Navkar Urbanstructure Ltd Management Discussions

INTRODUCTION

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

MARKET SIZE

India plans to spend US$ 1.4 trillion on infrastructure through ‘National Infrastructure Pipeline in the next five years. 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 water supply, 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 coining from the private sector.

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.

GOVERNMENT INITIATIVE AND INVESTMENT

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

In Union Budget 2025-26:

• In the Union Budget 2025-26, capital investment outlay for infrastructure has been increased to Rs. 11.21 lakh crore (US$ 128.64 billion), which would be 3.1% of GDP.

• As per the Union Budget 2025-26 access to relevant data and maps from the PM Gati Shakti portal will be provided to private sector in project planning

• Under the Union Budget 2025-26, the government has allocated record CAPEX of Rs. 2,65,200 crore (US$ 31.43 billion) for Railways.

• The Ministry of Development of North-Eastern Region (MDoNER) sanctioned 90 projects with a total cost of Rs. 3,417.68 crore (US$ 391.08 million) under the North-East Special Infrastructure Development Scheme (NESIDS) during the past three financial years (FY22 to FY24) and the ongoing FY25.

• The government aims to increase the share of natural gas in Indias energy mix from the current 6.7% to 15% by 2030.

• In the Union Budget 2025-26, the government has decided to allocate Rs. 2.87 lakh crore (US$ 32.94 billion) towards the Ministry of Road with a target of Rs. 35,000 crore (US$ 4.02 billion) in private sector investment.

• The government allocated Rs. 24,224 crore (US$ 2.78 billion) for solar energy, including Rs. 1,500 crore (US$ 172.14 million) for solar power (grid), Rs. 2,600 crore (US$ 298.37 million) for KUSUM, and Rs. 20,000 crore (US$ 2.30 billion) for PM Surya Ghar Muft Bijli Yojana.

• In the Union Budget 2025-26 the Department of Telecommunications and IT was allocated Rs. 81,005.24 crore (US$ 9.27 billion).

• The Indian government raised the Union Housing and Urban Affairs Ministrys budget by 18% to Rs. 96,777 crore (US$ 11.07 billion) for FY26, with major allocations for urban development, housing, and street vendor support.

• The Second Asset Monetization Plan aims to reinvest Rs. 10 lakh crore (US$ 115.34 billion) in capital for new projects over the period 2025-30 to recycle capital and attract private sector participation.

• The Union Minister of Finance Ms. Nirmala Sitharaman announced plans to connect 120 new airports over the next 10 years, benefiting four crore additional passengers.

• The government has approved 56 new Watershed Development Projects across 10 high-performing states, with a budget of Rs. 700 crore (US$ 80.9 million). For FY26, the total budgetary allocation towards the Ministry of Power stood at Rs. 21,847 crore (US$ 2.51 billion).

• The Union Budget has allocated Rs 5,915 crore to the Ministry of Development of North Eastern Region (DoNER), with a significant increase for the Prime Ministers Development Initiative for Northeast Region (PM-DeVINE) to Rs. 2,296.96 crore (US$ 264 million), Rs. 2,481 crore (US$ 284.71 million) was allocated to North East Special Infrastructure Development Scheme (NESIDS).

• The Ministry of Development of North Eastern Region (MDoNER) sanctioned 90 projects with a total cost of Rs. 3,417.68 crore (US$ 391.08 million) under the North East Special Infrastructure Development Scheme (NESIDS) during the past three financial years (FY22 to FY24) and the ongoing FY25.

• The Union Budget includes a Special Development Package under the DoNER Ministry, with Rs. 50 crore (US$ 5.74 million) each allocated for the Bodoland Territorial Council and the Karbi Anglong Autonomous Council. The Dima Hasao Autonomous Council is allocated Rs. 100 crore (US$ 11.48 million). This package will support infrastructure and development projects in these areas.

• The Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) is a government initiative aimed at developing modern infrastructure and efficient supply chain management to boost the food processing sector in India. The scheme aims to reduce agricultural wastage, increase the processing level, improve farmers returns, and create rural employment opportunities.

• Indias infrastructure sector is set for robust growth, with planned investments of US$ 1.4 trillion by 2025. The governments National Infrastructure Pipeline (NIP) program aims to channel significant capital into key areas such as energy, roads, railways, and urban development.

