Reliance Industrial Infrastructure Ltd Management Discussions

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), is as under:

Results of Operations and the State of Companys Affairs

During the year, the Companys Net profit was Rs.983 lakh as compared to Rs.1,021 lakh in the previous year. Revenue from transportation services was Rs.3,317 lakh as compared to Rs.3,350 lakh in the previous year. Revenue from infrastructure support and other operating income was Rs.1,632 lakh as compared to Rs.2,458 lakh in the previous year, mainly on account of lower utilization of the infrastructure assets.

The Company continues to provide infrastructure support services which includes transportation of petroleum products, natural gas and raw water through pipelines and other infrastructure support services mainly to Reliance Industries Limited.

Resources and Liquidity

The Companys net worth as on March 31, 2025 stood at 32,400 lakh, with accumulated reserves and surplus of 30,890 lakh.

The Return on net worth fell to 3.1% in FY 2024-25 as against 3.2% in previous year due to lower profits on account of lower utilisation of infrastructure assets.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios along with detailed explanation is given below:

• Trade Receivable Turnover Ratio decreased to 10.90 in FY 2024-25 as against 16.76 in the previous year primarily due to increase in average trade receivables.

• Return on Capital Employed increased to 286.6% in FY 2024-25 as against (125.6%) in the previous year due to reduced capital employed.

The Company continues to maintain its conservative financial profile and funds its requirements through internal accruals.

Macro-outlook, industry framework and road ahead

In current times, business environment around the world has become highly volatile. Almost every sector globally is operating amid extreme uncertainties, as major economies seek to bring about considerable alterations in existing trade and geo-political stances. The prolonged and continuing geo-political tensions further aggravate the situation.

Amid such periods of disruption, the virtue of economic self-reliance gains significant impetus. Indias thrust on "atmanirbharta" becomes all the more relevant, especially in crucial sectors like infrastructure. The roadways, ports, airports, pipelines and overall logistics of our country will play an integral role in ensuring Indias continued growth trajectory. The Company has deployed best-in-class assets, to support and enhance the infrastructure development.

Challenges, Risks and Concerns

Infrastructure projects are mainly characterized by prolonged development phases and involve long gestation period. The current emphasis on sustainability and climate change presents the challenge of maintaining environmental protection and effectively managing the carbon footprint throughout project implementation. Handling regulatory shifts during the lifecycle of a project constitutes a key risk factor.

The Company has a competent management team, well equipped to mitigate the risks involved. With strong governance structures in place, the Company remains focused on timely delivery of infrastructural services with prudent financial management. Over the years, the Company has been primarily serving one major customer, leveraging its existing assets to drive performance.

Human Resource Development

The Company believes that the quality of its employees is the key in the long run. The Company continues to have cordial relations with its employees. The Company provides personal development opportunities and all-round exposure to its employees.

Internal Controls

The Company has robust internal control systems and procedures commensurate with its nature of business which meets the following objectives:

• providing assurance regarding the effectiveness and efficiency of operations;

• efficient use and safeguarding of resources;

• compliance with policies, procedures and applicable laws and regulations; and

• transactions being accurately recorded and promptly reported.

The Company continues to have periodical internal audits conducted of all its functions and activities to ensure that systems and processes are followed across all areas.

The Audit Committee regularly reviews the adequacy of internal control systems through such audits. The Internal Auditor reports directly to the Audit Committee.

The Company also has a robust budgetary control system to monitor expenditure against approved budgets on an ongoing basis.

Internal Financial Controls

Internal Financial Controls are an integral part of the risk management framework and process that address financial and financial reporting risks. The key internal financial controls have been documented, automated wherever possible and embedded in the business process. The Company has in place adequate internal financial controls with reference to Financial Statement.

Assurance on the effectiveness of internal financial controls is obtained through management reviews and self-assessment, continuous control monitoring by functional experts as well as testing of the internal financial control systems by the Statutory Auditor and Internal Auditors during the course of their audits.

The Company believes that these systems provide reasonable assurance that the Companys internal financial controls are adequate and operating effectively as intended.

Risk Management

The Company has in place a Risk Management Policy commensurate with the size of the Company, which provides for a robust risk management framework to identify and assess risks such as safety, health and environment, operational, strategic, financial, security, property, regulatory, reputational and other risks and put in place an adequate risk management infrastructure capable of addressing these risks. The Risk Management Committee has been constituted to identify, monitor and report on the potential risks associated with the Companys business and periodically keeps the Board of Directors apprised of such risks and the measures taken by the Company to mitigate such risks.

Given below are significant potential risks to the Company and measures in place to mitigate them:

Operational Risk: Disruptions in operating the Companys pipelines and equipment may arise due to natural calamities, equipment failures or other unexpected or unforeseen interruptions.

The extreme risk for pipeline is "Damage to pipeline by third party activity in high consequence areas". This risk is being mitigated through daily line patrolling. Public awareness programs covering all stakeholders also play a significant role in reducing Third Party Damage incidents to a great extent. The Company consistently works towards monitoring the health of the pipelines through internal checks and external audit assurance in compliance with the requirement of Petroleum and Natural Gas Regulatory Board, thereby maintaining or improving operational efficiencies.

Safety, Health and Environment Risks: The Companys activities of transporting petroleum products and natural gas through its pipelines are inherently hazardous. Any accident, explosion, leakages or acts of terrorism may cause property damage or bodily injury and adversely impact surrounding communities and environment which may result in disruption of operations and litigations. The Company has structured inspections of its operating facilities for identifying and mapping operational hazards, investigating root cause analysis and to eliminate any such occurrence by developing mitigation plans.

Further, there is a comprehensive insurance plan in place to cover the above risks.