Shyam Metalics & Energy Ltd Management Discussions

Executive summary

Financial Year 2025-26 was a year of construction not merely of steel and infrastructure, though that, too, was on a scale the Company has not previously attempted, but of the foundational architecture that will define Shyam Metalics and Energy Limited for the decade ahead.

Against a backdrop of a challenging macro environment, compressed steel realisations driven by an unprecedented surge in Chinese exports, and the deliberate costs of running multiple new facilities through their ramp-up phases simultaneously, the Company delivered consolidated revenue of D18,552 crore, a 22% increase over the previous year and a consolidated Profit After Tax of D1,061 crore, representing 17% growth year-on-year.

These outcomes, achieved in the year they were achieved, reflect both the resilience of our integrated Ore to Metal model and the discipline of a management team that does not allow short-term pressures to alter a carefully considered long-term direction.

ECONOMIC OVERVIEW

Global Economy

The global economy remained moderately resilient during 2025 despite geopolitical uncertainty, elevated interest rates, commodity volatility and uneven demand conditions across major regions. Emerging market and developing economies continued to outperform advanced economies, supported by infrastructure spending, manufacturing expansion and urbanisation.

For the metals sector, the operating environment remained challenging. Volatility in iron ore, coal, energy, freight and ferroalloy inputs affected production economics, while trade- related actions and shifting steel flows, particularly from China, influenced pricing and competitive intensity across global markets.

At the same time, long-term demand remained supported by infrastructure development, renewable energy, electric mobility, industrial manufacturing and supply-chain diversification. Integrated metal producers with diversified product portfolios, captive power, backward integration and cost-efficient operations remained better positioned to manage this volatility.

GDP Growth (%)

Year	World	Advanced Economies	Emerging and Developing Economies
2025 E	3.4	1.9	4.4
2026P	3.1	1.8	3.9
2027P	3.2	1.7	4.2

Indian Economy

India remained one of the fastest-growing major economies during FY26, supported by strong domestic demand, resilient consumption, sustained public investment and improving private-sector participation. Real GDP is estimated to have grown 7.4% in FY26, up from 6.5% in the previous year, with growth in FY27 projected between 6.8% and 7.2%. Growth was primarily driven by infrastructure expansion, manufacturing activity and investment-led development, underpinned by healthy balance sheets across households, corporates and banks.

Government-led capital expenditure remained a key catalyst, rising from an average of 2.7% of GDP during 2016-20 to nearly 4% in FY25, with continued investment in roads, railways, metro projects, airports, ports, industrial corridors and urban infrastructure.These outlays strengthened demand visibility across steel-intensive sectors, including construction, transportation, engineering and industrial manufacturing.

Indias industrial sector is projected to grow by 6.2% in FY26. In FH1 FY26, industrial activity grew by 7.0%, while manufacturing GVA grew by 7.72% in Q1 and 9.13% in Q2, supported by rising capacity utilisation and supply chain diversification. Continued focus on Make in India, PLI schemes and manufacturing localisation further reinforced long-term demand prospects for steel, ferro alloys and value-added metal products.

Retail inflation moderated from 4.6% in FY25 to 1.7% during April-December FY26, improving purchasing power and supporting economic stability. However, volatility in energy prices, coal costs and commodity markets continued to influence input costs across energy-intensive industries. The external sector remained resilient, with the current account deficit moderating to 0.8% of GDP and FDI inflows rising 13% to USD 81 billion in 2025, reflecting sustained investor confidence in Indias manufacturing ecosystem.

For Shyam Metalics, this operating environment aligns directly with its integrated manufacturing base, captive power capabilities, diversified portfolio and increasing focus on downstream and value-added products across carbon steel, stainless steel, aluminium, speciality steel and railway-linked applications.

The Indian economy is expected to sustain its growth trajectory in FY27, with GDP growth projected between 6.8% and 7.2%, driven by continued public capital expenditure, a recovery in private investment, and stable consumption demand. Infrastructure spending across railways, highways and industrial corridors will remain the primary driver of demand for steel-intensive sectors. While global trade uncertainties and commodity price volatility remain watchpoints, Indias domestic fundamentals — moderate inflation, a manageable current account deficit and strong institutional balance sheets — provide a credible foundation for sustained expansion.

