room for domestic demand expansion.	• Raw Material Supply Chain Pressures: Volatility in global coking coal prices directly impacts operational margins due to the companys import- dependent sourcing model.
• Balanced Omni-channel Sales: The integration of direct enterprise B2B sales, dealer retail networks, and established digital platforms like Mjunction ensures stable market access and diversified customer acquisition.	• Asset Obsolescence: Aging infrastructure in selected older units requires frequent maintenance turnarounds, which can affect consistency in mill utilization.	• Emerging Industrial Segments: Growth across the automotive sector, green energy infrastructure, and defense manufacturing is expanding requirements for specialized steel grades.	• Regulatory and Land Acquisition Timelines: Delays in securing statutory forest clearances and resolving legacy lease renewals can impact long- term raw material planning.
• Strategic Core Relationships: Long- term supply relationships within public infrastructure, defense, and heavy engineering sectors provide a stable volume baseline relative to private peers.	• Limited Premium Export Focus: Lower relative penetration in high-value international niche markets limits the companys exposure to global premium margins.	• Enabling Policy	• Logistical Disruption Risks: Primary raw material transport corridors remain vulnerable to localized infrastructure constraints and environmental factors.
• Comprehensive Product Portfolio: SAIL offers a highly diversified product mix of long and fiat profiles, catering to a wide spectrum of industrial and downstream applications.		Frameworks: National initiatives, including the Specialty Steel PLI Scheme, local procurement mandates, and the Green Hydrogen Mission, offer an encouraging environment for high-value asset development.	• Increasing Domestic
			Competition: Rapid capacity expansions by private steel producers could pressure market share across traditional volume segments.
• Raw Material Integration: Securing 100% captive integration for iron ore needs provides long-term cost stability and supply insulation.			• ESG Compliance Costs: Meeting evolving carbon- reduction targets and international green standards will require substantial capital investments in new technology
• Asset Scalability: Large land bank reserves at existing plant locations offer cost-e_ective options for brownfield capacity expansions.		Green • First-Mover Steel Advantages: Early investments in low-carbon steelmaking technologies can help position the company to capture emerging premium green markets.	• Geopolitical and Currency Volatility: Ongoing international conflicts and trade fragmentation can disrupt export volumes and infiate the cost of imported inputs.
• Modernized Asset Base: Newly commissioned mills are optimized for high-performance, infrastructure- grade steel, supporting automated product-mix adjustments and operational cost efficiencies.			• Brand Infringement Issues: Unregulated use of the companys trademarks in local retail markets poses risks of brand dilution and customer deception.
• Experienced Talent Pool: A large team of technical professionals with deep expertise in metallurgy and process engineering supports operational execution.

D. OUTLOOK

International Monetary Fund (IMF) in its July 26 Economic Outlook states that risks to the outlook are more balanced than in April, but still tilted to the downside. The possibility of renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions. Trade fragmentation could accelerate, possibly hurting output and increasing prices. A possible correction in technology-driven expectations adds to the downside risks, whereas eroded policy bu_ers can amplify those risks. Upside risks stem from a swifter-than-expected normalization in energy markets, stronger-than-expected technology investment, a revival of durable cooperation that lowers trade barriers and structural reform that raises medium-term growth.

As per Economic Survey of India 2025-26, the Global economic environment remained uncertain, shaped by geopolitical tensions, trade disruptions and divergent growth and inflation outcomes across major economies. Looking ahead, while Global uncertainties remain elevated, domestic growth drivers are expected to continue supporting economic activity. With macroeconomic stability in place and ongoing reform efforts, the economy appears well-positioned to sustain growth in the near term. It concludes that Indias medium-term growth potential has strengthened to 7%, positioning the economy on a path of steady expansion amid global uncertainty.

E. REVIEW OF FINANCIAL PERFORMANCE

1. FINANCIAL OVERVIEW OF SAIL

SAIL achieved sales turnover of Rs.1,09,966 crore during the Financial Year (FY) 2025-26, which was higher by 8% as compared to corresponding period of last year (CPLY) turnover of Rs.1,01,716 crore. During the FY 2025-26, the Profit before Tax and Profit after Tax was Rs.4,333.86 crore and Rs.3,233.48 crore respectively as compared to CPLY Profit before Tax and Profit after Tax of Rs.3,008.82 crore and Rs.2,147.96 crore respectively. The comparative performance of major financial parameters during the FYs 2025-26 and 2024-25 is given below:

(Rs. crore)

Particulars	2025-26	2024-25
Sales Turnover	109965.70	101715.74
Profit Before Interest, Taxes, Depreciation and Amortisation (EBITDA)- before Exceptional Items	13145.60	11763.80
Less: Interest and Finance Charges	2158.10	2792.77
Less: Depreciation	5985.42	5649.57
Profit Before Exceptional Items and Tax	5002.08	3321.46
Less: Exceptional items Gain(-)/Loss (+)	668.22	312.64
Profit(+)/ Loss(-) before tax	4333.86	3008.82
Less: Provision for taxation	1100.38	860.86
Profit(+)/Loss(-) after Tax	3233.48	2147.96
Other Comprehensive Income	-33.65	-241.30
Total Comprehensive Income (+)/Loss(-)	3199.83	1906.66
Net Worth	58195	55656
EBITDA to Net sales (%)	11.95	11.57
Return (PAT) on Net worth (%)	5.56	3.86
EBITDA to average capital employed (%)	19.20	17.34
Earnings per share of Rupee 10/- each	7.83	5.20
Debt Equity Ratio	0.55:1	0.66:1
Current Ratio	0.82:1	0.90:1
Debtors Turnover Ratio (Days)	22	27
Inventory Turnover Ratio (Days)	101	126
Interest Coverage Ratio (No. of times)	2.86	1.95
Operating Profit Margin (%)	6.51	6.01
Net Profit Margin (%)	2.94	2.11

