RPP Infra Projects Ltd Management Discussions

INDIAN ECONOMY

Indias economy remains resilient despite a state of _ux in the global economy due to the twin shocks from trade and geopolitical tensions. The UN expects Indias economy to grow by 6.6% in 2025, fueled by strong private consumption, investment, and infrastructure spending. Healthy export growth in services (especially pharmaceuticals and electronics) and favorable agricultural output India is developing world-class infrastructure that will help achieve the countrys dream of becoming a $5 trillion economy and the third largest in the world. Indias road network will be number one in the world in the coming years, given the way in which infrastructure has expanded in the country over the past decade, with the stress on quality, cost and pan-India development. India is gearing up for a transformative boost in infrastructure during FY 2025–26, spanning highways, rail networks, housing, digital connectivity, and energy.

Highlights of Union Budgets 2025-26: n The budget allocates a substantial _11.21 lakh crore for infrastructure development, marking a continued commitment to national growth n The budget for Jal Jivan Mission has been increased to _67,000 crore, extending the mission until 2028, with a target to provide 100% potable tap water coverage to rural households. n An ambitious _10 lakh crore Asset Monetization Plan (2025–30) has been introduced to reinvest capital into new infrastructure projects, promoting sustainable growth. n _1.5 lakh Crores to states as long term interest free loans to support resource allocation.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Infrastructure is essential for economic prosperity and its development in recent years has been pivotal in shaping Indias growth trajectory. As the nation progresses towards becoming a global economic powerhouse, the emphasis on enhancing infrastructure has become more pronounced, reflecting its critical role in driving economic success.

Investments in infrastructure yield numerous benefits, such as job creation, enhanced global competitiveness, attraction of Foreign Direct investment (FDI), seamless economic integration, and enhanced living standards. Due to shifting geopolitical landscapes and the diversification of global value chains present an opportunity for India to emerge as a significant global economic hub.

Infrastructure development is pivotal to Indias vision of becoming a $40 trillion economy by 2047 and transitioning from a developing to a developed nation.

India is experiencing a significant infrastructure renaissance driven by increased government investment and development incentives. There are significant advancement in Indias transportation network, including road, railway, aviation and waterways. These developments aim to enhance connectivity, reduce logistics cost, and position India as a global economic powerhouse.

Indias landmarks Achievements in Infrastructure-

1. Amrit Bharat Station Scheme (Railway Modernisation)- Over 1,300 railway stations are being redeveloped under the Amrit Bharat Station Scheme.

2. Chenab and Anji Khad Bridges

3. Delhi–Mumbai Expressway

4. Under Bharatmala Pariyojana, India has completed 18,900 km of highways, including bypasses and ring roads.

Government Schemes and Incentive to Boost Construction Sector-

1. Industrial Corridors- Develop dedicated freight and industrial corridors across regions like Delhi–Mumbai, Chennai–Bengaluru, and Amritsar–Kolkata.

2. Urban Transport & Metro Expansion- Expand metro networks in tier-1 and tier-2 cities.

3. Renewable Energy Infrastructure- Expand renewable energy projects, including solar parks, wind farms, and green hydrogen infrastructure.

OPPORTUNITIES AND THREATS

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. The Government of India is expected to invest heavily in infrastructure sector, mainly highways, renewable energy, and urban transport. Further, the recent decision and push of Government for ‘Atmanirbhar Bharat and push for only local tenders upto specific size of contract and local purchases is expected to have a positive impact for the Company. Government aims to strengthen the infrastructure with its focus on four priorities of: PM Gati Shakti Inclusive Development Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action.

