Modern Engineering and Projects Ltd Management Discussions

Economy Overview

Global Economy Overview

The worldwide economy continued on a steady growth path in CY2024, achieving a GDP increase of 3.3%, even in the face of ongoing challenges from geopolitical conflicts, trade interruptions, and changing monetary policy environments. Overall inflation decreased to 5.8% in CY 2024, down from 6.7% the prior year, demonstrating the effects of stricter monetary measures and falling commodity prices.

Major economies central banks have begun a gradual move towards monetary easing, with the first rate cuts implemented in late CY 2024. Additional reductions are predicted for CY 2025, potentially improving liquidity and aiding a rebound in private sector investment. Although global manufacturing has shown signs of slowing down due to realignments in supply chains and changing demand, industrial output has remained strong. Growth has been supported by vibrant activity in construction, utilities, and essential services. A greater focus on regional trade integration and diversified supply chains is anticipated to strengthen cross-border economic resilience. Emerging markets continue to play a crucial role in global growth. In the Eurozone, a mild recovery is taking shape, bolstered by rising consumer demand, stabilizing industrial production, and a favorable monetary policy.

Anticipating the future, it is estimated that the worldwide GDP will increase at a consistent rate of 2.8% in calendar year 2025 and 3.0% in calendar year 2026. This forecast is supported by ongoing consumer expenditure, specific policy measures, and persistent innovation. The global economy is in a strong position to manage macroeconomic challenges and take advantage of structural growth prospects.

In the United States, the balance of risks has transitioned from inflation concerns to those regarding growth, as the repercussions of heightened tariff measures will start to affect the economy. Furthermore, alterations in the regulatory landscape, immigration policies, and fiscal measures are anticipated to shape the relationship between growth and inflation. The potential increase in inflation due to tariffs, along with the risks of slowing growth, may present a difficult situation for monetary policy. Technology is expected to continue being a strongpoint for the US economy in 2025, with expenditures projected to exceed USD 2 trillion for the first time.

The economies of Europe and the UK still appear to be delicate. Nevertheless, Germanys decision to allow fiscal expansion via a unique off-budget infrastructure fund of EUR 500 billion, scheduled to be allocated over the next ten years, has the potential to change the medium-term growth trajectory for Europe.

If the United States tariffs are implemented, Chinas economy would be the one most affected. The government may use a combination of fiscal support and monetary easing policies to stabilize the economy. These policies would increase domestic consumption and address the property sectors shortcomings.

India is on course to become the third-largest economy in the world in the medium term and is still largely immune to global headwinds. Thanks to favorable demographics, an investment-led stimulus, and continuous regulatory reforms, it remains one of the largest economies with the fastest rate of growth.

Indian Economy Overview

India continued to be a major force behind global expansion and showed remarkable economic tenacity, as evidenced by its 6.2 percent GDP growth in FY 2024-25. Due to rising capital investments and steady private consumption, domestic demand stayed high. In order to support growth, the Reserve Bank of India (RBI) remained vigilant about inflation. Proactive monetary interventions, stable food prices, and increased supply chain efficiency helped to moderate inflation to 3 percent.

Strong consumer demand, ongoing government emphasis on capital expenditure, and ongoing policy support are all expected to sustain Indias growth trajectory. Significant income tax relief for salaried individuals was introduced in the Union Budget, which is expected to increase domestic demand and support urban consumption. The Reserve Bank of India (RBI) recently reduced the repo rate by 50 basis points to 6.0 percent in a long-awaited move that indicated a change to a more accommodating monetary policy. Concurrently, it is anticipated that lowering the cash reserve ratio to 4% will increase systemic liquidity and foster favorable circumstances for private sector investment and credit growth.

Following a relatively stable first half of FY 2024-25, the rupee experienced a decline against the USD of approximately 5% from October to mid-February, a timeframe characterized by heightened volatility in financial markets. Despite positive foreign portfolio investment (FPI) inflows—totaling about USD 20 billion during H1 FY 2024-25—the trend shifted during H2 FY 2024-25, resulting in net outflows of a similar scale. Investments in debt securities saw net inflows of roughly USD 15 billion, while equity investments faced net outflows of a similar amount for FY 2024-25.

The external trade sector has shown consistent strength and expansion, even amidst volatility in the global trade landscape. In FY 2024-25, the export of goods and services reached USD 800 billion, which represents a growth of 5.5%. Total imports for this period are projected to be USD 915 billion, marking an increase of 6.8%.

