Era Infra Engineering Ltd Management Discussions

Era Infra Engineering Limited/ Annual Report FY 2025-26

1. Industry Structure, Developments and Business Overview

Era Infra Engineering Limited (EIEL or the Company) is a widely held public company with over three decades of experience in engineering, procurement and construction (EPC) across roads and highways, power, railways, metro systems, airports, and social, industrial and institutional infrastructure. The Companys securities were delisted from the Bombay Stock Exchange on July 4, 2018 and from the National Stock Exchange on August 8, 2018. Pursuant to BSE Notice No. 20251127-17 dated November 27, 2025 and NSE Circular No. NSE/CML/71602 dated December 2, 2025, the status of the Company has since been revised from Delisted to Suspended with effect from December 4, 2025 by NSE and with effect from December 1, 2025 by BSE - a positive step in the Companys path toward normalisation of its listing status.

The Company underwent Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, initiated on the application of Union Bank of India (lead bank of the consortium of lenders) and admitted by the Honble National Company Law Tribunal (NCLT), New Delhi with effect from May 8, 2018. The Resolution Plan for the Company was approved by the Honble NCLT on June 11, 2024, and the management and control of the Company vested with the Successful Resolution Applicant (SRA) on that date. Pursuant to the approval of resolution plan, the Board of Directors were reconstituted w.e.f. September 20, 2024. FY 2025-26 is accordingly the second financial year of operations under the new management and the first full year in which the effects of the CIRP-related restructuring (upfront settlement, issuance of Non-Convertible Debentures, extinguishment and reconstitution of equity capital) are substantially reflected on a steady-state basis rather than as one-time resolution adjustments.

The Company continues to operate in a single reportable business segment - Engineering, Procurement and Construction - in line with Ind AS 108, as the Board of Directors, acting as the Chief Operating Decision Maker, reviews the business on a consolidated / unified basis for resource allocation and performance assessment.

2. Financial Performance Review - Standalone

The Companys standalone results for the year, compared with the previous year, are summarised below

(Rs. in Lakhs):

Particulars	FY 2025-26	FY 2024-25	Change
Revenue from Operations	1,068.21	1,016.33	5.1%
Other Income	4,157.55	25,451.28	(83.7)%
Total Income	5,225.76	26,467.61	(80.3)%
Total Expenses	4,098.88	9,346.51	(56.1)%

Particulars	FY 2025-26	FY 2024-25	Change
Profit before Exceptional Items and Tax	1,126.88	17,121.10	(93.4)%
Exceptional Items (Expense)/Income	319.06	4,344,511.71	N.M.
Profit/(Loss) before Tax	807.82	(4,17,390.61)	N.M.
Tax Expense	688.11	645.05	6.7%
Profit/(Loss) for the Year	119.71	(4,18,035.66)	N.M.
Basic EPS (Rs.)	4.89	(28,216.60)	N.M.

Revenue from operations grew modestly by 5.1% to Rs. 1,068.21 lakhs (PY: Rs. 1,016.33 lakhs), driven by contract revenue of Rs. 962.31 lakhs and equipment hiring and management income of Rs. 105.90 lakhs. Given the Companys business practices of executing EPC contracts on a cumulative running-account basis, and considering that a large part of its historical project portfolio remains under arbitration/dispute resolution, revenue from core operations remains modest relative to the size of the balance sheet.

Other income declined sharply to Rs. 4,157.55 lakhs (PY: Rs. 25,451.28 lakhs). This decline is not indicative of a deterioration in the underlying business; rather, the prior year figure was elevated by one-time items including interest on arbitral awards of Rs. 24,123.12 lakhs and interest on the Enforcement Directorate-seized bank account of Rs. 494.27 lakhs recognised in FY 2024-25 upon release of attached funds pursuant to the Special Courts order. In the current year, other income principally comprised proceeds against encashment of a Performance Bank Guarantee of Rs. 2,655.00 lakhs and interest income of Rs. 1,466.77 lakhs (including Rs. 793.53 lakhs of interest on arbitral awards and Rs. 320.81 lakhs recognised on a one-time TDS/Form 26AS reconciliation for FY 2017-18 to FY 2023-24, disclosed as an exceptional item).

