Scan Steels Ltd Management Discussions

Scan Steels has adopted advanced technologies and processes to ensure that steel continues to be the preferred material as we transition towards a low-carbon future. In pursuing our strategic objectives, we are committed to responsibly reducing our environmental footprint and positively influencing the lives of our employees and partners.

OVERVIEW

The following operating and financial reviews are intended to convey the Managements perspective on the financial and operating performance of the Company at the end of Financial Year 2024-25.

The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities, and internal control systems and their adequacy in the Company during the Financial Year 2024-25. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards ( Ind AS ) complying with the requirements of the Companies Act, 2013 as amended and regulations/ guidelines issued by the Securities and Exchange Board of India ( SEBI ) from time to time.

ORGANISATIONAL OVERVIEW

The Scan Group is renowned name in Iron and Steel Industry backed by more than two decades of experience in steel making. Scan Steels Limited is the flagship company of "Scan Group" of industries and represents integrated Steel Plant located at Rajgangpur, Odisha near Rourkela and other factory is in Ballari, (Karnataka). Scan Steels is a complete integrated steel manufacturing unit having its own captive power plants.

The company is a pioneer in starting DRI unit in the State of Odisha. Over the years the Company has added many upstream as well as down-stream value adding installations to attain better control over its processes, minimize production cost, wider market penetration and minimize energy dependence on the state grid by means of installing a Captive Power Plant. During a decade the Company form merely being a rolling mill became Integrated Steel Producer. The Company expanded its activities by way of acquisition at present is having manufacturing facilities in the States of Odisha and Karnataka. We have vast range of rolled steel TMT products which ranges from 8mm to 32mm under

brand "SHRISHTII TMT". Under the Shrishti brand, the company also has its product, "SHRISHTII ROOFING" used for warehousing sheet and parking shed. The company is going to add a manufacturing facility for a MS pipe mill in the near future. The pipe mill may have different shapes, like square, round, etc. Focusing on innovation, technology, sustainability and people, we aim to become the most respected and valuable steel company in India.

Scan Steels, striving to contribute to the nations iconic infrastructure projects, has set industry benchmarks while producing quality steel that fosters progress and prosperity. On the way, we are transforming as a company, setting Scan Steels on a long-term, profitable growth path. We are augmenting scale and capacities, aiming at deploying emerging technologies, driving innovation, digitalization, enhanced cost efficiency, improved raw material security, and putting sustainability at the core while committing to zero harm to the environment, people, and community. At Scan Steels, we are not just building the future with steel; we are steering it with strength, resilience, and integrity.

OUTLOOK

Global Economic Environment

In Calendar Year (CY) 2024, the global economy exhibited resilience in the face of multiple challenges from geopolitical conflicts and inflationary pressures to tighter monetary conditions and uneven trade flows. Despite these constraints, global GDP growth held steady at 3.2%, and a similar outlook prevails for CY2025. This stability is underpinned by sustained infrastructure investments, technological innovation, and the favourable demographic profile of emerging markets.

India: A Growth Powerhouse

India continued to lead global economic performance, with GDP expanding by a strong 8.2% in FY2024-25. This growth was supported by consistent public capital expenditure on infrastructure, an ongoing digital transformation, and policy reforms that promote ease of doing business and incentivise private investments. With a high-growth trajectory expected to continue, India remains a key driver of global steel demand.

Steel Industry Trends

Globally, the steel industry faced margin compression as a result of softer prices, elevated input costs, and ongoing supply chain disruptions caused by geopolitical tensions. Chinas shift toward a consumption-led model, coupled with a sluggish property market and excess capacity, exerted significant downward pressure on international steel prices. Concurrently, steel producers globally are under increasing pressure to decarbonise and transition towards greener production.

In contrast, Indias steel sector remained resilient, driven by strong domestic demand, private sector investments, and government-led infrastructure momentum. Crude steel production in India grew by 13% in FY2024-25, highlighting the strength of underlying demand. Looking ahead, domestic steel consumption is expected to remain buoyant in FY2025-26, even as global headwinds may introduce pricing volatility.

Scan Steels: Positioned for the Next Phase of Growth

Scan Steels continues to build on its integrated business model - spanning steelmaking, power generation, and value-added products ?€” to enhance operational efficiency, cost competitiveness, and resilience to market cycles. The Companys emphasis on self-sufficiency in raw materials and energy provides a significant strategic advantage in an environment of price and supply volatility.

With India entering a multi-decade phase of infrastructure- led growth, Scan Steels is actively expanding its production capacity and product portfolio to meet the evolving needs of the market. Capacity enhancement initiatives, both brownfield and greenfield, are aligned with the Governments push for "Make in India" and infrastructure modernisation. These expansion projects are expected to generate significant direct and indirect employment, boost regional development, and improve supply chain integration.

Sustainability and Decarbonisation

Scan Steels is committed to sustainable growth and responsible manufacturing. The Company has intensified its focus on energy efficiency, emissions reduction, and circularity across operations. Leveraging its captive power facilities, Scan Steels is exploring the integration of renewable energy sources and low-carbon technologies to reduce its environmental footprint.

In line with global ESG benchmarks and national decarbonisation goals, the Company is also evaluating investments in cleaner production technologies and process

optimisation. Scan Steels believes that the transition to

green steel must be pragmatic, region-specific, and backed by a combination of innovation, policy support, and industry collaboration.

Looking Ahead

As India continues its transformation into a manufacturing and infrastructure powerhouse, Scan Steels is strategically positioned to capture emerging opportunities and deliver long-term value to stakeholders. Through capacity expansion, product innovation, and a strong sustainability framework, the Company remains committed to being a reliable partner in Indias growth story empowering communities, creating jobs, and strengthening the nations industrial backbone.

