Active Infrastructure Ltd Management Discussions

1. COMPANY OVERVIEW:

Active Infrastructures Limited is a fast-emerging player in the infrastructure development space. The Company operates primarily as an Engineering, Procurement, and Construction (EPC) contractor, providing end-to-end services across project planning, procurement, execution, commissioning, and maintenance. It is a leading civil construction company dedicated to building the foundations of tomorrow.

With a commitment to excellence, innovation, and sustainability, we deliver top-quality Infrastructures solutions that shape the future of communities and industries alike. Founded with a vision to provide reliable and efficient construction services, Active Infrastructures Limited has grown into a trusted partner for a wide range of projects. From highways and roads to water supply systems and urban Infrastructures, our expertise spans across multiple domains, ensuring that we meet the diverse needs of our clients.

At Active Infrastructures Limited, we believe in the power of collaboration and integrity. Our team of skilled professionals works closely with clients, engineers, and stakeholders to ensure every project is completed on time, within budget, and to the highest standards of quality.

The Company portfolio showcases a wide array of successful projects that stand as a testament to our dedication and craftsmanship. Whether its constructing vital transportation networks or developing cutting-edge real estate, Company is committed to building with purpose and precision. Over the past decade, the Company has executed significant projects across the following verticals such as:

Roads and Highways (BOT/Hybrid Annuity and EPC).

Water Infrastructure (Pipelines, Sewerage, STPs, WTPs).

Urban Infrastructure (Townships, Commercial Buildings, Urban Roads).

Industrial Infrastructure (Factories, Logistics Parks, Power Plants).

- Macro-Economic and Industry Overview

a) Global Economic Landscape

The global economy in FY 2025-26 remained in a transitional phase marked by persistent macroeconomic challenges and evolving geopolitical dynamics. While inflationary pressures moderated in several advanced economies, central banks across major jurisdictions maintained relatively tight monetary policies to ensure price stability. Elevated interest rates, coupled with geopolitical conflicts, trade disruptions, and volatility in energy and commodity markets, continued to influence global investment sentiment, international trade, and supply chain efficiencies.

Economic growth across developed markets remained moderate, reflecting subdued consumer demand, high borrowing costs, and cautious corporate investment. In contrast, emerging and developing economies demonstrated relatively stronger resilience, supported by domestic consumption, structural reforms, and sustained public investment. Governments across several countries continued to prioritize infrastructure development as a key driver of economic growth, employment generation, and long-term competitiveness. Infrastructure investment remained a critical pillar of global economic recovery, with increased focus on transportation networks, urban development, renewable energy, digital infrastructure, water management, and climate-resilient assets. Public-private partnerships, sustainable financing mechanisms, and multilateral funding initiatives continued to support the execution of large-scale infrastructure projects across both developed and emerging markets.

The global construction and infrastructure sector also witnessed increasing adoption of advanced technologies, including Building Information Modelling (BIM), automation, digital project management tools, artificial intelligence, and data-driven construction practices. At the same time, sustainability considerations gained further prominence, with governments and industry participants emphasizing environmentally responsible construction methods, energy-efficient infrastructure, and compliance with environmental, social, and governance (ESG) standards.

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Despite uncertainties arising from geopolitical tensions, fluctuating commodity prices, exchange rate volatility, and global trade realignments, the long-term outlook for the infrastructure sector remained positive. Continued government spending, urbanisation, increasing demand for modern infrastructure, and investments in sustainable development are expected to support future economic growth and create significant opportunities for infrastructure development companies worldwide.

b) Indian Economic Scenario

India remained one of the fastest-growing major economies during FY 2025-26, with real GDP growth estimated at 7.4%, supported by resilient domestic demand, higher consumption, and sustained investment. Infrastructure spending continued to be a cornerstone of the Governments economic agenda through enhanced capital expenditure and improved connectivity. The banking system remained robust with healthy credit growth and improved asset quality, while manufacturing and construction activities contributed to sustained industrial expansion.

c) Infrastructure Sector Landscape

Infrastructure continues to remain a key pillar of Indias vision to become a US$5 trillion economy, with the sector playing a crucial role in driving economic growth, improving connectivity, and enhancing overall competitiveness. The Government has maintained a strong focus on infrastructure development through increased capital expenditure, with significant investments directed towards transportation networks, urban infrastructure, renewable energy, water resources, and digital connectivity.