Your Company is quite conscious of the importance laid by the Government to the sector and sees following as the opportunity for itself:

Projects	Name of New projects	Other Works
Roads	Bharat Mala, Pradhan Mantri Gram Sadak Yojana	Six-laning of national highways, upgradation of state highways into national highways
Urban Infra	Schemes such as Swachh Bharat, Smart Cities, Green Mode of transport,	Mass Rapid Transit, Metro Train, Water Supply and Sanitation Projects, modernization and upgradation of station under Amrit Bharat station,

Irrigation and River Interlinking, Governments aggressive River Linking Canal / irrigation for river linking targets cultivation, provides huge opportunity Management of your Company has put very hard efforts and has made firm presence in few States of India. Further, your management also keeps on looking for profitable opportunity in nearby and boarder countries and also take up the suitable joint venture partner or indulge into subcontract work. Looking at the size, suitability and effective execution, your Company has concentrated in the state of high growth in its core area of operation, yet developing new territories. Your Company has maintained its focus in three business segments, i.e. infrastructure, water management and building and at the same time retaining its focus and being a frontrunner in the field of irrigation and water supply, civil construction works, national highways, rural roads and other infrastructure works. The various initiative of Central and State Government would be extremely beneficial for the Company owing to its strategic advantage of being established and having craved its niche area. The major threat the infrastructure industry is facing is the impact of global economic condition like all business entities operating in India. To be specific, the contracting and constructionmarkets are quite competitive and require substantial resources and capital investment in equipment, technology and skilledpersonnel.

The Company has carefully craved its niche area and continues to remain focused at its geographical presence as well as operating verticals/ ventures to capitalize on all emerging opportunities as per its policy with prudence. Your Company has decided to stay engaged in short term project of less than 24 months, with small and medium project size of less than Rs. 250 Crores, which gives it superior profitability in each project of around 12-13% of EBITDA.

Business Segments	Revenue in Crores	Percentage Revenue
Buildings	203.54	14.22
Water Management	709.25	49.54
Infrastructure	518.77	36.24

Further, your Company is increasingly moving towards larger projects which has stringent pre-qualification requirements and as such meets intense competition. Your Company has undertaken international project and are exploring further international opportunities, which has much strict timeline and smaller margins and same is expected to continue.Also, the entry of foreign construction companies into the Indian market have reduced the margins. All these arelikely to lead to significant challenges to our historical growth rates and acceptable profit and margins. Our contracts are awarded after a competitive bidding processes and satisfaction of other prescribed pre-qualification criteria.The ability of the Company to match the market is always a challenge even though the market is quite open. Further, due to applicability of local conditions, even the timeline of completion of the project, the cost escalation and timely recovery of the money also poses challenge to the industry and so to the Company.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

Your Company is engaged in the business of infrastructure development. The Company has internally identified and created the following three segments: (i) Buildings: (ii) Water Management; (iii) Infrastructure.

However, these three segments are not totally different and are not identifiable segments for reporting.

The revenue contribution during the financial year 2024-25 of each of the business segment is given below:

ORDER BOOK POSITION

Your Company has robust order book of Rs 2762.89 Crores as at end of financial year 2025.

The Company continues its strategy to maintain optimum margin and enhanced profitability and at present, its complete order book is from Government agencies. The order book size in the financial year 2024-25 is as below:

Business Segments	Amount (in Rs. Crores)	Percentage Order Book	Embedded EBITDA Margins
Buildings	392.03	14.19	10-12%
Water Management	526.55	19.06	15-18%
Infrastructure (Road)	1844.31	66.75	12-14%

Following were the major work order inflow in financial year 2024-25:

Name of Work	Amount	Segment	State
	(INR- Crores)
	Inclusive of GST
Major upgradation of Raipur Railway station of SECR on EPC mode- RPP- Sathyamoorthy JV - 60:40	247.68 Crores	Building	Chhattisgarh
Construction of New district jail - 1026 capacity at Hatharas District ,UP on EPC mode	152.11 Crores	Building	Uttar Pradesh
Construction of New district jail - 1026 capacity at Hapur District ,UP on EPC mode	158.81 Crores	Building	Uttar Pradesh
New District jail - 1026 capacity AT Jaunpur District, UP on EPC mode	152.11 Crores	Building	Uttar Pradesh
Construction of Concrete Pavement Road & Reconstruction & widening of Bridges Culverts for i) Alibag Bypass Road ( Pen Road Junction) to Alibag Roha Junction to Belkade to Garudpada Nagaon Hatale to Revdanda Bridge Road MSH-4 Km.262/500 to 280/745 in the State of Maharashtra.	201.94 Crores	Infrastructure	Maharashtra
EPC NSKHI (28C) - Improvement to Pachorowadi -Shewale- Satgaon Road SH-40 km 94/600 to 11/350 Tal Pachora Dist. Nashik.	116.68 Crores	Infrastructure	Maharashtra
Pipeline work at Odugatthur and Pallikonda in Vellore District	51.51 Crores	Water Management	Tamil Nadu
Improvement to Kothore Digar Satana Malegaon Chalishgon Pachora Shendurni Pahar Wakadi Road SH-19 km183/600 to 219/200 Taluka Jammer District Jalgaon, State of Maharashtra.	217.61 crores	Infrastructure	Maharashtra
Construction of customs office, medical facility centre, creche buildings, canteen, convention centre, A.O. Block, entrance arch, plug-and-play warehouse, water supply system, sewerage system, compound wall at SIP, Panapakkam	108.8 Crore	Infrastructure	Tamil Nadu