ECONOMIC OUTLOOK

The International Monetary Fund (IMF) projects that the global economy will maintain a steady growth rate of 3.2% in both 2024 and 2025, consistent with the pace seen in 2023. Global headline inflation is expected to moderate further, declining from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. While advanced economies are anticipated to return to their inflation targets sooner, core inflation is projected to ease more gradually across all regions.

A slight pickup in growth for advanced economies from 1.6% in 2023 to 1.8% in 2025 is expected, primarily due to a modest recovery in the euro area. This is likely to be offset by a minor slowdown in emerging market and developing economies, where growth is projected to ease from 4.3% in 2023 to 4.2% in both 2024 and 2025. Election cycles across several countries in 2024 may lead to temporary fiscal boosts. Central banks are also expected to begin cutting policy rates in the latter half of 2024, contingent on continued progress in the disinflation process.

While advanced economies show signs of recovery, emerging markets are forecasted to maintain stable growth, albeit with regional disparities. The property sector remains under pressure globally, with weak demand and liquidity constraints among developers. Trade growth is likely to stay subdued, weighed down by soft global demand. Geopolitical uncertainties, especially in the Middle East, pose risks of escalation, potentially impacting oil prices and maritime logistics, particularly through the Red Sea.

Energy prices are expected to stabilize in 2024. Coal and natural gas prices are forecasted to decline from previous peaks due to increased supply, high storage levels, and subdued demand. Non-fuel commodity prices are projected to remain broadly stable, though base metal prices may soften in response to slower industrial activity in China and Europe.

Monetary policy paths will differ across regions. In the

United States, growth remains resilient, supported by a strong labor market and consumer spending. The Federal Reserve is likely to initiate rate cuts in the second half of 2024, a move expected to be mirrored by the Bank of England and the European Central Bank. In contrast, Japan may gradually raise policy rates, backed by improving inflation dynamics and export growth. China, facing its slowest growth (excluding pandemic years) since the mid- 1990s, is grappling with weak domestic demand, although the first quarter of 2024 showed encouraging signs in manufacturing and auto production. Notably, Fixed Asset Investment (FAI) excluding real estate grew by 9.3%.

On the fiscal front, governments are expected to tighten spending in 2024, particularly among advanced economies, with a more moderate tightening projected for FY2025?€“

26. In emerging and developing markets, fiscal stances are expected to remain broadly neutral in 2024, with gradual tightening expected in 2025. Markets have responded positively to the outlook of easing monetary policy, with improved financial conditions, rising equity valuations, and increased capital inflows into emerging markets.

The macroeconomic environment is being shaped by several positive trends, including resilient growth, moderating inflation, rebounding labor markets, and decisive policy actions. However, challenges persist. Core inflation and service inflation remain elevated in many regions, economic divergence across countries is notable, and Chinas domestic demand weakness continues to be a concern. Additionally, real interest rates remain high, medium-term growth prospects are limited by sluggish productivity, and significant investments are required for transitioning to a green and climate-resilient economy.

Macroeconomic Trends in the Steel Sector

Global crude steel production is growing, particularly outside of China, reflecting increasing demand.

The global demand for finished steel is expected to rise by 1.7% in 2024, driven by infrastructure development and industrial activities.

Increased Chinese steel exports continue to present competitive pressures in the global steel market.

Raw material price volatility persists, with coking coal prices moderating while iron ore prices remain firm, impacting cost strategies across the sector.

The adoption of advanced technologies and digital solutions in mining and logistics is gaining momentum.

Countries are addressing climate change risks by introducing

carbon emission regulations, prompting steelmakers to accelerate their transition to green steel production.

This outlook provides a strategic context for Scan Steels Limited as it navigates the opportunities and challenges of the global economic and sectoral landscape in FY2025?€“26.

GLOBAL STEEL INDUSTRY

Global Context & Economic Outlook

Despite global economic resilience, steel demand is expected to stabilize with modest growth, constrained by lagged effects of monetary tightening, high inflation, elevated raw material costs, and geopolitical uncertainties.

In advanced economies (notably the EU and US), steel demand remains weak due to sluggish manufacturing and housing sectors although infrastructure spending is offering some support.

Emerging economies, especially in Asia, demonstrate stronger growth potential. However, risks to inflation remain persistent core inflation, high oil prices, and tight labour markets continue to cast a shadow over recovery prospects.

World Crude Steel Production

2023: Global crude steel production stood at 1,904 million tonnes (Mt).

2024: It slightly declined to 1,885 Mt, marking a 0.8% drop year-on-year.

Year-to-date 2025 (monthly data shows mixed trends): March 2025: 166.1 Mt (+2.9% vs March 2024)

June 2025: 151.4 Mt (?€“5.8% vs June 2024)

Forecast for 2025: Fastmarkets predicts global production to reach approximately 1.846 billion tonnes, lower than previous estimates, due to trade policy uncertainty and fragile demand.

Regional & Country Highlights

Country / Region Steel Production 2024 (Mt)

Change vs 2023

China~1,005 Mt ?€“1.7%

India~149.6 Mt +6.3%

Japan~84.0 Mt ?€“3.4% United States ~79.5 Mt ?€“2.4%

India ?€” A Standout Performer

2024?€“25 Fiscal Year: Indias crude steel production reached 151.1 Mt, up from previous years.

Indias capacity stands at nearly 200 Mt, with ambitious plans to scale up to 300 Mt by FY 2030?€“31.

2019?€“2024 Growth: Indias steel output surged 33%, while global production declined by 1%.

Tariff Measures: A temporary 12% safeguard tariff on select imports has boosted domestic demand. Consequently, job cuts at smaller mills have paused, and India may return to being a net exporter by 2025.

Challenges Ahead: Expansion predominantly in coal-based blast furnaces raises concerns about future export viability especially given looming carbon border adjustments in the EU.

Chinas Influence & Export Dynamics

China remains the largest global steel producer (over half of global output), though production dipped in 2024.

