ARSS Infrastructure Projects Ltd Management Discussions

1. 1.1 Global Economy Overview

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment.

In contrast, the services sector performed more creditably, global inflation declined from 6.1% in 2023 to 4.5% in 2024 (projected at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

1.2 Global Economy Outlook

The global economy is anticipated to remain resilient with 3.3% growth in 2025 and 2026. This stability is likely to be influenced by disinflation, declining commodity prices, and easing monetary restrictions. However, conflicts, geopolitical tensions, trade restrictions and climate risks could emerge as challenges. (Source: IMF, United Nations)

1.3 Indian Economy Overview

The Indian economy grew at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24. This reputed a four-year low due to sluggish manufacturing and investments. Despite the slowdown, India retained its position as the worlds fifth-largest economy. In March 2025, the rupee recorded the highest monthly appreciation in the currency since November 2018, rising 2.39%. Indias nominal GDP (at current prices) was INR 330.68 trillion in FY 2024-25 (INR 301.23 trillion in FY 2023- 24). The nominal GDP per capita increased from INR 2,15,936 in FY 2023-24 to INR 2,35,108 in FY 2024- 25, reflecting the impact of an economic expansion. Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices.

Indias services sector grew an estimated 8.9% in FY 25 (9.0% in FY 24), driven by public administration, defense and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in FY 25, compared to 8.6% in FY 24. Meanwhile, the construction sector expanded at 9.4% in FY 25, slowing from 10.4%.

1.4 Indian Economy Outlook

The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating INR 11.21 lakh crore for capital expenditure (3.1% of GDP) to drive infrastructure development. (Source: CNBC, Press Information Bureau, Business Standard, Economic Times).

1.5 Indias infrastructure sector

Indias infrastructure sector market size is estimated to grow from USD 223.59 billion in 2025 to USD 353.11 billion by 2030, at a CAGR of 9.57%. The countrys ambition to become a developed nation by 2047 is closely linked to robust infrastructure development. Over the past four years, the government has significantly prioritized infrastructure, recognizing its central role in driving economic growth.

Fiscal allocations reflect this commitment. In FY 23 saw a capital expenditure budget of INR 7.5 lakh crore (2.9% of GDP), followed by a substantial rise to INR 10 lakh crore (3.3% of GDP) in FY 24. This upward trend continued in FY 25 with INR 11.11 lakh crore (3.4% of GDP) and in FY 26, INR 11.21 lakh crore (3.1% of GDP), reinforcing long-term policy continuity and support.

To further boost infrastructure, the government plans to expand the number of airports to 220, operationalize 23 waterways and develop 35 Multi-Modal Logistics Parks by 2030. With strong policy backing, increased investments and technological advancements, India is well-positioned to sustain this momentum, establishing a strong foundation for future growth and global competitiveness.

Roads and bridges: For the year 2025-26, an allocation of INR 1,16,292 crore was allocated for roads and bridges, a 5% increase over the revised estimates for 2024-25. This expenditure covered key initiatives: National Highway development, expressway projects, expansion of lane capacity across projects, and the enhancement of road connectivity in regions affected by left-wing extremism. As part of the longterm vision, 1,000 Road Over Bridges (RoBs) and Road Under Bridges (RuBs) will be constructed in the coming years to further boost safety and connectivity across the network.

Railways: For FY 2025-26, a capital expenditure of INR 2,65,200 crore has been allocated to the Ministry of Railways. Of this, INR 2,52,200 crore, about 95%—will be provided through central government budgetary support. The budget places a strong emphasis on infrastructure development, station and train modernization, improved connectivity and enhanced passenger safety and comfort.

A significant INR 1,16,514 crore has been allocated specifically for safety related initiatives, which include track renewals, signalling upgrades, telecom enhancements and the development of new railway points and crossings. (Source: Mordor Intelligence, Bank Bazaar, IBEF, asianconfluence.org, prsindia.org, investindia.gov.in)

1.6 Union Budget FY 2025-26

For fiscal year 2025-26, a significant capital expenditure of INR 11.21 lakh crore, equivalent to 3.1% of GDP, was allocated. This investment underscores the governments commitment to strengthening the nations infrastructure.

Pradhan Mantri Gram Sadak Yojana (PMGSY): The government has allocated INR 19,000 crore to the Pradhan Mantri Gram Sadak Yojana (PMGSY) in Budget 2025-26, marking a significant increase from the previous year. This funding will support the construction of 62,500 km of all-weather roads, connecting 25,000 villages and bolstering infrastructure development across India.

Bharatmala Pariyojana: It focuses on the integration of national and economic corridors to enable efficient movement of freight and passengers. Phase I targets the development of 24,800 km of highways, while Phase II(A) proposes an additional 8,100+ km. The combined capital outlay for the programme stands at INR 5.35 trillion.

Vision 2047: This plan proposes expressways within 100-125 km of any location. Encompassing an investment of INR 20 trillion, Vision 2047 outlines the construction of over 75,000 km of highways in next 15 years, including 50,000 km of access control highways or expressways.

