Steelcast Ltd Management Discussions

Company Overview

Steelcast Limited has firmly established itself as frontrunner in the steel and alloy-steel castings industry, renowned for its manufacturing excellence using both No-Bake and Shell Moulding techniques. The company continues to power key sectors such as earth-moving equipment, mining, construction, railways, steel, cement, locomotives, and defence. s on April 2. Consequently, With a clear vision for growth, Steelcast is actively exploring new geographies, sectors, and customer segments, while steadily enhancing its production capabilities.

Although the companys annual performance remained subdued for the second consecutive year largely due to typical cyclical shifts in its operating markets a strong rebound began in Q3 FY25, marking the return of healthy quarterly growth.

The company witnessed a decline in export sales while domestic sales registered marginal growth compared to the previous year reflecting the stable demand base in the local market. The outlook for 2025-26 is optimistic despite global disturbances relating to trade tariff wars in various regions , with strategic plans underway to broaden market reach, diversify sector exposure, and expand the product portfolio.

Global Economic Overview

In 2024, the global economy grew at a moderate rate of 3.3%, suggesting a phase of relative stability, although growth remained lackluster. However, as we progress into 2025, the global environment is experiencing a significant a transformation, driven by nations reshaping their policy priorities in response to escalating geopolitical tensions and increasing economic challenges.

The United States has enacted a series of new tariff measures, leading to swift and strong retaliatory actions from major trading partners. This culminated in the introduction of effective nearlyuniversal rates have soared to levels not witnessed in over tariff a century, delivering a sharp and detrimental blow to global growth.

The situation has been exacerbated by the rapid and unpredictable nature of these policy changes, which have significantly increased economic rendered the near-term outlook more volatile. This rising instability has also compromised the reliability of traditional forecasting models, making it challenging to base projections on previously reliable assumptions. In the midst of this uncertainty, global headline inflation is now expected to decrease more gradually than previously thought. It is projected to decline to 4.3% in 2025 and further to 3.6% in 2026. This revision reflects inflation estimates for advanced economies, partially offset by slight downward adjustments in emerging markets and developing economies.

United States

The U.S. economy is now projected to grow by 1.8% in 2025, a downward adjustment influenced by the effects of tight monetary policy and increasing trade disruptions. Inflation is expected to stay high at approximately 3%, with recent tariff measures contributing an estimated additional one percentage point. Domestic consumption is slowing down, and the manufacturing sector is facing challenges from rising input costs due to ongoing global supply chain pressures.

China

Chinas growth is also slowing, with projections adjusted to 4% for 2025, influenced by weak external demand, continued internal deleveraging, and structural shifts towards a consumption-driven economy. Inflation is anticipated to stay low and may even dip into deflation. This trend raises concerns about underlying demand weakness and the possibility of renewed credit stress, especially in the property sector. Also, the China+1 strategy, where global companies diversify manufacturing away from China to reduce dependency, is reshaping global supply chains. While this may lead to slower export growth. For India, this shift presents a major opportunity: with its large workforce, improving infrastructure, and supportive government policies, India stands to gain new investments, boost exports, and emerge as a key alternative manufacturing hub, accelerating its economic growth.

Euro Area

The eurozone continues to be hindered by weak consumption and exports, leading to a revised GDP growth forecast of 0.8% for 2025. Political instability in certain areas and ongoing energy insecurity are further eroding investor confidence, particularly in Germany and France. Emerging Markets and Developing Economies (EMDEs): Growth in emerging markets and developing economies is exhibiting signs of moderation, with the effects being especially noticeable in countries like Mexico, South Africa, and Argentina. Elevated debt levels and weakening currencies in these markets are exacerbating inflationary pressures and limiting policy flexibility. Concurrently, many developing nations are facing tighter financing conditions and waning investor interest, which further exacerbates economic vulnerabilities. Around the globe, economies are adjusting their growth strategies to align with sustainability objectives in order to address climate change, resource limitations, and inequality. ESG principles investment trends, and business areinfluencing practices. Decarbonizing supply chains, increasing the use of renewable energy, and promoting circular and inclusive models have become essential for economic resilience and international collaboration. In this context, water circularity is emerging significantpriority . Circular as models that focus on reusing, recycling, and recovering water are fostering more efficientand resilient systems. With advancements in treatment technologies and global partnerships, water circularity is being recognized not only as an environmental necessity but also as a strategic tool for sustainable economic growth.

