Vedanta Ltd Management Discussions

<dhhead>Management Discussion & Analysis</dhhead>

GLOBAL ECONOMY

The global economy in FY 2024 25 has seen a mix of cautious optimism and a continued uncertainty. Encouragingly, inflation has shown signs of moderation across major economies, offering some relief after years of elevated price pressures. This easing trend, supported by more stable commodity prices and improved supply chain dynamics, has allowed central banks, especially in advanced economies, to hold firm on tight monetary policies without further aggressive rate hikes. While interest rate cuts have been limited, the more predictable inflation path has helped stabilize financial markets and laid the foundation for a gradual economic recovery.

However, this progress has been overshadowed by renewed geopolitical and trade tensions, particularly between the United States and China. Early in the fiscal year, the U.S. upheld steep tariffs on Chinese imports, averaging over 145%. In March 2025, U.S. also imposed a 25% duty on all steel and aluminium products, citing national security concerns. China responded with its own set of tariffs, some reaching 125%, triggering a sharp decline in bilateral trade and causing ripple effects across global supply chains.

A pivotal moment came in May 2025, when both nations agreed in Geneva to a 90-day suspension of tariffs exceeding 100%, aiming to de-escalate tensions and reopen dialogue. President Trump reduced tariffs on Chinese goods to 30%, while China lowered its tariffs on U.S. products to 10%. Despite this temporary truce, deeper issues remain unresolved, particularly around U.S. export controls on advanced semiconductors and China’s restrictions on rare earth minerals, both critical to high-tech and automotive industries.

High-level negotiations resumed in London in June, focusing on technology transfer, export licensing, and the broader tariff framework. Yet, the U.S. simultaneously proposed to raise steel and aluminium tariffs to 50%, signalling that tariffs remain a key strategic tool. While the tariff pause offers a brief reprieve, the path forward remains uncertain. Businesses worldwide continue to adapt to a complex and evolving trade landscape, as the global economy cautiously navigates these turbulent times.

In 2024, the global economy demonstrated resilience amid various challenges. The International Monetary Fund (IMF) reported a global real GDP growth rate of 3.3%, with emerging market and developing economies growing at 4.3%, and advanced economies at 1.8%. While this was an improvement over the pandemic years, it was still lower than pre-pandemic growth rates.

Global inflation continued to decline in 2024 following high inflation in previous years, partly due to the normalisation of supply chains after pandemic disruptions. Central banks, such as the U.S. Federal Reserve and the European Central Bank, were in a position to ease some of the aggressive monetary tightening policies they had implemented in

2022 and 2023 as inflation rates decreased. However, the disinflation stalled in certain countries and has been moving sideways, causing slower reductions in interest rate cuts.

Global manufacturing activities fluctuated in 2024 with intermittent expansion and contraction. While growth uncertainties, geopolitical tensions, and high finance costs dampen activities, falling inflation and resultant improving disposable income, coupled with easing interest rates in the later part of 2024, improved manufacturing activities. Service sector activities, on the other hand, continued to perform better with rising wages.

However, the global economic landscape has been rapidly evolving, with trade policy uncertainty emerging as the key driver of the near-term outlook. Since taking charge of the office on 20 January 2025, the U.S. President Donald has significantly escalated the U.S. tariff war, implementing sweeping measures that affect global trade dynamics.

On 01 February 2025, Trump issued an executive order to impose 25% tariffs on goods from Mexico and Canada, and 10% tariffs on China with effect from 04 February 2025. As these countries announced countermeasures, within two days, that order was held back for 30 days for Canada and Mexico, without giving any respite to China.

On 10 February, the U.S. President reinforced a 25% import duty on steel and imposed a 25% duty on aluminium (raised from earlier 10% tariffs imposed in 2018), effective from 12 March 2025, ending earlier exemptions to various countries. The White House also issued an executive order to conduct an investigation into whether imports of copper pose a threat to U.S. national security.

Trump affirmed the imposition of 25% tariffs on Canada

Mexico when the one-month delay expires on 04 March. An additional 10% tariff on goods from China also took effect the same day. He also imposed 25% tariffs on automobiles and certain automobile parts, with special tariff exemptions for USMCA (United States-Mexico-Canada Agreement) compliant auto parts as well as for the value of the U.S. content embedded in autos imported under USMCA.

Major headwind came on 2 April, when the White House imposed a baseline 10% tariff starting 05 April 2025, on virtually all countries and then additional “reciprocal” tariffs starting 09 April 2025, on countries that contribute to large, persistent US trade deficits. As countries like China, Canada and the EU strongly retaliated, Trump announced a 90-day pause on differential tariffs on 09 April.

But as China retaliated, the U.S. tariffs on both sides kept rising. China imposed 125% tariffs on U.S. products with other measures, while they now face a higher tariff of 145% from the U.S.

Global Economic Outlook

The U.S.-led multiple waves of tariffs against trading partners have caused major policy shifts, resetting the global trade system and giving rise to uncertainty. This has overshadowed the positive developments that the world has achieved during the post-pandemic revival in the last two years. For example, from the multi-decade high inflation came down near the target levels of the central banks, encouraging them to reduce the interest rates. Labour markets also improved, with unemployment and vacancy rates returning to pre-pandemic levels.

