Niraj Cement Structurals Ltd Management Discussions

Global Economy

The global economy held its footing in the face of geopolitical tensions, shifting trade patterns and tighter financial conditions across several advanced economies. Global output expanded 3.4% in Financial Year (FY) 2025, reflecting steady demand and a gradual healing of supply chains. Advanced-economy growth is projected to ease marginally, from 1.9% in FY 2025 to 1.8% in FY 2026, with the United States leading at around 2.1% and the Euro Area expanding by 1.4%. Asia continues on a strong growth path, anchored by China at roughly 5.0%, which is reinforcing demand across infrastructure, logistics and energy. Ongoing investment in transport networks, energy systems and industrial corridors across emerging markets is expected to underpin construction activity and infrastructure development.

Outlook

The global economic outlook remains broadly stable, supported by moderate growth across both advanced and emerging economies. Global output is projected to remain around 3.1% in FY 2026, with emerging markets continuing to contribute a significant share of overall growth. Strong economic momentum in Asia, particularly in India and China, alongside steady expansion in the United States, is likely to sustain global trade flows and industrial activity.

Governments across major economies are increasingly prioritising infrastructure modernisation, energy transition and supply chain resilience to strengthen long-term economic competitiveness. Elevated public investments in transport networks, logistics corridors, renewable energy systems and urban infrastructure are supporting capital formation and construction activity across regions. At the same time, the global environment remains shaped by geopolitical tensions, particularly the conflicts in West Asia, which have amplified concerns around energy security and trade continuity.

Countries are placing greater emphasis on diversifying supply chains, deepening regional trade integration and expanding infrastructure to build economic resilience amid rising trade tensions and global uncertainty. Even with geopolitical and financial-market risks in play, infrastructure-led investment is expected to support medium-term global growth.

IMF - World Economic Outlook, April 2026

Indian Economy

Indias economy stayed on a strong footing through Financial Year (FY) 2025-26, driven by resilient domestic demand, robust investment activity and continued government emphasis on infrastructure development. GDP growth for the year is estimated at around 7.7%, keeping India in place as the fastest-growing major economy worldwide. This growth has been aided by steady expansion in the services and infrastructure sectors, rising household consumption and sustained public capital spending directed at strengthening logistics, transport and industrial capacity. The government has kept its focus on infrastructure-led development, with capital investment allocations of over Rs 12.2 lakh crore aimed at improving connectivity, lifting productivity and drawing in private-sector investment across sectors.

Outlook

The outlook for the infrastructure and construction sector stays positive, backed by sustained policy attention and growing public investment in core infrastructure. The Government has continued to drive infrastructure-led growth through sustained emphasis on highways, railways, urban infrastructure, logistics corridors and energy-transition projects. Initiatives such as the PM Gati Shakti programme, the development of metro networks and investment in logistics and warehousing are expected to boost construction activity and open up project-execution opportunities across the sector. With infrastructure investment serving as a key multiplier for economic growth, the sector should see steady expansion of its project pipeline along with stronger participation from both public and private players in the years ahead.

Industry Overview

Indias infrastructure sector remains a major driver of growth, backed by sustained public investment and policy initiatives aimed at strengthening connectivity and logistics networks. Investment is flowing into key projects such as the Dedicated Freight Corridors linking the eastern and western regions, the expansion of national waterways, the development of high-speed rail corridors and the strengthening of multimodal logistics networks.

The Union Budget for FY 2026-27 has given a strong push to infrastructure development, with capital expenditure allocation rising to around Rs 12.2 lakh crore, nearly 3.1% of GDP. Bringing new waterways into operation and enhancing freight infrastructure are expected to improve cargo movement, lower logistics costs and support more sustainable transport systems. These steps should help strengthen regional connectivity, improve supply-chain efficiency and support long-term industrial and economic growth.

Road and Highway Infrastructure of India

Indias road and highway infrastructure continues to be among the strongest levers of economic development. The country has established itself as the second-largest road network globally, with over 63.45 lakh kilometers of roads, including 1.46 lakh kilometers of National Highways (NHs).

Government initiatives like Bharatmala Pariyojana and PM Gati Shakti have played a crucial role in advancing highway development across India. These programmes have led to a significant expansion of the national highway network and a notable increase in high-speed corridor lengths.

The government is firmly focused on transforming Indias road infrastructure, aiming to construct 10,000 km of national highways in FY 2025–26 to enhance connectivity and reduce logistics costs. This effort is part of a broader vision to develop 50,000 km of access-controlled expressways by 2037 under Vision 2047. The pace of highway development has seen significant acceleration, driven by strong capital investments that showcase the governments commitment to creating world-class transportation networks.

Opportunities for the Infrastructure Sector

Key Challenges for the Infrastructure Sector

01 Land Acquisition & Approval Delays

Infrastructure projects often require significant land acquisition and multiple regulatory approvals. Delays in obtaining environmental clearances and land approvals can affect project timelines and overall execution schedules.

02 Volatility in Raw Material Prices

Infrastructure projects are exposed to fluctuations in prices of key construction materials such as steel, cement, bitumen and fuel. Changes in input costs may impact project budgets and affect profitability, especially for long-duration contracts.

03 Execution and Project Management Risks

Large-scale infrastructure projects involve complex coordination among contractors, government agencies and suppliers. Execution challenges related to logistics, contractor capacity and project management may delay project completion.

04 Financing and Payment Delays

Infrastructure development requires significant capital investment and long project cycles. Delays in project payments, limited access to financing or changes in financial conditions may affect project implementation and working capital requirements.

