MBL Infrastructure Ltd Management Discussions

Economic overview

Indian economy

Overview: India continues to showcase remarkable economic resilience amid evolving global headwinds. Despite ongoing geopolitical uncertainties, trade tensions, and financial market volatility, the Indian economy is expected to maintain robust momentum.

In fiscal 2026, Indias GDP is projected to grow at 6.5%, sustaining the pace from fiscal 2025. This growth is underpinned by strong domestic drivers, including easing inflation, rising disposable incomes due to recent tax cuts, and continued government focus on capital expenditure. The Union Budgets provision for capex at 3.1% of GDP reinforces the governments commitment to infrastructure development, especially in sectors like roads, renewables, ports, and urban infrastructure.

Private consumption, particularly in the middle-income segment, is poised to remain strong, aided by lower food inflation, a normal monsoon outlook, and supportive monetary policy. The Reserve Bank of India is expected to continue rate cuts, following a 25bps reduction in February 2025, with further cuts of 50-75 bps projected in fiscal 2026.

Over the medium term, GDP growth is forecasted at 6.7% annually, with improving efficiency, innovation, and capital formation being key drivers. However, the economy remains vulnerable to external risks such as global trade slowdowns, US tari_ actions, and commodity price volatility. That said, Indias healthy foreign exchange reserves, low current account deficit, and manageable external debt provide critical bu_ers.

Outlook: Overall, the outlook remains optimistic, with India firmly positioned as one of the fastest-growing major economies, driven by a balanced blend of consumption, investment, and policy reforms.

Union Budget 2025-26: The Union Budget 2025-26 continued its emphasis on infrastructure-led growth, with key investments earmarked for roads, highways and urban development. Budget 2025-26, core to the vision of Viksit Bharat@2047, has allocated H11.21 lakh crores for the Infrastructure Sector. Capital expenditure push, along with reforms in asset monetisation and state support through 50-year interest-free loans, is expected to further strengthen infrastructure development across the country.

(Source: https://www.indiabudget.gov.in/doc/bh1.pdf)

India continues to have the second-largest road network in the world, spanning around 66.71 lakh km, comprising national highways, state highways, district roads, and rural roads. This vast network remains critical for economic activity, carrying about 65% of freight and 90% of total passenger tra_c.

In the Union Budget 2025-26, the government has allocated _2.87 lakh crore to the Ministry of Road Transport and Highways (MoRTH), reflecting a 2.41% increase over the previous year. Out of this, _1.70 lakh crore has been allocated to the National Highways Authority of India (NHAI), reafirming the governments focus on enhancing highway infrastructure and connectivity.

The Bharatmala Pariyojana Phase-I, targeting the development of 34,800 km of highways, remains a priority, with significant progress made in terms of project awards and construction. The deadline for the completion of Bharatmala Phase-I has been extended to 2027-28 to ensure comprehensive coverage.

Key policy initiatives such as the National Logistics Policy (NLP), PM Gati Shakti National Master Plan, and the development of Multimodal Logistics Parks (MMLPs) are working in tandem to reduce logistics costs and improve freight efficiency, directly benefiting road infrastructure development.

Private sector participation continues to be encouraged through 100% FDI under the automatic route in road infrastructure projects. Furthermore, asset monetisation efforts under the National Monetisation Pipeline (NMP) are expected to unlock significant capital from operational highway assets, supporting new infrastructure development.

With infrastructure investment expected to grow from 5.3% of GDP in 2023-24 to 6.5% by 2028-29, and an overall capital investment target of US$1.45 trillion over the next five years, the road sector is set to play a pivotal role in Indias journey towards a USD 5 trillion economy. The continued emphasis on highway expansion, multimodal integration, and asset monetisation is expected to sustain robust growth momentum in the road infrastructure sector during 2025-26 and beyond.

