Hindustan Construction Company Ltd Management Discussions

<dhhead>ManageMent Discussion & analysis</dhhead>

IntRoduCtIon

Hindustan Construction Company Limited ("HCC" or the "Company") is a trusted player in engineering and construction, specializing in large-scale infrastructure projects. With core expertise in the design, engineering, and execution of complex projects, HCC operates across the transportation, power, marine, water, and industrial sectors. Renowned for quality, excellence and precision, the Company has consistently delivered engineering landmarks in each of its focus areas.

HCC’s contributions to India’s infrastructure development include 25% of the country’s hydropower capacity, more than 60% of its nuclear power generation capacity, 4,036 lane km of roads and expressways, 395 bridges, and 360 km of intricate tunnelling.

The National Infrastructure Pipeline (NIP) spans multiple sub-sectors, including energy, roads, railways, and urban development. It has expanded to cover over 9,288 projects, with a cumulative investment of approximately 108.88 lakh crore (around $1.5 trillion) planned through FY2025. Notably, the sectors of energy, roads, railways, and urban infrastructure together account for nearly 70% of the total projected capital expenditure.

The investment burden is expected to be shared among the central government (39%), state governments (40%) and the private sector (21%). This massive infrastructure push is poised to drive growth in allied industries, generate employment, and boost economic activity. Special emphasis is being placed on clean and renewable energy projects, along with the creation of resilient urban infrastructure – initiatives that aim to strengthen India’s global competitiveness and enhance our citizens’ quality of life.

Recognizing the urgent need for sustainable infrastructure that addresses India’s unique challenges, the focus is increasingly on solutions that mitigate global warming and support long-term decarbonization goals. Infrastructure development today must align with the needs of future generations, delivering both resilience and sustainability at scale.

With its proven expertise and longstanding leadership in the infrastructure sector, Hindustan Construction Company (HCC) is strategically positioned to capitalize on these emerging opportunities.

MaCRoeConoMIC RevIew

The Indian economy is robust and remains the fastest growing large economy despite global uncertainties and strife. The second advance estimates of national accounts data, released last week by the National Statistics Office, puts the FY2025 GDP growth at 6.5% for the full year. India is likely to meet its fiscal deficit target comfortably for the year.

In the fourth quarter, Jan-March 2025 of the financial year, GDP growth was pegged at 7.4%, which was higher than the consensus estimate of analysts prior to the NSO release of the second advance estimates. The gross value added (GVA) for the fourth quarter of 2024-25 was 6.8%.

For the full year, the private final consumption expenditure (PFCE) showed a growth of 7.2% - much higher than the 5.6% growth in PFCE clocked in the previous year. Agricultural growth was 4.6% for the financial year, significantly higher than the 2.7% in the previous year. The construction sector grew by 9.4% YoY, lower than the 10.4% growth seen in the previous year.

India has surpassed Japan to become the fourth-largest economy in the world and is projected to surpass Germany in the near future, to become the third-largest economy globally.

The Indian economy is projected to grow 6.5% for the current financial year (2025-26) as well. While this a respectable growth rate for an economy of India’s size, it is lower than the GDP growth in the past three years. And though 6.5% is a good growth rate, India will need to strive for 8% plus growth, if it wants to become a developed country by 2047.

Monetary Policy and RBI annual report

With the consumer price index (CPI) moderating, the Reserve Bank of India’s Monetary Policy Committee is expected to cut repo rates by 25 basis points for the third consecutive time this week. Economists also expect the MPC to vote for keeping the policy stance as accommodative. Bar any sudden spike in inflation, economists also expect the RBI to cut repo rates in the subsequent policy review as well, after the current one.

The RBI also released its Annual Report for 2024-25. The report shows a good growth in RBI’s balance sheet by 8.21% over the previous year. In terms of assets, gold holdings grew by 52.09%. Domestic investments also rose by 14.32% though foreign investments grew much more modestly by 1.70%. While household savings have gone up, so have household liabilities.

The RBI’s total income grew by 22.77% to reach 3.38 lakh crore. Expenditure also grew, but slower at 7.76%. RBI transferred a record surplus of 2.69 lakh crore to the union government. It also added 44,861 crore to its contingency fund.

Challenges

While the overall macro-economic picture looks good, there are more than a few challenges ahead. The first is the uncertainty caused by US President Donald Trump’s rapidly changing tariffs for different countries. To a certain extent, this will be addressed if the US-India trade deal is finalized. However, there will still be uncertainty lurking due to US-China trade and geo-political tensions. For example, China has recently put a number of restrictions on Rare Earth exports. Rare Earth Elements (REEs) are required only in small quantities by multiple industries, including critical sectors like defence, aerospace, clean energy and electronics but China dominates the supply chain, and its restrictions can severely impact India’s manufacturing ambitions. Even otherwise, India’s dependence on China for pharmaceutical APIs, electronics, and multiple other products remains on the higher side.

India needs to derisk its supply chain in areas such as EV batteries and pharmaceuticals from China shocks and this will take a few years at least.

There are other challenges as well. The sanctions on Russia by the US could pressure India’s crude oil procurement. While there are enough crude oil suppliers globally willing to sell more to India, Russian oil is cheaper than its competitors.

Beyond that, there are the older challenges – labour productivity, lack of employment growth, and rising inequality in incomes. The Indian population’s dependence on welfare must be weaned off while simultaneously addressing wage gaps between certain segments of the population.

There are two other serious challenges on the horizon. The first is the rise of Artificial Intelligence (AI), which while it increases productivity, is expected to have a major impact on white collar jobs in the country. AI is expected to be overall beneficial to India’s growth trajectory, according to multiple studies by consultancies but it will also exacerbate unemployment issues and potentially, income inequality in the country in the short term.

The other big problem is global warming and climate change which is creating uncertainties in cropping and harvesting seasons and also causing multiple extreme weather events for most countries around the globe. The northern plains in India are particularly likely to bear the brunt of global warming and there are warnings from serious researchers about its effects on both agricultural as well as human productivity.

