J Kumar Infraprojects Ltd Management Discussions

Global economy

Overview

The global growth proved surprisingly resilient despite higher policy rates. Economic activity outpaced expectations in most countries and employment, in particular, remained robust, even as inflation retreated significantly. The global economy registered a decline in growth from 3.5% in 2022 to an estimated 3.1% in 2023. Asia is expected to contribute significantly to global growth in FY 2023-24, despite the weaker-than-expected recovery in China, sustained weakness in USA, rising energy costs in Europe, weak global consumer sentiment due to the Ukraine-Russia war and the Red Sea crisis resulting in increased logistics costs. A tightening monetary policy translated into increased policy rates and interest rates for new loans.

Inflation is edging down from multi-decade highs, with intermittent upticks. Financial market sentiments have been fluctuating with changing views about an early pivot by central banks in advanced economies (AEs). Growth in advanced economies is estimated to decline from 2.6% in 2022 to 1.5% in 2023 and further, 1.4% in 2024 as policy tightening takes effect.

Emerging markets and developing countries are projected to report a modest decline in economic growth from 4.1% in 2022 to 4.0% in 2023 and 2024. Emerging market economies (EMEs) are facing currency fluctuations amidst volatile capital flows.

The likelihood of lower interest rates has spurred rallies in equity markets, although uncertainty about the timing of interest rate reduction is reflected in bidirectional movements in the US dollar and sovereign bond yields. Global equity markets ended 2024 on a strong note, with major global equity benchmarks achieving double-digit returns. This out performance was driven by a downturn in global inflation, a slide in the dollar index, declining crude prices and higher expectations of rate cuts by the US Fed and other Central banks.

Global inflation is projected to decline steadily from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024 on account of a tighter monetary policy coupled with relatively lower international commodity prices. Core inflation is expected to decrease gradually, as inflation is not expected to return to its target until 2025 in most cases. The US Federal Reserve approved a much-anticipated interest rate hike that raised the benchmark borrowing costs to their highest in over 22 years.

Global headline inflation is expected to fall from an annual average of 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies. The pace of convergence toward higher living standards for middle- and lower-income countries has slowed, implying a persistence in global economic disparities.

Regional growth (%)	2023	2022
World output	3.1	3.5
Advanced economies	1.69	2.5
Emerging and developing economies	4.1	3.8

(Source: UNCTAD, IMF)

Performance of major economies, 2023

United States:	China:	United Kingdom:	Japan:	Germany:
Reported GDP growth of 2.5% in 2023 compared to 1.9% in 2022	GDP growth was 5.2% in 2023 compared to 3% in 2022	GDP grew by 0.4% in 2023 compared to 4.3% in 2022	GDP grew 1.9%in 2023 unchanged from a preliminary 1.9% in 2022	GDP contracted by 0.3% in 2023 compared to 1.8% in 2022

Outlook

Asia is poised to continue leading global growth in FY 2024-25. Inflation is expected to ease gradually as cost pressures decrease; headline inflation in G20 countries is projected to decline. Amid high inflation and monetary tightening, the global economy has shown resilience as the growth is expected to be stabilised at previous levels over the next two years (Source: World Bank).

The baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023. A little acceleration in advanced countries – where growth is predicted to climb from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025 – will be countered by a modest slowdown in emerging market and developing economies, from 4.3% in 2023 to 4.2% in both 2024 and 2025. The global growth projections for the next five years are at its lowest in decades, at 3.1%. Global inflation is expected to slowly drop, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced nations returning to their inflation objectives sooner than emerging market and developing economies.

Core inflation is expected to drop more gradually. Despite large interest rate rises by central banks to preserve price stability, the global economy has remained unexpectedly robust.

Indian economy

Overview

The Indian economy was estimated to grow 7.8% in FY 2023-24 as against 7.2% in FY 2022-23 primarily driven by improved performance in the mining and quarrying, manufacturing and certain segments of the services sector. Along with being one of the fastest growing economies in the world, India ranked fifth in the world in terms of nominal GDP for 2023 according to IMF forecasts (World Economic Outlook –April 2024 Update). India overtook the UK to become the fifth-largest economy in the world in 2022 and has maintained its position since then. In terms of purchasing power parity ("PPP"), India is the third largest economy in the world, only after China and the United States.

The Indian rupee displayed relative resilience compared to the previous year as the rupee depreciated 0.8% from H82.66 against the US dollar on the first trading day of 2023 to H82.18 on the last trading day of December 2023.