Total expenses fell by 56.1% to Rs. 4,098.88 lakhs (PY: Rs. 9,346.51 lakhs), mainly on account of depreciation and amortisation falling to a negligible Rs. 8.94 lakhs (PY: Rs. 4,063.70 lakhs), following the substantial write-off of the gross block in the prior year pursuant to a physical/technical reassessment of Property, Plant and Equipment under the Resolution Plan. Employee benefits expense increased to Rs. 669.92 lakhs (PY: Rs. 341.75 lakhs), reflecting the induction of new leadership and staff under the new management, while other expenses increased to Rs. 2,558.39 lakhs (PY: Rs. 1,381.45 lakhs), primarily on account of legal and professional charges of Rs. 2,298.19 lakhs incurred towards resolution-plan implementation, litigation, and arbitration matters.

The exceptional item for the year of Rs. 319.06 lakhs (net expense) principally comprised a provision against expected realisation of receivables as per the approved resolution plan (Rs. 224.63 lakhs), advances written off net of write-backs (net write-back of Rs. 444.43 lakhs), offset by reversal of an expected-credit-loss provision (Rs. 274.25 lakhs). This is not comparable to the prior years exceptional expense of Rs. 4,34511.71 lakhs, which represented the one-time impact of the CIRP resolution - principally the finance cost impact of prior-period interest and charges (Rs. 2,06,674.44 lakhs), inventories written off (Rs. 50,861.99 lakhs) and advances to suppliers/capital advances written off (Rs. 1,05,147.32 lakhs).

As a result, the Company reported a profit before tax of Rs. 807.82 lakhs for FY 2025-26, against a loss before tax of Rs. 4,17,390.61 lakhs in FY 2024-25 - the prior year loss being almost entirely attributable to the one-time resolution-related exceptional charge described above. After a tax expense of Rs. 688.11 lakhs (representing a deferred tax charge on write-off of MAT credit, since the new management has determined, based on a re-evaluation of taxable income for FY 2017-18 to FY 2023-24, that the MAT credit is not expected to be utilisable within the statutory ten-year window), the Company posted a net profit of Rs. 119.71 lakhs for the year, against a net loss of Rs. 4,18,035.66 lakhs in the previous year. Basic EPS for the year was Rs. 4.89 (PY: Rs. (28,216.60)), the improvement also reflecting the post-resolution increase in the weighted average number of equity shares outstanding.

3. Financial Performance Review - Consolidated

The consolidated results are summarised below

(Rs. in Lakhs):

Particulars	FY 2025-26	FY 2024-25	Change
Revenue from Operations	1,068.21	1,016.33	5.1%
Total Income	5,225.76	26,468.53	(80.2)%
Profit before Tax	743.22	(4,50,133.64)	N.M.
Profit/(Loss) for the Year	55.11	(4,50,781.48)	N.M.
Attributable to Owners of the Company	65.80	(4,41,979.30)	N.M.
Attributable to Non-Controlling Interest	(31.44)	(8,801.24)	N.M.
Total Assets	5,05,378.60	10,43,910.30	(51.6)%
Total Equity	3,16,331.75	2,56,100.22	23.5%

Consolidated revenue from operations and total expenses are broadly in line with the standalone figures discussed above, as substantially all operating activity is conducted at the Company (Holding Company) level. Consolidated profit for the year of Rs. 55.11 lakhs (PY: loss of Rs. 4,50,781.48 lakhs) is attributable to owners of the Company to the extent of Rs. 65.80 lakhs, with a loss of Rs. 31.44 lakhs allocated to non-controlling interests in subsidiaries with negative equity.