(Source:https://www.ibef.org/industry/roads-india )

The roads and highways sector is a pivotal element of Indias infrastructure strategy, playing a vital role in driving economic growth and enhancing connectivity. Home to the worlds second-largest road network, India boasts over 6.67 million kilometers of roads, including 146,145 km of national highways and 179,535 km of state highways. To stimulate private investment and accelerate growth, India has introduced innovative financing models such as the Toll-Operate-Transfer (TOT) and Hybrid Annuity Model (HAM). The sector has also embraced advanced technologies, including digital project management tools and geospatial technologies, significantly improving project efficiency and precision. Moreover, the governments commitment to sustainability is evident through the integration of green technologies to reduce environmental impact.

In recent years, the Ministry of Road Transport and Highways (MoRTH) has launched key initiatives to further develop the sector. Among them is the Bharatmala Pariyojana, which aims to enhance connectivity by developing 34,800 kilometers of highways with an investment of INR 5.35 lakh crore, targeting economic corridors, border areas, and remote regions. The Pradhan Mantri Gram Sadak Yojana (PMGSY) is focused on improving rural connectivity, providing better access to markets, education, and healthcare. These strategic investments and reforms are poised to transform Indias road infrastructure, driving economic growth and improving nationwide connectivity.

(Source: https://www.investindia.gov.in/sector/road-highways)

Gati Shakti National Master plan: Launched to bring synergy among different infrastructure projects, the Gati Shakti Master Plan integrates planning and implementation across multiple ministries. It focuses on optimising costs, improving efficiency, and reducing project delays, especially in transport and logistics corridors

National Infrastructure Pipeline (NIP): The NIP continues to be a flagship initiative aimed at facilitating world-class infrastructure across the country. It envisages investments of over _100 lakh crore across sectors like roads, railways, ports, and airports by 2025. The pipeline remains central to Indias vision of achieving higher economic growth through robust infrastructure development.

PM Gati Shakti Yojana: Building upon the National Master Plan, the PM Gati Shakti Yojana aims to facilitate seamless multimodal connectivity across India. The scheme emphasises faster project approvals, better coordination among ministries, and holistic development of economic zones, with roads and highways playing a critical enabling role.

Bharatmala Pariyojana: Bharatmala Pariyojana is focused on optimising the efficiency of road tra_c movement across the country by bridging critical infrastructure gaps. Phase-I of the project, targeting 34,800 km of highways, has been extended till 2027-28, with significant progress already achieved in project awards and construction activities

National Monetisation Pipeline (NMP): The NMP aims to unlock the value of brownfield infrastructure assets through private sector participation. Roads and highways constitute a significant portion of the monetisation plan, offering a strategic avenue for mobilising capital for new infrastructure investments and reducing fiscal pressure on public funding.

National Logistics Policy (NLP): Launched to reduce the logistics cost in India to be comparable with global benchmarks by 2030, the NLP aims to enhance efficiency across the entire supply chain. It focuses on developing an integrated, technology-driven logistics ecosystem to boost competitiveness and support the growth of road, rail, and air cargo networks.

Bharatmala Pariyojana: A flagship highway development program, Bharatmala Pariyojana aims to improve road connectivity across borders, coastal areas, ports, and backward regions. It focuses on developing economic corridors, expressways, and national corridors efficiency improvement projects, contributing significantly to Indias logistics and transport network.

Multimodal Logistics Parks (MMLPs): The government is developing a network of MMLPs to integrate multiple modes of transport, reduce handling costs, and improve freight efficiency. These parks are being developed under the PM Gati Shakti framework and will serve as key hubs for road, rail, and air logistics. Vision 2047: As part of Indias long-term infrastructure roadmap, Vision 2047 aims to transform the country into a developed economy with world-class infrastructure. The focus will be on sustainable highways, green energy corridors, smart logistics networks, and resilient transport systems, with significant emphasis on digital integration and multimodal connectivity.

Parvatmala Pariyojana: An ambitious program focused on developing ropeway infrastructure in hilly and difficult terrains, Parvatmala Pariyojana aims to provide safe, environment-friendly, and cost-e_ective alternative transport solutions. It is expected to complement road infrastructure in challenging geographies and boost tourism and regional connectivity.