The International Monetary Fund (IMF), its April 2024 economic outlook update, revised its India economic growth estimate in real terms for Fiscal 2024 to 7.6% from the previous 6.3% estimate October 2023, citing momentum from resilient domestic demand. Further, the growth forecast for Fiscal 2025 also witnessed an increase of 6.5% from the previous 6.3% forecast in October 2023. In the 11 months of FY 2023-24, the CPI inflation experienced an average of 5. with rural inflation exceeding urban inflation. Food inflation experienced a spike on account of lower production and erratic weather. Core inflation, on the other hand, averaged at 4.5%, down from 6.2% in FY 2022-23, moderated by softening global commodity prices. Indias foreign exchange reserves reached a historic peak of US$ 645.6 Billion. The credit quality of Indian companies remained robust from October 2023 to March 2024 on account of deleveraged Balance Sheets, sustained domestic demand and government-led capital expenditure. Rating upgrades continued to surpass rating downgrades in the second half of FY 2023-24. UPI transactions in India witnessed a record 56% growth in volume and 43% growth in value in FY 2023-24.

Growth of the Indian economy

Year	FY 21	FY 22	FY 23	FY 24
Real GDP growth (%)	-6.6%	8.7	7.2	8.2

Growth of the Indian economy quarter by quarter, FY 2023-24

Year	Q1 FY 24	Q2 FY 24	Q3 FY 24	Q4 FY 24
Real GDP growth (%)	8.2	8.1	8.4	7.8

(Source: Budget FY 2023-24; Economy Projections, RBI projections, Deccan Herald)

Indias monsoon in 2023 hit a five-year low, with August marking the driest month in a century. Despite receiving only 94% of its long-term average rainfall from June to September, wheat production estimatedly recorded 114 Million Tonnes in the FY 2023-24 crop year due to higher coverage. Rice production was anticipated to decrease to reach 106 Million metric Tonnes (MMT) in comparison to 132 Million metric

Tonnes in the previous year. Total Kharif pulses produced in FY 2023-24 stood at an estimated 71.18 Lakh metric Tonnes, which is lower than FY 2022-23 due to climatic conditions. As per the first advance estimates of national income released by the National Statistical Office (NSO), the manufacturing sector output is projected to have grown 6.5% in FY 2023-24 compared to 1.3% in FY 2022-23. The Indian mining sector experienced an estimated growth of 8.1% in FY 2023-24 compared to 4.1% in FY 2022-23. Financial services, real estate and professional services grew a projected 8.9% in FY 2023-24 compared to 7.1% in FY 2022-23.

Real GDP or GDP at constant prices increased from to H160.71 Lakh Crore in FY 2022-23 (provisional GDP estimate released on May 31, 2023) to an estimated H173.82 Lakh Crore in FY 2023-24. Growth in real GDP during FY 2023-24 stood at 8.2% compared to 7.2% in FY 2022-23. Nominal GDP or GDP at current prices was estimated at H295.36 Lakh Crore in FY 2023-24 as compared to the provisional FY 2022-23 GDP estimate of H269.50 Lakh Crore. The gross non-performing asset ratio for scheduled commercial banks improved from 4.1% as of March 2023 to 2.8% as of March 2024.

Indias exports of goods and services were expected to reach US$ 900 Billion in FY 2023-24 compared to US$ 770 Billion in the previous year despite global headwinds. Merchandise exports were expected to expand between US$ 495 Billion and US$ 500 Billion, while services exports were expected to touch US$ 400 Billion during the year. Indias net direct tax collection increased 17.7% to H19.58 Lakh Crore in FY 2023-24. Gross GST collection amounted to H20.2 Lakh Crore, marking an 11.7% increase, with an average monthly collection of H1,68,000 Crore, surpassing the previous years average of H1,50,000 Crore.

The agriculture sector projected grew 1.8% in FY 2023-24, which is lower than the 4% expansion recorded in FY 2022-23. Trade, hotel, transport, communication and services related to the broadcasting segment are estimated to grow at 6.3% in FY 2023-24, a contraction from 14% in FY 2022-23.

The Indian automobile segment was expected to close FY 2023-24 with a growth of 6-9%, despite global supply chain disruptions and rising ownership costs. The construction sector was expected to grow 10.7% year-on-year from 10% in FY 2022-23. Public administration, defense and other services were projected to grow by 7.7% in FY 2023-24 as against 7.2% in FY 2022-23. The growth in gross value added (GVA) at basic prices was pegged at 6.9%, down from 7% in FY 2022-23.

