Rithwik Facility Management Services Ltd Management Discussions

Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31,2025.

ECONOMY GLOBAL

The global economy entered 2024-25 on a cautious footing, characterized by moderate growth, persistent policy uncertainty, and pressure from geopolitical tensions. Various international organizations have provided slightly different estimates, reflecting lingering downside risks.

Growth Outlook

• The United Nations projected a steady global growth rate of 2.8% for both 2024 and 2025, with a slight uptick to 2.9% in 2026. Growth remains below the prepandemic average of 3.2%, hindered by structural constraints such as weak investment, demographic pressures, and subdued productivity. United Nations

• The IMF updated its July 2025 forecast to 3.0% growth in 2025 and 3.1% in 2026, citing softer trade tensions and improved financial conditions. The NewsMarket

• The OECD earlier anticipated slightly stronger growth: 3.1% in 2024 and a modest rise to 3.2% in 2025, driven by improving private sector confidence and easing inflation trends. OECD

• S&P Global took a more conservative view, projecting just 2.5% global GDP growth in 2025—potentially the weakest outside the COVID-19 downturn—due to heightened trade uncertainties. S&P Global

• PwC echoed this caution, forecasting a slowdown to 2.6% in 2025 and 2026, down from 2.8% in 2024, with geopolitical tensions and protectionism weighing heavily on growth. PwC

Key Risks & Challenges

• Elevated trade tensions and tariffs, especially between major economies, are complicating supply chains, curbing investments, and constraining trade-dependent industries. United Nations The Wall Street Journal Reuters

• Policy uncertainty—particularly around trade policy and central bank independence—adds to economic volatility, potentially undermining growth momentum. The Times The News Market The Economic Times

• Regional divergence persists: advanced economies face subdued growth while many emerging and developing regions remain relatively resilient, supported by domestic demand and infrastructure spending. United Nations+1

INDIA

The Indian economy remained one of the fastest-growing major economies in the world during 2023-24, supported by robust domestic demand, government-led infrastructure spending, resilient services sector growth, and improved manufacturing performance under the Make in India initiative.

According to official estimates, Indias GDP growth stood at around 6.5-7.0%, significantly above the global average, positioning the country as a key driver of global economic momentum. Growth was underpinned by private consumption, capital expenditure, and a strong performance in sectors such as real estate, construction, information technology, and financial services.

Key highlights of the Indian economy included:

• Government Initiatives: Large-scale investments in highways, airports, renewable energy, and urban infrastructure under programs like Smart Cities Mission and Gati Shakti.

• Manufacturing & Services Growth: Expanding industrial output and continued leadership of IT/ITES, financial services, and retail.

• Inflation Management: While food inflation remained volatile, overall inflationary pressures moderated due to calibrated policy interventions by the Reserve Bank of India (RBI).

• Banking & Financial Sector Stability: Healthy credit growth, strong capital buffers, and improved asset quality of banks and NBFCs.

• Urbanization & Demographics: Rising urban population and a young workforce continued to drive consumption and demand for infrastructure and services.

Despite strong fundamentals, the Indian economy faced certain challenges including global supply chain disruptions, elevated crude oil prices, and external demand volatility. However, proactive policy measures, stable macroeconomic management, and growing investor confidence helped mitigate risks.

Looking ahead, India is expected to sustain its high growth trajectory, supported by infrastructure expansion, digital transformation, increasing formalization of the economy, and favorable demographic trends. This positions the country as a strong growth engine in the global economic landscape.

FACILITY MANAGEMENT INDUSTRY GLOBAL

The global facility management industry continues to witness robust growth, driven by urbanization, rising demand for integrated services, sustainability initiatives, and the adoption of smart building technologies. Organizations are increasingly outsourcing facility management functions to specialized service providers to improve efficiency, reduce costs, and ensure compliance with health, safety, and environmental standards.

According to global market estimates, the FM market size was valued at approximately USD 1.3 trillion in 2023 and is projected to grow at a CAGR of 6-8% over the next five years, driven by the increasing demand for outsourcing non-core business functions, sustainability mandates, workplace digitalization, and integrated service delivery models.

