K E C International Ltd Management Discussions

GLOBAL ECONOMY

The global economy is projected to grow at 3.2% in 2024 versus a 3% growth experienced in 2023. The year 2023 was marked by significant events – the continuing Russia-Ukraine war triggering a global energy and food crisis, conflict in Gaza and Israel further contributing to supply chain disruptions initiated by the pandemic, and persistent high inflation culminating in globally synchronised monetary policy tightening. Despite these challenges, indicators suggest stabilisation and development in many regions, particularly in emerging markets and developing economies. This indicates a positive outlook for the global economy, albeit with some uncertainties and risks. Global growth is expected to continue at the same pace of 3.2% in 2025.

It is expected that the growth in developing markets will be higher than that of advanced economies. Growth in advanced economies is forecasted at 1.7% in 2024 as the United States slows down, while euro area growth, which was weak last year, sees a slight improvement amid declining inflation and more supportive monetary policy. Emerging markets and developing economies are expected to experience stable growth of 4.2% throughout the year, although regional differences exist. This uptick reflects a rebound in trade and improving domestic demand in several large economies, as inflation has started to recede.

Global headline inflation is anticipated to decline from an annual average of 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. This reduction is driven by the rationalisation of energy and commodity prices, the unwinding of supply chain disruptions, and the normalisation of global trade. Most of the central banks especially in developed economies plan to ease monetary policies but remain cautious about cutting rates too early.

Amidst the uncertainty and economic slowdown in 2023, infrastructure investments remained resilient. Upgradation of the quality of infrastructure and secular trends such as energy transition, transportation decarbonisation, asset modernisation, and the circular economy are driving investments in the infrastructure segment. Throughout the year, the Company experienced increased tendering activities across both developed and developing countries.

INDIAN ECONOMY

India has emerged as the fastest-growing economy among G20 nations with an expected growth of 8.2% in FY24, attributed to the continuing strength in domestic demand and a rising working-age population. The Indian economy is set to close FY24 at a GDP of USD 3.7 Trillion. Notably, the pandemic years did not significantly alter Indias trajectory towards the USD 5 trillion GDP milestone.

The IMF anticipates India to retain its title as the fastest-growing large economy for the next two years due to solid macroeconomic conditions, healthy corporate earnings, peaking interest rates, moderate inflation, and ongoing policy momentum. The Reserve Bank of India forecasts the economy to grow at 7.2% in FY25.

Infiation is expected to moderate to 4.5% in FY25, although geopolitical disruptions in the Middle East could exert some pressure. The IMF forecasts non-fuel commodity prices to remain broadly unchanged in 2024, softening by 0.9% compared to 2023. CRISIL expects Brent crude oil prices to remain in the USD 80-85 per barrel range, which, together with other factors, should help keep input costs in check.

Both the central and state governments have played a pivotal role in reviving investments post-pandemic. The central governments capital expenditure through the budget reached RS. 9.6 Lakh Crore in FY24. Large investments have been announced across sectors such as transportation, urban infrastructure, green energy, affordable housing, defence, social infrastructure, roads, and highways, among others. CRISIL estimates aggregate infrastructure capital expenditure to reach RS. 143 Lakh Crore during FY24 and FY30.

Over the past four years, capital expenditure in the country was primarily driven by the household sector and infrastructure buildout funded by central and state governments. Industrial investment is expected to gain momentum as looked ahead. An assessment of investment trends across approximately 20 sectors, representing more than 70% of total industrial investment in the country, indicates that private capital expenditure will increase to RS. 6.5 Lakh Crore annually on average between FY24 and FY28, up from RS. 3.9 Lakh Crore in the preceding five years. Emerging sectors are expected to contribute around 20% to industrial investments, primarily driven by electric vehicles, semiconductors, and electronics.

These developments position India as an attractive investment destination and enhance the confidence of global investors. Total FDI inflows in the country in FY24 stood at USD 44 Billion, with healthy increases seen from countries such as Mauritius, Japan, USA, Netherlands, Singapore, etc.

Interestingly, the next seven fiscal years (2025-2031) are projected to see the Indian economy surpass the USD 5 Trillion mark and move closer to USD 7 Trillion, based on CRISILs expectation of an average annual growth of 6.7%. At that point, India will become the third-largest economy in the world. This will require significant investment in infrastructure – both digital and physical – and growth-enhancing reforms aimed at improving the ease of doing business. Amid global risks, this strategy may also position India to capitalise on opportunities from diversifying global supply chains.

GLOBAL CONSTRUCTION INDUSTRY

Global construction growth is estimated to be 3.9% per annum to 2030, outpacing global GDP growth by over one percentage point, as per a benchmark global study from Global Construction Perspectives and Oxford Economics. This growth will be driven by both developed countries recovering from economic instability and emerging countries continuing to industrialise. The volume of construction output is projected to surge to USD 15.5 Trillion worldwide by 2030, with four key countries – China, the US, India, and Indonesia – leading the way and accounting for 58% of all global growth. Notably, while China remains a dominant player, its share of the world construction

India has emerged as the fastest-growing economy among G20 nations with an expected growth of 8.2% in FY24, attributed to the continuing strength in domestic demand and a rising working-age population.

market is expected to increase only marginally. On the other hand, US construction is projected to grow faster than China over the next 15 years, with an average annual growth rate of 5%. India is anticipated to experience a surge in construction, overtaking Japan to become the worlds third-largest construction market. In 2020, spending on construction represented 13% of global GDP, and this figure is expected to exceed 13.5% by 2030. Sub-Saharan Africa is predicted to experience the fastest growth among all regions globally, with an average annual growth rate of 5.7% between 2020 and 2030. Emerging Asia follows closely, with an average yearly growth rate of over 5% until 2030. Several major factors are expected to drive global construction growth, including increasing population, urbanisation, the need to improve existing infrastructure, green energy transition and the emergence of new technologies such as electric vehicles. These trends signify opportunities and challenges for the construction industry in the coming years.

India is poised to become a significant engine for global growth, with construction output expected to surpass USD 1 Trillion per annum by 2030, amounting to an accumulated spending of USD 7.9 Trillion in construction over the decade to 2030. The construction sector, one of the fastest-growing industries in India, currently accounts for 9% of the countrys GDP and is the second-largest employer, providing jobs to around 71 million people. Additionally, it ranks sixth among leading recipients of Foreign Direct Investment (FDI), having attracted over USD 32 Billion since 2000.

In the budget announcement for 2024-2025, the Finance Minister allocated RS. 11.11 Lakh Crore (USD 134 Billion) for infrastructure development, equivalent to 3.4% of the GDP, up from

RS. 10 Lakh Crore assigned in 2023-24.

The Indian construction market is primarily driven by two central factors: the demand for new homes and extensive infrastructure needs. The requirement for new infrastructure is intricately linked to the countrys growth trajectory. As the Indian economy continues to develop, there is a pressing need to enhance transportation infrastructure, power grids, and utility works, leading to investments in infrastructure development such as airports, ports, transmission lines, power plants and highways.

With over 60% of Indias population expected to reside in urban areas by 2030, the demand for housing, commercial, and retail space, as well as infrastructure, will escalate in urban areas. The governments ambitious plans for infrastructure development and affordable housing under initiatives like ‘Housing for All and ‘Smart Cities are anticipated to further boost the demand for construction services.