India entered a pivotal phase in its S-curve, marked by rapid urbanisation, industrialisation, increase in household incomes and rising energy consumption. The country emerged as the fifth largest economy with a GDP of US$ 3.6 Trillion and a nominal per capita income of H1,23,945 in FY 2023-24.

In FY 2023-24, Indias Nifty 50 index experienced a 30% growth, propelling Indias stock market to become the fourth largest globally with a market capitalisation of US$ 4 Trillion. Foreign investment in Indian government bonds saw a significant increase in the final quarter of 2023. India ranked 63^rd out of 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Moreover, Indias unemployment rate in urban areas declined to 6.7% in January-March 2024 according to NSSO from 6.8% during the same quarter last year, It was recorded at 6.6% in both the April-June 2023 quarter and July-September 2023 quarter and 6.5% for October-December 2023 quarter.

Outlook

India successfully tackled its global economic challenges in 2023 and is poised to continue as the worlds fastest-growing major economy backed by a growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. The Indian economy is anticipated to reach US$ 4.34 Trillion by 2025.

Union Budget FY 2024-25

The Union Budget FY 2024-25 retained its focus on capital expenditure spending, comprising investments in infrastructure, solar energy, tourism, medical ecosystem and technology. In FY 2024-25, the top 13 ministries in terms of allocations accounted for 54% of the estimated total expenditure. Of these, the Ministry of Defence reported the highest allocation at H6.22 Lac Crore, accounting for 12.90% of the total budgeted expenditure of the central government. Other ministries with high allocation included Road Transport and Highways, Railways and Consumer Affairs, Food and Public Distribution.

(Source: Times News Network, Economic Times, Business Standard, Times of India)

Global infrastructure overview

The global infrastructure sector is projected to reach US$ 2.72 Trillion in 2024, expanding to US$ 3.69 Trillion by 2029, with a CAGR of 6.27%. Strengthening infrastructure resilience is a critical global challenge. By 2050, annual investments of US$ 2.84 to 2.90 Trillion will be needed to address the infrastructure deficit, achieve Sustainable Development Goals, build net-zero economies and enhance resilience in low and middle-income countries even as current investments fall short.

North-East Asia led the infrastructure construction market in 2023, with Chinas investment in the Asia-Pacific region reaching US$ 530 Billion over the past decade, including US$ 245 Billion in construction contracts. Japan, South Korea, Taiwan, Hong Kong, Macau and Mongolia also contributed to regional growth.

By 2040, over US$ 2 Trillion is expected to be invested annually in infrastructure, driven by rapid development and urbanisation. Urbanisation increases the demand for transportation networks, energy grids and water systems. Developing countries are investing heavily to improve economies and living standards, while aging infrastructure in developed nations requires upgrades. An emphasis on sustainability is growing, with investments in renewable energy, energy-efficient buildings and sustainable transportation systems to combat climate change. Technological advancements like AI and IoT in infrastructure management are enhancing efficiency and reducing costs. Public-private partnerships (PPPs) are becoming common as governments and private investors collaborate on infrastructure projects. Digitalisation in planning, construction and maintenance is expected to improve efficiency and transparency. Forthcoming projects will focus on resilience, designed to withstand extreme weather and climate change disruptions.

(Source: Mordor intelligence industry report, G20drrwg, prevemtionweb.net, Globaldata, PWC-global infrastructure trends report)

Indian infrastructure overview

The Indian infrastructure sector is experiencing substantial growth, with the market size estimated at US$ 204.06 Billion in 2024 and projected to reach US$ 322.27 Billion by 2029, growing at a CAGR of 9.57%. This expansion is likely to be driven by the governments commitment to infrastructure development, which includes a significant allocation of 3.3% of GDP in FY 2023-24.

The FY 2023-24 budget highlights a 33% increase in capital investment outlay for infrastructure, raising it to H10 Lakh Crore to stimulate private investment. The construction sector continues to attract substantial foreign direct investment (FDI), with 100% FDI permitted in completed projects for townships, malls, business constructions and urban infrastructure.

Key government initiatives, such as the National Infrastructure Pipeline, with over US$ 1 Trillion investment planned over five years and the Gati Shakti National Master Plan, are pivotal in streamlining infrastructure projects. Public-private partnerships (PPPs) are crucial for sectors like airports, ports, highways and logistics parks, essential for achieving Indias target of becoming a US$ 5 Trillion economy by 2025. The sector is also attracting foreign direct investment.