While India has been moving rapidly in meeting its climate goals, many other nations and notably those in the West continue to disappoint in meeting their commitments.

In conclusion, India’s macro-economic indicators are stable but there are material challenges ahead due to a volatile geo-political landscape, the advent of game changing technologies such as artificial intelligence and finally, the increased threat of global warming.

InfRastRuCtuRe and ConstRuCtIon In IndIa

Over the past decade, India has embarked on an ambitious journey of infrastructure development to stimulate economic growth. To reinforce this momentum, the government has allocated 11.11 lakh crore towards capital expenditure in FY2025, representing 3.4% of GDP – a more than fivefold increase compared to 10 years ago. Notably, the majority of this surge has occurred in the past five years, with capital expenditure growing at an annual rate of 27% during this period.

The government’s consistent focus on creating world-class, high-quality infrastructure assets is evident, with the share of the Centre’s capex dedicated to infrastructure rising from 28% in FY2014 to approximately 60% in FY2025. Looking ahead, the government assures continued emphasis on infrastructure, supported by strong fiscal commitment alongside other development priorities.

Infrastructure development is critical to achieving India’s aspiration of becoming a US$10 trillion economy by 2032. Key initiatives such as the National Infrastructure Pipeline (NIP), Make in India, and the Production-Linked Incentive (PLI) scheme have been launched to accelerate growth in the sector. Historically, over 80% of infrastructure spending has been directed towards transportation, electricity, water, and irrigation.

Significant progress has been made over the last decade, including:

National Highway (NH) network expansion by 1.6 times.

94% electrification of the rail network.

Operationalization of 100 Vande Bharat trains.

Modernization of 1,318 railway stations.

Metro network expansion nearly fourfold to nearly 1000 km serving 23 cities – third largest in the world.

Operationalization of 84 airports.

Increase in power generation capacity by 70%.

These advancements have been catalyzed by flagship programs such as:

National Infrastructure Pipeline (NIP) – 111 lakh crore

National Monetization Pipeline (NMP) – 6 lakh crore

PM Gati Shakti National Master Plan

Sectoral initiatives like Bharatmala, Sagarmala, UDAN, Dedicated Freight Corridors, High-Speed Rail projects, BharatNet, Jal Jeevan Mission, AMRUT, and Smart Cities Mission.

Additionally, Phase IV of the PMGSY aims to connect 25,000 rural habitations.

At the sub-national level, state governments have also expanded their capital investments significantly, reaching 8.7 lakh crore in 2024 – a 2.5 fold increase since 2015. Central support has been extended through interest-free loans under special assistance schemes, with allocations exceeding 1 lakh crore in each of the last two years, and 1.5 lakh crore earmarked for FY2025, particularly targeting the implementation of next-generation reforms. Special attention is being given to the development of economically weaker states such as Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh through investments in industrial nodes, airports, medical colleges, and sports infrastructure.

Financing the Infrastructure Push: Infrastructure development in India has largely been funded through government grants and borrowings from domestic and international markets, including Multilateral Development Banks (MDBs). Recognizing the limitations of traditional financing, the government is actively promoting innovative models such as Public-Private Partnerships (PPPs) and structured financing instruments. Recent policy initiatives aim to enhance viability gap funding (VGF) for infrastructure projects and introduce a market-based financing framework. Building a robust pipeline of investment-ready, bankable projects is key to unlocking greater private sector participation.

Economic Multiplier Effect: Capital investment in infrastructure has a substantial multiplier effect, with every rupee spent yielding a return of 2.5 to 3.5 to GDP, as per NIPFP estimates. Infrastructure creation significantly enhances the productivity of agriculture, manufacturing, services, and tourism sectors. New initiatives like the rollout of Digital Public Infrastructure (DPI) applications across agriculture, logistics, MSMEs, education, health, and urban governance are expected to further boost the economy. Development of e-commerce export hubs under PPP mode and "plug and play" industrial parks near 100 cities will also drive organized growth in manufacturing and services.

Union Budget 2025-26 Highlights

Total infrastructure capital investment outlay: 11.21 lakh crore (US$128.64 billion), 3.1% of GDP.

Allocation for Railways: 2.65 lakh crore (US$31.43 billion).

Allocation for Ministry of Road Transport and Highways: 2.87 lakh crore (US$32.94 billion), with 35,000 crore (US$4.02 billion) targeted from private sector investment..

Sectoral Progress: India’s infrastructure sector is poised for robust growth, with US$2.5 trillion (~ 8.35 lakh crore) investments planned by 2032 to support the government’s vision of a $10 trillion economy. The PM Gati Shakti Master Plan has identified eight major projects, seven under Railways and one under MoRTH, to improve connectivity in challenging terrains.

India has the world’s second-largest road network. The National Highway length has expanded from 65,569 km in 2004 to 1,46,145 km in 2024. Flagship programs like Bharatmala Pariyojana and the Special Accelerated Road Development Programme for the North-East Region (SARDP-NE) continue to strengthen this network.

Strategic Focus Areas: The Union Budget outlines seven key priorities to reach the US$5 trillion economy target. Emphasis is placed on enhancing private sector investment, generating rural employment, and boosting consumption, particularly through the development of roads, shipping, and railways.

India’s broader infrastructure vision for FY2024–30 envisions a cumulative investment of US$1.723 trillion, with a strategic focus on power, roads, renewable energy, and electric vehicles.

India’s road and highway sector delivered a mixed performance in FY2025, marked by strong progress in construction and capital spending, even as challenges persisted in project awards and asset monetization. The National Highways Authority of India (NHAI) exceeded expectations by constructing 5,614 km of national highways, surpassing the target of 5,150 km, a significant milestone in the sector’s growth story. The total road network currently stands at over 6.7 million kms which is the second-largest road network globally, after the United States. This includes ~1.5 lakh km of national highways, ~1.8 lakh km of state highways, ~4,500 km of access controlled express ways, ~6 lakh km of district roads and ~4.5 million km of rural roads. NHAI’s capital expenditure reached a record high of over 2.5 lakh crore, exceeding the budgeted 2.4 lakh crore and registering a 21% increase over the previous year. However, despite these achievements, the pace of new project awards remained subdued. As of February 2025, only 4,874 km of highway projects were awarded, nearly identical to the 4,872 km awarded the previous year, signalling stagnation in fresh project initiation.