A material point of note for FY 2025-26: the consolidated financial statements do NOT include the financial information of three subsidiary companies - Bareilly Highways Project Limited, Haridwar Highways Project Limited, and Era Infrastructure (India) Ltd. - as these entities are themselves under CIRP and their affairs vest with the respective Insolvency Resolution Professionals, from whom audited financial statements and other requisite information were not available as at the date of preparation of these financial statements. The statutory auditors have accordingly qualified their opinion on the consolidated financial statements in respect of this matter, and separately in respect of unrecognised interest on borrowings of certain subsidiaries classified as Non-Performing Assets. This non-consolidation is the principal reason for the sharp year-on-year decline in consolidated total assets, from Rs. 10,43,910.30 lakhs to Rs. 5,05,378.60 lakhs - largely explained by the de-recognition of Intangible assets under development of Rs. 6,28,436.80 lakhs (toll/concession project assets held through the aforesaid subsidiaries) that were consolidated in the previous year. This is a presentation and consolidation-scope effect rather than a loss of underlying assets, and readers should exercise caution in drawing year-on-year comparisons at the consolidated level.

4. Financial Position - Standalone

Key balance sheet parameters are set out below

(Rs. in Lakhs):

Particulars	As at 31-Mar-26	As at 31-Mar-25	Change
Total Assets	4,41,618.20	4,48,355.94	(1.5)%
Net Worth (Share Capital + Other Equity)	4,00,382.14	4,00,283.18	0.0%
Total Borrowings	33,478.05	40,304.89	(16.9)%
Trade Receivables (Net)	2,60,458.47	2,69,170.94	(3.2)%
Cash & Cash Equivalents	302.68	119.81	152.7%
Net Debt	33,177.03	40,307.16	(17.7)%

Total assets declined marginally by 1.5% to Rs. 4,41,618.20 lakhs, largely on account of a reduction in trade receivables (down 3.2% to Rs. 2,60,458.47 lakhs, net of realisations and the arbitral share held back for assenting financial creditors as per the Resolution Plan) and utilisation of the loan given to related parties. Net worth remained broadly stable at Rs. 4,00,382.14 lakhs. Total borrowings reduced by 16.9% to Rs. 33,478.05 lakhs, reflecting continued repayment of Non-Convertible Debentures issued under the Resolution Plan (per the agreed redemption schedule) and repayment of unsecured Inter-Corporate Deposits. Cash and cash equivalents more than doubled to Rs. 302.68 lakhs (PY: Rs. 119.81 lakhs), aided by net cash generated from operating activities of Rs. 8,801.95 lakhs during the year - the first year of positive operating cash flow since the resolution.

The Companys net debt-to-equity ratio improved to 0.08 (PY: 0.09), reflecting the continued deleveraging of the balance sheet as arbitral award proceeds and receivable recoveries are applied towards debt service in line with the terms of the approved Resolution Plan.

5. Key Financial Ratios (Standalone)

As required under Schedule III to the Companies Act, 2013, the table below sets out the key financial ratios and explanations for variances exceeding 25% as compared to the previous year:

Ratio	FY 2025-26	FY 2024-25	Variance	Principal Reason for Variance
Current Ratio	22.53	23.70	(4.9)%	See note below
Debt-Equity Ratio	0.08	0.10	(16.4)%	Repayment of borrowings
Debt Service Coverage Ratio	0.21	2.88	(92.7)%	Decline in EBIT (exceptional gain in PY)
Return on Equity (%)	0.00	13.26	(100.0)%	PY figure inflated by exceptional PBT
Inventory Turnover Ratio	N.A.	0.04	N.M.	No inventory held in FY26
Trade Payables Turnover Ratio	0.19	0.12	55.6%	Higher settlement of payables
Net Profit Ratio	0.09	(411.32)	N.M.	Swing to profit in FY26
Return on Capital Employed (%)	0.00	0.04	N.M.	Lower operating earnings

The Debt Service Coverage Ratio and Return on Equity for FY 2024-25 were both distorted upward by the one-time exceptional write-backs/impact recognised during the resolution process in that year; consequently, comparisons of these ratios across the two years should be read in that context rather than as an indication of a decline in the current years operating performance. The Net Profit Ratio and Trade Payables Turnover Ratio both improved meaningfully in FY 2025-26, reflecting the return to normal, profitable operations following the completion of the resolution process.