Continued high exports exert pressure on global steel prices and the profitability of mills elsewhere due to oversupply concerns.

Summary Snapshot (2023?€“2025) 2023: Global steel production ~1,904 Mt 2024: Slight fall to ~1,885 Mt

2025 Outlook:

Production volatility mixed monthly results (rise in early 2025, steep decline by June)

Forecasted total ~1.846 bn t ?€” indicating potentially subdued annual output

India: Strong performance continues, significant capacity expansion and government support

Key Insights by 2025:

Global supply remains high, but demand sees only tepid growth amid economic uncertainty.

Geopolitical fragmentation, tariffs, and lingering inflation keep volatility elevated.

India emerges as a growth engine, backed by nation-building priorities and strengthened policy support.

Structural shifts especially decarbonization and changing global demand patterns will shape the industrys long-term trajectory.

OUTLOOK

In Calendar Year 2024, the global economy demonstrated resilience amid a backdrop of geopolitical tensions, inflationary pressures, tighter monetary policies, sovereign debt concerns, and muted global trade. Despite these headwinds, global GDP grew steadily, and is projected to maintain this momentum with an estimated growth rate of 3.2% in CY2025, in line with the previous year. Growth continues to be underpinned by infrastructure development, technological investments, and favourable demographic trends in emerging markets.

India, in contrast to the uneven global macroeconomic landscape, sustained strong economic momentum. This was largely driven by sustained public expenditure on infrastructure, continued digitalisation, and structural reforms aimed at improving the ease of doing business and incentivising fresh investment. In FY2024-25, the Indian economy expanded by a robust 8.2%, significantly outpacing global growth rates.

Reflecting these macroeconomic dynamics, the global steel industry experienced a challenging year. Demand moderated in China as the country shifted from investment- led to consumption-driven growth, compounded by a sluggish real estate sector. These developments, combined with elevated steelmaking capacity and increased exports from China, exerted downward pressure on global steel prices. Concurrently, input costs particularly for raw materials remained elevated, and regulatory and environmental compliance costs continued to rise, impacting margins for steel producers worldwide.

Despite global challenges, Indias steel industry emerged as a bright spot, supported by a surge in infrastructure spending, revival in private sector investments, and healthy demand across end-use sectors. Indias crude steel production witnessed a remarkable 13% growth over the previous fiscal, underlining the sectors resilience and potential. This strong domestic momentum is expected to continue in FY2025-26, as economic activity expands. However, steel prices may remain volatile, influenced by global economic trends, trade policies, and geopolitical developments.

The global steel industry is also at a pivotal point of transformation, particularly in terms of sustainability. Industry leaders especially in Europe and East Asia have started to make significant strides in decarbonisation, circularity, and the development of low-carbon technologies. However, given the diverse nature of geographies and market conditions, there is no universal path to green steel.

Solutions will need to be tailored to local realities, optimising

both environmental outcomes and cost efficiencies. Importantly, these sustainability efforts will require ongoing support through conducive policy frameworks and public investments, especially in the near to medium term.

As India embarks on a multi-decade growth trajectory, driven by its strong infrastructure pipeline and the Make-in-India push in manufacturing, the domestic steel industry is poised for significant expansion. Scan Steels Limited is proud to be an active participant in this national growth journey. Our integrated operations and value-driven approach position us well to navigate cyclical challenges and capitalise on emerging opportunities.

With the nations growing appetite for steel-backed development, we are strategically scaling up our production capacities, contributing to the growth of the domestic steel sector, creating direct and indirect employment, and empowering local communities. Our commitment remains steadfast to support Indias transformation through sustainable and inclusive industrial development.

INDIAN ECONOMY ?€“ EXECUTIVE SUMMARY

India sustained its status as the fastest-growing major economy in FY 2023?€“24, with real GDP growth of 8.2%, up from 7.0% the previous year. This performance was driven by government-led infrastructure investments, a resilient manufacturing sector, and robust services growth. Total consumption accounted for 56% of GDP, supported by a growing working-age population and improving rural demand.

The manufacturing sector grew by 9.9%, aided by easing input costs and strong private investment. Gross Fixed Capital Formation rose to 10.2%, reflecting significant capex in infrastructure and housing. The Union Budget for FY 2024?€“25 allocated a record 11.1 lakh crore towards capital expenditure, reaffirming a long-term growth agenda.

Exports reached US$776.68 billion, with a strong showing in services exports offsetting a 3.1% dip in merchandise exports due to global disruptions. The Current Account Deficit narrowed sharply to 0.7% of GDP, improving external stability. Inflation remained within manageable levels at 4.8% in March 2024, although food price volatility and monsoon patterns remain risks.

On the fiscal front, Indias fiscal deficit was reduced to 5.8% in FY 2023?€“24 and is projected to further narrow to 5.1% in FY 2024?€“25, aided by strong tax collections with direct taxes growing 18.5% and GST collections up 11.7%. The RBIs record dividend of 2.11 lakh crore provided additional fiscal space.

India remains the second-largest steel producer and

consumer, with per capita consumption well below global averages offering significant growth headroom. The steel demand elasticity to GDP was 1.8, and 3.0 to urbanization, indicating continued strong prospects amid government-led infrastructure growth.

With structural reforms, robust macro fundamentals, and expanding industrial capacity, India is well-positioned to maintain its high-growth momentum into FY 2025?€“26.

STRENGTH

Scan Steels is transforming every aspect of its business by embracing the best available and emerging technologies across functions?€”Corporate, Human Resources, Manufacturing, Mining, Marketing, and Supply Chain. The Company is driving cultural change, augmenting customer experiences, and developing innovative products. Further, through digitalization, the overarching objective is to create sustained value for all stakeholders while enhancing sustainability across the value chain.

