Ahluwalia Contracts India Ltd Management Discussions

OVERVIEW

This report presents Managements perspective on the Building Construction and Construction industry, along with an overview of the Companys strategy, operational and financial performance, material developments in human resources and industrial relations, key risks and opportunities, and the adequacy of its internal control systems during FY2025-26.

The report should be read in conjunction with the Companys financial statements, including the schedules and notes thereto, and other relevant information contained in the 47th Annual Accounts for FY2025-26.

The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS), in compliance with the requirements of the Companies Act, 2013, as amended, and the regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

GLOBAL ECONOMY

In 2025, the global economy grew by an estimated 3.4% despite a year marked by considerable volatility and uncertainty. The economic landscape was shaped by record increases in U.S. tariffs, heightened trade policy uncertainty, a series of trade agreements whose broader impact is yet to emerge, and a significant surge in AI-led investments.

Economic activity was influenced by the increasing use of trade as a strategic instrument and the accelerating shift towards technology-driven growth, particularly across North America and Asia. At the same time, geopolitical tensions intensified, with the escalation of conflicts in the Middle East adding further pressure to an already uncertain global environment.

These developments heightened risks across energy markets and international trade corridors, contributing to greater commodity price volatility and disruptions to cross-border logistics. The global economy continues to navigate these challenges, with the uncertainties of trade, geopolitics, energy markets and technology-driven transformation expected to remain relevant through FY2026-27.

ECONOMIC OUTLOOK

Global economic growth is projected to slow down with a growth rate of 3.1% in 2026 before recovering to 3.2% in 2027. Advanced economies are expected to grow by 1.8% in 2026, while growth in emerging market and developing economies is projected at 3.9%. Global headline inflation is projected to increase to 4.4% in 2026 and 3.7% in 2027, pausing its previous decline due to higher energy and food prices.

INDIAN ECONOMY

India continued to be among the fastest-growing major economies, recording an estimated growth of 7.5% in FY2025-26. Real GDP growth is projected at 6.7% in FY2026-27, reflecting continued resilience in domestic economic activity. Headline CPI inflation is expected to rise to around the RBIs target of 4% in FY2026-27, following a record low of 2.2% in FY2025-26.

Despite the anticipated increase in inflation, monetary policy is expected to remain supportive of growth, with the repo rate projected to stabilise at around 5.0%. With the gap between inflation and interest rates narrowing, effective monetary management will remain important to sustain favourable real interest rates and support consumption across interest-sensitive sectors such as automobiles and housing.

Public capital expenditure remains elevated at more than 5% of GDP, with continued focus on infrastructure development and defence. Sustained investments in steel-intensive infrastructure projects, including those under the National Infrastructure Pipeline (NIP 2.0), are expected to provide continued support to steel demand.

However, the outlook remains subject to significant external risks, particularly developments arising from the conflict in the Middle East. Energy price shocks could disrupt the ongoing disinflationary trend, with elevated oil and gas prices potentially triggering renewed cost-push inflation, limiting the scope for monetary easing and increasing input cost volatility across industrial sectors.

INTERNATIONAL ECONOMY

The global economic outlook remains mixed, with growth across major economies shaped by fiscal policy, monetary easing, technology-led investment and evolving trade dynamics.

In the United States, economic growth is projected at 2.3% in 2026, supported by fiscal stimulus under the Big Beautiful Bill and a strong increase in AI-related capital expenditure. However, elevated public debt, estimated at around 125% of GDP, remains a key risk. High debt levels could constrain future public investment, particularly in global infrastructure, as fiscal headroom narrows. They may also exert upward pressure on long-term interest rates and moderate investment appetite across capital-intensive sectors.

The Euro area is projected to grow by 1.2% in 2026, supported by fiscal easing in Germany, although structural challenges, including an ageing population, are expected to weigh on growth. The United Kingdom is forecast to expand by 1.1% with monetary easing and interest-rate cuts providing some support amid a gradually softening labour market.