Outlook

Despite the challenges confronting the global economy, this period presents a unique opportunity to enhance resilience and forge a more sustainable path forward. The adaptability demonstrated by many economies under pressure indicates that recovery is achievable with the right combination of coordinated policies and proactive reforms. By collaborating to create a stable and transparent trade environment, facilitating timely debt resolution, and addressing structural imbalances, countries can foster a more balanced and inclusive global recovery. Maintaining a clear direction in monetary policy, utilizing macroprudential tools as necessary, and implementing credible fiscal plans will contribute to restoring financial stability and safeguarding long-term growth.

International cooperation will be crucial in navigating the future. With aligned strategies, strong leadership, and a commitment to collective progress, the global economy can regain momentum, rebuild resilience, and unlock new opportunities for prosperity across regions.

Indian Economic Overview

Indias economic performance in FY 2024-25 has been strong, with a GDP growth rate of 6.5%, reinforcing its status as the fastest-growing major economy. The economy is benefiting from a mix of substantial government infrastructure investments, a recovery in rural demand fueled by a successful Kharif crop, and the continued growth of the servicessector,especially finance and real estate. The Reserve Bank of Indias accommodating stance, including a reduction in interest rates, has significantly boosted investment and consumption. Furthermore, enhanced manufacturing performance and steady urban consumption have maintained robust economic momentum. Despite ongoing risks related to global trade uncertainties, Indias strong domestic foundations, supportive policies, and dynamic private sector are expected to keep growth on track.

Sector-wise performance in FY 2024-25

Agriculture and Allied Sectors

In FY 2024-25, the agricultural sector is anticipated to grow at a rate of 3.8%, indicating a rebound from a period of underperformance. The beneficial monsoon season has resulted in a bountiful Kharif crop, greatly improving rural incomes and boosting demand. Furthermore, targeted government initiatives focused on enhancing agricultural infrastructure and providing support to farmers have created a solid basis for sustainable growth in the sector.

Industrial Sector

In FY 2024-25, the industrial sector is expected to grow by 6.2%, driven by a boom in construction and vital utilities like electricity, gas, and water supply. Manufacturing has also shown stability, with higher production levels in boosting overall sector growth and significant fostering a positive outlook for the year.

Services Sector

The services sector continues to be a crucial component of Indias economic strength, with financial, real estate, and professional services anticipated to grow by 7.2% in FY 2024-25. At the same time, trade, transport, and communication services are projected to increase by 6.4%, driven by heightened economic activity and strong consumer demand.

Construction Sector

Anticipated to expand by 8.6% in FY 2024-25, the construction sector is reaping the benefits infrastructure investments and substantial government spending initiatives are propelling backing. Significant growth, creating jobs, and producing positive ripple effects across associated industries.

From April to December 2024, Indias retail inflation decreased to a manageable 4.9%, driven by a stable period for food and gasoline prices. This drop in inflation provided the Reserve Bank of India with a rare opportunity for monetary easing, leading to a 25-basis point rate cut in February 2025, the first of its kind in almost five years. This deliberate adjustment reflects inflation outlook and is expected to boost both investment inflows and consumer spending, thereby strengthening the countrys economic trajectory.

The administration has reaffirmed its consolidation strategy by setting a budget deficittarget of 4.9% of GDP for improvement from the previous FY2024 25,asignificant years 5.6%. The Union Budget for FY 2025-26 allocates INR 11.21 lakh crore, roughly 3.1% of GDP, for capital investment. This substantial commitment underscores a focused effort on infrastructure-driven growth, aimed at enhancing structural capacities, creating job opportunities, and generating multiplier effects throughout the broader economy.