In the Union Budget 2024–25, the Ministry of Road Transport and Highways received an allocation of 2.78 trillion, a 2.8% increase over the previous year, reaffirming the government’s focus on sustained infrastructure development.

While FY2025 witnessed headwinds in project awards and monetization, the sector displayed resilience through strong construction performance and robust capital investment. The outlook remains positive, backed by continued fiscal support and strategic initiatives aimed at driving future growth and expanding India’s transport infrastructure. urban Infrastructure

Urban India’s infrastructure needs are projected to require US$840 billion in investments over the next 15 years. India now boasts the third-largest metro rail network in the world, covering over 1,000 km across 11 states and 23 cities and another 919 km under construction across 26 cities. Mumbai’s monorail, at almost 20 km, ranks as the third longest globally after China and Japan.

India has set a bold target of achieving net-zero carbon emissions by 2070 and aims to develop 500 GW of renewable energy capacity by 2030. To support this energy transition, the government has introduced several progressive policy measures, including the promotion of modular nuclear reactors, advanced thermal power plants, and energy audits for MSMEs to enhance efficiency. Urban sustainability efforts such as Transit-Oriented Development (TOD) plans in 14 major cities and large-scale urban redevelopment projects are also expected to make significant contributions toward reducing emissions and achieving climate goals.

With the Indus Waters Treaty (IWT) under abeyance, India is recalibrating its strategy to accelerate hydropower development in the western Himalayan region. The treaty had long constrained the country’s hydro potential in Jammu & Kashmir and Ladakh. Now, with the IWT on uncertain footing, India is actively pushing forward pending and strategically significant hydropower projects. This hydro push not only aims to bolster energy security and meet climate goals through renewable generation but also serves as a geopolitical assertion of India’s sovereign right to utilize its water resources more effectively within the treaty’s framework or beyond it, should abrogation become inevitable. At the same time, India being a lower riparian state in the North-Eastern part of India, fast track development of hydro projects especially in Arunachal Pradesh is critical for Energy security, Irrigation and to counter the threat of China building large storage projects in the upstream side of the river.

India’s hydropower sector demonstrated robust performance in FY2025, driven by increased generation and strategic expansion initiatives. An extra budgetary support of 12,461 crore has been earmarked for enabling infrastructure for upcoming hydropower projects. While hydropower development faces challenges such as complex terrains and long gestation periods, it remains vital for the socio-economic development of remote regions and for managing riparian rights with neighbouring countries to the east and west.

Between April 2024 and February 2025, hydropower generation reached 139,780 million units (MUs), a 10% growth over the

Pumped Storage Projects (PSPs) have emerged as a strategic pillar in India’s energy transition, offering a reliable solution for large-scale energy storage and grid stability. As of 2025, India has approximately 4,800 MW of operational pumped storage capacity. The Central Electricity Authority (CEA) has identified over 103 GW of potential PSP capacity across the country, and more than 30,000 MW is currently in various stages of planning and construction. Private sector participation in PSPs has significantly increased, with major developers announcing large-scale projects in Maharashtra, Madhya Pradesh, Rajasthan, and Andhra Pradesh. These developments are supported by favourable policies, faster environmental clearances, and the recognition of PSPs as renewable energy storage assets by the Ministry of Power. Moreover, states are facilitating land acquisition and incentivising investments to attract developers. However, challenges such as high capital costs, complex regulatory approvals, and environmental concerns in ecologically sensitive zones persist. By 2030, India aims to commission 20-30 GW of PSP capacity, making it a global leader in hydro-based energy storage. The long-duration storage capability, flexibility, and technological maturity of PSPs position them as an essential component of India’s strategy for energy security and decarbonisation.

Despite persistent challenges, the sector made notable strides in FY2025 and is positioned for accelerated growth. Hydropower is poised to play a crucial role in meeting India’s renewable energy targets, strengthening energy security, and supporting a balanced and resilient energy mix for the future.

At the same time, India has unveiled a landmark plan to privatise its nuclear power sector, proposing amendments to allow

127,038 MUs generated in the same period the previous year. The installed hydropower capacity rose to approximately 46.97 GW, which includes 5.10 GW from small hydro projects and an additional 0.44 GW under development. Currently, India is constructing 15 GW of new hydropower projects, aiming to increase its overall hydro capacity from 42 GW to 67 GW by 2031–32, representing a 50%+ growth. At the same time, Pumped Storage Projects (PSPs) are gaining momentum, with 2.7 GW under construction and plans to scale up to 55 GW by 2031–32.

private and foreign investors to hold up to 49% equity in nuclear plants. It has launched a 20,000 crore Nuclear Energy Mission for Small Modular Reactors (SMRs) and operationalise at least five indigenous SMRs by 2033 – all aimed at expanding capacity to 100 GW by 2047.

Railways

The National Rail Plan (NRP) 2030 is a visionary framework developed by the Ministry of Railways to build a future-ready, efficient, and sustainable railway system by 2030. The plan aims to significantly enhance capacity, modernize infrastructure, and increase the share of railways in freight transport to 45%, thereby reducing the logistics burden on roads. Key focus areas include the development of dedicated freight corridors, high-speed passenger rail, and multimodal integration with roads, ports, and logistics hubs. The NRP also prioritizes 100% electrification, a transition toward net-zero carbon emissions, and the digital transformation of railway operations to ensure greater safety and efficiency.

To support these goals, the Railway Budget for 2025–26 allocated a record 2.65 lakh crore in capital expenditure, the highest ever for Indian Railways, with approximately 1.92 lakh crore already spent by January 2025. During FY2025, Indian Railways renewed 6,450 km of track and replaced 8,550 turnouts, resulting in improved operational performance. Train speeds were increased to 130 km/h over 2,000 km, while 3,210 route kms (Rkm) of track were electrified, raising the electrification of the broad-gauge network to 97%, in line with the 100% target.

