Ramky Infrastructure 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, Rural Infrastructure, Waste Management among others. In lieu of the above the company is concentrating more of water and waste water management, industrial solutions and urban solutions where government has specific allocation in their budget.

Further during the year, Srinagar Banihal Expressway Limited (SBEL) has m r ade e-payment of the amounts due to the Asset Reconstruction Companies (ARCs). On the other hand Sehore Kosmi Tollways Limited (SKTL) an MDDA-Ramky ISBUS Terminal Limited a subsidiary d of Ramky Infra has initiated arbitration against their respective concessionaries for non-compliance of the contractual terms.

CURRENT SCENARIO:

Current Dimension of Infrastructure in India: Demand:

Our Country wants to become a 5 Trillion USD economy by

2025.

By 2036, 600 million people will be living in urban cities would be representing 40% of population. To meet this additional pressure, efforts are being put by the Government to meet the needs. In order to achieve this the requisite infrastructure comprising of roads, railways, aviation and shipping are to be adequately developed.

Opportunities:

In or der to achieve this the Government development of infrastructure will have a multiplier effect of increasing the efficiency of transportation and reduction of time of transportation thereby enabling optimal utilization of the resources of the country which would in turn increase employability and entrepreneurship. In compliance of this the Honourable Prime Minister has inaugurated projects worth USD 1.8 Billion in Kolkata enhancing connectivity at multiple levels. Alon g with this the Ministry of Civil aviation and announced 15 Airport projects worth USD 12.1 billion by 2028.

In Jun 2023, the Ministry of Road transport and Highways e opened INR 13,585 Crores Infrastructure Projects in the state of Bihar.

Government Policy:

A 50 years interest free loan to the state governments has been increased by one more year enhancing the investment in Infrastructure field at state level and incentives to attract investments are being given. A significantly increased outlay in infra space to the extent of INR 1.3 Lakh Crores has been done and correspondingly increasing the interest free loan scheme to state government for one more year thereby providing them the requisite incentive.

U nder the National Infrastructure Pipeline (NIP) projects worth INR 108 Trillion are at different stages of implementation.

Government Initiatives:

In In budget 2024-25, capital investment outlay has terim increased to INR 11.11 lakh Crores which is 3.5% of GDP. An Investment Finance secretariat is also being established to act as a single point for attracting and enhancing the opportunities for the private infrastructure players to enable them to invest in Railways, Road and Urban infrastructure. W orld Economic Forum and National Institute of Urban Affairs has collaborated to jointly design "Sustainable Cities India Program" The Sustainable Cities India Program is designed to help In cities meet Net Zero Goals. The ‘Sustainable Cities dian

India program intends to enable cities to decarbonize in a systematic and sustainable way that will reduce emissions and deliver resilient and equitable urban ecosystems. The Forum and NIUA will adapt the Forums City Sprint process and Toolbox of Solutions for decarbonization in the context of five to seven Indian cities across two years. The City Sprint process is a series o m f ulti-sectoral, multi-stakeholder workshops involving business, government, and civil society leaders to enable decarbonization, especially through clean electrification and that circularity.

Infrastructure Sector Initiatives:

Green energy initiative has been launched by Indian Railway to source its energy requirements from renewable sources.

Due to the various initiatives taken by the government, the cement production has increased by 11%.

By 2022,

Ministry of Road Transport and Highways has completed steel has 1,41,190 Kms of National Highways out of 2 Lakhs Kms Target for 2023-25.

Dept. o T f elecommunication has created Optical Fibre Cable Network (OFC) of 33,00,000 Kms against target of 50,00,000 Kms by 2024-25.

Ministry of Petroleum has completed pipeline of 20,000 Kms against target of 35,000 Kms by 2024-25.

Ministry of Power has surpassed has already completed laying of 4,54,000 Kms of transmission Network.

Any infr astructure project impacts 275 linked building materials components and machinery and that sector contributes to 8.2% of the economy.

Till J anuary 2023, 7804 smart cities mission projects work order have been issued aggregating to INR 1.80 Lakh Crores 66% of the work has been completed.

Affordable Housing:

Under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart cities Mission, Government has opened up arena for development of urban infrastructure comprising of road, sanitation and water treatment and waste water treatment. Till 2022, 64% of the smart city project has been completed with a total outlay of INR 92000 Crores approx.

