Vaswani Industries Ltd Management Discussions

OVERVIEW

The steel sector continues to remain a cornerstone of the global economy and a key catalyst for sustainable economic growth. As a fundamental raw material for construction, transportation, manufacturing, and energy production, steel exerts a profound influence across industries, generating significant multiplier effects on overall development.

India, presently the worlds second-largest steel producer, has witnessed strong demand momentum during FY 2024-25, primarily driven by large-scale government infrastructure investments, urbanization, and initiatives to strengthen the domestic manufacturing base under the “Make in India” and “Atmanirbhar Bharat” programs. The stainless-steel segment has further expanded, supported by rising demand from construction, automotive, railways, and consumer durables.

Despite persistent challenges such as volatility in raw material availability, fluctuating global commodity prices, geopolitical tensions, and lingering disruptions in global supply chains post-COVID-19, the Indian steel industry has displayed resilience and adaptability.

Looking ahead to FY 2025-26, demand growth is expected to be underpinned by continued public and private sector capital expenditure, increasing adoption of green and advanced steel technologies, and Indias strategic emphasis on infrastructure development and clean energy transition. The sector is also anticipated to benefit from rising global interest in sustainable steel, with opportunities in export markets as well.

THE GLOBAL ECONOMY he global economy in FY 2024-25 continued to face headwinds from geopolitical tensions, particularly the prolonged Russia Ukraine conflict, which disrupted energy markets and supply chains. Additionally, trade restrictions and tariff measures imposed by the United States and other economies created uncertainty in global commodity flows, including steel. Slower recovery in certain advanced economies, coupled with inflationary pressures, also weighed on demand. However, emerging markets, led by India, remained resilient, supported by infrastructure expansion and domestic consumption. The outlook for FY 2025-26 suggests moderate growth, with global trade expected to gradually stabilize despite ongoing risks.

ECONOMIC OUTLOOK.

The Indian steel industry is well-positioned for sustained growth, backed by abundant iron ore reserves, a skilled workforce, and rising domestic demand. Robust government infrastructure spending and supportive fiscal policies are expected to cushion the sector from global slowdowns. With several ongoing and upcoming projects, the industry outlook remains positive, pointing towards continued expansion in FY 2025-26.

INDIAN ECONOMY

The Indian economy remains resilient in FY 2025-26, driven by strong domestic demand, infrastructure investments, and government-led reforms. While the imposition of tariffs by the United States poses challenges for exports and global trade integration, Indias focus on self-reliance, manufacturing growth, and diversification of export markets is expected to mitigate adverse impacts and sustain overall economic momentum.

RISKS AND CONCERNS

The Company operates in a dynamic business environment where both global and domestic factors influence performance. Key risks impacting the industry include volatility in raw material prices, fluctuations in global commodity markets, and uncertainties arising from geopolitical tensions such as the Russia Ukraine conflict and trade restrictions, including tariff measures by major economies. Additionally, inflationary pressures, supply chain disruptions, and regulatory changes may affect cost structures and operational efficiency. Domestically, rising competition, environmental compliance requirements, and demand cyclicality pose further challenges.

The Company remains committed to proactive risk management through prudent planning, diversification, and continuous monitoring of economic and policy developments to ensure long-term sustainability and resilience.

OPPORTUNITIES AND THREATS

The Indian steel industry offers significant opportunities, supported by strong infrastructure spending, rapid urbanization, and rising demand from sectors such as construction, automotive, and consumer goods. The governments push for self-reliance and green steel initiatives further enhances long-term prospects. However, threats persist in the form of global economic uncertainties, tariff measures by major economies, volatility in raw material prices, and stringent environmental regulations, which may impact competitiveness and profitability.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE IRON-STEEL:

In the financial year 2024-25, the Company recorded notable progress in production volumes and capacity utilization as compared to FY 2023-24. Nevertheless, despite these operational achievements, turnover was adversely impacted owing to a decline in market realizations for its products.

Sponge Iron

Installed Capacity: 90,000 MT Actual Production: 81913 MT Capacity Utilization: 91.02%

During FY 2024-25, the Company achieved Sponge Iron production of 81,913 MT, translating into a capacity utilization of 91.02%. While this reflects a healthy operational performance, it was marginally lower than the previous years utilization of 93.25%, when production stood at 83,927 MT. Despite maintaining efficient operations, the turnover did not rise in line with production levels, primarily due to a downturn in market prices for Sponge Iron.

Billet

Installed Capacity: 66,000 MT Actual Production: 53769 MT Capacity Utilization: 81.47%

Billet production registered a significant increase, reaching 53,769 MT in FY 2024-25, corresponding to a capacity utilization of 81.47%. This reflects a notable improvement over the previous years utilization of 67.18%, when production stood at 44,341 MT. However, in line with the trend observed in Sponge Iron, the decline in market prices for Billets constrained the overall turnover, despite higher production levels.

Overall Performance

Total Installed Capacity: 156,000 MT Total Actual Production: 86.97 MT

The Companys total production during FY 2024-25 stood at 135,682 MT, marking a substantial increase over the previous years production of 113,567.45 MT. This reflects stronger operational efficiency and improved capacity utilization of 86.97%. Nonetheless, despite higher production, the turnover did not rise in the same proportion, largely due to lower market realizations for the Companys products.