THE STEEL SECTOR Global Steel Sector

The global steel market was valued at approximately USD 1.63 trillion in 2025 and is projected to reach USD 2.73 trillion by 2035, registering a CAGR of 5.29%. According to the World Steel Association, global steel demand is expected to reach 1,749 million tonnes in 2025 and 1,762 million tonnes by 2027, supported by infrastructure investments, industrial recovery and manufacturing expansion across emerging economies. Global steel production is projected to grow at an average annual rate of 0.9% through 2030, with emerging economies — particularly India, Southeast Asia and the Middle East accounting for the bulk of incremental consumption. Steel demand in developed economies grew a modest 0.2% in CY25, ending a three-year contraction, with a gradual recovery of 1.0-2.3% expected through CY27 as manufacturing activity and infrastructure spending improve.

The defining feature of the global steel landscape in 2025, however, was not demand — it was the scale and persistence of Chinese overcapacity. China, which accounts for over half of global steel output, saw domestic consumption decline for the third consecutive year as its property sector continued to contract and construction activity weakened. With production capacity far exceeding internal requirements, Chinese steel exports rose to an all-time high of 119 million tonnes in CY25, as producers redirected surplus output to international markets at prices that undercut regional competitors. The result was a structural distortion in global trade flows: steel export prices, including freight, fell below the cost of production fora sustained period, compressing margins for producers across Asia, the Middle East and Europe.

Over 30 countries initiated anti-dumping or safeguard investigations during the year. Chinas steel demand is expected to decline a further 1-1.5% in CY26, and exports are projected to remain above 100 million tonnes, suggesting that the supply overhang will persist as a defining feature of the global operating environment in the near term. For India, the impact was direct and material: cheap imports compressed domestic steel realisations through the first three quarters of FY26, eroding pricing power across the fiat and long-products value chain even as domestic demand grew by 7-8%.

Indian Steel Sector

The Indian steel industry delivered strong volume growth in FY26, with crude steel production rising 10.7% to 168.4 million tonnes and finished steel consumption increasing 7.6% to 163.7 million tonnes. India retained its position as the worlds second-largest steel producer, with domestic consumption more than doubling over the past decade. The market was valued at approximately USD 140.5 billion in 2025 and is projected to reach USD 227.4 billion by 2032, growing at a CAGR of 7.1%.

The growth story in FY26, however, was one of volumes against pricing headwinds. Domestic carbon steel realisations remained under sustained pressure through the first three quarters, driven by low-cost imports that compressed margins across the value chain. The Governments imposition of a 12% safeguard duty on certain fiat steel products from April 2025- confirmed as a three-year measure-along with anti-dumping duties on specific Chinese electrical steel, provided partial relief in FH2 FY26. Finished steel imports declined significantly, and India regained net exporter status with exports rising 35.9% to 6.6 million tonnes. For producers operating primarily in long products and value-added categories, as Shyam Metalics does, the pricing environment in carbon steel longs was comparatively more stable than in fiats, though not immune to broader realisation compression.

Demand drivers remained firmly in place. Government-led capital expenditure across railways, highways, metro networks, industrial corridors and urban housing continued to underpin steel consumption in construction and infrastructure. Indias national highway network has expanded beyond 1,45,000 kilometres, and the metro rail network now exceeds 1,095 kilometres across 26 cities — steel-intensive development that generates demand for long products, structural and TMT bars, categories where integrated producers with proximity to eastern Indias raw material belt hold a natural cost advantage.

Sponge iron and pig iron production recorded healthy growth, reflecting demand from both primary and secondary steelmakers. For vertically integrated players such as Shyam Metalics — where pig iron, sponge iron and ferro alloys serve as both saleable products and captive intermediates — this environment supported merchant volumes and internal cost efficiency.

Beyond carbon steel, the faster-growing segments are increasingly relevant to the Companys business. Stainless steel consumption continued to rise, driven by infrastructure, railways and consumer applications, with domestic producers gaining share as anti-dumping investigations on imports progressed.

Speciality alloys demand grew on the back of automotive, engineering and industrial applications. Aluminium foil and downstream products benefited from expanding demand in packaging, pharmaceuticals and renewable energy. Each represents a category where Shyam Metalics has established capacity oris investing under Vision 2031.

The operating environment remained cost intensive.

India imports approximately 85-90% of its coking coal requirements, and volatility in coking coal prices, energy expenses and freight rates continued to influence production economics. Integrated producers with captive power, backward integration and diversified revenue streams are structurally better positioned to manage this volatility — a profile that defines Shyam Metalicsoperating model.

The sector is also progressing towards low-carbon production through investments in renewable energy, waste heat recovery and energy-efficient technologies, supported by policy frameworks including the National Green Flydrogen Mission. For integrated producers with captive power and waste-heat recovery infrastructure already in place, this transition represents both a compliance imperative and a strengthening of competitive advantage.