Indias trade outlook seems to be on track for a gradual yet steady recovery. Exports are expected to rise, supported by strong global demand for key commodities such as engineering products, pharmaceuticals, and electronics. At the same time, falling oil prices and a robust domestic manufacturing initiative through the PLI programs are likely to reduce the need for imports. This trend suggests a shrinking trade deficit and a more stable external environment. The government is also pursuing new trade agreements and policies to boost exports, which could enhance Indias standing on the global stage. Alongside economic resilience, environmental sustainability remains a top priority. The government is fast-tracking its water circularity agenda to tackle the growing challenges of water scarcity. Its key initiatives like Namami Gange and Jal Jeevan Mission are expanding infrastructure for wastewater treatment and reuse. Guided by the National Framework on Safe Reuse of Treated Water, these programs are fostering of collaboration among multiple stakeholders and unlocking innovative reuse models. Thisrepresents significantshift from linear water usage to a regenerative approach that ensures ecological balance and long-term water security.

Outlook

Indias economic outlook remains strong and resilient despite global uncertainties. For FY 2025 26, GDP growth is projected to be around 6.5%, making India one of the fastest-growing major economies. This growth is underpinned by robust domestic consumption, government-led infrastructure spending, and a booming services sector, particularly in IT and financial services.

Key tailwinds include:

Rising manufacturing momentum via Make in India and PLI schemes

Strong foreign direct investment (FDI) inflows

Steady credit growth and improving banking health

Digital public infrastructure and formalization of the economy However, risks such as global demand slowdown, geopolitical tensions, and climate-related disruptions could temper near-term momentum.

Overall, India is well-positioned to benefitfrom global realignments like China+1, a growing youth demographic, and structural reforms, making its medium-term outlook highly promising.

Global metal casting industry overview

The global metal casting market was valued at USD 177.28 billion in 2024 and is projected to reach USD 325.69 billion by 2033, growing at a CAGR of 6.94% from 2025 to 2033. In 2024, the Asia Pacificregion accounted for over 54.9% of the market share, leading the global market. This growth is primarily driven by rapid industrialization, the rising demand in automotive manufacturing, and the expansion of infrastructure projects in the region.

The global metal casting market is experiencing significant growth driven by multiple factors across key industries. The global demand for infrastructure is projected to experience significant growth in the coming decades, driven by factors such as urbanization, technological advancements, and the transition to sustainable energy sources. According to the Global Infrastructure Hub, the world requires approximately $94 trillion in infrastructure investment by 2040 to meet the demands of economic growth and development. However, based on current trends, only $79 trillion is expected to be invested, leaving a substantial $15 trillion investment gap. Asia, particularly China and India, is anticipated to account for nearly 60% of global infrastructure spending by 2025, driven by rapid urbanization and industrialization, according to Global Infrastructure Outlook (outlook.gihub. org) Apart from infrastructure, increasing demand from the automotive and aerospace sectors, particularly due to the rise of electric vehicles and the need for lightweight, high-strength components, is a major contributor. Technological advancements, including improved casting methods, CAD/ CAM systems, and additive manufacturing, are enhancing production precision and efficiency. The industry is also benefiting from a shift toward sustainability, with growing adoption of recycled metals to reduce environmental impact and costs. Additionally, expanding construction and infrastructure projects worldwide are fueling demand for durable metal-cast components. Rising defense and military investments further support market expansion, as high-performance metal castings are crucial for vehicles, weapons, and equipment. Together, these trends underscore a robust outlook for the metal casting market across diverse applications.

Indian metal casting industry overview

The India foundry market size is estimated at USD 25.57 billion in 2025, and is expected to reach USD 42.61 billion by 2030, at a CAGR of 11.13% during the forecast period (2025-2030). India represents one of the largest metal casting markets in the Asia Pacific region second largest producer of castings after China. A major driver behind this growth is the growing demand in the automobile industry. In 2024, Indias automobile industry saw strong growth, with total vehicle sales rising by 12.5% to 23.85 million units. Apart from this, programs such as Make in India and Production Linked Incentive (PLI) schemes support local manufacturing and export growth. The government plans to introduce a green steel policy to promote the production of decarbonized steel, reflecting a commitment to sustainable practices. India is committed to decarbonize the steel sector in alignment with net-zero emission intensity target by 2070. The industry is increasingly adopting eco-friendly practices, including the use of recycled materials and efficient waste management systems, aligning with global environmental standards and enhancing competitiveness in international markets.