In FY 2023-24 Under AMRUT scheme Indian Government has allocated INR 8000 Crores for Smart Cities Mission.

In th In e Budget 2024-25, the government announced INR terim 77,523.58 Crore to the Ministry of Housing and Urban Affairs.

Sustainable Development:

The Namami Ganga Mission a key program of the Government towards achieving the SDG – 6 has been launched as a priority program in

FY 2015-20 with outlay of INR 20,000 Crores.

Government of India has launched a National Clean Air Programme in 2019 as a pan India time bound national level strategy for prevention, control and abatement of air pollution besides augmenting the air quality monitoring network across the country. Major components include Sewerage Project management, Urban and Rural Sanitation, tackling industrial pollution, water use efficiency and quality improvement, ecosystem conservation and Clean Ganga Fund among other. As per "National Policy on Resource Efficiency" a need to build upon existing policies to address multiple sectors should be devised for mainstreaming Resource Efficiency, in helping India achieve Sustainable Development Goals (SDGs). The initiatives note that the Paris agreement emphasises that Climate finance in strengthening the global response to climate change.

Bulk Drug Parks:

Indias contribution in 3^rd largest by Volume and 14^th Largest by Value. India globally contributes 3.5% of total drugs and medicines exported globally. In view of this with the intention to bring down the manufacturing cost of Bulk Drug and increase the marketability of the products and provide easy testing and infrastructure facilities the government has come up with a Scheme called "Promotion of Bulk Drug Parks" in 2020 with the intention to provide world class "Common Infrastructure Facilities" (CIF) and ensure that CIF Meets with the standards of environment and innovative methods adoption in common waste management systems.

COMPANY PERSPECTIVE

The flagship company of the Ramky Group, Ramky Infrastructure Limited is one of the leading infrastructure companies in India with a wide sectoral and geographical presence. Determined continually to f oray in fast-growing infrastructure segments across India, the to

Company has diverse and extensive execution experience across key sectors o gr f Over the years core competence has been further owth. developed by the engineering, planning and project execution skills. Ramky Infra has diversified its business portfolio which helps us to mitigate risk of slowdown in any one particular segment.

The Compan is professionally managed with a well-qualified and experienced personnel in all following areas including but not limited to engineering, procurement, legal, secretarial, finance and administration combined with a full-fledged MIS system.

Ramky Infra operates through the following principal business modes: i. En gineering, Procurement & Construction (EPC) Business, which is operated by the Company, ii. Developer Business which is operated mainly through the special purpose vehicles.

EPC BUSINESS

The Company operates the EPC business in the following sectors: i. Water and Waste-Water projects such as water treatment plants, water transmission and distribution systems, elevated and ground level service reservoirs, sewage treatment plants, common effluent treatment plants, tertiary treatment plants, underground drainage systems and lake restorations; ii. Building Construction, which includes commercial, residential, public, institutional and corporate buildings, mass housing,

High-Rise, Healthcare Infrastructure, Integrated Townships projects and related infrastructure facilities such as hospitals and shopping malls; and iii. Irrigation projects such as cross-drainage works, barrages, lift irrigation projects, canals, feeder channels; iv. Roads and Bridges: This sector includes expressways, bridges, flyovers, rural roads, terminals and dedicated service corridors v. Industrial: This includes parks, Industrial Infrastructure, SEZ etc. vi. P ower: This includes electricity transmission networks, sub stations, feeder lines, High and low tension distribution lines.

DEVELOPER BUSINESS

Development projects undertaken on a Public-Private partnership basis with the Government and are typically awarded after qualifying through a competitive bidding process. Sectors Includes: i. T ransportation & Transportation Terminals ii. In dustrial parks and Industrial Solutions iii. Urban water and waste water management and Urban solutions iv. In tegrated Townships

Risks:

Ramky Infrastructure Limited since its inception has been actively involving in EPC Contracts. Over the period of time, due to various experiences the management is of the understanding that EPC contracts specifically given by Government authorities are subject to many risks.

As the stakeholders are well aware that due to taking up of many projects simultaneously which required huge fund outflow and delay in release of funds from the government and other legal issues your company had faced financial problems which resulted in implementation of Stress Resolution mechanism notified by RBI. Due to this the company had demonetized its road assets thereby generating the requisite liquidity.

Therefore, keeping the past difficulties in mind and the current working scenarios the entity faces the undermentioned risks in general.