According to estimates from the Power Ministry, India is projected to witness a more than 83% increase in investments in renewable energy projects to around USD 16.5 Billion in 2024, as the country focusses on energy transition to reduce carbon emissions. In addition to solar and wind energy, India is intensifying its focus on green hydrogen to reduce dependence on fossil fuels.

In general, the outlook for the infrastructure sector is favourable, but ongoing geopolitical uncertainties, high inflation and interest rates, and tighter monetary policies in major economies may pose challenges in the short term.

The Indian construction market is primarily driven by two central factors: the demand for new homes and extensive infrastructure needs. The requirement for new infrastructure is intricately linked to the countrys growth trajectory.

POWER TRANSMISSION & DISTRIBUTION BUSINESS

KEC, a leading global EPC player in the Power Transmission & Distribution (T&D) sector, provides comprehensive solutions encompassing the design, manufacturing, supply, installation, and commissioning of Transmission Lines, Substations, and Underground Cabling in both domestic and international markets. Renowned for its expertise in delivering complex projects in challenging geographies, KEC consistently completes projects ahead of schedule, thanks to its world-class engineering and design capabilities, global supply chain, and advanced construction practices.

The Companys T&D business operates in more than 70 countries across Asia (including South Asia, the Middle East, Southeast Asia, and Central Asia), Africa, the Americas, Oceania, and Europe. This business segment contributes approximately 50% to both overall revenue and the order book and is currently executing over 150 transmission line, substation, and cabling projects globally.

The Company operates six state-of-the-art tower manufacturing plants located in India, Brazil, Mexico, and the UAE. These facilities collectively position KEC as one of the worlds largest tower manufacturers, boasting a combined annual production capacity exceeding 3.7 Lakh tonnes of lattice towers, poles, and transmission line hardware. The Company is further expanding its tower manufacturing capacity in Dubai from 50,000 MT to 60,000 MT per annum. Additionally, the Company owns and operates four tower testing stations across India and the Americas. Companys geographically diverse manufacturing footprint strengthens its relationships with customers and enhances competitiveness in various markets.

The global T&D infrastructure market is expected to witness investments exceeding USD 1 Trillion over the next decade. A significant portion of these investments will be allocated to constructing new transmission lines and substations to integrate renewable energy generation projects. Additionally, substantial funds will be directed towards regional grid integration and cross-border interconnections. In developed economies, there will be a focus on replacing and upgrading ageing grids, further driving demand. Simultaneously, technological advancements are fuelling the expansion and modernisation of transmission networks. KEC is strategically positioned to meet the diverse needs of its clients globally and execute technology-driven projects with best-in-class standards of quality and safety.

Throughout the year, the Transmission

& Distribution business revenue grew by 21% and reaching approximately

RS. 10,500 Crore, supported by a strong focus on execution excellence despite challenges arising from unprecedented supply chain bottlenecks. The business remained focussed on enhancing execution processes and implementing automation, mechanisation, and digitalisation initiatives, resulting in faster or ahead-of-schedule project completions. Additionally, efforts to build a World-Class Engineering organisation, equipped with future-ready processes to enhance design capabilities across all business segments are reaping good results. This includes improving quality through first-time right designs, instituting design-to-value processes to optimise project costs and reducing design cycle time by leveraging robotic process automation, artificial intelligence and advanced analytics. Moreover these advancements are driving reduction in overall material consumption thus helping the company achieve its ESG targets.

The India Transmission & Distribution business secured highest ever order intake of over RS. 5,900 Crore, with a staggering growth of 40% over FY23. In line with the growth in order intake, the business has delivered a healthy revenue growth of 45% over the last year. This unprecedented accomplishment can be attributed to the success of the strategy of becoming a contractor of choice for Tariff Based Competitive Bidding (TBCB) players and improving competitiveness in the substation segment. Further expansion into high-value technology intensive segments such as Digital substations & HVDC Converters have also helped consolidate companys position in the market. Going forward, technology-led opportunities like SVC (Static Var Compensator), Statcom (Static Synchronous Compensator), and TCR (Thyristor Controlled Reactor) are expected to drive the market forward and company is well positioned to benefit from this technological shift.

During the year, the Company strengthened its position as a leading provider of Engineering, Procurement and Construction services for Tariff Based Competitive Bidding (TBCB) market by securing multiple transmission line and substation orders especially in Gujarat, Rajasthan and Karnataka. The company has extended its success in State Electricity Board with West Bengal State Electricity Transmission Company

Limited (WBSETCL) Combined package (TL + SS + Cabling) & First Integrated package (TL+SS) in Bihar State Power Transmission Company Ltd. (BSPTCL). Further, the company widened its client base by securing orders from various non-utility clients. This year also marked repeat orders from private players and exclusive tower supply orders.

The company was recognised by POWERGRID for successful completion of critical Chittorgarh-Neemuch Transmission Line project. In a moment of pride, companys 400/220 kV AIS Kallam Substation project was inaugurated by the honourable Prime Minister. The company also commissioned the 765/400 kV Warora Kurnool Transmission line, its largest project to date in India, involving approximately 1,750 CKM of powerline stringing. In this year, the Company successfully commissioned 20 T&D projects with ~4,300 CKM and installed ~4,500 MVA of substation capacity.

The India Transmission & Distribution sector is going through a very exciting time with substantial investments being planned to enable the green energy transition agenda. As per Central Electricity Authoritys draft national electricity plan (Volume 2), India may need investments of

RS. 4,75,000 Crore by 2027 to develop its transmission network, including transmission lines, substations and reactive compensation, for RE integration projects. The plan envisages 170 transmission schemes with investments of over RS. 3,10,000 Crore for interstate transmission lines and RS. 1,60,000 Crore for intrastate transmission projects. Pioneering projects such as undersea cables connecting the Andaman & Nicobar Islands with mainland India and HVDC line connecting India with Sri Lanka are also being evaluated.

The company received more than 10 appreciation letters from clients on best Safety and ESG practices. The notable amongst them have been prestigious awards at Net Zero Sumit recognise by UBS Forums Pvt. Ltd and National Safety Council Award. These awards recognise companys commitment to environmental, social, and governance standards.

The business is focussing on strengthening capabilities and driving execution excellence to accelerate completion of its large order book. With global geopolitical uncertainties still unfolding, supply chain constraints remain a challenge, however company has been engaging actively for strategic tie-ups. The current unexecuted order book of ~RS. 7,500 Crore provides an excellent platform to grow the business and sustain its leadership position in the market.

In FY24, the Companys International Transmission & Distribution (T&D) division fortified its presence across various regions. Demonstrating consistent progress every year, the business achieved a 12% increase in revenue compared to the previous year and successfully secured new orders exceeding RS. 4,100 Crore. With an increased emphasis on Middle Eastern markets, the business secured two significantly high value EPC contracts of ~RS. 1,900 Crore for transmission line projects in Saudi Arabia. KEC EPC LLC, the companys subsidiary based in the UAE, has secured its largest order in Dubai. Additionally, the subsidiarys pre-qualifications have been further strengthened to capitalise on opportunities in the UAE market.

During the year, the company received prequalification and Certificate of Eligibility (COE) from a prominent client in Thailand, for 500/230/115kV Transmission Lines and Substation projects further strengthening its position in the East Asia Pacific Market.

Aligned with the strategic imperative of fostering growth through geographical diversification, the business has been successful in securing new orders in the European and Australian markets for tower supplies. The business has secured significant orders of over

RS. 2,000 Crore for supply of products catering to clients across the globe.

