Rachana Infrastructure Ltd Management Discussions

GLOBAL ECONOMY

Global economy grew marginally at 3.4% in 2025 compared to 3.3% in the previous year, influenced by the US tariff shock of April 2025. Despite being partially unwound through subsequent trade deals, it left effective tariff rates well above pre-2025 levels and heightened trade policy uncertainty.

Advanced economies witnessed a marginal growth from 1.8% in 2024 to 1.9% in 2025, while emerging market and developing economies demonstrated relative resilience, expanding by 4.4% in 2025 compared to 4.3% in 2024.

Global inflation continued its multi-year downward trend in 2025, declining to an estimated 4.1% from 5.8% in 2024.

(Source: IMF, un.org)

GLOBAL OUTLOOK

Given the challenge of forming stable, real-time assumptions for projections, the IMF World Economic Outlook report adopted a reference forecast instead of a conventional baseline, assuming the war remains contained in duration, intensity, and reach, with disruptions easing by mid-2026, in line with commodity futures as of March 10, 2026.

Under this reference view, global growth is projected at 3.1% in 2026 and 3.2% in 2027. Global inflation is expected to rise to 4.4% in 2026 before easing to 3.7% in 2027.

(Source: OECD Interim Economic Outlook, IMF, World Economic Forum, Federal Reserve, Bank of England, European Central Bank, Bank of Japan)

INDIAN ECONOMY

The Indian economy demonstrated resilience in FY 2025-26 amidst a challenging global environment characterised by geopolitical turbulence and fragmented trade conditions. Indias real GDP growth for FY 2025-26 is estimated at approximately 7.4% - 7.6%, backed by domestic demand and sustained public capital expenditure. The private sector investment, while improving, remained measured, reflecting differentiated risks amidst a volatile trade and tariff environment.

Indias headline inflation moderated significantly during FY 2025-26 and averaged around 2.0-3.0%, reflecting easing food and fuel prices and contained core inflation. Inflationary pressures remained well within the Reserve Bank of Indias (RBIs) tolerance band, notwithstanding episodic volatility in select components.

The US-Israel-Iran conflict poses significant energy related risks, with rising crude prices, LNG disruptions and elevated shipping and insurance costs directly impacting Indias import bill and overall trade. This has already led to supply chain uncertainties with early spillover effects beginning to weigh on select energy-intensive and import-dependent sectors.

Indias ability to navigate these challenges will depend on maintaining macroeconomic stability, strengthening domestic demand drivers, and sustaining reform momentum to support economic growth.

INDIAN ECONOMY OUTLOOK

The year under review underscores a defining divergence: a world grappling with uncertainty, and an India navigating it with confidence.

In a global environment marked by fragmentation and caution, India stands out as a rare convergence of stability, scale and structural opportunity. The World Bank has revised its FY27 growth estimate upward to approximately 6.6%, reflecting resilient domestic momentum even as growth moderates from the previous year. India is expected to retain its position as the fastest-growing major economy.

Growth will be shaped by a combination of strong domestic demand and resilient private consumption, supported by low inflation and GST rationalisation, alongside stable export performance with improved access to key markets. This momentum is further reinforced by sustained policy support, ongoing economic reforms, and a favourable demographic advantage.

While risks persist, particularly from elevated energy prices, subsidy pressures on government spending, and uncertainty in global demand, Indias macroeconomic fundamentals remain strong.

Over the medium term, sustained consumption, gradual investment recovery, and expanding global trade linkages are expected to reinforce Indias position as a key driver of global economic growth.

(Source: MoSPI, Business Standard, Press Information Bureau, Business Standard, IMF, OECD, Deccan Chronicle. NDTV Profit, Outlook Business, The Asian Banker)

INDUSTRY OVERVIEW

The infrastructure sector continues to be a cornerstone of Indias economic growth and long-term development strategy. Over the past year, the Government has maintained its focus on strengthening physical, digital and social infrastructure, with investments across transport, energy, logistics, urban development, water resources and telecommunications. Initiatives such as the National Infrastructure Pipeline (NIP), PM Gati Shakti and other sector-specific programmes continue to support integrated infrastructure development, improve connectivity and enhance the efficiency of supply chains.