Company having fully integrated sufficient steel making multi-location manufacturing facilities and the various plants comprises of:

DRI Unit

Induction Furnace with Concast

Steel Melting Shop

TMT Rolling Mills

Captive Power Plant

Coal Washery

Company has a production Installed capacity of 3,34,400 MT of TMT. The brand name "SHRISHTII TMT" is the renowned household name within Odisha state. It is the largest TMT manufacturing plant in Odisha with total integration. The marketing network of the company is very well organized. It fulfills the demand and requirements of all type of customers in urban area as well as in rural areas.

RISK AND CONCERNS

Our Risk Management framework provides a structured approach to identify, prioritize, manage, monitor, and report on key and emerging risks. It also facilitates the seamless integration of internal controls into our business processes.

Scan Steels risk management process involves the identification and regular assessment of risks by our plants and corporate functions, followed by the implementation

of effective mitigation strategies. Concurrently, our Risk

Management Committee (RMC) adopts an approach to identify and evaluate long-term, strategic, and macro risks to our business.

During FY 2024-25 Overall, its strategic and operational risks were well mitigated and did not disproportionately affect its overall competitiveness. The Company does not perceive any inherent risk in the long run, with the exception of certain primary concerns that have afflicted the progress of our industry in general, like:

shortage of Labour

rising manpower and material costs,

Approvals and procedural difficulties.

Lack of adequate sources of finance.

The Company is exposed to risks from market fluctuations in interest rates and stock market fluctuations in share prices.

Our strategy planning process is guided by the Vision, Mission, and Values of the organisation, along with the strategic direction provided by the Board and Senior Leadership Team. As part of the process, we examine both the external and internal business environment and factor in potential risks and opportunities that could disrupt the industry. Materiality assessment provides insights into the changing needs of all our stakeholders.

Pursuant to the requirements of Regulation 21 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Companies Act, 2013, the Company has this risk management framework in place. The Risk Management Committee ( RMC ) of the Board provides oversight and sets the tone for implementing the Risk Management framework across the organisation. RMC ensures that our Risk Management framework effectively addresses aspects like: Prudently taking intended risks to plan for the best and prepare for the worst, Executing decided strategies and plans with a focus on action, Avoiding, mitigating, transferring (such as through insurance), unintended risks, such as performance, incident, process, and transaction risks. The probability or impact of these risks is reduced through tactical and executive management, policies, processes, inbuilt system controls, and internal audit reviews.

We recognise that emerging and identified risks must be mitigated to: Protect the interests of our shareholders and other stakeholders, achieve business objectives, Enable sustainable growth.

The risk appetite of the organisation is aligned to the SSL

Vision. Risk Appetite is driven by the following:

The health and safety of our employees and the communities in which we operate are our prime concerns, and our operating strategy is focused on the above objective.

All business decisions are aligned with the Scan Steel Code of Conduct.

Management actions are focused on continuous improvement.

Environment and Climate Change impacts are assessed on a continuous basis.

The long-term strategy of the Company is focused on generating profitable growth and sustainable cash flows that create long-term stakeholder value.

Risk Owners may accept risk exposure in their Annual and Long-term business plans, which, after implementation of mitigation strategies, is aligned with our risk appetite.

The health and safety of employees and the communities in the vicinity of our operations continues to be the top priority for the Company, while simultaneously ensuring the continuity of our business operations.

A detailed overview on the Few risks landscape and mitigation strategies

Financial Risk

Geopolitical tensions and the financialization of commodities might also increase raw material costs and financial market volatility, impacting the cost of capital and exacerbating the impact of INR depreciation against the USD.

key mitigation strategies

Reducing working capital through operational excellence and continuous improvement programmes, Sustainable cash flow generation, Balance between growth and deleveraging with a focus on shareholder returns .

Macroeconomic Risks

The economic slowdown in China has disrupted global steel trade volumes impacting adversely global and Indian steel prices, affecting the Companys business in India.

key mitigation strategies Diversification of the product portfolio, Development of alternate markets, etc. Increasing sales of value-added and branded products for sales mix enrichment. Driving improvement projects to support additional value.

Commodity Risk

Raw materials (mainly coal and iron ore) are a significant contributor to the input cost of steelmaking. These commodities have global supply chains, and their prices get impacted by various factors such as the dynamic geopolitical landscape, supply-demand imbalances, weather patterns, policy interventions by governments in key sourcing and consuming countries (especially China), etc.

key mitigation strategies Developing predictive analytics tools to have advance information on price direction so as to optimise buying decisions helps to curtail the Risk. The captive or domestic raw materials provide another avenue to guard against volatility as they have a relatively stable cost and price. localisation to de-risk the supply chain for both direct and indirect commodities. diversification of coal sourcing to mitigate the risk of geographical concentration Scan Steels has undertaken a risk assessment to assess the capabilities of key vendors. We proactively engage in assessing the risk of single-geography sourcing, and mitigations have been put in place to diversify sourcing and/ or find alternate materials.

Regulatory Risks

Our operations are governed by various statutes encompassing laws and regulations for the environment and climate change, trade measures, competition, taxes, mining, and others. Any deviation in compliance and adherence has the potential to not only impact our operating performance but also dent our reputation. The continuously evolving regulatory scenario, resulting in changes to the statutory provisions and the introduction of new ones, makes compliance more complex. Non-compliance with increasingly stringent regulatory and environmental norms may result in liabilities.

key mitigation strategies as we have a zero-tolerance policy towards non-compliance, we are continuously scanning the regulatory canvas to understand the changing statutes and their implications that could influence our procurement decisions and market footprint to protect and generate business value. A compliance management system is in place to Focus on compliance. Policy advocacy to promote best practices, ensure a level playing field through safeguard measures, and improve the ease and cost of doing business. Dialogue with regulatory authorities for greater clarity and availing of legal consultations for timely clearances; Working with industry associations towards simplification of rules; a predictive policy regime; and a transition time for regulatory changes Employees are regularly sensitised about the need

to comply and educated about the compliance requirements

of the role.