With the world’s two biggest economies at loggerheads in a full-blown trade war, the fear of a global slowdown intensified. Heightened uncertainty has affected the consumer sentiment, discouraging them from making big-ticket expenditures. Business sentiment is also damaged, prompting many companies to suspend their capital spending plans. On top of that, inflation in the U.S. could rise again as Trump’s policies on trade, deportation, and tax are inflationary.

The newly emerged situation has triggered a downward revision of global growth prospects by the forecasting agencies. The International Monetary Fund (IMF) in its World Economic Outlook (WEO) on 22 April has dropped global GDP projection from 3.3% in 2024 to 2.8% for 2025 and 3% in 2026, down from 3.3% for both years in its January 2025 WEO Update. This is much below the historical (2000-19) average of 3.7%. Global headline inflation is now likely to decline at a slower pace than earlier expectations in January, reaching 4.3% in 2025 and 3.6% in 2026.

However, market sentiment improved after Donald Trump had said that his tariffs on China would come down

“substantially” and he had “no intention” of firing the chair of the U.S. central bank, Jerome Powell. China also signalled its openness to trade talks with the U.S.

Geopolitical Tensions and Climate Change Impacting Trade

Global supply chains are grappling with unprecedented challenges due to escalating geopolitical tensions and the intensifying impacts of climate change. Trade conflicts, particularly between major economies, have led to significant disruptions, with new tariffs and protectionist policies forcing companies to diversify their supplier bases and rethink their manufacturing strategies. Regional conflicts, such as the crisis in the Red Sea, have resulted in a 67% decrease in container ship transits compared to the previous year, causing vessels to reroute and increasing transit times and costs.

Simultaneously, climate change has emerged as a critical factor affecting supply chain stability. Extreme weather events, including floods and droughts, have disrupted production and transportation networks. For instance, severe drought conditions have led to a 36% reduction in transits through the Panama Canal, further complicating logistics and inflating costs due to longer alternative routes.

These environmental challenges highlight the urgent need for businesses to incorporate climate resilience into their supply chain planning.

In response to these dual challenges, companies are increasingly investing in technologies such as artificial intelligence and digital twins to enhance supply chain visibility and resilience. There is also a growing emphasis on reshoring and diversifying supplier networks to mitigate risks associated with geopolitical and climate-related disruptions. In future, the convergence of geopolitical instability and climate change is expected to continue posing significant risks to global supply chains. Businesses that proactively adapt by enhancing flexibility, investing in technology, and prioritising sustainability will be better positioned to navigate the complexities of the global trade environment.

United States of America

In 2024, the U.S. economy was navigating through a period of transition, marked by uncertainty over the general election, a cooling housing market, and efforts to manage inflation. But still, the U.S. economy registered impressive growth of 2.8% in 2024, which was marginally below the 2.9% achieved in 2023.

Consumer spending, which is a major driver of U.S. GDP, continued to show perseverance, but at a more moderate rate. While the job market remained relatively strong, inflation and high-interest rates were impacting purchasing power and confidence.

The Federal Reserve had significantly raised interest rates between 2022 and 2023 to combat inflation, and in 2024, it was maintaining these higher rates to keep inflation in check. But after peaking in 2022, inflation continued to moderate in 2024, and by mid-year, inflation declined closer to the Federal Reserve’s target of 2%.

While inflation was cooling, the central bank reduced the interest rate by a cumulative 100 basis points in 2024 but remained cautious about potential price surges in the future.

But intensified trade war and tariff announcements have shifted this to a notably more pessimistic stance. In early April, J.P. Morgan Research raised the probability of a recession occurring in 2025 to 60%, up from 40%. Goldman Sachs also raised the odds of a U.S. recession to 45% from 35%. Despite direct pressure from the U.S. President, U.S. Federal Reserve Chair Jerome Powell said that the Fed would be in wait and watch mode before changing interest rates, as President Donald Trumps tariff policies could push inflation and employment further away from the central banks goals.

While the possibility of the U.S. entering recession (defined as two consecutive quarters of negative GDP growth) appears to be low, particularly after achieving 2.9% GDP growth in Q4/CY2025, the pace of growth in the U.S. economy is vulnerable to considerably slow down if the current trade policies are retained. Growth in the U.S. is expected to slow to 1.8% in 2025 and 1.7% in 2026 from 2.8% in 2024, as per the IMF.

China

In 2024, Chinas economy showed signs of recovery after the disruptions caused by the pandemic, but it also faced a series of challenges. After a sluggish period following the pandemics strict lockdown measures, China’s economy could achieve the targeted 5.0% GDP growth in 2024.

The growth rate was partly due to the governments efforts to shift focus from manufacturing and infrastructure investment to services, consumption, and high-tech industries. In 2024, China’s government rolled out various measures to boost economic growth, including targeted fiscal stimulus, monetary easing, and investments in green infrastructure. These measures were intended to stabilise the economy, promote consumption, and stimulate investment in key sectors. This rebalancing was part of Chinas longer-term strategy to move towards a more sustainable and consumer-driven economy.