Under the PM Gati Shakti initiative, 434 railway infrastructure projects valued at 11.17 lakh crore have been identified across three major corridors to enhance connectivity and network efficiency. Looking ahead, the government plans to invest between 2.9 trillion and 3 trillion in FY2026 for continued railway modernization, including the rollout of 400 high-speed Vande Bharat trains by March 2027, further cementing railways’ role as a key enabler of India’s sustainable growth and logistics transformation.

In FY2025, India’s water and irrigation sector saw significant advancements, driven by increased irrigation coverage, improved water-use efficiency, and strategic investments in sustainable practices. From FY2016 to FY2021, the area under irrigation grew from 49.3% to 55% of the Gross Cropped Area (GCA). Similarly, irrigation intensity increased from 144.2% to 154.5%, reflecting better utilization of irrigation resources. The "Per Drop More Crop" (PDMC) initiative has played a key role in promoting water-use efficiency, particularly through micro-irrigation technologies like drip and sprinkler systems. Between FY2016 and FY2024, approximately 90 lakh hectares were brought under micro-irrigation.

The Union Budget for 2024–25 further reinforced the commitment to water conservation and efficient irrigation, with a focus on reusing treated water and integrating renewable energy sources, such as solar power, into irrigation systems. Looking ahead, the government is expected to continue or increase funding for water conservation and irrigation efficiency programs, particularly targeting the expansion of micro-irrigation and the promotion of sustainable agricultural practices.

India’s National River Linking Project (NRLP), conceived in 1980 under the National Perspective Plan, aims to interconnect around 30 river links across both Himalayan (14) and Peninsular (16) basins using a vast network of nearly 3,000 dams, canals, tunnels, and reservoirs. The flagship Ken–Betwa Link Project, launched in 2021 with an estimated 44,605 crore investment, will transfer surplus water from the Ken to the drought-prone Betwa basin, serving over 10 lakh ha of farmland, supplying drinking water to 62 lakh people, and generating ~130 MW of

Ports

India’s ports are poised to expand their capacity by 500–550 million tonnes per annum (MTPA) each year from FY2023 to FY2028, with a focus on petroleum, oil, lubricants, coal, and containerized cargo. The Indian ports infrastructure market is anticipated to grow at a compound annual growth rate (CAGR) of 7.36%, reaching $10.65 billion by 2030. Additionally, the World Bank forecasts India’s growth at 6.3% for FY2026, which could impact port traffic and investment trends.

water and Irrigation clean energy. While several other links like Par–Tapi–Narmada and Damanganga–Pinjal have DPRs in place, most remain in the feasibility stage awaiting political consensus and environmental clearance. The project will enhance irrigation, boost rural livelihoods, bolster water security, mitigate floods and droughts, and open freshwater navigation corridors. The NRLP thus embodies one of India’s most ambitious and contested efforts to reshape its water landscape for climate resilience and agricultural transformation.

Overall, FY2025 marked a step forward for India’s water and irrigation sector in terms of sustainability and efficiency. While challenges persist, the ongoing emphasis on innovation, policy support, and farmer engagement is poised to drive further improvements in the years to come.

HCC: stRategIC develoPMents

HCC has set its long-term strategic goals by identifying key focus areas that leverage the Company’s proven strengths in executing complex infrastructure projects. These goals are aligned with its core competencies in engineering excellence, project management, and innovation. At the same time, the Company is actively working to enhance its existing capabilities by embracing new technologies, entering high-growth sectors, and building a future-ready talent pool. Parallelly, HCC is prioritizing financial resilience by optimizing operations, monetizing non-core assets, and strengthening its balance sheet to support sustained growth and long-term value creation.

Business development – Core Business expansion

EPC projects remain HCC’s core strength, with proven expertise in conceptualizing, designing, executing, and commissioning large, complex works across transportation, power, and water & irrigation sectors. India continues to be the Company’s primary market, with a focused approach towards leveraging its strong geographical presence to tap into emerging opportunities.

Historically, nearly 100% of HCC’s order book consisted of government clients. However, with the growing private sector investment in Pumped Storage Hydro (PSH) projects, HCC is now actively engaging with leading private developers for the construction of these projects. Recently, HCC was appointed by Tata Power to execute a PSH project in Maharashtra. Given the close similarity between PSH and conventional hydro projects, HCC’s deep expertise and proven capabilities in the hydro sector position it strongly to contribute to this emerging segment.

The recent upgrade of HCC’s credit rating to investment grade ("CARE BBB-; Stable") marks a key milestone in its financial recovery and operational stability. This improved rating reflects enhanced debt servicing capacity and financial discipline, which is expected to reduce borrowing costs, improve access to capital, and strengthen stakeholder’s confidence. It also enhances HCC’s credibility with clients, partners, and investors, reaffirming its leadership in the infrastructure sector. The company is selectively focusing on new geographies to undertake projects in its core sectors.

HCC’s business development strategy focuses on consolidating its order book in existing geographies while targeting high-value projects in less competitive sectors. In FY2025, the Company secured three contracts totalling 5,692.6 crore (HCC’s share: 3,472 crore). It is also the lowest bidder in projects worth 3,513 crore, where contracts are yet to be signed. Additionally, HCC has submitted bids worth 22,760 crore currently under evaluation and has identified a robust project pipeline of 70,000 crore across railways, roads, metros, and urban infrastructure. The Company is also exploring strategic partnerships to participate in road PPP projects.

HCC continues to engage proactively with the government on policy formulation and plays an active role in shaping the infrastructure sector through its involvement in leading industry bodies. Mr. Arjun Dhawan, Vice Chairman & Managing Director of HCC, has been elected as a National Council Member of the Construction Federation of India (CFI) and contributes to the Confederation of Indian Industry’s (CII) infrastructure initiatives.