Political and regulatory risks: Infrastructure projects in India are exposed to multiple regulatory challenges throughout their lifecycle, from pre-tendering to post-construction. These risks include delays in obtaining necessary approvals, changes in regulatory frameworks, breach of contractual obligations, and occasional denial of government payments. Such uncertainties significantly impact investor sentiment and future capital inflows.

Land acquisition: Land acquisition remains a major bottleneck for infrastructure development. Projects are often delayed due to resistance from farmers and local communities, procedural ine_ciencies, and legal disputes. The complexity and opacity of land acquisition processes discourage private investors from mobilising resources for large road, energy, and industrial projects.

Evolving environmental regulations: Infrastructure projects must increasingly comply with dynamic and evolving environmental standards. Midway changes in environmental guidelines often result in delays, redesigns, and cost escalations, making project execution more complex and uncertain.

Access to long-term financing: Given the long gestation period of infrastructure projects, securing long-term, stable financing remains a significant challenge. Financial institutions and investors are cautious about committing resources to projects where returns are delayed and contingent upon regulatory and operational risks.

Increasing population: Indias expanding population necessitates sustained economic growth to absorb new entrants into the workforce. To achieve this, the country needs to grow at a real GDP rate of 10.8% until 2030, 6.5% until 2040, and 4.2% until 2047. Over the next 25 years, the projected capital requirement stands at US$ 120 trillion. A larger population density directly boosts the rate of return on investments in roads, as areas with higher population concentrations demand greater road infrastructure per unit area.

Urbanisation: Indias urban population is expected to grow by 328 million between 2022 and 2047. With a significant portion of the population residing in towns with fewer than 500,000 people, rapid urban expansion is placing immense pressure on existing infrastructure, including roads, bridges, and public transportation. Urbanisation drives infrastructure demand, which in turn reduces transaction costs, enhances productivity, and propels economic growth.

Industrialisation: The industrial sector continues to show robust growth, with the Index of Industrial Production (IIP) rising by 5.8% in 2023-24, compared to 5.2% in the previous year. Industrial output grew by 1.9% in March 2023. Achieving Indias economic ambition of becoming a US$ 5 trillion economy by 2025 will require significant infrastructure enhancements, particularly in the transport and logistics sectors.

Infrastructure investment: Infrastructure development remains a cornerstone of Indias economic aspirations. As the nation aims to become a US$ 5 trillion economy and a developed nation by 2047, infrastructure investments are expected to play a pivotal role. Investments in roads, railways, aviation, shipping, and inland waterways have a multiplier effect,improving transport efficiency, stimulating commercial activity, and unlocking entrepreneurship opportunities. Under the National Infrastructure Pipeline (NIP), projects worth _108 trillion (approximately US$ 1.3 trillion) are underway at various stages of implementation.

The infrastructure sector is key to Indias economic growth. The governments focus on policy initiatives ensures timely creation of world-class infrastructure. Indias infrastructure spending will nearly double to _143 lakh crore by 2030, boosting connectivity and supporting the vision of becoming a developed economy by 2047.

Progress in the road sector is impressive, with 743,000 km of roads and 8,400 bridges completed out of 814,000 km and 11,150 sanctioned. The pace of national highway construction has accelerated to over 30 km per day in recent years. With strong policy support and continued investment, Indias infrastructure sector is set for significant growth.

Roads and highways development: The Bharatmala Pariyojana Phase I focuses on developing 34,800 km of National Highways, with an emphasis on corridor-based development. The project will cover 31 States/UTs and over 550 districts by 2027-2028, alongside the construction of 22 new greenfield expressways, presenting significant growth opportunities in Indias transportation infrastructure.

Airports and aviation: The UDAN scheme aims to enhance regional air connectivity, having already launched 425 new routes and 58 airports. With a 2023-24 budget of INR 1,244.07 Cr for UDAN, and plans to revive 72 airports and heliports, this initiative provides growth potential in airport infrastructure and regional air travel services.