The Government has sustained its emphasis on public capital expenditure as a key driver of economic activity. In the Union Budget for financial year 2026-27, capital expenditure was maintained at a strong level, with the Centre budgeting approximately ?11 lakh crore towards capital expenditure. In addition, capital support to States has been strengthened, including ?2 lakh crore of special assistance for capital investment. The Budget also provides for higher capital outlay on key infrastructure segments, including Indian Railways and roads and bridges, reinforcing the Governments continued commitment to expanding and modernising Indias transport infrastructure.

Indias infrastructure landscape is also evolving beyond traditional physical assets. The Economic Survey 2025-26 highlights the growing importance of digital public infrastructure, clean energy systems, resilient water management and future-ready technologies. These developments are expected to support productivity, competitiveness and innovation while improving the resilience and sustainability of the economy. Continued investment, greater private-sector participation and improved project execution will remain important to sustain the infrastructure investment cycle.

Looking ahead, the Governments vision of Viksit Bharat @2047 provides a long-term framework for transforming India into a developed economy, with infrastructure development serving as a critical enabler of economic opportunity, regional connectivity and inclusive growth. The sector is expected to benefit from sustained public investment, increasing private participation, technological advancement and the growing emphasis on resilient and sustainable infrastructure.

Against this backdrop, India remains well positioned to leverage its structural strengths, expanding infrastructure base and favourable long-term growth prospects. Effective implementation, prudent macroeconomic management, access to long-term financing and continued focus on sustainability will be important in translating the countrys infrastructure ambitions into durable and inclusive economic growth.

ROADS AND HIGHWAYS

India has the second-largest road network in the world, with National Highways forming the primary arterial network supporting economic activity, trade and regional connectivity. The National Highway network expanded from approximately 91,287 km in March 2014 to 1,46,572 km as of December 2025, reflecting the Governments continued focus on strengthening road infrastructure and improving connectivity. Maharashtra, Uttar Pradesh and Rajasthan remain among the States with the largest National Highway networks.

The roads and highways sector continued to receive strong policy and investment support during FY 2025-26. The Government has focused on developing high-capacity corridors, expressways, access-controlled highways and multimodal connectivity, while promoting greater private-sector participation through public-private partnership models and asset monetisation. Road infrastructure investment has a significant multiplier effect on the wider economy by improving logistics efficiency, reducing travel time and costs, facilitating movement of goods and people, and supporting industrial and commercial activity.

The Government further reinforced its commitment to the sector through the Union Budget 2026-27, which provided approximately 3.10 lakh crore to the Ministry of Road Transport and Highways, including substantial allocations to NHAI and road development. Going forward, continued urbanisation, rising passenger and freight mobility, expansion of manufacturing and logistics networks, and the growing emphasis on sustainable and resilient infrastructure are expected to support long-term growth in the sector. Central and State Government initiatives, together with increasing private-sector participation and technology-led project execution, are expected to further strengthen Indias road infrastructure and its role as an enabler of the countrys long-term economic growth. 1,46,572 km as of December 2025, compared with around 91,287 km in March 2014. The policy focus has increasingly shifted towards development of high-capacity economic corridors, access-controlled highways, expressways, bridges and multimodal connectivity, supported by initiatives such as Bharatmala Pariyojana and the PM GatiShakti National Master Plan. PM GatiShakti is also being integrated into highway planning through digital mapping of National Highways, State Highways, expressways, logistics infrastructure, traffic data and other utilities, with the objective of improving project planning and inter-agency coordination.

The Government has continued to support significant public investment in the roads sector while encouraging greater participation from private developers. The Union Budget 2026-27 provides approximately 3.10 lakh crore for the Ministry of Road Transport and Highways, reinforcing the Governments commitment to road and highway development. The sector continues to utilise multiple project-delivery models, including Engineering, Procurement and Construction (EPC), Hybrid Annuity Model (HAM) and other Public-Private Partnership (PPP) structures, thereby providing opportunities across construction, development, operation and maintenance of road assets. Under HAM, the Governments construction support mechanism and subsequent annuity payments are intended to facilitate private-sector participation while balancing project and financing risks. The continued use of these models, together with asset monetisation and recycling of operational road assets, is expected to support a sustained pipeline of projects for the private infrastructure sector.

