Kridhan Infra Ltd Management Discussions

Annexure -C

INDUSTRY STRUCTURE AND DEVELOPMENTS

OVERVIEW

The objective of this report is to convey the Managements perspective on the external environment and infrastructure industry, as well as strategy, operating and financial performance, risks and opportunities and internal control systems and their adequacy in the Company during FY2024-25. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Annual Accounts 2024-25. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (‘SEBI) from time to time.

The Company has been facing some hurdles over the last few years due to liquidity mis-match. Despite of the uncertainties and challenges faced by the company, the management is optimistic of a resolution with its financial creditors and regain its position going forward due to strong fundamentals like product development, technology, manpower, quality, relationship etc.,

Global GDP growth is anticipated to improve slightly to 3.0% in 2025, following a stabilization at 2.9% in 2024. The ongoing geopolitical tensions, particularly the Russia-Ukraine conflict, alongside persistent inflationary pressures, continue to challenge the global economic environment. However, the easing of monetary policies by central banks, as inflation begins to moderate, is expected to provide some support to global growth.

In 2025, the United States is projected to experience a modest growth rate of 2.0%, benefiting from a more stable monetary environment. The Eurozone is forecasted to see a slight recovery with a growth rate of 1.2%, as energy markets stabilize and fiscal policies support recovery efforts. Chinas economy is expected to maintain a growth rate of 5.1%, driven by continued domestic demand and industrial expansion.

Global inflation is expected to decline further to 5.8% in 2025, as commodity prices stabilize and supply chain disruptions continue to resolve. Inflationary pressures in major economies like the US, Eurozone, China, and India are expected to ease, contributing to a more favorable global economic outlook.

Indias economic growth is expected to remain strong, with GDP projected to grow by 6.5% in FY 2024-25. The governments continued emphasis on infrastructure development through initiatives like the Gati Shakti plan and the Production Linked Incentive (PLI) scheme will be key drivers of industrial growth and competitiveness. As global businesses continue to diversify supply chains, Indias position as a global manufacturing hub is expected to strengthen further.

Indias ongoing digital transformation, supported by robust digital infrastructure, will continue to drive e-commerce growth and attract international investments in the technology sector. The widespread adoption of digital platforms is reshaping various sectors, including retail and services, further solidifying Indias position in the global digital economy.

The long-term growth prospects of the Indian economy remain positive, with a growing middle class fueling consumer demand. Indias large domestic market, coupled with a dynamic industrial sector, continues to attract multinational investments across various sectors. Additionally, Indias burgeoning startup ecosystem is expected to remain a significant driver of economic growth, supported by foreign investments and a tech-savvy population.

Capital investment is projected to remain at approximately 3.5% of GDP, bolstering private sector investments, job creation, and overall economic growth. Significant investments in the energy sector, particularly in energy transition projects such as the Green Hydrogen Mission, will play a crucial role in driving growth. Key steel-consuming sectors are expected to perform well in FY 2024-25, with government-led infrastructure projects and an improving global semiconductor supply chain providing support.

The governments focus on CAPEX-led growth is evident in the FY 2024-25 budget, with an allocation of INR 14 lakh crore for infrastructure development, marking a 35% increase over the previous year. This expenditure is expected to significantly contribute to GDP growth, particularly in sectors like railways, national highways, and housing, which are essential for driving steel demand.

The cement industry is set to benefit from ongoing infrastructure projects and robust demand in the housing, commercial, and industrial segments. Government policies, including increased budget allocations for highway and road infrastructure, are expected to sustain growth in this sector. The PM Awas Yojana, with its extended Credit-linked Subsidy Scheme (CLSS) until 2027, will continue to support growth in the real estate sector, especially in affordable housing.

Urbanization will remain a key driver of demand for cement and steel, with construction activities in metropolitan, semi-urban, and urban areas continuing to grow. Large-scale residential projects under the PMAY program are expected to boost the residential real estate sector, leading to increased consumption and spending in these markets.

The outlook for Indias economy in FY 2024-25 remains positive, with strong urban consumption and infrastructure spending expected to drive growth. Demand is projected to grow at 7.6% in 2025, supported by robust consumer spending and government-led infrastructure projects. The steel and cement sectors are likely to see favorable growth opportunities, with continued investments in housing and infrastructure. The Union Budget 2024-25s allocation of $13 billion for safe housing, sanitation, and road connectivity reflects the governments commitment to sustained infrastructure development.

With inflation well-managed and economic growth on a healthy trajectory, India is well-positioned for continued expansion. The anticipated pre-election spending, coupled with a busy construction season, is expected to drive volume growth in the steel industry, with production likely reaching 430- 440 million tonnes.

However, the economic environment remains complex, with risks stemming from geopolitical tensions, particularly in neighbouring regions, and persistent inflationary pressures. High interest rates could also pose challenges to sustained growth. In the US, economic growth may be constrained by ongoing fiscal and monetary policies. Europe continues to face recession risks, exacerbated by high natural gas prices, which are dampening consumer spending and wage growth. The ongoing energy crisis resulting from the Russia-Ukraine war, along with tight monetary policies by the ECB and the Bank of England, will continue to impact Europes growth potential.

OPERATIONS

A Summary of key financial indicators is given below. The detailed financial performance may be viewed from the Balance Sheet and schedules thereto in the Annual Report.

(Rs. In lakhs)

We are conscious of the need for an environmentally clean and safe operations. Our policy requires all operations to be conducted in way so as to ensure safety of all concerned, compliance of statutory and industrial requirement for environment protection and conservation of natural resources.

The Company had a well-defined risk management mechanism covering risk analysis, exposure, potential impact, and risk mitigation processes. We assess the overall risk exposure from both top-down and bottom-up perspectives, which are then consolidated to provide a birds eye view of our risk profile.

The subsidiary Company at Singapore, viz Readymade Steel Singapore Pte Ltd., is under liquidation process. The Company has already impaired its investments and loan outstanding in the said subsidiary. The accumulated losses in the previous years have resulted in erosion of Companys net worth. The Company has submitted its plan for settlements to its lenders, for long term viable solution, which is under active consideration.

The Management monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of management, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls.

The Audit Committee reviews the reports submitted by the management. Also, the Audit Committee has independent sessions with the external auditor and the Management to discuss the adequacy and effectiveness of internal financial controls over financial reporting and internal financial controls respectively.

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.