Vaswani Industries Ltd Management Discussions

OVERVIEW

During the financial year under review, Vaswani Industries Limited continued to strengthen its operational capabilities and business fundamentals despite a challenging and competitive business environment. The Company recorded healthy growth in its core operations, with Revenue from Operations increasing by approximately 13.54% over the previous year. The significant improvement in EBITDA reflects better operating performance and enhanced efficiency across the Companys manufacturing activities.

During the year, the Company successfully completed and commissioned the expansion of its Billet manufacturing capacity from 66,000 MT to 1,50,000 MT per annum, thereby strengthening its production capabilities and enabling it to cater to growing market demand and higher-value steel requirements. The Company also commissioned aggregate solar power projects of 66.25 MWp, supporting its focus on renewable energy, energy-cost optimisation and sustainable operations.

Further, ongoing technological upgradation of the steel-making facilities, including initiatives for production of higher-grade and value-added steel, is expected to enhance product quality, operational efficiency and long-term competitiveness. The Company remains focused on sustainable growth, capacity utilisation, cost efficiency and value creation for its stakeholders.

THE GLOBAL ECONOMY

The global economy continued to face a challenging environment marked by geopolitical uncertainties, evolving trade policies, elevated input costs and uneven economic recovery. These factors influenced investment, manufacturing activity and commodity markets, including iron and steel. Global steel demand is expected to remain broadly stable in 2026, with growth projected at 0.3%, while stronger growth is anticipated in 2027. The steel industry continues to benefit from infrastructure development, construction, automotive, renewable energy and manufacturing investments. India remains a key growth market, with steel demand projected to increase by 7.4% in 2026, supported by infrastructure spending, construction, automotive demand and capital expenditure.

ECONOMIC OUTLOOK.

The global economic outlook remains cautiously positive, supported by moderating inflation, improving investment activity and gradual recovery in manufacturing and trade. However, geopolitical tensions, protectionist trade measures, commodity-price volatility and uncertain interest-rate movements continue to create challenges. For the iron and steel industry, infrastructure development, energy transition, construction and manufacturing investments are expected to remain key demand drivers. Steel producers may also benefit from increasing demand for higher-quality and value-added products, while managing raw-material costs, energy efficiency and global competitive pressures.

INDIAN ECONOMY

India continues to demonstrate strong economic resilience, supported by domestic consumption, infrastructure expenditure, manufacturing growth and private investment. Government initiatives in roads, railways, housing, renewable energy and industrial development are expected to sustain steel consumption. The expansion of manufacturing and infrastructure capacity is likely to create opportunities across the iron and steel value chain. Growing demand from construction, automotive, engineering and renewable-energy sectors provides a favourable environment for domestic steel producers.

RISKS AND CONCERNS

The Company operates in an industry exposed to fluctuations in raw material prices, energy costs, steel prices and overall market demand. Volatility in prices of iron ore, coal, scrap and other inputs may affect margins and profitability. Changes in government policies, environmental regulations, taxation and trade measures may also impact operations. Intense competition and fluctuations in domestic and international steel markets could affect selling prices and capacity utilisation. Operational risks, including equipment breakdowns, power availability and supply-chain disruptions, may affect production. The Company seeks to mitigate these risks through operational efficiency, technology upgradation, renewable energy initiatives, prudent cost management and continuous monitoring of market conditions.

OPPORTUNITIES AND THREATS

The Indian steel industry presents significant growth opportunities, supported by increasing infrastructure development, urbanisation, construction activity, automotive demand and investments in renewable energy and manufacturing. Government initiatives promoting domestic steel production and higher-value products may further strengthen industry prospects. The Companys expanded billet capacity, focus on special-grade steel, technology upgradation and renewable power generation provide opportunities to improve capacity utilisation, product mix and cost efficiency.

At the same time, the industry remains exposed to volatility in iron ore, coal, scrap and energy prices, fluctuations in steel prices, intense competition, changing trade policies and environmental regulations. Global oversupply and import pressures may also affect domestic realisations and margins. The Company continues to monitor these factors and adopt appropriate measures to manage associated risks.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

IRON-STEEL:

During the financial year 2025-26, the Company demonstrated improved operational performance across its Iron & Steel Division, comprising the Sponge Iron and Billet Divisions. The Company recorded higher production volumes and enhanced utilisation of its manufacturing facilities, supported by improved operational efficiency and favourable market realisations. The increase in production volumes, together with improved market realisations, contributed to growth in the turnover of the Division during the year under review. The enhancement of Billet manufacturing capacity from 66,000 MT to 1,50,000 MT further strengthened the Companys production capabilities and provides a strong foundation for future growth. Sponge Iron

• Installed Capacity: 90,000 MT

• Actual Production: 90659.21 MT

• Capacity Utilization: 100.73%

During FY 2025-26, the Company produced 90,659.212 MT of Sponge Iron against an installed capacity of 90,000 MT, achieving 100.73% capacity utilisation. The higher production reflects improved operational efficiency and effective utilisation of the Companys production facilities.

Billet

• Installed Capacity: 1,50,000 MT

• Actual Production: 77099.88 MT

• Capacity Utilization: 51.40 %

During FY 2025-26, the Company significantly enhanced the installed capacity of its Billet Division from 66,000 MT to 1,50,000 MT in June 2025. Following the capacity expansion, the upgraded facilities underwent multiple rounds of testing and trial runs, with commercial production commencing after July 2025. During the year, the Company achieved production of 77,099.88 MT, representing 51.40% capacity utilisation based on the revised installed capacity. The increased production capacity provides a stronger platform for future growth and improved operational efficiency.