Railways and green energy: Indias railway sector is undergoing major projects like the Mumbai-Ahmedabad Speed Rail Corridor and the Chenab Bridge, alongside the introduction of Vande Bharat Express trains. The focus on becoming a Net Zero Carbon Emitter by 2030 opens opportunities in sustainable energy solutions and green technology for the railway sector.

Ports and maritime: The Sagarmala initiative aims to enhance port-led development, with a goal to increase port capacity from 2,600 MTPA to over 10,000 MTPA by 2047. The operationalisation of 23 new waterways by 2030 presents a significant opportunity for investments in port infrastructure, shipping, and logistics.

MBL specialises in executing civil engineering projects across various sectors, including highways (EPC, BOT and O&M), housing, urban infrastructure, railways/metro, and other infrastructure. MBL was among the first contractors to be awarded contracts for the prestigious North South East West Corridor by NHAI and was the first to successfully complete the project. MBL was one of the initial contractors to be entrusted with the maintenance of National Highways by NHAI. The Company has consistently demonstrated significant growth in its bid capacity and prequalification capabilities. MBL is accredited for executing civil engineering projects under the following certifications:

ISO 9001: 2015 - Recognising the organisations commitment to quality management systems.

ISO 14001: 2015 - Acknowledging the organisations environmental management systems.

ISO 45001: 2018 - Certifying the organisations health and safety management systems.

The total income of the Company during the 2024- 25 was H20,341 lakhs on standalone basis and H24,835 lakhs on consolidation basis as against H18,415 lakhs on standalone basis and H25,346 lakhs on consolidation basis during 2023-24. The Company had profit after tax of H4,879 lakhs on standalone basis and loss of H16,949 lakhs on consolidation basis during 2024-25 as against profit of H663 lakhs on standalone basis and loss of H3,933 lakhs on consolidation basis during 2023-24.

Key ratios

Key financial ratios are given below:

The key ratios are not comparable as operations of the Company were not normal. The documents for implementation of the Approved Resolution Plan by the Banks have been executed and the date of implementation of the Package/Resolution Plan has been declared by banks as September 04, 2024.

The Company has developed a robust risk management framework designed to effectively identify, assess, and address operational and business risks. Senior management regularly evaluates key risk areas, and detailed policies and procedures are implemented to detect, mitigate, and monitor risks at all levels. When necessary, the Company conducts comprehensive risk assessments through external agencies, which provide strategic recommendations to the Board for enhancing risk management and implementing appropriate controls.

Strategic risk: The Companys limited business strategy could impact its ability to capitalise on opportunities in a growing market.

Mitigation: The Company has developed extensive expertise in the EPC/BOT sectors, supported by a dedicated team that keeps track of industry trends. While the core focus remains on roads and highways, the Company has expanded its portfolio to reduce dependence on a single sector. We have ventured into railways/ metro, urban infrastructure, building/housing, and industrial infrastructure, ensuring a more diversified business approach.

Competition risk: The increasing number of mid-sized players entering the infrastructure sector could pose challenges to the Companys growth aspirations.

Mitigation: Smaller-scale road and highway projects offer easier entry points compared to larger projects, which attract fewer participants. The Company has built a strong reputation as a reliable partner for emerging projects. Our proven ability to manage large-scale projects nationwide has established us as one of Indias leading road development firms.

Financial risk: Poor financial management could impact the Companys ability to secure funding for projects and control costs, potentially affecting profitability.

Mitigation: The Company brings years of experience in the infrastructure sector and has implemented stringent financial management protocols to ensure efficient handling of project costs and overall productivity. Following the finalisation of the Resolution Plan under IBC, 2016, the Company has secured sufficient funding from the working capital consortium bank, with reasonable cost of funds.

Execution risk: Inability to secure or execute large projects within specified timelines could lead to project delays and tied-up funds.

Mitigation: The Company remains focused on projects that align with its core strengths, enabling us to leverage technical expertise and ensure timely completion. We also have specialised divisions dedicated to critical aspects like bitumen, concrete, equipment, and quarry operations, ensuring smooth execution and minimising delays.

Economic risk: Any adverse changes in government policies could potentially affect the entire infrastructure sector.