The Primary Sectors Driving Steel Demand in India

Infrastructure and Construction: The Indian construction sector, valued at USD 685 billion in 2025 and projected to reach USD 1.25 trillion by 2034, remains one of the largest consumers of steel. Rapid urbanisation, expanding residential and commercial real estate, and substantial investments in transportation infrastructure, industrial corridors and smart cities are driving demand for structural steel.TMT bars and wire rods. Continued government focus on infrastructure- led growth, supported by rising capital expenditure and PPP projects, is expected to sustain long-term consumption and create strong opportunities for integrated steel producers.

(Source: https://www.imarcgroup.com/india-construction-rnarket)

Automotive and Transportation: Indias automotive industry is expected to strengthen its position as one of the worlds largest vehicle markets by 2026, supported by rising passenger vehicle demand and growth in electric mobility. Expansion across passenger vehicles, commercial vehicles and two-wheelers is driving higher consumption of fiat steel, speciality steel and alloy steel.The growing trend towards vehicle premiumisation and electric vehicles is increasing demand for advanced high-strength steel, lightweight grades and value-added products, positioning the sector as a sustained driver of steel demand and product innovation.

(Source: https://creativesnext.com/info/auto-industry-outlook-in-india/)

Engineering and Manufacturing: Indias manufacturing sector, valued at approximately USD 310.3 billion in 2025 and projected to grow at a 9.1% CAGR through 2033, is driving significant demand for steel and allied metal products. Expansion across automotive, engineering, consumer durables, capital goods and industrial machinery is driving consumption of fiat steel, long steel, speciality steel and ferro alloys. Government initiatives, including Make in India and PLI schemes, alongside rising FDI and investments in industrial corridors, are supporting capacity expansion and localisation, strengthening domestic steel demand.

(Source: https://www.datainsightsmarket.com/reports/india-manufacturing- market-18623)

Renewable Energy: Indias renewable energy expansion is emerging as a significant driver of steel demand. As of March 2026, the country had installed 283.5 GW of non-fossil fuel capacity, including 150.3 GW of solarand 56.1 GW of wind energy, with an additional 55.3 GW added during FY26. Large- scale investments in solar parks, wind farms, transmission infrastructure and grid modernisation require substantial quantities of structural steel, galvanised steel and electrical steel. Indias target of 500 GW of non-fossil fuel capacity by 2030 is expected to create sustained long-term demand across the renewable energy value chain.

(Source: https://www.pib.gov.in/PressReleasePage. aspx Rs.PRID=2250039&reg=3&lang=1)

Value-Added and Downstream Metals Opportunity: The Indian metals sector is increasingly moving beyond volume- led growth towards value-added, application-specific and downstream products. Demand from infrastructure, railways, renewable energy, electric mobility, packaging and consumerfacing industries is creating opportunities for specialised steel, stainless steel, aluminium and coated products. Value-added categories improve portfolio resilience, reduce dependence on commoditised realisations and support stronger customer stickiness. This trend is directly relevant to Shyam Metalics.

The Companys expansion across cold-rolled products, stainless steel, aluminium foil, speciality steel and railway wagon manufacturing reflects a deliberate move towards premiumisation and downstream integration. By combining integrated operations with captive power, raw material linkages and a diversified product portfolio, the Company is positioned to participate in both core steel demand and higher-value metals opportunities.

SWOT Analysis

Strengths

The availability of domestic iron ore reserves and coal and the growing presence of integrated metal producers support raw material security, operating efficiency and cost competitiveness.

Policy support through public capital expenditure, PM Gati Shakti, Make in India, the National Steel Policy and PLI-linked manufacturing initiatives continues to strengthen the domestic steel ecosystem.

Weaknesses

Limited capacity and technological weaknesses hinder the steel industrys ability to manufacture high- quality steel for new-age applications.

The steel industry remains cyclical and is sensitive to fluctuations in demand, realisations, raw material prices and global trade conditions.

High dependence on imported coking coal exposes the sector to international price volatility, currency movements and supply chain disruptions.

Steel and metals production are energy-intensive, making profitability sensitive to coal, power, freight and logistics costs.

Capacity expansion and technology upgrades require significant capital investment, while initial ramp-up phases may temporarily affect utilisation and margins.

Opportunities

Rising investments in infrastructure, railways, housing, industrial corridors and manufacturing are expected to support longterm domestic steel demand.

Growing demand for speciality steel, stainless steel, ferro alloys and value- added downstream products creates opportunities for margin improvement and portfolio diversification.

Expansion of renewable energy, electric mobility, battery manufacturing, defence, engineering and transportation sectors is creating new application-led demand for steel, aluminium and specialised metal products.

