RKEC Projects Ltd Management Discussions

1. Introduction

Company Overview:

RKEC Projects Limited is a leading construction services organization with a legacy spanning over 40 years, specializing in civil and defence construction across India. Established as a company in 2005, RKEC has consistently built a strong reputation for delivering high-quality infrastructure projects on time and within budget.

Our core expertise includes the design and execution of complex projects such as bridges, ports, dams, high-rise buildings, airports, marine structures, highways, oil and gas pipelines, cross-water constructions, industrial complexes, and environmental structures.

With a commitment to engineering excellence and sustainability, RKEC Projects Limited continues to build spaces that enhance the quality of life and foster economic development across the country.

Industry Context:

The construction industry in 2025 is undergoing rapid transformation, propelled by technological innovation, sustainable construction practices, and evolving market demands. Emerging technologies such as AI-driven project management, modular construction, digital twin modeling, and green building solutions are redefining how projects are conceived and delivered.

Indias construction sector is witnessing robust growth due to urbanization, government infrastructure initiatives, and rising demand for residential and commercial spaces. Economic stabilization postpandemic, favorable policy support, and increased private investment are further boosting this expansion.

However, the industry continues to face headwinds such as fluctuating material costs, skilled labor shortages, and regulatory uncertainties. Navigating these challenges requires agility, innovation, and a strong emphasis on safety, quality, and environmental compliance.

2. Financial Performance

Revenue Analysis:

For the Financial year ended March 31, 2025, RKEC Projects Limited reported revenue of Rs.399.01 Cr a 16.98 % increase compared to Rs. 341.08 Cr in the previous year. This growth was primarily driven by the successful completion of projects.

Profitability:

EBIDTA margins improved to 58% from 50.85 % in the prior year, reflecting enhanced project management and cost control measures. Net profit for the year was Rs. 20.06 Cr, a 4.94 % increase from 19.90 Cr in the previous year.

Liquidity and Financial Position:

RKECs liquidity position remains stable, with a current ratio of 1.58 from 2.01 last year. The company generated Rs. 11.33 Cr in operating cash flow, supporting its ability to meet short-term obligations and invest in growth opportunities. Total debt has increased slightly to Rs.195.46 Cr from Rs. 138.98 Cr, and the debt-to-equity ratio remains at 0.14:1.

Capital Expenditures and Investments:

Capital expenditures for the year amounted to Rs. 37.12 Cr, primarily invested in new construction equipment and technology upgrades. Notably, the company has implemented a new project management software system to enhance operational efficiency and improve project delivery timelines.

3. Operational Performance

Project Management:

RKEC successfully completed Rs.75.30 Cr major projects during the year. We bagged projects worth Rs. 386.22 Cr.in the year under review. While most projects were delivered on time, the Farrakka project faced a delay due to unforeseen accident in 2020. We have received EOT for the project. The company has implemented new risk management strategies to mitigate similar issues in the future.

Safety and Compliance:

Our commitment to safety is demonstrated by a 15% reduction in workplace incidents compared to the previous year. RKEC continues to invest in safety training programs and adhere to stringent regulatory requirements, maintaining an exemplary safety record and compliance with all industry standards.

4. Strategic Direction and Future Outlook

Strategic Goals

In FY 2026, RKEC Projects Limited aims to accelerate growth by expanding its presence in the commercial and smart infrastructure sectors while deepening its focus on sustainable and green building practices.

Our strategic goals include:

?€? Diversifying our project portfolio by entering new high-potential sectors such as smart cities and renewable infrastructure.

?€? Strengthening market presence through strategic partnerships, alliances, and government collaborations.

?€? Enhancing sustainability initiatives, aligning with global ESG trends and compliance mandate:

?€? Investing in advanced construction technologies to boost productivity, safety, and efficiency across all operations.

Market Opportunities and Risks:

Opportunities:

?€? Rising demand for green buildings, smart infrastructure, and public-private partnership (PPI projects across India.

?€? Government emphasis on infrastructure spending under national programs such as Gati Shakt PM Gati Shakti Master Plan, Smart Cities Mission, and the National Infrastructure Pipelin (NIP).

?€? Expansion opportunities in urban transportation, port modernization, airport upgradation, an coastal infrastructure.

Risks:

?€? Volatility in raw material prices, particularly steel and cement, impacting cost structures.

?€? Regulatory changes and policy shifts that may delay project approvals or alter financial feasibility.

?€? Macroeconomic uncertainties, including interest rate fluctuations and geopolitical tensions, which may influence investor sentiment and project funding.

