Madhucon Projects Ltd Management Discussions

I. Industry Structure and Developments:

Indias high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. Infrastructure is a key enabler in helping India become a US $26 trillion economy. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs. Indian Prime Minister also recently reiterated that infrastructure is a crucial pillar to ensure good governance across sectors.

The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The US$ 1.3 trillion national master plan for infrastructure, Gati Shakti, has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. Infrastructure support to the nations manufacturers also remains one of the top agendas as it will significantly transform goods and exports movement making freight delivery effective and economical.

The Smart Cities Mission 1 and Housing for All programmes have benefited from these initiatives. Saudi Arabia seeks to spend up toUS$ 100 billion in India in energy, petrochemicals, refinery, infrastructure, agriculture, minerals, and mining.

The infrastructure sector is a key driver of the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from the Government for initiating policies that would ensure the time-bound creation of world-class infrastructure in the country. The infrastructure sector includes power, bridges, dams, roads, and urban infrastructure

development. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure, and construction development projects.

To meet Indias aim of reaching a US$ 5 trillion economy by 2025, infrastructure development is the need of the hour. The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as Make in India and the production-linked incentives (PLI) scheme to augment the growth of the infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water, and irrigation.

While these sectors still remain the key focus, the government has also started to focus on other sectors as Indias environment and demographics are evolving. There is a compelling need for enhanced and improved delivery across the whole infrastructure spectrum, from housing provision to water and sanitation services to digital and transportation demands, which will assure economic growth, increase quality of life, and boost sectoral competitiveness.

Budget 2025-26, capital investment outlay for infrastructure has been increased by Rs. 11.11 lakh crore (US$ 133.86 billion), which would be 3.4 % of GDP. As per the Interim Budget 2025-26, a capital outlay of Rs. 2.65 lakh crore (US$31.81 billion) has been made for the Railways, an increase of 5.8% overthe previous year. Starting with 6,835 projects, the NIP project count now stands at 9,142 covering 34 sub-sectors, as per news reports. Underthe initiative, 2476 projects are under the development phase with an estimated investment of US$ 1.9 trillion. Nearly half of the under-development projects are in the transportation sector, and 3,906 are in the roads and bridges sub-sector.

The Indian Railways expects to complete total revenue of Rs. 2,64,500 crore (US$ 31.81 billion) by the end of 2025-26. Indias logistics market is estimated to be US$ 317.26 billion in 2024 and is expected to reach US$ 484.43 billion by 2029, growing at a CAGR of 8.8%. India intends to raise its ranking in the Logistics Performance Index to 25 and bring down the logistics cost from 14%to8% of GDP, leading to a reduction of approximately 40%, within the next five years.

AAI and other Airport Developers have targeted capital outlay of approximately Rs. 98,000 crore (US$ 11.8 billion) in airport sector in the next five years for expansion and modification of existing terminals, new terminals and strengthening of runways, among other activities.

India currently has the fifth-largest metro network in the world and will soon overtake advanced economies such as Japan and South Korea to become the third-largest network. Metro rail network reached 810 kmsand is operational in 20 cities. At almost 20 kms, Mumbai monorail is the third largest route in the world after China with 98 kms and Japan with 28 kms.

FDI in construction development (townships, housing, built-up infrastructure, and construction development projects) and construction (infrastructure) activity increased by 12.4% year-on-year and stood at $67.7 billion for the period of April 2024 to January 2025

Indian logistics market is estimated to touch US$ 320 billion by 2025. The overall infrastructure capex is estimated to grow at a CAGR of 11.4% over 2021 -26 driven by spending on watersupply, transport, and urban infrastructure. Investment in infrastructure contributed around 5% of the GDP in the tenth five-year plan as against 9% in the eleventh five-year plan. Further, US$ 1 trillion investment in infrastructure was proposed by the Indias planning commission during the 12th five-year plan, with 40% of the funds coming from the private sector.

Overall, the infrastructure sector is the winner in this years Budget. However, its success lies in its effective implementation and focusing on projects with quick turnaround time.

II. Opportunities and Strengths:

The Government of India is taking every possible initiative to boost the infrastructure sector and is expected to invest highly in the infrastructure sector, mainly Transportation, Urban Development & Industrial Projects. Many steps have been taken to improve funding avenues to the infrastructure sector. There are huge opportunities for the industry in the future. Your Company is having opportunities and strengths with an order book position of Rs. 5964 Crores.