Transportation dominates the infrastructure sector, with significant investments directed towards roads, highways and railways. The government aims to construct a 2 Lakh-Kilometer national highway network by 2025 and operationalise 23 waterways by 2030. The Indian Railways received the highest capital outlay of H2.40 Lakh Crore (US$ 29 Billion) for FY 2023-24, about nine times the outlay in 2013-14. Urban development initiatives like the UDAN scheme for aviation and the expansion of metro networks are transforming urban transportation. Indias metro rail network, now the fifth-largest globally, is set to overtake advanced economies like Japan and South Korea. Indias logistics market, estimated at US$ 435.43 Billion in 2023, is projected to grow to US$ 50.52 Billion by 2028, with ongoing efforts to improve the Logistics Performance Index ranking and reduce logistics costs.

The Indian infrastructure sector is poised for growth, supported by robust government policies and substantial investments. The focus on sustainable development, coupled with increased private sector participation and foreign investments, is expected to drive the sectors expansion. Key projects, such as the Delhi-Mumbai highway and the worlds highest railway bridge, underscore Indias engineering capabilities and commitment to enhancing infrastructure. While challenges like regulatory hurdles and environmental concerns persist, effective governance and innovative financing solutions will be crucial in overcoming these obstacles. On the overall, the sector is set to play a critical role in Indias economic growth, aiming to create liveable, climate-resilient and inclusive cities by 2047.

(Source: mordorintelligence.com, ibef.org, nortonrosefullbright.com, angelone.in )

Railways

Indias first bullet train could be operational in 2026. The 508-Kilometer Mumbai-Ahmedabad High-Speed Rail (HSR) project, initially delayed, is progressing with more than 290 Kilometer completed, including bridges over eight rivers and ongoing work at 12 stations. A significant section includes a 21 Kilometer underground tunnel, with a 7 Kilometer undersea stretch, funded by a H40,625 Crore loan from Japan International Cooperation Agency (JICA). The new Pamban bridge, Indias first vertical lift railway bridge, will connect Rameswaram and Mandapam. It features 100 spans of 18.3 meters each and a 63-meter navigational span, standing 3 meters taller than the old bridge. This engineering marvel will facilitate the passage of ships up to 22 meters high. Chennais Integral Coach Factory is preparing sleeper variant Vande Bharat trains for long-distance journeys. The government has allocated over H1 Lakh

Crore for rolling stock production in 2024-25, including 200 sleeper variant Vande Bharat trains. Initial routes for these trains include Delhi-Mumbai and Delhi-Howrah, with an approximate project cost of H35,000 Crore.

The Udhampur-Srinagar-Baramula Rail Link (USBRL), costing H37,012 Crore, will connect Kashmir with the rest of India. Significant progress has been made, including the completion of the worlds highest railway bridge on the Chenab River.

Indian Railways plans to construct an additional 40,000 Kilometer of tracks over the next 7 to 8 years and complete three major freight corridor projects. India aims to manufacture 1,000 new-generation Amrit Bharat trains and develop trains capable of running at 250 Kilometer/h. The Amrit Bharat Scheme focuses on redeveloping 1,309 railway stations across India at a cost of H25,000 Crore. The government has also announced three major economic railway corridor programs under the PM Gati Shakti Initiative to enhance logistics efficiency and reduce costs.

In addition, 40,000 normal rail bogies will be converted to Vande Bharat to improve passenger safety and comfort. The Vande Metro, a shorter-distance version of the Vande Bharat Express, will cater to urban commuters, with trials beginning in July. Initial routes include Chennai-Tirupati, Bhubaneswar-Balasore, Agra-Mathura, Delhi-Rewari and Lucknow-Kanpur, extending connectivity across Tamil Nadu.

A total 7,188 route kilometres were electrified in FY 2023-24. Some 14 States and Union Territories comprised 100% electrified rail tracks. There was jump in the electrification rate from about 1.42 Km/day between 2004-14 to about 19.6 Km/day in FY 2023-24.

(Sources: Business Today, NDTV, The Times of India, The Economic Times, Business Standard, India Shipping News, Y20india, Livemint)

Metro Railways

The rapid expansion of Indias metro rail system has transformed urban commuting, with the network poised to expand from 248 Kilometer in 2014 to an impressive 945 Kilometer by 2024. This substantial growth reinforces the crucial role of metro rail in facilitating convenient transportation for urban dwellers, benefitting approximately 1 Crore passengers daily. From servicing just 5 cities in 2014, the metro rail network has expanded to encompass 21 cities nationwide, with construction underway on 919 Kilometer of lines across 26 cities. The introduction of Indias first state of art ‘Namo Bharat train, operating on the Delhi-Meerut regional rapid transit system (RRTS) corridor, emphasises the nations commitment to enhancing regional connectivity and modernise transportation infrastructure. For the first time in India, Kolkata Metro undertook operations under the Hooghly River, the project costing H4,965 Crore across 4.8 Kilometer.

