Constronics Infra Ltd Management Discussions

a. INDIAN INFRASTRUCTURE INDUSTRY

The infrastructure sector continues to remain a key driver of Indias economic growth and development. Infrastructure investment has remained a policy priority for the Government of India, with sustained focus on improving connectivity, logistics efficiency, urban infrastructure, transportation networks and the overall quality of physical infrastructure. The sector encompasses roads and highways, railways, ports and waterways, airports, power, urban infrastructure, housing and other core infrastructure segments.

Indias infrastructure development continued to gain momentum during FY 2025-26, supported by increased public capital expenditure and large-scale investments in transportation and connectivity. Government capital expenditure has increased significantly over the years, reinforcing infrastructure as an important growth driver for the Indian economy. For FY 2025-26, Government capital expenditure was budgeted at approximately ? 11.21 lakh crore, while effective capital expenditure was budgeted at approximately ? 15.48 lakh crore.

The road and highway sector continued to witness significant expansion. The National Highway network increased to approximately 1,46,572 kilometres by March 2026, compared with 91,287 kilometres in March 2014. During FY 2025-26, the National Highways Authority of India constructed 5,313 kilometres of National Highways, exceeding its annual target of 4,640 kilometres. NHAIs capital expenditure on National Highway development during FY 2025-26 stood at approximately ?2.44 lakh crore.

Railway infrastructure has also continued to expand, with significant investments in network capacity, electrification, safety systems and modernisation. The Governments continued emphasis on rail connectivity, high-speed corridors and station redevelopment is expected to support long-term infrastructure development and economic activity.

The Governments focus on integrated infrastructure development through initiatives such as PM GatiShakti, multimodal connectivity, economic corridors and logistics infrastructure is expected to improve the movement of goods and people and enhance the efficiency and competitiveness of the Indian economy. The continued development of roads, railways, ports, airports and other infrastructure assets is expected to create opportunities across the construction and allied sectors.

The Indian economy continued to demonstrate resilience during FY 2025-26. As per the First Advance Estimates released by the National Statistical Office, Indias real GDP was estimated to grow by 7.4% during FY 2025-26, compared with 6.5% in FY 2024-25. The construction and manufacturing segments in the secondary sector were estimated to grow by 7.0% during FY 2025-26.

The infrastructure sector is expected to continue benefiting from sustained government expenditure, increasing urbanisation, growing demand for transportation and logistics infrastructure, and the need for modern and resilient infrastructure. These factors are expected to provide opportunities for construction and infrastructure companies in the medium to long term.

The Indian infrastructure and construction sector continues to present significant growth opportunities, supported by sustained government spending, increasing infrastructure requirements, urbanisation, industrial development and the expansion of transportation and logistics networks.

The Companys strengths include its experience in the construction and infrastructure sector, established business relationships, execution capabilities and ability to participate in infrastructure development opportunities. The continued expansion of road, highway and other infrastructure projects presents opportunities for the Company to strengthen its presence and pursue sustainable business growth.

At the same time, the sector remains exposed to various risks and challenges. These include fluctuations in the prices of key construction materials, labour costs, financing costs, delays in land acquisition and statutory approvals, project execution and completion risks, delays in tendering and award of contracts, availability of labour and materials, supply-chain disruptions and changes in government policies and regulations.

Geopolitical developments, global economic uncertainties and fluctuations in commodity and energy prices may also affect project costs and execution timelines. The Company continues to monitor these developments and evaluates their potential impact on its operations and financial performance.

The increasing emphasis on timely project completion, cost efficiency, quality standards, environmental considerations and regulatory compliance requires construction companies to maintain adequate operational and financial discipline. The Company remains focused on prudent project selection, effective cost management, timely execution and continuous monitoring of project-related risks.

The Company has established an appropriate internal control and risk management framework commensurate with the size, nature and complexity of its business operations. The Companys risk management framework broadly focuses on business risk assessment, operational controls and compliance with applicable policies, laws and regulations.

The Board of Directors oversees the Companys key business and operational risks and reviews appropriate measures for identification, assessment and mitigation of such risks. Risks relating to project execution, tendering, cost escalation, contractual obligations, availability of resources, regulatory compliance and other operational matters are monitored on an ongoing basis.

The Company evaluates potential risks associated with projects and tenders before taking decisions relating to bidding and execution. Appropriate controls are implemented to monitor project progress, costs, contractual obligations and compliance requirements.

The Companys internal control systems are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, reliability of financial reporting and compliance with applicable laws and regulations. The Audit Committee periodically reviews the adequacy and effectiveness of the internal control environment and monitors the implementation of audit observations and recommendations.

The Company believes that its internal control and risk management systems are adequate and commensurate with the nature and scale of its operations.