Segment-wise performance:

1. Transportation Division:

Your Company has executed many transportation projects such as highways, tunnels, railways, flyovers etc across PAN India. Besides, work amounting Rs. 3709.97 Crore was done till March, 2025 out of the total work amounting to Rs. 2826.26 Crore. Balance work of Rs. 883.71 Crore is outstanding as on date.

2. Irrigation Projects:

Your Company executed many Irrigation projects such as Canals, Dams, Tunnels, Spillways, Pump house and Lift Irrigation Projects across PAN India. At present various Irrigation Projects having a total value of Rs. 2,468.06 Crore are under progress across PAN India. Out of which work amounting to Rs. 1,648.58 Crore was already executed till March, 2024, while work amounting to Rs. 819.48 Crore is the balance outstanding to be executed.

3. Industrial Projects:

Your Company has executed several Industrial projects such as Coal Handling Plants etc., in PAN India, work amounting Rs. 1807.85 Crore was done ti II March, 2025 out of the total work amounting to Rs. 1374.20 Crore. Balance work of Rs. 433.65 Crore is outstanding as on date.

III. Outlook:

Future outlookof infrastructure industry in India:

The outlook for the Infrastructure sector appears positive since the country is looking forward with a strong mandate to stimulate economic growth.

Some of the recent government initiatives and investments in the infrastructure sector are as follows:

The Central government has increased its capital expenditure (capex) allocation to US$ 133.9 billion (Rs. 11.11 trillion) for the fiscal year beginning April 1, 2024, with a focus on advancing Indias infrastructure, as part of a strategic move to stimulate economic growth. An increase of 11.1% from the previous year, the FY25 interim budget allots US$ 133.9 billion (Rs. 11.11 trillion) for capital expenditures, or 3.4% of GDP. With a 37% increase in the current fiscal year, capital expenditures (capex) are on the rise, which bolsters ongoing infrastructure development. In Interim Budget 2024-25, capital investment outlay for infrastructure has been increased by 11.1 % to Rs. 11.11 lakh crore (US$ 133.86 billion), which would be 3.4 %of GDP.

Goals for Indias economic growth to become a US$ 5 trillion economy. In order to anticipate private sector investment and to address employment and consumption in rural India, the budget places a strong emphasis on the development of roads, shipping, and railways. Indias ambitious plan calls forspending US$ 1.723 trillion (approximately Rs. 143 trillion) on infrastructure between FY24 and FY30, with a particular emphasis on power, roads, and developing industries like renewable energy and electric vehicles.

Indian Prime Minister emphasized that India is committed to attaining net-zero carbon emissions by 2070, and that the countrys ambitious goal of 500 gigawatts (GW) of renewable capacity by 2030 should be met. In order to make this possible, he unveiled a plan to raise the proportion of gas in Indias energy mix to 15% by 2030, which will involve spending roughly US$ 67 billion over the course of the following five to six years.

The government has decided to allocate Rs. 2.76 lakh crore (US$ 33.4 billion) towards the Ministry of Roads for 2024-25. A capital outlay of Rs. 2.55 lakh crore (US$ 30.72 billion) has been madeforthe Railways, an increase of 5.8% over the previous year. The allocation for solar power grid reached Rs. 8,500 crores (US$ 1.02 billion) from the previous allocation of Rs. 4,970 crores (US$ 598.80 million). The Interim Budget 2024-25 allocated Rs. 1,11,876.6 crore (US$ 13.5 billion) for the Department of Telecom. The government announced Rs. 77,523.58 crore (US$9.3 billion) to the Ministry of Housing and Urban Affairs.

Three significant economic railway corridor initiatives — energy, port connectivity, mineral and cement, and high traffic density — will be carried out by the railway industry. Additionally, in order to improve passenger safety, convenience, and comfort, forty thousand standard rail bogies will be converted to Vande Bharat standards. In the aviation sector, the number of airports has doubled to 149, and currently, 1.3 crore passengers are transported on 517 new routes. Indian airlines have taken the initiative to order more than a thousand new aircraft. As part of the PMAwasYojana (Grameen), two crores more houses to betaken up in the next five years.

A network of 35 Multimodal Logistics Parks is planned to be developed as part of Bharatmala Pariyojana, with a total investment of about Rs. 46,000 crore (US$ 5.5 billion), which once operational, shall beable to handle around 700 million metric tonnes of cargo. Of this, MMLPsat 15 prioritized locations will be developed with a total investment of about Rs. 22,000 Crore (US$ 2.6 billion). YourCompany isgiving majorthrust in various infrastructure projects to reap the benefit of growth in infrastructure sector.

