Rachana Infrastructure Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW AND OUTLOOK

Global growth is forecast to slow from the 2.5% 2024 pace to 2.4% in 2025 and rebound to 2.7% in 2026. Inflation is expected to continue to cool, although in many countries the price pressure will take longer to unwind than it took to emerge.

The slower expected glide path on rate cuts by the U.S. Federal Reserve, which plays an outsized role in global financial markets, will have a larger impact on rate decisions by developing economies. These markets are more sensitive to the exchange rate movements than we have seen in the past. Weakening currencies relative to the U.S. dollar are inflationary for those economies. To further complicate matters, foreign exchange markets have been reacting to unexpected election outcomes.

Between interest rate uncertainty and the elections, business leaders remain hesitant to engage in major investment projects. Consumers are cutting back on financed goods due to elevated rates, while governments face higher financing costs as debt rolls over at higher interest rates.

OUTLOOK:

Overall, the global economic outlook remains cautious. While growth persists, persistent inflation, elevated geopolitical risks, and structural vulnerabilities pose significant downside risks. Sustained global recovery will depend critically on restoring trade cooperation, maintaining prudent monetary and fiscal frameworks, and investing in productivity enhancing sectors such as technology, energy and education. International cooperation will be essential to strengthen economic resilience and foster a more inclusive sustainable growth trajectory.

INDIAN ECONOMIC OVERVIEW

Indias strong economic performance in FY24 has reaffirmed its position as one of the worlds fastest- growing major economies. Nominal GDP or GDP at Current Prices in the year 2024-25 is estimated to exceed Rs. 325 lakh crores (3.9 trillion US dollar), against the provisional estimates of Rs. 295.36 lakh crores (3.54 trillion US dollar) for 2023-24. The estimated growth in nominal GDP during 2024-25 is expected to be around 10.0%, driven by sustained consumption, increased private sector investment and robust capital expenditure by the Government. Indias exports continue to recover with a focus on diversification, with Engineering Goods, Petroleum Products and Electronic Goods remaining key contributors. Rising employment levels, an uptick in rural demand and robust urban consumption patterns are expected to support GDP growth in the upcoming quarters. Government policy thrust on tax rationalisation, digitisation, and infrastructure development is likely to continue driving long-term growth. The contact-based services sector remains resilient and is expected to contribute meaningfully to the GDP in FY26.Indias position as a preferred investment destination is further strengthening amidst global volatility, supported by macroeconomic stability, policy consistency and a strong domestic market.

Indias economic outlook for FY 2025-26 remains broadly positive, underpinned by dynamic domestic demand, structural policy reforms, and substantial investments across critical sectors. The Reserve Bank of India projects real GDP growth at 6.5% for FY 2025-26, maintaining the same rate as estimated for FY 2024-25. RBI has further projected growth rate of 6.7% for FY 2026-27, highlighting continued recovery momentum. This expansion is expected to be driven by continued infrastructure investments, accelerating digital transformation, rising manufacturing output supported by Production Linked Incentive (PLI) schemes, and sustained rural consumption bolstered by favourable agricultural performance.

Infrastructure development remains a key catalyst for growth, with significant investments directed towards highways, railways, ports, and urban connectivity, improving logistics efficiency and reducing operational costs for businesses across the economy. At the same time, inflationary trends warrant continued vigilance. While headline inflation has moderated, food inflation remains elevated in certain segments, influencing consumer purchasing power and posing challenges for monetary policy calibration. The RBI is likely to maintain a cautious yet adaptive stance, adjusting policy levers as necessary to balance growth and price stability.

INDUSTRY OVERVIEW Indian infrastructure sector

The infrastructure sector continues to be a cornerstone of Indias economic strategy. With significant investments under the National Infrastructure Pipeline (NIP), Gati Shakti and related schemes, the Government is targeting integrated development across transport, energy, logistics and urban infrastructure.

In the Union Budget for financial year 2025-26, the government allocated H11.21 lakh crore towards capital expenditure, marking a continued commitment following the previous years allocation of H11.11 lakh crore. This strategic investment is aimed at enhancing Indias physical infrastructure across segments such as power, roads, bridges, urban infrastructure and water resources.

