Generic Engineering Construction & Projects Ltd Management Discussions

Introduction:

Generic Engineering Construction and Projects Limited (the Company) is engaged in the construction of residential, industrial, commercial and Institutional buildings with a presence in Maharashtra, Karnataka, Gujarat, Himachal Pradesh and Goa. Generic offers general contracting, design-build; engineering, procurement and construction (EPC); and project management consultancy (PMC) services. The companys forte lies in executing projects having a ticket size between Rs.25 Crores to Rs. 100 Crores. The company has expertise in building data centres, hospitals, schools, all types of industrial and residential buildings. The company is a pioneer in building cold storage. The company has the highest market share of contracting business in the fastest growing market of Navi Mumbai, where the company has delivered more than 300 industrial buildings. The company also provides designing and engineering services for architecture, structural, electrical, mechanical, HVAC, plumbing and sewerage, fire protection, building management, and infrastructure works.

At the outset of 2025, encouraging developments in the global economy encompass the easing of inflation and energy costs from their apex levels, along with Chinas decision to terminate its zero-COVID strategy, which is projected to provide a stimulus to economic growth. While the complete impact of these changes is yet to be fully realized, emerging markets and developing economies are already experiencing a substantial upswing in growth rates, The tightening of monetary policy by the majority of central banks is anticipated to drive inflation back toward its targets leading it toward the recovery path.

Indias macroeconomic performance in FY 2024–25 further reinforced its status as the fastest-growing major economy in the world, recording a real GDP growth of 6.5% as per RBI. This growth unfolded despite an uncertain global environment, marked by geopolitical tensions, supply chain realignments, and monetary tightening across advanced economies. Indias resilience was shaped by a combination of controlled inflation, sustained domestic consumption, steady employment generation, and a policy ecosystem anchored in execution-led governance. The year was notable for the Government of Indias continued fiscal thrust on capital expenditure, aimed at crowding in private investment and addressing infrastructure bottlenecks. Indias expanding economic base, deepening financial markets, goal to bring down logistics costs from 14-16% of GDP to single digit, and improved ease of doing business have collectively strengthened investor confidence, placing the country on a structurally sound growth trajectory toward a potential $5 trillion economy by

FY 2029–30.

The construction and infrastructure sector sustained a high growth trajectory during FY 2024–25, with construction sector Gross Value Added (GVA) rising by 8.6%. However, the sector navigated through temporary headwinds including election related code of conduct restrictions, which led to delayed project awards in some regions. Additionally, the extended and erratic monsoon season posed operational challenges in several parts of the country, resulting in intermittent delays and increased site management costs. Despite these challenges, the governments strong infrastructure thrust ensured continued momentum, and the outlook postelection is expected to strengthen further as new policy directives and budget allocations translate into on-ground activity.

Indias construction industry has been one of the most lucrative economic prospects in the countrys recent history, due to growing urbanization and population growth The construction industry in India has experienced substantial expansion in recent years, and it is likely to continue rising at good rates in the foreseeable future. As a veteran in the industry, Generic has having potential in getting more projects in the said sector. Hence your company is continuously making efforts to fuel this industrys growth as well as the prospective opportunities for investors in this field.

Further, having wide range of working experience in the said industry your company has already completed or nearly completion of numerous projects, which will help the Company to bagged more such projects.

The threat be it external or internal, is inherent in every business. The main concerns are, demand constrains for the products arising from the prevailing environment, natural calamities, low disposable income and charge in the priority of consumers and fierce completion leading to higher spent on trade activities and promotional support necessitating allocation of more resources.

In order to deal for such threats or risk, your Company has closely monitored various aspects like cost of the construction, materials, time of completion of project etc. and whenever it has realized to take immediate action, it has given effect to. Focus on financial discipline including effective management of net working capital has helped to overcome the above risk and concerns to some extent.

The company operates in a single business / geographical segment. Hence, segment wise performance is not furnished.

Infrastructure development continues to be a key driver of Indias economic growth. The Union Budget 2025–26 has allocated Rs. 11.21 lakh crore (3.1% of GDP) for infrastructure, with a total effective outlay of Rs.19.8 lakh crore (5.5% of GDP). This is supported by the proven multiplier effect of infrastructure spending, estimated to boost GDP by 2.4 times.

Our Company remains exposed to risks which could impact our operating and financial performance. These risks could be macro, geopolitical, environmental, health related and sector specific in nature. We continue to remain vigilant and have mitigation strategies in place to minimise the impact from such risks.