Mr. Ajit Gulabchand, Chairman of HCC and a founding member and long-serving President of CFI for over 24 years, has been honoured with the title of President Emeritus, in recognition of his enduring leadership and contribution to the Indian construction industry.

In addition to his industry roles in India, Mr. Arjun Dhawan serves as an active member of the World Economic Forum’s Engineering & Construction Industry Strategy Officers group and Global Commission on Nature-Positive Cities. This high-level platform brings together global leaders, including city mayors, business executives, international organisations, NGOs, and academic institutions, to champion nature-positive urban transformation. The Commission serves as a trusted forum for addressing real-time challenges to sustainable urbanisation, offering actionable guidance, sharing global best practices, and identifying innovative financing mechanisms for nature-based solutions. Mr. Dhawan also collaborates with various World Economic Forum communities and participates in global dialogues and platforms that foster public-private collaboration for resilient and inclusive cities.

Capital Raising and liquidity Improvement

HCC further strengthened its financial position with the successful completion of a 600 crore Qualified Institutional Placement (QIP) in December 2024. The offering received an overwhelming response and was fully subscribed within hours of launch. Shares were issued at a price of 43.01, including a premium of 42.01 per share. The QIP attracted a diverse set of top-tier institutional investors, both domestic and global, reflecting strong market confidence in HCC’s strategic direction and long-term growth potential.

This marks HCC’s second successful capital raise in FY2025, following the 350 crore Rights Issue completed in April 2024, which was oversubscribed by 2.5 times. The proceeds from the QIP are being deployed to support business expansion, strengthen working capital, and reduce debt, in line with the Company’s strategy to enhance financial flexibility and balance sheet health.

To further improve liquidity, HCC is selectively pursuing out-of-court settlements with clients to unlock long-standing disputed receivables. The Company has also successfully prepaid the entire fund-based debt of three lenders by utilizing arbitration award proceeds deposited in court. HCC remains committed to continuing similar transactions as part of its ongoing efforts to deleverage and meet its debt obligations ahead of schedule.

strategic divestments and sale of non-Core assets

In line with HCC’s strategic focus on its core EPC business, and pursuant to a Court-approved Scheme of Arrangement, the Company has divested its stake in Steiner AG (SAG) held through its wholly owned subsidiaries, HCC Mauritius Investment Limited (HMIL) and HCC Mauritius Enterprises Limited (HMEL) to Uniresolv SA, an affiliate of m3 Immobilier Holding SA, a leading player in Geneva’s real estate and financial sectors.

This transaction enables Steiner Development AG (SDAG), a key subsidiary of SAG, to begin a new chapter as a direct subsidiary of m3 Immobilier, with ambitions to prepare for a future Swiss IPO. HCC stands to benefit from SDAG’s success through potential earnout liquidity of up to 205 crore, tied to SDAG’s future performance.

IGN=JUSTIFY>At closure, HCC retained ownership of two SAG subsidiaries – H56 Immo AG (formerly Steiner Eagle AG) and Steiner India Ltd (SIL) – which collectively hold approximately 1,174 crore in contractual receivables and claims, and 43 crore in Indian land assets. These assets are expected to be monetised over the next five years. m3 will actively support HCC in realising value from SEAG’s assets, with HCC agreeing to share up to 205 crore with m3 from any recoveries.

The partnership between HCC and the m3 Group reflects a collaborative approach to advancing each company’s strategic priorities

The company has also sold a land parcel in Panvel, Maharashtra, for a total consideration of 95 crore, as part of its ongoing strategy to monetize non-core assets and strengthen its balance sheet by reducing debt.

accelerated deleveraging

The Company is actively executing an accelerated deleveraging strategy to enhance its financial strength. In addition to the scheduled debt repayment of 530 crore in March 2025, it has also successfully prepaid the entire outstanding Optionally Convertible Debentures (OCDs) amounting to approximately 134 crore, held by one of its key lenders. Since the implementation of the Resolution Plan, the Company has cumulatively repaid around 1,462 crore to its lenders, representing nearly 32% of the principal debt outstanding at the time the Plan was adopted.

Looking ahead, the Company is exploring further prepayments to lenders through mechanisms such as court-backed bank guarantees, claim conciliations, realization of arbitration awards, and potential capital market fundraisers. These initiatives are aimed at further reducing debt and reinforcing the Company’s balance sheet.

RIsk ManageMent:

HCC is committed to the highest standards of business conduct and governance, with a strong focus on risk management as a core pillar of its corporate strategy. A robust risk management framework is integral to safeguarding the company’s assets, ensuring regulatory compliance, and achieving sustainable business growth.

objectives of the Risk Management Policy:

Timely identification and response to risks and opportunities

Protection of the company’s assets and business interests

Support for sustainable growth and protection of shareholder value

Compliance with applicable legal and regulatory requirements

All employees are actively engaged in managing risks within their respective functions and areas of responsibility.

Risk Management Process:

1. Risk Identification: Risks are identified at all organizational levels.

2. Risk Prioritization: Risks are assessed based on likelihood and potential impact.

3. Mitigation Planning: Specific action plans are developed to address identified risks.

4. Regular Review: Mitigation strategies and risk levels are reviewed periodically.

The overall risk assessment is based on the combination of the probability of occurrence and the magnitude of potential impact. This gross risk is managed by implementing control measures, either through new mitigation strategies or by strengthening existing controls. Operating teams are responsible for executing these mitigation plans.

Risk Management framework:

The framework operates at two distinct levels:

1. Enterprise Risk Management (ERM):

Focuses on risks at the organizational level, including overarching business processes, systems, and strategic action plans.

2. Project Level Risk Management:

Addresses risks throughout the project lifecycle from tendering and planning to execution and handover. Risks are categorized into specific areas such as:

Operational

Financial

Contractual

Order book-related

Project cost and schedule overruns

These are documented through activity log registers and mitigation reports, maintained and monitored by respective functional heads.

governance and oversight:

The Risk Management Committee oversees the framework and meets at least twice a year to review the policy, structure, and effectiveness of mitigation strategies. As of March 31, 2025, the Committee consists of 4 members. During FY2025, the Committee met on July 04, 2024, and December 16, 2024.

