Surani Steel Tubes Ltd Management Discussions

Indian Economy - Overview for FY 2025-26

The global economic environment remained uncertain during the year, influenced by geopolitical tensions, trade disruptions, and uneven growth and inflation across major economies. Despite these challenges, the Indian economy sustained strong growth momentum in FY26, with the First Advance Estimates projecting real GDP growth of 7.4 per cent, reaffirming Indias position as the fastest-growing major economy for the fourth consecutive year.

Growth was driven by robust domestic demand, supported by sustained private consumption and capital formation. On the supply side, the services sector remained the primary driver of growth, while manufacturing gained momentum and agriculture continued to provide stability despite structural constraints.

Government initiatives, including the Production Linked Incentive (PLI) Scheme, continued to attract investments and strengthen domestic manufacturing. Looking ahead, sustained reforms in ease of doing business, innovation, skilling, infrastructure, logistics, and MSME development will be critical to achieving the vision of Viksit Bharat @2047 and enhancing Indias role in global value chains

Industry Structure and Developments

The Indian steel industry sustained its growth momentum in FY 2025-26, driven by increased infrastructure investments, robust domestic demand, and strong export performance. The Electric Resistance Welded (ERW) pipes segment continued to witness healthy demand, particularly from the oil & gas, construction, water transportation, and agriculture sectors. Consequently, Indias finished steel consumption surpassed 164 million tonnes during the year under review.

A key highlight of FY 2025-26 was the significant improvement in Indias steel trade performance. Finished steel exports increased by 35.9% to approximately 6.6 million tonnes during the April-March period, while imports declined sharply by 31.7%, reflecting the strengthening competitiveness of the domestic steel industry.

Operating in this favourable yet highly competitive environment, Surani Steel Tubes Limited leveraged its diversified product portfolio, with a strong focus on ERW pipes and tubes, to effectively cater to the evolving requirements of customers across both domestic and international markets.

Global Outlook of Steel Industries:

After two years of declining steel consumption, the World Steel Association (WSA) expects global steel demand to grow slightly by 0.3% to 1,724 million tonnes (MnT) in 2026. This forecast assumes that the Middle East crisis eases by the middle of the year. According to the WSA, the major steel markets are not expected to be significantly affected by the direct impact of the crisis. The association also expects stronger growth of 2.2% in global steel consumption in 2027.

• China retained its position as the worlds largest steel producer with 1,005.1 million tonnes, although production declined slightly from 2023.

• India remained the second-largest steel producer, recording 149.4 million tonnes in 2024, up from 140.8 million tonnes in

2023, supported by strong infrastructure, construction, and manufacturing demand.

Finished Steel Demand (MnT)	2023	2024	2025	2026 (F)	Y-o-Y %
World	1,778.5	1,751.1	1,718.2	1,724.1	0.3
China	905.1	856.6	796.0	784.1	-1.5
India	132.8	147.9	159.8	171.6	7.4
Developed Economies	356.2	348.3	348.8	352.5	1.0
World ex-China	873.4	894.5	922.2	940.1	1.9

Source: World Steel Association

Note: F = Forecasted

Opportunities and Threats Opportunities:

• Rising demand from the infrastructure, oil & gas, and water supply sectors.

• Free Trade Agreements with United Kingdom, European Union, and others are likely to expand market access for the sector.

• Innovation in manufacturing processes and quality control practices.

• Governments focus on indigenous manufacturing and policy support.

Threats:

• Geopolitical uncertainties disrupting global trade flows and supply chain logistics.

• Foreign exchange rate volatility affecting export revenues and profitability.

• Strong competitive pressure from both organized and unorganized market participants.

• Fluctuations in raw material prices, particularly hot-rolled (HR) coils, directly impacting profit margins.

Pricing Trends

Steel and key raw material prices remained lower on average during FY 2025-26 compared to the previous year, mainly due to weak global demand and increased steel exports from China. Steel prices recovered in the last quarter of FY 2025-26, supported by the implementation of the Safeguard Duty, higher input costs, and strong domestic demand. However, the risk of increased steel imports into India remains due to global overcapacity and expanding trade restrictions, further impacted by weaker regional demand caused by the Middle East conflict.

Challenges and Risks

• Geopolitical tensions, including conflicts in the Middle East, have increased volatility in global energy prices, freight rates, and supply chains.

• Rising crude oil prices have led to higher transportation, shipping, and logistics costs, increasing overall operational expenses.

• Steel manufacturing is energy-intensive; therefore, higher fuel and energy costs can increase production costs and impact profitability.

Green Steel Transition & Decarbonising

• Green hydrogen and decarbonisation initiatives position the Company favourably in the evolving low-carbon steel landscape.

• Over 130 countries have committed to net-zero emission targets, representing nearly three-quarters of global greenhouse gas emissions. While the United States, the European Union, and the United Kingdom aim to achieve net-zero by 2050, China has set a target of 2060 and India has committed to reaching net-zero by 2070

• Policies such as the EUs Carbon Border Adjustment Mechanism (CBAM) and increasing public procurement of low-carbon steel are expected to drive the growth of the global green steel market.

Indias Demand Outlook

Indias total steel demand is expected to reach ~230 MT by FY 31. This growth will be driven by the building and construction (rising urbanization rate, increasing steel intensity) and infrastructure segments (investment in roads, railways and airports, increasing steel usage).

Key Growth Drivers

• Global infrastructure investment will continue to be a major demand driver, especially through public spending in transport, renewable energy, water supply, and housing.