• Geopolitical tensions leading to supply chain disruptions

Political Risks: The Company has operations in multiple locations in multiple states and is consequently subject to various geopolitical risks. Appropriate mitigation strategies are in place to address the same.

Mitigation: The Company mitigates political and geopolitical risks through continuous regulatory monitoring, active stakeholder engagement, and geographic diversification of operations. Robust contractual safeguards, including change-in-law and force majeure clauses, are incorporated into agreements. Scenario planning and contingency strategies are in place to ensure operational continuity in case of disruptions. The Company participates in industry forums for policy advocacy and maintains crisis management protocols, including security measures, to address potential unrest.

• Working Capital Risk

Risk: Project delays, cost overruns and consequent delays in receipt of payments from the Clients lead to an increase in working capital requirement. There is a process of close monitoring and follow-up with the Clients for timely approvals and payments for better working capital management.

Mitigation: The Company mitigates working capital risks arising from project delays, cost overruns, and payment lags through close monitoring of project progress, proactive follow-up with clients, and timely securing of approvals and payments to ensure effective cash flow management.

• Competition Risks

Risk: There has been an increase in the number of operators in the niche segment that the Company functions in. However, the Companys competitive advantage is derived from experienced workforce, quality and timely delivery, strong track record, technical expertise, financial strength, brand equity and regular engagement with Clients and representatives.

Mitigation: The Company addresses rising competition in its niche segment through its experienced workforce, proven track record, technical expertise, financial strength, strong brand equity, commitment to quality and timely delivery, and continuous engagement with clients and stakeholders.

• Project delay risk

Risk: If projects are not finished on time, then the company is susceptible to increased cost and loss of reputation which can hurt the order book.

Mitigation: The Company has processes, systems and strong human capital which continuously improves the project management capabilities of the organisation and engages in careful bid preparation to avoid any over utilisation of resources.

• Safety concerns

Risk: Onsite accidents can lead to serious or fatal injuries which is against the companys policies and ethos. Moreover, there is risk from pecuniary and nonpecuniary losses to the company.

Mitigation: The company considers the safety of all its personnels including off payroll workers in the construction site, as the highest priority. Therefore, the company deploys safety measures such as safety gear for workers, equipments integrated with warning systems and safety attachments, standard operating procedure (SOP) manual.

The Company has an adequate internal financial control system commensurate with the size, scale and complexity of its operations. It has put in place adequate controls, procedures and policies for ensuring orderly and efficient conduct of its business including adherence to polices, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records. Appropriate frameworks have been designed to have internal controls over financialreporting, which ensures the integrity of financial statements of the Company and reduces possibility of malpractice. Design of key processes and various policies are reviewed periodically, from the point of view of adequacy of controls.

The Board of Directors and management at all levels of the Company demonstrate through their directives, actions and behaviours the importance of integrity and ethical values to support the functioning of the system of internal control. The

‘Code of Conduct and the ‘Whistle-blower/ Vigil Mechanism policies form an integral component of the internal control system. The Code of Conduct compliance is mandatory for employees and the Whistle-blower / Vigil Mechanism policies enables employees and vendors to raise genuine concerns about any actual or suspected ethical / legal violations or misconduct or fraud, with adequate safeguards against victimisation, fear of punishment or unfair treatment.

Internal controls are tested for effectiveness, across all project sites and functions by the Internal Audit team, which is reviewed by the management for corrective action from time to time and deviations, if any, are reported to the Audit Committee periodically.

During the year under review, your company has achieved Revenue from Operations and including other Income of Rs 31,034.29 Lakhs as compared to Rs. 29,330.52 Lakhs in the pre21vious year. After deducting Expenses ,Exceptional

Items and taxes and other adjustments the profits of the Company were standing at Rs. 1,201.96 Lakhs as compared to Profit of Rs. 1,126.47 Lakhs during the previous year.

The Company recognise our industry in which we operated is a labour and employees intensive industry and key to the success of the organization and in meeting its business objectives. Hence, our company strive to create a quality of life for its employees. Keeping the spirits high at workplace needs a sound mental and physical fitness and deep-rooted culture which promotes work life balance.

Number of employees during financial year 2024-25 where 21

The key financial ratios for the financial year 2024-25 is as follows;

* Capital employed includes Equity, Borrowings, Creditor for Capital Expenditure and reduced by Investments, Cash and Cash Equivalents, Capital Work-in-Progress and Intangible Assets under Development, Deferred Tax Assets.