The policy environment is also increasingly focused on timely project execution, technology adoption, road safety, sustainability and efficient utilisation of public funds. Greater emphasis on digital project monitoring, drone-based surveys, data-driven planning and integration of infrastructure assets is expected to improve transparency and execution efficiency. The Governments continued focus on resolving inter-agency and multi-stakeholder issues, including through enhanced coordination under the PM GatiShakti framework, is expected to facilitate smoother implementation of large infrastructure projects. For road infrastructure companies, these policy initiatives provide a favourable medium- to long-term operating environment, while also increasing the importance of execution capabilities, financial discipline, quality standards and timely completion of projects.

Going forward, continued urbanisation, growth in passenger and freight movement, expansion of manufacturing and logistics networks, and the need for improved last-mile and regional connectivity are expected to sustain demand for road infrastructure. The combination of substantial government capital expenditure, a growing National Highway network, increasing private-sector participation and multiple project-delivery models is expected to create opportunities across the road infrastructure value chain. The Company remains well positioned to participate in this growth, leveraging its capabilities in road construction and infrastructure development while maintaining a focus on prudent project selection, efficient execution, quality, safety and sustainable value creation.

INDUSTRY OUTLOOK

The outlook for the Indian road infrastructure sector remains positive, supported by sustained economic activity, rising freight and passenger mobility, urbanisation and the continued expansion of manufacturing and logistics networks. The sector is expected to increasingly move towards corridor-based development, with greater emphasis on connecting industrial clusters, ports, logistics hubs and major economic centres. The Governments medium-term pipeline includes approximately 13,400 km of projects with an estimated value of 8.3 lakh crore, providing visibility for future project opportunities. The development of high-speed corridors is also expected to accelerate, with approximately 9,366 km currently under implementation and a long-term target of around 26,000 km by FY2033.

For private road infrastructure companies, opportunities are expected to emerge across EPC, HAM, PPP, operation and maintenance, and asset monetisation. The Governments objective of mobilising 30,000 crore of private investment in National Highway development during FY 2026-27, together with increasing use of technology, digital monitoring and innovative project-delivery mechanisms, is expected to encourage greater private-sector participation. At the same time, the sector is likely to witness increased focus on project quality, execution capability, financial discipline, safety and lifecycle sustainability. Against this backdrop, the Company remains well positioned to leverage emerging opportunities by maintaining a disciplined approach to project selection, strengthening execution capabilities and focusing on timely delivery, quality and sustainable value creation.

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.

COMPANY OUTLOOK

The outlook for the Company remains positive, supported by sustained Government focus on infrastructure development, growing demand for quality road connectivity and increasing opportunities for private-sector participation. The Company will continue to focus on securing quality projects, strengthening execution capabilities, maintaining financial discipline and delivering projects within agreed timelines. With a disciplined approach to project selection and execution, the Company remains well positioned to participate in the long-term growth of Indias infrastructure sector and create sustainable value for its stakeholders.

RISK AND CONCERN

Our equipment-intensive operations result in significant fixed and operating costs. The Company owns and operates a substantial fleet of construction equipment and machinery and maintains a sizeable workforce to support its road infrastructure projects. These resources involve significant expenditure towards depreciation, maintenance, repairs, fuel, manpower and other operating costs. Any slowdown in project execution, delays in receiving work fronts or payments, or reduction in the Companys order book may affect asset utilisation and cash flows. Inability to generate adequate operating cash flows to meet these fixed and operating costs could adversely affect the Companys business, financial condition and results of operations.

We operate in a highly competitive road infrastructure industry, which may exert pressure on margins and project opportunities.

The road infrastructure sector is characterised by intense competition, particularly in EPC and other project-based contracts, with participation from established infrastructure companies as well as new and regional players. Competitive bidding may result in pricing pressure and lower project margins. The Companys ability to maintain its market position and secure new projects depends on its execution track record, technical capabilities, financial strength, equipment availability, project management capabilities and ability to submit commercially competitive bids. Failure to successfully compete for projects or maintain execution efficiency may adversely affect the Companys order book, profitability and financial performance.

Labour disruptions, skilled manpower shortages or wage pressures may adversely affect project execution.

