MSP Steel & Power Ltd Management Discussions

ECONOMIC OVERVIEW

GLOBAL ECONOMY 1

The global economy grew by 3.5% in CY 2025, demonstrated notable resilience despite ongoing policy uncertainties and elevated trade tensions.

Investments in technology, favourable financial conditions and supportive fiscal & monetary policies sustained this growth. The advanced economy expanded by 1.9%, supported by resilient consumption and continued innovation-driven investments. Meanwhile, emerging economies outpaced advanced economies by recording a growth rate of 4.5%, driven by robust domestic demand and consistent trade across Asia, with China continuing to play a significant role in global manufacturing and industrial activity.

Global inflation moderated to 4.1% amid geopolitical tensions, subdued industrial activity, and policy disruptions, triggering a sharp rise in precious metal prices. On the positive side, easing supply constraints and balanced labor markets provided vital economic support. This stability was further bolstered by strong foreign investment and a weaker US dollar.

OUTLOOK 2

Global GDP is forecast to grow by 3.0% in CY 2026 as the economy navigates shifting trade policies and fiscal pressures.Thisprojectedgrowthisdrivenbyresilientdomestic demand, monetary easing, and sustained policy actions

Persistent conflicts in West Asia have increased uncertainty in the global energy market. Disruptions near critical transit routes could elevate energy prices and cause logistical delays. Consequently, inflation is projected to edge up to 4.7% in CY 2026, before declining to 3.9% in CY 2027 due to easing labour market conditions and subdued demand for tradable goods.

INDIAN ECONOMY 3

The Indian economy expanded by 7.7% in FY 2025-26, maintaining its position as the fastest-growing economy.

Despite a challenging global environment, resilient macroeconomic fundamentals and continued policy support drove this growth. Inflation moderated to 3.4% during the year, enabling the RBI to implement a cumulative 125 basis points reduction in the policy repo rate. These measures helped maintain stable borrowing costs and supported market sentiment across sectors.

Economic activity accelerated due to strong domestic demand, aided by reduced income tax and GST rates, alongside increased freight movement by Indian Railways. This expansion was further bolstered by widespread growth across the countrys eight core industries.

The government allocated approximately H11.21 lakh crore for capital expenditure in FY 2026 to advance infrastructure, construction, railways and manufacturing 4 . This ongoing focus on large-scale infrastructure projects and urbanisation was pivotal in increasing steel consumption during the year.

OUTLOOK 5

Indias economic outlook stays cautiously optimistic despite uncertainties from tariff-related trade disruptions and global capital flow volatility, which could periodically impact exports and investor sentiment. However, strong capacity utilisation and continued government focus on capital expenditure are projected to support investment activity, with the GDP growth rate projected at 6.6% for FY 2026-27.

Supply-chain disruptions due to the conflict in West Asia could weigh on the availability of key manufacturing inputs, pushing the projected CPI inflation for FY 2026-27 up to 5.1%. However, this inflationary pressure is expected to be partially mitigated by positive supply-side conditions, including sufficient reservoir levels and ongoing advantages from GST rate rationalisation.

Policy support and regulatory frameworks continue to drive market expansion and technological advancement. Incentive schemes and infrastructure-focused policies are boosting domestic manufacturing and lowering import reliance. In line with the broader vision of Atmanirbhar Bharat and increased self-reliance, India is working to minimise dependence on foreign sources.

INDUSTRY OVERVIEW

GLOBAL STEEL INDUSTRY 6

Global steel production reached 1,850 MT, propelled by demand from the automotive, healthcare, construction and manufacturing industries. The sector is upgrading equipment by enhancing material strength, corrosion resistance and anti-termite properties. Key strategic priorities include advancing digitisation, implementing automation and transitioning to sustainable, eco-friendly and highly recyclable manufacturing practices.

