H.G. Infra Engineering Ltd Management Discussions

Economic Overview

Global Economy¹

The global economy posted a growth of 3.3% in CY 2024 while navigating through challenges such as political conflicts, trade frictions, and evolving monetary policies. The global inflation dropped from 6.6% in CY 2023 to 5.7% in CY 2024, owing to firm policy actions by central banks and improved energy supply that helped stabilize input costs.

Much of this years momentum came from central banks taking strict steps to control inflation. Energy availability also helped keep prices steady and generate economic activity. Developing and emerging countries grew at the rate of 4.3%, well ahead of the 1.8% growth seen in advanced countries. High local consumption, rising foreign investment and consistent performance in manufacturing and technology supported this expansion. Their ability to keep growing despite global challenges shows an important tilt in the balance of economic growth.

Outlook

The global economy is expected to grow at a moderate pace, with projections indicating a 2.8% expansion in CY 2025 and 3.0% in CY 2026. This is supported by a gradual easing of inflation and supportive, targeted policy measures by central banks across the globe. Emerging markets are anticipated to sustain steady growth at around 3.7%, while advanced economies are likely to see a modest but consistent recovery, with growth reaching 1.4% in CY 2025.

With inflation projected to decline to 4.2% in CY 2025 and further to 3.5% in CY 2026, consumer spending is expected to gain momentum. Despite recent increases in tariffs and rising protectionism in various regions, the global economy continues to demonstrate resilience and interconnectedness.

Indian Economy

Indias economy expanded by 6.5% in FY 2024-2025 despite challenges like global tensions, supply chain uncertainties, and shifting trade dynamics.² This growth was largely driven by the services sector, which remained a key engine of economic activity. One of the standout enablers was the consistent upgrade of the countrys digital infrastructure, which expanded access to financial services and credit for individuals and businesses alike, increasing overall economic momentum.

Inflation eased from 5.4% in FY 2024 to 4.6% in FY 2025, providing economic stability.³ These declines increased consumer confidence and helped unlock demand across a range of industries. The government remained an active catalyst - implementing key reforms, simplifying business regulations, and investing significantly in infrastructure. These measures have improved market confidence, especially in capital-intensive sectors like construction and support. Meanwhile, disciplined fiscal management and effective monetary policies have helped maintain macroeconomic stability.

Indias focus on addressing structural bottlenecks and improving ease of doing business is drawing huge interest from global investors. This creates a strong foundation for longterm growth and economic resilience. With continued reforms and strategic investments, India is well-positioned to lay down a credible path for long-term expansion.

Outlook

India has emerged as the worlds fourth-largest economy, surpassing Japan, with its per capita income having doubled since 2014, driven by strong domestic and foreign investments, thriving manufacturing activity, and growth in trade and financial services. The governments continued emphasis on capital expenditure, rising rural demand, and rapid development of both digital and physical infrastructure is expected to further accelerate economic progress and improve social outcomes. As global supply chains stabilise and input costs ease, industries tied to essential services and daily consumption are well-positioned to gain from increased demand and greater operational efficiencies.

The 25-basis point cut in the repo rate till March 2025 is poised to inject liquidity, enhance access to credit and uplift market confidence. At the same time, the government is navigating global tariff shifts with a strategic approach to safeguard national economic interests. Despite external uncertainties, Indias growth momentum is expected to hold, supported by robust domestic demand, a cooling inflationary environment, and sound macroeconomic fundamentals. Additionally, the UK Free Trade Agreement is set to deepen bilateral trade through reduced tariffs, smoother customs procedures, and increased investment opportunities, reinforcing economic ties and mutual prosperity.

Industry Overview

Indias Infrastructure Sector

Indias infrastructure sector stands at the forefront of the countrys ambition to become a $5 trillion economy, playing a crucial role in driving economic growth, creating jobs and transforming urban landscapes. As the nation charts the course towards a ‘Viksit Bharat by 2047, the government has strengthened its commitment through initiatives like the National Infrastructure Pipeline (NIP), which continues to guide investments across key sectors such as transport, logistics, energy and urban development.