Chinas economy is projected to grow by 4.4% in 2026, supported by domestic stimulus measures and a stabilisation in trade relations with the United States. While the emerging trade truce signals an easing in broader bilateral tensions, it is accompanied by increasing sector-specific protectionism as countries seek to safeguard domestic industries from excess capacity and competitive pressures.

Against this backdrop, global trade volumes are projected to grow by 2.8% in 2026 and accelerate to 3.8% in 2027, reflecting the ongoing realignment of global supply chains and trade linkages.

BUSINESS ENVIRONMENT

India offers a dynamic and opportunity-rich business environment shaped by economic growth, regulatory reforms, digitalization, and a youthful, expanding market.

Economic Landscape

India remains one of the worlds fastest-growing major economies, supported by a large and diverse domestic market, a favourable demographic profile and sustained investment in infrastructure and technology. Private consumption accounts for nearly 60% of GDP, while a median age of below 30 years and a labour force of more than 500 million provide a strong foundation for long-term economic growth.

Continued government spending on infrastructure, energy and digital connectivity, alongside public-private partnerships and foreign direct investment (FDI), has further strengthened the countrys economic ecosystem and created opportunities for businesses across sectors.

Business Environment in India:

Indias business environment in 2025 is rapidly evolving with digitalization, regulatory reforms, and expanded finance access. The New Industrial Policy aims to boost competitiveness, sustainability, and global integration, promising growth and innovation for businesses.

Indias exciting, ever-changing, and opportunity-rich environment allows individuals, groups, and organizations to strive for many goals based on dynamic and continuing advances in infrastructure, taxation, and governance. While economic data and perspectives differ amongst Indian states and regions, emerging trends from digitization, growing access to financing, and advances for regulated ease of doing business provide potential promise for the 1M+ MSMEs, 85,000+ startups, and larger organizations.

Businesses are benefitting from reduced logistics costs, innovative access to formal finance (the Indian banking system reportedly provided over ?1.5 lakh crore in credit facilities), and easier compliance with the advent of GST and IBC from a regulatory standpoint.

Infrastructure

Infrastructure remained central to Indias Growth strategy in FY 2026. The Union Budget for 2026-27 raised public expenditure to ?12.2 Lakh Crores (upto >11.5% year-on-year). The Infrastructure segments are crucial to the countrys sustainable economic growth and development. The business segments include:

a) Up-gradation of Indian Railway Stations
b) Hospitals
c) Residential Complexs - Prime Minister Scheme and State Government Scheme
d) Institutional Buildings - Technical
e) University/College - Infrastructure
f) Central Vista Projects

The business has a robust domestic presence and undertakes large-scale, complex projects, offering turnkey solutions tailored to meet customers requirements.

This includes roads, bridges, and railways. Soft infrastructure is all the institutions that maintain the economic, health, social, environmental, and cultural standards of a country. This includes educational programs, official statistics, parks and recreational facilities, law enforcement agencies, and emergency services.

Water

The Water & Effluent Treatment business provides end-to-end water management solutions to government and private sector clients. Its capabilities span the entire water lifecycle, encompassing potable water treatment, storage and distribution, wastewater management, industrial water solutions, irrigation, desalination and smart water infrastructure.

Supported by its in-house Water Technology Centre, the business continuously adopts advanced technologies, innovative solutions and global best practices to improve operational efficiency, sustainability and the effectiveness of water management systems.

Business Model and Strategy

The business faces industry-specific challenges, including intense competition from established players and new entrants, workforce shortages and cost escalations. To address these challenges, the business capitalises on the in-house Water Technology Centre to provide for low-cost innovative solutions that are sustainable and future-ready.

The Middle East saw robust growth driven by extensive investments in desalination projects and the adoption of smart water technologies, as governments and private entities focus on addressing water scarcity and enhancing water security. Strategic partnerships and large-scale initiatives emerged to modernise infrastructure and improve the efficiency of water distribution systems amidst heightened environmental challenges.