Anticipating a continuation of this momentum, KEC Towers LLC Dubai has strategically enhanced its manufacturing capacity from 50,000 MT to 60,000 MT, aligning with the growing demands of the Middle East market. In a significant development during the year, KEC Towers LLC has received approval from an esteemed client for tower supplies in Saudi Arabia.

With a steadfast commitment to executionexcellence,KECsinternational business division has successfully delivered projects encompassing 500 kilometres of transmission line and 37 bays of substation. The company has achieved a significant milestone with the successful completion of our maiden standalone 132kV Underground Cabling project in the UAE.

The Company has strategically pivoted towards the adoption of new-age technologies and embraced agile working methods, leading to execution excellence and enhanced client satisfaction levels. During the year, the company has consistently garnered recognition for its unwavering commitment to exceeding client expectations by going the extra mile. As a testament to its commitment to safety, projects in Saudi Arabia and the UAE were awarded distinction (the highest recognition) in British Safety Council International Safety Award 2024.

KEC EPC LLC, the companys subsidiary based in the UAE, has secured its largest order in Dubai. Additionally, the subsidiarys pre-qualifications have been further strengthened to capitalise on opportunities in the UAE market.

In FY24, the company achieved an impressive tender pipeline of USD 4.5 Billion, majorly from the Middle East region.

Saudi Arabia stands out as the leading market within the Middle East, holding a considerable share of the overall market landscape. The evolving economic landscape of Saudi Arabia signals a significant transformation, offering attractive opportunities for diversification beyond its traditional oil-centric economy, which is expected to lead to a strong tender pipeline in the Transmission and Distribution (T&D) sector. The increase in opportunities is primarily driven by Saudi Arabias steadfast commitment to integrating renewable energy and establishing regional grid connections, in line with major infrastructure projects like NEOM city, Qiddiya, Red Sea, and Diriyah Company, among others, as part of Vision 2030 for Saudi.

Similarly in UAE, electricity demand is expected to grow at a CAGR of more than 6% to FY27 driven by the addition of new gas-fired projects as well as shift toward renewables as part of UAE Energy Strategy 2050, which target to increase the contribution of clean energy in the overall national energy mix of the country to 50%. The ambitious Dubai Economic Agenda for 2033 stands as a symbol of progress, aiming to double the size of Dubais economy over the next decade and solidify its position among the top three global cities through strategic investments. Additionally, Omans economic and energy development vision focusses on the emergence of green hydrogen-linked infrastructure as a key growth driver, signalling a shift towards sustainable energy solutions. These investments will necessitate new transmission lines and substation infrastructure.

In the SAARC region, Bangladesh and Nepal stand out as prominent markets. In Bangladesh, a concerted effort towards grid capacity expansion

The company has strategically pivoted towards the adoption of new-age technologies and embraced agile working methods, leading to execution excellence and enhanced client satisfaction levels.

and renewable energy integration is underway. In an effort to achieve its energy goals, Bangladesh has set ambitious targets to attain 40% clean energy by the year 2041. Nepals energy vision prioritises achieving energy self-sufficiency by maximising hydropower potential, expanding renewables, and fostering cross-border transmission line projects for regional integration.

In the East Asia-Pacific (EAP) region, Thailand presents a favourable market with its National Energy Framework for 2023 charting an ambitious course towards achieving net-zero emissions by 2065. The country plans to allocate approximately USD 1.2 Billion for capital expenditure towards nations energy infrastructure, from 2026-2030. Meanwhile, Malaysias Sarawak region emerges as a focal point for energy development, offering abundant opportunities for generation capacity expansion of 2.7 gigawatts, indicating improved opportunities in the T&D sector. Countries such as Vietnam and the Philippines demonstrate ambitious Power Development Plans that encompass Transmission and Distribution (T&D) upgrades and expansions aimed at optimising the utilisation of renewable resources.

SAE Towers, the companys wholly-owned subsidiary in the Americas, has delivered a turnaround performance in FY24 with revenues of approximately

RS. 1,450 Crore, reflecting a growth of 9%. During the year, the company successfully increased its hardware business to RS. ~200 Crore, expanded its hardware portfolio with fittings for OPGW, cross-rope steel wire, and the Stock Bridge Damping system and successfully delivered its first USA hardware order. In FY24, the company, with a focus in sustainability, installed a solar plant at its Brazil facility with a capacity of 750 KWp, which was commissioned in a record 100 days.

The Brazilian Federal Government has been actively investing in the transmission,distribution,andrenewable energy sectors. The Transmission Expansion Program (PET) and the Long-Term Expansion Plan (PELP), according to studies by the Energy Research Office (EPE), estimate that investments in new transmission lines could reach BRL 56.2 Billion in the coming years. The contracts contemplate an extension of 4,471 kilometres of transmission lines and substations with a transformation capacity of 9,840 MVA. In addition, Brazil plans to invest BRL 50 Billion (USD 9.5 Billion) in new transmission lines and infrastructure to boost solar and wind deployments. Furthermore, the Brazilian Minister of Mines and Energy presented the Electricity Transmission Grants Plan (POTEE), which consists of a USD 11.2 Billion investment into the construction of renewable power transmission infrastructure in the Northeast region. Further, many countries in the South America are investing in developing their electricity transmission and distribution systems to serve the rising electricity demand and consolidating renewable energy sources into their grids. The company is in active discussions with developers who have secured projects in the largest ever ANEEL Transmission auction conducted recently and is well-positioned to secure orders for the supply of towers and hardware.

The North America market is projected to witness growth owing to rising electricity demand, requirement to upgrade the present grid infrastructure, propel renewable energy integration and enhance grid resiliency. The U.S. Department of Energy, announced USD 13 Billion in new financing opportunities for developing and transforming the nations electric grid. Incremental transmission investment is required in the U.S. by 2030 to meet the changing needs of the system due to electrification, with an additional USD 200-600 Billion needed from 2030 to 2050. In Mexico, the government is planning to add 4.3 GW of generation capacity in the near term and make large-scale investments in energy transmission and distribution. During the year, KEC achieved a breakthrough in the US market with the successful supply of hardware products, thus opening up new avenues for expansion and growth.

The business has a steady inflow of orders and has a robust order book & L1 position comprising orders for the supply of towers, hardware & poles and engineering & testing of towers from the Americas.

KECs Civil Business has delivered robust YoY growth of 32%, generating revenues of RS. 4,370 Crore. This success stems from executing a diverse range of projects across sectors including factories, buildings, public spaces, water pipelines, water treatment plants, data centres, logistics, and warehouses for both private and government clients. As part of its diversification and risk mitigation strategy, the business has ventured into new segments such as hospitals, FMCG plants, and precast commercial buildings. During the year, the business enhanced its focus on profitable segments, securing orders worth over RS. 4,200 Crore. Positioned for significant growth, the business boasts an unexecuted order book of over RS. 10,000 Crore and benefits from favourable market tailwinds.

Indias goal of becoming a USD 5 Trillion economy hinges on rapid infrastructure development across various sectors and regions. The Union Budget 2024-25, with a capex allocation of RS. 11.1 Lakh Crore, representing 3.4% of Indias GDP, marks an 11% increase in sectoral spending from the previous year, underscoring the governments commitment to accelerating infrastructure investments. Flagship initiatives such as the National Infrastructure Pipeline (NIP), Make in India, and the Production-Linked Incentives (PLI) scheme aim to boost investments in energy, renewables, power, urban infrastructure, water, industrials, and more. The Gati Shakti initiative, or the National Master Plan for Multi-modal Connectivity, targets projects worth USD 1.2 Trillion, fostering intergovernmental collaboration to comprehensively address infrastructure needs, including roads, railways, airports, ports, mass transport, waterways etc.