The governments aim to provide multi-modal transport solutions, has resulted in the development of ropeways under the Parvatmala Pariyojana and the rollout of Multi Modal Logistics Parks (MMLPs) in major cities. These initiatives are designed to improve last-mile connectivity, decongest urban areas and promote sustainable transport options. The expansion of wayside amenities and port connectivity projects further demonstrates a holistic approach to infrastructure, ensuring seamless movement for both goods and passengers while creating new opportunities for private sector participation and innovation.

With a capital expenditure outlay of Rs11.21 lakh crore, the union budget FY 2025-26 emphasizes inclusive development, improved connectivity, and sustainable urbanization. Key initiatives include expanding air connectivity under

UDAN, launching a Rs25,000 crore Maritime Development Fund, and extending the Jal Jeevan Mission to 2028, laying a robust foundation for long-term growth and quality of life improvements across India.⁴

Road and Highway Infrastructure of India⁵

Indias road and highway infrastructure continues to be the strongest levers of economic development. The country has established itself as the second- largest road network globally, with over 63.45 lakh kilometres of roads, including 1.46 lakh kilometres of National Highways (NHs).

Government initiatives like Bharatmala Pariyojana and PM Gati Shakti have played a crucial role in advancing highway development across India. These programs have led to a significant expansion of the national highway network and a notable increase in high-speed corridor lengths.

The government is firmly focused on transforming Indias road infrastructure, aiming to construct 10,000 km of national highways in FY 2025-26 to enhance connectivity and reduce logistics costs. This effort is part of a broader vision to develop 50,000 km of access- controlled expressways by 2037 under Vision 2047. The pace of highway development has seen significant acceleration, driven by strong capital investments that showcase the governments commitment to creating world-class transportation networks.

Railway and Metro Infrastructure of India⁶

Indian Railways has made significant advances in modernizing its infrastructure, with a clear focus on speed, safety, and reliability. As of March 2025, more than 23,000 kilometers of track have been upgraded to support train speeds of up to 130 kmph, while an additional 54,337 kilometers are now equipped for speeds of 110 kmph. These upgrades feature stronger tracks, advanced signalling systems, and fencing in high-risk zones, particularly along the Golden Quadrilateral and Golden Diagonal routes, which connect major cities and handle a substantial share of passenger and freight traffic. The successful deployment of the Vande Bharat Express Indias first semihigh-speed train capable of reaching 160 kmph highlights the impact of these infrastructure improvements, enabling faster, safer, and more reliable train services.

The modernization drive is backed by record investments, with the 2025-26 Budget allocating Rs2.65 lakh crore for railway development, the highest ever. This funding supports the expansion of 68,000 km of track, the addition of 400 new

Vande Bharat trains by 2027, and the comprehensive electrification of nearly 97% of the network, making operations cleaner and more efficient. Safety remains a top priority, with significant allocations for track renewal, signalling upgrades. Indian Railways is also investing in station redevelopment, manufacturing new rolling stock, and introducing special train services to meet rising demand during peak periods, all of which contribute to increased passenger and freight capacity and support Indias economic growth

Indias metro rail network has experienced rapid growth over the past decade, expanding from about 280 km in 2014 to over 1,011 km across more than 20 cities by March 2025. This expansion reflects the governments commitment to easing urban congestion, improving city mobility, and providing efficient alternatives to road transport. In addition to intra-city metro expansion, India has launched the Regional Rapid Transit System (RRTS) to enhance connectivity between nearby cities, with the Delhi-Meerut corridor and the Namo Bharat train serving as flagship examples. These advancements in metro and regional rail infrastructure highlight Indias shift toward integrated, multi-modal urban transport solutions, ensuring more accessible and sustainable mobility options for millions of urban residents.