6. Outlook

With the Resolution Plan now substantially implemented and the Companys listing status changed from Delisted to Suspended on both exchanges, the managements near-term priorities are:

(a) completion of pending procedural formalities, including allotment of equity shares to the Special Purpose Companies (SPCs) in respect of the transitional debt of Rs. 755.00 lakhs and incorporation-related filings for SPCs;

(b) recovery of the substantial arbitration claims (contingent assets of Rs. 2,02,102.23 lakhs standalone / consolidated as at March 31, 2026) that remain the Companys principal source of future cash flow and deleveraging;

(c) regularisation of statutory dues, including the Provident Fund matter currently before the EPF Appellate Tribunal; and

(d) reconciliation of tax portal balances (GST, income tax, and TDS/TCS demands aggregating to over Rs. 61,000 lakhs standalone, all pertaining to the pre-resolution period and considered extinguished under the approved Resolution Plan) through the pending writ proceedings before the Honble High Court. Management believes that successful execution of these steps, together with continued recovery of legacy receivables, positions the Company to rebuild its EPC order book and revenue base over the medium term.

7. Risks and Concerns

? Recoverability risk: A substantial proportion of the Companys assets comprise trade receivables, arbitral claims and related recoverables arising from legacy EPC and infrastructure projects, the realisation of which is contingent on the outcome of ongoing arbitration, litigation and negotiated settlements - as also identified as a Key Audit Matter by the statutory auditors.

? Consolidation and subsidiary risk: Three subsidiaries remain under separate CIRP proceedings and their financials could not be consolidated this year; the eventual outcome of those processes (including possible loss of control, or recognition of further impairment) remains uncertain.

? Statutory and regulatory matters: Outstanding disputes with the EPFO, Income Tax and GST authorities (largely pre-resolution period, and considered settled under the Resolution Plan) continue to appear on government portals pending procedural closure, and irregularities in statutory due deposits during the year have been noted by the auditors.

? Internal controls: The statutory auditors have noted that the audit-trail (edit log) feature was not enabled in the accounting software used during the year, and have accordingly been unable to comment on compliance with Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.

? Concentration of revenue: Core EPC revenue remains modest relative to the size of the balance sheet, and a large part of near-term profitability continues to depend on non-operating items such as arbitral award interest and settlements rather than recurring contract execution.

8. Internal Control Systems and their Adequacy

The Company has an internal control system commensurate with the size and nature of its business, including an internal audit function whose reports have been considered by the statutory auditors in determining the nature, timing and extent of their audit procedures. The statutory auditors have expressed an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting as at March 31, 2026 (standalone), and an unmodified opinion at the Group level (consolidated), subject to the qualifications described in Section 3 above regarding the three non-consolidated subsidiaries. As noted above, the audit-trail (edit log) feature in the accounting software was not enabled during the year; the Company is in the process of addressing this observation.

9. Human Resources

Following the change in management pursuant to the approved Resolution Plan, the Company has been strengthen and align its organisational and leadership structure, reflected in the increase in employee benefits expense to Rs. 669.92 lakhs (PY: Rs. 341.75 lakhs) and the appointment of key managerial personnel during the year, including the Managing Director & CEO. The Company continues to take suitable steps towards regularising legacy employee dues, including gratuity and provident fund liabilities pertaining to the pre- and during-CIRP period, in accordance with the terms of the approved Resolution Plan.

10. 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 could differ materially from those expressed or implied, given the Companys continuing dependence on the outcome of arbitration and litigation proceedings, recovery of legacy receivables, completion of residual resolution-plan formalities, and the general economic and regulatory environment in which the Company operates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.