The Companys operations are dependent on the availability of skilled, semi-skilled and other personnel required for construction and project management activities. Strikes, work stoppages, labour disputes, absenteeism, shortage of skilled manpower or increased wage demands may disrupt project execution and increase operating costs. Such disruptions could result in delays in achieving project milestones, additional costs or contractual consequences, which may adversely affect the Companys business, cash flows and results of operations. The Company seeks to mitigate these risks through effective workforce planning, employee engagement, compliance with applicable labour regulations and timely deployment of manpower across project sites.

OPPORTUNITIES

Sustained Government focus on infrastructure development:

The continued emphasis on infrastructure-led economic growth, particularly in roads, highways, expressways and economic corridors, provides a favourable environment for infrastructure companies. Growing investment in connectivity and logistics infrastructure is expected to generate opportunities for experienced contractors with established execution capabilities and the ability to undertake large and complex projects.

Growing opportunities in road and highway development:

The expansion and modernisation of Indias road network, together with increasing requirements for high-capacity corridors, bridges, bypasses and other supporting infrastructure, is expected to create a sustained pipeline of projects. The Companys experience in road construction and its established fleet of construction equipment position it to participate in projects across different geographies and project categories.

Increasing private-sector participation:

The Governments continued use of EPC, HAM and PPP models, along with asset monetisation and other innovative financing mechanisms, is creating opportunities for private infrastructure companies. This provides scope for the Company to pursue projects that align with its technical capabilities, financial capacity and risk appetite while maintaining a disciplined approach to project selection.

Opportunities arising from urbanisation and economic growth:

Rapid urbanisation, industrial expansion, increasing freight movement and the development of logistics and manufacturing corridors are expected to drive demand for improved road connectivity. Investments in peripheral roads, urban infrastructure, regional connectivity and access roads to industrial and logistics hubs may provide additional opportunities for the Company to diversify its project portfolio.

Technology and operational efficiency:

The increasing adoption of digital project monitoring, advanced construction technologies, equipment automation and data-driven project management provides opportunities to improve productivity, asset utilisation and project execution. Effective utilisation of the Companys existing equipment fleet and continued investment in modern technology can support improved operational efficiency and competitiveness.

Focus on disciplined growth:

The Companys established workforce, equipment base, execution capabilities and industry experience provide a platform for pursuing sustainable growth. Going forward, the Company intends to focus on selective bidding, efficient utilisation of resources, timely project execution and prudent financial management to capitalise on emerging opportunities while maintaining an appropriate balance between growth and risk.

THREATS

Regulatory and approval risk: Frequent policy updates, evolving compliance norms, and delays in land acquisition and statutory approvals can extend project timelines and increase holding costs.

External and force majeure risk: Natural disasters, pandemics, and macroeconomic disruptions can interrupt construction activity, disrupt supply chains, and weaken demand sentiment.

Liquidity and working capital risk: Milestone-based payments, extended receivable cycles, and retention clauses create uneven cash flows, increasing dependence on short-term borrowings and raising finance costs.

Technology and productivity risk: Lower adoption of advanced construction technologies such as BIM, prefabrication, and digital project management tools can lead to inefficiencies, rework, and margin pressures.

Input cost and commodity price risk: Volatility in steel, cement, fuel, and other raw material prices-driven by global commodity cycles and currency fluctuations-can compress margins, particularly in fixed-price contracts.

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.

FINANCIAL AND OPERATIONAL PERFORMANCE

The Company has considered the potential impact of geopolitical conflicts and global economic uncertainties, including volatility in fuel and raw material prices, inflationary pressures, supply-chain disruptions and other macroeconomic factors, while preparing its financial statements. These factors have been considered in assessing the recoverability of financial and non-financial assets and other relevant financial and operational estimates. The Company has considered appropriate internal and external information available as at the date of approval of the financial statements and continues to monitor developments and their potential impact on its operations.

During FY 2025-26, the Company delivered a strong improvement in its financial performance, despite a challenging operating environment marked by volatility in input costs, fuel prices, inflationary pressures and broader geopolitical uncertainties. Revenue from Operations increased by 46.52%, from 9,415.74 lakh in FY 2024-25 to 13,794.94 lakh in FY 2025-26, reflecting improved project execution and business activity. Profit Before Tax increased substantially by 145.06% to 1,355.54 lakh, while Profit After Tax increased by 146.82% to 1,012.72 lakh. The Companys EBITDA margin also improved from 10.54% to 14.84%, reflecting better operating efficiency, effective cost management and improved utilisation of resources.