Flagship initiatives such as the PM Gati Shakti National Master Plan and the National Logistics Policy continue to promote integrated infrastructure planning, multimodal connectivity, and improved logistics efficiency, thereby reducing logistics costs and enhancing ease of doing business. These initiatives, coupled with sustained public investment and growing private sector participation, are expected to create long-term opportunities for infrastructure developers and contractors while supporting balanced and inclusive economic development across the country.

Major areas of focus include :

Transportation: Roads, railways, airports, metro systems, and waterways.

Urban Development: Smart cities, housing, waste management, and water supply.

Energy: Green energy corridors, solar and wind infrastructure.

Digital Infrastructure: Data centers, telecom towers, and connectivity networks.

2) Background

a) Nature of Business

Active Infrastructures Limited is a fast-emerging player in the infrastructure development space. The Company operates primarily as an Engineering, Procurement, and Construction (EPC) contractor, providing end-to-end services across project planning, procurement, execution, commissioning, and maintenance. Over the past decade, the Company has executed significant projects across the following verticals:

Roads and Highways (BOT/Hybrid Annuity and EPC).

Water Infrastructure (Pipelines, Sewerage, STPs, WTPs).

Urban Infrastructure (Townships, Commercial Buildings, Urban Roads).

Industrial Infrastructure (Factories, Logistics Parks, Power Plants).

b) Strategic Positioning:

The Company has adopted a prudent approach towards bidding for high-quality, margin-accretive projects. Its emphasis remains on:

Building a diversified and risk-balanced order book.

Enhancing operational efficiencies.

Strengthening client relationships (especially with PSUs and government departments).

Leveraging digital tools for project monitoring and cost control.

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3) Business and Financial Performance

a) Operational Performance

FY 2025-26 was a year of cautious optimism for the Company. While inflation and supply constraints posed challenges, the Company remained focused on on-time and on-budget project delivery. Noteworthy achievements include:

Development of major urban road widening and smart drainage projects.

Commissioning of rural water supply schemes under Jal Jeevan Mission.

Upgradation and rehabilitation of national highway packages under NHAI.

Initiation of pre-construction works for solar-enabled infrastructure projects.

The Company also invested in enhancing its on-site safety standards, training programs, and technology adoption to improve execution quality and ensure regulatory compliance.

b) FINANCIAL HIGHLIGHTS IN LAKHS) Particulars	FY 2025-26	FY 2024-25	% Change
Revenue from Operations	4496.77	3663.10	22.75%
EBITDA	1374	754.35	82%
EBITDA Margin (%)	30.55	20.82	46.73%
Profit After Tax	1,010.36	568.74	77.70%
EPS O	6.73	5.27	27.70%

c) Key Ratio Indicator

The key financial ratios of the Company on a Standalone and Consolidated basis are as follows: (i) Standalone Financial Ratios

Sr. No.	Ratio	Current Period	Previous Period	% Variance	Reason for Variance
(a)	Current Ratio	9.59	7.2	33.20%	Decrease in Current liabilities more as
	(Current Assets / Current Liabilities)				compared to increase in Current assets.
(b)	Debt-Equity Ratio	NA	0.07	NA	-
	(Total Debt / Total Equity)
(c)	Debt Service Coverage Ratio	NA	1.09	NA	-
	(Earning Available for Debt Service / Debt Service)
(d)	Return on Equity Ratio	0.09	0.09	1.43%	-
	(Net Profit After Tax / Average Shareholders Equity)
(e)	Inventory turnover ratio	0.91	0.81	11.91%	-
	(Net Sales / Average inventory)
(f)	Trade Receivables turnover ratio	3.21	5.52	-41.77%	Due to substantial
	(Net sales / Average accounts receivable)				increase in average accounts receivable
(g)	Trade payables turnover ratio	3.93	1.72	128.55%	Increase in trade
	(Net Credit Purchases / Average accounts payable)				payable is more
(h)	Net capital turnover ratio	0.39	0.35	11.43%	-
	(Net sales / Working Capital)
(i)	Net profit ratio	24%	15.77%	52.19%	Increase in Net profit is higher in comparison to the net sales
	(Profit After Tax / Net Sales)
(j)	Return on Capital employed (EBIT / (Total net worth -	12%	6.73%	78.31%	Due to increase in Profitability
	Intangible Assets +Total debt - Deferred Tax Asset)
(k)	Return on investment	0	0	0%
	(Gain on Investment / Total Investment)