Mitigation: India has demonstrated impressive growth and is now the worlds fastest-growing economy, with a strong focus on infrastructure development, particularly in the road sector. This focus has created numerous opportunities for MBL. The Company has a proven track record of identifying and capitalising on opportunities across the infrastructure industry, enabling us to stay resilient against policy changes.

Industry risk: A downturn in the road sector may affect the sustainability of the Company.

Mitigation: The road sector remains a cornerstone of Indias infrastructure development, receiving significant attention from both Central and State governments. Numerous initiatives and policy reforms are designed to foster growth in this sector. The Companys diversified involvement in all aspects of infrastructure development,beyond just roads, effectively mitigates any risks associated with downturns in the road sector.

Input risk: The timely availability of high-quality resources (raw materials and finances) is crucial for the completion of infrastructure projects. The cost escalations may impact profitability.

Mitigation: The Company exercises direct control over its projects, enabling precise management of materials and resources. Key raw materials like steel, bitumen, and cement are sourced directly from well-established manufacturers. We operate captive quarries to ensure the timely availability of bulk raw materials at competitive costs. As most of our contracts include input escalation clauses that safeguard profitability in case of cost fluctuations.

Manpower risk: High attrition rates, especially of specialised professionals, could erode the Companys competitive edge. Recruitment and retention of skilled professionals is an ongoing challenge in the industry.

Mitigation: The Company fosters an inclusive, supportive work environment where leadership is cultivated at all levels through clear structures of responsibility and accountability. Competitive compensation and comprehensive training programs are provided to employees, which helps retain top talent. These practices have resulted in a low employee turnover rate, ensuring continuity and expertise within the organisation.

Quality risk: For an infrastructure company, product quality is paramount. Any failure to meet quality standards can lead to negative publicity and harm the Companys reputation.

Mitigation: The Company procures raw materials exclusively from trusted brands like SAIL, TISCO, RINL, Ultratech, and others, minimising quality risks. We maintain in-house laboratories and employ skilled engineers to oversee quality checks throughout the project lifecycle. Regular inspections are conducted during the execution phase, and dedicated divisions handle quarrying, mining, concrete, and bituminous operations. The Companys rigorous quality control processes ensure that all projects meet the highest standards before delivery to clients.

We place significant value on human principles and focus on providing our employees with the necessary support, both moral and financial. Our senior management team consists of experienced professionals with diverse expertise in various positions and regions. As of March 31, 2025, our workforce includes 246 dedicated employees.

MBL has established a comprehensive Health, Safety, and Environment (HSE) Policy with the goal of maintaining a safe and healthy work environment, striving for zero injuries and a commitment to environmental preservation. We regularly conduct training for our staff, perform audits, and hold ISO 9001, ISO 14001, and OHSAS 45001 certifications to ensure effective policy implementation.

Our management places a strong emphasis on health, safety, and environmental responsibility, with structured Standard Operating Procedures (SOPs) in place at every stage of construction. We prioritise the safety and well-being of our employees, partners, service providers, and the general public, alongside minimising our environmental impact. HSE is a core focus and is integrated into our operations at every level. Our HSE policy ensures compliance with legal standards while minimising visual impact and disruptions to the public. We continuously engage our employees to raise safety awareness and eliminate unsafe practices.

We maintain a robust internal control system to ensure that all transactions are properly authorised, recorded, and reported, while safeguarding our assets. This system is supported by well-documented policies, guidelines, and procedures. With over 30 years of experience in the industry, these internal control systems have evolved to meet our growing needs. Furthermore, we have implemented an extensive CCTV surveillance system at all project sites to enhance security. These measures are regularly reviewed, and improvements are made as necessary to ensure continued effectiveness.

The statements in the Management Discussion and Analysis Report regarding projections, estimates, and expectations are made in good faith. The achievement of the stated results is subject to risks, uncertainties, and assumptions that may not always prove accurate. Market data and information are gathered from both published and unpublished sources, and while we strive for reliability, their accuracy, completeness, and dependability cannot be guaranteed.