A slump in housing sales has receded from -29.3% in January 2024 to -17% in December 2024 and further improved to -2.1% in YTD March 2025. Housing prices also reversed the negative Y-o-Y growth trend.

China’s industrial sector showed resilience in 2024, with strong performance in sectors like technology, green energy, and electric vehicles (EVs). The government’s push for innovation and technological self-reliance led to growth in high-tech industries, including semiconductors, robotics, and renewable energy. China’s industrial production also rose by 5.8% in 2024 and registered a robust jump of 7.7% in March 2025, mainly backed by solid export growth before the U.S. tariffs set in.

Automobile sales in China grew modestly by 4.5%, with 31.4 million units sold in 2024. But New Energy Vehicles witnessed a huge surge of 36% to 12.9 million units sold in 2024. New Energy Vehicle now holds 41% share in China’s automobile sales.

INDIA ECONOMY

Indias economic performance in FY 2024-25 has been characterised by a combination of strong growth drivers and emerging challenges. Following a splendid 9.2% GDP growth in FY 2023-24, the Indian economy is estimated to grow by 6.5% in FY 2024-25 (per the Second Advance Estimate).

Weak urban consumption, persistent food inflation, and sluggish private sector investment have contributed to the economic slowdown. Except for agriculture, all other sectors registered lower growth in FY 2024-25 than the previous fiscal year, with a more notable slowdown observed in manufacturing, which is likely to have grown by just 4.3% in FY 2024-25 vis-?-vis 12.3% in FY 2023-24.

Rising trade and tariff tensions, along with resulting financial market volatility, potential slowdown in global growth in the near term. While this subdued global outlook may affect India’s growth by weakening external demand, the country’s domestic drivers, namely, consumption and investment, remain relatively insulated from global shocks.

India is relatively better placed compared to other countries to face the vagaries of trade tension. India is less dependent on exports as export contributes just 21% of India’s GDP as compared to 87% for Vietnam or 65% for Thailand. On the other hand, private consumption fuels the economic growth, having a 61% share in GDP vis-?-vis 40% for China, 55% in Vietnam and Canada. India is also better placed as compared to its regional peers if the reciprocal tariff is triggered after the 90-day pause.

Integral to this accelerated growth trajectory and increasing economic self-sufficiency have been significant governmental reforms and considerable capital allocated towards both physical and digital infrastructure. Government initiatives such as Make in India and the Production-Linked Incentive (PLI) scheme have also played a crucial role. The services sector in India demonstrated a steady expansion of 7.2%. This growth was fuelled by strong performance across a range of areas, including finance, property, professional services, public administration, and defence, amongst others.

Indias economic stature continues its upward climb, with the nation now holding the position of the worlds fifth-largest economy by nominal Gross Domestic Product (GDP) and the third-largest when assessed by purchasing power parity (PPP). Ambitious national targets have been set to achieve a US$ 5 trillion economy by FY 2027-28 and a US$ 30 trillion economy by 2047. These aims are to be accomplished through substantial infrastructure investments, ongoing governmental reforms, and the widespread adoption of technological advancements.

Reflecting this commitment, the capital investment budget for the upcoming financial year (2025-26) has increased to 11.21 lakh crore, representing 3.1% of GDP. have sparked concerns about a

The outlook for the agricultural sector has improved, supported by a forecast of an above-normal southwest monsoon in 2025, which could boost farm incomes and help stabilise food prices. In March, headline inflation eased to a

67-month low of 3.3%, largely due to a drop in food prices. RBI has also reduced the interest rate by 50 basis points so far and is expected to cut more to support growth. The manufacturing sector has also shown improvement, as indicated by a strong manufacturing PMI of 58.2 in April 2025, which is the highest in 10 months.

Infrastructure development remains a major focus of the Indian government. The National Infrastructure Pipeline (NIP), with investments in roads, railways, airports, and ports, is expected to see substantial funding through 2025 and beyond. As mentioned earlier, the Union Budget for 2025-26 proposed total capital expenditure of

11.21 lakh crore and an effective capital expenditure of 15.48 lakh crore. The budget also proposed an outlay of 1.5 lakh crore for 50-year interest-free loans for states for infrastructure development.

Hence, the IMF forecasted a relatively more stable economic growth of 6.2% in 2025 and 6.3% in 2026, though it is

0.3 and 0.2 percentage points lower, respectively, than its January 2025 outlook update.

Outlook

Indias economy is expected to grow at a rate of 6.2% in FY 2025-26. Projections indicate that by 2030, India will likely become the worlds third-largest economy, driven by investment in infrastructure, greater private sector capital expenditure, and the expansion of financial services.

Ongoing reforms are anticipated to support this long-term economic advancement.