The Indian real estate sector, valued at USD 280 Billion, accounting for approximately 7% of Indias GDP, encompasses both residential and commercial categories, both of which are experiencing significant growth. According to a report by Confederation of Real Estate Developers Associations of India (CREDAI), it is estimated to reach USD 1.3 Trillion by 2034 and a whopping USD 5.17 Trillion by 2047. Urbanisation is driving substantial demand for affordable housing, while the desire for enhanced lifestyles and work-related needs fuels demand for luxury and expansive housing options. The Company is executing over 70 high-rise residential towers, aiming to become the preferred construction partner for top real estate developers nationwide. The company has strengthened its presence in key real estate hubs such as Mumbai, Pune, Hyderabad, Delhi-NCR, Kolkata and Bengaluru, diversifying and expanding its residential and commercial building portfolio.

Similarly, the commercial real estate sector in India is experiencing a surge in demand, primarily driven by the expansion of Global Capability Centres (GCCs). The resurgence in office space demand, returning to pre-COVID levels, highlights the robustness of the commercial real estate market, valued at USD 40 Billion in 2024 and expected to reach USD 106 Billion by 2029. This year, the Company expanded its project portfolio in the commercial real

The Water segment is a pivotal component of Indias infrastructure development, playing an essential role in ensuring the provision of safe and adequate drinking water. The Government of Indias ambitious Jal Jeevan Mission, especially its flagship ‘Har Ghar Jal programme, is dedicated to supplying potable water to rural households nationwide.

estate sector, including precast building construction works with distinguished real estate developers.

Indias data centre sector is set for substantial expansion, projected to reach ~5 GW from the current 1.3 GW, attracting investments of RS. 1.6 Lakh Crore. This expansion is underpinned by supportive regulatory frameworks, including the Digital Data Protection Bill, which categorises data centres as critical infrastructure, in addition to state-level policies and incentives.

The Companys Data Centre division has maintained its growth momentum, securing projects from renowned multinational corporations and expanding its data centre portfolio to five projects with a total capacity of 100 MW. The Company has also developed Mechanical, Electrical, and Plumbing (MEP) capabilities tailored for the data centre segment, enabling it to competitively bid for and execute comprehensive data centre packages.

In the Industrial segment, Civil Business has achieved significant expansion by securing Engineering, Procurement, and Construction (EPC) orders across diverse sectors. Repeat business from established clients underscores KECs position as the preferred construction partner for major corporations in the Cement, Metals & Minerals, and Chemicals sectors. In the last fiscal year, the company secured substantial orders from leading manufacturers for constructing greenfield and brownfield plants, further reinforcing trust in KECs unmatched quality and reliability. Additionally, the Company has honed its expertise in installing heavy electromechanical equipment and systems, thereby enhancing its capabilities and solidifying its leadership in industrial construction.

The Water segment is a pivotal component of Indias infrastructure development, playing an essential role in ensuring the provision of safe and adequate drinking water. The Government of Indias ambitious Jal Jeevan Mission, especially its flagship ‘Har Ghar Jal programme, is dedicated to supplying potable water to rural households nationwide. As part of the

National Infrastructure Pipeline Scheme, the government has earmarked over

RS. 3.5 Lakh Crore for more than 500 water supply and treatment projects across various states. These extensive initiatives present significant opportunities for companies with expertise in water infrastructure, positioning them to play a crucial role in this transformative agenda.

The Company is actively engaged in executing large-scale water pipeline and supply scheme projects that support the Jal Jeevan Mission. KECs comprehensive scope of work includes constructing over 13,000 kilometres of water pipelines, more than 850 Elevated Storage Reservoirs (ESRs), water intake wells, and water treatment plants. These projects are crucial for ensuring the provision of safe and adequate drinking water to rural areas across India. Notably, these initiatives have achieved significant milestones by collectively installing over 1.25 Lakh house service connections. Leveraging its extensive expertise, the Company is strategically positioned to expand its footprint in the water segment.

Companys Civil Business is well positioned to capitalise on the vast opportunities in the Infrastructure & Real Estate industry, driven by substantial investments. The Company remains dedicated to maintaining a safe and healthy working environment for its employees, underscoring its steadfast commitment to operational excellence and stakeholder satisfaction, earning multiple prestigious awards from clients and industry bodies. In FY24, a few of the major accolades include the "Emerging Company of the Year" at the Construction World Global Awards, the "Sustainable Organisation of the Year 2024" at the Net Zero Summit & Awards, and the British Safety Council Award 2024 for six prominent projects. Additional recognitions include the British Safety Council RoSPA Gold Award for multiple projects, and the "Best Concrete Structure" award for a residential project by the Indian Concrete Institute, Goa Centre & UltraTech Cement Ltd at the ICI – Ultratech Awards – 2023, underscoring KEC Internationals commitment to excellence and safety.

The Company focusses on adopting cutting-edge technology, nurturing design and engineering expertise, and fostering execution excellence. The integration of digital tools such as

Building Information Modelling (BIM), Document Management Systems, AI-driven business development, asset tracking and management systems, Concrete Management Systems, and fuel monitoring systems for mobile assets demonstrates the Companys commitment to leveraging advanced technologies. These initiatives enhance the Companys value proposition and positions it at the forefront of technological advancements in the construction industry. Emphasising its forward-thinking approach and commitment to continuous improvement, the Company launched a transformation programme, in FY23, in collaboration with a leading global management consultant as part of the Civil Execution Excellence initiative. This initiative is helping achieve project and process excellence in the company by developing comprehensive execution and project management practices.

With robust execution capabilities, anchored in an unwavering commitment to excellence in project management, stringent quality assurance, and timely delivery for clients, and promising opportunities on the horizon, the business is poised to sustain its growth trajectory and expand into new territories.

The Companys Urban Infrastructure division is dedicated to delivering comprehensive construction services for Metro rail and Regional Rapid Transit System (RRTS) projects. Companys expertise spans the full spectrum of civil, system works and finishing works for construction of elevated viaducts, stations, river over bridges, depots, workshops, etc. Additionally, the company is delivering projects in advanced technological domains such as power supply systems, electrification (including OHE and Third Rail systems), and ballast-less tracks. The Company is presently executing 15+ projects, encompassing 55 km of viaducts, 43 metro stations, 2 depots, 150 kms of metro track laying work and 100 kms of OHE electrification. Additionally, the Company runs five Precast/Prefab Yards with a production capacity of approximately 2,000 cubic metres of concrete per day.

The Indian government has significantly increased its commitment to enhancing urban public transportation, allocating

RS. 24,931 Crore in the interim budget to support various metro projects nationwide, marking a 7.57% rise from the previous year. Data from the Union Ministry of Housing and Urban Affairs reveals that approximately one Crore passengers use metro systems daily, underscoring the critical role of metro networks in efficient urban mobility. Investments in urban transport infrastructure are being driven by both central and state governments, with substantial backing from international financial institutions. Beyond major metropolitan hubs, over 20 non-metropolitan cities in key states like Maharashtra, Uttar Pradesh, Tamil Nadu, Gujarat, and Madhya Pradesh are actively advancing metro initiatives. This decentralisation fosters equitable economic growth and development across diverse urban landscapes. Recognising the unique needs of urban centres with populations exceeding 20 Lakh, alternative metro models like MetroNeo and MetroLite have been proposed. These innovative systems offer adaptable and economical solutions that balance efficiency, affordability, and environmental consciousness, ensuring optimal urban connectivity without the challenges of extensive heavy metro infrastructure.