Road Ahead:

The roadmap to Indias infrastructure is exciting and futuristic, and it will not be an exaggeration to say that the new decade seems to be a promising one.

With a 37% increase in the current fiscal year, capital expenditures (capex) are on the rise, which bolsters ongoing infrastructure development and fits with 2027 goals for Indias economic growth to become a US$ 5 trillion economy. In order to anticipate private sector investment and to address employment and consumption in rural India, the budget places a strong emphasis on the developmentof roads, shipping, and railways.

Global investment and partnerships in infrastructure, such as the India-Japan forum for development in the Northeast are also indicative of more investments. These initiatives come at a momentous juncture as the country aims for self-reliance in future- ready and sustainable critical infrastructure.

India, it is estimated, needs to invest US$ 840 billion over the next 15 years into urban infrastructure to meet the needs of its fastgrowing population. This investment will only be rational as well as sustainable, if we additionally focus on long-term maintenance and strength of our buildings, bridges, ports, and airports.

As a result of digitalisation and opportunities that tier II and III cities present for economic growth, the divide between metro and non-metros is blurring, moving to the new era of infrastructure growth. Commercial real estate properties have witnessed exponential growth in demand across Tier II & III cities as Information technology and Information technology enabled services and banking financial services and insurance focused organizations are increasingly decentralizing their operations to adapt to the new normal.

The residential sector has witnessed good sales, and launches have also shown signs of an uptick during 2022, total sales in the top-7 cities was projected to exceed 360,000 units in 2022.

Civil Aviation Ministrys Vision 2040 report states that there will be 190-200 functioning airports in India by 2040. Delhi and Mumbai will have three international airports each, while top 31 Indian cities will have two operational airports each. 220 destinations (airports/heliports/wateraerodromes) under UDAN are targeted to be completed by 2026 with 1000 routes to provide air connectivity to unconnected destinations in India.

Indias Infrastructure forms an integral part of the countrys economic ecosystem. There has been a significant shift in the industry that is leading to the development of world-class facilities across the country in the areas of roads, waterways, railways, airports, and ports, among others. The country-wide smart cities programmes have proven to be industry game-changers. Given its critical role in the growth of the nation, the infrastructure sector has experienced a tremendous boom because of Indias necessity and desire for rapid development. The expansion has been aided by urbanisation and an increase in foreign investment in the sector.

The infrastructure sector has become the biggest focus area for the Government of India. Indias GDP is expected to grow by 8% overthe next three fiscal years, one of the quickest rates among major, developing economies, according to S&P Global Ratings. India and Japan have joined hands for infrastructure development in Indias Northeast states and are also setting up an India- Japan Coordination Forum for development of Northeast to undertake strategic infrastructure projects forthe region.

India being a developing nation is set to take full advantage of the opportunity forthe expansion of the infrastructure sector, and it is reasonable to conclude that Indias infrastructure has a bright future ahead of it.

IV. Risks and Concerns:

The Company has the major effect on timely completion of various projects. The availability of construction labor force is expected to affect the projects for some time. On the other hand, other construction delays continue to be a concern factor which stems from number of factors outside the control of the project sponsors, which includes land acquisition, regulatory approvals, inflation, and litigation etc., which can delay the timely completion of the project and increase in cost of project. This can, in turn, lead to additional funding, additional cost of fund etc.

As the sector is driven by infrastructure projects to a large extent, it is expected to be hit severely by the current levels of uncertainty, dismal business and consumer sentiments, loss of income as well as the diversion of government funds towards other sedors.

I. Internal Control Systems and their adequacy:

Your Company has adequate system of Internal Control developed by our in-house Internal Audit team consisting of qualified and experienced accounting, costing and technical professionals to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for preparing financial information and otherdata and for maintaining accountability of assets.

II. Discussion on financial performance with respect to operational performance:

During the year under review, your Company has decrease in a total income (standalone) of Rs.85,592.45 Lakhs against Rs. 1,20,566,74 Lakhsand Earning per Share (EPS) of Rs. (2.85) against Rs. (1.39)ofthe Previous Year.

III. Human Resou rces/lndustrial Relations:

Your Company has recruited competent Professionals at all levels of management for all verticals of the Company as a part of corporate restructuring process and strengthening its Business Verticals to meet the pace of growth ofyourCompany.The Industrial relation is very oordial.