CONCLUSION:

While FY 2024-25 reflected higher production volumes and improved capacity utilization, the Companys turnover was adversely affected by subdued market prices for its products. This highlights the need to balance operational efficiency with close monitoring of market dynamics that materially influence financial performance. Going forward, the Company intends to explore strategies to mitigate the impact of price volatility and strengthen its resilience against external uncertainties.

POWER:

In the financial year 2024-25, the Power Division, encompassing Waste Heat Recovery (WHR) and Atmospheric Fluidized Bed Combustion (AFBC) systems, delivered a remarkable increase in power generation. This growth was further bolstered by the strategic addition of a new Siemens turbine, enhancing efficiency and reliability across the power generation process.

Power Generation

Actual Production (FY 2024-25): 70988200 Units Actual Production (FY 2023-24): 67,976,900 Units

The combined operations of the WHR and AFBC systems generated 70,988,200 units of power in FY 2024-25, as against 67,976,900 units in FY 2023-24. This year-on-year growth highlights the Companys continued focus on optimizing energy recovery and enhancing power generation efficiency. The steady increase in output demonstrates the effectiveness of operational improvements and the Companys commitment to sustainable energy practices.

Operational Enhancements

During the year, the company commissioned a new Siemens turbine, a move aimed at increasing the efficiency of power generation operations. This state-of-the-art turbine has become the primary driver of the companys power generation, significantly contributing to the higher output. The older turbine, while no longer the primary unit, remains operational and has been designated as a standby system, ensuring reliability and continuous power supply in case of any maintenance needs or unexpected downtimes.

Solar Power Generation (FY 2024-25): 8,639,409.12 Units

During FY 2024-25, the Company successfully commissioned its 16.25 MWp Solar Power Plant, which commenced operations in December 2024. Despite being operational for only four months (December 2024 to March 2025), the plant generated an impressive 8,639,409.12 units of renewable energy. This achievement underscores the effectiveness of the Companys clean energy initiatives and its commitment to diversifying energy sources while contributing to long-term sustainability goals

Conclusion:

The performance of the Power Division in FY 2024-25 reaffirms the Companys strong focus on energy efficiency, reliability, and sustainability. The strategic addition of the Siemens turbine, coupled with the consistent performance of the WHR and AFBC systems, contributed to a significant increase in power generation during the year. Further strengthening this portfolio, the commissioning of a 16.25 MWp Solar Power Plant in December 2024 generated 8.64 million units within just four months of operation, underscoring the Companys commitment to renewable energy and long-term sustainability.

This diversified mix of conventional and renewable sources not only enhances operational capabilities but also ensures energy self-reliance, with the backup turbine providing added security and resilience. Collectively, these initiatives position the Company to meet its power requirements more efficiently while advancing its environmental and sustainability objectives.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE/INDUSTRIAL RELATIONS

The Company continues to recognize its workforce as a critical driver of growth and innovation. During FY 2024-25, the Company focused on strengthening human resource practices by implementing targeted training programs, workshops, and skill development initiatives to enhance employee capabilities and align them with evolving business needs. Leadership development and performance management systems were reinforced to ensure accountability, meritocracy, and career progression across all levels.

The Company also undertook employee engagement initiatives, including interactive sessions, recognition programs, and wellness activities, fostering a positive and inclusive workplace culture. Industrial relations remained harmonious throughout the year, characterized by open communication, mutual respect, and collaboration between management and employees. The Company maintained a strong focus on workplace safety, health, and employee welfare, ensuring compliance with statutory requirements and industry best practices.

Overall, these efforts contributed to higher employee motivation, productivity, and retention, reflecting the Companys commitment to nurturing talent and sustaining a motivated, skilled, and engaged workforce

RATIO ANALYSIS

S.No.	Particulars	FY.2025	FY.2024	%change	Reason
1	Debt equity Ratio	1.14	0.27	320.51	Due to deployment of more debt in the capital structure
2	Current ratio	1.53	2.63	-41.69	Current ratio decreases due to increase in current liabilities
3	Debt service coverage ratio	2.97	0.95	212.35	Debt Service Coverage ratio increases due to moratorium period during which no interest or principal has to be repaid
4	Return on equity	6.64	7.71	-13.88	Return on equity has decreased due to reduction in net profit after tax and increase in shareholders equity
5	Inventory turnover ratio	7.35	8.18	-10.24	It has increased due to increase in revenue from operations
6	Net capital turnover	7.51	5.57	34.74	While turnover has increased, the working capital has reduced, therefore the variance
7	Net Profit Ratio	2.09	2.32	-9.90	While the net profit has reduced, the turnover has increased, therefore the variance.
8	Return on capital employed	7.20	12.96	44.43	Due to increase in capital employed, the variance is 44.43%

CAUTIONARY STATEMENT

Statements in this report that describe the Companys objectives, projections, or expectations constitute “forward-looking statements”. Actual results may differ materially from those expressed or implied. Key factors that could influence the Companys performance include prevailing market conditions, fluctuations in input costs, changes in government regulations, economic developments within India and globally, and other risk factors beyond the Companys control