Several factors solidify this positive outlook, including Indias favourable demographics, increasing capital investment, proactive government schemes, and strong consumer demand. Improved spending in rural areas, helped by moderating inflation, further reinforces this growth trajectory. The governments focus on capital expenditure, prudent fiscal management, and measures to boost business and consumer confidence are creating a supportive environment for both investment and consumption.

Programmes such as Make in India 2.0, reforms designed to improve the ease of doing business, and the Production-Linked Incentive (PLI) scheme are intended to strengthen infrastructure, manufacturing, and exports, positioning

India as a significant player in global manufacturing. With inflation expected to be on target by the end of this year

(2025), a more accommodating monetary policy is likely. Infrastructure development and supportive government policies will facilitate capital formation, while rural demand will receive a boost from initiatives like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

(Source: PIB, MoSPI, Economic Survey)

Market Overview

FY 2024-25 saw significant volatility in LME aluminium prices. Prices stood at ~US$ 2,250/tonne in March 2024, spiked to US$ 2,700/tonne in

May following sanctions on Russia, and dropped to US$ 2,200/tonne by

July. A reduction in Chinese export rebates in November lifted prices to US$ 2,600/tonne, stabilising around US$ 2,500/tonne by December. Trade measures by the United States further supported a stable trading range of

US$ 2,500 2,700/tonne towards year-end.

In CY 2024, global primary aluminium production rose by 3% Y-o-Y to

~73.0 million tonnes. Demand remained broadly aligned, resulting in a marginal surplus of 0.2 million tonnes. Ex-China, both production and consumption remained flat. In

India, demand increased by 10% to ~5.5 million tonnes in FY 2024-25, with primary metal comprising 64% of consumption.

Market Outlook

Global aluminium demand is projected to grow at a CAGR of ~3% between 2024 and 2030, supported by decarbonisation trends and the transition to clean energy. Demand from EVs is expected to reach 31.7 million tonnes by 2030, while increased use of aluminium in solar panels and in replacing copper wiring in power infrastructure will drive further growth.

In China, consumption continues to show strength, though long-term growth will depend on sustained activity in transportation and a gradual recovery in construction. For the Rest of the World, modest demand growth is expected in 2025 as inflation moderates, and investment picks up.

India remains a strong demand centre, with domestic consumption expected to grow over 8% in FY 2025-26. Rising demand from sectors such as electronics, appliances, renewables, defence, and aerospace will continue to support this growth.

Products and Customers

Vedanta remains India’s largest primary aluminium producer, with an installed capacity of ~2.4 million tonnes. Its portfolio spans ingots, primary foundry alloys, wire rods, billets, and rolled products, catering to sectors including energy, transportation, construction, packaging, aerospace, and defence. The Company achieved a 48% domestic market share in FY 2024-25, with sales volumes rising ~18% Y-o-Y.

Vedanta continued expanding its value-added product (VAP) share, which accounted for ~53% of total global aluminium sales in FY 2024-25 – an 8% increase Y-o-Y. The Company is targeting a 70% VAP share in FY 2025-26.

Market Overview

FY 2024-25 witnessed considerable volatility in zinc prices, driven by macroeconomic headwinds and geopolitical developments. The LME zinc price averaged

US$ 2,875 per tonne during the year marking a 16% rise from FY 2023-24’s average of US$ 2,475 per tonne. Prices peaked at US$ 3,102.91 per tonne in October 2024 before moderating to US$ 2,887.83 per tonne by

March 2025. LME warehouse inventories declined to 141 kt and SHFE stocks to 72 kt by March

2025, down significantly from the previous year, indicating tightening market conditions.

Global refined zinc production contracted marginally by 3% to

13,237 kt in CY 2024, compared to

13,712 kt in CY 2023. Meanwhile, demand saw moderate growth, with global refined consumption rising by

1.7% to 13,602 kt, up from 13,369 kt in the previous year. This demand-supply imbalance resulted in a market deficit of 436 kt.

Trade conditions remained complex, shaped by new tariff measures under the US administration, which created uncertainty in global trade and applied pressure on industrial activity, particularly in the US. However, infrastructure-led spending in China and Germany partially offset this impact. Notably, Europe’s zinc demand grew by 3.8% in CY 2024, surpassing earlier expectations. In India, the zinc market continued to demonstrate resilience, registering a 5% increase in demand during CY 2024.

Market Outlook

The global zinc market is expected to remain balanced but tight. Refined zinc production is projected to rise by 4% to 13,367 kt in CY 2025, while consumption is anticipated to grow 2% to 13,892 kt. Persisting geopolitical tensions, including those in the Middle East, along with elevated tariffs between the US and China – despite ongoing discussions to lower duties to 10-20% – are likely to keep commodity markets volatile. The US Federal Reserve has kept interest rates steady at 4.25–4.50%, amid gradually easing inflation, which stands at 2.4% but remains sticky at 2.8%.

India’s zinc demand is expected to grow by 5-6% in FY 2025-26, reaching 867 kt, supported by continued urbanisation, infrastructure investments, and increasing household incomes. Key demand drivers include rail modernisation, renewable energy, and rural electrification.