Expansion of Indias Metro Rail Network

Renewable Energy & Bess Sector of India⁷

Indias renewable energy sector continues its growth, driven by a strong policy framework and the countrys commitment to sustainability and energy security. Solar power has emerged as the leading contributor with close to 98 GW of installed capacity, followed by wind energy at over 48 GW, highlighting Indias abundant natural resources and effective government initiatives. The concerted push towards solar, wind, and hydro energy has significantly bolstered clean energy capacity, reducing reliance on fossil fuel imports and aligning with global climate commitments. Government-backed initiatives, including PM-KUSUM, and a focus on innovation have cultivated a thriving renewable ecosystem, firmly positioning India as a pivotal player in the global clean energy transition and on track to achieve its target of 500 GW renewable capacity by 2030.

The Battery Energy Storage Systems (BESS) sector is rapidly gaining traction, playing a crucial role in mitigating the intermittency of renewable power sources and enhancing grid stability. Technological advancements and rising investments are enabling smoother integration of renewables into the national power grid, thereby improving efficiency and reliability. Alongside BESS, Pumped Storage Projects (PSPs) are emerging as complementary solutions for large-scale energy storage. Indias BESS capacity is projected to grow significantly, reaching 47.23 GW by 2031-32, propelled by financial incentives, supportive regulations such as the Energy Storage Obligation (ESO), and dedicated national tenders. These developments mark a major stride toward ensuring affordable, reliable, and sustainable energy for the future.

Water & Irrigation

The water and irrigation sector continues to gain momentum with a strong focus on expanding access to clean water, improving sanitation, and enhancing irrigation infrastructure. The Ministry of Jal Shakti leads initiatives such as the Jal Jeevan Mission and the Swachh Bharat Mission, while AMRUT 2.0 supports urban water security with a total outlay of Rs2.99 lakh crore.⁸ Major programs like the Pradhan Mantri Krishi Sinchai Yojana and large-scale river interlinking projects including the Ken-Betwa, Eastern Rajasthan Canal, and Wainganga- Nalganga links are driving integrated water resource development. These initiatives are increasingly being executed through Public-Private Partnership (PPP) and Engineering

Procurement Contract (EPC) models, emphasizing sustainability, efficient fund utilization, and technological innovation to ensure long-term water security and agricultural resilience.

Urban Infrastructure

The urban infrastructure saw a marked push under the Ministry of Housing & Urban Affairs, with a total budget allocation of Rs82,577 crore.⁹ The government remained committed to advancing affordable housing, modernizing urban transport, and strengthening essential services like water supply, sanitation, and waste management. These initiatives are well-positioned to address the challenges of rapid urbanization, while ongoing efforts to empower urban local bodies with greater financial and administrative capacities promise to ensure sustainable and resilient urban development.

Airport Infrastructure

The airport infrastructure experienced steady momentum, driven by strategic investments and inclusive expansion. Under the National Infrastructure Pipeline, over Rs91,000 crore was earmarked for development, with more than Rs82,600 crore already deployed by November 2024 highlighting strong delivery capacity and acceleration.¹⁰ Major projects, including new terminals and greenfield airports like Noida and Navi Mumbai, are set to enhance capacity and connectivity, while regional schemes such as UDAN continue to improve access to underserved areas The sector faces challenges such as the need for regulatory reforms and efficient execution, but the overall outlook remains positive, with ongoing upgrades expected to boost economic growth, employment, and Indias positioning as a global aviation hub.

Government Initiatives Bharatmala Pariyojana¹¹

The Bharatmala Pariyojana is Indias flagship highway development programme focused on road connectivity and freight efficiency across the nation. Out of the total target of34,800 km, over 26,425 have already been awarded, and 19,826 km have already been built. The scheme is significantly contributing to the creation of a high-capacity and well-connected road network across the country. By focusing on the development of high-speed greenfield corridors, it is enhancing connectivity, reducing travel time, and supporting the growing logistics demands of the economy. This large- scale road development initiative is also Showcasing regional integration and boosting economic activities by improving access to remote and underserved areas.

National Rail Plan Vision 2030¹²

The National Rail Plan (NRP) Vision 2030 is a long-term plan to make Indias railway system future-ready by 2030. As part of its short-term goals under Vision 2024, it focuses on complete network electrification, capacity enhancement through adding more tracks, elimination of all level crossings on major routes, and speeding up the completion of major infrastructure projects.