Looking ahead, the governments vision of Viksit Bharat by 2047 offers a comprehensive blueprint for economic transformation, centred on building human capital, expanding infrastructure, and leveraging technology for inclusive growth. Maintaining geopolitical stability will also be critical to realising this vision, as regional frictions, particularly with neighbouring Pakistan, could pose headwinds to progress. With prudent macroeconomic management, India is well positioned to harness these structural strengths and achieve durable, sustainable progress over the coming decades.

ROADS AND HIGHWAYS

India has the second largest road network in the world and its National Highways span a total length of 1,46,145 km, forming the primary arterial network of the country. Maharashtra has the longest network of national highways in India, with a total length of approximately 18,459 km, followed by Uttar Pradesh at 12,292 km and Rajasthan with 10,706 km in second and third place respectively.

India is well positioned to capitalise on emerging opportunities in the global infrastructure landscape, supported by a robust policy framework, favourable demographic trends, with the growing needs of its rapidly urbanising population. This momentum is further fuelled by the broader demand from emerging economies and the global shift towards sustainable and resilient infrastructure. As India works towards becoming a USD 5 trillion economy, infrastructure development remains a critical enabler.

Increased expenditure in this sector has a multiplier effect on the economy, boosting productivity and laying the foundation for long term sustainable growth. The continued emphasis on world-class infrastructure creation reflects Indias broader economic vision.

In addition to the central governments efforts through agencies like the National Highways Authority of India (NHAI), various state governments are actively developing highways and expressways, contributing significantly to the expansion of Indias road infrastructure.

GOVERNMENT POLICIES

Indian Government continues to place a strong emphasis on urban infrastructure and has introduced several key measures to support the expansion of sustainable urban transport solutions. Metro Rail has emerged as a cornerstone of this transformation, offering a fast, reliable and eco-friendly alternative to conventional public transport commuting methods.

With sustainability now a critical global imperative, India is increasing its focus on the creation of green and resilient infrastructure. Renewable energy projects, innovative waste management solutions, ecofriendly buildings, and sustainable transportation networks are emerging areas where infrastructure companies can explore and capitalise on substantial opportunities.

The Government has been implementing several initiatives for the development of road infrastructure and transformed the landscape from commuting perspective.

National Monetisation Pipeline-II

The second phase of the National Monetisation Pipeline (NMP-II) presents significant opportunities for infrastructure companies, as the Government of India sets an ambitious asset monetisation target of 10 Lakh Crores over a five-year period from FY 2025-26 to FY 2029-30, with 1.9-2 Lakh Crores earmarked for FY 2025-26. This phase builds on the success of NMP 1.0, under which the government achieved 5.65 Lakh Crores of the 6 Lakh Crores objective amounting to 94% of the initial target, over a four-year period from FY 2021-22 to FY 2024-25.

NMP-II will focus on strategic sectors such as coal and mining, highways, power, and railways, while also expanding its scope to infrastructure development on vacant public land. With a reinvestment goal of 10 Lakh Crores in new projects, this phase is designed to unlock capital for greenfield development, boost private participation, and enhance asset productivity.

The National Highways Authority of India (NHAI) is expected to be the largest contributor in FY 202526, followed closely by power, railways, and coal & mining sectors. Road assets alone are projected to generate 0.3 Lakh Crores through monetisation. Overall, asset monetisation in FY 2025-26 is expected to exceed the 1.8 Lakh Crores achieved in the previous year by 5-10%.

A wide spectrum of industries will contribute to asset classes and land parcels under NMP 2.0, including:

• Ports

• Warehousing and Storage

• Coal and Mines

• Telecommunications

• Civil Aviation

• Roads and Railways

• Electricity

• Petroleum and Natural Gas

• Urban Infrastructure (including housing and transportation)

Key policy measures to encourage private participation: The Government decided to leverage private sector expertise and resources to deliver projects more efficiently, effectively and at a lower cost than traditional procurement methods.

The private sector brings its expertise in project management, financing and technology, while the Government provides regulatory oversight, public policy direction and often some form of financial support. This has gained popularity in

recent years as the Government seeks to provide essential infrastructure and services to its citizens without relying solely on public funds.

Public-Private Partnership (PPP) model: This is a model of infrastructure development and service delivery that involves collaboration between the public and private sectors. Under the PPP model, the Government partners with private companies to finance, design, build, operate and maintain infrastructure projects such as highways, airports and power plants. The private sector brings in capital, technical expertise, and efficiency in operations, while the Government offers assistance through policies, regulatory frameworks and funding. The objective of PPP is to leverage the strengths of both sectors to deliver better-quality and more cost-effective public services.