During the Financial Year 2025–26, the Companys Turnover stood at Rs.1,09,966 crore, reflecting an increase of 8% over the corresponding period last year (CPLY). This was primarily due to a higher production of Saleable Steel by 7%. The Profit Before Tax (PBT) stood at Rs.4,333.86 crore and Profit After Tax (PAT) at Rs.3,233.48 crore, higher than the CPLY PBT of Rs.3,008.82 crore and PAT of Rs.2,147.96 crore, due to multiple cost and revenue factors.

The increase in profitability over CPLY is largely attributable to Lower imported and indigenous coal prices; Lower usage of Power/LPG, Indigenous coal, External coke, Ferro alloys, etc.; Better Techno-economic parameters like improvement in Coke Rate, Specific Energy Consumption, BF Productivity, etc.; Higher interest income and other non-operating income; Lower salary and wages and interest expenses; Higher sales and profit on sale of iron ore lump/fines/tailings/dump fines, etc. However, the profitability was partially offset by Lower Net Sales Realisation of Saleable Steel (-2%); Lower impact of Rail price; Higher usage of imported coal, iron ore, etc., Negative impact of stock valuation; Higher expenditure on Store and Spares, Repair & Maintenance, Power and Fuel, Demurrage, Security expenses; Higher royalty rates; Negative impact of exceptional items; Loss on account of foreign exchange fluctuation and higher depreciation, etc..

In terms of key financial ratios, Debtors Turnover Ratio improved due to drop in debtors and increase in turnover, Inventory Turnover Ratio showed a marginal improvement over the previous year, Debt-Equity Ratio improved due to increase in net worth and reduction in borrowings, Interest Coverage Ratio increased due to higher EBIT as compared to decrease in interest and finance charges w.r.t. CPLY.

1.1 Cost Control Measures

• Strategic focus on innovation and process improvements through continuous R&D and productivity initiatives led to meaningful reductions in cost, enhancement in product quality, and increased value addition. In this regard, under the "PRAVARTANAM" programme, "McKinsey & Company India LLP" has been engagedasthestrategicdigitaltransformationconsultant for preparing and supporting the implementation of SAILs enterprise-wide digital transformation roadmap. As part of the contractual deliverables, McKinsey is required to facilitate realization of substantial business value through implementation of identified use cases, including the ones for cost reduction.

• Operational efficiency at Blast Furnaces improved via key enablers such as enhanced Oxygen Enrichment, improved Furnace Stove health, and Commissioning of new Stoves, contributing to better fuel efficiency and output.

• Material efficiency gains were achieved through beneficiation of raw material and Lump crushing, enhanced pellet usage in burden mix, and optimization of ore fines quality and feed ratios.

• Phasing out of obsolete and underperforming assets allowed for improved overall productivity and higher capacity utilization across operational units.

• As a part of its ongoing manpower optimization and organisational transformation initiatives, SAIL implemented a Voluntary Retirement Scheme during the period May, 2026 to July, 2026, through which a total of 609 employees separated from the services of the Company.

1.2 Marketing

During FY 2025-26 India consolidated its position as the worlds second largest producer with Crude Steel production of 169.227 million tonnes (MT) registering a growth of 11.2% and consumption of 164.188 MT registering 8% growth over CPLY. As per JPC, India was a net exporter with exports reaching 6.6 MT against imports of 6.5 MT.

Raw material markets for steelmaking experienced a divergence during FY 2025-26, with iron ore remaining relatively range-bound, while Coking Coal saw significant volatility, ending the period with a sharp price spike due to geopolitical disruptions and freight costs. Conflict in the Middle East led to a spike in maritime insurance and freight rates, which impacted landed cost of seaborne Coking Coal. Global steel prices during FY 2025-26 were characterized by a "V-shaped" recovery in Western markets. Prices peaked in early April, 2025, before entering a downward slide. During July to September, 2025, Global prices hit a seasonal low. Chinas property sector crisis continued to weigh on Global sentiment, as Chinese mills aggressively exported low-cost steel to clear domestic gluts. During October to December, 2025, US maintained 50% tariffs and the EU intensi_ed its Carbon Border Adjustment Mechanism (CBAM). These measures began decoupling Western prices from the low cost Chinese market. There was continued stagnation in China as domestic demand contracted by 1-2%, keeping Chinese export prices nearly 50% lower than US domestic prices. January-March, 2026 period was characterized by tensions in the Middle East with disrupted shipping lanes spiking freight costs.

Going forward, the movement of Global steel prices will be contingent upon how the following issues take shape:

(i) Global economic growth;

(ii) Chinas property slump;

(iii) Trade flows/tari_s & barriers, etc.; and

(iv) Prices of raw materials.

During FY 2025–26, your Company undertook several strategic marketing and business initiatives to reinforce and expand its leadership position in the highly competitive domestic steel market. Through a sustained focus on product innovation, brand development, niche marketing, digital enablement, customer servicing, and market penetration & diversification, SAIL continues to strive toward continuous improvement and long-term business growth.

