Modern Engineering and Projects Ltd Management Discussions

[Pursuant to Regulation 34(2)(e) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Companies Act, 2013]

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian economy continues to be one of the fastest-growing major economies globally, with the infrastructure and construction sectors serving as its backbone. During the financial year 2025-26, the Government of India sustained its aggressive capital expenditure (Capex) push, treating infrastructure development as a core catalyst for macro-economic growth. Flagship initiatives such as the PM Gati Shakti National Master Plan, Bharat Mala Pariyojana, and increased budgetary allocations for urban infrastructure, water supply grids, and smart city developments have provided structural support to the sector.

Modern Engineering & Projects Limited operates primarily within the Engineering, Procurement, and Construction (EPC) arena, executing civil infrastructure contracts, structural works, and public-private utility projects. The industry environment during the period under review was characterized by:

• Streamlined Regulatory Approvals: Accelerated digital clearing systems and single-window mechanisms at state levels reduced initial project mobilization lags.

• Competitive Bidding Dynamics: Increased entry of mid-sized technical players intensified competitive pressure in standard government tenders.

• Consolidation of Execution Models: A clear industry shift toward hybrid annuity models (HAM) and milestone- linked payment frameworks demanded high fiscal discipline from EPC contractors.

2. OPPORTUNITIES AND THREATS Opportunities

• National Infrastructure Pipeline (NIP): The ongoing deployment of multi-billion-dollar state and central projects offers a substantial addressable market for expanding the Companys order-book pipeline.

• Geographical Expansion: Substantial urban redevelopment drives across tier-2 and tier-3 cities match the operational agile nature of the Companys regional execution teams.

• Asset Monetization and Digital Integration: Integrating IOT-enabled equipment tracking and Building Information Modelling (BIM) presents structural opportunities to reduce material wastage and accelerate execution schedules.

Threats

• Input Cost Volatility: Global supply chain movements and local resource constraints caused cyclical price hikes in primary raw materials like structural steel, cement, aggregates, and fuel.

• Working Capital Pressures: Extended processing cycles for running-account (RA) bills or delayed milestone certifications by government agencies pose liquidity risks.

• Regulatory & Environmental Tightening: Stricter local compliance norms concerning land acquisition, tree translocation, and pollution control can cause unexpected halts at project sites.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company operates strictly within a single primary business segment, which is Engineering, Procurement, and Construction (EPC) Civil Infrastructure Projects. Therefore, there are no separate reportable geographic or product- wise segments under Ind AS 108.

During FY 2025-26, project execution was balanced across our active project sites. The operational focus remained on executing existing contract backlogs efficiently, maintaining strict project schedules, and achieving targeted technical billing milestones to optimize revenue recognition.

4. FINANCIAL AND OPERATIONAL PERFORMANCE

The financial metrics of your Company reflect strong operational scalability during the year under review:

• Top-Line: The Company recorded an impressive Total Income of ^11,978.71 Lakhs during FY 2025-26, showing an expansive growth of 25.29% against ^9,561.11 Lakhs in the preceding financial year 2024-25. This robust increment is attributed to faster milestone completions and higher conversion rates of the order book into revenue.

• Bottom-Line: The Company earned a Net Profit after Tax (PAT) of ^848.92 Lakhs for FY 2025-26, registering a growth of 16.51% compared to a PAT of ^728.61 Lakhs in the previous financial year 2024-25.

• Profit Margin: While net profit grew by ^120.31 Lakhs, the Net Profit Margin slightly down to 7.09% in FY 2025-26 from 7.62% in FY 2024-25. This slight reduction is due to inflation in material procurement and mobilization expenses for newly awarded contracts.

5. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

In compliance with the disclosure requirements of Schedule V(B)(1)(i) of the SEBI LODR Regulations, 2015, significant changes (defined as a change of 25% or more compared to the previous year) in key financial ratios along with detailed explanations are provided below:

Sr. No.	Key Financial Ratio	FY 2025-26	FY 2024-25	Variance (%)	Explanation for Variance > 25%
1	Debtors Turnover Ratio	1.50	2.15	(30.41)	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	-	-	-	Not applicable
3	Interest Coverage Ratio	13.18	13.27	0.09	Not applicable
4	Current Ratio	1.47	1.36	7.91	Not applicable
5	Debt-Equity Ratio	0.55	0.13	325.41	During the year Borrowing has increased due to sanction of new loans.
6	Operating Profit Margin (%)	9.54	7.71	23.74	Not applicable
7	Net Profit Margin (%)	7.09	7.62	(7.00)	Not applicable
8 ^	Return on Net Worth (%)	12.35	12.40	(0.42)	Not applicable u

6. RISKS, CONCERNS, AND MITIGATION FRAMEWORK

Your Company operates under a structured Enterprise Risk Management (ERM) framework to proactively address vulnerabilities:

• Commodity Price Escalation Risk: Sharp rises in raw material costs impact fixed-price bids. Mitigation: The Company incorporates price-escalation variation clauses in all fresh long-term bidding contracts.

• Credit & Liquidity Risk: Capital lock-in during litigation or delayed public department signoffs. Mitigation: The Company monitors aging schedules regularly and utilizes non-fund-based banking lines (bank guarantees) prudently.

• Project Delay Risk: Liquidated damages due to missing target deadlines. Mitigation: Modern project management dashboards provide real-time tracking of milestones directly to the top management.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has instituted internal financial control systems that match the size, nature, and complexity of its EPC operations. These controls ensure that all corporate assets are shielded against unauthorized loss or misuse, transactions are recorded accurately, and financial statistics comply with applicable Indian Accounting Standards (Ind AS).

The framework includes regular internal audits conducted by independent auditing experts. Their findings and corrective action plans are presented directly to the Audit Committee of the Board. The management confirms that the internal financial controls are adequate and operated with structural efficiency during FY 2025-26.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Your Company views its human capital as its core executing asset. During the financial year, the HR division prioritized field safety compliance, upskilling engineers on digital construction techniques, and executing merit-driven retention structures.

The Company maintained stable and peaceful industrial relations across all active corporate offices and construction project sites. As on March 31, 2026, the total number of permanent employees on the rolls of the Company stood at 71

9. OUTLOOK

The mid-to-long-term outlook for the Company is highly promising. Driven by national infrastructure expansion, the Company is positioned to secure high-value contracts. Management will focus on bid optimization, cost containment, and asset optimization to enhance profit margins and maximize stakeholder returns in the upcoming financial year.

10. CAUTIONARY STATEMENT:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations.

Actual results could differ materially from those expressed or implied due to external variables including general economic conditions, shifts in government policies, tax legislations, raw material price fluctuations, and technological disruptions over which the Company has no direct control.

	By Order of the Board of Directors of
	Modern Engineering and Projects Limited
	Sd/-
	Fattehsingh Krishnrao Patil
	Managing Director
	DIN:10738344
	Sd/-
	Radheshyam Mopalwar
	Director
Place: Mumbai	DIN:02604676
Dated: August 13, 2026
Registered Office:
Unit no. 1106, 11th Floor, Hallmark Business Plaza,
Near Guru Nanak Hospital, Bandra (East), Mumbai - 400051