Tender Risk: The very first risk faced by the entity is in the nature of contract. Many EPC Contracts being awarded by the government are fixed price contracts with no Cost overrun or Time overrun clause into it. This is making bidding for the contract hi risky. Any deviation or un-foreseen event is ghly having an impact on entitys margin and risk faced.

Financial Risk: Huge Financial Commitment are being required at the time of tendering which includes mobilization advances and Bank guarantees. Since this has significant impact on the working capital requirements which has to be serviced regularly, the risk of cash generation mismatch between the financial obligation becoming due and the corresponding in ability to generate revenue is evident.

Material Risk: The EPC Contracts from the Government are not including Cost escalation due to which the contractee faces great risk of not being able to procure the raw materials required for executing of contract from the market which is highly dynamic.

Manpower Risk: The construction faces a shortage of skilled

Labour. M a times labour from inter-state are brought in any for execution of the work.

Compliance Risk: Execution of the Infra projects requires compliances at holistic level. Many a times the release of corresponding funds from the Government is coupled with the status of compliances done. Since, the legislations in our country are numerous there is risk associated with the execution.

Unforeseen Risk: Many a times the company specifically in areas of underground works have faced a risk wherein even after seismological test, the terrain has turned unfavourable and execution of contract has incurred huge cost which were not accommodated by the Government authorities.

Clearances Risk: In majority of the Government contracts the requisite clearances from the Government contracts have to be supported by contractor. But the company has faced many challenges in this many a times due to which there is delay in execution.

Due to these risks the company has faced over the year, the company at this point is selective in bidding process. Unless the Contract has reasonable margin and is having Cost overrun clause in it, the company is sceptical in bidding for the same would have an impact on execution of the project.

A LIST OF THE KEY OPERATING SPVS / SUBSDIARIES ALONG WITH THE DETAILS OF PROJECTS:

Sl. No	Name of SPV	Nature of business
1	Visakha	A joint venture with Government of
	Pharmacity	Andhra Pradesh to build, operate and
	Limited	maintain Pharma Industrial Park at
		Visakhapatnam, Andhra Pradesh under
		Build, operate and own model
2	MDDA-Ramky	A BO con T with Mussorie Dehradun tract
	IS Bus Terminal	Development Authority (MDDA) to
	Limited	operate Bus Terminal and Commercial
		Mall, in Dehradun, Uttarakhand. The
		concession period for this project has
		come to an end.
3	Ramky Elsamex	A subsidiary company which developed
	Hyderabad Ring	the Outer Ring Road Project in State
	Road Limited	of T elangana under Built-Operate &
		Transfer model. The concession period
		of the project is completed and the
		project has been handed over to
		authorities.
4	Pantnagar CETP	A Common Effluent treatment plant
	Limited	set up in Uttarakhand to treat the
		industrial effluents generating from
		industries in State Infrastructure and
		Industrial Development Corporation
		of Uttarakhand Limited (SIDCUL) area
		under BOT Model
5	Srinagar Banihal	A subsidiary company which developed
	Expressway	the Road project to NHAI in the State of
	Limited	Jammu & K under BOT (annuity) ashmir
		model. The project is currently under
		O&M.
6	Hyderabad STPS	A subsidiary of the company incorporated
	Limited	for the construction of STPs of various
		capacities and sewer pipe network along
		South of Musi River, Hyderabad under
		Hybrid Annuity Mode (HAM) including
		O&M for 15 years.
7	Ever Blooming	It is a subsidiary incorporated in
	Eco Solutions	FY 2022-23 with the purpose of
	Limited	construction and O&M of environmental
		infrastructure and management for
		Residential communities. It is in
		nascent stage and the company expects
		reasonable revenue from this projects
		in future.

FINANCIAL PERFORMANCE:

DISCUSSION ON FINANCIAL PERFORMANCE - STANDALONE Revenues

Ramky Infrastructure Limited (RIL) recorded the revenue of INR

20,331.90 million in FY 2023-24 as compared to INR 14,739.94 million during 2022-23.

Other Incomes

The Oth incomes in 2023-24 is INR 1,039.25 million as against er INR 972.74 million in FY 2022-23.

Expenditure excluding finance cost

The e xpenses for FY 2023-24 is INR 15,832.96 million as compared to INR 11,984.63 million in FY 2022-23.

Finance Costs

The fin costs for FY 2023-24 is 682.87 million as against finance ance cost of FY 2022-23 being INR 717.47 million.