The 33.5 Kilometer aqua line 3 of Mumbais metro network was entirely underground and runs along the Colaba-Bandra-SEEPZ corridor, connecting the citys key financial hubs. Expected to be fully operational in 2024, the project is estimated to cost around H33,000 Crore and received funding from several entities, including Japan International Cooperation Agency (JICA).

(Sources: Investindia, Orfonline.org, Pib, Businessstandard, Theeconomictimes)

Roadways

India comprises the worlds second-largest road network, spanning 6.7 Million kilometers. This extensive network is crucial for transportation, handling 64.5% of all goods movement and 90% of passenger traffic. Road transportation has steadily grown due to improved connectivity among cities, towns and villages. The government has significantly boosted infrastructure, allocating about

US$ 1.4 Trillion for investment until 2025. The roads and highways market in India is projected to grow at a CAGR of 36.16% from 2016 to 2025, driven by government initiatives to enhance transportation infrastructure. In FY 2023-24, highway construction reached 12,349 Kilometer, a 20% increase from the previous year. The length of national highways with four lanes or more increased by 2.5 times, from 18,387 Kilometer in 2014 to 46,179 Kilometer in 2023. The average pace of national highway construction rose by 143% to 28.3 Kilometer per day since 2014. Overall, the national highway network expanded by 60%, from 91,287 Kilometer in 2014 to 146,145 Kilometer in 2023.

(Sources: Invesindia, ibef.org, Pib, Indianinfrastucture)

Pradhan Mantri Gramme Sadak Yojana (PGMSY)

Rural consumerism is likely to increase in the upcoming years. Hence, to enhance rural logistics and facilitate rural mobility, PMGSY was launched to grow rural road infrastructure. The goal of PMGSY is to connect all eligible unconnected habitations in rural areas of the nation with a single all-weather road to the designated population size (500+ in plain areas, 250+ in North-Eastern and Himalayan States). The programme also includes an upgrade component for districts to which all qualifying settlements with the required population size have access.

(Source:Pib)

Bharatmala Pariyojna

The Bharatmala Pariyojana, also known as the ‘India Garland Project, is an ambitious road development initiative aimed at creating efficient, congestion-free transportation links across various destinations. In October 2017, the Government of India approved Phase I of the Bharatmala Pariyojana, targeting the development of 34,800 Kilometer of National Highway corridors. This extensive project encompasses various categories, including the development of Economic Corridors, Inter-corridor and Feeder Routes, National Corridors Efficiency Improvement, Border and International Connectivity Roads, Coastal and Port Connectivity Roads and Expressways. Bharatmala Pariyojana

Phase 1 encompasses 34,800 Kilometer across 31 states and Union Territories, covering over 550 districts. Of this, 27,384 Kilometer was awarded and 15,045 Kilometer constructed. Phase 1 is scheduled for completion by 2027-28.

<p >(Source:Pib)

Growth drivers

Growing urbanisation: With rapid urbanisation, theres an ever-increasing demand for sustainable and modern infrastructure in cities. This includes the development of smart cities, urban transport networks like metro rail services and green infrastructure. By 2047, Indias population is projected to reach 1.7 Billion, with nearly 51% living in urban areas. To accommodate this growth, Indian cities will need approximately 230 Million housing units by then.

Connectivity projects: Major projects such as Bharatmala, Sagarmala and the dedicated freight corridors are upgrading and streamlining transportation, widening opportunities in project development, operations and logistics. Bharatmala Pariyojana, Indias largest highway infrastructure program, aims to develop 34,800 kilometers of national highway corridors with an investment of H5.35 Trillion. Since its approval in 2017,

15,549 kilometers of construction have been completed. Under the Sagarmala initiative, the Indian government has identified 604 projects worth US$ 127 Billion.

Renewable energy: Indias commitment to transitioning to renewable energy has spurred investments in solar, wind and hydropower projects. With a target of achieving 500 GW of renewable energy installed capacity by 2030, India is determined in its pursuit of sustainable energy solutions.