In alignment with these efforts, several new value-added and niche-grade steel products were successfully developed and commercialized in a strategic manner to cater to evolving industry demands and tap into emerging sectors. These developments reinforce SAILs commitment to product differentiation, value addition, and customer-centric growth, positioning your Company to better address the changing needs of infrastructure, automotive, energy, and manufacturing sectors. Beyond the conventional sales strategies, the Company undertook a range of targeted initiatives in FY 2025–26 to strengthen market presence, drive retail expansion, deepen customer engagement, and reinforce its position as Indias leading steel producer.

Your Company promoted its structural steel brand "SAILNEX", comprising Parallel Flange Sections produced at IISCO and Durgapur Steel Plants. Through webinars, customer meets, and collaborations with designers and architects, SAIL strengthened the adoption of steel in design and construction, positioning "SAILNEX" as a premium product for infrastructure.

Marketing Services & Workplace Safety (Marketing Services)

SAIL issued product-wise material handling safety guidelines and organized regular safety training and medical camps at its Central Marketing Organisation (CMO) warehouses to ensure workforce welfare and operational safety.

1.3 Future Outlook – Marketing Strategy & Customer Engagement

In line with its commitment towards continuous improvement, your Company remains focused on deepening customer relationships, expanding market reach, and enhancing customer satisfaction through targeted strategic initiatives and digital integration.

Key Marketing Priorities Going Forward:

• Opening of Business Development Offices.

• Maximizing sales through order booking schemes, ensuring efficient alignment of supply with customer demand cycles.

• Strengthening engagement with Key Accounts and Consumers by building strategic, long-term partnerships with high-value customers to ensure sustained business volumes and mutual value creation.

• Expanding Tier-1 Distribution Network to cater to B2B industrial segments by offering not only timely supplies but also integrated Value Added Services (VAS).

• Enhancing penetration in the retail market through a robust Tier-2 distribution system focused on delivering SAIL SeQR TMT to end-users, especially in semi-urban and rural markets.

• Driving growth in Mid-Sized Accounts (MSAs) by deploying data-driven Sales Force Effectiveness tools and improving servicing capability.

• Widening and deepening the distributor–dealer ecosystem to improve accessibility and responsiveness across segments and geographies.

• Brand promotion initiatives aimed at reinforcing SAILs leadership in quality, reliability, and trust across consumer and industrial segments.

• Boosting sales through e-commerce platforms, leveraging digital infrastructure to enhance customer convenience, transparency, and efficiency.

Customer-Centric Technical Support:

To align with evolving market demands, SAIL has redefined the role of its Application Engineers. Their responsibilities now include:

• Providing technical solutions and support to address customer challenges in steel usage.

• Identifying new product applications and emerging demand areas.

• Facilitating customized product development by engaging with clients during the design and development phase.

• Promoting adoption of SAIL products in specialized applications, strengthening customer loyalty and product relevance.

Strategic Alliances and Contract Manufacturing:

For the first time, your Company has entered into a Contract Manufacturing Agreement with M/s. NMDC Steel Ltd. and M/s. RINL for the supply and marketing of HR and Semis products. This strategic alliance aims to:

• Enhance product mix availability and size flexibility.

• Expand the customer base across segments.

• Improve service quality and customer satisfaction.

• Consolidate SAILs presence in critical downstream and industrial applications.

Digitilization

• Implementation of HSM-based digital signatures for SAP-generated documents in SAP ECC, enabling secure, automated document authentication.

• Digital Signature with API Integration with SAP Documents

• S4 HANA

• Road, Logistics

• Landed Price Concept

• Retail Tier-I, Tier-II

Future Growth Focus Areas:

SAIL is in the process of formulating medium and long-term strategies centered on:

• Segment and Geography realignment for maximizing realizations.

• Expanding share in value-added and emerging steel segments, including:

• Electricity Transmission Monopoles

• Agriculture Implements

• Precision Tubes

• Wagon Manufacturing

• General Engineering & Fabrication

• Cold Forming and Auto Components

• Solar Energy, PEBs, and Windmills

• Earth Moving Equipment (EME)

• Oil & Gas infrastructure

1.4 Funds Management

During the FY 2025–26, the Companys total borrowings decreased from Rs.36,934 crore as on 31^st March, 2025 to Rs.31,922 crore as on 31^st March, 2026, aligned with applicable IND AS accounting standards. Consequently, the

Debt-to-Equity ratio improved to 0.55:1 as on 31^st March, 2026, compared to 0.66:1 as on 31^st March, 2025.

The Net Worth of the Company increased from Rs.55,656 crore to Rs.58,195 crore during the year, reflecting strengthened financial resilience and improved internal accruals.

Interest and finance charges on operational accounts also decreased to Rs.2,158 crore during FY 2025–26, compared to Rs.2,793 crore in the previous year, primarily due to the decline in debt burden and associated costs.

Reinforcing the Companys strong financial profile, the long-term borrowings of SAIL have been rated as:

• ‘CARE AA – Outlook: Stable by M/s. CARE Ratings; and

• ‘IND AA – Outlook: Stable by M/s. India Ratings (RBI approved Credit Rating Agencies).

The chart below highlights the five-year trend of the Companys Debt and Net Worth, showcasing a consistent increase in net worth and stable debt levels over time, ensuring financial prudence and long-term sustainability.

1.5 Contribution to SAIL Gratuity Trust

In alignment with the Companys settlement obligations for gratuity payments, an amount of Rs.11.65 crore was funded by the SAIL Gratuity Trust during the financial year. As of 31^st March, 2026, the total corpus of the Trust stood at Rs.5758.16 crore, ensuring adequate provisioning for future gratuity liabilities and reflecting prudent employee benefit management.

2. ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE COMPANY

2.1 Revenue from Operations

(a) Sale of Products (Rs. crore)

Particulars	FY 2025-26	FY 2024-25	Change %
1 Sales of Iron and Steel Products	105141.59	98359.74	6.90
2 Sales of Other Products	4824.11	3356.42	43.73
3 Total Sales Turnover	109965.70	101715.74	8.11

The product range included Flat Products such as Plates, Hot Rolled (HR) Coils/Sheets, Cold Rolled (CR) Coils/ Sheets, Galvanised Plain and Corrugated Sheets, and

Long Products like Rails, Structural, Wire Rods, and Merchant Products. In addition, the portfolio was enriched with Electric Resistance Welded (ERW) Pipes, Spiral Welded Pipes, and

Silicon Steel Sheets, contributing to the Companys strong presence across various steel-consuming sectors.

The product category-wise contribution to sales turnover during the fiscal year was as follows:

Products Category	% of Sales value
Saleable Steel
Flat Products (including Pipes & Electrical Sheets) (a)	46
Long Products (b)	41
Integrated Steel Plants – Mild Steel (c = a + b)	87
Alloy & Special Steel Plants - Alloy & Special Steel (d)	3
Total Saleable Steel (e = c + d)	90
Secondary Products (Pig Iron, Scrap, Coal Chemicals, etc.) (f )	10
Total (g = e + f)	100

This diversified product mix enables the Company to address the requirements of core sectors such as infrastructure, construction, railways, automotive, energy, and engineering, while also enhancing its market reach and customer value proposition.

c) Sale of Services – Service Charges

(Rs. crore)

FY 2025-26	FY 2024-25	Change %
21.32	23.80	-10.42

Revenue from sale of services decreased by about Rs.2.48 crore over the previous year.

(d) Exports

(Rs. crore)

FY 2025-26	FY 2024-25	Change %
1156.74	492.03	135.10

Other operating revenues increased by about Rs.84.57 crore over previous year mainly due to increase in export incentives and higher realization from sale of sundries.

(e) Other Operating Revenues

(Rs. crore)

FY 2025-26	FY 2024-25	Change %
823.22	738.65	11.45

Revenue from Exports increased due to increase in export quantity of Pig Iron, Slabs, PM Plates and HR Coils.

2.2 Other Income

(Rs. crore)

FY 2025-26	FY 2024-25	Change %
1151.08	1134.41	1.47

Other income increased by about Rs.16.67 crore over previous year primarily on account of higher interest income.

2.3 Expenditure

Particulars	FY 2025-26	FY 2024-25	Change %
Raw Materials Consumed	49866	50810	-1.86
Employee Remuneration & Benefits	11392	11659	-2.29
Finance Cost	2158	2793	-22.74
Depreciation	5985	5650	5.93
Other Expenses	32401	29288	10.63

Employee Remuneration & Benefits: Declined by 2.29%, mainly due to a natural separation in manpower resulting from retirements and separations.

Finance Cost: Decreased substantially by 22.74% owing to decrease in borrowings and average cost of funds, reflecting macroeconomic conditions and capital expenditure requirements. Depreciation: Registered an increase of 5.93%, attributable to the capitalization of new assets and facilities during the financial year. Other Expenses: Showed a 10.63% rise on account of higher spending on royalty, repairs & maintenance, freight outward, and security-related expenses.

This expenditure trend reflects a judicious balance between operational optimization and strategic investments aimed at long-term competitiveness and growth.

2.4 Contribution to Exchequer

During the Financial Year 2025-26, SAIL contributed Rs.23,973 crore to the exchequer by way of payment of taxes and duties to various Government agencies.

2.5 Non-Current/Current Assets

Rs. crore)

Particulars	FY 2025-26	FY 2024-25	Change %
NON CURRENT ASSETS
(a) Property, Plant and	64666	65023	-0.55
Equipment
(b) Capital Work-in-Progress	10552	7206	46.43
(c) Right of use Asset	9889	6839	44.61
(d) Investment Property	1	1	0
(e) Intangible assets	1390	1426	-2.54
(f ) Inventories	4348	4592	-5.31
(g) Financial Assets
(i) Investments	1900	1759	8.02
(ii) Loans	12	19	-36.84
(iii) Other Financial Assets	1736	1554	11.71
(h) Income Tax Assets (Net)	475	451	5.32
(i) Other non-current assets	2516	2355	6.84
TOTAL NON CURRENT	97485	91225	6.86
ASSETS
Particulars	FY 2025-26	FY 2024-25	Change %
CURRENT ASSETS
(a) Inventories	23456	29072	-19.32
(b) Financial Assets
(i) Trade Receivables	6541	7557	-13.45
(ii) Cash and cash equivalents	10	286	-96.50
(iii) Bank balances other than	636	619	2.74
(ii) above
(iv) Loans	21	23	-8.69
(v) Other Financial Assets	1455	1221	19.13
(c) Income Tax Assets	0	0	0
(d) Other Current Assets	3646	2911	25.25
(e) Assets classified as held for sale	4	4	0
TOTAL CURRENT ASSETS	35769	41693	-14.21
TOTAL ASSETS	133253	132918	0.25

Non-Current Assets:

The Companys non-current assets increased by 6.86%, reaching Rs.97,485 crore in FY 2025–26 compared to Rs.91,225 crore in FY 2024–25. Key movements include:

• Capital Work-in-Progress (CWIP) rose by Rs.3,346 crore (+46.43%) due to continued capital expenditure in ongoing modernization and expansion projects across Steel Plants.