Business Overview

Hindustan Zinc, the world’s largest integrated and India’s only primary zinc producer, maintained its leadership with a 77% domestic market share in FY 2024-25. It achieved record-high domestic zinc sales of 603 kt, up 4% Y-o-Y. The Company also recorded its highest-ever Value-Added Product (VAP) sales at 179 kt, growing 11% Y-o-Y. Approximately, 73% of refined zinc production was sold domestically, with the balance exported to South-East Asia, the Middle East, the US, and Europe.

Market Overview

The LME lead price closed FY 2024-25 at US$ 2,002 per tonne, up 2% from US$ 1,965 the previous year.

The average price for the year was US$ 2,046 slightly below FY 2023-24’s US$ 2,122. Global lead demand remained moderate amid easing inflation, with the

IMF forecasting a decline to 4% in 2025, improving real incomes and consumption of lead-intensive goods. However, persistent high interest rates maintained by the Fed and ECB continued to limit investments in key sectors such as automotive.

Industrial activity showed steady recovery: China’s manufacturing expanded by 5% Y-o-Y, US capacity utilisation stabilised at 78%, and Europe saw a rebound in factory output after a mild slowdown. These developments supported lead consumption across batteries, infrastructure, and electronics.

On the supply side, global refined lead production declined 2.1% to 14,205 kt in CY 2024, while consumption fell slightly by 0.7% to 14,151 kt – resulting in a modest surplus of 54 kt.

India’s primary lead demand rose 6-7% during FY 2024-25, supported by growth in automotive, battery, and infrastructure sectors. The shift toward secondary lead gained momentum, now accounting for over 60% of total supply. This was further driven by the removal of customs duties on lead scrap in the FY 2025-26 Union Budget, encouraging formal recycling infrastructure due to its 15-25% cost advantage over primary metal.

Market Outlook

Global refined lead production is expected to rise 2.0% to 14,486 kt in CY 2025, while consumption is projected to increase 1.5% to 14,369 kt.

In India, the lead consumption landscape is evolving, driven by a 140% Y-o-Y surge in electric vehicle (EV) production, signalling reduced reliance on traditional lead-acid batteries. Policy shifts – such as duty exemptions on lithium-ion battery scrap and critical minerals – are accelerating the transition to alternative chemistries. Indirect tax reforms in the FY 2025-26 budget are expected to further support domestic manufacturing and export competitiveness.

Company Overview

Hindustan Zinc expanded its primary lead market share to 74% in FY 2024-25, up from 64% the year prior. The Company sold 166 kt domestically and exported 59 kt. Production continued to focus on 99.99% purity LME-registered lead ingots, with strategic efforts underway to increase domestic offtake and expand customer applications.

Market Overview

FY 2024-25 marked another strong year for silver, with prices reaching a high of US$ 33.40 per Toz in mid-February – a 16% increase from the December 2024 close of

US$ 29. Despite some profit-booking, silver maintained most of its gains, stabilising above US$ 32. Price support came from global macroeconomic uncertainty, largely driven by President Trump’s renewed tariff stance, which sparked record silver deliveries into the US. As a result, CME-approved vault holdings surged past 400 Moz, a 30% increase since the US elections.

India, too, recorded its highest January silver imports since 2008, reflecting strong bullion demand. Meanwhile, London vault inventories declined 9% month-on-month, tightening short-term availability and raising silver leasing rates.

Silver’s dual identity – as both a precious and industrial metal – led to mixed performance drivers. On one hand, gold’s stagflation-fuelledrally pulled silver upwards. On the other, trade war fears weighed on industrial sentiment, tempering investor appetite for base and industrial metals.

Market Trends

Global silver demand is projected to exceed supply for the seventh consecutive year in CY 2025, with demand expected to remain elevated at 1.2 Boz. Supply is forecast to remain flat at 1 Boz, with mine production peaking at 835 Moz, driven by increased base metal activity and new output from US and Canadian mines. However, output is expected to decline beyond 2025 as older mines reach end-of-life, barring new investment decisions.

In CY 2024, silver supply grew by 2% to 1.015 Boz. This was led by a 5% increase in mine production, driven by new mining operations in Mexico and improved yields from Chilean gold mines. Silver recycling added another 200 Moz to the global supply.

Global demand reached a near-record 1.15 Boz, the second highest in history. While jewellery and silverware segments saw modest declines, this was offset by industrial demand, which grew 4% to a record 576 Moz. The rise was driven by increased use in vehicle electrification and EV charging infrastructure.

Market Outlook

The silver market outlook for CY 2025 remains strong, underpinned by robust industrial and investment demand. Industrial use reached a record high of 689 million ounces in 2024, driven largely by the photovoltaics (PV) sector, and is expected to remain a key growth driver despite potential cost-sensitive substitution in PV and electric vehicles (EVs). Traditional industrial applications of silver continue to show stable demand irrespective of price fluctuations.

Investment demand is also on the rise, amid the geopolitical uncertainties and investor preference for tangible assets. Coins, bars, and exchange-traded products (ETPs) are forecasted to grow at high single-digit rates. Meanwhile, India is emerging as a major source of future demand, with industrial usage expected to rise significantly due to expanding applications in EVs, 5G, and other advanced technologies.