Operational Risks

The steel industry is capital-intensive, and the maintenance of critical assets is vital. The industry is also prone to a high proportion of fixed costs and volatility in the prices of raw materials and energy. Limitations or disruptions in the supply of raw materials could adversely affect the Companys profitability. internal factors such as equipment Failure of critical information systems or servers that control the Companys manufacturing plants may adversely impact business operations, practises may be inadequate to deliver the highest standards of equipment reliability, Conventional maintenance leading to unplanned interruptions of operational processes or maintenance delays, process safety-related incidents, and ageing assets can potentially disrupt operations, safety, and customer service levels. External factors such as extreme weather conditions and natural disasters.

key mitigation strategies expertise Establishing sources of supplies from alternate geographies, focus on the formulation and execution of advanced maintenance practices to improve plant availability and reliability. Robust disaster management plans and standard operating processes are in place. Enhancing in-house capability and leveraging past learnings.

Market Related Risks

Steel is a cyclical industry, and excess volatility in the steel and raw material markets may adversely impact the Companys financial condition. Competition from substitute materials or changes in manufacturing processes may lead to a decline in product demand, resulting in a loss of market share. Fast-paced technological changes and shifting customer preferences may necessitate the adoption of newer grades of steel and advanced materials.

key mitigation strategies the only way to beat this cycle is by offering solutions. Development of value-added products and enhanced services and solutions Strengthening contractual agreements. Developing strong customer relationships and gaining brand equity requires continued focus on cost and a timely response on cost control to stay competitive.

Occupational Health and Safety Risk

manufacturing locations are subject to various stringent safety laws and regulations. Non-adherence to process and workforce safety requirements, safety laws, and regulations may impact business continuity and reputation. Integrated steel plants have hazardous operations, adversely impacting the health and safety of the workforce, which in turn may negatively affect business operations and the Companys reputation across geographies.

key mitigation strategies We have created a strong safety governance structure and established a robust safety management system. Safety trainings are conducted to meet the requirements of employees, contractors, and other relevant stakeholders as a part of the safety competency and capability enhancement initiative. Standard operating procedures have been developed and disseminated across the organisation. Periodic Safety inspections and internal and external safety audits ensure that our systems are properly implemented and compiled. Mandatory usage of PPEs such as safety shoes, safety helmets, appropriate hand gloves, etc. is strictly implemented at all our plants. Adherence to these is being implemented and monitored vigilantly to ensure a safe workplace. We invest in training and developing our leaders to cultivate a culture of safety excellence. Through the deployment of best practises, we strive to lead by example and inspire others to prioritise safety. Runs focused campaigns on various themes to drive safety culture.

Supply Chain Risk

The supply chain network is subjected to Weather disruptions, physical and environmental destruction, trade restrictions due to geopolitical tensions, and disruptions at suppliers. The developing rail, road, and port infrastructure, handling facilities, and dependence on outsourced partners may lead to disruption of operations. Also, Political instability is a threat to raw material suppliers.

key mitigation strategies Scan Steels has a dedicated team focused on managing its supply chain. The Company implemented and enforced the Responsible Supply Chain Policy Framework. We are continuously working towards diversification in sourcing and expanding our vendor base from other geographies to manage supply chain disruptions. Measures like logistics network optimisation, improving operational capacity at loading and unloading points, and upgrading existing facilities are being undertaken.

Cyber Security Risk

Cybersecurity risks could damage reputations and lead to financial losses. Such threats arise from: Theft of corporate information Theft of financial information (e.g., financial results and bank details) Ransomware: Cyber extortion Disruption to business (e.g., inability to carry out SAP transactions, online payments) Loss of business or contract

key mitigation strategies Firewall hardening rule sets were

implemented, Strengthening the cybersecurity posture Self- assessment and continuous monitoring, A cybersecurity awareness programme was conducted across all locations in view of the growing threats of cyberattacks due to increased online trades and transactions, monitored threats, and responded to, investigated, and remedied cybersecurity-related incidents and data breaches.

FINANCIAL RISK AND MANAGEMENT

The companys few portions of activities are exposed to variety of financial risks i.e. market risk, credit risk and liquidity risk. The companys primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The companys financial instruments (excluding receivables from related parties) are influenced mainly by the individual characteristics of each customer. The companys exposure to credit risk is the concentration of risk from the top few customers and the demographics of the customers.

Credit Risk

Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily trade receivables from customers other than government entities. These Trade receivables are typically unsecured and are derived from revenue earned from domestic and foreign customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers to which the company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the company uses expected credit loss model to assess impairment loss or gain. the company uses a matrix to compute the expected credit loss allowance for trade receivable.

key mitigation strategies Credit risk is managed on instrument basis. For Banks and financial institutions, only high rated banks /institutions are accepted. For other financial instruments, the company assesses and maintains an internal credit rating system. The finance function consists of a separate team who assesses and maintain internal credit rating system. Internal credit rating is performed on a company level basis for each class of financial instrument with different characteristics.

VL1: High-Quality assets, negligible credit risk VL2: Quality assets, low credit risk

VL3: Standard assets, moderate credit risk

VL4: Sub ?€“standard assets, relatively high credit risk

VL5: Low- quality assets, very high credit risk VL6: Doubt full assets, credit ?€“ impaired

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forward- looking information. Especially the following indicators are incorporated:

Internal credit rating

External credit rating (as far as available)

Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the borrowers ability to meet the obligation.

Actual or expected significant changes in the operating results of the borrower.

Significant increase in credit risk on other financial instruments of the same borrower

Significant changes in the value of the collateral supporting the obligation or in the quality of the third- party guarantees or credit enhancements.

Significant changes in the expected performance and behavior of the borrower, including changes in the payment status of borrowers in the group and changes in the operating results of the borrower.