• Right-of-Use (ROU) Assets increased by Rs.3,050 crore (+44.61%), largely attributable to new long-term lease agreements recognized under IND AS 116, which mandates capitalization of leases over a certain duration.

• Intangible Assets declined marginally (-2.54%) due to amortization exceeding additions during the year.

Current Assets:

Total current assets decreased by 14.21%, from Rs.41,693 crore in FY 2024–25 to Rs.35,769 crore in FY 2025-26. Key observations:

• Inventories fell by Rs.5,616 crore (-19.32%), majorly due to:

• Decrease in raw material inventories by Rs.649 crore.

• Notable reduction in finished/semi-finished product stock by Rs.4,983 crore.

• Marginal decrease in stores & spares by Rs.81 crore.

• Marginal increase in others by Rs.97 crore.

• Trade Receivables reduced by Rs.1,016 crore (-13.45%), reflecting better collection efficiency and higher realization from customers.

Explanation for Key Line Items:

• Right-of-Use (ROU) Assets: The increase reflects new lease contracts, including plant premises, logistics infrastructure, and warehouses.

• Other Financial Assets (Non-Current & Current):

• Non-Current: Includes security deposits, advances recoverable after one year, and interest receivables linked to long-gestation projects.

• Current: Comprises short-term loans, accrued income, and recoverable claims, which declined due to lower short-term placements and faster liquidation of previous period dues.

2.6 Non-Current/ Current Liabilities

(Rs. crore)

Particulars	FY 2025-26	FY 2024-25	Change %
NON-CURRENT LIABILITIES
(a) Financial Liabilities
(i) Borrowings	7219	10101	-28.5
(ii) Lease Liabilities	9537	6553	45.5
(iii) Trade Payables
(iv) Other Financial Liabilities	1658	1568	5.7
(b) Long Term Provisions	6144	6095	0.8
(c) Deferred tax liabilities	6374	6422	-0.7
(net)
(d) Other non-current liabilities	498	493	1.0
Total Non Current	31430	31232	0.6
Liabilities
Current Liabilities
(i) Borrowings	14444	19710	-26.7
(ii) Lease Liabilities	722	569	26.8
(iii) Trade Payables	10920	10499	4.0
(iv) Other Financial Liabilities	11541	9519	21.2
(b) Other current liabilities	3861	4196	-7.9
(c) Provisions	1532	1387	10.4
(d) Current Tax liabilities (net)	607	148	310.2
Total Current Liabilities	43627	46028	-5.2
TOTAL (CURRENT + NON CURRENT LIABILITIES)	75057	77261	-2.9

Non-Current Liabilities:

Non-current liabilities marginally increased by 0.6% to Rs.31,430 crore in FY 2025–26 compared to Rs.31,232 crore in FY 2024–25. Major contributors include:

• Long-Term Borrowings decreased by Rs.2,882 crore (28.5%) primarily due to higher sales realisation coupled with better market conditions, leading to funds inflow in inventory.

• Lease Liabilities increased by 45.5% (Rs.9,537 crore vs Rs.6,553 crore), primarily on account of new long-term lease contracts recognized under IND AS 116. These included plant infrastructure, warehousing, and logistics facilities for operational expansion and continuity.

• Other Financial Liabilities and Long-Term Provisions showed moderate increases due to routine business expansion and provisioning for statutory and employee obligations.

• Deferred Tax Liabilities decreased marginally reflecting timing differences between book and tax depreciation and other deferred tax items.

Current Liabilities:

Total current liabilities stood at Rs.43,627 crore in FY 2025–26, marking a decrease of 5.2% from Rs.46,028 crore in FY 2024–25. Key changes:

• Short-Term Borrowings significantly decreased by Rs.5,266 crore (-26.7%) due to improved collections, higher realization and working capital management.

• Trade Payables reduced sharply by 31.5% as a result of optimized procurement and payment cycles and clearance of previous dues.

• Current Lease Liabilities increased by 26.8%, in line with expanded lease commitments.

Total Liabilities

• The total liabilities (current + non-current) declined by 2.9%, indicating stronger financial discipline and optimization of obligations.

• Lease Liabilities rose due to expansion in leased infrastructure aligned with strategic growth and modernization.

3. PLANT-WISE FINANCIAL PERFORMANCE (PROFIT BEFORE TAX)

(Rs. crore)

Plant/Unit	FY 2025-26	FY 2024-25
Bhilai Steel Plant (BSP)	2174.92	3481.53
Durgapur Steel Plant (DSP)	218.48	237.67
Rourkela Steel Plant (RSP)	888.25	20.24
Bokaro Steel Plant (BSL)	554.50	-621.12
IISCO Steel Plant (ISP)	773.31	520.75
Alloy Steels Plant (ASP)	-41.26	-48.32
Salem Steel Plant (SSP)	-294.96	-383.09
Visvesvaraya Iron & Steel Plant (VISP)	-43.22	-37.59
SAIL Refractory Unit (SRU)	43.80	38.33
Chandrapur Ferro Alloys Plant (CFP)	-174.94	-59.91
Central Units	234.98	-139.67
SAIL: Profit Before Tax (+)/Loss(-)	4333.86	3008.82

F. MATERIALS MANAGEMENT

SAIL implemented multiple strategic initiatives to enhance cost-e_ciency and effectiveness in materials procurement and vendor development:

Procurement on GeM Portal:

• Achieved a total procurement of Rs.10,391.38 crore through the Government e-Marketplace (GeM), including Rs.2,386.22 crore worth of Services. Services procurement witnessed a significant jump of about 32% over the previous financial year.