• In line with the PM GatiShakti National Master Plan, the government has shortlisted eight key infrastructure projects·seven from the Ministry of Railways and one from the Ministry of Road Transport and Highways (MoRTH)·to enhance efficiency and reliability in challenging terrains.

• Union Minister of Road Transport and Highways, Mr. Nitin Gadkari, announced that the Ministry has allocated Rs. 1,255.59 crore (US$ 150.01 million) for the construction of a 28.9 km, four-lane access- controlled Northern Patiala Bypass.

• In October 2024, the Ministry has approved 50 National Highway projects spanning 1,026 km in Manipur, with 44 projects covering 902 km located in the hills. Of these, 8 projects totaling 125 km have been completed, while 36 ongoing projects, with an investment of Rs. 12,000 crore (US$ 1.43 billion), will cover the remaining 777 km.

• In June 2024, Ministry of Housing & Urban Affairs has approved proposals worth Rs. 860.35 crore (US$ 103.91 million) for West Bengal under SBM-U 2.0. During the first phase of SBM-U (2014-19) a total fund of Rs. 911.34 Cr (US$ 130.34 million) was allocated to West Bengal which has been increased by 1.5 times to Rs. 1449.30 crore (US$ 175.04 million) in SBM-U 2.0 (2021-26).

• India has the second largest road network in the world and its National Highways expanded from 65,569 km in 2004 to a total length of 1,46,145 km in 2024, forming the primary arterial network of the country. The Government of India has undertaken several initiatives to enhance and strengthen the National Highways network through flagship programmes such as the Bharatmala Pariyojana which includes the subsumed National Highway Development Project (NHDP), the Special Accelerated Road Development Programme for the North-East Region (SARDP-NE), and many more ongoing projects.

• The total length of National Highways (NHs) constructed in Northeastern Region (NER) during the last ten years is 9,984 km with an expenditure of Rs. 1,07,504 crore (US$ 12.98 billion) while 265 nos. of NH projects are under implementation at a cost of Rs. 1,18,894 crore (US$ 14.36 billion) with total length of 5,055 km.

• 7 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 for spending 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.

• Prime Minister Mr. Narendra Modi 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.

INDUSTRY STRUCTURE:

The construction industry makes up for a major part of Indias GDP. Being a significant contributor to the GDP of India, the industry acts as a gateway for more opportunities. Investment in the construction industry in India, therefore, directly leads to the countrys economic development. The Construction industry in India consists of the real estate as well as the urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others, while urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare.

• By 2025, Construction market in the country is expected to emerge as the 3rd largest globally and the

construction output is expected to grow on an average of 7.1% each year. An enhancement in the construction industry will directly have a positive effect on other industries like cement, technology, steel, etc. The development of a nation is recognized through its infrastructure. FDI in the construction department in North India will bring with it new possibilities to uplift the construction industry.

100% FDI in construction development ^! sector under automatic route is permitted in

completed projects for operations and management of townships, malls/shopping complexes, and business constructions.

100% FDI in real estate in India is allowed under the automatic route for urban infrastructures such as urban transport, water supply and sewerage and sewage treatment.

OPPORTUNITIES:

The word “potential” is a much over used phrase when looking at India. As we have seen earlier the infrastructure statistics are of such mind - boggling proportions that it could be said that there is a massive potential for the growth of ready mixed concrete industry. However, realizing that potential will take a considerable time as companies come to terms with the unique obstacles presented in the Indian market.

The infrastructure sector has become the biggest focus area for the Government of India. India plans to spend US$ 1.4 trillion on infrastructure during 2019-23 to have a sustainable development of the country. The Government has suggested investment of Rs. 5,000,000 crore (US$ 750 billion) for railways infrastructure from 2018-30. Favorable valuations make the sector an attractive opportunity. Only 24% of the National Highway network in India is four lanes. Therefore, presents an immense scope for improvement. The regional connectivity scheme (RCS) gives opportunity for development of airports.

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 for the region.

Our vision is to achieve leadership position in India and explore the opportunities out of India. We committed to building long term relationships based on integrity, performance and value, as well as client satisfaction. To be one of the premier infrastructure companies in India by 2022 executing various vertical of construction activities with the help of its in-house raw material production.