Fast-tracking of project approvals: The Government has streamlined the project approval process for infrastructure projects to make it easier for private companies to invest in such projects. This includes setting up a single-window clearance system and reducing the number of approvals required.

Logistics infrastructure: In recent years, Indias logistics infrastructure has attracted considerable attention and investment as it remains inadequate to meet the countrys growth aspirations.

If improvements are not made in a timely manner the waste produced by inadequate logistical infrastructure is expected to increase.

The waste produced by inadequate logistical infrastructure is expected to increase. However, if addressed in an integrated and coordinated manner, almost half of this waste can be eliminated. Also, this will help lower Indias transportation fuel requirements by 15 to 20%

To address these challenges, an integrated approach is required, focusing on the development of rail and waterway networks, alongside roads. The Government has undertaken several initiatives, such as the Dedicated Freight Corridors (DFCs) and the Bharat Mala project, aimed at improving connectivity and reducing transportation costs. These projects involve the construction of new highways, expressways and rail corridors, providing efficient transportation links between major industrial and consumption centres

OPPORTUNITIES:

Government Infrastructure Projects: The Indian government has announced several infrastructure projects, including the Bharat Mala Pari yojana, the Sagar mala project and the National Highways Development Project. These projects will require significant investments in infrastructure and these opportunities need to be capitalised on by winning contracts for construction, operation and maintenance.

Increased Private Sector Participation: The Indian Government has been actively encouraging private sector participation in the infrastructure industry through various policy measures. This has led to an increase in private investments in areas such as infra development of roads, ports, airports and increased focus on renewable energy.

Infrastructure Development in Tier-II and Tier-III Cities: The Indian Government is focusing on developing infrastructure in smaller cities and towns, which presents significant opportunities for investors and businesses.

This includes investments in areas such as affordable housing, access to clean water, sanitation and healthcare.

Increased Investment in Digital Infrastructure: The Indian government has launched several initiatives to promote the development of digital infrastructure, including the Digital India programme. This has led to a surge in investment in areas such as broadband connectivity, data centres and e-commerce.

Emerging Markets: With the growth of the Indian economy, there is a rising demand for infrastructure development in smaller towns and cities. This can be leveraged by expanding of operations to emerging markets and offering its services in these regions.

Focus on new models of operations: Hybrid Annuity Mode (HAM), Toll Operate and Transfer and Operate Maintain and Transfer, Engineering, Procurement and Construction (EPC) are some of the new models gaining prominence. The Engineering, Procurement and Construction (EPC) model is becoming increasingly popular in the construction industry due to its efficiency and cost-effectiveness. The Company has already secured several EPC contracts and this trend is expected to continue, providing significant opportunities for growth. The Company has also secured few HAMS and BOT model-based projects which gives future growth opportunities to the Company.

Embracing technology: With technological advancements, the construction industry is rapidly changing and companies that embrace technology can gain an early mover advantage. The Company implements advanced digital solutions and leverages cutting-edge tools to enhance project management, improve operational efficiency and drive innovation in infrastructure development. The Company also incorporates the latest technologies such as Artificial Intelligence (AI), Internet of things (IoT) and data analytics to optimise construction processes, enhance safety measures and deliver sustainable and futuristic infrastructure solutions.

Sustainability: There is a growing preference for sustainable infrastructure and companies that adopt environment-friendly practices can gain a competitive advantage. The Company can profit from this trend by incorporating sustainable practices into its operations, such as using renewable energy sources, reducing waste and improving energy efficiency.

Project complexity and risk Management:

Infrastructure projects are often extensive and complex, involving multiple stakeholders, intricate logistics and various risks. Effective project management, risk assessment and mitigation strategies are critical to ensuring successful and timely project execution. Urbanisation and population growth Rapid urbanisation and growing population place further strain existing infrastructure systems. Meeting the demand for transportation, housing, utilities, and other critical services necessitates careful planning and resource allocation.

Political and policy uncertainty:

Changes in government policies, regulations and political scenarios can impact infrastructure projects. Political stability and favourable long-term policies are crucial for attracting investments and ensuring project continuity.

Funding and investments:

It is challenging to secure adequate financing for infrastructure projects. Infrastructure development is often impeded by limited public funds, overlapping priorities and difficulties in attracting private investment. Regulatory and approval processes

Infrastructure projects often face complex regulatory frameworks and lengthy approval processes.