Overall Performance

• Total Installed Capacity: 2,40,000 MT (Sponge Iron 90,000 MT + Billet 1,50,000 MT)

• Total Actual Production: 1,67,759.092 MT (Sponge Iron 90,659.212 MT + Billet 77,099.880 MT)

During FY 2025-26, the Company continued to strengthen its manufacturing operations and production capabilities. The Company recorded total production of 1,67,759.092 MT, comprising 90,659.212 MT of Sponge Iron and 77,099.880 MT of Billets. During the year, the installed capacity of the Billet Division was enhanced from 66,000 MT to 1,50,000 MT, with commercial production commencing after completion of testing and trial runs. The capacity expansion is expected to support higher production and operational growth in the ensuing years.

CONCLUSION:

During FY 2025-26, the Company demonstrated a positive and progressive performance in its Steel & Iron Division, supported by improved production volumes, enhanced operational efficiency and growth in turnover. The Company produced 90,659.212 MT of Sponge Iron and 77,099.880 MT of Billets during the year. The enhancement of Billet manufacturing capacity from 66,000 MT to 1,50,000 MT in June 2025, followed by testing and trial runs, and commencement of commercial production after July 2025, marks an important milestone in the Companys growth journey. The expanded capacity is expected to provide greater operational flexibility, support higher production volumes and strengthen the Companys position for sustainable growth in the coming years.

POWER:

AFBC & WHRB

In the financial year 2025-26, 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 2025-26): 76667600 Units

• Actual Production (FY 2024-25): 70988200 Units

The combined operations of the Waste Heat Recovery (WHR) and AFBC systems generated 76,667,600 units of power during FY 2025-26, compared with 70,988,200 units during FY 2024-25, registering a year- on-year increase of approximately 8.00%.

The growth in power generation reflects the Companys continued focus on optimizing energy recovery, improving operational efficiency, and maximizing the utilization of available resources. The consistent increase in power generation demonstrates the effectiveness of operational improvements and reinforces the Companys commitment to energy efficiency and sustainable power generation 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

• Actual Production (FY 2024-25): 8,639,40912 Units

• Actual Production (FY 2025-26): 48268355 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 during the year, the plant generated 8,639,409.12 units of renewable energy.

During FY 2025-26, with the plant operational throughout the year, solar power generation increased significantly to 48,268,355 units, registering a substantial year-on-year growth of approximately 458.93%. The significant increase reflects the full-year operation of the solar plant and the Companys continued commitment to renewable energy, energy efficiency, diversification of energy sources, and long-term sustainability

Conclusion:

During FY 2025-26, the Company continued to strengthen its power generation capabilities through efficient utilization of its Waste Heat Recovery (WHR), AFBC and Solar Power systems. Power generation from WHR and AFBC increased to 76,667,600 units, compared with 70,988,200 units in the previous year, reflecting improved operational efficiency. Solar power generation also increased significantly to 48,268,355 units, supported by the full-year operation of the Companys 16.25 MWp Solar Power Plant. These achievements demonstrate the Companys continued focus on energy optimization, renewable energy adoption and sustainable operations, while contributing to reduced dependence on conventional energy sources and supporting long-term environmental and business objectives.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE/INDUSTRIAL RELATIONS

The Company considers its human resources to be one of its key assets and continues to focus on maintaining a motivated, skilled and productive workforce. During the year under review, the Company maintained cordial and harmonious relations with its employees across all levels. The Company continued to provide a conducive and safe working environment, with due emphasis on employee welfare, health, safety and professional development.

During the year, the Company undertook various initiatives for strengthening employee engagement, improving operational efficiency and enhancing the skills and capabilities of its workforce through appropriate training and development programmes. The Company also continued to comply with applicable labour and employment laws and regulations.

There were no material developments in human resources or industrial relations during the year under review that had a significant impact on the operations of the Company. The management remains committed to fostering a positive work culture, employee satisfaction and continuous improvement in human resource practices.

RATIO ANALYSIS

Particulars	FY.2026	FY.2025	%change	Reason
1 Debt equity Ratio	1.85	1.14	62.37	due to an increase in borrowings during the year.
2 Current ratio	1.37	1.53		Current ratio decreases due to increase in current liabilities
3 Debt service coverage ratio	6.60	2.97	122.37	Debt Service Coverage Ratio increased due Higher earnings belore interest, depreciation and finance costs, coupled with lower debt servicing obligations during the year
4 Return on equity	2.95	6.64	(55.56)	The ROE decreased due to lower Profit After Tax arising from an increase in differed Tax:: Liability consequent to Capitalization of assets during the year.
5 Inventory turnover ratio	6.31	7.35	(14.10)	due to an increase in average inventory compared to the previous year
6 Net capital turnover	11.25	7.51	49.77	The increase in Net Capital Turnover Ratio is due to an increase in revenue and a Decrease in working capital during the year.
7 Net Profit Ratio	0.91	2.09	(56.56)	Net profit Ratio decrease due to lower not profitability resulting from increased expenses & higher deferred Tax Liability consequent to capitalization of assets during the year.
8 Return on capital employed	7.40	7.20	2.66	indicating a marginal improvement in the efficiency of capital employed

CAUTIONARY STATEMENT

Statements in this Report describing the Companys objectives, projections, estimates, expectations or future plans may constitute "forward-looking statements". Actual results may differ materially from those expressed or implied due to various factors, including changes in market conditions, fluctuations in input costs, regulatory and policy changes, economic developments in India and globally, competition, and other risks and uncertainties beyond the Companys control. The Company assumes no responsibility for updating or revising such statements in light of future developments.