(Source: Statista ,Reuters, Openpr.com)

Growth drivers

Demographic dividend

India, the worlds most populous country, offers some of the lowest labor costs globally. With nearly half of the population under the age of 30 and a rise in disposable income, there is a growing demand for infrastructure that must be met.

Defence sector

The government allocated over INR 6.8 lakh crore to defence including INR 1.8 lakh crore for military modernization. This marks a 9% increase from last year, aiming to boost Indias military capabilities and self-reliance.

Railway sector

From FY16-25, the total investment in the Indian Railways is expected to reach Rs. 17.4 lakh crore, growing at a CAGR of 12%, positioning the railways as a key driver in Indias push toward a high-income economy.

Growing EV demand

By 2030, India is on track to become the largest EV market, with rise in investment over the next 8-10 years.

Infrastructure investment

The surge in infrastructure development projects across India has increased the demand for cast products such as door handles, curtain railings, and construction equipment, positively impacting market growth.

Real estate expansion:

The real estate sector is projected to reach a market size of $1.3 trillion by fiscal year 2034, accounting for 13.8% of the GDP, and is expected to surge to $5.17 trillion by 2047, constituting 17.5% of the GDP. Additionally, there is an anticipated demand for 31.2 million additional housing units by 2030, which is expected to boost the construction sector.

Innovation and research funding

A substantial allocation of Rs. 20,000 crore has been designated to promote private-sector-driven innovation and R&D. This initiative aims to support advancements in deep tech and emerging sectors, fostering technological growth and enhancing the nations competitive edge. Technological advancements and process efficiency: Foundries are increasingly adopting modern techniques like computer-aided design (CAD), computer-aided manufacturing (CAM), and 3D printing. These innovations enhance precision, reduce production time, and minimize material wastage, thereby improving overall efficiency.

(Source: The Hindu, Business World, Economic Times, India TV News)

Industry structure and developments of Steelcast Limited

1. Mining industry

Mining industry is expected to show good growth in the coming year 2025-26 as compared to last fiscal year 2024-25. a. Domestic sector showed a lower performance with sales of INR 1,076 Lakhs as against INR 2,365 Lakhs of previous year thus witnessing de-growth of 54% in FY 2024-25 as compared to FY 2023-24. This was due to excess inventory as well as reduction in demand due to Russia Ukraine crisis. This was due to lower demand in the market. b. Export sector showed a sales of INR 6,998 Lakhs in FY 2024-25 compared to INR 7,315 Lakhs in FY 2023-24; posting a decline of 4.3% on YoY basis.

2. Earthmoving equipment

In line with mining machinery industry the earthmoving industry is also expected to show a positive trend in the coming year 2025-26 as compared to the current fiscal year 2024-25. a. Domestic sector sales were INR 8,567 Lakhs in FY 2024-25 compared to INR 7,123 Lakhs, showing a growth of 20% YoY. b. Export sector sales were INR 10,175 Lakhs in FY 2024-25 compared to sales of INR 13,700 Lakhs in FY 2023-24 showing a de-growth of 26% on YoY

basis. This was due to excess inventory as well as reduction in demand due to Russia Ukraine crisis.

3. Construction equipment

This industry is also showing a promising trend in FY 2025-26 as compared to FY 2024-25. a. Domestic market showed sales of INR 7,210 Lakhs in FY 2024-25 compared to INR 6,955 Lakhs in FY 2023-24 showing a YoY growth of 3.5%. b. Export market showed growth of 185% on YoY basis with sales of INR 408 Lakhs in FY 2024-25 compared to sales of INR 143 Lakhs in FY 2023-24. This was due to development of new parts and opening of new export facilities of existing customers.