Guidance and Projections:

For the fiscal year 2026, RKEC Projects targets a revenue growth of 8-10%, supported by:

?€? New project acquisitions across both private and public sectors.

?€? Robust execution of existing contracts from a healthy unexecuted order book of ?1,170 crore, ensuring strong revenue visibility.

?€? Improved operational efficiencies through digitization, process optimization, and workforce upskilling.

We expect to:

?€? Maintain stable gross margins despite external pressures.

?€? Enhance profitability by targeting higher-value contracts and optimizing resource utilization.

?€? Add a substantial volume of fresh orders through active bidding across key infrastructure domains.

Key Competitive Advantage

RKECs strength lies in its over four decades of domain expertise and a consistent track record of on- time, within-budget delivery across complex infrastructure projects. Our competitive edge includes:

?€? Comprehensive execution capabilities in Bridges, Ports, Dams, Airports, Highways, Marine Works.

?€? Strong stakeholder relationships, including long-standing partnerships with major clients, banks, and financial institutions.

?€? A well-integrated fleet of construction equipment and a skilled workforce enabling seamless project delivery.

?€? A proven financial track record, backed by efficient capital allocation and risk management practices.

Opportunities

Indias rapid pace of development, coupled with increased government focus on infrastructure, offers immense opportunities. The expansion of key sectors?€”power, steel, petrochemicals, telecom, and transportation?€”is driving demand for world-class civil and industrial infrastructure.

With Indias push towards becoming a great economy, infrastructure remains at the core of national growth. RKEC is strategically positioned to capitalize on these emerging trends by leveraging its expertise, experience, and execution excellence.

5. Risk - Mitigation Strategy

Competition risks - Competing with several other companies for the acquisition of concessions for projects.

Mitigation: The Company is continuously focusing on building competitive advantage in its core business areas to ensure that it is competitively well positioned. The Companys rich experience in the infrastructure sector, continuous operational improvements, process excellence, financial discipline and timely completion of projects has strengthened the Companys overall competitive position in the sector.

Project Completion risk - On-time completion of the project is very necessary for maintaining the reputation and financial viability.

Mitigation: On time completion of the projects is the top priority of the company. Proper steps are undertaken at each stage of the projects to meet the completion deadlines.

Capital-intensive business risk - The infrastructure sector depends heavily on working capital.

Mitigation: We enjoy good credit ratings in the Industry, which helps us in obtaining better terms on various loans for financing our construction equipment, term debt for projects and working capital facilities. We also endeavor to keep our debt-equity ratio low by utilizing our internal accruals in an efficient manner which has enabled us to maintain better profitability from project.

Input cost risk Acquisition of the right material with the required quantity at the project site is very important for the timely completion of the projects.

Mitigation: Raw materials are purchased directly for the company nominated vendors which have been tested over time which leads the right quality, price, and on-time supply.

Geographical Risk: The Company is operating in multiple states and is exposed to risks on account of different site conditions, labour requirement and related regulatory compliances.

Mitigation: The Company has in place mitigation strategies to perform detailed risk assessment of each site, robust manpower planning, site mobilization and de-mobilisation standard operating procedures and compliance checklist to mitigate such risks.

6. Internal Control System and their Adequacy

The Company has adequate system of internal control commensurate with its size and operations to ensure orderly and efficient conduct of the business. These controls ensure safeguard of assets, reduction and detection of frauds and error, adequacy and completeness of the accounting record and timely preparation of reliable financial information.

Material Developments in Human Resources/Industrial Relations Front, including the Number of People Employed

During the year under review, no such initiatives and/or developments in Human Resources/Industrial Relations front has been taken by the Company.

7. Conclusion

Summary of Key Points:

RKEC Projects Limited has demonstrated good financial performance, with significant revenue growth and improved profitability. Our focus on strategic investments in technology and safety has positioned us well for future growth. We remain committed to achieving our strategic goals and addressing any challenges proactively.

Managements Commitment:

The management team is dedicated to delivering value to our shareholders and stakeholders through disciplined execution of our strategic initiatives and a relentless focus on operational excellence. We are confident in our ability to navigate the evolving construction landscape and drive sustained growth.

Cautionary Statement

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimated and expectations are "forward looking statements". Actual results might differ, materially from those anticipated because of changing ground realities. Forward-looking statements are based on certain assumptions and expectations of future events. The achievement of such results is subject to risks, uncertainties and even less than assumptions. Market data and information gathered from various published and unpublished reports and sources, their accuracy, reliability and completeness cannot be assured. We do not undertake to make any announcement in case any of economic scenarios, industry developments and the forward-looking statements become materially incorrect in future or update any development and forward-looking statements made from time to time by or on behalf of the Company.