Introduction

Ahluwalia Contracts (India) Ltd (ACIL or the Company) is a leading engineering and construction company engaged in the execution of prestigious and complex projects across diverse segments. Its capabilities span civil engineering, high-rise buildings, design-and-build projects, Build-Operate-Transfer (BOT) projects and specialised infrastructure developments.

The Company has successfully delivered projects across key sectors, including Central Vista buildings, hospitals, hostels, universities and other institutional developments. With a strong focus on quality, excellence and precision, ACIL has established a track record of delivering complex engineering projects and creating landmark developments across its areas of operation.

FINANCIAL PERFORMANCE

Particulars	FY 2025-26	FY 2024-25
Gross Order Book	29,67,570.00	23,53,900.00
Income from Operations	4,56,519.81	4,09,862.31
EBITDA	43,449.67	34,179.91
PAT	26,432.16	20,151.08
Earnings Per Share (in ?)	39.46	30.08

KEY FINANCIAL RATIOS AND THEIR DEVELOPMENT

Details	FY 2025-26	FY 2024-25	Change in %
Current Ratio	1.89	2.12	-10.82%
Debt Equity Ratio	0.00	0.01	-76.23%
Debt Service Coverage Ratio	17.89	15.95	12.13%
Return on Equity (ROE)	13.70	11.85	15.61%
Inventory Turnover Ratio	13.40	12.51	7.07%
Debtors Turnover Ratio	6.01	5.35	12.32%
Trade Payables Turnover Ratio	2.31	2.33	-1.01%
Net Capital Turnover Ratio	3.04	2.57	18.32%
T>Net Profit Ratio	5.79	4.92	17.76%
Return on Capital Employed (ROCE)	20.12	18.58	8.26
Return on Investment	0.00	0.00	0.00