Navigating through various approvals and complying with environmental and land acquisition regulations can cause delays and raise project costs.

Sustainability and climate change:

Building infrastructure that is resilient to climate change and environment-friendly is a growing concern. The industry must address challenges pertaining to reducing carbon emissions, adapting to extreme weather events and implementing sustainable construction practices.

Stakeholder Engagement:

Infrastructure projects involve numerous stakeholders, including communities, local authorities, environmental groups and businesses. Balancing diverse interests, addressing concerns and maintaining effective communication throughout the project lifecycle is a major challenge.

Outlook

India has to focus on enhancing its infrastructure to reach its year 2025 economic growth target of USD 5 trillion. To this end, the Government has set a target to invest USD 1.8 trillion in infrastructure over the next five years. The Indian government also intends to modernise the countrys infrastructure network while creating numerous job opportunities. In the years ahead, the government is expected to focus more on transportation infrastructure. The Government plans include building new highways, railways and airports as well as modernising existing ones. The Government is investing heavily in the development of metro rail systems in major cities, with plans to have metro rail systems in 25 cities by 2025.37 This is expected to enhance transportation efficiency and reduce traffic congestion. Another focus area is energy infrastructure, with the Government striving to increase the generation of renewable energy. This includes investments in solar, wind, hydroelectric and nuclear power.

The Government is also investing in the development of water and sanitation infrastructure, digital infrastructure and affordable housing.

COMPANY OVERVIEW:

Your Company is an Indian Infrastructure Company that has been contributing to the Development of the nations Infrastructure for over two decades. Your company is mid-size private sector company engaged in the business of Construction of Road projects on Bill of Quantities (BOQ) and on EPC basis. Your Company continues to operate in three business segments only i.e., Road and Highway Construction projects, Trading and Quarry Mining.

Road and Highway Construction project plays a major role in the core business of our company. We are proud to say that This Year we are making more than 110 Lane Length Kilometre Roads. We are specialised in construction of all type of roads like Four Lane Highway, Two Lane Highway, State Highway, Major District Road. We are also involved in roads for Urban Development Town Planning Schemes and also Resurfacing & Reconstruction of roads in City as well. We have done mining works for various clients at our own Mines at Vadagam, Gujarat. In these mining project the mines are almost 100 ft below ground level and million tons of aggregate has been produced from this project so far.

OUTLOOK

Post pandemic, demand for Black trap, Roads and Bridge Construction and its related products has gone up.

Increased penetration of organized retail sector, growing population and rising income levels are likely to drive demand for construction projects.

The rapid deterioration of the global economic outlook following the pandemic and Russia-Ukraine war has severely impacted demand and margins. The major focus of the industry will be on cost cutting measures, improving productivity and quality and reduction in wastage.

RISK AND CONCERN

We own a large fleet of equipment and have a large number of employees, resulting in increased fixed costs to our Company. In the event we are not able to generate adequate cash flows it may have a material adverse impact on our operations.

We operate in a highly competitive environment and may not be able to maintain our market position, which may adversely impact our business, results of operations and financial condition.

Our operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees or any other kind of disputes with our employees.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Companys internal control systems and procedures commensurate with the size and nature of its operations. The Company has adequate system of Internal Controls to ensure that the resources of the Company are used efficiently and effectively, all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly, financial and other data are reliable for preparing financial information and other data and for maintaining accountability of assets. The management periodically reviews the internal control systems and procedures for efficient conduct of the Companys business. Internal Audit is conducted by independent Chartered Accountants, on quarterly basis. To maintain its objectivity and independence,

the Internal Auditors report directly to the Audit Committee of the Board. The Audit Committee reviews the Internal Audit Reports and effectiveness of the Internal Control Systems. If required, the corrective actions are taken and the controls strengthened.