Procurement from Micro and Small Enterprises

• SAILs procurement from Micro and Small Enterprises (MSEs) in FY 2025-26 is placed in the Table below:

Particulars	Target (%)	Actual (%)
Total Procurement from MSEs(General, SC/ST & Women)#	25	44.41
Procurement from SC/ST MSEs	4	0.47
Procurement from Women owned MSEs	3	2.14

# for materials & services procurement but without considering imports, proprietary and high value items which cannot be procured from MSEs.

Total procurement from MSEs stood at 44.41%, well above the mandatory 25% target.

? SC/ST MSEs increased to 0.47% from 0.33%.. ? Women-owned MSEs increased to 2.14% from 1.65%.

• Figures exclude imports, proprietary, and high-value items that cannot be sourced from MSEs.

Vendor Development Initiatives:

• Conducted 52 Vendor Development Programs across Plants and Units.

• Special focus on SC/ST and Women entrepreneurs, with dedicated sessions on opportunities, item-specific requirements, and vendor registration.

• Emphasis on mentoring, training, and handholding local MSEs to strengthen the supply ecosystem.

G. FOREIGN EXCHANGE CONSERVATION

Given that SAILs imports significantly exceed its exports, Foreign Exchange Management remains a key priority. The Company is proactively pursuing various strategies to reduce foreign exchange outgo and promote domestic substitution, including:

• Reduction in Import Dependency: Coking coal remains a major import item. SAIL is focusing on increasing the use of indigenous coal through a blended coal mix, thereby lowering reliance on imported coal and conserving foreign exchange.

• Domestic Substitution Initiatives: Emphasis is being placed on sourcing materials and inputs domestically wherever feasible and cost-e_ective, aligned with the Companys technological requirements.

• Diversification of Import Sources: E_orts are underway to broaden the supplier base for imported inputs/raw materials to ensure cost efficiency and supply security.

• Policy Support: The Government of Indias Policy of Restricting Global Tenders for Projects up to _200 crore is being leveraged by SAIL to: y Encourage domestic participation in procurement. y Further conserve foreign currency.

• Indigenization Drive: The Company continues to work towards indigenizing procurement, provided quality, technology, and price benchmarks are met.

H. PROJECT MANAGEMENT

AMR SCHEMES

In FY 2025–26, SAIL undertook significant Addition, Modi_cation & Replacement (AMR) Schemes across its major steel Plants, with an investment commitment of approximately Rs.22,498 crore. These initiatives are aimed at sustaining current operations, modernising critical infrastructure, improving efficiency, and enhancing environmental compliance. The projects in areas of sustainability, infrastructure, environment, capacity enhancement, energy and critical infrastructure enhancement undertaken by the five Integrated Steel Plants are as under: Notably, projects worth around Rs.1,489 crore were completed during FY 2025-26, which include Installation of 1.0 MTPA Pellet Plant on Build-Own-Operate (BOO) Basis at Dalli Mines, BSP; Replacement of existing 33KV MRS Indoor Switchboard by GIS at DSP; Installation of 4^th Stove in BF-4 at DSP;

Plant	Projects
Bhilai Steel Plant	Rebuilding of Coke Oven Battery-7 & 8; Replacement of Converter vessels, trunnion rings, support system and Installation of secondary emission control system for three converters in SMS-II; Installation of High Pressure Primary Descaling Unit in Plate Mill; Up-gradation of Blast Furnace(BF)-7 Stock House De-dusting System;
	Replacement of Hot Leveller-1 of Plate Mill;
	Extension of mixer bay and replacement of two (2) Mixer Cranes of 125+30 T capacity in SMS-II;
	Super accelerated cooling system for high strength plates in Plate Mill; Installation of 140 TPH Walking Beam type
	Reheating Furnace in Plate Mill;
	Installation of 1.0 MTPA output upstream Slime Beneficiation Plant on Build-Own-Operate (BOO) basis at Dalli
	Mines is under process;
	New Mine Developer cum Operator to develop & operate 14 MTPA mine was initiated at Rowghat Mines.
Durgapur Steel Plant	Power Augmentation Scheme for new 1250 TPD Oxygen Plant on Build-Own-Operate (BOO) basis;
	Installation of New Gas Fired Boiler;
	Installation of New Coke Oven Gas Holder;
	Installation of 1250 TPD Oxygen Plant on BOO basis;
	Rebuilding of Coke Oven Battery-4;
	Extension of FG Bay and other Associated Facilities for enhancing of storage of Billets & Blooms and dispatch facilities at CCP;
	Installation of New Electric Driven Exhauster in 1.0 MT Coal Chemical Plant;
	Up-gradation of ESPs in Sinter Plant-2;
	Installation of New Bar Mill;
	Up-gradation of Blast Furnace(BF)-3;
	Relining of Stoves of BF-3;
	Revamping of Air Pollution Control System of Sinter Plant-1.
Rourkela Steel Plant	Installation of new Stamp Charge Coke Oven Battery-7 (1 MTPA) along with CDCP & By-Product Plant;
	Installation of 4th Stove in BF-5;
	Installation of Treatment System-2 for Zero Liquid Discharge; Installation of 1000 TPD Oxygen Plant on Construct,
	Operate and Maintain (COM) Basis;
	Installation of 0.18 Mtpa Micro Pellet Plant on COM Basis for waste utilization and management;
	Installation of 2 Mtpa Pellet Plant on COM basis;
	Engagement of MDO for Development & Operation of mines at Taldih (7.0 Mtpa ROM feed) along with Installation of 10 Mtpa loading facility at Barsua Valley.
Bokaro Steel Plant	New Sinter Plant;
	Development of Alternate System for Drawal of Raw Water from Damodar River for BSL & Township;
	Installation of 220 kV, 3rd line between CTPS of DVC to MRS; Replacement of Turbine and Auxiliaries for Turbo
	Blower No.-5; Revamping of Blast Furnace-3;
	Rebuilding of Coke Oven Battery-6;
	Replacement of Central Compressor Plants (CCP-I & CCP-II) by Installation of Compressed Air Station;
	Replacement of remaining 4 Sets of Battery Cyclones with 4 Nos. of ESPs in Sinter Plant-1;
	Installation of Equipment of RMHP (Twin Boom Stackers, Bucket Wheel Reclaimer and Barrel Shell Reclaimer);
	Installation of 2 Nos. of Booster Fans at GMBS for Reheating Furnaces of HSM;
	Installation of two Combi Roll Grinders and one Work Roll Grinder in Roll Grinding & Bearing Shop at CRM;
	Secondary Emission Control in Converters of SMS-II; Replacement of Benzol Storage Unit of BRP-2, CO&BPP;
	Appointment of MDO for Development & Operation of Tasra Open Cast Project (OCP).
IISCO Steel Plant	Installation of 4th Stove in BF-5;
	Installation of 3rd Ladle Furnace in Secondary Refining Unit;
	Installation of Stamp Charge Battery (COB-12) with supporting facilities.

