Suraj Ltd Management Discussions

Suraj Limited ("the Company") is Indias leading Manufacturer of Stainless Steel seamless Pipes, tubes, and "U" tubes, Flanges & fittings with Electro polishing having a plant at Survey no. 779/A, Thol, Tal:- Kadi, Dist: - Mehsana and Survey No. 51, Village : Chandarda, Kalol-Mehsana Highway, Dist : Mehsana, Gujarat. Our products find application in important industry segments like pharmaceuticals, dyes & pigments, Oil, Gas, Refinery, etc. The day to day management of the Company is looked by the Executive Director assisted by a team of competent technical & commercial professionals.

The stainless steel pipes and tubes industry forms a vital segment of the global steel market, supporting sectors such as oil & gas, petrochemicals, power generation, pharmaceuticals, food processing, and construction. In India, the demand for stainless steel seamless pipes and tubes is growing due to infrastructure development, increasing energy needs, and emphasis on hygienic and corrosion-resistant materials.

Electropolished tubes and hygienic fittings are gaining traction in pharmaceuticals and high-purity process industries, enhancing the relevance of value-added products. With Indias focus on ‘Make in India and import substitution, domestic manufacturers are better positioned to tap global markets.

Financial Performance with Respect to Operational Performance:

The total income on a standalone basis for the financial year 2024-25 stood at Rs. 23,796.85 lakhs, representing a decline of 28.78% compared to Rs. 33,411.80 lakhs in the previous year. On a consolidated basis, the total income for the year was Rs. 23,374.29 lakhs, also reflecting a decrease of 28.78% from Rs. 33,411.80 lakhs in the previous year.

The profit after tax on a standalone basis amounted to Rs. 1,324.80 lakhs, registering a decline of 35.89% as compared to the previous year. On a consolidated basis, the profit after tax was Rs. 1,165.00 lakhs, showing a reduction of 45.88% compared to the previous year.

1. Rising demand in healthcare, pharma, and food-grade applications for electro-polished tubes. The capital goods sector accounts for 11% of the total steel consumption and is expected to increase 14-15% by 2025-26. It has the potential to increase in tonnage and market share.

2. Export opportunities amid global diversification from single-source suppliers. Corporate Indias capex is expected to grow and generate greater demand for steel.

3. Government thrust on infrastructure and industrial growth. The infrastructure sector accounts for 9% of steel consumption and is expected to increase to 11% by 2025-26. Due to rising investment in infrastructure the demand for steel products would increase in the years ahead.

4. Growing demand from clean energy segments such as solar, hydrogen, and nuclear.

1. Volatility in raw material prices, especially nickel.

2. Dumping of cheap imports from countries like China, South Korea, etc.

3. Fluctuations in foreign exchange rates affecting export margins.

4. Stringent global quality certifications and compliance requirements.

• Operational risks from dependency on limited raw material suppliers.

• Logistical challenges due to global shipping and freight volatility.

• Regulatory compliance with increasingly stringent domestic and global standards.

• Environmental concerns and carbon emission compliance impacting production processes.

The Company has implemented robust risk mitigation strategies, including supplier diversification, investment in sustainable technology, and efficient logistics planning.

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations. Key elements of the Internal Control Systems are as follows:

(i) Existence of Authority Manuals and periodical updating of the same for all Functions.

(ii) Existence of clearly defined organizational structure and authority.

(iii) Existence of corporate policies for Financial Reporting and Accounting.

(iv) Existence of Management information system updated from time to time as may be required.

(v) Existence of Annual Budgets and Long Term Business Plans.

(vi) Existence of Internal Audit System.

(vii) Periodical review of opportunities and risk factors depending on the Global/Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place.

The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally, the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required.

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The Management and the employees are dedicated to achieve the corporate objectives and the targets set before the company.

Indias finished steel consumption stood at 119.17 MT in FY23, 138.5 MT in FY24 and 111.25 MT in FY25. The Indian Steel Association (ISA) anticipates that the steel requirement will reach 128.9 MT in the 2023-24 period, showing an increase from 119.9 MT in the preceding year. Indias domestic steel demand is estimated to grow by 9-10% in FY25 as per ICRA. To drive post COVID-19 economic recovery, for the government has planned investments in roads, railways, metro connectivity, industrial parks, industrial corridors, DFC, transportation of water, oil and gas, transmission towers, affordable housing. All these sectors will drive demand for steel.

Key Financial Ratios:

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios are as under:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied due to various factors beyond the Companys control.