China maintains its global leadership in production, driven by extensive domestic construction, robust export manufacturing and heavy state-sponsored industrial capacity. India holds the second position, advancing its market share through strategic infrastructure investments, rapid urbanisation and government initiatives aimed at expanding domestic manufacturing. Meanwhile, the United States, Japan and Germany remain major industrial contributors despite experiencing moderate growth.

OUTLOOK 7

The global steel industry is navigating a structural transition marked by multiple headwinds, including rising protectionism, excess capacity and trade policy uncertainty. Despite these challenges, global steel demand is transitioning towards a recovery, rebounding from a recent production drop. Global demand stabilisation remains uneven across regions. India leads global growth, fuelled by robust infrastructure development and automotive manufacturing. Conversely, Chinese demand is projected to contract in the near term before plateauing, as its real estate correction concludes.

Globally, the recovery of infrastructure and the enhancement of manufacturing continue to promote consistent development in the world steel markets. Concurrently, the industry is moving toward low-carbon steelmaking and circular production models worldwide, with green hydrogen and scrap-based Electric Arc Furnace (EAF) production gaining momentum.

INDIAN STEEL INDUSTRY 8

During the 2025-26 financial year, the Indian steel industry remained the worlds second-largest producer. Steel is recognized as a key Sunrise Sector in India, driving domestic consumption and industrial growth. The countrys steel production continues to show strong momentum, with output up 2.2% year over year, driven by robust manufacturing growth and sustained increases in domestic demand. This expansion reflects the rapid pace of infrastructure development and urbanization.

Further, India regained its status as a net exporter of steel, driven by a 35.80% increase in finished steel exports. This expansion strengthened the industrys presence across key markets in the Middle East, Europe, and Southeast Asia. Concurrently, steel imports declined by 46.47%, helping to bolster the overall global competitiveness of Indian steel products

While the sector continued to attract investments aimed at expanding production capacity, it navigated a distinct range of cost and financial pressures. Steel prices in India recovered in early 2026 after a continuous downward trend over the preceding three years. However, final profit margins remained constrained due to fluctuating coking coal and raw material costs, volatile global pricing and elevated logistics and freight costs arising from geopolitical disruptions towards the end of the year.

OUTLOOKS 9

The Indian steel industry is projected to sustain its production growth and strong demand, anchored by structural economic and demographic factors. Sustained investments in urban infrastructure, residential housing, commercial construction, energy and industrial machinery are projected to drive significant growth in steel demand and overall consumption.

To navigate energy security, input costs and global market volatility, the industry leverages supportive policies, infrastructure development and investments in green steel technologies, ensuring its sustained role as a central pillar of Indias industrial and economic progress.

India targets a 500 MT steel production capacity by 2047 to accelerate industrial growth, create business opportunities and support infrastructure development. Concurrently, the sector will drive decarbonisation