Construction of 30 MLD Sewage Treatment Plant at RSP Township; Installation of 4^th Slab Caster along with Ladle Furnace at SMS-II at RSP; Reconstruction of unused Stove No.4 in BF-2 at BSL; Replacement of Existing RRI (Route Relay Interlocking) System by SSI (Solid State Interlocking) System at Steel Works Station (SWS) at BSL; High Pressure Water Mist Spray (HPWMS) Fire_ghting and Fire Detection Alarm (FDA) system for Category-1 Cable Tunnels at BSL; and Laying of new Steam Pipe Line from PBS-2 to COB-10 at ISP.

I. IN-HOUSE DESIGN & ENGINEERING

The Centre for Engineering & Technology (CET), an ISO 9001:2015 certified in-house design, engineering, and consultancy arm of SAIL, plays a pivotal role in driving the Companys growth and modernization initiatives. CET is entrusted with the preparation of investment proposals and execution support for projects across the steel value chain, from mines to finishing, ensuring both sustainability and regulatory compliance, aligning with evolving environmental norms, particularly in the area of carbon emission reduction. CETs core competencies encompass a wide spectrum of activities including mine planning, mineral beneficiation, ore handling and transportation systems, pelletisation, and integrated material handling solutions. In addition, it provides design and engineering support for Hot Blast Stoves and Slag Granulation Plants associated with Blast Furnace operations. The domain of CETs expertise further extends to Coke Oven Batteries, Sinter and Pellet Plants, Blast Furnaces (including CDI systems and top recovery turbines), Steel Melting Shops, Ladle Furnaces, Continuous Casting Units, TSCDR systems, Rolling Mills, and associated utility infrastructure. This includes critical facilities such as Zero Liquid Discharge (ZLD) systems, Power and Oxygen Plants, Pollution Control Systems, and Plant-wide Automation Solutions. With a deep understanding of Brownfield complexities, CET has developed a distinct capability in executing modifications and upgrades in operating SAIL Plants, while also demonstrating competence in Greenfield Expansion Project Conceptualization. Currently, CET is spearheading several large-scale initiatives including Brownfield Expansions of DSP and RSP, and preparing mining plans for development of various iron ore leases across SAIL Mines. At Bhilai Steel Plant (BSP), CET is overseeing the modernization of the Plate Mill, incorporating advanced features such as a walking beam furnace, high-pressure descaling, super-accelerated cooling, hot stamping, and a hot leveler. Projects like the installation of new Stamp Charged Coke Oven Batteries with Coke Dry Cooling Plants (CDCP), a first within SAIL, are underway at RSP, BSL, and ISP. Concurrently, Coke Oven Battery rebuilding programs are also in progress at BSP, BSL, and DSP, alongside major Blast Furnace upgradation initiatives including BF-3 revamps at DSP and BSL and installation of new Hot Blast Stoves across all the five Integrated Steel Plants.