Transition to green steel, integration of renewable energy, scrap recycling, energy efficiency and low-carbon manufacturing can strengthen long-term competitiveness.

Threats

Elevated Chinese steel exports affect domestic prices, putting pressure on realisations and margins.

Geopolitical tensions, trade restrictions, tariff actions and supply chain disruptions may affect raw material availability, exports and global steel flows.

Increasing environmental regulations, carbon-related compliance requirements, and mechanisms such as CBAM may raise costs and affect the export competitiveness of carbonintensive producers.

COMPANY OVERVIEW

Shyam Metalics and Energy Limited is one of Indias leading integrated metal producers, with a diversified portfolio spanning carbon steel, stainless steel, ferroalloys, aluminium foil and allied downstream products.The Company operates on an integrated Ore-to-Metal model, serving infrastructure, construction, engineering, transportation, packaging, industrial and export markets through a broad range of intermediate and finished products.

Manufacturing operations are strategically located across key mineral and industrial regions, supported by captive power generation, railway sidings and dedicated logistics infrastructure.This configuration strengthens cost competitiveness, enhances operating reliability and provides the flexibility to serve both captive and merchant demand across product categories.

In FY26, the Company accelerated its platform build-out through capacity expansion, downstream integration and a sharper focus on value-added products. Its growing presence in cold rolled products, stainless steel, aluminium foil, speciality steel and railway-linked applications marks a deliberate shift towards premiumisation, product diversification and long-term margin resilience.

The following table summarises the Companys installed capacities across key business segments.

Business Segment (MTPA / MW)	FY26	FY25
Iron Ore Pellet	6.00	6.00
Sponge Iron	3.05	3.05
Billets	2.01	2.01
TMT Bars, Structural Steel, Wire Rods & Pipes	2.07	2.07
Specialty Alloys	0.22	0.22
Stainless Steel Billets	0.12	0.12
Stainless Steel Finished Steel	0.15	0.15
Aluminium Foil	0.04	0.04
Pig Iron	1.22	0.77
Coke Oven	0.45	0.45
Colour-Coated Sheets	0.40	0.25
Captive Power (MW)	467	467
Renewable Power (MW)	9	9

* FY26 aluminium-foil capacity was restated from 0.04 MTPA to 0.024 MTPAto reflect ultra-thin foil production.

Operational Performance

Operational progress in FY26 was substantial. The Pig Iron plant at Jamuria, commissioned in FY25, achieved 100% utilisation in FY26, validating both execution capability and underlying product demand.

The Colour-Coated facility reached 71% utilisation within its first full year. Developed with an investment of Rs.603 crore, the Companys greenfield Cold Rolling Mill at Jamuria - Phase 1 (2,50,000TPA) commenced operations in October 2024. Phase 2 of the facility commenced operations in April 2026.

Stainless steel volumes grew 11.5% while realisation improved by 6.7%; speciality alloys delivered 11.9% volume growth.

Both segments confirm that diversification into higher-value categories is meeting market demand rather than simply adding capacity.

Fixed assets grew from Rs.6,356.68 crore to Rs.8,134.01 crore over the year — reflecting the intentional deployment of capital into productive assets that will underpin revenue growth in FY27 and beyond.

Segment Performance

The Companys operations span five primary reporting segments. The following section provides a factual account of FY26 performance across each.

Carbon Steel, Long and Flat Products: Revenue contribution remained dominant, with long products (TMT bars, structural steel, wire rods) continuing to form the core of volume output. Flat products — CR coil and sheet — emerged as a meaningful new revenue line in FY26 following commissioning of the Cold Rolling Mill. Carbon steel segment margins remained under pressure throughout FH1 due to Chinese dumping and rising input costs, with a recovery evident in H2 as utilisation improved and the new facilities progressed through their ramp-up curves.

Stainless Steel: This segment delivered the most consistent performance improvement across FY26. Volumes grew 11.5% year-on-year, realisations improved by 6.7%.The acquisition of Mittal Corp continues to provide the upstream billet and wire rod base from which SMELs stainless steel downstream ambition is built. The Rs.1,800 crore downstream expansion at Sambalpur, targeting 6,00,000 TPA of finished capacity by Q1 FY29, will transform this segment from a growth contributor to one of the Companys primary earnings anchors.

Ferro Alloys and Speciality Alloys: Speciality alloy volumes delivered the standout growth figure of FY26, an 11.9%year- on-year increase. The Company remains among the largest ferro alloy producers in India by installed capacity, and the segments performance in FY26 reflects both the strength of end-market demand and the competitive advantage of our integrated production model, which positions us to maintain supply consistency through input cost cycles.