In FY24, the Company achieved significant milestones, including the successful completion and delivery of Phase 1B of the Kochi Metro Project, which was inaugurated by the Prime Minister Narendra Modi. Another notable achievement was the trial run of Bhopal Metro Rail from Subhash Nagar Depot, which was constructed by KEC and inaugurated by the then

Madhya Pradesh Chief Minister Shivraj Singh Chauhan.

The Delhi Metro projects are nearing the final stages, with the handover phase approaching swiftly. Out of the total 18 kilometres and 14 stations, 14 kilometres of viaduct and 10 stations are in advanced stages for handover. This includes a groundbreaking one kilometer Integrated Elevated Viaduct, featuring a double-decker structure with traffic on one level and the metro on another, a first of its kind in the Delhi-NCR region. In the Chennai Metro projects, the company has made significant progress with several sections of viaduct and stations close to completion and handing over. KEC was among the first contractors to complete piling works in Phase 4 of the Chennai Metro projects. The Chennai Metro Projects have garnered prestigious RoSPA Gold Awards from the British Safety Council and certificates of appreciation for achieving 8 million safe man-hours across various Metro projects in the preceding year.

During the year, the Company has executed a rigorous programme aimed at enhancing engineering and execution capabilities for Metro projects. This initiative has streamlined processes, elevated project management pro_ciency, and implemented transformative measures for enhanced cost efficiency. The company has integrated state-of-the-art automation and mechanisation techniques into construction operations, including Building Information Modelling (BIM), drone-based surveys, and Ground Penetrating Radar (GPR) for utilities identification, significantly bolstering project planning and monitoring capabilities.

By maintaining a leadership position in innovation and embracing the challenges of a dynamic economy, the Company continues to establish new benchmarks of excellence in the infrastructure sector. This commitment drives sustainable growth and catalyses positive transformation across communities and urban landscapes.

KEC International offers a diverse portfolio of EPC services in the railway sector, encompassing overhead electrification (OHE), new railway lines, track doubling and tripling, gauge conversion, port connectivity, signalling and telecommunication, KAVACH, Automatic Block Signalling, tunnel ventilation, speed upgradation, and construction of railway stations, platforms, bridges, residential quarters, depots, workshops and railway sidings. The Company is also present in urban infrastructure segments delivering power supply systems, electrification – both overhead and 3^rd rail systems and ballast-less track laying projects for metros.

In the fiscal year 2023-24, the business achieved revenues exceeding

RS. 3,100 Crore and secured new orders worth approximately RS. 1,100 Crore. The business secured its first international contract in the SAARC region for signalling and telecommunication project, marking a significant milestone in its global expansion. The company also strengthened its presence in the Auto Block Signalling, speed upgradation and overhead electrification segments of Indian Railways. The business remains selective in Railway order intake to navigate increased competition and maintain a healthy margin profile.

The company played a crucial role in supporting the governments 100% electrification initiative by completing the overhead electrification of 1,092 track kilometres (TKM), representing nearly 19% of the nations total overhead electrification commissioned during the year. Moreover, it achieved a total track laying and commissioning of 116 TKM. With a diverse unexecuted order book surpassing RS. 3,000 Crore, from clients across central public sector undertakings, zonal railways, metro projects, private enterprises, and international government establishments, the business is focussed on fast-tracking the completion of existing projects and re-engineering end-to-end processes.

The Government of Indias commitment to revitalising the Indian Railways, as proposed in the National Rail plan 2030, signals promising prospects for the railways business. In the previous years, a large part of the spent has been towards increasing freight-carrying capacity, rolling stock, and Vande Bharat trains. From FY25, the company anticipates the governments increased allocation towards conventional infrastructure development within railways to facilitate the seamless operation of high-speed trains such as Vande Bharat. Indian Railways has outlined plans with capex allocation of RS. 2.5 Lakh Crore in Interim Budget 2024-25 for capacity expansion. This includes development of three corridors: the energy, mineral, and cement corridors; the port connectivity corridors; and the high-traffic density corridors and extending the railway network by over 40,000 km within the next six to eight years.

The Government is focussing on increasing capacity, speed, and safety of Indian Railway network through upgradation of existing OHE network from 25 kV to 2x25 kV and implementation of Automatic Block Signalling and KAVACH technologies. During the year, the Company extended its leadership in 2x25 kV electrification by adding over 300 kms of projects. The Company is now executing 14 projects of 2x25 kV OHE totalling over 2,400 route kms. Automatic Block Signalling projects are also under implementation across the railway network to increase line capacity through automation and the Company has secured two projects in the segment totalling over 130 RKM.

The Company has been associated with 6 metro networks across the country and currently executing over 10 projects encompassing power system works and Ballast-less track (BLT) works.

Further, Indian Railways indigenously developed Train Collision Avoidance System (KAVACH), which has so far been deployed on over 1,460 RKM, will improve safety and speed of the existing railway. In a joint venture, the Company is presently implementing KAVACH system on over 750 kms of the railway line in the Chipiyana-Kanpur Pandit Deen Dayal Upadhyay section of North Central Railway. Indian Railways plans to introduce KAVACH on 2,500 km of railway lines in FY25, with a subsequent increase to 5,000 km annually until the entire network is covered.

In the realm of urban railway infrastructure, the Company is actively engaged in executing projects encompassing metro electrification, power supply systems, and track laying for clientele spanning Mumbai, Patna, Kochi, Chennai, Ahmedabad, Kolkata, and New Delhi. Presently, over 930 km of metro rail is operational across 20 cities in India, with an additional 900 km under construction in various cities. The Company has been associated with 6 metro networks across the country and currently executing over 10 projects encompassing power system works and Ballast-less track (BLT) works.

The Company is backward integrated into manufacturing of supplies to enhance supply chain reliability, improve quality, and drive competitive advantage in the market. The Company manufactures railway cables, railway conductors signalling cables, PIJF cables, contact wires, feeder, jumper, and dropper wires, catenary and contact conductors, Quad cables, etc. at its cable manufacturing plant. The Company also manufactures Over Head Electrification structures in its manufacturing units for Transmission & Distribution structures.

The Company is committed to improving and strengthening project engineering and execution practices to reduce costs and shorten delivery timelines. The Company developed and deployed technological solutions such as connected IoT for remote quality inspection and freight-optimisation digital tool to reduce dead freight and optimise logistic cost.

The company, while remaining committed to deepening its presence in emerging technology-enabled segments in Indian Railways, is proactively working on expanding the railways business to the international market by leveraging its reach in the Transmission & Distribution business.

OIL & GAS PIPELINES BUSINESS

The Companys Oil & Gas pipelines business, the focus is on laying cross- country Oil & Gas i.e. Crude, Natural Gas and Petroleum Product pipelines across the country. In FY24, the business has delivered revenues of over RS. 625 Crore with a healthy growth of 30% y-o-y. In line with the diversification agenda, the company has secured its first International order in Benin, Africa for setting up a CGD pipeline network. The Company has received approval from Saudi Aramco for onshore Oil & Gas pipeline projects. The Company is also pursuing approvals in other countries as part of the globalisation strategy for the business.