Profit before Tax

There is Pr before Tax for FY 2023-24 is INR 4,855.34 million ofit and for FY 2022-23 it is INR 3,010.58 million.

Profits after Tax

The Pr after Tax for FY 2023-24 is INR 3,602.20 million as ofit compared to FY 2022-23 PAT of INR 2,144.70 million.

Earnings per Share

The EPS f FY 2023-24 is INR 52.06 as against INR 30.99 for FY or 2022-23.

DISCUSSION ON FINANCIAL PERFORMANCE – CONSOLIDATED

The consolidated financial statements have been prepared and presented in accordance with Indian Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under section 133 of the Companies Act, 2013 and other relevant provisions of the Act. The Current year results include the results o 20 Companies including 19 subsidiaries (Of which 1 has to f commence business as on 31-March-2024). These companies broadly operate in Roads, Bus Terminal, Industrial Parks and others sectors.

Revenue

The con solidated turnover of the company for 2023-24 is INR 21,605.21 million as compared to INR 17,051.29 million in FY 2022-23.

Profit / Loss after Tax

The con solidated Profit after Tax for FY 2023-24 is INR 3,210.73 million as against INR 11,526.35 million for FY 2022-23.

Earnings per Share

The con solidated EPS for FY 2023-24 is INR 44.48 as against INR 164.83 for FY 2022-23.

OPPORTUNITIES & THREATS

Strengths & Opportunities

Ramky Infra is an Integrated Infrastructure company with inherent strengths of experienced management team with broad geographic

and operational base. It has an execution expertise over diversified

array of projects and being considered as one stop shop for end to

end project execution.

Growing Competition of Indian industry due to focus on

efficiency and quality.

Vast export marked to explore.

Growing recognition of "Made in India" brand in global market

Major growth through outscoring opportunities

Support from the Government and better financial support from

players of the Financial Eco System.

Awareness among the society at large for a better sustainable

growth of the economy and pressure from world institutions

to enable the economy move towards clean and green energy.

RISKS AND CONCERNS:

Risk is the concept of actual outcome deviating from the expected

outcome.

As an Infrastructure company following are the risks faced by the

entity.

Construction Risk

Design Risk

Environmental Risk

Procurement Risk

Sub-Contractors Risk

Technology Risk

Design Risk

Disputes between labours

Changing sequences in construction activity

Non availability of resources

Change in quantities of work

In Tim work permissions for executing work Safety of workers

Stoppage of work due to Medical outbreak

Delay in Land acquisitions and hand over

Legal battles for disputes

Environmental Risk:

Impact of weather condition on completion of project

Pollution by construction waste

Procedure to facilitate construction waste clean-up or disposal

Financial Risk:

Delay from clients to release funds

Unprecedented delay in executing of project

Interest service costs.

Change in Legislation leading to considerable financial outflow.

Delay in procurement of funds for taking up the project

Political Risk:

Political uncertainty.

The construction companies need to include risk as an integral part of their project management. Decision making such as risk assessment in construction projects is very important in the construction management. The identification and assessment of project risk are the critical procedures for projecting success.

INTERNAL FINANCIAL CONTROL AND THEIR ADVOCACY

The Company has adequate Internal Financial Controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis.

Material developments in Human Resources / Industrial Relations front, including number of people employed

Ramky Infrastructure Limited believes in creating an environment, wherein human resources derive a sense of purpose, passion and personal growth at work, leading to better organizational performance. Towards realizing this, the company relies on the four pillars, namely, talent engagement, performance management, Capability development and maintaining cordial industrial relations. It also believes in review of its HR processes and systems on an ongoing basis to optimize costs, time and labour.

FORWARD LOOKING STATEMENTS

With th COVID Pandemic coming to an end and lives and businesses e bouncing back to normalcy, your company is hopeful that the projects will be executed with full potential.

Substantial efforts are being made to close down all the old projects. With the various measures taken up by the Governments for reviving the economy and various sectoral financial assistance from the Banking and financial sectors your company is hoping that a head way will be made in operations of the entity.

For and on behalf of the Board of
Ramky Infrastructure Limited
Sd/-	Sd/-
Y.R. Nagaraja	Eshwar Reddy Purmandla
Managing Director	Director
DIN: 00009810	DIN: 01892327
Place: Hyderabad
Date : 13.08.2024