Artefact Projects Ltd Management Discussions

This analysis report briefly describes the Company, current industry and business environment, ability of company to avail opportunities, exhibit strength, handling of threats/weaknesses, financial performance, internal controls and other related issues.

INDUSTRY DEVELOPMENTS:

The infrastructure sector continues to remain a key driver of Indias economic growth, supported by sustained public investment and the Governments focus on strengthening connectivity and infrastructure capacity. The Economic Survey 2025-26, Chapter 9, para 9.4, highlights that the Government of Indias capital outlay increased by nearly 89%, from Rs. 5.92 lakh crore in FY 2021-22 to a budgeted Rs. 11.21 lakh crore in FY 2025-26. The Survey also highlights the continued focus on infrastructure development, multimodal connectivity and logistics efficiency.

Budgetary Allocation: The Union Budget 2026-27 further reinforces the Governments focus on infrastructure development. The Ministry of Road Transport and Highways has been allocated Rs. 3,09,875 crore, including Rs. 2,94,167 crore towards capital expenditure, while the Ministry of Railways has been provided Rs. 2,81,377 crore, including Rs. 2,77,830 crore towards capital expenditure. The allocations reflect the continued focus on expansion, modernisation and strengthening of Indias road and railway infrastructure.

BUSINESS OUTLOOK:

The Company continues to strengthen its position as a leading engineering consultancy and project management organization, providing end-to-end solutions for infrastructure development. With over three decades of experience, the Company offers comprehensive services in planning, design, engineering, project management, and supervision across highways, bridges, flyovers, urban infrastructure, buildings, railways, airports, water resources, and other key infrastructure sectors.

The Companys longstanding association with prestigious clients such as the National Highways Authority of India (NHAI), Ministry of Road Transport and Highways (MoRTH), Mumbai Metropolitan Region Development Authority (MMRDA), Airports Authority of India (AAI), and various Central and State Government departments, public sector undertakings, and other statutory authorities continues to provide a strong platform for business growth.

During the year, the Company has made efforts to enter into allied vertical of the railway sector and secured orders from railway authorities, marking a strategic expansion into a high-growth segment. Further, the Company has been empanelled as a Project Management Consultant (PMC) for the design of municipal roads, pavements, and underground utility ducts, along with quality assurance and quality control of various road and trench works in Mumbai BMC for a period of five years. These developments strengthen the Companys order book, enhance revenue visibility, and support its long-term growth and diversification strategy.

THE INFRASTRUCTURE SECTOR - DEVELOPMENT, OPPORTUNITIES AND THREATS:

DEVELOPMENT AND OPPORTUNITIES:

The Union Budget 2026-27 outlines several significant measures aimed at enhancing infrastructure development across India, with direct relevance to the Companys business verticals of Highways, Railways and Urban Infrastructure.

The Union Budget 2026-27 has proposed seven new high-speed rail ‘Growth Connector corridors (Mumbai- Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi and Varanasi-Siliguri, a new Dedicated Freight Corridor linking Dankuni (East) to Surat (West), and twenty new National Waterways to be developed over the next five years. The sector continues to present strong growth opportunities, with the national highways network currently spanning over 1, 46,195 kilometers. For a Company engaged in highway and railway design and consultancy, these mega-corridors represent a multi-year pipeline of survey, detailed engineering, design review and project supervision assignments. Key Government initiatives that are expected to generate new business opportunities for the Company include:

^ Bharatmala Pariyojana - Development of 34,800 km of national highways with an investment of Rs. 5.35 trillion.

^ PM Gati Shakti National Master Plan - Integrates road, rail, port and logistics infrastructure planning across Ministries.

^ National Infrastructure Pipeline (NIP) - Comprises over 1,800 critical road projects with private sector participation.

^ Development of Greenfield Expressways by the Ministry of Road Transport & Highways (MoRTH) - 27 Greenfield corridors spanning 9,860 km are under development, creating opportunities for the Company.

These Government initiatives continued capital push into Railways, Roads & Highways and Urban Infrastructure and its steps to widen foreign and institutional participation in infrastructure financing, will enhance growth potential. The sustained growth in infrastructure investment, supported by a deepening pool of domestic and foreign capital, will offer huge business potential and opportunities for the Company in the years ahead.

https://www.indiabudget.gov.in/

THREATS:

The Company operates in a relatively stable policy and governance environment, which supports its long-term business outlook. While no immediate structural risks are anticipated, external factors—including geopolitical conflicts, global trade tensions, tariffs, and economic volatility—could result in short-term fluctuations in operations and performance.

The Company has a substantial order book of ongoing projects aggregating to approximately Rs.338 crores, out of which projects aggregating to approximately Rs. 214 crores are being undertaken by the Company as the Lead Consultant, which provides revenue visibility for the foreseeable future.

