Garuda Construction and Engineering Ltd Management Discussions

A. Company Overview

Our Company was incorporated as "Garuda Construction and Engineering Limited" (Formerly known as Garuda Construction and Engineering Private Limited) on September 21, 2010, as a private limited company, in accordance with the provisions of the erstwhile Companies Act, 1956, pursuant to a Certificate of Incorporation dated September 21, 2010. Our aim is to increase our execution capabilities in terms of the size and number of civil construction projects across various sectors, namely, residential, residential cum commercial, infrastructure, commercial and industrial. We also aim to procure larger contracts with other developers outside our group entities and expand our client base. Along with our growing civil construction base, we intend to take on larger roles in the capacity of developers and we intend to commence such development mandates in due course.

Our Company, is a growing civil construction company with growth in revenue from operations of 22,503.01 lakhs for the period ended March 31, 2025, 15,417.83, 16068.76 and 7,702.08 lakhs for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. We provide end-to-end civil construction for residential, commercial, residential cum commercial, infrastructure and industrial projects and additional services for infrastructure and also hospitality projects, Wherein, civil construction includes construction of residential, hospitality, industrial, infrastructural and commercial buildings, construction of concrete building structures and composite steel structures which are required for the civil construction. Further, we are also involved in sector pertaining to civil construction cum services. The construction of concrete building structures and composite steel structures are procured by us from underlying subcontractors as per specified designs which may be mandated by overlying developers or by our own engineering teams. Further, we also provide services such as operations and maintenance services ("O&M") and Mechanical, Electrical and Plumbing ("MEP") services and finishing works as a part of our construction services. Hence, all-in-all we offer complete construction services under our banner. Though historically we have been an in-house construction company for our group related entities, where our group entities and corporate Promoters bid for third party civil construction contracts (private sector as well as where Government entities have a requirement where the bidding is as per publicly available tender documents and the Governments tendering process in certain cases), we are directly venturing into contracts with unrelated third parties and we are taking on a larger role of a residential developer.

We started the civil construction work in hospitality sector with Golden Chariot Vasai Hotel & Spa in the year 2010. The initial objective was to be an in-house construction company. However, with increased exposure and work experience in the construction sector we are desirous of expanding our business. For instance, in 2014, we completed construction of the Golden Chariot Vasai Hotel & Spa; in 2015, we renewed and refurbished Golden Chariot, the Boutique Hotel, these were construction contracts with our promoter namely PK Hospitality Services Private Limited. In the year 2017, we commenced the civil construction of residential buildings in the Mumbai Metropolitan Region ("MMR") near the Riwali park, Kandivali, dated June 30, 2017. In 2021, we concluded civil construction of the Delhi Police Headquarters, for the concessionaire, which is one of our marquee projects, which involved construction of twin towers of seventeen (17) storeys each, with a complete glass fagade and steel bridge connecting the two towers. We are currently engaged in civil construction of five (5) residential projects, two (2) commercial projects, one (1) residential cum commercial, one (1) industrial project, one (1) infrastructure and one (1) civil construction cum services.

B. Industry structure and developments

Our company operates in the construction industry. The construction sector is the countrys second-largest economic segment after Agriculture. The sector contributed 8.4% to the national GVA (at constant price) in FY23. The order book of construction companies is dependent upon the capital expenditure in the economy. Broadly, the investments can be classified into infrastructure, real estate and industrial construction. Increase in infrastructure demand & government initiative shows the potential for catapulting India to the third largest construction market globally. Overall the Indian Construction sector has grown at a CAGR of 10.6% from FY18 to FY23 from Rs. 2,375 Billion to Rs. 3,922 Billion. The construction sector is further expected to grow from Rs. 3,922 Billion in FY23 to Rs. 6,494 Billion in FY30 at a CAGR of 7.5%. Historically, infrastructure creation, spread across sectors such as roads and highways, telecom, airports, ports, power, oil and gas and railways has dominated the investments. Increase in Infrastructure demand & government initiative shows the potential for catapulting India to the third largest construction market globally. The sector is expected to contribute 15% to the Indian economy by 2030.

C. Opportunities and Risk along with its Mitigation.

The construction sector offers significant opportunities driven by large-scale infrastructure development, government initiatives in roads, railways, metro systems, renewable energy, and housing, as well as rising private sector investments. Increasing demand for sustainable and technologically advanced construction methods further strengthens long-term prospects for organized players like your Company.

At the same time, the industry faces inherent risks such as project delays, cost overruns, dependency on sub-contractors, regulatory hurdles, volatility in raw material prices, and availability of skilled manpower. Financial challenges including liquidity management, interest rate fluctuations, and credit exposures also add to the risk landscape.

To address these challenges, your Company has instituted a robust risk management framework that emphasizes early identification, assessment, and monitoring of risks. Mitigation strategies include adopting advanced project management practices for cost and time control, maintaining strong vendor and sub-contractor relationships, securing adequate contractual protections and insurance coverage, and ensuring prudent financial planning. The Audit Committee and the Board, periodically reviews the risk landscape to strengthen preparedness.

Through this balanced approach of leveraging opportunities while proactively mitigating risks, your Company remains well-positioned to deliver projects efficiently, protect stakeholder value, and sustain growth in a dynamic EPC environment.