ji) Consolidated Financial Ratios

Sr. No.	Ratio	Current Period	Previous Period	% Variance	Reason for Variance
(a)	Current Ratio	2.16	2.22	-2.70%	-
	(Current Assets/Current Liabilities)
(b)	Debt-Equity Ratio	0.67	0.48	39.58%	Due to substantial Increase in term loan
	(Total Debt / Total Equity)
(c)	Debt Service Coverage Ratio	0.26	0.37	-29.73%	Due to substantial Increase in term loan
	(Earning Available for Debt Service / Debt Service)
(d)	Return on Equity Ratio	0.83	1.29	-35.54%	Due to increase in other equity
	(Net Profit After Tax / Average Shareholders Equity)
(e)	Inventory Turnover Ratio	1.89	2.00	-5.38%	-
	(Net Sales / Average inventory)
(f)	Trade Receivables turnover ratio	1.89	2.44	-22.42%
	(Net sales / Average accounts receivable)
(g)	Trade Payables Turnover Ratio	5.04	4.95	1.88%
	(Net Credit Purchases / Average accounts payable)
(h)	Net Capital Turnover Ratio	1.06%	1.01%	5.00%	-
	(Net Sales / Working Capital)
(i)	Net Profit Ratio	10.65%	14.59%	-27.00%	Due to increase in Net sales in proportion to Net profit
	(Profit After Tax / Net Sales)
(j)	Return on Capital Employed	8.98%	12.01%	-25.20%	Due to increase in networth
	(EBIT / (Total net worth - Intangible Assets +Total debt - Deferred Tax Asset)
(k)	Return on Investment	0	0
	(Gain on Investment / Total Investment)

3.1 Analysis of Financial Ratios

Standalone basis :

The Companys standalone financial ratios indicate an improvement in liquidity, operational efficiency and profitability during the year. The Current Ratio increased to 9.59 from 7.20, reflecting a stronger liquidity position. Profitability improved, as evidenced by the increase in the Net Profit Ratio to 24.00% and Return on Capital Employed to 12.00%. While the Trade Receivables Turnover Ratio declined due to higher average receivables, the Trade Payables Turnover Ratio improved significantly, indicating better management of trade payables. The Debt-Equity Ratio and Debt Service Coverage Ratio were not applicable during the year due to the absence of borrowings.

Consolidated basis :

On a consolidated basis, the Company maintained a stable liquidity position, with the Current Ratio remaining at 2.16. The Debt-Equity Ratio increased owing to higher term borrowings, which also resulted in a lower Debt Service Coverage Ratio. Profitability ratios, including the Net Profit Ratio and Return on Capital Employed, declined primarily due to increased borrowings, higher net worth and a relatively lower growth in profit compared to revenue. However, the Group continued to maintain healthy working capital management and operational stability during the year.

3.2 Order Book Position and Execution Strategy

As on March 31,2026, Active Infrastructures Limited had an unexecuted order book of approximately ^125.33 crores, spread across 4 active projects on . The order book composition by sector is as follows:

Segment	Order Book Share (%)
Roads & Highways	N/A
Water Infrastructure	95.78%
Urban Infrastructure	N/A
Industrial & Others	N/A

Further, As on March 31, 2026, Digvijay Shradha Infrastructure Private Limited - a majority-owned (50.5%)

subsidiary of Active Infrastructures Limited had an unexecuted order book of approximately ^92.43 Crores across

Roads & Highways segment.

4. Opportunities and Growth Drivers

Government Infrastructure Spending: Continued emphasis on capital expenditure by the Government is expected to generate significant opportunities in roads, water supply, urban infrastructure and industrial development projects.

Urbanisation and Smart Cities: Rising urbanisation and increasing investments in housing, urban mobility, water management and sanitation are expected to drive demand for EPC services.