Macro-economic information (such as regulatory changes, market interest rate or growth rate) is incorporated as part of the internal rating model.

Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the company treasury maintains flexibility in funding by maintaining available under committed credit lines.

key mitigation strategies Management monitors rolling

forecasts of the companys liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at local level in accordance with practice and limits set by the company. These limits vary by locations to take into account the liquidity of the market in which the entity operates. In addition, the companys liquidity management policy involves, projecting cash flows in major currencies, considering the level of liquid assets necessary, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

Financial Market Risk

The company is not an active investor in equity market. It continues to hold certain investment in equity for long term value accretion which are accordingly measured at fair value through other comprehensive income. Accordingly, fair value fluctuations arising from market volatility is recognized in other comprehensive income.

Foreign Currency Risk

The company dont have foreign currency exposure hence no foreign exchange forward contracts are required to hold and to mitigate the risk of foreign exchange fluctuation.

Cash flow and fair value interest rate risk

The companys main interest rate risk arises from long term borrowings with variables rates, which exposes the company to cash flow interest rate risk. Group policy is to maintain most of its borrowings at fixed and variable rate using interest rate swaps to archive this when necessary.

The companys fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount not the future cash flows will fluctuate because of a change in market interest rates.

Price risk

The companys exposure to equity securities price risk arises from investments held by the company and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss.

Profit for the period would increase/ decrease as a result of gains/ losses on equity securities classified as at fair value through profit or loss. Other components of equity would increase/decrease as a result of gains/ losses on equity securities classified as fair value through other comprehensive income.

CAPITAL MANAGEMENT

The companys objectives when managing capital are to:

Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return on capital to shareholders or issue new shares.

The company monitors capital using gearing ratio, which is net debt divided by total Equity. Net debt comprises of long term and short-term borrowings less cash and bank balances. Equity includes equity share capital and reserves that are managed as capital.

Other key mitigation strategies

Apart from this, there could be an oversupply position due to capacity expansion, the setting up of new projects in the steel industry, and the scarcity of raw materials. Industry is highly labour-intensive and subject to stringent labour laws. Your Company has identified the major thrust areas to concentrate on, which it believes are critical to the achievement of organisational goals. The company annually reviews the List of Risk Areas to identify potential business threats, and suitable corrective actions are initiated. Confirmations of compliance with appropriate statutory requirements are obtained from the respective units or divisions. A corporate governance policy clearly laying down the roles, duties, and responsibilities of various entities in relation to risk management is in place.

MEDIUM ?€“TERM AND LONG-TERM STRATEGY

Our strategy planning process is influenced by the Vision, mission, and Values of the organisation, along with the strategic direction provided by the Senior Leadership Team. As part of the process, we examine both the external and internal business environment and factor in potential risks and opportunities that could disrupt the industry. Materiality assessment provides insights into the changing needs of all our stakeholders. Our long-term strategies and annual business plans are formulated as an outcome of the integrated strategy planning process. The overall strategy and plans are cascaded down to individual divisions or departments with clearly defined responsibilities across all employee levels.

The Company focuses on the following strategy to make its competitive position and progress of the company:

In-house research, reports from specialised agencies,

and interactions with all concerned to help track the macroenvironment

Internal meetings ensure multi-disciplinary stress testing and regular tracking of assumptions to proactively respond, and a due diligence review before dealing with uncertainties.

Compliance with norms through selecting the right equipment, processes, competencies, inputs, and Security arrangements like access monitoring systems, vigilance, and mock drills

The executive committee and other unit or functional meetings closely monitor operational plans; cost optimisation, inventory, collections, and vendor credit Initiatives have been taken up.

SEGMENT WISE PERFORMANCE

The Company is engaged in only one segment viz. Steel Manufacturing and as such there is no separate reportable segments as per IND AS -108 "Operating Segment."

PRODUCTS AND MARKET PERFORMANCE

It is imperative that we keep pace with the growing needs of our customers, primarily those in the Automotive and Construction sectors. We aim to deliver enhanced benefits through customised services and solutions and value-added products throughout the customers purchase journey.

PRODUCT HIGHLIGHTS

Volume

Long products are comprised of almost 50 % of product portfolio (in terms of sales value) in FY 2025. Long products are manufactured at Rambahal & Budhakata unit.

Sector

Long Product in India is largely consumed by Construction & Infra and Industrial & Engineering sector. The volume movement was better in FY 2024-25 as compared to corresponding last fiscal.

OPERATIONAL REVIEW

The company is engaged in the manufacturing of TMT Rod, Sponge Iron, MS billets, and ingots, as well as generating power for captive consumption. The Company has a semi- Automatic Rolling Mill.

Facilities

The company has its four Units at different places of India: -

Unit -1 is situated at Rambhahal, At- Keshramal, Rajgangpur, Sundergarh (Odisha) with the facilities of Rolling Mills ?€“ 2, Sponge Iron-2, Induction Furnace ?€“ 2.

Unit -2 is situated at Gangajal, Budhakata, Sundergarh, Odisha with the facilities of Sponge Iron- 4, SMS Billet Caster

-3, Captive Power Plant ?€“ 1 and Coal Washery -1.

Unit-3 is situated at Bai-bai, Tudalaga, Sundergarh, Odisha with the facilities of Induction Furnace ?€“ 2.

Unit-4 is situated at Vill- Veniveerapura, Ballari, Karnataka with the facilities of Sponge Iron 2.

Overview

Scan Steels is an Integrated Steel Plant. It manufactures TMT Bars to fulfill the requirement of the state. It is a local brand in Odisha.

Turn Over

During the year under review, On Standalone basis, the Revenue from operations of the Company for FY 2024-25 was Rs. 78919.93 Lakhs as compared to Rs. 96541.32 Lakhs for FY 2023-24 registering a flat trajectory of (18.25%). The profit after tax ("PAT") attributable to shareholder for

FY 2024-25 was Rs. 1960.50 Lakhs as against Rs. 1773.01 lakhs for FY 2023-24 registering a growth of 10.57%.