Indias strategic initiatives, such as diversifying export destinations, bolstering domestic manufacturing capacities, and advancing structural reforms, are better positioning the countrys economy within global value chains, even in the face of prevailing global uncertainties, such as geopolitical risks and financial market volatility. These initiatives offer a strong basis for long-term, widely-based expansion.

Industry Structure and Development

Infrastructure Sector

Infrastructure development – including physical, digital, and social aspects – has been a primary priority for the Government over the past five years. This has manifested in several ways, such as heightened public investment in infrastructure, the establishment of institutions aimed at streamlining approvals and execution, and the introduction of creative methods for resource mobilization. In FY25, there has been a significant increase in capital expenditure following the elections.

The government has implemented various supportive mechanisms to accelerate the planning, approval, and execution of projects. The National Infrastructure Pipeline (NIP) was introduced with a proactive vision, aiming for an estimated infrastructure investment of approximately 111 lakh crore from FY20 to FY25. The NIP acts as a centralized platform for organizing projects from states, union territories, and central ministries to aid in their oversight and evaluation. At present, it includes over 9,766 initiatives and schemes across 37 sub-sectors. These initiatives are monitored and assessed through the integrated India Investment Grid (NIP-Project Monitoring Group) portal.

The government is implementing new frameworks to attract investment in infrastructure projects. To enhance private investment in existing assets, the National Monetization Pipeline (NMP) was introduced in August 2021. This initiative established the guidelines for monetization policy and identified a series of core assets with an estimated value of 6.0 lakh crore for the timeframe from FY22 to FY25. For the duration of FY22 to FY24, out of the target of 4.30 lakh crore, transactions amounting to 3.86 lakh crore in terms of accruals or private investments were achieved under the core asset monetization. The sectors of roads, power, coal, and mines were the leaders in performance, bolstered by market-tested models and reforms.

The government has prioritized infrastructure development as a key focus of its fiscal and public policy strategy. For FY25, the capital expenditure of the union government is projected to be approximately 3.3 times higher than that of FY20. In the first quarter of FY25, the advancement of infrastructure spending was hindered by delays in new approvals and expenditures due to the general elections, as well as significant monsoon rains in various areas. However, from July to November 2024, the pace of capital expenditure has accelerated.

Infrastructure program of the Union Government encompasses various public-private partnership (PPP) models, such as build-operate-transfer (both toll and annuity), design-build-finance-operate-transfer, hybrid annuity model, and toll-operate-transfer. The government has implemented several debottlenecking and facilitation measures, including the National Infrastructure Pipeline, National Monetization Pipeline, and PM-Gati Sakti, which have shown progress.

Reforms introduced by financial market regulators aim to promote private sector participation. However, private enterprise involvement remains limited in numerous key sectors.

India Infrastructure Sector Market Trends Source:

The Indian infrastructure sector is projected to be valued at USD 190.7 billion in 2025, with expectations to grow to USD 280.6 billion by 2030, indicating a compound annual growth rate (CAGR) of 8.0%. This growth is driven by the National Infrastructure Pipeline, which aims for investments totalling USD 1.34 trillion by 2025, along with the Union Budget 2025-26 that preserves capital expenditure at 3.1% of GDP. According to the Ministry of Finances "Economic Survey 2024-25," significant investments in highways, rail corridors, and urban transit are being supported by extensive utility improvements and rapidly expanding digital networks. The development of new public-private partnership (PPP) models, enhanced municipal bond markets, and specific reforms within the sector are expanding the financing landscape, while the adoption of technology is reducing project duration and lifecycle expenses.

Bharatmala Pariyojana is advancing Indias infrastructure by addressing critical gaps through the development of economic corridors, expressways, and connectivity roads. Aligned with the Make in India vision, the programme focuses on improving logistics efficiency, fostering industrial growth with enhanced connectivity to key hubs, and ensuring safer, more reliable transportation networks. This initiative not only boosts economic growth but also supports indigenous manufacturing and infrastructure development, making India more self-reliant in its transportation and logistics sector. As on February 28, 2025, 26,425 km of projects awarded under the planned 34,800 km, with 19,826 km already constructed. The total Expenditure incurred under Bharatmala Pariyojana amounts to Rs. 4,92,562 crore.