Government Initiatives 10
Initiatives		Description
National Steel		The Government of India\u2019s National Steel Policy 2017 provides support to develop a technologically
Policy 2017		advanced, competitive and self-sufficient industry. This framework covers demand, capacity, raw
		materials, logistics, R&D and energy efficiency.
		Under this framework, the government has made the following targets:
		Sl. No. Parameter	Projections (2030-31)
		1 Total Crude Steel Capacity	300mt
		2 Total Crude Steel demand/Production	255mt
		3 Per Capita Finished Steel Consumption	158kg
Production		Launched on 4 November 2025, the PLI Scheme 1.2 targets fresh investments in advanced categories
Linked Incentive		like superalloys, CRGO steel, stainless steel and titanium alloys. The Ministry of Steel signed MoUs
(PLI) Scheme		with 60 companies for 85 eligible applications out of 118 received. This round is expected to attract
for Specialty		a committed investment of H11,887 crore and a capacity of 8.29 million tonnes.
Steel
		J 236 Crore
		PLI Incentives Disbursed for Specialty Steel
Initiatives	Description
Steel Quality	The Ministry of Steel introduced the Steel Quality Control Order (QCO) to ban substandard or
Control Order	defective domestic and imported steel products. This ensures end users receive only quality steel
(QCO)	conforming to relevant BIS standards. Currently, 151 Indian Standards covering carbon steel, alloy
	steel and stainless steel are notified under the QCO.
Research &	The Ministry of Steel operates the R&D Scheme \u2018Promotion of Research & Development in Iron &
Development	Steel Sector\u2019. It provides financial assistance for collaborative projects with academic institutions,
(R&D)	research laboratories and steel companies to address technological challenges. Following a third-
	party evaluation, the scheme has been revised and extended for five years until 31 March 2031.
	J 5\u201310 Crore 75
	Annual R&D Budget Projects Approved
	for the Steel Sector under the Scheme
	J 7 Crore J 6 Crore
	Expenditure Incurred in Budget Estimate for
	FY 2025\u201326 FY 2026\u201327
Steel Import	The Ministry of Steel revamped the 2019 Steel Import Monitoring System (SIMS) portal to improve
Monitoring	data tracking for policy and growth. Effective 21 November 2025, the new \u2018SARAL SIMS\u2019 simplifies
System (SIMS)	registration for MSME small consignments and export-purpose imports. Concurrently, regular SIMS
	registration reduced its required data fields to promote Ease of Doing Business.

Key Industry Drivers

Construction and Infrastructure

Steel remains a premier construction material. In India, sustained public capital expenditure continues to fuel robust infrastructure and construction activity, which serve as the primary structural drivers for domestic steel market growth. Rapid urban expansion and government initiatives like Smart Cities Mission and National Infrastructure Pipeline (NIP) have significantly increased the countrys steel requirements. Large-scale infrastructure projects, such as highways, ports, railways and industrial corridors, consume massive amounts of high-quality steel. Consequently, the expansion of construction and infrastructure serves as the main driver for steady steel demand, factory capacity use and the broader growth of the Indian steel industry.

Engineering and Manufacturing

The Make in India initiative and PLI Schemes have significantly accelerated capital inflows into the steel sector, strengthening domestic manufacturing capabilities and reducing import dependencies.

Capital goods production, industrial machinery and equipment manufacturing are heavily dependent on steel, establishing a diverse consumption base across the nation. As India progresses toward becoming a global manufacturing hub, the engineering and manufacturing sector is positioned to play an increasingly important role in maintaining the momentum of the Indian steel industry.

Automotive

The rapid expansion of Indias automotive market is set to heavily influence the domestic steel sector. As vehicle manufacturing and sales rise, the requirement for premium-grade steel is expected to grow in tandem. Further, the transition toward electric vehicles introduces fresh avenues for steel producers to create lighter and more robust materials. This transition is expected to generate demand for specialised steel products, altering overall market dynamics. The continuous growth of Indias automotive sector deepens its demand for domestic steel, fostering a mutually beneficial relationship across both industries.

Opportunities and Challenges

Opportunities

Key Focus Areas	Description
Green	India\u2019s steel industry is accelerating its shift toward decarbonisation through strategic investments
Technology	in hydrogen-based direct reduced iron (DRI) and electric arc furnace (EAF) technologies. Bolstered
Transition	by government initiatives like the National Clean Energy Fund, these sustainable practices are
	actively reducing carbon emissions and driving long-term operational efficiency.
Customised	Industries now require steel products featuring specific qualities, including enhanced tensile
Structural Steel	strength and corrosion resistance. Customisation in structural steel enables manufacturers to
Demand	target niche markets, distinguishing themselves from competitors and building client loyalty.
Digitalisation in	Integrating digital technologies, such as real-time data analysis and predictive maintenance,
Manufacturing	can optimise production workflows. These technological advancements allow steel producers to
	lower expenses, decrease operational downtime and meet quality benchmarks more effectively.
	By adopting digitalisation, steel manufacturers in India can maintain agility and competitiveness
	within a fast-changing industry environment.
Emerging	Rising domestic demand coincides with opportunities for domestic steel manufacturers to enter
Market	international markets. Developing economies, especially across Asia and Africa, provide active
Expansion	export markets that offer significant growth potential for steel producers aiming to expand their
	global reach.