For information on Committee membership, please contact the Secretarial Department (Mr. Nitesh Jha). Additional details are available in the relevant section of the Annual Report.

oPeRatIons RevIew

HCC’s core business centers on providing Engineering and Construction (E&C) services for large-scale infrastructure projects across key sectors, including power (hydro, nuclear), transportation (roads, bridges, metros, and ports), water (irrigation and water supply), and industrial infrastructure. In FY2025, the Company delivered strong performance across all sectors and regions, in line with India’s broader economic recovery.

HCC reported a turnover of 4,801.1 crore, driven by the accelerated execution of multiple projects across the country. The Company continues to leverage advanced technologies to boost productivity and operational efficiency, while maintaining a strategic focus on the timely and profitable execution of its order book, effective working capital management, and optimized fund utilization.

HIgHlIgHts fY2025

In FY2025, the project delivery has improved with various initiatives taken during the year. Key achievements include:

HCC achieved significant milestones with the receipt of completion certificates for five major projects: Rajasthan Atomic Power Project – Units 7 & 8, the Integrated Nuclear Recycle Plant (INRP) of BARC at Tarapur, the Anji Khad Cable Stay Bridge and the T49A tunnel project in Jammu & Kashmir, and Delhi Metro’s DC06 package. In February 2025, trial runs commenced for Phase 2 of the Mumbai Metro Line 3, marking another key milestone. In April 2025, the Company successfully synchronized Unit 6 (250 MW) of the Tehri Pumped Storage Project in Uttarakhand. Additionally, the Vishnugad Pipalkoti Hydropower Project has completed 5.8 km of TBM tunnelling out of a total 12.1 km. Two other marquee projects, the Mumbai Coastal Road and the Parwan Dam in Rajasthan, are nearing final completion.

Worli Sea Link. The launch, along with three major interchanges, has significantly enhanced connectivity to key areas such as Worli, Prabhadevi, Lower Parel, and Lotus Junction. This critical infrastructure is expected to reduce travel time from South Mumbai to Terminal 2 of the international airport from nearly two

BusIness develoPMent

HCC’s business development strategy focuses on consolidating our order book in existing geographies and focusing on high value jobs in spaces of bridges, tunnels, urban infra & hydropower. The Company’s order book stood at 11,852 crore as of March 31, 2025. The company is also the lowest bidder in projects worth 3,513 crore, where contracts are yet to be signed. Another 30,950 crore worth bids have been submitted, which are under evaluation. Furthermore, a bid pipeline of 46,440 crore has been identified for future growth.

PRoJeCt PeRfoRManCe

The Company has demonstrated a marked improvement in project performance, driven by enhanced execution capabilities, streamlined project management processes, and the adoption of digital tools for real-time monitoring. The company achieved faster project turnaround times, reduced execution bottlenecks, and improved resource utilization across key sites. This operational efficiency has led to timely milestone achievements, better cash flow generation, and stronger client confidence. HCC’s focus on disciplined execution and proactive risk management continues to strengthen its track record in delivering complex infrastructure projects on schedule and within budget.

PRoJeCts uPdate

transportation:

The transportation sector accounts for approximately 53% of HCC’s order backlog, with steady progress across several marquee projects:

On January 26, 2025, Maharashtra Chief Minister Devendra Fadnavis inaugurated the northbound ‘Bow Arch String Girder’ bridge, which connects the Mumbai Coastal Road to the Bandra-hours to just 30 minutes.

In Jammu & Kashmir, the Anji Khad Cable Stayed Bridge, India’s first cable-stayed railway bridge, has reached a major milestone. All major civil works, including track laying, approach roads, and associated activities, have been completed, along with successful trial runs. The 193-metre-high pylon is tallest in the country. A comprehensive structural health monitoring system with real-time alarms and accessible inspection platforms ensures ongoing safety and maintenance.

On January 5, 2025, Prime Minister Narendra Modi inaugurated the first section of the 112.32 km Delhi Metro Phase 4 project. This included a 2.03 km underground extension of the Magenta Line (Line-8) from Janakpuri West to Krishna Park Extension, featuring a new station constructed by HCC.

In Mumbai, the trial run for Phase 2 of Metro Line 3 was conducted in February 2025 for data collection. Finishing works at all four underground stations built by HCC are in advanced stages of completion.

The HCC–KEC Joint Venture successfully completed the launch of all 624 U-girders on 15 March 2025, for the 7.945 km elevated corridor of Chennai Metro Line 4’s Package ECV-02. A total of 3,202 precast components, including U-girders, pier arms, portal beams, and pier capshave been erected, along with the launch of two Open Web Girders (OWGs) across the Tambaram–Maduravoyal Bypass. Package ECV-02 forms a key part of the 26.1 km Line-4 corridor from Light House to Poonamallee Bypass, under the larger 116.1 km Chennai Metro Phase 2 project.

These developments reflect HCC’s execution capabilities in delivering high-impact transportation infrastructure across India.

Hydro Power:

Hydropower projects account for 29% of HCC’s order backlog, with project performance showing significant improvement, supported by proactive client interventions.

At the Tehri Pumped Storage Project (4x250 MW) in

Uttarakhand, HCC successfully synchronized Units #5 and #6 with the National Grid. This marks a major milestone, as the project is India’s first pumped storage facility equipped with variable speed turbines.

At the Vishnugad Pipalkoti Hydropower Project (VPHEP), the Head Race Tunnel (HRT) has reached a cumulative excavation of 5,991 meters, with 5,604 meters completed using a Tunnel Boring Machine (TBM). The 9.86-meter diameter Double Shield TBM was launched on 14 July 2023, following extensive planning and coordination led by senior project stakeholders.

nuclear Power:

HCC has successfully completed the civil works for the front-end blocks of the Nuclear Recycle Blocks (NRB) at Bhabha Atomic Research Centre (BARC), Tarapur. Handed over to BARC’s Nuclear Recycle Board on 30 June 2024, the project represents a significant step forward in advancing India’s closed nuclear fuel cycle. It stands as a testament to HCC’s engineering expertise, strict adherence to global safety standards, and excellence in execution. This achievement reinforces India’s commitment to sustainable energy and highlights its strategic drive toward energy self-reliance.