D. Segment wise or product- wise performance

The Company operates in single business segment i.e. Construction Activity hence segment information has not been provided. Further the Company conducts its business in only one Geographical Segment, viz., India.

E. Outlook.

The construction and EPC sector in India continues to play a pivotal role in driving economic growth, supported by increased government spending on infrastructure, housing, roads, railways, ports, renewable energy, and urban development. The push for large-scale projects under initiatives such as Bharatmala, Sagarmala, Smart Cities Mission, PM Gati Shakti, and Housing for All is expected to generate significant opportunities for EPC contractors in the coming years.

Growing private sector participation, foreign investments, and adoption of modern technologies are also strengthening the industry. At the same time, demand for sustainable and green construction practices is gaining prominence, creating avenues for companies that can integrate environment-friendly methods into project execution.

While the sector holds strong growth potential, it is not without challenges. Rising input costs, labour availability, project delays due to regulatory approvals, and volatility in raw material prices remain concerns. However, with increased focus on public-private partnerships, digital project management, and strong policy support, the long-term outlook for the construction industry remains positive.

Your Company, with its expertise in delivering EPC projects across diverse sectors, is well-positioned to benefit from the governments continued emphasis on infrastructure creation and the private sectors push for large-scale developments.

F. Risk and Concerns.

In the EPC and construction industry, risks are inherent and arise from multiple external and internal factors such as project delays, cost escalations, dependency on sub-contractors, regulatory changes, and fluctuations in raw material prices. Your Company recognizes that effective risk management is critical to ensuring the timely execution and delivery of projects, maintaining profitability, and safeguarding stakeholder interests.

Your Company has instituted a robust risk management framework that enables systematic identification, assessment, and monitoring of key business risks. This framework focuses on project-specific risks such as land acquisition issues, design changes, delays in approvals, availability of skilled manpower, and supply chain disruptions. Financial risks such as interest rate volatility, liquidity management, and credit exposure are also monitored closely.

The Audit Committee and the Board of Directors, periodically reviews these risks and provides oversight to ensure appropriate mitigation strategies are in place. This includes contractual safeguards, insurance coverage, strong vendor management practices, and adoption of advanced project management tools for cost and time control.

Your Company continues to focus on proactive risk identification and implementing both short-term corrective actions and long-term preventive measures to address challenges that could materially impact project execution or long-term business goals. While risks cannot be completely eliminated, the Companys risk management practices ensure resilience, stability, and sustained growth in a dynamic EPC environment.

G. Internal Control Systems and their adequacy

The Companys internal controls are commensurate with the nature of its business, the size and complexity of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or disposition, executing transactions with proper authorization and ensuring compliance with corporate policies. The system ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial, reporting, accounting and information security.

The Internal Financial Control of the company is analyzed and audited for the compliances and accordingly the report under Section 143 of the Companies Act, 2013 is prepared and the report on internal control over financial reporting as issued by the statutory auditors of the Company for the year ended March 31, 2025.

The Companys internal auditors review business processes and controls. The audit committee reviews reports presented by the internal auditors on a periodic basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains a constant dialogue with the statutory and internal auditors to ensure effective operations of the internal control systems. The Audit Committee of the Board then discusses significant findings and corrective measures initiated. The Audit Committee of the Board of Directors periodically reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening these systems.

H. Discussion on Financial Performance with respect to Operational Performance.

This has been explained in the Boards Report

I. Material Developments in Human Resources/Industrial Relations front, including number of people employed.

Your Company endeavours to create a work environment which is collaborative and learning and growth oriented to enable employees to perform at their full potential. Your Company believes that a motivated and empowered employee base is the key to our operations and business strategy, and has developed a large pool of skilled and experienced personnel. Your Company maintain a collaborative, inclusive, non-discriminative and safe work culture, and provide equal opportunities to all employees. It believes that such an enabling environment is essential for us to deliver value for our customers, shareholders and communities. The Company also takes various measures to keep its employees motivated and committed to their work by providing them a healthy work environment.

As on March 31, 2025, the Company had 102 employees including the managing director.

J. Details of Significant changes in key financial ratios, along with detailed explanations therefor, including:

Standalone Figures

Consolidated Figures

Cash Flow Statement:

K. Details of any change in Return on Net Worth as compared to the immediately previous financial year.

The return on net worth of your Company for the FY 2024-25 is 15.01% as against 30.62% in the previous financial year, the said decrease is due to increase in equity due to Initial Public Offer on Main Board Platform i.e NSE Limited and BSE Limited.

L. Disclosure of Accounting Treatment.

Where in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard has been followed, the fact shall be disclosed in the financial statements, together with the managements explanation as to why it believes such alternative treatment is more representative of the true and fair view of the underlying business transaction- Not Applicable

Cautionary Statement

Statements in this report describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable laws and regulations. The actual results may differ materially from those expressed in this statement because of many factors like economic condition, availability of labor, price conditions, domestic and international market, changes in Government policies, tax regime, etc. The Company assumes no responsibility to publicly amend, modify or revise any statement on basis of any development, information and event.