05 Competitive Intensity

Numerous infrastructure businesses active in the same geographies compete fiercely for project awards; some rivals are larger, better capitalised and more experienced. To navigate high interest rates, sluggish demand and rising input costs, the Company has adopted risk mitigation, disciplined execution and cost management, building a lean, effective organisation.

Government Initiatives

• Bharatmala Pariyojana

Indias flagship highway development programme focused on road connectivity and freight efficiency across the nation. Out of a total target of 34,800 km, over 26,425 km have already been awarded and 19,826 km already built. The scheme is significantly contributing to a high-capacity, well-connected road network — developing high-speed greenfield corridors, enhancing connectivity, reducing travel time and supporting the economys growing logistics demands, while boosting regional integration and improving access to remote and underserved areas.

• PM Gati Shakti Master Plan

Launched in 2021, PM Gati Shakti is a National Master Plan that aims to build world-class multimodal infrastructure to support Indias ambitions under the ‘Make in India vision. It integrates 16 ministries, including Railways and Roadways, and uses geospatial data and digital tools to enable better planning, coordination and execution of large infrastructure projects — minimising delays, improving multimodal connectivity and encouraging greater private sector participation, while showcasing balanced regional development and stronger economic linkages.

• National Infrastructure Pipeline (NIP)

NIP is a major government roadmap for infrastructure investment between 2020 and 2025, with a total investment of Rs 111 lakh crore. It covers roads, railways, power, telecom, urban development and ports, with contributions from central and state governments as well as private entities. Key highlights include tripling of investment in road development, long-term railway planning through Vision 2030 and 2050, expansion of BharatNet for rural high-speed internet, port development under the Sagarmala programme, and strengthening of the power sector and affordable housing through PM Awas Yojana — together aiming to stimulate growth, create employment and improve quality of life.

Company Overview

The infrastructure sector is a key driver for the Indian economy, highly responsible for propelling the countrys overall development, and enjoys intense focus from Government for initiating policies that ensure time-bound creation of world-class infrastructure. The sector includes power, bridges, dams, roads and urban infrastructure development, and acts as a catalyst for Indias economic growth by driving allied sectors such as townships, housing, built-up infrastructure and construction development projects.

Niraj Cement Structurals Limited ("Niraj") has been in the business of specialty engineering construction and infrastructure for the past three decades, and is amongst the oldest and most well-reputed infrastructure companies in India, with a wealth of diverse experience and exposure. Our corporate philosophy of trust, integrity and quality has placed us at the forefront of the construction industry.

At Niraj, we adhere to global standards in construction, with appropriate supervision and project control to maximise quality, a focus on sustainable development and solid solutions to construction challenges. The Company provides end-to-end solutions across highways, bridges, water supply and drainage, irrigation, storm water drainage and other infrastructural work.

Indias extensive infrastructure needs are well known; decades of underinvestment have left the country with deficits in critical areas such as railways and roads. Project implementation is undertaken with the assistance of sub-contractors and other agencies, and Niraj provides the necessary technical and financial assistance to its sub-contractors.

The dedicated architects, engineers and quantity surveyors who drive the firms activities are ably complemented by a team of multi-skilled and competent support staff. The Company also actively procures the latest construction technologies to assist its highly skilled workforce.

Operational Performance

Financial Performance — Standalone

During the Financial Year under review, the Company generated revenue from operations of Rs 54,043.92 Lakhs compared to Rs 50,671.77 Lakhs in the previous financial year, with an increase of 6.65%. The profit before tax for FY 2025-26 was Rs 2,899.81 Lakhs, marking an increase of 43.41% from Rs 2,022.07 Lakhs in the previous year. The profit after tax stood at Rs 2,161.99 Lakhs, up by 41.22% from Rs 1530.89 Lakhs in the previous Financial Year.

Financial Performance — Consolidated

During the Financial Year under review, the Company generated revenue from operations of Rs 54,203.23 Lakhs compared to Rs 50,714.23 Lakhs in the previous financial year, with an increase of 6.88%. The profit before tax for FY 2025-26 was Rs 2,853.77 Lakhs, marking an increase of 42.12% from Rs 2,007.94 Lakhs in the previous year. The profit after tax stood at Rs 2,116.88 Lakhs, up by 39.58% from Rs 1,516.65 Lakhs in the previous Financial Year.

Key Financial Ratios

Internal Control Systems and Their Adequacy

The Company has proper and adequate internal control systems commensurate with the size of its business operations, geared towards achieving efficiency in its various business operations, safeguarding assets, optimum utilisation of resources and compliance with statutory regulations. Efforts for continued improvement of internal control systems are being consistently made in this regard.

Corporate Social Responsibility

The Company has proper and adequate internal control systems commensurate with the size of its business operations, geared towards achieving efficiency in its various business operations, safeguarding assets, optimum utilisation of resources and compliance with statutory regulations. Efforts for continued improvement of internal control systems are being consistently made in this regard.

Human Resource Management

The Company continues to excel in the field of Human Capital management, with unique practices in the infrastructure industry. The Company strives to achieve the highest levels of employee engagement through multiple focused initiatives towards effective training and development of employees at various levels. The healthy status of the Companys human capital is evident from the trend analysis of achievement, higher productivity with stable employee numbers and a low attrition rate vis-?-vis industry competitors.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives and expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and reasonable expectations of future events. Actual results could, however, differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand and supply, price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations and tax structure, economic developments within India and in the countries with which the Company has business contacts, and other factors such as litigation and industrial relations.