CHALLENGES RISKS & CONCERNS:

> Industry/ policy risk:

The Companys business is highly dependent on road and bridge projects in India undertaken or awarded by governmental authorities and other entities funded by governments. Any change in

government policies resulting in a decrease in the amount of road and bridge projects undertaken or a decrease in private sector participation in road and bridge projects adversely affects our business and results of operations. Our business may be affected by changes in interest rates, changes in Government policy, taxation, exchange rates and controls, social and civil unrest and political, economic or other developments in or affecting India.

> Project risk:

Infrastructure projects involve agreements that are long-term in nature (as much as three years in EPC contracts and around 25 years in Design, Build, Finance, Operate and Transfer (DBFOT) road projects). All long-term projects have inherent risks associated with them and involve variables that may not necessarily be within our control. These include inflation, interest rates movements, liquidity, commodity and oil prices, governance, construction delays, material shortages, unanticipated cost increases, cost overruns, inability to negotiate satisfactory arrangements with joint venture partners, and disagreements with our joint venture partners.

We are increasingly bidding for large-scale infrastructure projects. There are various risks associated with the execution of large-scale projects. Managing large-scale integrated projects may also increase the potential relative size of cost overruns and negatively affect our operating margins. In addition, we may need to execute large-scale projects through joint ventures with other companies, which expose us to the risk of default by our Joint Venture Partners.

• Adherence To Safety & Quality Norms

• Sustainable & Continual Growth

• Teamwork And Healthy Competition

• Concern Towards The Stakeholders

• Deliver Best Service.

• Strong Willingness to Learn.

• Adherence To Values & Ethics

> Companys Diversified Activities

Drainage Work:

? Company has been awarded by Gujarat Urban Development Corporation (GUDC) for Drainage Work at Anand Town amounting to Rs. 90 Cr which is completed satisfactorily.

? Company has been awarded by Gujarat Urban Development Corporation (GUDC) for Drainage Work at Borsad Town amounting to Rs. 23 Cr. which is completed satisfactorily.

? Company has been awarded by Gujarat Water Sewerage & Supply Board (GWSSB) for Drainage Work at Kapadwanj Town amounting to Rs. 24 Cr. which is running satisfactorily.

? Company has been recently awarded an order of Rs. 211.00 Cr by Bhopal Municipal Corporation for Sewage Treatment Project at Kolar Town & outside upper and lower lake catchment area south & south east zone in the name of Joint Venture.

We have equipped ourselves with all the resources required to venture into the new field.

Manpower:

We have recruited best talent available in the market for executing this new project viz. Project

Management, Project Execution, Finance, HR, Legal, IT.

Money:

We are financially self-sustained however capable of raising funds easily due to our reputation and contacts with the Banks like Union Bank, HDFC, Axis etc.

Method:

We have developed the best SOPs so that the project taken is completed well within time / before time without compromising quality of work.

Material:

We preserve an extensive database for local vendors and others so that no work delays due to material unavailability.

Management:

We are a professionally managed company wherein we follow the best solutions to our business aspects in the most strategic way.

As mentioned,

• We are professionally managed company.

• We are financially self-reliant and enjoy very robust relationship with Banks.

• Our core strength lies in Infrastructural Development.

• We are equipped with the best machines / resources.

• Our Project Team is highly qualified and carries rich experience.

• We believe in sustainable growth without compromising Quality & Safety.

FUTURE OUTLOOK:

With the concern over liquidity there has been a general slowdown in both real estate and infrastructure projects. Many of the high-end residential projects, especially in metro cities, have been delayed.

India is in fast-forward mode and time is of essence. Players like BPOs often want to start operations straight away and have no time to wait. All this is tipping the scales in favor of infrastructure project, and mechanized construction equipment at sites. So, we conclude that the coming years will be moving from the recession to the boom in such a way that infrastructure industry will get booster without compromise.

SEGMENT WISE PERFORMANCE:

The Company is operating only in one sector i.e. Infrastructure Project Activity therefore the segment reporting and performance standard is not applicable to the Company.

QUALITY CONTROL:

The Management and the Employees of Navkar Builders Ltd. are committed to operate every aspect of the Construction adhering to the standards that offers quality service to all clients by adopting and implementing effecting Quality Management System & Procedures.