Aluminium: SMEL is Indias largest speciality aluminium foil manufacturer, and this position was further strengthened in FY27 through capacity additions under the Rs.800 crore aluminium investment programme. Realisation per tonne improved 10.4%, the greatest improvement among the Companys segments. The planned extension into battery- grade aluminium foil, aligned with Indias electric-vehicle transition and the growing domestic battery manufacturing ecosystem, is currently in advanced development and will be reported upon in greater detail in FY27.

Energy: Captive power generation continued to account for 81 % of total power consumption across the Companys facilities, a ratio that directly defends operating margins in periods of grid tariff volatility. The Companys acquisition of a 26% stake in a solar power company in August 2025 marks the first formal step towards integrating renewable energy into the captive power programme, consistent with the Companys stated direction to reduce the carbon intensity of its energy mix progressively.

FINANCIAL PERFORMANCE REVENUE PERFORMANCE

The Company delivered consolidated revenue from operations of Rs.18,552 crore in FY2025-26, a 22% increase over Rs.15,138 crore in the previous year. Growth was broad-based and volume-driven — total volumes grew 22% year-on-year in Q4 FY26 alone, with full-year expansion reflecting the combined contribution of several newly commissioned facilities that reached meaningful utilisation levels through the year. Revenue crossed Rs.5,000 crore in a single quarter for the first time, with Q4 FY26 recording Rs.5,240 crore — a 27% year-on- year increase — confirming that momentum was genuine and accelerating into FY27.

Growth was not uniform across segments. Carbon steel, which accounts for the largest share of total volumes, faced a challenging pricing environment for most of FY26. Domestic realisations came under sustained pressure from elevated Chinese exports at below-market prices — a structural distortion that compressed average carbon steel realisations by 3% year-on-year. Gains in higher-realisation categories partially offset this: stainless steel realisations improved by 6.7% and aluminium foil by 10% per tonne. The mix improvement was deliberate, and is the clearest available evidence that diversification is translating into financial outcomes, not merely strategic intent.

THE MARGIN JOURNEY: A FOUR-QUARTER NARRATIVE

EBITDA for FY26 stood at Rs.2,537 crore against Rs.2,097 crore in FY25 — a 21 % improvement in absolute terms. Full-year EBITDA margin was 13.7%, and the following is a frank account of how the Company arrived at that number and what it signals for FY27.

The year unfolded in two distinct halves. In Q1 FY26, the margin profile was broadly consistent with the prior year as the Pig Iron plant at Jamuria — commissioned in FY25 — ramped to 104% utilisation and began delivering its designed integration benefit.

Q2 FY26 marked the deepest point of margin pressure: consolidated EBITDA margin declined to 12.10% as four facilities-the Coke Oven, Blast Furnace, Sinter Plant and Cold Rolling Mill-entered simultaneous commissioning and early ramp-up. The costs of this phase were real and fully anticipated: commissioning losses, sub-optimal input ratios, elevated power and fuel costs before captive systems stabilised, and a labour and overhead structure calibrated for steady-state production being carried at partial utilisation. These are not structural margin problems. They are transitional costs with a defined end date — and that end date arrived in H2 FY26.

Q3 FY26 saw a partial recovery as facilities progressively stabilised, though headwinds from carbon steel realisation persisted. Q4 FY26 delivered the clearest evidence of the Companys underlying margin capability: EBITDA of Rs.756 crore ata margin of approximately 14.4%, representing 33%year- on-year growth. Operating EBlTDA-excluding other income- grew 41% in Q4. The drivers were operational, not cyclical: higher utilisation across Jamuria facilities, a more favourable product mix as value-added volumes grew, and progressive normalisation of input costs as procurement systems aligned with new production configurations.

The Q4 run-rate is the best current indication of underlying earnings capacity before the next wave of commissioned capacity — SBQ mill and stainless steel downstream — adds further volume from FY29 onwards.

BALANCE SHEET AND LIQUIDITY

The Companys balance sheet remains a defining strength, and FY26 has not altered that position. Gross debt stands at Rs.957 crore against a net worth of Rs.10,500 crore a leverage ratio among the lowest in the domestic integrated steel sector and well within the self-imposed ceiling of 0.5x debt-to-equity. A net cash position is maintained. The CRISIL AA+/Stable rating, upgraded in November 2025, reflects an independent assessment that this financial profile is sustainable through the investment cycle ahead.

Free cash flow generation in FY26 was sufficient to fund the years capital expenditure from internal accruals, consistent with the financing philosophy underpinning Vision 2031. The Company has publicly committed that the entire remaining capex programme will be funded without any incremental external debt that would breach the 0.5x D/E ceiling.