CET is also facilitating critical technological enhancements such as CDI system augmentation in BFs of BSP and BSL, Top Recovery Turbines (TRT) installation at DSP, Converter shell replacement and ladle furnace installation at BSP and ISP respectively, and commissioning of new Universal Rail and Structural Mills at BSP, Bar Mill installation at DSP, and automation upgrades of Reheating Furnaces at BSLs Hot Strip Mill. Other significant assignments include establishing a product testing lab for New Plate Mill (NPM) and Hot Strip Mill (HSM) at RSP, setting up Cold Rolling Mill (CRM) at RSP, Zero Liquid Discharge (ZLD) projects at DSP, BSL, and RSP, augmentation of power infrastructure at BSP, DSP and RSP, ESP-based de-dusting systems at BSL and DSP, and central air compressor stations and RMHP equipment installations at BSL. Other major assignments of CET include replacement of Turbo Blowers, modernization of Battery Cyclones with ESPs in Sinter Plant-01, installation of CNC Roll Grinding Machines, Secondary Emission Control systems at SMS-II at BSL, and replacement of cranes across SAIL Plants. With regard to SAIL Mines, CET is actively involved in capacity expansion projects at Kalta and Bolani Iron Ore Mines, installation of High-rate Thickeners (HRT) and wagon loading systems at Kiriburu, development of rapid loading systems at Bolani, and implementation of Sewage Treatment Plants in townships and mining areas. To meet evolving product quality standards and environmental benchmarks, CET has also provided consultancy for the establishment of new Pellet and Micro-pellet Plants, as well as Beneficiation Facilities. CET is also spearheading strategic transformations such as preparing future roadmap of Greenfield Expansion of RSP.

J. RESEARCH & DEVELOPMENT

Emphasizing the critical role of technological advancement and process innovation in achieving sustainable growth, SAIL has established a world-class R&D facility in Ranchi. This Research & Development Centre for Iron and Steel (RDCIS) of SAIL is a premier research institution in India specializing in ferrous metallurgy. With more than 300 advanced diagnostic instruments and extensive pilot-scale facilities spread across 15 major laboratories, RDCIS conducts research spanning the complete Iron and Steel production chain - from Raw Materials to Finished Steel products.

In the FY 2025-26, RDCIS successfully completed 26 R&D projects and more than 110 assignments, delivering substantial technical and financial benefits to your Company. RDCIS also introduced several Sustainability and Green Steel initiatives, including: (a) In-house upgradation of ignition furnace of a sinter machine to reduce fuel consumption by 25-30%; (b) Development of agglomeration technique for recycling of Al-killed LF slag into briquettes; (c) Study of addition of grog with parent magnesia for making of MgO-C bricks; and (d) Utilisation of CDCP dust and tar decanter sludge in coke and sinter making to promote waste recycling and reduction in raw material consumption.

As part of its ongoing sustainability efforts, RDCIS has made significant developments in two prestigious Govt. of India assisted projects: (a) Hydrogen Injection in the Blast Furnace (under the National Green Hydrogen Mission); and (b) Setting up a pilot-scale vertical reactor for studying hydrogen-based DRI production. Both the hydrogen injection system and the pilot H2-DRI system have been designed and contract finalised for their supply. Besides these projects, in its pursuit of research excellence, RDCIS also undertook other initiatives in collaboration with leading research institutions, academic organizations, and industries.

RDCIS continues to lead pioneering efforts in the development of niche products designed to meet evolving market requirements. In FY 2025–26, 28 new products were successfully introduced, spanning diverse industry segments. Key developments include EDD steel (IS 513 CR4), MC60 Grade HR coils, and ISC470LA High Strength CR coils for automotive and agricultural applications; DMR 249A HR plates produced through RHOB for defense; ASTM A387 Cl. 2 (Gr.11/12) N&T plates for boiler and pressure vessels; and advanced electrical steels such as Higher grade CRNO (50C470/50C400) and Gr.1 SiK HR Coils with ultra-low carbon content (0.03–0.06% C) for electrical machinery.

RDCIS professionals achieved remarkable milestones in FY 2025-26, filing 22 Patents and 17 Copyrights, presenting 58 Technical Papers at national & international conferences, and publishing 47 Papers in reputed journals, reflecting the Centres continued commitment to excellence in R&D and technological leadership. Their contributions to the steel industry earned several prestigious awards.

K. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has established robust and efficient Internal Control Systems aimed at ensuring operational efficiency, judicious utilization and safeguarding of resources, accuracy and timeliness in financial reporting, adherence to laid-down policies and procedures, and compliance with applicable laws and regulations. At SAIL, Internal Audit functions as a multi-disciplinary domain that rigorously reviews, evaluates, and appraises systems and processes, offering valuable suggestions for improvement. It supports management in achieving organizational objectives by adopting a systematic and disciplined approach to enhance the effectiveness of risk management, thereby contributing to sound corporate governance.

To bolster the Internal Audit function, SAIL continually upgrades the system by ensuring oversight through the Board-level Audit Committee, which safeguards its independence and effectiveness. Emphasis is placed on transparency in internal controls, optimizing skillsets of audit personnel, and applying risk-based audit planning. The Annual Audit Plan is carefully formulated to cover key risk areas with a strong focus on system and process audits, aiming for cost savings, revenue optimization, inventory & idle asset review, and better compliance mechanisms.

The Internal Audit framework is further supported by comprehensive policies, guidelines, and procedures. Training and capacity-building of internal audit executives, along with awareness programs for auditees, form key pillars of SAILs proactive internal audit culture. Periodic reviews are carried out, and Audit Findings are presented regularly to the Management and the Audit Committee. Additionally, inputs from the Statutory Auditors on internal control adequacy and financial reporting serve to reinforce the integrity and transparency of SAILs financial and operational systems.

Cautionary Statement Regarding Forward-Looking Information

Certain statements contained in this Management Discussion and Analysis Report, describing the Companys objectives, projections, estimates, expectations, or predictions may be forward-looking in nature and are intended to be covered under applicable laws and regulations. These forward-looking statements represent the Companys current assumptions, expectations, and forecasts concerning future events, and are inherently subject to uncertainties and risks. Actual outcomes may differ materially from those expressed or implied due to changes in economic conditions, government policies, market dynamics, and other unforeseen or incidental factors.