Indias National Highway network has undergone a remarkable transformation over the past decade, driven by higher budget allocations and accelerated construction. The network has expanded from 91,287 km in 2014 to 1,46,145 km in 2024, marking a 60% increase. This expansion has significantly improved connectivity, reduced travel time, and boosted economic activities across the country.

Indias infrastructure and construction industries have been crucial in advancing the Make in India initiative, laying the foundation for industrial development and economic growth. Significant projects in transportation—such as roads, railways, maritime transport, aviation, and urban development—not only have improved connectivity and logistics but also have elevated the living standards in both rural and urban regions. The growth of national highways, metro systems, and upgraded railway services, along with strategic initiatives like PM Gati Shakti and the Smart Cities Mission, highlights the nations dedication to sustainable development. With ongoing investments in infrastructure and technological advancements, India is set to create new opportunities for industries, increase employment, and speed up economic advancement, reinforcing its status as a global hub for manufacturing and logistics.

Government Initiatives are driving the Infrastructure Segment

Roads: Bharatmala Pariyojana aims to develop 34,800 km of National Highways. By 2024, approximately 76 per cent of the projects (26,425 km) has been awarded, and 18,926 km have been constructed. As of 2024, road project to connect all four dhams through highway with total length of 825 km and 620 km has been completed under Char Dham Mahamarg Pariyojna. Length of National High-Speed Corridors (HSCs) expanded from 93 km in 2014 to 2,474 km in 2024.

Airports: Airport operators and developers, including the Airports Authority of India, are pursuing a capital expenditure plan exceeding 91,000 crore from FY20 to FY25. About 91 per cent of this has been achieved by November 2024. New airports and improved regional connectivity under the Ude Desh ka Aam Naagrik (UDAN) scheme have improved air connectivity considerably. Under the Regional Connectivity Scheme UDAN), 619 routes connecting 88 airports, including two water aerodromes and 13 heliports, have been operationalized so far. The airports cargo handling capacity has been gradually increasing, reaching 8.0 million MT in FY24.

Railways: During FY25 so far, the progress in the expansion of the railway network stayed at levels comparable to the previous year, while the addition of rolling stock increased considerably. Between April and October 2024, 17 new pairs of Vande Bharat trains were introduced to the network, and 228 coaches were produced.

Opportunities & Threats

Opportunities

• The Union Budget 2025 is expected to prioritize infrastructure development, allocating significant resources to transportation, green energy, and urban development.

• Opportunities exist for greenfield projects across all infrastructure sub-sectors, fueled by government initiatives like PM Gati Shakti and Smart Cities Mission.

• The focus on improving logistics infrastructure through multimodal parks is expected to reduce transportation costs and enhance market access.

Threats

• Regulatory bottlenecks and policy inconsistencies can pose significant challenges to infrastructure development.

• Ensuring environmental compliance and mitigating the environmental impact of infrastructure projects is crucial, requiring careful planning and execution.

• Unavailability of raw material and shortage of skilled labor is another challenge

• Liquidity crunch and cash flow disruptions in the event of economic slowdown impacts operations as well

• Geopolitical instability and trade tensions can disrupt supply chains and impact project costs.

Outlook

The Government has recognized that investment in the economy is a crucial driver for the nations development. Major reforms such as the Asset Monetization Plan 2.0, a three-year pipeline for PPP projects, and a comprehensive revision of the existing Bilateral Investment Treaties are proactive strategies intended to attract private sector investment and enhance government liquidity for financing new initiatives. These reforms aim to fulfill the goal of sustained increase in investment within the sector, as highlighted in the Economic Survey (2024-25). In addition, the plan to introduce a National Framework for Global Capability Centers, along with initiatives to boost tourism with collaboration from both states and the private sector, is anticipated to enhance the countrys GDP and stimulate job creation, while prioritizing the development of essential skills among the youth. Finally, tax reforms for the maritime industry are expected to bolster Indias competitiveness on a global scale and foster domestic involvement in coastal shipping. In summary, the proposals are crafted to promote an ‘India First mindset by drawing private sector investment, expediting growth, and cultivating a skilled workforce.

Real GDP, which measures the economys output after removing the effects of inflation, expanded by 6.5 per cent in 2024–25. The Reserve Bank of India expects this pace to continue into 2025–26.

The Indian Union Budget 2025-26 allocates a total of 11.21 lakh crore to the infrastructure sector. This allocation is part of the broader vision of Viksit Bharat @ 2047 and signifies a continued focus on infrastructure development as a key driver for economic growth.