4. Locomotive and railways

With new customers and parts under development in this fiscal year and also the Association of American Railroads (AAR) audit done and certificate received, expect good sales in the coming years. In FY 2024-25, the sales was INR 2,330 Lakhs compared to INR 2,153 Lakhs in FY 2023-24, showing a growth of 8.25% on YoY basis.

5. Cement and steel sector

These are expected to remain steady in FY 2025-26. In FY 2024-25, sales were INR 389 Lakhs compared to INR 290 Lakhs in FY 2023-24, showing YoY increase of 34%.

6. Ground engaging tools (GET) improvement in this sector in the Weexpectasignificant coming year with the development of new customers and new parts. We have already received new parts for developments from our existing customers in USA as well as developed new customers in Australia. Total overall sales in this segment for FY 2024-25 was INR

167 Lakhs and expect this to go up substantially in the coming years.

7. Partnering with Indian defence units

The Company is making its constant endeavour to contribute to the defence of the nation by partnering with the Indian Defence units as well as for Exports. This effort is continuing and we expect improvement in this sector considering the Government push through schemes like Atmanirbhar Bharat, Make in India etc. In continuation of our earlier sale, we have received a trial order for export of defense components and expect samples to be delivered in Q1 of FY 2025-26. Once approved and successful, we expect significant business as well as development of new parts.

Position of the company in the foundry market

Amidst a global economic slowdown, India is poised to achieve a 6.2% GDP growth in FY25, buoyed by escalating consumption, expanding urbanization, increasing disposable incomes, and favorable government policies.

(Source: pib.gov.in)

Our company has a strong foothold in the mining and earthmoving industries, which have traditionally driven the majority of our sales. Government investments in infrastructure and housing have, in turn, played a key role in increasing the demand for our products.

With the recent tariffs imposed by America on various countries including India & China, but considering good business and political relationship between India and America and comparatively lower tariffs on India as compared to China, we expect to have sizable new parts coming in for development as well as increase in share of business in existing parts as well. Also, India could now emerge as a global manufacturing hub as most of the companies are looking at China + 1 strategy as well.

Risk management

While every business inherently carries some level of risk, our company understands the critical importance of proactively identifying and addressing these risks. To achieve this, we have developed a robust risk management framework that continually assesses both our internal operations and the external environment, identifying potential risks and creating effective strategies to manage them. These risk management initiatives are seamlessly embedded into our strategic plans, ensuring their thorough implementation throughout the organization. We face a range of risks, including geopolitical issues such as conflicts or natural disasters, travel restrictions, industry-specific challenges, fluctuations in foreign currency exchange rates, client concentration, technological threats, and financialrisks. Our company has already put in place measures to manage these risks at various levels of management. Additionally, we regularly review and monitor our risk mitigation strategies to ensure their continued effectiveness in protecting our business.

Changes in the financial performance

Particulars	2024-25	2023-24
Sales/Income from Operations	37,616.54	40,981.45
Other Income	444.83	269.70
Sub-Total	38,061.37	41,251.15
Total Expenditure (before Interest & Depreciation)	27,008.93	29,262.88
Operating Profit (EBIDTA)	11,052.43	11,988.28
Operating Margin %	29.38	29.25
Profit/(loss) After Tax	7,219.79	7,500.21
Return on Capital Employed % (EBIT)	30.07	37.82
(ROCE=Tangible Net Worth + Total Long-Term Debt + Deferred Tax Liability)
No. of months Receivables (Receivables/Sales*12)	3.11	2.73
Current Ratio (Current Assets/Current Liabilities)	4.01	3.73
Debt Equity Ratio (Total Debt/Shareholders Equity)	-	-
Production (in MT)	12,913	12,204

Quality Assurance

During FY25 ( April24 to March25), we undertook following initiatives to further strengthen our quality parameters:

a) Development of cold box process to make high quality core making.

b) Centrifugal casting process adopted to make defect free precisions small casting.

c) In Lab facility enhancement further by installing STEREO microscope for fracture analysis & investigation.

d) Hydrogen gas measurement (on line) in liquid steel for assessment of cleanness of steel in terms of gases in Melt.