The strong growth in profitability reflects the Companys continued focus on timely project execution, operational efficiency, prudent cost management and effective utilisation of its equipment and workforce. The significant improvement in earnings demonstrates the Companys resilience and ability to navigate challenging market conditions while delivering sustainable growth. Management remains focused on maintaining financial discipline, strengthening execution capabilities and selectively pursuing opportunities in Indias growing road infrastructure sector.

Financial Performance

Particulars	FY 2025-26	FY 2024-25	Growth / Change
Revenue from Operations	13,794.94	9,415.74	46.52% ?
Other Income	256.94	270.98	5.18% ?
Total Revenue	14,051.88	9,686.73	45.07% ?
Total Expenses	12,696.35	9,133.56	39.01% ?
Profit Before Tax (PBT)	1,355.54	553.17	145.06% ?
Profit After Tax (PAT)	1,012.72	410.33	146.82% ?
EBITDA*	2046.69	992.83	106.15% ?
EBITDA Margin	14.84%	10.54%	4.30 pp ?
PBT Margin	9.83%	5.87%	3.96 pp ?
PAT Margin	7.34%	4.36%	2.98 pp ?
Basic EPS (?)	5.44	2.21	146.15% ?
Diluted EPS (?)	5.44	2.21	146.15% ?

*EBITDA has been derived as Profit Before Tax + Finance Costs + Depreciation & Amortisation - Other Income.

Financial Performance - FY 2025-26 vs FY 2024-25

Comparison of revenue, profit before tax and profit after tax. Figures in ? Lakhs.

(Chart image present in original — showing bar chart with Revenue from Operations, Profit Before Tax, Profit After Tax for FY 2025-26 and FY 2024-25)

2025-26

Ratios	As at 31-03-2026	As at 31-03-2025	Variance	Explanation for any change in the ratio by more than 25% as compared to the preceding year
Current ratio	5.81	4.67	24.41	-
Debt-equity ratio	0.09	0.13	(28.27)	The ratio is impacted on account of considerable reduction in the total debt along with the increase in total shareholders equity during the current year as compared to the previous year.
Debt service coverage ratio	2.71	1.66	63.39	The ratio is impacted on account of considerable increase in the PAT of the company along with the reduction in the amount of principal and interest repayments on the term loan availed during the current year as compared to the previous year.
Return on equity ratio	0.11	0.05	127.78	The ratio is impacted on account of considerable increase in the PAT of the company along with the increase in the average shareholder equity during the current year as compared to the previous year.
Inventory turnover ratio	57.27	29.22	96.01	The ratio is impacted on account of considerable increase in the Revenue from operations along with the reduction in average inventory held during the current year as compared to the previous year.
Trade receivables turnover ratio	5.04	3.87	30.27	The ratio is impacted on account of considerable increase in the net credit sales along with the increase in the average accounts receivable during the current year as compared to the previous year.
Ratios	As at 31-03-2026	As at 31-03-2025	Variance	Explanation for any change in the ratio by more than 25% as compared to the preceding year
Trade payables turnover ratio	14.69	3.26	350.36	The ratio is impacted on account of considerable increase in the net credit purchases along with the reduction in the average trade payables during the current year as compared to the previous year.
Net capital turnover ratio	1.81	1.53	18.33	-
Net profit ratio (%)	7.21	4.24	70.14	The ratio is impacted on account of considerable increase in PAT along with the increase in Total Income during the current year as compared to the previous year.
Return on capital employed (%)	17.48	7.14	144.70	The ratio is impacted on account of considerable increase in EBIT along with the increase in the Tangible Net Worth during the current year as compared to the previous year.

CAUTIONARY STATEMENT

Certain statements under Management Discussion & Analysis describing the Companys objectives, projections, expectations may be forward looking statements within the applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could differ materially from those expressed or implied, since the Companys operations are influenced by external and internal factors beyond the Companys control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, basis any subsequent developments, information or events.

By Order of the Board of Directors

For Rachana Infrastructure Limited

Place: Ahmedabad

Date: August 27, 2026

Sd/-

Girishkumar O. Raval

Chairman & Managing Director

DIN: 01646747