This is not a soft aspiration — it is a constraint that management has chosen to impose on its own capital allocation decisions, reflecting a conviction that growth pursued without balance sheet discipline is not growth worth pursuing. FY26, despite its complexity, validated that conviction.

Working capital management improved through FY26 as procurement and inventory systems adapted to the expanded asset base. Debtor days, creditor days, and inventory days are monitored at the consolidated level by the CFOs office and reported quarterly to the Audit Committee; year-end positions are disclosed in the notes to the financial statements.

EARNINGS PER SHARE AND DIVIDEND

Consolidated Basic Earnings Per Share for FY2025-26 stood at Rs. 38.10 against Rs. 32.70 in the previous year, reflecting PAT growth from Rs. 1040 crore to Rs.1,061 crore. The Board has proposed a final dividend of Rs. 2.70 per share for FY26, consistent with the Companys Distribution Policy and its commitment to returning value to shareholders while preserving the capital required to execute Vision 2031.

Financial Snapshot of Standalone Business ( Rs. Crore)

1 Particulars	FY26	FY25
Total Income	7,103.8	6,623.7
Operating EBITDA	923.15	777.02
Interest and Financial Charges	50.6	49.9
Profit Before Tax (PBT)	743.8	660.5
Tax Expenses	190.9	170.8
Net Profit (PAT)	552.9	489.6

Key Financial Ratios

1 Financial Ratio	FY26	FY25	Change(%)	Reason for Variation
Debtors Turnover (times)	6.65	7.01	-5.1%	NA
Inventory Turnover (times)	6.34	7.78	-18.5%	NA
Return on Equity (%)	8.90	8.48	5%	NA
Interest Coverage Ratio (times)	12.64	14.41	-12.3%	NA
Current Ratio (times)	1.53	1.80	-15%	NA
Debt-Equity Ratio (times)	0.04	0.03	6.2%	NA
Operating Profit Margin (%)	9.78	8.74	11.90%	NA
Net Profit Margin (%)	7.93	7.58	4.7%	NA

Human Resources

At Shyam Metalics, operational performance begins with the people who deliver it.The Companys human resource approach is built on a simple premise: invest in capability, maintain high standards and create conditions where employees can perform at their best.

Talent and Capability Building

The Company invested in structured learning and development programmes across technical, functional and leadership competencies during FY26.Training interventions were designed around role-specific requirements and aligned to evolving business needs as new facilities ramped up and product portfolios expanded. Continuous skill development remained central to workforce readiness and organisational agility.

Employee Engagement

Engagement initiatives spanned all operating locations through interactive programmes, leadership connect sessions and team-building activities. Regular communication forums enabled open dialogue between management and employees, encouraging idea-sharing, feedback and alignment with business priorities.

Digital HR Transformation

The Company continued to strengthen its HR technology infrastructure. Digitisation of attendance management, payroll, performance evaluation and employee lifecycle processes improved efficiency, reduced manual intervention and enabled HR teams to focus on strategic priorities. The Company also introduced a new HRMS with advanced Al enablement and next-generation technology.

Ethics and Governance

Awareness programmes on the Code of Conduct, workplace ethics and compliance requirements were conducted throughout the year. Grievance redressal mechanisms and whistleblower frameworks remained active, reinforcing a culture of accountability and institutional trust.

Safety and Well-being

Workplace safety remained a priority across all facilities. Regular safety training, health awareness campaigns and preventive protocols were implemented to maintain a secure operating environment. The Company continued to promote inclusivity, equal opportunity and a respectful workplace where employees from diverse backgrounds can contribute effectively.

Recognition

Individual and team contributions were recognised through structured appreciation programmes. Cultural events and employee-centric initiatives strengthened workplace cohesion and reinforced a performance-driven, purpose-aligned organisational culture.

Corporate Social Responsibility

Shyam Metalics views Corporate Social Responsibility not as a peripheral obligation but as an integral dimension of how it operates.The Companys CSR programmes are designed to create measurable, lasting impact in the communities where it is present — through sustained interventions in livelihood generation, education, healthcare, environmental stewardship and community infrastructure.

Skill development and vocational training programmes equip individuals from underserved communities with employable capabilities and entrepreneurial pathways, building economic self-reliance at the household level. Educational initiatives

— including scholarships, coaching centres and digital learning facilities — expand access to quality education for students from economically disadvantaged backgrounds, strengthening the long-term human capital base of the regions the Company serves.