Construction activities at the FRFCF, a critical component of India’s nuclear fuel cycle infrastructure, are progressing on schedule. Key civil works for the fuel reprocessing plant building, substation building, and associated support structures are underway. Structural works, including the casting of high-precision cell walls, beams, and columns, are in progress, adhering to stringent nuclear-grade quality standards. The project plays a vital role in supporting India’s fast breeder reactor programme by enabling the closed-loop recycling of spent nuclear fuel. Upon completion, the FRFCF will significantly enhance India’s capacity for sustainable and self-reliant nuclear energy production.

water supply and Irrigation:

The tunnel work for the Parwan Gravity Dam Project in

Rajasthan has been fully completed, while the dam construction is in its final stages. This ambitious multipurpose project aims to address the severe water scarcity in southeastern Rajasthan by providing irrigation, drinking water, and industrial water supply, along with contributing to flood control measures.

ManageMent sYsteMs

HCC has implemented an Integrated Management System (IMS) that aligns with international standards - ISO 9001:2015 (Quality), ISO 14001:2015 (Environment), and ISO 45001:2018 (Occupational Health & Safety). This integrated approach ensures consistency and efficiency across all operations.

Guided by its Mission, Vision, IMS Policy, and defined objectives, HCC is committed to delivering excellence to its clients. Regular Management Review Meetings (MRMs) and a structured program of internal and external audits across project sites and the head office ensure effective implementation of the IMS.

In FY2025, HCC successfully completed an ISO surveillance audit, covering key functions at the head office and selected projects in its core sectors: Hydro, Transport, and Nuclear. The audit reaffirmed HCC’s compliance with applicable ISO standards

Throughout the year, HCC observed several National and International awareness days across all sites to reinforce its commitment to quality, safety, health, and environmental responsibility. These included:

National Safety Day

World Quality Day

World Environment Day

World AIDS Day

World Water Day

Activities such as awareness campaigns, First Aid and Fire Fighting training, plantation and cleanliness drives, field games, and recognition of exemplary worker contributions helped strengthen the QHSE culture.

Industry Recognitions in fY 2024–25:

April 2024: Certificate of Appreciation from DMRC to the DC-06 Project for achieving 7 million Safe Man-hours.

September 2024: Safety & Quality Forum Award 2024 by the Institution of Engineers (India) to the DC-06 Project for innovative safety and quality management practices.

December 2024: Certificate of Appreciation from BARC Tarapur for achieving 33.72 million Safe Man-hours.

March 2025: Certificates of Appreciation from the National Safety Council awarded to Vishnugad Pipalkoti HEP, Mumbai Metro Line-3, and BARC Tarapur for notable achievements in

Occupational Safety & Health during 2024. keY suBsIdIaRIes

HCC InfRastRuCtuRe CoMPanY ltd.

HCC Infrastructure Company Ltd. (HICL) serves as the investment and development arm of HCC for infrastructure projects implemented under the Public Private Partnership (PPP) framework. The company undertakes projects through various models such as Build-Operate-Transfer (BOT), Build-Own-Operate-Transfer (BOOT), and Hybrid Annuity Model (HAM) playing a pivotal role in shaping long-term infrastructure assets across the country.

HICL is a debt-free entity, reflecting prudent financial management and a conservative capital structure. Its revenue streams include income from overloading charges collected at operational highway assets such as Baharampore-Farakka Highways Ltd. (BFHL) and Farakka-Raiganj Highways Ltd. (FRHL). In addition, HICL anticipates further inflows from pending arbitration and claim awards related to Raiganj-Dalkhola Highways Ltd. (RDHL), enhancing its financial robustness and reinforcing its position in the infrastructure development space.

HuMan ResouRCes (HR)

HCC, a pioneer in infrastructure development, has long been an employer of choice in the Indian construction industry. We value our people as our greatest asset and have consistently evolved our work culture, systems and policies to support their growth and well-being.

With a total workforce of more than 7500, we are committed to ensure diversity across gender, region and ability. To strengthen our talent pool, we continue to hire top talent from premier engineering and management institutes.

Our inclusive approach extends to building a friendly infrastructure at project sites and offering young professionals cross-functional exposure to prepare them for future leadership roles. We have one of the highest retention rates among campus hires.

We invest heavily in capability building through a mix of technical, functional and behavioural learning and development programs. These are delivered in collaboration with domain experts and specialised institutions. We have a robust performance management system built on SAP SuccessFactors. This helps us in ensuring an objective assessment of employees thus recognizing and retaining top performers.

Employee engagement remains central through celebrations of festivals, national days, milestones and achievements across sites. Our POSH policy promotes a respectful and gender-neutral workplace, reinforced by regular awareness sessions.

HCC’s continuing focus is on building talent, fostering inclusion and preparing the organization for the future.

fInanCIal RevIew

table 1: abridged Profit and loss account of HCC

( crore)

