Rama Steel Tubes Ltd

I am honoured to present the annual report of Rama Steel Tubes Limited for FY24. As we reflect on the past year, our Company's journey has been defined by both significant opportunities and formidable challenges. Our Company has embraced these challenges with determination, ensuring that our growth trajectory remains robust and our commitment to excellence unwavering.

Despite ongoing geopolitical tensions and supply chain disruptions, the global economy exhibited resilience due to robust consumer spending and a gradual return to pre-pandemic levels of economic activity. The global economic environment in FY24 was marked by a combination of recovery and persistent uncertainties. According to the International Monetary Fund (IMF), the global economy grew by 3.2% in 2023 and is expected to maintain the same growth pace in both 2024 and 2025.

India demonstrated strong economic performance in FY24, with GDP growth of 8.2%, fuelled by strong domestic demand, increased government spending on infrastructure, and a rebound in various industrial sectors. India's economic performance was underpinned by continued investments in infrastructure, urban development, and a dynamic manufacturing sector. Recent reforms, coupled with the economy's inherent strength, have laid a strong foundation for sustained growth. The RBI is expected to maintain tight liquidity conditions while ensuring adequate liquidity to support credit needs and has projected a 7.2% GDP growth for India in FY25. The country's anticipated growth trajectory and decreasing inflation suggest it is well-positioned to become the world's third-largest economy by 2030.

The steel industry provides essential materials for infrastructure development, industrial production, and technological advancements around the world. In 2023, the production of finished steel increased to 1,763.0 Million Tonnes (MT), up from 1,545.0 MT in 2013. However, it experienced a slight decline of 0.1% compared to 2022 levels. Looking ahead, the demand for finished steel is expected to grow by 1.7% in 2024, reaching 1,793 MT, and by 1.2% in 2025, reaching 1,815 MT. This growth is further supported by the expansion of the global steel pipes and tubes market, which was valued at USD 133.20 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 6.1% through 2030. This increase is driven by rising demand from the petrochemical, construction, and oil and gas sectors, with the Asia-Pacific region leading the market's growth.

The Indian steel sector has experienced substantial growth, positioning India as the world's second-largest steel producer and a formidable player on the global stage. In FY24, India's steel consumption continued to grow, driven by increased construction activities, infrastructure projects, and government-led initiatives aimed at enhancing urban and rural infrastructure. The finished steel production in India grew by 12.7% in FY24 to reach a total of 138.8 million tonnes. Additionally, the India Steel Pipes and Tubes Market, valued atUSD 32.9 billion in 2023, is expected to expand at a CAGR of 6.4% through 2030, fuelled by rising demand for lightweight, high-strength steel and sustainable practices in the industry. The steel industry's growth will be driven by infrastructure development, rapid urbanisation, a booming construction sector, rising automobile demand, rural development, expanding export opportunities, technological advancements, and a focus on sustainability.

As a pioneer and leading manufacturer in the Indian steel tube and pipes industry, our Company holds a strong position in the market with a pan-India presence. Our competitive edge lies in an experienced leadership, deep market understanding, strong brand recognition, and diverse operations both geographically and in our diversified product portfolio. Our products, marketed under the "TTT Rama" brand, have gained significant global brand equity.

In FY24, we celebrated a historic milestone by marking our 50th anniversary, which stands as a testament to our enduring strength and remarkable growth over the years. Over the decades, our Company has consistently shown strength and accelerated progress. Our Company excels in operational efficiency, sustainable practices, and high-quality manufacturing, supported by advanced facilities in India and subsidiaries in the UAE and Nigeria.

Despite a challenging year, we demonstrated resilience and adaptability, reflecting our strong foundation and strategic focus. In FY24, our Company faced a 10% decrease in sales volumes due to several factors: a drop in raw material prices led to reduced prices for finished products, market fluctuations caused by a global slowdown, and delays in government activities due to the general elections in India. The elections and the Model Code of Conduct affected the peak sales period in the fourth quarter, leading to a 21.7% decline in revenue to Rs1,046.5 crores. However, it achieved a 7.5% increase in EBITDA to Rs64.4 crores, driven by an emphasis on high-margin products and effective marketing strategies. Our Company saw a 9.4% rise in net profit to Rs30.0 crores in FY24. We also improved our debt-to-equity ratio to 0.4 by reducing our total debt by 25%, showcasing our strong financial management and commitment to long-term growth. Our dedication to enhancing our capabilities and expanding our portfolio has positioned us as a leading player in the steel tube and pipe industry.

In addition, our extensive distributor network across India gives us a competitive edge, enabling us to meet local market demands effectively and leverage local sourcing advantages. By 31 March 2024, it had established connections to most Indian cities through over 300 dealer points and more than 1,400 SKUs.

Our Company has decided to withdraw the merger plan with Lepakshi Tubes Ltd. Instead, we have started to invest Rs10 crores to expand Lepakshi Tubes' manufacturing capabilities for larger diameter products. This strategic move aligns with our goal to enhance product offerings and capture a larger market share in high-demand segments. I remain optimistic about the future of the steel industry in India and anticipate growth driven by increased volumes.

During FY24, our Company has announced plans to raise upto Rs500 crores through a Follow-On Public Offering (FPO). On March 6, 2024, our Company approved the sale of our entire 50% stake in Hager Mega Mart Private Limited (HMMPL), which means HMMPL is no longer an associate of our Company. Additionally, we retained a 51% stake in Ashoka Infrasteel, a partnership firm, and a 25% stake in Peer Panchal Construction (JV). These strategic initiatives are aimed at augmenting our production capacity, improving operational efficiency, and supporting our growing portfolio of products.

As we look towards the future, we remain optimistic about the growth prospects of the steel industry and our role in shaping its trajectory. We are committed to continuing our focus on innovation, operational excellence, and strategic expansion to drive sustainable growth.

Our strategic initiatives for FY25 include further capacity expansion and diversification of our product portfolio. We aim to increase and strengthen our presence across various sectors, including water distribution, electricity distribution and street lighting, telecom applications, and irrigation projects. Our Company is committed to expanding our product range by adding 10 new SKUs each month, with a target of reaching 2,500 SKUs by 2025-26. Additionally, we have planned to increase our total installed capacity to 500,000 metric tonnes by FY 2025-26 and focus on specialised markets such as steel pipes and tubes for City Gas Distribution and solar energy power plants. We are also investing in research and development to enhance the quality and efficiency of our product offerings.

Our Company will continue to focus on serving key end-user industries, including construction, infrastructure, and energy, with a diverse range of steel pipes and tubes. Our efforts will be directed towards enhancing our export capabilities and exploring new markets to drive revenue growth and diversification. In addition to our growth initiatives, we will continue to invest in sustainability and corporate social responsibility. We are dedicated to adopting environmentally friendly practices and contributing to the communities in which we operate.

I extend my sincere gratitude to all our stakeholders for their unwavering support and trust in our Company. I would like to thank our dedicated employees for their hard work, commitment, and innovation, which are the driving forces behind our success. I also want to express my gratitude to our customers, partners, and suppliers for their invaluable collaboration and support.

I would also like to thank our Board of Directors for their guidance and strategic vision, which have been instrumental in steering our Company towards new heights of success. As we embark on the journey ahead, I am confident that our collective efforts and unwavering commitment will lead us to achieve even greater milestones.

With best wishes for continued success and growth,

Sincerely,

Sd/-

Chairman & Managing Director