Healthcare outreach programmes, medical camps and community health facilities extend essential medical services to rural populations with limited access to institutional care. Water conservation, afforestation, renewable energy adoption and sustainable agricultural practices contribute to environmental preservation and resource security across operating geographies.

Investments in sanitation, public infrastructure, sports promotion and the preservation of local cultural heritage complete the Companys community engagement framework

— one designed to improve quality of life, strengthen institutional trustand ensure thatthe benefits of industrial growth are shared equitably with the communities that make it possible.

Business Outlook

Shyam Metalics is confident about its long-term growth trajectory. The structural drivers underpinning that confidence

— Indias infrastructure-led steel demand, manufacturing expansion, railway modernisation, renewable energy build-out and the progressive shift towards value-added metal products — are not cyclical. They are policy-backed, investment-supported and multi-decade in duration.The Companys strategic positioning at the intersection of integrated steelmaking, downstream value addition and product diversification places it squarely in the path of this demand.

UnderVision 2031, the Company has outlined a clear roadmap to scale revenue to Rs.42,500 crore plus (2.3x), supported by an aggregate capacity expansion from 16.78 million tonnes to 27 million tonnes and a Rs.10,155 crore capital expenditure programme, funded entirely through internal accruals. EBITDA margins are targeted to improve by 200-300 basis points as the product mix shifts towards higher-value categories and operational leverage from the expanded asset base is fully realised. Export revenues are targeted to double from USD 200 million to USD 400 million, and the growth programme is expected to generate over 10,000 new direct and indirect employment opportunities.

To advance this vision, the Board has approved a fresh capital expenditure programme of Rs.2,700 crore, comprising Rs.900 crore for a 0.8 MTPA Special Bar Quality (SBQ) mill at Kharagpur

— a facility that will serve automotive, engineering, defence and precision manufacturing applications — and Rs.1,800 crore towards expanding stainless steel downstream capabilities at Sambalpur, with targeted capacity of 0.6 MTPA. These projects are expected to be commissioned from FY29 onwards and will deepen the Companys presence in higher-margin categories where domestic supply remains constrained.

The Company is simultaneously entering railway wagon manufacturing, leveraging its integrated steel and stainless steel capabilities to create a downstream business aligned with Indias railway infrastructure expansion programme.

In aluminium, the Company continues to expand its foil operations — including specialised battery-grade foil for EV applications — building on its position as Indias largest speciality aluminium foil manufacturer. In stainless steel, the Company targets flat product capacity of 6.5 times its current level with downstream applications spanning tubes, utensils, defence and railways.

The financial foundation supporting this ambition is robust.

A net cash balance sheet, gross debt of Rs.957 crore against net worth of Rs.10,500 crore, a CRISIL AA+/Stable rating and a demonstrated commitment to fund growth without breaching the self-imposed 0.5x D/E ceiling provide the capital discipline required to execute a programme of this scale without compromising balance sheet integrity.The Q4 FY26 EBITDA run-rate of Rs.756 crore achieved before the next wave of capacity additions — offers a credible baseline from which the Vision 2031 targets can be pursued.

Shyam Metalics enters FY27 with its largest-ever operating asset base, a diversified and expanding product portfolio, integrated cost advantages, captive power infrastructure and the financial strength to invest through cycles. The Company is positioned not merely to participate in Indias metals demand growth but to shape the terms on which it competes

— through premiumisation, downstream integration and disciplined capital deployment.

Risk Management

Shyam Metalics employs an integrated, enterprise-wide approach to risk management. The Company identifies, assesses, and mitigates risks across all functions and business verticals. Its framework addresses regulatory requirements, protects brand equity, and limits exposure to financial, operational, and market-related uncertainties. Equally, it positions the Company to act on emerging opportunities with speed and confidence. The outcome is a business built for resilience — one that delivers consistent growth while staying prepared for shifts in the external environment.