Companies that invest in technology, ESG compliance, and integrated service delivery models will remain better positioned to capture market opportunities. Emerging markets in Asia-Pacific, Middle East, and Africa are expected to witness faster growth due to infrastructure expansion and urban development, while North America and Europe will remain mature markets emphasizing sustainability and digital transformation.

INDIA

The Facility Management (FM) industry in India has emerged as a critical component of the services sector, contributing significantly to workplace efficiency, infrastructure maintenance, and sustainability. FM in India includes a wide range of services such as building operations, housekeeping, security, pest control, landscaping, catering, energy management, and integrated workplace solutions.

The Indian FM market is estimated at USD 70-75 billion in 2023 and is expected to grow at a CAGR of 12-15% over the next five years, outpacing global averages due to rapid urbanization, infrastructure expansion, rising adoption of outsourcing models, and increased demand for compliance-driven and technology-enabled services.

The Indian FM industry is characterized by the coexistence of large multinational companies (CBRE, ISS, JLL, Sodexo, Compass) and strong domestic players (BVG India, SILA, Updater Services, Quess Corp, SIS Group). While MNCs dominate integrated and high- value contracts, local firms remain competitive in cost-driven and manpower-intensive services.

The Indian FM sector is poised for robust double-digit growth, driven by outsourcing trends, smart city projects, and increasing formalization of the economy. Integrated facility management and technology-enabled services will gain traction, with clients seeking cost efficiency, compliance assurance, and sustainability.

In the near to medium term, the industry is expected to witness:

• Consolidation through mergers, acquisitions, and partnerships.

• Increased investment in training and skill development of the FM workforce.

• Expansion into manufacturing, logistics hubs, healthcare, and educational institutions as new growth drivers.

• Continued growth in urban and semi-urban markets supported by government initiatives.

Overall, the facility management industry in India is transitioning from a largely unorganized, manpower-centric market to a more structured, technology-driven, and compliance-oriented industry, aligning with global standards while capitalizing on Indias unique growth trajectory.

INTERNAL CONTROL

Internal controls are essential to ensure the accomplishment of goals and objectives of any business entity. They help to ensure efficient and effective operations, compliance with applicable laws and regulations, transparency in its activities and provision of reliable financial reporting to the Stakeholders.

Our Internal Control System is fully equipped with necessary checks and balances ensuring that the transactions are adequately authorized and reported correctly. The Internal Auditor conducts regular Audits of various departments and Units to ensure that necessary controls are in place. The Audit Committee while reviewing the system and the Internal Audit Report, call for comments of Auditors on internal control systems and discuss any related issues with the Auditors and the Management of the company before submission to the Board. The Independent Directors also satisfy themselves on the integrity of financial information and ensure that financial controls including Signature controls. Budget Controls, Data control and systems of risk management are in place.

EMPLOYEES

There are no significant changes in the workforce of the Company. The attrition rate of the company is negligible and the company is able to retain the workforce in all verticals like skilled, Semi-skilled and unskilled labor force.

PERFORMANCE

During the year under review, the Facility Management (FM) industry in India demonstrated resilient growth despite macroeconomic uncertainties. The sector benefited from strong demand across commercial real estate, IT/ITES, manufacturing, healthcare, retail, and infrastructure projects.

The Companys revenue from operations recorded a robust increase, driven by expansion of client base, renewal of long-term contracts, and higher adoption of integrated facility management solutions. The growth in sales outpaced the proportionate rise in operating expenses, leading to an improvement in Earnings Before Interest and Tax (EBIT) and enhancement of operating margins.

Focused cost optimization initiatives, better workforce productivity, and increasing use of technology-enabled solutions contributed to overall efficiency. As a result, key financial ratios including operating margin and return on capital employed (ROCE) showed improvement during the year.

On the service delivery front, the Company continued to strengthen its presence across major metros and also made inroads into tier-II and tier-III cities, capitalizing on the rising demand for professional FM services. Strong client retention, supported by quality and compliance standards, further reinforced the Companys market position.