Company Overview

Hindustan Zinc (HZL), the world’s 4^th largest silver producer, continued to play a pivotal role in the global silver market. In FY 2024-25, the Company produced 687 tonnes of silver. Responding to surging global and domestic demand, HZL is actively enhancing its production capabilities to strengthen its position and support the evolving market.

Market Overview

Global oil market experienced moderate growth in both supply and demand during 2024. Non-OPEC countries led supply expansion, with the United States adding 0.7 million barrels per day (Mb/d), followed by Canada (+0.21 Mb/d), China, and Argentina. Concurrently, global oil demand rose by approximately 1.6 Mb/d, driven by increased transportation and industrial fuel consumption across non-OECD countries, as well as new refinery capacities added in China and the Middle East.

India’s oil consumption continued its upward trajectory, reaching 5.55 Mb/d in 2024, an increase of 0.21 Mb/d Y-o-Y. While the domestic economy faced a temporary slowdown, indicators suggest recovery is on track. With heightened government spending and the possibility of interest rate cuts in early 2025, India is expected to maintain a steady growth path through 2025 and 2026, albeit at a slightly moderated pace. Crude oil prices in 2024 averaged US$ 80.8 per barrel, marking a 2% decline compared to 2023. Prices fluctuated in a narrow range of US$ 70-86 per barrel, shaped by several factors: a subdued economic outlook in major economies, steady non-OPEC+ supply, geopolitical tensions in the Middle East, and shipping disruptions in the Red Sea. OPEC+ production cuts helped stabilise the market and prevented prices from falling below the lower end of this band. Market Drivers and Outlook Looking ahead, OPEC projects global oil demand to grow by 1.5 Mb/d in 2025, reaching 105.2 Mb/d. This growth will be led by strong aviation fuel demand, increased road transport usage, and sustained industrial and agricultural activity in non-OECD nations. Supply from non-OPEC countries is expected to increase by 1.1 Mb/d, with the United States, Canada, Brazil, and Norway contributing the most. However, several risks remain. The ongoing Russia-Ukraine conflict and intensifying trade tensions could disrupt supply and affect pricing dynamics. According to the US Energy Information Administration (EIA), Brent crude prices are forecast to average US$ 74/b in 2025, reflecting an easing of OPEC+ cuts and stronger production outside the alliance. In this context, trade friction and geopolitical developments will remain key variables influencing the market. India is poised to play a larger role in shaping global oil demand, driven by rapid urbanisation, rising disposable incomes, and a growing population. Its oil consumption is forecast to rise to 5.8 Mb/d in 2025, buoyed by increased airline traffic and steady GDP growth. Products and Customers Cairn India, one of India’s leading private oil and gas exploration and production companies, holds gross proven and probable reserves of 1,430 million barrels of oil equivalent (mmboe). Its crude oil is supplied to both public and private refineries, while natural gas supports the fertiliser, city gas distribution, and industrial sectors. In FY 2024-25, 100% of Cairn’s crude oil and gas output was sold within India, in alignment with domestic regulatory requirements.

Market Overview

Global steel demand is set for a modest recovery from late 2025, driving increased iron ore consumption. This growth will be led by emerging Asian markets and infrastructure-focussed economies such as India and the Middle East. Global steel demand is projected to grow by 1.2% annually, supported by infrastructure investments and manufacturing expansion across South Asia, Southeast Asia, and North America.

Iron ore prices experienced significant volatility in late 2024, rising nearly 20% to around US$ 105 per tonne following policy announcements from China aimed at stimulating growth.

On the demand side,

China: Despite a decline in steel demand, China’s iron ore imports have remained resilient, largely due to strategic stockpiling and ongoing infrastructure projects. However, challenges persist, particularly in the property sector, which continues to weigh on steel consumption. India: India’s iron ore exports have declined sharply as domestic demand surges in line with expanding steelmaking capacity. Local miners are prioritising the domestic market to meet this growing need.

Market Outlook

The global steel and iron ore markets are positioned for recovery, driven by infrastructure spending and economic stimulus measures. India emerges as a critical growth engine, with steel demand expected to rise by 8% in 2025, underpinned by strong infrastructure development and supportive government policies. Steel production in India is projected to reach 152 million tonnes by FY 2024-25, pushing domestic iron ore demand up by 9% to

255 million tonnes.

As the world’s second-largest steel producer, India’s expanding capacity and robust momentum will significantly influence global iron ore dynamics, even as other regions face oversupply and price pressures.

Company Overview

The Company has strengthened its position as a leading producer of iron ore and pig iron. It achieved key production milestones in FY 2024-25, including 5 million tonnes of iron ore from Karnataka, 4.2 million tonnes from Odisha, and 1.3 million tonnes from Goa mines following their reopening. Additionally, over 819 kilo tonnes of pig iron were produced, reinforcing its role in supporting industrial growth and maintaining sector leadership.

