Deepak Builders & Engineers India Ltd Management Discussions

GLOBAL ECONOMY

During FY26, the global economy remained strong despite increased uncertainty later in the year. Investments in artificial intelligence (Al), digital infrastructure, and clean energy helped support economic growth. These positive developments reduced some of the negative impact caused by higher tariffs, increased trade restrictions, and rising geopolitical tensions in the Middle East.

The prolonged Russia-Ukraine Conflict and escalating tensions in the Middle East, particularly around key energy supply routes, contributed to volatility in crude oil prices and heightened uncertainty in global markets. These disruptions impacted global supply chains, increased freight and insurance costs, and led to periodic spikes in commodity prices, especially crude oil and natural gas.

Despite global uncertainties, India continued to stand out as one of the fastest-growing major economies, supported by strong domestic demand, policy reforms, and increased public capital expenditure. The country remained an attractive destination for global investors, particularly in infrastructure and real estate sectors, positioning itself as a key driver of global growth in the medium term.

INDIAN ECONOMY

India consolidated its position as the fastest-growing major economy among the G20 nations in FY26.

India continued to remain one of the fastest-growing major economies globally in FY 2025-26, supported by strong macroeconomic fundamentals, resilient domestic demand, and sustained policy support. Despite global uncertainties, the Indian economy demonstrated stability, underpinned by prudent fiscal management, a robust banking system, and continued focus on capital expenditure. Indias real estate and infrastructure sectors benefited from policy continuity, regulatory reforms, and improved ease of doing business.

India also continued to improve its global competitiveness, including progress in innovation and digital adoption. Government-led initiatives such as Make in India, Digital India, Startup India, and Production Linked Incentive (PLI) schemes further strengthened the manufacturing ecosystem and encouraged domestic and foreign investments.

COMPANY BUSINESS

Your Companys is leading builders & contractors of North India with varied experience of Development and Construction of Luxury Homes. Flats. Institutional Buildings, Education Institutions, Judicial Complex, Hospitals, Railways, bridges/ Flyovers & Highways.

The company undertake Construction & Infrastructure projects, under EPC mode on a fixed-sum turnkey basis as well as on an item-rate basis/percentage basis Projects under EPC mode reduce complexity and improve coordination, leading to cost control and timely completion of the project. The companys major chunk of the business is transacted with Central Govt., State Govt. & Semi Govt

At present, your company is having eleven projects under execution with total cost of Projects l 2785.38 crore

The details of these projects as under:

Institutional & Commercial Building:

(i) Building works for Plant Building of M/s Indian oil Corporation (IOCL), Panipat, Haryana

(ii) Unity Mall at HSIIDC, IE, Kamal, Haryana

(iii) Construction of Centre for Interfaith Studies in Guru Nanak Dev University at Amritsar, Punjab

Hospital Buildings:

(i) Construction of National Institute of Ayurveda (NIA) Panchkula. Haryana

(ii) All India Institute of Ayurveda (AIIA)-Ph-ll, Sarita Vihar. New Delhi

(iii) Construction of 150 bedded Critical Care Block at PGIMER, Chandigarh

(iv) Establishment of New Medical College at Dausa (Rajasthan)

Railways Projects:

(i) Redevelopment/construction of Ludhiana Railway Station

(ii) Redevelopment/construction of Jalandhar Cantt Railway Station

(iii) Redevelopment/construction of Delhi Cantt Railway Station

(iv) Redevelopment/construction of Faridabad Railway Station

Your company has successfully completed the redevelopment/construction of the prestigious Jalandhar Cantt. Railway Station, inaugurated by the Honble Prime Minister on 17 July 2026 under the Amrit Bharat Station Scheme. The redeveloped station has been designed to provide passengers with modem infrastructure, enhanced convenience, improved accessibility, and world-class public amenities. It reinforces our ability to undertake and deliver complex infrastructure projects while maintaining high standards of quality, safety and timely completion.

The company has recently awarded the following two new projects:

1. Construction of 12 High-rise Residential Buildings at the existing Panipat Refinery & Petrochemical Complex Township, IOCL, Haryana (Package-I), valued at * 474 25 crores.

2. Construction of Shri Krishna AYUSH University, Kurukshetra, Haryana, valued at Rs. 548.70 crores.

The Companys business is expected to continue growing through structured initiatives, improved planning, enhanced coordination, and the adoption of advanced construction technologies and equipment. These measures will help reduce dependence on manual labour, improve productivity, and enhance overall operational efficiency.

The Companys vision is to contribute to infrastructure development across the country by executing construction projects with uncompromising integrity, excellence, innovation, and continuous technological advancement. It aims to become an industry leader in innovative engineering and sustainable infrastructure development.

The Companys foremost priority is to complete all projects within the stipulated timelines while maintaining the highest standards of quality and safety.

KEY HIGHLIGHTS OF THE COMPANY PERFORMANCE IN FINANCIAL YEAR 2025-26

1 The total income of the Company for the year under review is Rs. 55992 48 Lakhs as compared to Rs. 58665.21 Lakhs recorded in the previous year.

2. Net Profit after tax stood at Rs. 3965 21 Lakhs as compared to a Net Profit after tax of Rs. 5674.98 Lakhs in the previous year.