The business has strengthened the Composite Station Works portfolio by securing new orders in the segment. Further, the business is focussing on accelerated completion of existing Composite Station projects, which will enhance its capability to bid for process plants and refinery offsite works paving way for further diversification into Refinery works, Gas Gathering stations and LNG plants. Beyond Oil & Gas, the business is executing projects in iron ore slurry pipelines and water pipelines.

The company expects the oil & gas pipelines market to remain healthy in FY25 with a market size of

RS. 4,500 – 5,000 Crore. India is poised to become the worlds largest source of oil demand growth in this decade. During the 2023-2030 forecast period, India is projected to account for more than one-third of global oil demand growth. Going forward, the government plans to invest RS. 7.5 Trillion in the development of the oil and gas infrastructure in India over the next five years. Of this, roughly RS. 3 Trillion, is expected to be used for building gas infrastructure including pipelines, LNG terminals and CGD networks.

India is currently the worlds fourth- largest refiner and it further plans to add as much as 56.6 million tonnes per annum (MTPA) of crude oil refining capacity in the next few years, with 84% of this expansion through brownfield projects. The governments focus on refining stems from Indias rising consumption of crude oil as its industrial, construction, and manufacturing sectors expand. Additionally, following the Russia-Ukraine conflict, Indian refiners have emerged as key destinations for refining. Furthermore, India is strengthening its strategic petroleum reserve programe and improving its oil industry readiness to enhance its capacity to respond to potential oil supply disruptions. Indias leading Oil & Gas players are also actively expanding their petrochemical footprint.

In international markets, major operators like Saudi Aramco have announced investments in over 100 projects during 2024-2027. These projects encompass oil and gas processing, petrochemicals, pipelines, and allied infrastructure. In the UAE, ADNOC Gas is set to invest over USD 13 Billion in the domestic and international projects by 2029. ADNOC also plans to expand its natural gas pipeline network and develop infrastructure to meet the growing global gas demand for petrochemicals in Ruwais.

The focus on economically and environmentally sustainable transportation of iron ore slurry is expected to drive the slurry pipeline market in India. Both private and public sector companies are planning large slurry pipeline projects alongside pellet and beneficiation plants.

The business is continuing to invest in strengthening its people and equipment base to cater to the growing hydrocarbons sector. Further, the business is focussing on innovation and digitalisation by leveraging technologies in project monitoring and cost optimisation.

The cables business offers a comprehensive portfolio, delivering a wide range of cables, transmission conductors, and turnkey cabling solutions to over 90 countries worldwide. Renowned for its steadfast commitment to timely delivery and superior quality, the business specialises in manufacturing a diverse spectrum of cables, including low voltage, high voltage, and extra high voltage cables, control and instrumentation cables, telecom cables, and overhead conductors for railway and transmission lines. The Company also manufactures speciality cables such as green cables, solar cables, submersible cables, concentric cables, railway cables, EV charging cables, mining cables, and hybrid cables. The Company has two fully integrated manufacturing facilities in Vadodara and Mysuru, both in India.

The cable industry in India is poised for significant expansion, with projections of approximately RS. 65,000 Crore by FY28, boasting a remarkable growth rate exceeding 10%. This growth is propelled by the governments focus on infrastructure development, transition to green energy, investments in the Power Transmission and Distribution sector, rapid urbanisation driving demand in residential and commercial real estate, industrial capital expenditure supported by the "Make in India" initiative, and a global trend towards diversification and derisking of supply chains. Investments in sectors like data centres, digital connectivity, EV charging infrastructure, defence, and railways are expected to bolster the industry.

KECs cables business achieved its highest-ever revenue, profitability, and order intake during FY24. The business has delivered a more than 80% growth in Profit Before Tax (PBT) as compared to the previous year. With orders amounting to over RS. 1,900 Crore, a 12% increase over the previous year, the business has seen growth across sectors, including Transmission & Distribution, renewables, metals and mining, and data centres. Export orders grew by 11% over FY23 with foray into 5 new markets and with shipments to 33 countries. Moreover, the business obtained UL approvals for cable exports to the US, which is expected to drive growth in the future. In the domestic market, order intake through dealers improved by 36%.

In a significant move, the company has set up a PVC compound manufacturing facility, leading to lower costs, better quality, and improved supply chain control. Continuing its focus on innovation, the company introduced seven new products during the year. In yet another strategic development, the Company is establishing an

Aluminium conductor manufacturing plant to meet the growing demand in the T&D sector. The diverse portfolio of Aluminium conductors, including ACSR, Al-59, AAAC, ACSS, etc., will enable the business to cater to varied sector requirements and drive significant growth in both Cables and Power T&D businesses. Being a strategic enabler for the Companys other businesses is significantly helping the Company to improve the performance of the Cables business, and simultaneously, enhance competitiveness of the respective business segments.

KECs cables business is well-positioned to capitalise on significant market opportunities, including the increasing demand for faster and more reliable data cables driven by 5G adoption, cloud computing, and IoT penetration. The Companys expertise in manufacturing Optical Fibre Cables (OFC) aligns well with this increase in demand for data cables. Its portfolio of Green Cables, compliant with RoHS (Restriction of Hazardous Substances) and REACH regulations and _ame-retardant cables demonstrate companys commitment to safety and sustainability in the industry.

There is a growing trend towards underground cabling both in India and International, driven by the need to enhance safety, reliability, and efficiency while addressing Right of Way (RoW) challenges. The rapid expansion of Smart cities and the increasing demand for uninterrupted power supply in regions prone to extreme weather conditions further underscore the importance of underground cabling solutions. Drawing upon its extensive expertise, the company has made notable progress in executing large-scale underground cabling projects, both domestically and internationally.

With a robust portfolio of products and services and strengthened manufacturing capabilities, the Company is well-positioned to meet the increasing demand for cables in both Indian and global markets. The Company remains confident to significantly grow the business and create value for its stakeholders.

In the newly launched Renewables businesses, the Company is strategically focussed on building future engines of growth in the areas of energy transition and other speciality sectors. With Solar, Wind, Green Hydrogen and EHV cabling identified as key areas, it aims to capitalise on the global shift towards green energy and green transportation. The business has achieved revenues of

~ RS. 450 Crore, marking an impressive growth of over 400% year-on-year.

India ranks 4^th globally in Renewable Energy installed capacity, 4^th in Wind Power capacity, and 5^th in Solar Power capacity, according to the REN21 Renewables 2023 Global Status Report. The installed solar energy capacity has surged by 30 times in the last 9 years and currently stands at approximately

82 GW as of March 2024. Indias solar market is projected to grow at a Compound Annual Growth Rate (CAGR) of 40%, reaching a substantial

USD 238 Billion by 2032 (from USD

38 Billion in 2021). This represents a market potential of more than

RS. 1 Lakh Crore in the next five years. India has ambitious plans to reach 140 GW of wind capacity by 2030, up from the current 46 GW as of March 2024, as part of its journey towards the long-term goal of achieving net zero emissions by 2070. The country has set an enhanced target at the COP26 of achieving 500 GW of non-fossil fuel-based energy by 2030. This commitment is a key pledge under the Panchamrit initiative, which is recognised as the worlds largest expansion plan in renewable energy.