KEY RATIOS

Sr. No. Particular	Ratio For F.Y.		% Change
	2024-25	2023-24
1. Debtors Turnover Ratio Formula: Debtors Turnover Ratio= Net Credit Sales/Average Account Receivable Definition: The Debtors Turnover Ratio also called as Receivables Turnover Ratio shows how quickly the credit sales are converted into the cash. This ratio measures the efficiency of a firm in managing and collecting the credit issued to the customers.	3.87 Times	3.66 Times	0.21 Times
2. Inventory Turnover Ratio Formula: Inventory Turnover= Cost of Goods Sold / Average Inventory Definition: Inventory turnover is a ratio showing how many times a company has sold and replaced inventory during a given period. A company can then divide the days in the period by the inventory turnover formula to calculate the days it takes to sell the inventory on hand.	29.22 Times	23.40 Times	5.82 Times
3. Interest Coverage Ratio Formula: Interest Coverage Ratio= Interest Expense/EBIT Definition: The interest coverage ratio measures how many times a company can cover its current interest payment with its available earnings. The ratio is calculated by dividing a companys earnings before interest and taxes (EBIT) by the companys interest expenses for the same period.	0.22 Times	0.33 Times	(0.11) Times
4. Current Ratio Formula: Current Ratio=Current assets/ Current liability Definition: The current ratio is a liquidity ratio that measures whether a firm has enough resources to meet its short-term obligations. It compares a firms current assets to its current liabilities, and is expressed as follows: The current ratio is an indication of a firms liquidity.	4.67 Times	3.78 Times	0.89 Times
5. Debt Equity Ratio Formula: Debt Equity Ratio = non-current borrowings (+) current borrowings (-) cash and cash equivalent /Total Equity Definition: The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders equity and	0.13 Times	0.20 Times	(0.07) Times
debt used to finance a companys assets. Closely related to leveraging, the ratio is also known as risk, gearing or leverage.
6. Operating Profit Margin Ratio Formula: Operating profit margin = *Operating income/ Total revenue *Operating Income excluding Exceptional Item Operating profit margin = **Operating income/ Total revenue **Operating Income including Exceptional Item Definition: In business, operating margin?also known as operating income margin, operating profit margin, EBIT margin and return on sales ? is the ratio of operating income to net sales, usually presented in percent. Net profit measures the profitability of ventures after accounting for all costs.	0.0597 Times	0.0512 Times	0.009 Times
7. Net Profit Margin Ratio Formula: Net Profit Margin= Net Profit/ Sales Definition: The net profit percentage is the ratio of aftertax profits to net sales. It reveals the remaining profit after all costs of production, administration, and financing have been deducted from sales, and income taxes recognized.	0.0424 Times	0.0386 Times	0.0037 Times
8. Return on Net Worth Ratio Formula: Net Income/Shareholders Equity Definition: The return on Net Worth is a measure of the profitability of a business in relation to the equity.	0.0482 Times	0.0446 Times	0.0036 Times

FINANCIAL AND OPERATIONAL PERFORMANCE

Particulars for the year ended	Marc h 31, 2025	March 31,2024
Net revenue from Operations (Sales)	9686.73	9396.95
Profit Before Depreciation, Exceptional Item and Tax	768.37	699.72
Less: Depreciation	215.20	245.58
Profit Before Extra-Ordinary Items and Tax	553.17	454.14
Extra Ordinary Items	0.00	0.00
Profit Before Tax	553.17	454.14
Tax Expense
-Current Tax	150	110
Less: MAT Credit Receivable	0.00	0.00
-Deferred Tax	(7.16)	(18.72)
Profit After Tax	410.33	362.85
EPS (Basic) (In Rs.)	2.21	1.95
EPS (Diluted) (In Rs.)	2.21	1.95

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

There were 210 employees on roll in the Company as on 31st March 2025 Company maintained Relations with the employees were cordial throughout the year. Your Company provides to its employees favourable work environment conducive to good performance with high degree of quality and integrity. The Company continuously nurtures this environment to keep its employees highly motivated and result oriented. Effective Human Resource Practices and customized training programmes enable building a stronger performance culture.

CAUTIONARY STATEMENT

Statements in this Management Discussions and Analysis Report describing the Company objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on reasonable assumptions and expectations of future events. Actual results could however, differ materially from those expressed or implied. Factors that could make a difference to the Companys operations include market price both domestic and overseas availability and cost of raw materials, change in Government regulations and tax structure, economic conditions affecting demand / supplies and other factors over which the Company does not have any control. The Company takes no responsibility for any consequence of decisions made based on such statements and holds no obligation to update these in future.

	By Order of the Board of Directors
	For, RACHANA INFRASTRUCTURE LIMITED
	Sd/-
Date: 25/08/2025	Girishkumar Ochchhavlal Raval
Place: Ahmedabad	Chairman & Managing Director
	DIN:01646747