Discussion on Financial performance with respect to operational performance Operational Performance Review:

The financial statements have been prepared in compliance with the requirement of the Companies Act, 2013 and Indian Accounting Standards in India.

During the year under review, there is decrease in revenue from operations by 4.73%. The revenue from operations is Rs. 55428 11 lacs during the financial year 2025-26 as compared to Rs. 58179 38 lacs during the previous year.

The profit before tax amounting to Rs. 5378.04 lacs during the financial year 2025-26 as compared to Rs. 8103.79 lacs during the previous year.

The profit for the period amounting to Rs. 3965.21 lacs during the financial year 2025-26 compared to Rs. 5674.98 lacs during the previous year.

Key Financial Ratios:

Key Financial Ratios along with detailed explanation thereof for the year 2025-26 (previous year 202425) pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

Particulars	Unit	2026	2025
Current Ratio	times	2.50	2.75
Debt-Equity Ratio	times	0.39	0.32
Debt Service coverage ratio	times	0.91	1.49
Return on Equity	%	9.35	20.26
Return on Capital Employed	%	11.72	19.16
Debtors\u2019 turnover ratio	times	4.10	5.33
Inventory turnover	times	2.08	2.32
Net profit margin	%	7.15	9.75

Notes:

1. Variance in Debt Service Coverage Ratio is on account of increased debt repayments as compared to the previous year.

2. Variance in Return on Equity Ratio is on account of decreased profit after tax and also increased average shareholders equity.

3. Variance in Return on Capital Employed Ratio is on account of decreased earnings before interest & taxes and also increased capital employed.

4. Variance in Net Profit Ratio is on account of decreased profit after tax as well as revenue from operations as compared to previous year.

Threat Risks and Concerns

The Construction & Infrastructure business is a high-risk business. Each construction project is unique and comes with its own set of challenges and opportunities There are risks which are inherent in construction projects like financial, contractual, operational, political and environmental and can be caused by both internal and external sources The major identified risk areas are safety hazards that lead to accident and injuries, unknown site conditions, remote working areas, procurement of materials, unexpected increase in matenal costs, finance liquidity related issues, shortage of labour, interest rate & credit risk. When risks come into existence in a project, they have a serious impact on costs, schedules, and performance of the project, which leads to delays. Moreover, the risks to the Companys businesses can arise from changes in technologies, evolution in business models as well as intensified competition.

While the Company is equipped to deal with these risks and manage these aspects suitably. The Company has a healthy risk management framework, which regularly monitors the risk and advises on corrective action to be taken. Overall, risk management is integrated with business processes to ensure that risks are adequately managed, while ensuring that the regulatory and other compliance requirements are met. Managing risks in construction projects has been recognized as a very important process in order to achieve projecl objectives in terms of time, cost, quality, safety and environmental sustainability.

Internal Control Systems and their Adequacy

The Company has internal control system which is commensurate with the nature, size and complexity of the business. The Company s internal controls framework ensures integrity in conducting its business, safeguarding its assets, timely preparation of reliable financial information, accuracy and completeness in maintaining accounting records and prevention and detection of frauds and errors.

The primary responsibility for establishing, operating and upgrading the Internal Controls System is on the management of the company and is extended by internal audits, standard operating procedures, on an ongoing basis.

The Internal Audit function conducts comprehensive audits across all organizational functions, with a strong focus on operational efficiency and the effectiveness of control systems. A structured audit cycle ensures that every major area of the Company is reviewed.

The function provides independent assurance on a broad range of risks, including strategic, operational, financial, compliance and safety-related aspects. Insights and actionable recommendations are periodically shared with both Management and the Audit Committee. The Audit Committee actively reviews the effectiveness of the Internal Control systems, provides oversight and guidance for corrective actions.

During FY26, internal audit findings, were regularly presented to the Audit Committee. The Committee reviewed these updates and noted the adequacy and effectiveness of the Companys internal control systems and procedures. The Internal Control system includes a whistle-blower mechanism that encourages directors, employees and third parties to report genuine concerns, misconduct or fraud without fear of retaliation.

Human Resources

A skilled and motivated workforce is essential to upholding our stringent quality and safety standards. Strong employee relations are also crucial for maintaining our competitive edge. To this end. the Company invests in comprehensive training programs to develop a highly skilled workforce. Regular training, competitive compensation, and robust employee welfare initiatives foster a positive work environment and contribute to harmonious labour relations. The total number of employees as on 31st March 2026 are 496 employees.

A skilled and motivated workforce is essential asset of an organization to achieve its objectives and goals. The company provide its employees a conducive work environment that helps them deliver their best. The Company invests in comprehensive training programs to develop a highly skilled workforce and expand their knowledge. The HR teamworks closely with project managers to implement safety programs which includes conducting safety training, enforcing safety protocols, and ensuring compliance with occupational health and safety regulations.

The effective management of the workforce to ensure the successful completion of construction projects within budget and on schedule.

Forward-looking Statement

The Annual Report including those which relate to the Directors Report, Management Discussion and Analysis Report may contain certain statements on the Companys intent expectations or forecasts that appear to be forward looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company bears no obligations to update any such forward looking statements.