e) Start uses of Ceramic Refractory Gating components in place of Normal Refractory Gating in Mold to minimized sand erosion defects in Casting.

f) Study of Polymer quenching behavior to prevent quench crack in high strength low alloy steel.

g) Welding process layer audit has been initiated to ensure quality welding.

h) In house welding training carried out by external agency to educate welder and supervisor.

i) Development of artificial ceramic sand for high temperature application

j) Some Automation done in Fettling for small castings produced through Shell molding.

k) Layer process audit for Cross-functional Sections initiated for consistent compliance of Foundry Process..

l) In-house 3D Scan started for Dimensional measurement in sample casting..

m) Participation of Quality Assurance professional in foundry work shop for knowledge sharing on advancement in latest technology in foundry process, material and quality control.

Human resources and industrial resources

At our organization, we are dedicated to attracting and retaining exceptional talent to foster a vibrant and innovative work environment. We prioritize continuous learning, collaboration, and professional growth, ensuring we remain agile in an ever-changing market landscape. Our employees are our greatest asset, and we are committed to empowering them through streamlined processes that encourage creativity and deliver substantial value. We maintain strong connections with our workforce, focusing on safety protocols and initiatives that drive productivity. With a team of 1602 employees, we recognize the importance of our corporate reputation and the positive impact we can make by prioritizing environmental, health, and safety (EHS) considerations.

Our EHS management approach adheres to rigorous standards, recognizing the critical role these factors play in our operations. We have established comprehensive metrics to track our performance in these areas, continuously all, ensuring the refining safety of our employees is our top priority, and we are unwavering in our commitment to maintaining a secure work environment by enforcing high safety standards.

Investor Relations and Engagement

Investor Relations (IR) is essential in todays dynamic environment for managing investor expectations. The goals of the Companys investor relations activities are to enhance confidence, foster long-term relationships, and build trust with stakeholders, including shareholders, investors, and analysts, through transparent and accurate information disclosure, explanations, and two-way communication. To achieve these objectives consistently, the Company regularly shares essential information and engages in various investor relations activities. By closely interacting with the investor community, the Company can build investor confidence, allowing it to maximize the value derived from its IR program.

Steelcast conducted following major activities for Investor erence to the Relations and Engagement:

Conducted results earning calls post announcement of the financial results

Organized plant visits for analyst & investors community to showcase our plant, ensuring that the stakeholders gain insights into

Investor presentation and the required disclosures are shared with the Stock exchanges as well as hosted on the website of your Company.

Internal control system

Your Company has an adequate and effective Internal Control Mechanism in place to ensure efficient conduct of its operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records and the timely preparation of reliable financial information as per its Management Information System (MIS). These controls have been designed to provide reasonable assurance about maintaining proper accounting controls for ensuring the reliability of financial monitoring of operations and protecting assets from unauthorized use or losses, compliance with regulations. The Company has continued its efforts to align all its processes and controls with global best practices. Apart from strong internal control, your Company has also appointed external and independent Audit Firms as its Internal auditors for periodical checking and monitoring of the Internal Control Measures for its plants. Internal Auditors are present at the Audit Committee Meetings Where Internal Audit Reports are discussed alongside management comments and the findings and observation of the Internal Auditors. The Terms of Reference of the Audit Committee inter alia include reviewing the adequacy of the internal control environment, monitoring implementation of the action plans emerging out of Internal Audit findings including those relating to the strengthening of the Companys Risk Management Systems and discharge of statutory mandates.

Your Company has a Comprehensive Budgetary Control System in operation and its Key Performance Indicators (KPI) are set for all-important operational parameters. These are monitored and reviewed regularly by the management in Management Committee Meetings, which are chaired by the Executive Director of the Company and participated by all departmental heads and necessary corrective and preventive actions are being initiated.

Cautionary statement

Statement in this "Management Discussion and Analysis" describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could operations make include global and Indian demand and supply conditions, finished goods prices, input materials availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. The Company assumes no responsibility to publicly amend, modiFYor revise any forward-looking statements, based on any subsequent development, information or events or otherwise.