Water Infrastructure: Growing focus on water conservation, drinking water supply, sewerage networks and wastewater treatment presents substantial opportunities for the Company.

Industrial and Logistics Development: Expansion of industrial corridors, manufacturing facilities, logistics parks and warehousing is expected to support growth in the industrial infrastructure segment.

Strong EPC Execution Capabilities: The Companys integrated EPC expertise, project execution capabilities and established track record position it well to capitalise on emerging infrastructure opportunities across India.

5. Risks and Mitigation Measures

The Company recognises that effective risk management is fundamental to achieving sustainable growth and creating long-term stakeholder value. Accordingly, it has established a structured risk management framework to identify, assess, monitor and mitigate risks that may affect its business objectives, operational performance and financial position.

The Companys risk management framework is integrated with its business planning and decision-making processes and enables proactive identification of emerging risks as well as implementation of appropriate mitigation strategies. The framework covers strategic, operational, financial, regulatory, legal, project execution, environmental and market-related risks.

The Board of Directors has overall responsibility for overseeing the Companys risk management framework, while the Audit Committee periodically reviews the adequacy and effectiveness of risk management practices and internal control systems. Senior management continuously monitors key business risks and implements appropriate corrective and preventive measures to minimise their impact.

The Companys risk management process broadly includes :

Identification of key business and operational risks.

Assessment of the likelihood and potential impact of identified risks.

Development and implementation of appropriate mitigation measures.

Continuous monitoring and periodic review of the risk environment.

Strengthening internal controls and governance practices to enhance organisational resilience.

The Company also places significant emphasis on regulatory compliance, financial discipline, project monitoring, information security and business continuity planning. Regular reviews of project execution, liquidity management, statutory compliances and market conditions enable the Company to respond effectively to changing business dynamics.

The Company believes that its proactive approach towards risk management, supported by strong governance practices and robust internal controls, enhances organisational resilience and enables it to capitalise on emerging opportunities while effectively managing uncertainties associated with the real estate business.

Being in a project-based industry, the Company faces several risks:

Risk Category	Description	Mitigation
Project Delay Risk	Delay in land acquisition, clearances, or utility shifting	Robust pre-bid diligence and legal teams
Cost Escalation	Rise in steel, cement, diesel	Escalation clauses in contracts, long-term vendor MOUs
Working Capital	Delayed payments in public sector contracts	Diversified clientele and factoring facilities
Labour Risk	Shortage of skilled workforce	In-house training, local recruitment, subcontracting
Regulatory Compliance	Environmental and safety regulations	ESG-aligned internal control systems

The Company has a Risk Management Committee that regularly assesses exposure and implements corrective actions.

6. Internal Controls and Audit Systems

The Company has established a comprehensive internal control framework commensurate with the nature, size and complexity of its business operations. The internal control systems are designed to ensure operational efficiency, safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, and effective risk management.

The Company has implemented appropriate policies, standard operating procedures and delegation of authority across various business functions to facilitate systematic and efficient conduct of operations. Adequate internal financial controls are in place to ensure the orderly and efficient conduct of business, prevention and detection of frauds and errors, protection of assets, and timely preparation of reliable financial information.

The Internal Audit function, carried out by an independent firm of Chartered Accountants, periodically reviews the adequacy and effectiveness of the internal control systems, operational processes and compliance framework. The scope of internal audit covers key business processes, financial controls, statutory compliances, project execution, procurement, accounting systems and information flow across the organisation.

The Internal Auditor submits periodic reports to the Audit Committee of the Board highlighting key observations and recommendations. The Audit Committee reviews the internal audit findings, monitors the implementation of corrective actions and provides strategic guidance to strengthen the internal control environment. The management takes appropriate and timely corrective measures on the observations and recommendations made by the Internal Auditor. The Company has also established internal financial controls over financial reporting in accordance with the provisions of the Companies Act, 2013. These controls are periodically evaluated to ensure their adequacy and operating effectiveness. During the financial year under review, no material weakness in the design or operation of internal financial controls was observed that could have a material impact on the Companys financial reporting.