Challenges

Competition from Low-Cost Steel Imports:

Inexpensive Chinese steel imports are squeezing Indian manufacturers by undercutting domestic prices and attracting cost-sensitive buyers. Although the government periodically implements anti-dumping and safeguard duties to protect local players, the unpredictable nature and inconsistent renewal of these trade policies leave the domestic steel industry navigating ongoing market volatility.

High Logistics Costs

Indias steel industry faces high logistics costs because its production plants and raw materials are concentrated in the east, far from major western and northern demand centres. This geographic divide makes transporting finished steel expensive and complicates efforts to maintain timely customer deliveries

Environmental Sustainability and Carbon Emissions

Environmentalimpactandcarbonintensityremainkey challenges for the Indian steel industry. This is mainly due to dependence on coal-based blast furnace and direct reduced iron processes, which consume high energy and generate significant emissions. The industry also faces pressures related to water usage, raw material efficiency and waste management while maintaining cost competitiveness.

Company Overview

MSP Steel & Power Limited (MSP Steel), the flagship entity of the MSP Group, is a vertically integrated steel manufacturer in India with its manufacturing unit located at Raigarh in Chhattisgarh. The company operates across the entire steel value chain, managing everything from raw material processing to the production of downstream value-added products. Its products serve critical sectors including infrastructure, construction, automotive and engineering.

Transitioning from a single-product unit into a structured producer with a nationwide presence and growing global footprint. Its state-of-the-art facilities, qualified workforce, comprehensive product portfolio and sound management practices have established the Company as a trusted partner in Indias development as a progressive industrial economy.

Key Differentiators

Experienced Promoter Leadership	Financial Resilience
Led by Suresh Kumar Agrawal, who has over four decades	The Company successfully exited the Restructuring
of experience in the steel industry. His leadership has	framework after settling its Right of Recompense (RoR)
supported the Companys steady growth over the years.	obligations. This marked the completion of its financial
	restructuring and provided greater strategic flexibility for
	future growth.
Captive Power Infrastructure
The Company operates an 87.5 MW captive power plant,	Improved Credit Profile
ensuring uninterrupted power supply for manufacturing
operations and supporting operational reliability.	CARE Ratings upgraded the Company\u2019s long-term
	bank facilities from CARE BBB to CARE BBB+ with a
	Stable outlook. The short-term bank facilities were also
Dedicated Railway Siding	upgraded from CARE A3+ to CARE A2, reflecting an
	improved credit profile.
MSP Steel has its own 2.4 km railway siding at Jamgaon,
Raigarh, enabling priority allocation of railway rakes from
loading points and improving logistics efficiency.

Business Performance

During FY2025-26, MSP Steel expedited the deployment of its Enterprise Resource Planning (ERP) system across the organization, which advanced process integration, operational clarity, and managerial decision-making. The business also directed capital toward automation and digital systems to optimize operational efficiency, corporate governance, and client responsiveness.

In addition, it continued to strengthen its product portfolio and customer engagement. These initiatives were complemented by continued efforts to improve manufacturing efficiencies, optimise asset utilisation and reinforce product quality through a culture of continuous improvement.