The Green Hydrogen Mission, established in 2023, with the goal of positioning the country as a major hub for the production and export of the green hydrogen / ammonia, aims to transition the economy to low carbon intensity and reduce dependency on fossil fuel imports. This initiative will lead to the development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonnes) per annum by 2030, along with an associated renewable energy capacity addition of about 125 GW in the country. The Green Hydrogen targets for 2030 are expected to attract over RS. 8 Lakh Crore in investments, with a significant increase in projects for hybrid renewable energy, associated transmission lines, substations, as well as storage and pipeline projects for green hydrogen / ammonia. The central government has authorised a budget of RS. 20,000 Crore for the mission. According to NITI Aayog, the market is expected to be worth USD 340 Billion in total by 2050. Additionally, India is attracting foreign direct investments in the segment due to comparatively low setup costs, high solar irradiation, improved government support, and the availability of well-qualified professionals.

With the expansion into the Renewable Energy sector, the business has prioritised large-scale solar PV power plants and onshore wind EPC projects, while also building its capabilities in Green Hydrogen. Positioning itself as the preferred partner within the growing opportunities in this emerging energy sector, the company is exploring opportunities in the expanding markets of Middle East, Latin America, Southeast Asia and Africa.

KEC Internationals emergence into the renewable energy and speciality sectors marks a strategic pivot towards sustainable growth avenues. As India steers towards ambitious renewable energy targets and global initiatives like the Green Hydrogen Mission gain traction, the business stands poised at the forefront, leveraging its expertise and partnerships to contribute meaningfully to these transformative endeavours.

With its extensive expertise and presence across the value chain and related sectors, the Company is strategically positioned to capitalise on the myriad of opportunities arising in the coming years.

FINANCIAL PERFORMANCE

Analysis of Profit and Loss statement and Balance Sheet including the key ratios based on consolidated results is mentioned as follows:

PROFIT AND LOSS STATEMENT ANALYSIS

Revenue for FY24 stands at

RS. 19,914 Crore with a robust growth of 15% Y-o-Y. The growth is backed by healthy execution in T&D, both in India and International and Civil businesses.

In terms of EBITDA, the company has delivered a substantial growth of 46% Y-o-Y with EBITDA margins expanding by 130 bps to 6.1% vis-?-vis 4.8% in FY23.

Companys PBT has increased by 2.6 times to RS. 426 Crore as against RS. 161 Crore in FY23 and PAT has nearly doubled to RS. 347 Crore as against RS. 176 Crore in FY23.

Interest costs to sales ratio has slightly increased to 3.3% in FY24 against 3.1% in FY23 owing to higher interest rates.

Earnings per Share (EPS) increased to RS. 13.49 in FY24 from RS. 6.85 in FY23.

Recommended a Dividend of RS. 4 per equity share i.e. 200% of the face value of RS. 2 each for FY24 – Total outflow of RS. 103 Crore.

BALANCE SHEET ANALYSIS

Net Worth increased to RS. 4,096 Crore from RS. 3,771 Crore in FY23. The

Company has not raised any Equity Capital during the year, keeping the Equity Share Capital unchanged at RS. 51 Crore. Reserves and Surplus increased to RS. 4,044 Crore from RS. 3,720 Crore in FY23.

Book Value per share increased to RS. 159 from RS. 147 in FY23.

Gross Borrowings increased to RS. 3,826 Crore from RS. 3,216 Crore in FY23.

The Companys Net Working Capital days have been maintained at 112 days in line with March 2023.

KEY FINANCIAL RATIOS
Key Financial	2023-24	2022-23	Change
Ratios (1)
Debtors Turnover	4.5	3.7	20.9%
Inventory Turnover	16.4	15.2	8.0%
Interest Service Coverage	1.9	1.6	21.0%
Ratio
Current Ratio	1.1	1.1	-1.8%
Debt Equity Ratio	0.9	0.9	9.6%
Operating Profit Margin %	6.1%	4.8%	27.0%
Net Profit Margin %	1.7%	1.0%	71.0%
Return on Net Worth %	8.8%	4.8%	85.1%

• Operating Profit Margin, Net Profit Margin and Return on Net Worth have improved due to increase in profits during the year.

• There were no other significant changes (25% or more) in any of the above key financial ratios.

[1] Assessment of key ratios have been derived at as follows: (Debtors Turnover = Revenue from Operations/Trade Receivables) (Inventory Turnover = Revenue from Operations/Inventories)

(Interest Service Coverage Ratio = Profit Before Depreciation and Amortisation, Interest and Tax/ Interest) (Current Ratio = Current Assets/Current Liabilities) (Debt Equity Ratio = Total Debt /Total Equity including all reserves) (Operating Profit Margin % = EBITDA/Revenue from Operations) (Net Profit Margin % = Net Profit after Tax/Revenue from Operations) (Return on Net Worth % = Net Profit After Tax/Average Net Worth (Total Equity including all reserves))

INTERNAL CONTROL ADEQUACY

At KEC, Internal Control serves as a fundamental pillar of Corporate Governance. The Company has implemented an Internal Control mechanism that aligns with its evolving needs. This mechanism operates through the ERP system, SAP, and incorporates effective Internal Controls to safeguard the Companys resources, ensure operational efficiency, monitor systems, and comply with laws and regulations.

The Internal Control mechanism is tailored to the nature, size, and complexity of the business at both the entity and process level. It ensures integrated, objective, and reliable financial information. The Internal Audit department conducts audits at various locations, covering all major functions with focus on operational areas and Internal Control systems. This comprehensive approach ensures that all Company operations are audited at least once every three years. The department provides assurance across all areas of risk, including strategic, commercial, safety, operational, compliance, and financial risks in all business segments of the Company. The management and the Audit Committee of the Board of Directors receive periodic recommendations on process improvements and implementation status reports. The Audit Committee periodically reviews the adequacy of the Internal Control system, provides guidance, and directs further action, if necessary, including benchmarking best practices externally.

Throughout FY24, the internal audit findings & implementation status of actions taken with respect to recommendations against audit findings were shared with the Audit Committee through presentations. The Audit Committee expressed satisfaction with the adequacy of the Companys Internal Control system and procedures.

Employees are guided by the ‘RPG Code of Corporate Governance & Ethics, which reflects and reinforces the unique corporate culture and values prescribed by KEC and the RPG Group. The Internal Control system includes a whistle-blower mechanism, which encourages directors, employees, and third parties to report genuine concerns, misconduct, or fraud without fear of unfair treatment or punishment. In exceptional cases, they have direct access to the Chairman of the Audit Committee.

ENTERPRISE RISK MANAGEMENT

The Company works predominantly in the Engineering Procurement and Construction (EPC) business and has developed robust risk management processes. With widespread operations across 30+ countries, the Company faces various risks associated with turnkey projects, whose long-term success largely depends on the existence of a robust risk identification and management system that helps identify and mitigate various risks.

KECs robust risk management framework works at various levels across the Company and mandate periodic reviews of its systems to ensure they are in line with current internal and external environments.

Some of the enterprise-level risks identified by the Company and the mitigation measures being implemented are:

1. Geopolitical Risks:

Unexpected political unrest or changes in some of the developed/ developing countries, ongoing Ukraine-Russia war, Israel-Palestine war and Red Sea incidents are some of the risks which can disrupt supply chain & impact the execution/ progress of its projects.