• Government initiatives e.g. Make in India and Atmanirbhar Bharat, Production Linked Incentive (PLI) Scheme, Steel Import Monitoring System (SIMS) etc.

• Steel-intensive green transition projects (e.g., wind turbines, electric vehicles, grid expansion) will boost long-term structural demand.

• Rising automotive demand: The shift towards electric vehicles (EVs) and advanced high-strength steel (AHSS) is increasing demand for lightweight and durable steel.

• EV-driven growth: Expanding EV production is boosting steel demand for battery packs, body structures, and other vehicle components.

Internal Control Systems and Their Adequacy

The Company implemented suitable controls to ensure its operational, compliance and reporting objectives. The Company has adequate policies and procedures in place for its current size as well as the future growing needs. These policies and procedures play a pivotal role in the deployment of the internal controls. They are regularly reviewed to ensure both relevance and comprehensiveness and compliance is ingrained into the management review process.

Adequacy of controls of the key processes is also being reviewed by the Internal Audit team. Suggestions to further strengthen the process are shared with the process owners and changes are suitably made. Significant findings, along with management response and status of action plans are also periodically shared with and reviewed by the Audit Committee. It ensures adequate internal financial control exist in design and operation.

The internal audit function reviews operational and financial processes on a regular basis to assess the effectiveness of internal controls, risk management practices, and compliance with statutory and regulatory requirements. Any control weaknesses identified during the course of internal audits are addressed through appropriate corrective actions to strengthen the overall control environment.

The Company continually reviews and enhances its internal control framework to align with the evolving needs of the business. During the year under review, the Internal Auditors did not report any material weakness, significant deficiency, or serious observation relating to the adequacy or effectiveness of the Companys internal financial controls.

The Internal Audit is processed to design to review the adequacy of internal control checks in the system and covers all significant areas of the Companys operations. The Audit Committee reviews the effectiveness of the Companys internal control system.

Financial Performance with respect to Operational Performance

Revenue:

During the year, the Companys revenue declined compared to the previous year. However, despite the lower revenue, the Company reported a significant improvement in profit after tax, reflecting better cost management, improved operational efficiency, and enhanced profitability. The management remains focused on strengthening operational performance and sustaining profitable growth.

Profitability:

The Profit After Tax (PAT) for the year stood at Rs. 204.64 Lakh, as against Rs. 48.56 Lakh in the previous year. During the year, the Company recognized an exceptional gain of Rs. 196.86 Lakh on account of sale of investments, representing the difference between the carrying amount of the investment (after fair value adjustments in accordance with the applicable accounting standards) and the sale proceeds realized on such disposal. The recognition of this exceptional gain contributed to the improvement in the Companys profitability during the year.

Financial Results:

(Rs. In Lakhs)

	Standalone		Consolidated
Particulars	For the Financial Year March 31, 2026	For the Financial Year March 31, 2025	For the Financial Year March 31, 2026	For the Financial Year March 31, 2025
Revenue from Operations	9227.59	22500.38	9227.59	22500.38
Other Income	357.27	238.26	357.27	238.26
Total revenue	9584.86	22738.64	9584.86	22738.64
Operating Profit (Before Finance Cost and Depreciation & Amortization)	195.92	376.03	195.92	376.03
Less: Finance Cost	-	1.73	-	1.73
Profit before Depreciation & Amortization	195.92	374.30	195.92	374.30
Less: Depreciation & Amortization	88.52	79.80	88.52	79.80
Profit before Exceptional and Extraordinary item and Tax	107.40	294.51	107.40	294.51
Add: Exceptional items	196.86	(277.98)	196.86	(277.98)
Profit before Tax	304.26	16.53	304.26	16.53
Less/(Add): Current Tax	19.41	12.08	19.41	12.08
Less/(Add): Deferred Tax liability/ (Assets)	76.57	(50.70)	76.57	(50.70)
Less/(Add): Prior period tax adjustment	3.64	6.58	3.64	6.58
Profit after Tax	204.64	48.56	204.64	48.56
Earnings Per Share
Basic	1.32	0.38	1.32	0.38
Diluted	1.32	0.38	1.32	0.38

Significant Change in Key Financial Ratio:

Key Ratios	FY 2025-26	FY 2024-25	% Change	Reasons, if Change >25%
Debtors Turnover	6.11	15.80	-61.30%	Due to decrease in revenue from operations compared to the previous year
Inventory Turnover	1.02	4.63	-78.04%	Due to increase in closing inventory.
Interest Coverage Ratio	N.A.	N.A.	N.A.
Current Ratio	1.89	4.11	-53.90%	Due to proportional increase in both Current assets & Current Liabilities
Debt Equity Ratio	N.A.	N.A.	N.A.	-
Operating Profit Margin (%)	2.04%	1.65%	23.60%	N.A.
Net Profit Margin (%)	2.22%	0.22%	927.55%	Due to increase in Net Profit After Tax (PAT), driven by an exceptional gain on the sale of current investments. Conversely, the PAT in the previous year was significantly lower due to the recognition of a fair value loss on those same investments.
EPS (Diluted) (in Rs.)	1.32	0.38	N.A.

Human Resources and Industrial Relations

The Company recognizes its human resources as a key driver of sustainable growth and operational excellence. As of March 31, 2026, Surani Steel Tubes Limited had a workforce of 50 permanent employees and workers. The Company maintained harmonious industrial relations throughout the year, fostering a collaborative and productive work environment. Regular training and skill development programmes were conducted to enhance employee capabilities, strengthen safety awareness, and support continuous improvement.

Cautionary Statement

Statements in the 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 may differ materially from those expressed or implied.