FINANCIAL PERFORMANCE OF THE COMPANY
	Standalone		Consolidated
Particulars
	FY 2025\u201326	FY 2024\u201325	FY 2025\u201326	FY 2024\u201325
Total Income	2,84,603.55	2,90,882.80	2,84,604.06	2,90,883.48
EBITDA	18,073.05	13,706.79	18,077.66	13,749.24
PAT	3385.09	(2,870.98)	3377.10	(2,835.94)
EPS Basic	0.60	(0.62)	0.60	(0.62)
EPS Diluted	0.57	(0.62)	0.56	(0.62)

KEY FINANCIAL RATIO

	As at	As at
Particulars			% Variance	Reasons
	31st March 2026	31st March 2025
Current ratio	1.17	1.26	(6.84)	-
Debt-equity ratio	0.28	0.25	13.85	-
Debt services coverage ratio	2.31	0.89	160.03	Increased primarily on
				account of an increase in
				earnings in the current year.
Inventory turnover ratio	5.36	6.02	(10.90)	-
Trade receivables turnover ratio	35.76	40.36	(11.39)	-
Trade payables turnover ratio	8.99	10.89	(17.49)	-
Net capital turnover ratio	22.16	19.12	15.90	-
Net profit ratio	1.19	(0.99)	220.27	Increased primarily due to the
				company turning a profit in
				the current year
Return on capital employed	0.09	0.07	34.11	Increased primarily due to the
				company turning a profit in
				the current year
Return on investment	3.28	5.64	(41.91)	Decreased primarily on
				account of reduction in
				the gain from fair value of
				investments in the current
				year.
Return on Equity Ratio	3.38	(3.69)	191.58	Increased primarily due to the
				Company turning a profit in
				the current year

HUMAN RESOURCES MANAGEMENT

People remain at the core of MSP Steels long-term success. During the year, the Company continued to strengthen its people development agenda by fostering a culture of continuous learning, collaboration and high performance. It remained focused on building a future-ready workforce through capability development, employee engagement and an inclusive workplace that supports long-term career growth. The Companys commitment to creating a high-trust and people-centric organisation continued to strengthen its talent ecosystem and organisational capability.

Key HR Highlights

Learning Management System (LMS) rolled out across Corporate Office and Plant locations.

Technical, behavioural and leadership development programmes strengthened workforce capability.

Wellness, leadership connect and recognition initiatives enhanced employee engagement.

Structured career progression and internal talent development supported long-term growth.

Recognised among Indias Top 50 Best WorkplacesT in Manufacturing 2026 (Large Category) and Indias Best WorkplacesT in Cement & Building Materials 2025.

1212

Number of Employees

STATUTORY COMPLIANCE

Statutory compliance adherence provides a great deal of security, starting from employees minimum wages to the companys business existence. The Company has adequate systems and processes to ensure that it is in compliance with all applicable laws and it is complying with all the Statutory rules and regulations applicable to it. The HR department complies with Statutory Acts like Factories Act, PF & Misc Provision Act, ESI Act, Minimum Wages Act, Bonus Act, Professional Tax Act, Shop and Establishment Act, Maternity Benefit Act, Payment of Wages Act and Other Labour Regulations as applicable for the organisation. The Accounts Department complies with Direct and Indirect Tax Compliance. The Company Secretary complies with the Companies Act, SEBI Regulations and other allied corporate laws applicable to the Company.

All the Statutory Compliances are met for the smooth functioning of the Company.

RISK & MANAGEMENT

The Company prioritises proactive risk management across all business activities. The Company has implemented a structured risk management framework that regularly monitors both internal and external environments to detect and mitigate potential threats.