Mitigation: The Company monitors such risks and develops suitable mitigation strategies addressing the feasibility of operating in the country, strategic sourcing options, and evaluating the impact of war and working out strategies to overcome the risks.

KECs robust risk management framework works at various levels across the Company and mandate periodic reviews of its systems to ensure they are in line with current internal and external environments.

2. Commodity Price Variations:

The Company deals with various commodities, such as steel, zinc, copper, and aluminium. Fixed price contracts may have a negative impact on the Companys profits if input costs rise without proper hedging mechanisms.

Mitigation: The Company believes in keeping its commodity exposures hedged to optimum levels and measures and manages these risks centrally. It carries out periodic reviews of these risks at appropriate levels. In some projects the supply of project material is kept in customers scope.

3. Cyber Security:

Cyber-attacks and threats may impact the security of IT infrastructure and critical IT assets of the Company.

Mitigation: The Companys IT systems are protected with anti-virus and its network is secured through firewall to avert any cyber-attacks. Network Logical separation between OT and IT are in place across locations. New generation Security Operations Centre Services have been deployed which not only records but automatically disables any network intrusion. Audit recommendations and suggestions

The Companysrobust globalpresence helpsit minimise theimpact on businessduring a slowdownin investment in acountry or region.It has a significantpresence in several

underdevelopedand emergingeconomies, whereinfrastructureinvestment remainsa key priority forsustainable growth.provided by an external IT specialistare implemented to further strengthenIT security.

4. Interest Rate Fluctuation Risk:

Volatility in interest rates impacts theprofitability of the Company.

Mitigation: The Company closelyreviews its borrowing levels toensure reduction in working capitalintensity & improvement in cashflows and optimises mix of foreigncurrency borrowings.

5. Execution Challenges:

The Company faces executionchallenges such as geologicalsurprises, land acquisition and

Right of Way (RoW) issues, pendingapprovals and clearances fromGovernment agencies, workingin difficult terrains, manpowerissues, etc.

Mitigation: The Company closelymonitors the risks for each projectand deploys suitable strategies toeffect timely mitigation. Companyengages various technologies toassess terrains and soil conditions atproject sites. Company has deployedseveral mechanisation, automation and digitisation initiatives across projects to improve productivity and quality of execution.

6. Demand Risk:

Infrastructure investment slowdown can lead to lower order intake and lower sales.

Mitigation: The Companys robust global presence helps it minimise the impact on business during a slowdown in investment in a country or region. It has a significant presence in several underdeveloped and emerging economies, where infrastructure investment remains a key priority for sustainable growth. Further, the Company has a diversified business portfolio which includes Substations, Railways, Civil, Solar, Urban Infrastructure, Oil & Gas Pipelines, Smart Infrastructure, and Cables, all of which provide ample growth opportunities in the future.

7. Foreign Currency Fluctuation Risk:

With operations in many geographies, any adverse movement in any currencies can adversely impact project profitability and financials.

Mitigation: Foreign exchange risk is tracked and managed based on the approved Risk Management Policy. Tenders are generally quoted in hard currencies and other currencies based on the currency of import to maintain a natural hedge. Currency exposure is monitored on a monthly basis and hedged on a net basis.

8. Environment, Health & Safety:

Environment, health and safety risk impacting employees and workers.

Mitigation: EHS is integrated into the KRAs of various teams, with on-site safety officers, regular audits by the Corporate Safety Audit team, review of audit results in monthly EHS Steering Committee meetings, and provision of Behaviour-Based Safety Training (BBS) to promote proactive accident prevention.

9. Succession Planning Risk:

Risk of inadequate succession planning for key personnel posing challenges to long-term sustainability and growth.

Mitigation: Top talent and critical positions are identified annually in the organisational management review. The leadership pipeline has been strengthened and proper processes are implemented for hiring and retaining the best talent. Additionally, the Company periodically reviews the succession plan for its senior management team to ensure continuity in leadership.

HUMAN RESOURCES

The Company has embraced a holistic approach centred on attracting, inspiring, and retaining talent, fostering a culture of excellence and innovation. This commitment is reflected in significant advancements in people practices, demonstrating the Companys dedication to creating a nurturing workplace environment conducive to growth and well-being.

The organisations focus on its people is evident in its people-centric agenda, encapsulated by the RPG Groups brand tagline - "Hello Happiness". Aligned with the RPG Groups principles, KEC cultivates a performance-driven culture that emphasises continuous learning and development.

To gauge employee sentiment, the Company conducted the "Happiness Survey" in FY24, achieving a Happiness quotient of 83%. Key drivers of happiness include a sense of fulfilment, connection, and value within the workplace. To ensure sustained focus on employee well-being, KEC conducts action planning workshops and has established a dedicated Happiness Council. These initiatives aim to enhance employee satisfaction and drive a positive cultural shift across the organisation.

At the heart of the Companys culture are six pillars, guiding employee actions and shaping shared values that contribute to a vibrant and fulfilling work environment: Execution Excellence, Happiness, Customer- Centricity, Inclusive Diverse and Global Mindset, Technology & Engineering Mindset, Empowerment & Trust.

The Company is committed to promoting employee well-being and continuous development through various initiatives. The introduction of KECARES, Companys holistic wellness programme, underscores this commitment, offering sessions tailored to enhance Physical, Emotional, and Financial well-being of all employees. Additionally, to recognise and celebrate outstanding contributions towards employee happiness, the organisation has established the Reward

& Recognition programme, RACE - Recognise and Celebrate Excellence.

Recognising the importance of lifelong learning in todays dynamic business landscape, the Company fosters a culture of continuous development. Various training programmes, workshops, and mentorship opportunities are provided, including the Project Management Excellence Certification Programme, Procurement Academy, and sessions focussed on enhancing Commercial Acumen. The Digital Learning Championship and virtual learning initiatives further enrich the learning experience for employees.

Leveraging technology to enhance HR operations and employee experience is a priority for the Company. Significant progress has been made in digitising HR procedures, from recruitment and onboarding to performance management and employee engagement. The implementation of AI-based chatbot, Electra, provides round-the-clock assistance to employees with their queries, further enhancing the overall employee experience.

As the preferred employer among top engineering and business school campuses in India, the Company invests in talent development through flagship programmes like the Engineering Leadership Programme. Recruitment efforts focus on attracting engineering graduates and postgraduates from prestigious institutions such as IITs, NITs, and NICMARs across India. The organisation also recruits talented individuals from leading business schools through the Group Management Resource programme and identifies future leaders through the Future Leaders Board programme, aligning with the Groups Vision of Unleashing Talent.

Diversity and inclusion are central to the Companys values. Initiatives such as Womenocity aim to improve the experiences of female employees, while hiring practices prioritise diversity, including individuals returning to work after a career break and those from marginalised communities, in alignment with ESG Goals. As of March 31, 2024, the Company has a total employee count of 7,644 (including subsidiaries).

CAUTIONARY STATEMENT

Statements in this report describing the Companys objectives, expectations, predictions, and assumptions may be ‘forward-looking within the meaning of applicable Securities Laws and Regulations. Actual results may differ materially from those expressed herein. Important factors that could influence the Companys operations include global and domestic economic conditions affecting demand, supply, price conditions, natural calamities, change in Governments regulations, tax regimes, other statutes, and factors such as litigation and industrial relations.

Leveraging technology to enhance HR operations and employee experience is a priority for the Company. Significant progress has been made in digitising HR procedures, from recruitment and onboarding to performance management and employee engagement.