Risk Category	Potential Impact	Risk Mitigation Approach
FINANCIAL RISK	Large-scale expansion projects and volatility in raw material prices may impact cash flows, profitability and overall financial performance.	The Company maintains a strong liquidity position supported by healthy cash reserves and prudent capital management. Strategic sourcing arrangements, long-term procurement contracts and disciplined capital allocation help manage cost fluctuations and strengthen financial resilience.
MARKET & COMPETITIVE RISK	Intensifying competition across steel, stainless steel and aluminium segments may exert pressure on market share, pricing and margins.	Shyam Metalics continues to strengthen its market presence through product diversification, expansion of distribution channels and a growing focus on value-added and branded products. The emphasis on premium offerings enhances differentiation and supports sustainable profitability.
GLOBAL STEEL PRICING AND IMPORT PRESSURE RISK	Elevated steel exports from global markets, particularly China, and changing trade flows may create pricing pressure in domestic and international markets, affecting realisations and margins.	The Company mitigates this riskthrough product diversification, increased focus on value-added products, domestic market strength, disciplined cost management and integrated operations that provide flexibility across product categories.
OPERATIONAL RISK	Delays in project execution, capacity expansion or operational disruptions may affect production efficiency, customer commitments and business growth plans.	The Company continuously invests in modern manufacturing technologies, process automation and supply chain optimisation. Robust project management practices and operational excellence initiatives support timely execution and efficient capacity utilisation.
PROJECT EXECUTION AND RAMP-UP RISK	Large-scale capacity expansion, commissioning of new facilities and ramp-up of downstream projects may involve execution delays, stabilisation costs, lower initial utilisation and temporary margin pressure.	The Company manages this riskthrough phased capex execution, internal technical expertise, project monitoring, experienced operational teams, disciplined capital allocation and gradual ramp-up of new capacities.
ENVIRONMENTAL & REGULATORY RISK	Evolving environmental regulations and compliance requirements may increase operating costs and necessitate modifications to production processes.	The Company continues to strengthen environmental compliance through investments in pollution-control systems, energy-efficient technologies, monitoring mechanisms, resource optimisation and responsible manufacturing practices. EHS governance, regulatory tracking and corrective- action processes remain central to maintaining operational continuity and stakeholder trust.
SUPPLY CHAIN RISK	Dependence on critical raw materials and potential disruptions in supply networks could impact production continuity and cost structures.	The Companys integrated business model, captive power facilities, strategic inventory management and long-term supplier partnerships enhance supply security and reduce exposure to external disruptions.
RAW MATERIAL AND ENERGY COST RISK	Volatility in iron ore, coal, power, ferro alloy inputs, freight and other key costs may affect production economics, working capital requirements and profitability.	The Companys integrated operations, captive power capabilities, strategic sourcing, inventory management, logistics infrastructure and cost-control initiatives help reduce exposure to input-cost volatility.
TECHNOLOGY & INNOVATION RISK	Rapid technological advancements may require continuous investments to maintain competitiveness and operational relevance.	Shyam Metalics remains focused on innovation, product development and technology adoption across its businesses. Ongoing investments in advanced manufacturing capabilities, specialty products and research initiatives support long-term competitiveness and value creation.

Internal Control Systems and Their Adequacy

Shyam Metalics has established a robust internal control and governance framework designed to support operational excellence, financial discipline, regulatory compliance, and effective risk management across its businesses. The internal control architecture is embedded within the Companys processes. It is aligned with its strategic objectives, enabling timely identification, assessment, and mitigation of business risks while ensuring the integrity of operations and reporting.

Given the Companys integrated manufacturing operations, internal controls also cover raw material procurement, inventory management, production planning, project execution, plant operations, captive power utilisation, environmental compliance, quality assurance, logistics, sales realisation and working-capital monitoring.

The control framework is built around a comprehensive risk- based approach encompassing governance oversight, risk assessment mechanisms, control procedures, information flow, and continuous monitoring systems. Standardised policies, operating procedures, and approval matrices are deployed across functions to strengthen accountability, enhance process efficiency,and safeguard organisational assets.

The Company maintains an independent internal audit function that evaluates the effectiveness of internal controls. operational processes, financial reporting systems, and compliance mechanisms. Internal audits are conducted through a structured audit programme covering key business functions, manufacturing operations, commercial activities, information systems, and statutory compliance requirements. Audit observations and recommendations are reviewed by management, and corrective actions are implemented through defined timelines to strengthen process effectiveness.

To further enhance transparency and governance standards, the Audit Committee of the Board regularly reviews internal audit findings, risk assessments, control deficiencies, and compliance status. The Committee provides strategic oversight to ensure that appropriate remedial measures are undertaken and that internal control systems remain responsive to the evolving business environment.

In addition, periodic reviews by independent external professionals provide further assurance on the adequacy and effectiveness of the Companys internal control framework. Through continuous monitoring, process improvements, and technology-driven controls, Shyam Metalics remains committed to maintaining a strong governance culture, protecting stakeholder interests, and ensuring sustainable business growth.

CAUTIONARY STATEMENT

The statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or outlook may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied due to various factors, including changes in economic conditions, commodity prices, demand trends, regulatory developments, project execution timelines, environmental compliance requirements, competitive intensity and other internal or external factors. The Company assumes no obligation to publicly amend, modify or revise any forward-looking statements based on subsequent developments, information or events.