Accordingly, the Company does not foresee any immediate threat to its business in the short term.

RISKS AND CONCERNS:

The Companys ability to foresee and manage business risks since more than 3 decades in infrastructure services already proven in spite of adverse external conditions in past. The Companys long-term outlook is positive, in spite of short-term external factors.

Your Company continues to focus on its core strength in Highways as it has a strong domain expertise. Your Company has collaborated with number of reputed Foreign and Domestic Consultancy organizations for expansion in similar verticals in the infrastructure space, especially Railways and urban Infrastructure.

Appropriate and timely management intervention helps mitigate the risk of volatility in revenue receipts.

(INTERNAL CONTROLS AND THEIR ADEQUACY:

Your Company has adequate system of internal controls. Such internal controls are supplemented by Internal Financial Control Manual and Programme of internal audits. These are designed to ensure that financial and other records are reliable for preparing financial information and other reports and for maintaining regular accountability of the Companys assets. The Internal Auditors of your Company present their report on a quarterly basis to the Audit Committee of the Board.

A Management Information System covers major operating parameters and is reviewed regularly by the Board of Directors. Material deviations from planning and budgeting are reviewed on a quarterly basis by the Board for corrective actions.

NET WORTH:

As on 31^st March, 2026, the Net Worth of the Company stood healthy at Rs. 7061.55 Lacs as compared to Rs. 6567.59 Lacs during the previous financial year. This increase mainly due to profits for the year of the Company.

SECURED LOANS:

Total Secured Long-Term Borrowing of the Company was Rs. 382.81 Lacs. Short Term Borrowing of the Company was Rs.1139.44 Lacs. (Including working capital loan and other long term Loans) (Sanctioned limits of Rs.1125 Lacs).

FIXED ASSETS:

The Gross Block of fixed assets stood at Rs. 2492.45 Lacs as against Rs. 2404.94 Lacs for the previous year. The increase in Gross block of Fixed Assets is as a result of Normal Capital Expenditure on account of Project expansion and new project offices set up to cater to Enhanced orders.

CURRENT ASSETS: SUNDRY DEBTORS:

Sundry Debtors stood at Rs. 1641.15 Lacs as on 31^st March 2026 as against Rs. 1230.43 Lacs during the previous financial year. Debtors include GST Receivable of Rs. 463.66 Lacs. Debtors mainly comprise of project and quarter end billings and outstanding Bills due of last quarter pending approvals. All clients are Government/ PSU. Due to the formal prior approval based system of obtaining payments of the invoices, the Company has to sustain certain levels of Debtors as a normal business feature.

CASH & BANK BALANCES:

The Cash and Bank Balances stood at Rs. 222.72 Lacs. This mainly includes due to fixed deposits pledged with Banks as 100% cash Collateral for Bank guarantees issued by the company to its clients as per Contractual requirement.

LOANS & ADVANCES:

Current Short Term Business Loans and Advances stood at Rs. 1762.31 Lacs (Previous year Rs. 1696.40 Lacs). And Long Term Business Loans and Advances stood at Rs 3200 Lakhs (Previous year Rs. 3200.53 Lacs) in line with previous years level.

CURRENT LIABILITIES & PROVISIONS (EXCLUDING CURRENT MATURITY OF SECURED LOAN):

The current liabilities and long term provisions stood at Rs. 2611.08 Lacs (previous year Rs. 1962.71 Lacs). This mainly consists of Trade Payables, Statutory Liability and other Provisions in the books.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company continues its committed priority on Human capital.

The Company has adopted Indian Accounting Standard (IND-AS), notified under the Companies (Accounting) Rules, 2015.

As at the end of the financial year 2025-2026, the Companys human resources comprised 186 Technical employees and 99 Non-Technical employees, aggregating to a total 285 workforce of employees

DETAILS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS:

Particulars	2026	2025
Operating Ratio	32.69%	37.16%
PBIDT Ratio	24.57%	31.33%
PBT Ratio	21.12%	28.41%
PAT Ratio	14.67%	21.91%
Net Worth (Rs. In Cr.)	7061.55	6567.59
Return on Net Worth	7.40%	11.31%
Return on Equity (PBT/Equity)	9.65%	13.00%
Interest Coverage Ratio	4.50	5.71
Debt Equity Ratio (Secured Loan/Equity)	0.22	0.22
Current Ratio	1.72	1.64
Debtors Turnover Ratio	1.97	2.44
EPS (Basic)*	7.29	10.23
EPS (Diluted)*	7.29	10.23

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis report describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements with the meaning of applicable laws and regulations. Actual results might differ.