Digital infrastructure: Investments in digital infrastructure, including fiber optics, data centers and telecommunications, support Indias transition to a digital economy, unlocking vast opportunities in the digital realm. The development of such infrastructure acts as a catalyst for economic growth, creating jobs, promoting industrial expansion and stimulating growth in real estate and related sectors. High-quality infrastructure lowers the cost of conducting business, enhances productivity and enhances the global competitiveness of Indian goods and services. As of October 31, 2023, India comprised over 888 Million broadband users, with 590,020 common service centres (CSCs), including 468,773 CSCs in rural areas.

Foreign direct investments: Foreign direct investment into Indias infrastructure sector remained strong, contributing to the enhancement of technological expertise and managerial know-how, with potential spillovers benefiting industry segments. Between April 2000 and September 2023, FDI inflows amounted to US$ 26.42 Billion and US$ 32.08 Billion, respectively.

(Sources: Linkedin, IBEF, Business standard, Indiainvestmentgrid, Urbanet, Niua, Investindi, Thefinancialexpress, pib)

Government initiatives

The capital investment outlay for infrastructure increased 33% to H10 Lakh Crore (US$ 122 Billion) in 2023-2024, representing 3.3% of GDP and nearly three times the outlay in 2019-20.

The pace of national highway construction increased from an average of 12 kilometers per day in 2014-15 to around 34 kilometers per day in FY 2023-24.

The Union Budget FY 2023-24 allocated a record H2.40 Lakh Crore (US$ 29 Billion) for railways, approximately nine times the outlay in 2013-14.

The establishment of the Infrastructure Finance Secretariat aims to boost private investment in infrastructure, covering railways, roads, urban infrastructure and power.

The government extended the 50-year interest-free loan to State governments for one year, with an enhanced outlay of H1.3 Lakh Crore (US$ 16 Billion) in the Union Budget FY 2023-24 to incentivise infrastructure investment.

The identification of 100 critical transport infrastructure projects prioritised an investment of H75,000 Crore (US$ 9 Billion), with H15,000 Crore

(US$ 1.8 Billion) from private sources, targeting last and first mile connectivity for ports, coal, steel, fertiliser and food grains sectors.

The revival of 50 additional airports, heliports, water aerodromes and advance landing grounds aimed to enhance regional air connectivity.

The establishment of an urban infrastructure development fund (UIDF), managed by the National Housing Bank, will utilise priority sector lending shortfall to create urban infrastructure in Tier 2 and Tier 3 cities.

(Sources:IBEF, Thetimesofindia)

Company overview

Our Company is actively engaged in expanding Indias metro rail network by constructing an additional 61 kilometers of track during the year. Notably, Metro projects make up around 27% of J. Kumars current order book. 25% of the total revenue for FY 2023-24 came from underground and elevated metro projects. As we progress with the completion of metro Line 3, which is currently around 90% finished, our Company is planning to undertake more substantial projects independently. The Line 3 Metro section which spans from Colaba to SEEPZ and covers two packages, both of which are at an advanced stage of completion, constructed by J. Kumar. The Mumbai metro rail corporation (MMRC) is on track to inaugurate the first phase of Line 3, connecting SEEPZ to BKC, highlighting the significant progress achieved. Simultaneously, other metro lines such as Line 9, Line 2B, Line 6, Navi Mumbai metro, Pune metro, Delhi metro and Surat metro are progressing swiftly.

Consequently, there will be an annual rollout of operational segments along these metro lines, enhancing public connectivity. In the forthcoming fiscal year, J. Kumar aims not only to complete the Pune metro project but also to actively engage in bidding processes for the Bhopal, Indore and Kanpur metro projects, demonstrating our dedication to expanding urban transportation networks throughout India.

Metro projects

Our Company is actively engaged in expanding Indias metro rail network by constructing an additional 61 kilometers of track during the year. Notably, Metro projects make up around 27% of J. Kumars current order book. 25% of the total revenue for FY 2023-24 came from underground and elevated metro projects. As we progress with the completion of metro Line 3, which is currently around 90% finished, our Company is planning to undertake more substantial projects independently. The Line 3 Metro section which spans from Colaba to SEEPZ and covers two packages, both of which are at an advanced stage of completion, constructed by J. Kumar. The Mumbai metro rail corporation (MMRC) is on track to inaugurate the first phase of Line 3, connecting SEEPZ to BKC, highlighting the significant progress achieved. Simultaneously, other metro lines such as Line 9, Line 2B, Line 6, Navi Mumbai metro, Pune metro, Delhi metro and Surat metro are progressing swiftly.