Some important priorities include the development of new freight corridors, high-speed rail networks and checking what types of trains and engines will be needed in the future. The plan also encourages private companies to invest in train services, terminals, and railway tracks. All in all, the NRP seeks to make railways faster, cleaner, and more efficient to handle future transport needs up to 2050

Gati Shakti Master Plan¹³

PM Gati Shakti, launched in 2021, is a National Master Plan that aims to build world-class multimodal infrastructure to support Indias ambitions under the ‘Make in India vision. It integrates 16 ministries, including Railways and Roadways, and uses geospatial data and digital tools to enable better planning, coordination and execution of large infrastructure projects.

The Gati Shakti initiative has played a crucial role in enhancing project efficiency by minimizing delays, improving multimodal connectivity, and encouraging greater private sector participation. Through its integrated approach, the initiative continues to support faster implementation of road and highway projects, showcasing balanced regional development and stronger economic linkages.

National Infrastructure Pipeline (NIP)¹⁴

The National Infrastructure Pipeline (NIP) is a major government roadmap for infrastructure investment between 2020 and 2025, with a total investment of Rs111 lakh crore. It covers key areas, including roads, railways, power, telecom, urban development, and ports, with contributions from central and state governments as well as private entities.

Some of the key highlights of the NIP include tripling of investment in road development, long-term planning in the railway sector through Vision 2030 and 2050, expansion of BharatNet, delivering high-speed internet to rural areas, Port development under the Sagarmala program to enhance trade competitiveness and strengthening the power sector and affordable housing through PM Awas Yojana.

The NIP strives to stimulate economic growth, create employment opportunities and improve quality of life through large-scale infrastructure upgrades.

These drivers collectively reshape Indias infrastructure landscape, fuelling the countrys transition towards a more resilient and inclusive economy.

Company Overview

Established in 2003, H.G. Infra Engineering Limited (HGIEL) is among Indias leading infrastructure development companies, renowned for its execution excellence and strong engineering capabilities. With over two decades of experience, the company has built a stalwart reputation as a trusted EPC partner in the development of critical infrastructure.

The Company specialises in executing end-to-end Engineering, Procurement, and Construction (EPC) services and Hybrid Annuity Model (HAM) projects across transport infrastructure, renewable energy, and Battery Energy Storage Systems (BESS) including Transmission.

HGIELs operational strength lies in its vertically integrated approach. This is supported by a state-of-the-art equipment fleet and a highly skilled workforce. By embracing innovative technology and engineering innovation, HGIEL consistently delivers projects with precision, efficiency and reliability.

Opportunities and Challenges

Opportunities

Strong Order Book and

Diversification

• The Company has a strong order Book of Rs1,52,812 Million, ensuring revenue visibility and sustained growth momentum

• It is actively engaged across Roads & Highways, Railways & Metro, Solar, and Battery Energy Storage Systems (BESS), transmission, water infrastructure, airport etc. thereby minimizing sector- specific risks and capitalizing on emerging growth drivers.

Pan- India Presence

• With operations across 13 states and over 28+ ongoing projects, the Company benefits from access to diverse regional opportunities and government contracts

Drivers of Industry Growth

• The ongoing government focus on infrastructure development through initiatives such as Bharatmala, Gati Shakti, and the National Infrastructure Pipeline is a key catalyst for industry growth.

• The growing opportunities in solar and BESS segments align with Indias clean energy goals, offering new areas for expansion.

Technological Adoption

• The Company operates more than 3,000+ modern equipment units, supporting efficient project execution and cost optimization.

• It has the potential to further enhance operational efficiency through wider adoption of digital project management tools and automation

Challenges

Competitive Industry Environment

• The EPC and infrastructure sector is highly competitive, with pressure on margins due to aggressive bidding and new entrants.

• The Company maintain a healthy book-to-bill ratio (currently 2.5x) is crucial to ensure sustained growth.