FINANCIAL PERFORMANCE:

The Company has diversified its business activities and at the verge of achieving better financial performance. The Company has successfully implemented various operational excellence programs designed with the help of external consultants so as to optimize on cost and delivery commitments. The Companys cash flow position as at the yearend continues to remain strong. Increased liquidity has strengthened the Companys confidence for launching new growth initiatives for the existing and emerging businesses of construction.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof, including:

Sr. No.	Financial Ratio	Year ended
		31.03.2025	31.03.2024
1.	Debtors Turnover	0.63	0.84
2.	Inventory Turnover	0.61	0.06
3.	Interest Coverage Ratio	--	--
4.	Current Ratio	3.03	3.44
5.	Debt Equity Ratio	0.04	0.09
6.	Operating Profit Margin (%)	19.31	19.74
7.	Net Profit Margin (%)	0.02	0.05

Notes:

1. Debtors Turnover is decrease due to bifurcation of Trade Receivables and Advance received from customers.

2. Inventory Turnover ratio is decreased Due to change in Purchase during the year.

3. Interest Coverage Ratio increase Due to repayment of loan in F.Y 2024-25

4. Current Ratio is increased due to change in Loans and advances in the current financial year

5. Debt equity ratio increase due to repayment of loan in F. Y 2024-25

6. Operating Profit Margin (%) is decrease due to increase in purchase / expenses in Current Financial year.

7. Net Profit Margin (%) is increase Due to Proportionate change in Expense to Income.

INTERNAL CONTROL SYSTEM:

The Companys employees and projects have been and are exposed to risks and threats to life, liberty, and property while operating in risky geographical areas. The Company however takes pride in executing prestigious works in the nation building task. The Company has taken measures with the help of the Government to provide adequate security, facilities, and also insurance coverage in such places. The Company has a formal Enterprise Risk Management framework in place which will be reviewed periodically.

PARTICULARS OF EMPLOYEE

I. INFORMATION AS PER RULE 5(1) OF CHAPTER XIII, COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Remuneration paid to whole-time directors and KMP:

Name of the Director and KMP	Designation	Ratio of remuneration of each Director / KMP to the Median Remuneration of Employees	Percentage increase in Remuneration in the Financial year 2024-25
Mr. Harsh Shah	Managing Director	35.70:1	31.24
Mrs. Pinki Sagar	Executive Director and Chief Financial Officer	Nil	Nil
Mr. Sarjeevan Singh	Independent Director	Nil	Nil
Mr. Nileshkumar Patel	Independent Director	Nil	Nil
Ms. Sonal Gandhi	Independent Director	Nil	Nil
Ms. Bhoomi Ben Patel	Independent Director	Nil	Nil
Mr. Vijay Amulwani	Company Secretary	3.25:1	Nil
Mr. Utkarsh Shukla	Company Secretary	1.82:1	Nil

Notes:

1) The details of remuneration of the Independent Directors of the Company have been provided in the Corporate Governance Report. The ratio of remuneration and percentage increase for the Independent Directors Remuneration is not considered for the purpose above.

2) Percentage increase in remuneration indicates annual total compensation increase, as recommended by the Nomination and Remuneration Committee and duly approved by the Board of Directors of the Company.

3) The percentage increase in the median remuneration of employees in the financial year 2024-25 was Nil.

4) There were 10 permanent employees on the rolls of the Company as on March 31, 2025.

5) Average percentage increase made in the salaries of employees other than the KMP in the previous financial year was Nil, whereas the average percentage increase in remuneration of the KMP was 31.24%. The average increase of remuneration every year is an outcome of the Companys market competitiveness as against similar Companies. The increase of remuneration this year is a reflection of the compensation philosophy of the Company and in line with the benchmark results.

6) During the year, the Company paid sitting fees of ?4.95 lakhs to the Independent Director, Mr.

Nilesh Patel

Affirmations

It is hereby affirmed that the remuneration paid to all the Directors, KMP, Senior Managerial Personnel and all other employees of the Company during the financial year ended March 31, 2025, were as per the Nomination and Remuneration Policy of the Company.

Information as per Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

(a) The Company does not have any employees who is drawing remuneration in excess of limit prescribed under section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

(b) The statement containing the names of top ten employees will be made available on request sent to the Company on navkarbuilders@yahoo.co.in