Risk and concerns

The construction sector encounters risks like rising construction costs, potential delays in project completion, and concerns regarding the quality and standards of the work. Additionally, the industry faces operational risks, including fluctuations in raw material costs, labor availability challenges, shifts in political and regulatory conditions, and capital cost variations, among others. Many of these risks can be managed, and effective risk mitigation can be achieved through diligent project monitoring and improved contract management.

Internal Control Systems and their adequacy

The Companys internal control measures are designed to align with the organizations growth rate and the growing complexity of its operations. This guarantees adherence to a range of policies, practices, and regulations.

We maintain a robust and effective Internal Control system that ensures accurate financial reporting, protects assets, and promotes compliance with management policies. The Company has established a method for the prompt preparation of accounts and management information reports to meet relevant laws and regulations.

Our budgetary control system is practical, allowing management to evaluate actual performance against the budget on a monthly basis. An established organizational structure is available, complete with levels of authority, internal regulations, and guidelines for executing business transactions.

Discussion on Financial Performance with respect to operational performance

The Break-up of Revenue and Costs of Company is as given below:

(Rs. in lakhs)

Particulars	March 2025	March 2024
Income:
Revenue from Operation	9,561.11	9,321.93
Other income	229.86	62.45
Total Revenue	9,790.97	9,384.38
Expenses:
Cost of Material Consumed	7,834.51	7,456.74
Employee benefits expenses	546.99	524.36
Finance costs	59.36	96.43
Depreciation & Amortization expense	179.32	283.73
Other expenses	442.56	354.12
Total Expenses	9,062.73	8,715.37
Profit /(Loss) Before Extra-Ordinary Items and Tax	728.24	669.01
Less:
Current Tax	203.78	285.57
Deferred Tax	(204.15)	18.92
Profit/ (Loss) After Tax	728.61	364.52
Other Comprehensive Income
A) Items that will not be reclassified to Profit & Loss	4.59	(1.14)
B) Tax impact relating to items that will not be reclassified to
Profit or loss	(1.16)	0.28
Total comprehensive income for the period	732.05	363.67
Earnings Per Share (EPS)	7.85	11.80

Human Resource and Industrial Relations

Industrial relations of the company were cordial during the year and continue to remain peaceful at all the principal offices and all the employees are working with the company for a common objective. Modern Engineering and Projects Limited had 30 employees on payroll as on March 31, 2025.

Significant Changes in Financial Ratios

Sr. no Key Financial Ratio	Financial year ended		Change	Reason for significant
	March 2025	March 2024	(%)	Change (25% or more as compared to previous financial year) in ratio
1. Debt Turnover Ratio	2.15	7.15	-69.93%	During the year, revenue from operations has increased.
				However, due to a more than proportionate increase in
				Trade Receivables, the ratio has seen a decline.
2. Inventory Turnover Ratio	NA	NA		NA
3. Interest Coverage Ratio	13.24	7.94	-67.15%	Due to profit in current financial year as compared to Loss in previous financial year.
4. Current Ratio	1.36	0.70	93.77%	During the year, receivables have proportionately increased due to which the ratio has improved.
5. Debt Equity Ratio	0.13	-16.20	-100.82%	During the year the lease liabilities of the company has substantially increased.
6. Operating Profit Margin (%)	8.24%	8.21%	0.03%	Due to profit in current financial year as compared to Loss in previous financial year.
7. Net profit Margin (%)	7.62%	3.91%	94.88%	During the year both the profit and revenue of the company have increased, due to which the ratio has improved.
8. Return on Net worth	12.40%	68.34%	-81.85%	The companys net worth has seen improvement, coupled with a positive turnaround in EBIT

Cautionary Statement

Statements in this Report describing your Companys objectives, projections, estimates and expectations or predictions, may be ‘forward looking statements are within the meaning of the applicable laws and regulations. Actual results might differ substantially or materially from those expressed and implied. Important developments that could affect your Companys operations include a downtrend in the international market, fall in on-site, offshore rates and significant changes in political and economic environment, environment standards, tax laws, litigations and labour relations.

	For and on behalf of the Board of Directors of
	Modern Engineering and Projects Limited
	Radheshyam Mopalwar	Fattehsing Patil
Place: Mumbai	Chairman & Non-Executive Director	Managing Director
Date: August 28, 2025	DIN: 02604676	DIN: 10738344