REC Ltd

I am pleased to address you as the Chairman and Managing Director of your company, NMDC Steel Limited (NSL), as we mark a significant milestone in our journey. NSL stands as a testament to India's industrial prowess, representing a strategic initiative by the Ministry of Steel to augment the nation's steel production capabilities. On August 12, 2023, the company achieved its First Blow-In of the Blast Furnace and within three days, produced Hot Metal on August 25, 2023. NMDC Steel Limited produced its final product - the HR Coil on August 24, 2023, only 9 days after the production of Hot Metal. In the journey ahead, NSL achieved 1 million tonnes of cumulative Hot Metal production in a record time of 226 days.

It has now been a year since that momentous event, and I am proud

to announce that as of July 21, 2024, NSL produced 1.5 million tonnes of Hot Metal from its Blast Furnace. On August 11, 2024, the Plant crossed 1 million tonnes of Liquid Steel production and on August 20, 2024, NSL achieved the milestone of 1 million tonnes of HR Coil production within a year of commissioning.

The Plant recorded 40 heats, 6967 T Liquid Steel and 6519 T HR Coil production on August 15, 2024, which marks the highest production in a day at NSL.

Over the past year, NMDC Steel Limited has made steady progress in ramping up production and stabilizing operations. The Steel Plant's design integrates energy- efficient technologies such as Continuous Casting, Pulverized Coal Injection, Coke Dry Quenching, and Top Recovery Turbine to minimize environmental impact

and optimize resource utilization. Our commitment to sustainable development is further reflected in our adoption of a zero liquid discharge system, recycling initiatives, and waste heat recovery options. By focusing on optimizing our processes, enhancing efficiency, and maintaining high safety and quality standards, we have achieved significant improvements across all areas of production, setting new benchmarks and achieving our initial targets ahead of schedule.

Steel Industry Overview

The global steel sector has remained largely steady, with crude steel production experiencing a slight increase of 0.4%, rising to 1.892 billion tonnes in 2023 from 1.885 billion tonnes in 2022. China, which accounts for more than half of the world's steel production, maintained flat output in 2023 due

to its government's efforts to reduce carbon emissions. Meanwhile,

India, the second-largest producer, exhibited robust growth in its steel sector, with production reaching 140 million tonnes, marking a 12% increase.

As per the National Steel Policy 2017, India aims to achieve crude steel production of 255 million tonnes by 2030, with the crude steel capacity reaching 300 million tonnes. The domestic steel industry will continue to rely primarily on the BF-BOF route, with its share expected to increase from the current ~ 46% to 60-65% by 2030.

India has been and will remain a global hub for steel production, underpinned by its robust economic growth. Finished steel consumption in FY24 stood at 136 million tonnes, witnessing over 14% year-on-year growth. The buildings, construction, and infrastructure sectors are the primary demand drivers, followed by the capital goods and automotive industries. The Indian government's initiatives and schemes, such as the Gati Shakti Master Plan, Make in India, Pradhan Mantri Awas Yojana - Housing for All, and the Urban Infrastructure Development Scheme for Small and Medium Towns, have created significant prospects for steel consumption.

Physical and Financial Performance

The financial year 2023-24 witnessed impressive achievements in terms of physical production for NSL. The company achieved production of 4.94 lakh tonnes of Hot Rolled Coil within a span of 7 months, considering that NSL commenced commercial operations on August 31, 2023. Sales of Hot Rolled Coils were recorded at an impressive 3.52 lakh tonnes, generating total revenue of Rs.

3,049 crores for the company. During the year under review, the company incurred a loss of Rs.

2,201 crores and incurred a capital expenditure of Rs. 1,226 crores.

NSL has recorded the highest production, in a single month, of Hot Metal - 1.7 lakh tonnes; Liquid Steel - 1.3 lakh tonnes; and HR Coil - 1.25 lakh tonnes in August 2024. We have successfully commenced PCI operations on May 24, 2024, and produced LPG-grade steel sheets for the first time, marking our entry into the market for specialty steel products. We have begun taking orders from OEMs and are developing customized grades of specialty steel, including high- strength, low-alloy steel, which has been well-received by our customers.

NSL is on the threshold of breaking even. Currently, we are producing close to 1.25 lakh tonnes of HR Coil, which is marginally below our breakeven point on a month on month basis. On our way forward, we plan to ramp up production to

2.1 lakh tonnes of Hot Metal and 1.5 lakh tonnes of HR Coil on a monthly basis, consistently. We are confident that we will reach this target in the third quarter of FY25.

Building on a Strong Foundation

As we reflect on the past year, it's clear that commissioning and operating a steel plant is both challenging and rewarding.

The experiences and lessons learned have established a strong foundation for our continued success. Moving forward, our focus will be on leveraging these insights to drive further improvements, enhance operational efficiency, and maintain high safety and quality standards.

Corporate Governance

NMDC Steel Limited adheres to the highest standards of governance, aiming to create long-term value for all stakeholders, including

shareholders, customers, suppliers, creditors, the Government of India, State Governments, governmental agencies/departments, and society at large. The company is committed to conducting its business ethically and responsibly, guided by the principles of accountability, transparency, fairness, and effective stakeholder management.

Looking Ahead: A Path to Sustainable Growth

As we move forward, we will continue to emphasize operational excellence, strategic growth, and sustainability. The Management is committed to charting a path forward for NSL, focusing on continuous improvement, innovation, and value creation for all stakeholders. We remain dedicated to driving long-term growth while upholding our responsibility to the environment and the communities we serve.

In conclusion, I would like to extend my gratitude to our dedicated team, MECON and technology partners, shareholders, bankers, lenders, suppliers, and customers for their steady support and confidence in NMDC Steel Limited. I would also like to acknowledge the support, cooperation, and guidance received from the Ministry of Steel, the Ministry of Environment, Forest and Climate Change, and other departments of the Government of India and the State Government of Chhattisgarh.

As we continue on this exciting journey, I am confident that the company will move from strength to strength and scale new heights.