2. Company overview

The Company carries out civil and infrastructure projects, Railways, Highways, flyovers, Irrigation works etc. However the company is under going financial stressed. The lenders initiated the Corporate Insolvency Resolution Process (CIRP) against the Company. Mr. Uday Narayan Mitra has been appointed as Interim Resolution Professional w.e.f. 30^th November, 2021 and is continuing as RP as per IBC, 2016. During the financial year 2024-25, the total new work order for a worth of INR 238.03 cr. has been awarded to the company and also the existing work has been continuing.

2.1 BUSINESS DEVELOPMENT AT ARSS

The Company has secured the following contracts (work order) during the financial year 2024-2025:

1. At Dhanbad : Composite works (Civil & Electrical) involving Earthwork, Blanketing, P.Way work, Minor& Major Bridge work, ROBs/LHS, Retaining wall, Shifting of Utilities, Station buildings, Quarters, Drain, Road diversion, Supply and spreading of ballast, supply of P.Way materials, Linking of track and other P. Way work and other ancillary associated Civil Engineering works and Supply, Installation, Testing and commissioning in connection to electrification with 2X25 KV OHE system and Electrical General work and Removal/Modification of various electrical infringements 11 KV/33 KV H.T. & L.T. overhead lines coming under proposed alignment between Pradhankhanta (DFCC/ IR CH:261.200/260.200) to Gomoh (DFCC/IR CH: 28.470/300.15) Approx. 39.00 KM Route, KM including New Pradhankhunta yard and Excluding 1.4 KM (DFCC/IR CH: 271.090/270.090 to DFCC/ IR Ch: 272.490/271.490) in connection with construction of 3^rd & 4^th Double line track in Dhanbad Division of East Central Railway under Dy/CE/Con/Dhanbad. vide LOA No. CAO-C-SOUTH-HQ- ENGINEERING / ECR-CAO-C-S-ETEN-57-23-24/0093051010132 dated 16.04.2024. Regarding Issuance of Work Order in two phase with a Contract Value of 207.74 crores and 10.04 Crores, respectively.

2. At Baiguda : Koraput - Singapur Road Doubling Project: Execution of Earth-work in formation, Major bridges works, Minor bridges works, P.Way related works, Supply of Ballast, Station & Service buildings works, Platforms works, Foot Over Bridges works and other allied works from Km 33.50 to Km 61.17 in Baiguda - Lakshmipur Road section in connection with doubling of existing single line track in Koraput - Singapur Road line of Waltair Division of East Coast Railway. vide LOA No. ECOR- CONST-HQ-ENGG / ETCPMIIVSKP2020063 / 00853100039499 dated 04.08.2021. Regarding Issuance of Work Order with a Contract Value of 20.25 cr.

2.2 Segment wise performance

The Company is engaged in only one segment viz. Construction Business and as such there is no separate reportable segments as per IND AS -108 “Operating Segment.”

2.3 Financial performance with respect to operational performance

Since the Company is under CIRP, it has tried to restricted its losses to 8.36 Cr. (PBT) as compared to the previous years loss of 33.49 Cr. However, The turnover of the Company has reduced to 165.39 Cr. during the year, as against 320.87 crores in the previous financial year.

The performance during the year ended 31^st March, 2025 has been as under:

(Rs In Crores)

Particulars	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Revenue from Operation	165.39	320.87	165.39	320.87
Profit before Depreciation, Interest and Tax	(6.93)	(32.54)	(6.95)	(32.54)
Less : Depreciation	0.98	0.95	0.98	0.95
Interest	0.45	0.0023	0.45	0.0023
Share of net profit or associates and joint ventures accounted using equity method	-	-	1.75	0.51
Profit Before Tax	(8.36)	(33.49)	(6.63)	(32.98)
Less : Tax Expenses
a) Current Year	-	-	-	-
b) Earlier Year	-	-	-	-
c) Deferred Tax	1.13	1.86	1.13	1.86
Profit/Loss After Tax	(9.49)	(35.35)	(7.77)	(34.84)
Balance brought forward from previous year	(383.77)	(348.42)	(391.21)	(356.38)
Add : Re-measurement of defined employee benefit plans through OCI	-	-	-	-
Amount Available for Appropriation	(393.26)	(383.77)	(398.98)	(391.21)
Appropriations
a) Dividend	-	-	-	-
b) Tax on Dividend	-	-	-	-
c) Transfer to General Reserve	-	-	-	-
Balance Carried to Balance Sheet	(393.26)	(383.77)	(398.98)	(391.21)
Earnings per Share (In ) (Weighted) Basic (Equity Shares of face value of 10/- each)	(4.18)	(15.54)	(3.42)	(15.32)
Earnings per Share (In ) (Weighted) Diluted (Equity Shares of face value of 10/- each)	(4.18)	(15.54)	(3.42)	(15.32)

2.4 Key Financial Ratio : Pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015], the details of changes in key financial ratio as compared to previous year are stated below:

Particulars	2024-25	2023-24	% change as compared to PY
Debtors Turnover (Times)	18.10	37.22	(51.37)
Inventory Turnover (Times)	2.26	5.55	(59.28)
Interest Coverage Ratio (Times)	(17.48)	(14326.89)	(99.88)
Current ratio (Times)	0.17	0.18	(5.56)
Debt Equity Ratio (Times)	(9.94)	(10.55)	(5.78)
Operating profit Margin (%)	(4.46)%	(10.14)%	56.02%
Net Profit Margin (%)	(5.74)%	(11.02)%	47.91%
Return on Net worth (ROE)	(5.80)%	(22.91)%	74.68%

1. Debtors turnover ratio: Decreased primarily account of increase in receivables. Further there is decrease in turnover as compared to previous year.