	Standalone
	FY 25	FY 24
Income from Operations	4,801.1	5,042.8
Other Income	98.0	125.3
Total Income	4,899.1	5,168.1
Construction Cost(incl. material)/ Other Exp.	3,551.4	4,030.3
Employees Cost	316.7	325.8
EBITDA (excluding Other Income)	933.0	686.7
EBITDA margin (%) (excluding Other Income)	19.43%	13.62%
Finance Cost	506.4	542.9
Depreciation	64.7	67.8
Exceptional items - Gain / (Loss)	-	168.6
Profit / (Loss) Before Tax and Exceptional Items	460.0	201.3
Profit / (Loss) Before Tax after Exceptional Items	460.0	369.9
Tax expense	375.1	191.3
Profit / (Loss) After Tax	84.9	178.6
Other comprehensive income / (loss)	(7.1)	21.4
Total Comprehensive Income (after Tax)	77.8	200.0

key financial Ratios

	Standalone
	FY 25	FY 24	Reason for variance above than 25%
Debtors Turnover Ratio (in times)	1.74	1.95	The change is less than 25%
Inventory Turnover Ratio (in times)	24.68	24.18	The change is less than 25%
Interest Coverage Ratio (in times)	2.40	1.70	The increase in EBITDA, driven by operational efficiency and other measures, helped offset the overall decline in operating income
Current Ratio	1.31	1.11	The change is less than 25%
Debt Equity Ratio	0.79	1.92	Owing to reduction in debt and increase in net worth on account of profit for the year and capital raised during the current year
Operating Profit Margin (%)	19.43	13.62	The increase in EBITDA, driven by operational efficiency and other measures, helped offset the overall decline in operating income
Net Profit Margin^ (%)	1.77	3.54	Though Operating EBITDA is improved, but due to onetime hit on account of adoption of new income tax regime, net profit after tax is lower
Return on Net Worth	4.47	19.71	Despite improved Operating EBITDA, net profit after tax declined due to a one-time impact from the new income tax regime. Higher capital infusion during the year increased net worth, leading to a lower return on net worth

^ Before Other comprehensive income/(loss), net of tax

CoRPoRate soCIal ResPonsIBIlItY

At HCC, excellence in business is intrinsically linked with a commitment to community welfare and sustainable development. While executing some of India’s most complex infrastructure projects, HCC embraces responsible practices that enhance the well-being of communities both in the immediate vicinity of its operations and beyond.

In accordance with Section 135 of the Companies Act, 2013 and Schedule VII, HCC has formalized a Corporate Social Responsibility (CSR) Policy supported by an Integrated Management System (IMS) procedure for effective implementation. The company’s CSR initiatives are structured around five key focus areas:

1. Sustainability Reporting

2. Water Stewardship

3. Disaster Relief and Response

4. HIV/AIDS Awareness

5. Community Development

Complementing his leadership role in the infrastructure sector, Mr. Arjun Dhawan, Vice Chairman and Managing Director of HCC, serves as an active member of the World Economic Forum’s Engineering & Construction Industry Strategy Officers group and Global Commission on Nature-Positive Cities. This distinguished platform brings together global leaders—including city mayors, business executives, international agencies, NGOs, and academia—to drive nature-positive urban transformation. The Commission functions as a collaborative forum to address the pressing challenges of sustainable urbanisation by offering practical guidance, sharing international best practices, and exploring innovative financing for nature-based solutions. Mr. Dhawan also engages with multiple World Economic Forum communities and contributes to global conversations that promote public-private partnerships for building resilient, inclusive, and environmentally conscious cities

SuStainability RepoRting

HCC is committed to environmental transparency and regularly reports the economic, environmental, and social impacts of its operations through sustainability reports. To date, the company has published fourteen sustainability reports, prepared in accordance with the Global Reporting Initiative (GRI) guidelines and assured by independent third-party agencies for accuracy and credibility.

HCC integrates social, economic, environmental, governance, and financial considerations into every aspect of its operations. Its long-standing collaboration with the World Economic Forum in areas such as sustainability and urban planning helps shape innovative practices for a better future. Current efforts focus on water conservation, waste reduction, occupational health and safety, and inclusive community development all of which underscore HCC’s commitment to global best practices.

The company is a member of the United Nations Global Compact (UNGC) and TERI World Business Council on Sustainable Development, and a signatory to several UNGC initiatives, including ‘Caring for Climate’ and ‘The CEO Water Mandate’.

Ceo wateR Mandate

HCC was the first Indian company to endorse the UNGC’s ‘CEO Water Mandate’, embedding water resource management into all aspects of its business. The company actively monitors water usage at all project sites and implements the 4R principle - Reduce, Reuse, Recycle, and Recharge to drive water conservation.

These measures have resulted in:

Reduced freshwater consumption

Enhanced water-use efficiency

Safe return of treated water to natural sources

HCC also undertakes watershed management initiatives at its project sites, with systems in place to monitor and manage water usage responsibly. During periods of water scarcity, the company provides drinking water support to local communities. As a result of these sustained efforts, HCC has maintained Water Positive status for nine consecutive years..

dIsasteR RelIef and ResPonse

With experienced engineers, project management expertise, and access to heavy equipment, HCC is uniquely positioned to assist during natural disasters. Its project sites often serve as the first responders in emergencies, facilitating evacuations and initiating relief measures.

HCC is a founding member of the Disaster Resource Partnership, a World Economic Forum initiative that coordinates private-sector support during natural disasters. Since 2004, the company has participated in several critical rescue and relief missions across India and abroad.

HIv/aIds eduCatIon and awaReness

Acknowledging the high vulnerability of migrant workers to HIV/ AIDS, HCC has implemented a workplace HIV/AIDS policy and awareness program at its project sites. The initiative includes:

Educational sessions integrated into safety week tool-box talks

Awareness campaigns tailored for migrant worker communities

These efforts aim to destigmatize the issue, provide accurate information, and promote preventive healthcare.

CoMMunItY develoPMent

HCC has a longstanding tradition of supporting community development in areas surrounding its project sites. Its initiatives focus on improving the quality of life through interventions in education, healthcare, infrastructure support, and livelihood enhancement, fostering inclusive growth and social well-being.

InteRnal ContRols and tHeIR adequaCY

HCC has established a comprehensive system of internal controls designed to ensure:

Efficient and effective use of resources

Protection of assets from unauthorized use or loss

Proper authorization, recording, and reporting of all significant transactions

Reliability of financial and operational data for decision-making

Maintenance of accountability over assets

This system is reinforced by a structured internal audit program, regular management reviews, and detailed policies, procedures, and guidelines.

CautIonaRY stateMent

Statements in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include a downtrend in the infrastructure sector, significant changes in India’s political and economic environment, exchange rate fluctuations, tax laws, litigation, labour relations, and interest costs.