2025-26

Awards

LIST OF ACIL AWARDS

Sl. Certificate Name	Project / Site Name	Category
1 Construction Industry Development Council (Vishwakarma Award 2025)	Matlab Rural Hospital, Visakhapatnam, Darbhanga Airport	Best HSE Practices - CIDC VK Awards
2 Construction Industry Development Council (Vishwakarma Award 2025)	TATA Medical Centre, Mumbai	Best HSE Practices - CIDC VK Awards
3 Construction Industry Development Council (Vishwakarma Award 2025)	DLF city centre Ltd "DLF Downtown Project"	Best HSE Practices - CIDC VK Awards
4 Construction Industry Development Council (Vishwakarma Award 2025)	Puri Constructions Pvt Ltd, Gurgaon	Best HSE Practices - CIDC VK Awards
5 Construction Industry Development Council (Vishwakarma Award 2025)	ETSY Realcon Private Ltd-The Edition, Gurugram	Best HSE Practices - CIDC VK Awards
6 Construction Industry Development Council (Vishwakarma Award 2025)	Reworfront Condominium Pvt Ltd-SANGHA PROJECT- Kolkata	Best HSE Practices - CIDC VK Awards
7 Construction Industry Development Council (Vishwakarma Award 2025)	Birla Trimaya Phase1, 2 at Devanahalli, Bengaluru	Best HSE Practices - CIDC VK Awards
8 Construction Industry Development Council (Vishwakarma Award 2025)	Lal Bahadur Shastri International Airport, Varanasi (UP)	Best HSE Practices - CIDC VK Awards
9 Construction Industry Development Council (Vishwakarma Award 2025)	DLF home developers "The Arbour Project"	Best HSE Practices - CIDC VK Awards
10 Construction Industry Development Council (Vishwakarma Award 2025)	Emmar India Ltd-Housing Projects Gurgaon	Best HSE Practices - CIDC VK Awards
11 Construction Industry Development Council (Vishwakarma Award 2025)	Open Stadium at Amingaon Sports Complex, Kamrup, Assam	Best HSE Practices - CIDC VK Awards
12 Construction Industry Development Council (Vishwakarma Award 2025)	RIB Data Centre Complex & RBI Enterprise Computing & Cyber Security Training Institute, Bhubaneswar	Best Project Award - CIDC VK Awards
13 Construction Industry Development Council (Vishwakarma Award 2025)	Mumbai Metro Rail Development Authority (MMRDA), Mumbai	Best Project Award - CIDC VK Awards
14 Construction Industry Development Council (Vishwakarma Award 2025)	Max Super Speciality Hospital-Delhi	Best Project Award - CIDC VK Awards
15 Construction Industry Development Council (Vishwakarma Award 2025)	Amity University, Bengaluru	Best Project Award - CIDC VK Awards
16 Construction Industry Development Council (Vishwakarma Award 2025)	Amity University, Mohali	Best Project Award - CIDC VK Awards
Sl. Certificate Name	Project / Site Name	Category
17 Construction Industry Development Council (Vishwakarma Award 2025)	Albroz, Bharti Reality, New Delhi	Best Project Award - CIDC VK Awards
18 Construction Industry Development Council (Vishwakarma Award 2025)	Medical College Koriyawas, Mohindergarh, Haryana	Best Project Award - CIDC VK Awards
19 Construction Industry Development Council (Vishwakarma Award 2025)	DLF city centre Ltd "DLF Downtown Project"	Award for HSE Supervisors - CIDC VK Awards
20 Construction Industry Development Council (Vishwakarma Award 2025)	Chandigarh Railway Station	Award for HSE Supervisors - CIDC VK Awards
21 Construction Industry Development Council (Vishwakarma Award 2025)	Puri Constructions Pvt Ltd, Gurgaon	Award for HSE Supervisors - CIDC VK Awards
22 Construction Industry Development Council (Vishwakarma Award 2025)	Vidyapati Darbhanga Airport, Bihar	Award for HSE Supervisors - CIDC VK Awards
23 Construction Industry Development Council (Vishwakarma Award 2025)	Muthut Hospital, Dwarka, New Delhi	Award for HSE Supervisors - CIDC VK Awards
24 Construction Industry Development Council (Vishwakarma Award 2025)	Albroz, Bharti Reality, New Delhi	Outstanding Contribution in project

INFORMATION TECHNOLOGY SERVICES & IT SECURITY RISK

IT risks are the vulnerabilities and threats that arise from within the IT infrastructure that can negatively impact a business. The negative impact could be a monetary loss, compromise of customer data, halt in operations, compliance violations, or even a hit on brand reputation and goodwill.

Formally, the IT risks can be categorized into four aspects.

i) Security, such as unauthorized access of business-critical data.
ii) Availability, such as an outage of a key infrastructure component.
iii) Performance, such as poor network speeds leading to loss of productivity.
iv) Compliance, such as adhering to GDPR laws or incurring heavy penalties from failing to do so.

An IT risk under each of these categories occurs from three components:

An asset is considered any IT resource with valuable information. It could be a business-critical server or a person or a team managing the critical server. Any considerable value-adding component in the IT supply chain is considered an asset.

Vulnerabilities and threats are two sides of the same coin. A vulnerability can be an organization process gap, an oversight in asset design, bugs in the software code, or a lack of knowledge among employees. In the end, vulnerabilities are weak points in an organization that can be exploited to cause damage.

Threats are the potential for malicious agents to exploit a known or an unknown vulnerability. The threats can be internal, disgruntled employees disrupting the business or an external hacker injecting a malicious agent into the supply chain.

So an IT risk is a combination of the probability of a threat and the potential impact of the vulnerability for the number of assets involved for that specific vulnerability.

While IT risk calculation seems like a data-backed quantitative value, in practice, organizations often use qualitative ratings. Often times, it is impossible to fix a tangible value or a probability for IT risks specific to an asset, threat, or a vulnerability.