The management believes that the existing internal control systems and processes provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, compliance with applicable laws and regulations, efficient utilisation of resources and achievement of operational objectives. The Company remains committed to continuously strengthening its governance framework and internal control mechanisms in line with evolving business requirements and regulatory expectations.

7. Human Resources

The Company firmly believes that its employees are its most valuable asset and the cornerstone of its sustained growth and success. It remains committed to fostering a professional, inclusive and performance-driven work environment that encourages innovation, collaboration, integrity and continuous learning.

The Companys human resource strategy focuses on attracting, developing and retaining talented professionals by providing opportunities for skill enhancement, career progression and employee engagement. Various initiatives are undertaken to strengthen technical competencies, leadership capabilities and functional expertise through training and development programmes aligned with the Companys business objectives.

The Company promotes a culture of transparency, ethical conduct, equal opportunity and mutual respect across all levels of the organisation. It is committed to maintaining a safe, healthy and conducive workplace and ensures compliance with all applicable labour laws and statutory requirements. The Company also has appropriate policies and mechanisms in place to address employee grievances and to prevent discrimination and harassment at the workplace.

Employee welfare continues to remain a key priority. The Company encourages open communication, teamwork and employee participation, thereby fostering a positive organisational culture and strengthening employee engagement.

Industrial relations remained cordial and harmonious throughout the financial year, with no material disruptions affecting the Companys operations. The management remains confident that its committed workforce, supported by effective human resource practices, will continue to contribute significantly towards achieving the Companys strategic objectives and sustainable long-term growth.

As of March 31, 2026, Active Infrastructures Limited had a workforce of over 46 employees and contract staff. Recognizing that skilled manpower is critical in the infrastructure industry, the Company has focused on: -

Technical training and certification in construction safety, design codes, and site logistics;

Incentive-linked performance management system;

Gender and regional diversity in site offices;

Employee welfare, insurance, and compliance with labor laws.

The Company is also investing in digital HR platforms for improved payroll, attendance, and resource tracking.

8. ESG and Sustainability Initiatives

Sustainability is integral to the long-term success of infrastructure companies. During FY 2025-26 the Company made significant strides in integrating ESG (Environmental, Social, and Governance) values:

Environmental: Water harvesting on project sites, low-emission machinery, and dust suppression systems.

Social: CSR programs in healthcare and rural education, local employment, and community engagement.

Governance: Strengthened Board oversight, internal audit reviews, and stakeholder transparency.

In the coming year, the Company plans to publish its first voluntary ESG Scorecard and align with the BRSR framework as mandated by SEBI for listed companies.

9. Future Outlook

The outlook for the infrastructure sector in India remains highly promising. Active Infrastructures Limited intends to capitalize on these opportunities by :

Exploring PPP and HAM model projects in transport and water sectors.

Diversifying into high-growth areas like logistics infrastructure, tunneling, and metro rail.

Enhancing prequalification to bid for larger and more complex projects.

Leveraging data analytics, AI, and drone tech to reduce execution risks.

Strengthening the balance sheet through prudent financial management and selective equity participation.

The Companys medium-term strategy focuses on growth with stability, profitability with sustainability, & execution excellence with stakeholder value creation.

10. Health, Safety and Environment (HSE)

The Company is committed to maintaining the highest standards of health, safety and environmental protection across its business operations. It believes that a safe and healthy workplace is fundamental to sustainable business growth and operational excellence.

The Company strives to provide a safe working environment for its employees, contract workforce, customers, business associates and other stakeholders by implementing appropriate health and safety policies, standard operating procedures and preventive measures. Safety awareness programmes, periodic training sessions, toolbox talks and regular inspections are conducted to promote a strong safety culture and ensure adherence to established safety practices at project sites and offices.

The Company places significant emphasis on compliance with applicable health, safety and environmental laws, regulations and industry standards. Appropriate safety equipment, emergency response procedures and risk mitigation measures are implemented to minimise workplace hazards and enhance operational safety.

Environmental sustainability continues to remain an integral part of the Companys business philosophy. The Company encourages efficient utilisation of natural resources, responsible waste management, energy conservation and environmentally responsible construction practices, wherever feasible, with an objective of minimising the environmental impact of its operations.