Financial Leverage and Debt

• The Consolidated debt has increased mainly due to project- specific borrowings, which could impact financial flexibility if not managed prudently.

Sectoral and Policy Risks

• The Changes in government policies, funding delays, or regulatory hurdles can affect project awards and execution.

• Due to high exposure to government projects may lead to payment delays or changes in project scope.

Operational Performance

The Company delivered a robust operational performance during the financial year 2024-2025, achieving significant milestones across its infrastructure project portfolio. As of March 31, 2025, the total order book stood at Rs1,52,812 Million. Government contracts accounted for approximately 96.7% of this order book, while private sector orders contribution is 3.3% of the total Order Book as of March 2025.

Category Wise Performance

Category wise Order book Split

(Amount in Rs Million)

	Road	Rail	Solar	BESS
FY 2023-2024	84,850	26,507	12,983	-
FY 2024-2025	1,03,920	30,975	8,187	9,730

Outlook

The Company is growing with a strong momentum supported by its strategic emphasis on diversification and strong execution within its infrastructure assets. The company growing has continued to consolidate its strength in roads and highways while gradually diversifying into complementary businesses.

The Company is leveraging its robust project portfolio including high- value EPC and HAM road contracts, railway station redevelopment, and clean energy infrastructure to align with national priorities in renewable energy, rail modernization, and urban development. With a targeted order inflow of Rs11,000 crore in FY 2026 70% from roads and railways, 30% from emerging sectors, while roads remain a core strength, it is strategically diversifying into sectors like airport, water, ropeways, and transmission & distribution to enhance margins, reduce dependency on roads, and position itself as a future-ready, multi-sector infrastructure player.

Credit Ratings:

ICRA has reaffirmed and assigned AA- (Positive) for Long-term- Fund based facilities and AA- (Positive)/A1+ for Long-term/Short-term - Non-Fund Based facilities including enhanced exposure.

Key Ratios

S.No. Particulars	FY 2024-25	FY 2023-24
1. Debt-equity ratio	0.37	0.19
2. Return on equity (%)	22%	23.5%
3. Book value per share (Rs)	443	356
4. Earnings per share (Rs)	88.55	83.7
5. Debtors turnover ratio	5.28	5.70
6. Inventory turnover ratio	6.39	8.51
7. Interest service coverage ratio	7.09	12.26
8. Current ratio	1.40	1.68
9. Operating Margin (%)	15.71%	16.05%
10. Net profit margin (%)	9.5%	10.7%

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous Financial Year) in key financial ratios

Debt-equity ratio

0.37%

Net profit margin (%)

9.5%

Human Resources

The Company continued to prioritize strategic human resource management by concentrating on building its workforce capabilities and aligning employee initiatives with the companys growth objectives. It prioritized skill development, operational excellence, and a performance and accountability culture. Continued investment in employee welfare, safety training and operational upskilling continued to be a foundation of its people strategy, supporting Its resilience and execution excellence in a competitive infrastructure landscape.

Enterprise Risk Management

The company continued to strengthen its Enterprise Risk Management (ERM) framework to proactively identify, assess, and mitigate key strategic, operational, financial, and compliance-related risks. The ERM function was integrated across business units to ensure a comprehensive and dynamic risk management approach aligned with the companys long-term objectives. Key initiatives included regular risk reviews, enhanced internal controls, scenario planning, and the adoption of digital tools to monitor emerging risks. The company placed special emphasis on cybersecurity, regulatory compliance, and ESG-related risks, ensuring that risk mitigation strategies were embedded within decisionmaking processes at all levels.

Internal Control Systems and their Adequacy

The Company has established a well-structured internal audit system that supports efficient operations, regulatory compliance and asset protection. The audit committee diligently reviews internal audit reports, takes corrective action as required and maintains open communication with both statutory and internal auditors to ensure the effectiveness of internal control systems. This incredible internal audit framework ensures that the Company operates with integrity, transparency and accountability while mitigating risks and safeguarding the interests of stakeholders.

Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectations and estimations, which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual results could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent developments.