2. Inventory turnover ratio: Decreased primarily on account of increase of inventory as compared to previous year.

3. Interest coverage ratio: Decreased primarily on account of higher operating profits and higher interest.

4. Current ratio-Decreased primarily on account of decrease in current assets.

5. Debt equity ratio: Decreased primarily on account of movement of long term borrowing and Decrease in Net Worth.

6. Operating profit margin: Increased on account of higher operating profit.

7. Net profit Margin: Increased on account of lower net loss.

8. Return on net worth: Increased primarily on account of lower loss to reserve as compared to previous year.

3. Human Resources Development and Industrial Relations:

During CIRP, there is no material changes in employment of the company. as on March 31,2025, we had 383 full time employees in compare to previous year where we had 406 employee.

Labor relations at all work sites and at the headquarters of the Company continued to remain cordial throughout the year. There was no industrial dispute during the year under review.

4. Opportunities and Threats, Risks and concerns:

Opportunities

Increased government spending on infrastructure: With the Indian government aiming to improve infrastructure, this proves to be a lucrative opportunity for the Company. The Company can capitalise on the opportunities and accelerate its growth in the coming years.

Threats

Competition: The construction sector is highly competitive with several established players dominating the market. The Company has to endure intense competition, especially during bidding for projects. This can impact the overall profitability of the Company.

Project delays: Any delay in obtaining approvals for government projects can pose a threat to the Companys finances, impacting its overall profitability. Project delays also have the potential to tarnish the reputation of the Company.

The completion of the ongoing real estate projects continues to slow major challenge more particularly in view of the ongoing Corporate Insolvency Resolution Process (CIRP).

Risks and concerns

Besides the economic, regulatory, taxation and environmental risks and also the investment outlook towards Indian real estate sector, your company is currently exposed to liquidity risk. The banks are reluctant to provide credit to this industry due to rising NPAs and lower profit in property business.

Weakness

Reliance on Government Contracts: A large portion of the Companys business hinges on Government contracts. Delays or changes in government spending plans could significantly impact the Companys revenue streams.

5. Internal control systems and their adequacy:

Management has put in place effective Internal Control Systems to provide reasonable assurance for:

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the information used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows:

• Existence of Authority Manuals and periodical updating of the same for all Functions.

• Existence of clearly defined organizational structure and authority.

• Existence of corporate policies for Financial Reporting and Accounting.

• Existence of Management information system updated from time to time as may be required.

• Existence of Long Term Business Plans.

• Existence of Internal Audit System.

• Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

ARSS has an adequate system of internal control to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for preparing financial information and other data and for maintaining accountability of assets. The internal control is supplemented by extensive programs of internal audits, review by management, documented policies, guidelines and procedures.

The Company has appointed an Independent Auditor to ensure compliance and effectiveness of the Internal Control Systems in place. The Audit Committee is regularly reviewing the Internal Audit Reports for the auditing carried out in all the key areas of the operations. Additionally the Audit Committee approves all the audit plans and reports for significant issues raised by the Internal and External Auditors. Regular reports on the internal audit are given to the Board of Directors/ RP. Audit Reports are regularly circulated for perusal of Senior Management for appropriate action as required. Normal foreseeable risks of the Companys assets are adequately covered by comprehensive insurance. Risk assessments, inspections and safety audits are carried out periodically. However, during CIRP, Audit Committee has been suspended.

6. Strategic Initiative:

The Company is well on its course to meet its growth targets despite increase competition. Effective business strategies have allowed the Company executing projects in a timely manner and economies on critical resources though joint venture in large projects.

The foray into high potential business of railways, roads and bridges has been successful during the year and boosted the order in flow. The Company is strengthening its manpower for execution of high value projects and adding assets for development of infrastructures to complete all contracts in time.

7. Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the infrastructure sector, significant changes in political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labour relations and interest costs.

		For and on behalf of the
		Board of Directors (suspended during CIRP)
	Sd/-	Sd/-	Sd/-
	Subash Agarwal	Rajesh Agarwal	(Uday Narayan Mitra)
	Chairman	Managing Director	Resolution Professional
Place: Bhubaneswar	(DIN:00218066)	(DIN: 00217823)	(IP Reg.No.IBBI/IPA001/
Dated: August 11,2025			IP-P00793/2017-18/11360