The Company remains committed to continuously strengthening its Health, Safety and Environment (HSE) framework through regular monitoring, employee awareness, adoption of best industry practices and continual improvement initiatives to ensure a safe, healthy and sustainable workplace

11. Cautionary Statement

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans, strategies or predictions may constitute "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied in such statements due to various factors including, but not limited to, changes in economic conditions, government policies, taxation, regulatory framework, interest rates, availability and cost of finance, inflation, input costs, market demand, competition, project execution risks, availability of statutory approvals, geopolitical developments, natural calamities and other risks and uncertainties beyond the Companys control.

The Company undertakes no obligation to publicly update, revise or amend any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable laws and regulations. Readers are advised to exercise due caution and not place undue reliance on these forward-looking statements while making investment or business decisions.

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Current Images of the Project Site

Name of Project - Construction of Four-lane "Western side spur of Rampur -

Rudrapur section connecting NH-24 (NEW NH-09) to NH-87 bypassing Rampur town" (Design Km 00+000 to Design Km 13+700) on EPC Mode in the state of Uttar Pradesh.

Name of Project -	Construction of Four-lane "Western side spur of Rampur -
	Rudrapur section connecting NH-24 (NEW NH-09) to NH-87
	bypassing Rampur town" (Design Km 00+000 to Design Km
	13+700) on EPC Mode in the state of Uttar Pradesh.
Length of Project -	13.70 Km ( Rampur - Rudrapur)
Location -	Rampur , Uttar Pradesh
Estimated Cost -	Rs. 221.45 Cr

III. We have project in the pipeline in the Company ACTIVE INFRASTRUCTURES LIMITED Wainganga Nalganga River Link Project
- Name of Project -	Wainganga Nalganga River Link Project
- Description of Project -	Geotechnical Investigation for Wainganga Nalganga River Link Project in (M.S) for VIDC in state of Maharashtra.
- Work Order Value -	Rs. 37.13 Cr

IV. We have project in the pipeline in the Company ACTIVE INFRASTRUCTURES LIMITED Tripura Tourism Development Corporation Limited (ADB Tender)

- Name of Project -	Tripura Tourism Development Corporation Limited (ADB Tender)
- Description of Project -	Up gradation of visitor amenities/facilities,enchancment of built and Natural features at chaturdash devta temple and kasba kalibari Temple and reconstruction of Yatri Niwas at chaturdash devta temple.
- Department Name -	Tripura Tourism Development Corporation Limited
- Work Order Value	Rs. 28.20 Cr
- Share of Active Infrastructures Limited 20 %

VI. We have project in the pipeline in the Company ACTIVE INFRASTRUCTURES LIMITED Package - 3C Improvement of Water Supply Services

Name of Project	Current Images of the Project Site - Package - 3C Improvement of Water Supply Services
Description of Project	- Package - 3C Improvement of Water Supply Services in
Department Name	polaykalan in Shajapur district and hatpipalya & Bagli in Dewas District in Madhya Pradesh. - M.P Urban Development corporation Limited
Work Order Value	- Rs. 21.87 Cr

VII. We have project in the pipeline in the Company ACTIVE INFRASTRUCTURES LIMITED Package - 6J Improvement of Water Supply Services

Current Images of the Project Site

- Name of Project -	Package - 6J Improvement of Water Supply Services
- Description of Project -	Package - 6J Improvement of Water Supply Services in Satai and Bijapur Nagar Panshad in Chhatarpur District and Jatara and khargapur Nagar Panshad in Tikamgarh district in Madhya Pradesh.
- Department Name -	M.P Urban Development corporation Limited
- Work Order Value -	Rs. 70.22 Cr

VIII. We have project in the pipeline in the Company ACTIVE INFRASTRUCTURES LIMITED Package - 7C Improvement of Water Supply Services

Current Images of the Project Site

- Name of Project -	Package - 7C Improvement of Water Supply Services
- Description of Project -	Package - 7C Improvement of Water Supply Services in Kothi Kotar, Jaitwara and Birsingpur Nagar Parishads in Satna District in Madhya Pradesh.
- Department Name -	M.P Urban Development corporation Limited
- Work Order Value -	Rs. 18.30 Cr