Demand and Supply

India’s power sector made notable progress in 2024, marked by a record power demand reaching 250 GW and continued improvements in energy infrastructure. Electricity generation grew by 4.89% compared to the previous fiscal year, reaching approximately 1,667.6 billion units in FY 2024-25 (tentative figures as of February 2025). Total installed capacity expanded robustly to 470 GW by February 2025.

Significant strides were made in renewable energy, with an additional 129 GW capacity added since 2014, complementing the expansion of thermal power to meet the rising electricity demand. The government’s initiatives, such as universal electrification, enhanced rural power availability, and energy conservation efforts, reinforce India’s trajectory toward becoming a global energy leader.

Supporting this growth, revised Right of Way (RoW) guidelines have been introduced to facilitate transmission infrastructure aimed at integrating 500 GW of renewable energy by 2030, underscoring the commitment to a sustainable power future.

Market Drivers

India’s power demand is propelled by macroeconomic factors, including a population projected to reach

1.5 billion by 2030 and accelerating urbanisation. Per capita electricity consumption increased to 1,395 kWh in 2024-25, a 45.8% rise since 2013-14, though it remains about one-third of the global average, indicating significant growth potential.

For FY 2024-25, India targets electricity generation of 1,900 billion units, up 9.3% from 1,738.8 billion units the previous year. The generation mix includes 1,445 billion units from thermal power, 148 billion from hydro, 55 billion from nuclear, 8 billion through imports (mainly Bhutan), and 244 billion from renewable sources excluding large hydro.

Fossil fuel-based plants, primarily coal and lignite, contribute 248 GW (52.6%) of installed capacity, while non-fossil sources such as renewables and nuclear account for 223 GW.

Electricity availability has improved substantially, with rural areas receiving an average of 21.9 hours per day, up from 12.5 hours in 2014. Urban areas average 23.4 hours daily. Round-the-clock tariffs in the Day Ahead Market for FY 2024-25 stand at 4.435 per kWh, reflecting stable power pricing.

Products and Consumers

Vedanta Group is well-positioned to capitalise on India’s expanding power sector with a diversified portfolio of around 12 GW, spanning both Independent Power Producers (IPP) and Captive Power Plants (CPP). It ranks as the second-largest private power player in India.

Within the IPP segment, Vedanta is the fourth-largest private player with 4,780 MW capacity, including major assets such as Talwandi Sabo Power Limited (1,980 MW) and Jharsuguda plant (600 MW). The Company’s growth pipeline includes the upcoming Meenakshi Energy Limited (1,000 MW) and Vedanta Limited Chhattisgarh Thermal Power Plant (1,200 MW).

Sector Overview

India cemented its position as the world’s second-largest steel producer in FY 2024-25, achieving finished steel production of 145.3 million metric tonnes (MMT). This marked a robust Y-o-Y growth of 4.4%, reflecting resilience amid a global economic slowdown, ongoing trade tensions, and subdued demand from China.

A key driver of domestic steel consumption has been the Indian government’s strong focus on infrastructure development. Flagship initiatives such as the National Infrastructure Pipeline (NIP) and the PM Gati Shakti National Master Plan (NMP) have accelerated demand, helping push India’s per capita steel consumption closer to 100 kg. The National Steel Policy aims to elevate this further to around 158 kg by FY 2030-31, signalling significant

Despite this positive domestic momentum, global steel prices softened due to weak demand worldwide, surplus steel availability from China, and easing raw material costs. Consequently, India remained a net importer of finished steel, with imports rising to 9 MMT between April 2024 and March 2025 — a 16% increase compared to the previous year. This surge has placed downward pressure on domestic steel prices. To address rising imports and associated trade tensions, a proposal for a 12% safeguard duty on select steel products for 200 days has been tabled.

Market Drivers

India’s government is steadfast in its commitment to reaching a steel production capacity of 300 MMT by 2030. This ambition is backed by a 10% increase in capital expenditure for FY 2025-26, with a budget allocation of

11.2 lakh crore.

Driving this growth are the country’s goals to become a US$ 5 trillion economy through initiatives like “Make in India,” Multi-Modal Corridors, Pradhan Mantri Awas Yojana (housing for all), and Production-Linked Incentive (PLI) schemes. Rising incomes, rapid urbanisation, and ongoing infrastructure development are expected to sustain strong steel demand.

For FY 2025-26, key sectors including infrastructure, construction, and automotive remain priorities. Plans include building 20 million new houses under PM Awas Yojana over five years, sanctioning three new Economic Corridors under PM Gati Shakti, expanding airport infrastructure through the UDAN scheme, and extending the Jal Jeevan Mission till 2028.

Products and Customers – ESL Steel Limited

ESL Steel Limited offers a broad product range including TMT bars, wire rods, ductile iron pipes, billets, and pig iron.

Its strategic presence and diversified portfolio position it well to benefit from rising demand in construction, infrastructure, and manufacturing.