On a Consolidated basis, the Revenue from operations of the Company for FY 2024-25 was Rs. 78919.93 Lakhs as compared to Rs. 96541.32 Lakhs for FY 2023-24 registering a flat trajectory of (18.25%). The profit after tax ("PAT") attributable to shareholder for FY 2024-25 was

Rs. 2165.20 Lakhs as against Rs. 2105.44 lakhs for FY 2023- 24 registering a growth of 2.84%.

Note: The figures are in bracket shows negative.

On a Standalone basis, Earnings per share was Rs. 3.35 (Basic) and (Diluted) stood at in FY 2024-25 as compared to Rs. 3.39 (Basic) and Rs. 3.37 (Diluted) in FY 2023-24.

On a Consolidated basis, Earnings per share was Rs. 3.69 (Basic) and (Diluted) stood at in FY 2024-25 as compared to Rs. 4.02 (Basic) and Rs. 4.00 (Diluted) in FY 2023-24.

Quality

Your Company continues to concentrate on quality, and the strict adherence to this policy continues to benefit your company in price realisations.

FINANCIAL PERFORMANCE

Highlights FY 2024- 25

Financial Data	2024- 25	2023- 24	Growth (%)
Total Income	793.81	967.43	- 17.95%
Operating EBIDTA	45.36	47.53	- 4.57%
EBIDTA margin (%)	5.75%	4.91%	17.11%
Depreciation and amortization expenses	15.69	15.40	1.88%
Interest Cost	8.19	9.99	- 18.02%
Profit before Exceptional Items	26.09	24.16	7.99%
Exceptional Items	-	-	-
PAT	19.61	17.73	10.60%
Earnings per shares (basic)	3.35	3.39	- 1.18%
Earnings per shares (diluted)	3.35	3.37	- 0.59%

Other key Financial Indicators

SL. NO.	RATIOS	2024- 25	2023- 24	CHANGE	%CHANGE
1	Debtors Turnover (No. Of days)	8	13	- 5	- 38.46%
2	Inventory Turnover (No. Of Days)	80	63	17	26.98%
3	Interest Coverage Ratio	5.54	4.76	0.78	16.41%
4	Current Ratio	1.82	1.55	0.27	17.42%
5	Debt \u2013Equity Ratio	0.15	0.30	-0.15	- 50.00%
6	Operating EBITDA (Margin %)	5.75%	4.91%	0.84%	17.11%
7	Net Profit Margin (%)	2.47	1.83	0.64	34.97%
8	Return on Net worth (%)	4.69	4.44	0.25	5.74%

Note:

Inventory turnover is high due to higher amount of inventory holding

Interest coverage ratio has gone up substantially due to higher EBDITA margin and lower interest on debt

Net Profit margin has gone up substantially due to higher operational efficiency in production of finished products.

OPERATIONAL PERFORMANCE

Product Wise Gross Sales

Breakup ( Rs. in crores)

PRODUCT	2024- 25	2023- 24	% CHANGE
TMT REBARS	697.74	761.41	- 8.36
SPONGE IRON	-	-	-
MS INGOT/MS BILLET	41.35	35.13	17.71

Product Wise Sales Quantity

Breakup (Qty in MT)

PRODUCT	2024- 25	2023- 24	% CHANGE
TMT REBARS	1,53,869	1,60,637	- 4.21
SPONGE IRON	-	-	-
MS INGOT/MS BILLET	10750	8136	32.13

FINANCIAL MANAGEMENT

Senior management reviews the requirement for funds for projects under implementation periodically, and after assessing the financial market, decisions are taken to identify the lenders. A part of the fund requirement is arranged by way of borrowing from Banks on competitive terms, and the balance is met from internal accruals.

The finance department is working at the Bhubaneswar & Factory establishment and is manned by qualified and experienced personnel. The department properly records all financial transactions, and proper financial reports are periodically sent to senior management. Proper controls are in place, and audits are conducted regularly.

INDUSTRIAL RELATIONS AND HUMAN MANAGEMENT

Our communities, customers, and suppliers are critical to our business continuity and social license to operate. We believe in building long-term, transparent, and trust-based relationships with them through continuous stakeholder engagement and innovation. We aim to strengthen the supplier relationships by holding vendors meet and supplier relationship programmes.

We recognise that the success of our business relies on the integral role played by our suppliers and business partners. Our key focus areas are Timely Payment, continuity of orders, capacity building, which helps in Sustainable supply chain practices, and Local procurement. As one of our core stakeholders, they ensure the seamless operation of our business and contribute to our achievements. We firmly believe in establishing mutually beneficial relationships by selecting partners who align with our values, business ethics, and commitment to sustainable practices.

The total number of employees as of March 31, 2025 was 1720. The corner stone of Scan Steels ambitions for becoming a bigger, better, and more efficient steel producer rests on the drive and ability of its people. The Human Resources Department (HRD) works continuously to maintain healthy working relationships with workers and other staff members. We embrace diversity and inclusivity in our workforce, fostering equal opportunities for all, regardless of gender, age, ethnicity, religion, or background. Our recruitment policy champions a rich tapestry of talent, uniting individuals from diverse areas of expertise, cultures, and age groups. Through our comprehensive strategy, we forge an inclusive workforce, empowering women and minority groups to actively contribute and thrive.

Driven by a people-first mission, we believe that engaged employees are at the core of our business success. We strive to make Scan Steels a safe place to work by keeping our employees motivated and inspired. We recognise our employees expertise and commitment as crucial for achieving operational excellence, gaining a competitive edge, and ensuring long-term success. we cultivate and empower our workforce, promoting a culture of excellence. Through investment in their personal and professional development and the adoption of industry-leading practices, we strive to establish ourselves as a preferred employer. It is our responsibility to ensure our workforce stays motivated and engaged. We cultivate a culture that values and encourages every idea. Our employees are actively encouraged to contribute to various improvement initiatives, propose innovative ideas, and participate in cross-functional projects.