For instance, the probability of a threat actor accessing a remote employees workstation when connected to an unsecured network cannot be accurately quantified. Therefore, the goal of an IT risk analysis is to identify and prioritize the risks that organizations face, so they can be neutralized in the order of urgency.

ENHANCING WORKMEN EFFICIENCY

Our Human Resources approach is built around clearly defined priorities that address both immediate organisational requirements and long-term workforce readiness. These priorities encompass Talent Acquisition and Recruitment, Performance Management, Employee Retention, and Training and Development. Each area is supported by focused initiatives and enabling platforms that strengthen the alignment between individual performance, employee growth and organisational objectives.

We continue to modernise our HR infrastructure to make employee services more accessible, responsive and transparent. A range of digital tools and platforms has been introduced to strengthen employee engagement and enhance service delivery. These include self-service payroll modules with tax declaration facilities, a comprehensive HR Help Desk accessible through both desktop and mobile devices, centralised grievance redressal through the HRMS portal, and digital notice boards for timely dissemination of corporate communications.

Our in-house quarterly magazine and social media platforms further support employee engagement by keeping our workforce informed, connected and aligned with the Companys culture, values and developments.

HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS

ACILs strength lies in its people - their collective spirit, commitment, expertise and shared values that continue to shape the organisation. Guided by this belief, the Company is fostering a workplace that promotes continuous learning, inclusion, collaboration and mutual growth.

Through the One ACIL journey, the Company is working towards greater integration across its diverse operations and geographies, bringing together varied capabilities and perspectives to strengthen operational excellence and build a sustainable competitive advantage.

During the year, ACIL continued to strengthen its people ecosystem, with a focus on building a culture that is agile, digitally enabled and aligned with responsible growth. The Company remains committed to creating an environment where employees can adapt to changing business needs, develop their capabilities and contribute meaningfully to organisational priorities.

Looking ahead to 2030, ACIL will continue to invest in its people and capabilities, while creating a workplace that combines high performance and productivity with inclusion, engagement and a strong sense of purpose.

HEALTH & SAFETY MANAGEMENT SYSTEM AND ENVIRONMENT (HSE):

ACIL remains committed to building a strong and proactive health and safety culture, with the aspiration of achieving Zero Harm and setting high benchmarks for safety performance across the industry. Health and safety considerations are embedded within the Companys annual business planning process, ensuring clear accountability and ownership at every level of the organisation.

The Companys safety governance is led by the Safety, Health and Environment (SHE) Department at the corporate level, with strategic oversight under the leadership of the Whole-time Managing Director. This governance structure ensures that safety remains an integral part of business decision-making and operational execution.

ACILs management system, aligned with ISO 45001:2018, integrates safety policies, strategic priorities and frontline practices. Digitised risk registers enable a systematic approach to risk management by facilitating hazard identification, validation of critical controls and continuous monitoring of high-consequence risks.

The Company continues to strengthen safety leadership through structured field engagement, capability-building initiatives and a balanced framework of recognition and accountability. Employee capability development is supported through the Safety Leadership Development Centre and Practical Training Centre, with updated programmes covering high-potential incident scenarios, hazard prediction and mindfulness-based decision-making for supervisors.

Digital technologies are also being increasingly deployed to strengthen safety management. Initiatives including drone-based monitoring, safety applications such as Photoapp and DDMS, and AI-enabled CCTV systems are enhancing safety observations, data quality, reporting accuracy and proactive risk identification.

The governance framework has been further strengthened through the reconstitution of the Performance Improvement Team, enabling cross-site knowledge sharing and continuous improvement. Weekly safety insights, supported by Generative AI-enabled analytics, further enhance the Companys ability to identify emerging risks, strengthen controls and drive informed safety interventions across project sites.

Date: 14-08-2026

Place: New Delhi