In FY 2024-25, ESL recorded finished sales of approximately 1.34 million tonnes, driven by strong domestic demand and record project sales, leading to its lowest closing stock of TMT bars and wire rods. The Company prioritised value-added products, with 85% of wire rod sales in high carbon and alloy grades, introduced new grades, and doubled sales in the Cold Rolled Steel segment. It also expanded its TMT offering to include 40 mm diameter bars.

Outlook for ESL Steel

ESL Steel Limited aims to capitalise on growth opportunities by focussing on alloy segment sales, optimising its product mix, and broadening wire rod diameter ranges to maximise revenue. Despite global challenges such as price volatility and trade issues, the Company’s focus on innovation, digitalisation, and operational efficiency supports its growth ambitions. ESL remains committed to contributing. to India’s steel self-sufficiency as infrastructure development and economic expansion continue to drive the sector forward.

Sector Overview

High Carbon Ferro Chrome (HCFC) plays a critical role in stainless steel manufacturing, where it enhances durability, corrosion resistance, and high-temperature performance. Over 85% of global HCFC production is consumed by the stainless-steel industry, making its demand closely tied to the health of this sector.

Asia, led by China, dominates the global HCFC market, accounting for nearly 85% of consumption and controlling significant ore reserves – HCFC’s primary raw material. While South Africa remains the largest supplier of chromite ore, China’s scale in HCFC production positions it as a key influencer in global pricing and supply trends.

India continues to strengthen its role in this market, emerging as the fourth-largest producer globally with an output of approximately

1.4 million tonnes in CY 2024. India’s

HCFC industry is predominantly export-oriented, with around 60% of production shipped overseas.

However, from the second half of FY 2024-25, HCFC prices faced downward pressure due to soft demand in China and Europe, coupled with falling ore prices. Domestic prices in India mirrored this decline but remained slightly higher than Chinese levels. Looking ahead, the trend is expected to reverse from mid-Q4 of FY 2024-25, with prices likely to stabilise and strengthen in early FY 2025-26 as stainless steel demand recovers both globally and within India

Market Drivers

The near-term outlook for HCFC is positive, supported by a projected 4–5% global increase in stainless steel production. This growth is expected to be driven by infrastructure development in emerging economies and a demand rebound from China.

India is poised to outpace global trends, with HCFC and stainless-steel production projected to grow at 7–8% in FY 2025-26. This acceleration is underpinned by large-scale infrastructure investments and a rise in per capita stainless-steel consumption, signalling sustained domestic demand for HCFC.

Company Overview – FACOR

Ferro Alloys Corporation (FACOR) is a leading player in India’s HCFC sector, ranked as the fourth-largest domestic supplier. In FY 2024-25, FACOR directed 87% of its HCFC output to serve stainless steel and alloy steel producers in India, underscoring its strategic domestic focus in a predominantly export-led industry.

FACOR is also advancing its

Value-Added Products (VAP) portfolio to tap specialised markets in Europe and South Korea. As part of its FY 2025-26 strategy, the Company is targeting higher production volumes and expanded presence across domestic and global markets.

Our Ferroalloy business remains focussed on capacity expansion, deeper domestic market engagement, and scaling our VAP offerings –positioning us strongly to grow in an evolving global HCFC landscape.

Sector Overview

FY 2024-25 was a dynamic year for the copper market. Prices reached record highs in Q1 before softening in the following quarters, only to recover again in Q4, supported by stimulus measures announced by China.

Domestic copper demand continued to grow at a CAGR of 7%, driven by the accelerating electrification of transport, increased construction activity, and industrial growth supported by Production-Linked Incentive (PLI) schemes. Rising sales of consumer durables such as air conditioners and electronics further boosted demand.

A key development during the year was the shift in India’s import mix. Semi-finished copper imports

(e.g., cathodes) declined by 7% as manufacturers increasingly opted for blister copper – supported by the removal of customs duty in the Union Budget 2024 – favouring higher value-added domestic processing.

Market Drivers

India’s copper demand is expected to reach 3 million tonnes by CY 2030, with a projected 7% growth in FY 2025-26. Several trends underpin this trajectory: Infrastructure push: Continued investment in industrial corridors, highways, housing, and renewable energy systems positions copper as a key enabler of national development

Electric mobility: The rising penetration of Electric Vehicles, which require significantly more copper than internal combustion engine vehicles, is expected to be a major growth lever Economic growth: India’s expanding economy supports copper-intensive sectors such as construction, manufacturing, and consumer appliances Energy transition: Copper’s essential role in solar, wind, and battery storage technologies is opening new avenues for demand

Company Overview

The Company remains a leading player in India’s copper industry, supported by its broad product portfolio, customer-focussed approach, and innovation-led strategy. It caters to diverse segments including housing wires, winding wires, cables, transformers, and electrical profiles.

Holding a strong 20% domestic market share, the Company is actively expanding its export footprint, targeting neighbouring countries and Gulf markets. Its ongoing focus on green copper production – incorporating sustainable practices and efficient technologies

– reinforces its long-term competitiveness and commitment to responsible growth.

Well-aligned with national priorities and global trends, the Company is poised to capitalise on the sector’s growing potential in FY 2025-26 and beyond.