Consequently, there will be an annual rollout of operational segments along these metro lines, enhancing public connectivity. In the forthcoming fiscal year, J. Kumar aims not only to complete the Pune metro project but also to actively engage in bidding processes for the Bhopal, Indore and Kanpur metro projects, demonstrating our dedication to expanding urban transportation networks throughout India.

Roads and tunnels

24% of the total revenue for FY 2023-24 came from flyovers, roads & tunnels segment. In FY 2023-24, our Company successfully established unobstructed connectivity at Amra Marg and opened up public access to the JNPT Port. The

Chheda Nagar flyover, a remarkable infrastructure, guarantees a seamless and continuous journey between Mumbai, Thane and Navi Mumbai. This not only facilitates the smooth flow of traffic but also contributes to the reduction of air pollution in the eastern part of Mumbai. The SCLR flyover showcases a distinctive feature - Indias second double-decker flyover -marking a pioneering achievement for the city.

Water Civil and others

Our Company also constructs swimming pools, sports facilities, hospitals and other medical facilities. It also constructs railway terminals and stations. During

FY 2023-24, the segment contributed 11% of total revenue.

Order book breakup

Segment wise breakup

Segment	Order Book	%
	(J in Crore)
Metro - Elevated	3,101	15%
Metro - Underground	2,556	12%
Total - Metro	5,657	27%
Elevated Corridors / Flyovers	8,155	39%
Roads & Road Tunnels	4,984	24%
Water	1,053	5%
Civil & Others	1,163	6%
Total - Non Metro	15,355	73%
Total	21,011	100%

Geographical breakup

Geography	Order Book	%
Maharashtra	13,566	65%
Tamilnadu	4,064	19%
NCR	2,011	10%
Gujarat	628	3%
Karnataka	165	1%
U.P.	577	3%
Total	21,011	100%

Order wins FY 24

Particulars	Authority	(J in Crore)
Chennai Elevated Corridor - Package 1	NHAI	915
Chennai Elevated Corridor - Package 2	NHAI	1,015
Chennai Elevated Corridor - Package 3	NHAI	865
Chennai Elevated Corridor - Package 4	NHAI	775
Goregaon Mulund Link Road	BMC	3,088
MML-2B - 5 Stations	MMRDA	99
Command Hospital, Lucknow on EPC Mode	Military Engineer Services	431
Chennai - Elevated Corridor Grand Southern Trunk	Highways Department, TN	494
Flyover from Link Road, Andheri (West) to Poonam Nagar (JVLR)	MMRDA	379
CIDCO Coastal Road - Ulwe	CIDCO	912
Orange Gate to Grant Road	BMC	931
Ghansoli- Airoli along Palm Beach Road	NMMC	345
Versova – Dahisar Costal Road - Package B Bangur Nagar to Mindspace	BMC	1,278
Malad
Hari Nagar Colony DTC , Delhi	NBCC	283
Total		11,810

Revenue breakup

Segment wise breakup

Segment	FY24	%
	(H in Crore)
Metro - Elevated	1,195	24%
Metro - Underground	941	19%
Total - Metro	2,136	44%
Elevated Corridors / Flyovers	1,380	28%
Roads & Road Tunnels	742	15%
Water	255	5%
Civil & Others	367	8%
Total - Non Metro	2,743	56%
Total	4,879	100%

Geographical breakup

Geography	FY24	%
	( J in Crore)
Maharashtra	3,348	69%
NCR	1,289	26%
Gujarat	168	3%
Karnataka	72	1%
Uttar Pradesh	2	0%
Total	4,879	100%

Our financial performance

Particulars	FY 24	FY23
Revenue from Operations	4,879	4,203
Cost of Material Consumed	3,170	2,784
Construction Expenses	550	457
Employee Expenses	369	309
Other Expenses	86	56
EBITDA	704	597
EBITDA Margin (%)	14.4	14.2
Other Income	28	30
Depreciation	168	155
EBIT	564	473
EBIT Margin (%)	11.6	11.2
Finance Cost	124	99
Profit before Tax	441	374
PBT Margin (%)	9.0	8.9
Tax	112	99
PAT	329	274
PAT Margin (%)	6.7	6.5
Cash PAT	497	429
Cash PAT Margin (%)	10.2	10.2