Risk Type	Impact										Mitigation Strategies
Supply Chain and	Changes		in raw		material process					and	The Company maintains long-term relationships
Sourcing Risks	potential		supply		chain			disruption		can	with reputed suppliers, including government-
	negatively affect cost control and delivery										owned enterprises and established industry
	timelines										players, to ensure a reliable supply of critical
											raw materials. It also focuses	on supplier
											diversification, inventory planning,	sustainable
											procurement practices and	continuous
											engagement with value chain	partners to
											enhance supply chain resilience.
Technological	Continuous investment in new technologies								The Company continuously invests in modern
Risks	is necessary to prevent obsolescence and								and energy-efficient technologies, including
	sustain a competitive advantage.								induction furnaces, waste heat recovery
									systems and process automation. It also
									emphasizes resource optimization, research
									and development, adoption of Best Available
									Technologies (BAT) and continuous process
									improvements to enhance productivity and
									operational sustainability.
Environmental	Strict environmental regulations could raise								The Company proactively strengthens its
and Regulatory	operating costs and require changes to the								environmental management framework
Compliance Risks	Companys production methods.								through continuous monitoring of emissions
									and effluents, installation of pollution control
									equipment, zero liquid discharge (ZLD) systems,
									rainwater harvesting, waste recycling initiatives
									and adoption of energy-efficient technologies.
									Regular compliance reviews ensure adherence
									to applicable environmental regulations.
Operational	An inability to scale up production capacity								The Company focuses on preventive
Efficiency Risks	can cause inefficiencies and project delays,								maintenance, process optimisation, energy
	which can damage the brand image						and		conservation, waste heat recovery, efficient
	reduce stakeholders trust in the Companys								utilisation of by-products and implementation of
	capabilities.								robust occupational health and safety practices.
									Continuous employee training, performance
									monitoring and operational excellence initiatives
									further support efficient plant operations.
Competition Risks	Entering the stainless steel and aluminium								The Company aims to strengthen its
	foil	markets		introduces		more	intense		competitive position through product
	domestic and global competition.								quality, operational efficiency, technological
									upgradation, cost optimisation, sustainable
									manufacturing practices and customer-centric
									solutions. Continuous investments in capacity
									enhancement and innovation enable the
									Company to respond effectively to evolving
									market requirements.
Financial Risks	Significant capital			expenditure			for		The Company follows a disciplined capital
	expansion and fluctuating raw						material		allocation framework, focuses on cost
	costs lead to market instability and reduced								optimisation through energy efficiency and
	profit margins.								resource conservation, improves operational
									productivity and maintains prudent financial
									management practices to strengthen resilience
									against market volatility.

BUSINESS OUTLOOK

Having successfully completed its financial restructuring, MSP Steel has entered a new phase of growth. The Company will focus on capacity expansion, operational excellence, value-added products, digital transformation and customer-centricity under its Vision 2030. It remains committed to building a stronger, smarter and future-ready organisation that creates long-term value for all stakeholders. The Company also aims to strengthen energy efficiency, optimise resources and promote responsible manufacturing while contributing to Indias industrial growth.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

To ensure effective internal controls across business processes and systems, the Company has established a comprehensive internal control framework. This framework is designed to provide accurate, reliable and quality-assured financial and operational information, ensuring compliance with applicable laws and safeguarding the Companys assets.

The framework comprises both entity-level and business process controls. The adequacy and efficacy of these controls are regularly evaluated.

In addition to internal control, the Company has appointed external, independent Audit Firms as its Internal auditors to conduct periodic checks and monitor Internal Control Measures.

The Companys internal financial control framework is commensurate with the size and operation of the business and is in line with the requirements of the Companies Act, 2013. The Company has established standard operating procedures and policies to guide the operations of each of its functions. The Audit Committee also meets with the Companys Internal Auditors and Statutory Auditors to ascertain their views on the adequacy of the Companys internal control systems and keeps management informed of its major observations. Robust and continuous internal monitoring mechanisms ensure the timely identification of risks and issues. The Management, Statutory and Internal Auditors undertake rigorous testing of the Companys control environment.

CAUTIONARY STATEMENT

The Management Discussions and Analysis describe the Companys projections, expectations or predictions and are forward-looking statements within the meaning of applicable laws and regulations. These statements are based on current information and may differ from actual results due to risks and uncertainties. Important factors that could make a difference to the Companys operations include demand-supply conditions, finished goods prices, raw materials costs and availability, fluctuations in exchange rates, changes in Government regulations, tax laws, natural calamities, litigation and industrial relations, economic developments within the country and other factors.