We maintain platforms for rewarding and recognising

exceptional efforts, ensuring engagement and creativity thrive within our workforce.

INTERNAL FINANCIAL CONTROL SYSTEMS AND INTERNAL AUDIT

The Company has an Internal Financial Controls ( IFC ) framework commensurate with the size, scale, and complexity of the Companys operations. The Board of Directors of the Company is responsible for ensuring that IFC have been laid down by the Company and that such controls are adequate and operating effectively. The Audit Committee regularly reviews audit plans, significant audit findings, the adequacy of internal controls, compliance with accounting standards, and so on. The internal control framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorised use, executing transactions with proper authorization, and ensuring compliance with corporate policies. The Companys internal financial control framework is commensurate with the size and operations of the business and is in line with the requirements of the Companies Act, 2013.

The Company believes in systematic work and the placement of proper checks. Proper systems are in place, and regular reviews are held at higher levels to check the efficacy and relevance of these systems. These reviews also prescribe changes wherever required. The Company has laid down Standard Operating Procedures and policies to guide the operations of each of its functions. Business heads are responsible for ensuring compliance with these policies and procedures. Robust and continuous internal monitoring mechanisms ensure the timely identification of risks and issues. The internal auditors of the company conduct audits of various departments and areas. Their reports are placed before the Audit Committee, which reviews these reports and the comments and suggestions of the Internal Auditors. The Audit Committee also oversees financial systems, procedures, and internal controls and is competent to request any information or document from any department. The management, statutory auditors, and internal auditors have also carried out adequate due diligence on the control environment of the Company through rigorous testing.

The scope and authority of the Internal Audit function are defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee. The Internal Audit team develops an annual audit plan based on the risk profile of

the business activities. The Internal Audit plan is approved

by the Audit Committee, which also reviews compliance with the plan. The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control systems in the company and their compliance with operating systems, accounting procedures, and policies at all locations of the Company.

Based on the report of the internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls.

Significant audit observations and corrective action(s) thereon are presented to the Audit Committee. The Audit Committee, at its meetings, reviews the reports submitted by the Internal Auditor. Also, at frequent intervals, the Audit Committee has independent sessions with the statutory auditor and the Management to discuss the adequacy and effectiveness of internal financial controls.

STATUTORY COMPLIANCE

The Company has in place adequate systems and processes to ensure that it is in compliance with all applicable laws. The Company Secretary is responsible for implementing the systems and processes for monitoring compliance with the applicable laws and ensuring that the systems and processes are operating effectively. The Chief Financial Officer places a certificate before the Board at each meeting where the Financial Results are approved about the Fairness of the data. The Company Secretary also confirms compliance with Company law, SEBI regulations, and other corporate laws applicable to the Company. Through Stringent compliance measures, we guarantee transparency and maintain the integrity of our operations.

CORE VALUES AND CULTURE

Corporate success is based on certain core values and the corporate culture developed by the Company. Ethics are at the core of our operations. Our Code of Conduct prohibits corrupt practices, conflicts of interest, and unethical conduct. We emphasize information security and foster ethical competition, creating an environment of trust and integrity. Underlying this is a firm belief that teamwork and motivation rooted in fairness are the keys to success in business. The group sets benchmarks for itself in these areas and strives to achieve them, believing in seeking the active participation of everyone in decision-making rather than relying on the imposition of central diktats. Quality, productivity, and optimal utilization of resources?€” human

and material?€”woven around the concept of the welfare of

the community as a whole are central to the managements philosophy.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) programmes of Scan Steels strive to make a difference in the communities around its area of operations. And ensure that all developmental activities and initiatives undertaken are accessible to the most marginalised segments, such as children, women, the elderly, and those with disabilities. This would reflect particularly in the fields of the areas for CSR activities are promoting education, animal welfare, healthcare, promoting Sports, drinking & sanitation and for rural development projects. We intend to collaborate with key stakeholders, especially the local administration and institutions, to facilitate development through initiatives in the mentioned thematic areas. The initiatives are strategically designed on the basis of community needs assessment, mapping, participatory planning, and local feasibility. The CSR programmes supplement the local governments efforts in development, besides striving to have the communities own the initiatives and sustain their impact over time. Most of our programmes are centered in and around Sundergarh and other districts of Odisha.

RESEARCH AND DEVELOPMENT A PRIORITY

A research and development focus has provided strong scientific support to the groups quantitative growth with continuing enhancements in the quality of the product. The research and development policy keeps the groups long-term interests in view and believes in anticipating the needs of the future. It is committed to modernization and encourages it in every field.

CAUTIONARY STATEMENT

This report contains projections, estimates, expectations, etc., which are just "forward-looking statements". Actual results could differ from those expressed or implied in this report. Important factors that may have an impact on the Companys operations include economic conditions affecting demand, supply, and price conditions in the domestic and overseas markets, changes in government regulations and policies, tax laws and other statutes, and other incidental factors. The Company assumes no responsibility to publicly modify or revise any forward-looking statements on the basis of any further events or new information. Actual results may differ from those mentioned in the report.

CONCLUSION

At Scan Steels, innovation and responsibility have been at the core of building a sustainable enterprise and exploring possibilities for creating a better future. Whether by developing high-strength steel or offering new solutions for construction and mobility, we relentlessly focus on delivering products that are synonymous with quality and durability. We also deploy the best available technologies and processes to drive resource efficiency and develop materials of the future that are superior, sustainable, and affordable. We have focused on strengthening our balance sheet, upholding the highest standards in ethical and responsible business practices, and striving towards a shared future of prosperity.