Key performance ratios

Particulars	FY 24	FY23
Debt-equity ratio (x)	0.22	0.22
ROCE (%)	18.6	17.6
ROE (%)	13.2	12.4
Working capital cycle (days)	123	126
Debtor turnover cycle (days)	89	99
Inventory turnover cycle (days)	77	81
Creditor turnover cycle (days)	44	55
Asset Turnover (x)	5.0	4.5
Interest cover (x)	4.56	4.77
Return on gross block (%)	16.98	15.90

Risk management

While JKIL has achieved notable success, it recognises the importance of managing risk factors to sustain growth and profitability. Our Company has implemented a robust risk management system, incorporating a comprehensive framework. This includes swift identification, evaluation and mitigation of risks across all functional areas. Led by a dedicated risk management committee, these efforts involve risk assessment, policy development and ongoing monitoring. The committee oversees credit offers, assesses risk efficiency and reports outcomes to top management and the board, ensuring effective risk management practices are ingrained throughout the organisation.

Some key risks that our Company faces with their mitigation strategies:

Political risks: Our Company operates in multiple locations across various states and is therefore exposed to different geopolitical risks. To address these risks, our Company has implemented appropriate mitigation strategies.

Competition risks: The number of operators in our Companys niche segment has increased. However, our

Company maintains its competitive advantage through an experienced workforce, a strong track record, technical expertise, financial strength, brand equity and regular engagement with clients and representatives.

Operational risks: To meet project requirements, careful attention is given to selecting sub-contractors, vendors, key technical and non-technical employees, insurance coverages, financial partnerships, timely acquisition of Right of Way and preparation of designs and drawings. By identifying associated risks and initiating mitigation measures, our Company effectively addresses operational risks.

Working capital risks: Project delays, cost overruns and consequent delays in receipt of payments from the clients lead to an increase in working capital requirement. Our Company has a process of close monitoring and follow-up with the clients for the timely approvals and payments for better working capital management.

Contract and Claims: In a competitive environment, our Company proactively addresses potential litigations and claims by maintaining robust documentation and follow-up mechanisms with clients, subcontractors and vendors. To mitigate risks arising from disputes and differences, our Company has a comprehensive system to identify, analyse, evaluate and address loss exposures and breaches of contractual obligations. This system also monitors risk control measures and financial resources to minimise the adverse effects of any losses.

Cyber security risks: As businesses increasingly rely on IT across various functions, the challenge of cybersecurity becomes paramount for safeguarding the organisations information and systems, ensuring confidentiality, maintaining data integrity and preventing data loss. Our Company has established a cybersecurity framework to identify, detect and prevent such risks. It prioritises systematic communication of potential cyber risks and corresponding remedial actions through awareness programs tailored for all relevant employees.

Human resources

JKIL places significant importance on its human resources, recognising their pivotal role in our Companys achievements. With a focus on attracting and retaining top talent, the Human Resources department employs effective recruitment strategies to identify skilled professionals who resonate with the organisations values and objectives. Emphasising continuous employee development, our Company offers comprehensive training programs to nurture technical expertise and promotes professional growth. A robust performance management system ensures regular evaluations, constructive feedback and acknowledgment of exceptional contributions, facilitating a culture of accountability and excellence. JKIL actively encourages employee engagement through transparent communication, teamwork and various initiatives like team-building activities and cultural programs. Our Company prioritises health and safety, implementing measures to comply with regulations, conducting regular safety training and cultivating a safety-conscious work environment. J. Kumar Infraprojects supports work-life balance by offering flexible work arrangements and competitive compensation and benefits packages to ensure its employees well-being. Through nurturing a talented and motivated workforce, J. Kumar Infraprojects ensures the delivery of high-quality projects, driving our Companys growth and success. 7335 Employee strength as of March 31, 2024.

Internal control

JKILs internal control and risk management system is designed and executed in compliance with the highest corporate governance requirements. Internal control systems are a vital aspect of the overall organisational structure, in which different personnel from across the organisational hierarchy collaborate to carry out their separate roles under the supervision of the board of directors.

The boards audit committee examines the efficacy of the internal control system from the yearly plan and audit results through compliance with accounting principles.

Cautionary statement

According to applicable laws and regulations, certain statements and/ or comments in the management discussion and analysis that describe our Companys plans and projections may be regarded as forward-looking statements. Actual results could significantly differ from the forward-looking statements in this publication due to a number of risks and uncertainties. The influence of Indias political and economic situations, the erratic nature of interest rates, new regulations and government efforts that could harm our Companys operations and its capacity to carry out future plans are just a few of these risks and uncertainties. Our Company disclaims all liability.