EXPANSION

The Facility Management (FM) sector in India is undergoing rapid transformation, creating significant opportunities for expansion. Rising urbanization, infrastructure growth, and increasing preference for outsourcing non-core activities have accelerated demand for professional FM services.

During the year, the Company focused on strengthening its presence across key metropolitan markets while also expanding into tier-II and tier-III cities, where rapid real estate and industrial development is driving the need for organized FM providers.

The Company pursued expansion through:

• Service Diversification: Enhancing its portfolio with integrated facility management, energy management, and technology-enabled workplace solutions.

• Geographic Reach: Establishing a stronger footprint in emerging urban centers to capture growth opportunities.

• Sectoral Penetration: Expanding beyond traditional IT/ITES clients into healthcare, retail, manufacturing, logistics, and education sectors.

• Strategic Partnerships & Alliances: Collaborating with technology providers and sustainability consultants to deliver smart and ESG-compliant solutions.

• Workforce Development: Scaling training programs to create a skilled workforce that meets evolving client requirements.

The Company remains committed to a balanced growth strategy, combining organic expansion through new contracts and client acquisitions with potential inorganic opportunities through mergers, acquisitions, or joint ventures.

RISKS AND THREATS

• Economic Slowdowns: Reduced real estate activity and lower corporate occupancy levels may directly affect demand.

• Regulatory Complexity: Frequent changes in labor codes, GST, and state-wise compliance requirements increase operational risk.

• Intense Competition: Both multinational and domestic players compete aggressively, leading to margin pressures.

OPPURTUNITIES & FUTURE PROSPECTS

• Government Initiatives: Programs such as Smart Cities Mission, Digital India, and urban infrastructure development create demand for professional FM services.

• Integrated Facility Management (IFM): Corporates are increasingly seeking one-stop providers for bundled services, opening avenues for organized players.

• Sectoral Expansion: Rising demand from healthcare, retail, airports, logistics, education, and manufacturing, beyond the traditional IT/ITES sector.

• Tier-II & Tier-III Market Penetration: Urbanization in smaller cities will boost demand for structured FM services.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

S.No	Ratios	As on 31/03/2025	As on 31/03/2024	Remarks
1	Interest Coverage Ratio	12.26	13.02	The Company has taken fresh loans during the year as a result interest expenditure has increased, which in turn has resulted a decrease in Interest Coverage Ratio.
2	Current Ratio	1.45	1.29	There is an increase in other current Assets which has resulted an improvement in current ratio
3	Debt-Equity Ratio	0.03	0.04	There is increase in equity as compared to last year which resulted in lower debt equity ratio.
4	Operating Profit Margin	12.20	10.76	The increase in sales outpaced the proportionate rise in expenses, resulting in higher EBIT and improved operating ratios.
5	Net Profit Margin	0.82	0.74	The proportionate rate of increase in revenue is more than expenses which resulted in higher net profit margin.
6	Return on Asset	1.32	1.21	In Current fiscal year Return on Asset is higher due to the increase in Net income
7	Return on Capital Employed	0.20	0.17	There is increase in EBIT which in turn resulted in higher ratio.

DISCLOSURE OF ACCOUNTING TREATMENT

In accordance with the Companies (Indian Accounting Standards), Rules, 2015 of the Companies Act, 2013, read with Section 133 of the Companies Act, 2013, your Company need not adopt the Indian Accounting Standards (Ind AS) for preparation of its financial statements. The financial statements for the year have been prepared in accordance with and in compliance of Schedule III notified by the Ministry of Corporate Affairs (MCA). There has been no difference in the Accounting treatment from that of accounting standards.

FORWARD-LOOKING STATEMENTS:

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements.

Place: Chennai	For and on behalf of the Board of Directors
Date: September 1, 2025	Rithwik Facility Management Services Limited
	SD/-	SD/-
	Rithwik Rajshekar Raman	Niranjan Vyakarna Rao
	Managing Director	Whole Time Director
	DIN: 07836658	DIN:02918882