Keeping on the objective, management of your Company keeps on reviewing/ revisiting its strategies based on market condition with effort to minimize cost and expenditure and maximize the value for stakeholders. The Company with the view of maximization of profit yet with maintaining minimum risk, still sustain the growth and remainfocused,has adopted the strategies and kept the same implemented and followed. The efficient and timely project execution and selection of the territories and work area is extension of the same strategies.

FINANCIAL PERFORMANCE/ OPERATIONAL PERFORMANCE

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, guidelines issued by the Securities and Exchange Board of India and Ind AS. The management of Company accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in true and fair manner, the form and substance of transactions and reasonably present the state of affairs on the Balance Sheet and Profit of the Company for the year ended on the date.

Standalone Performance:

Your Company has posted total revenue of Rs.1431.55 Crores in financial year 2024-25 as compared to Rs. 1332.39 Crores in financial year 2023-24. Total cost increased to Rs.1361.21 Crores in financial year 2024-25 as against 1286.23 Crores in the in financial year 2023-24. The EBITDA for the financial year 2024-25 reduced to Rs.107.58 Crores as compared to Rs. 115.28 Crores in financial year 2023-24. The Profit after Tax (PAT) for the financial year 2024-25 stood at _65.47 Crores as compared to _65.52 Crores in the previous financial year 2023-24, reflecting a marginal decrease.

The Company achieved the operational efficiency and earned higher profit during the period. The Company achieved optimum utilization of resources available with it, i.e. men, machine and material.

Consolidated Performance:

During the present year, none of the subsidiary was material subsidiary. The operation in all these subsidiaries is nominal and mostly comprised of the minimal expenses. A new subsidiary has been incorporated during the financial year and details for same has been appropriately provided.

The total consolidated revenue stood at Rs 1439.43Crores in financial year 2024-25 as compared to Rs 1353.41 Crores in financial year 2023-24. Total consolidated expenses increased to Rs.1369.27 Crores in financial year 2024-25 as against Rs. 1318.87 Crores in financial year 2023-24. Profit after tax for the financial year 2024-25 increase to 65.29 Rs Crores as compared to Rs. 57.20 Crores during the financial year 2023-24.

Company achieved operation efficiency and earned higher profit during the financial year 2024-25.

BUSINESS OUTLOOK

Financial year performed well compared to previous year. It showed our company start performing well and assures to maintain same moment in the next year and would achieve new record.

As the global economy regains strength and emerging nations continue their rapid development, theres little doubt that the next decade will be favorable for capital project and infrastructure spending. India witness boom in infrastructure industry for next decades. Government will make heavy investment in infrastructure industry to achieve the target of developed

The Company also has mix of project duration, which provides and ensures timely inflows. The Companys present order book can be divided into project duration of upto12 months, upto24 months and upto36 months, which in terms of percentage is 19.39%, 36.00% and 44.06%, respectively.

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States/ Countries	Order Book Percentage	States/ Countries	Order Book Percentage
Tamil Nadu	42.69	Jharkhand	1.43
Uttar Pradesh	23.01	Karnataka	1.26
Maharastra	21.76	Chhattisgarh	8.97

The Company has implemented diversified geographical location, yet maintaining strong presence at few places, which can be observed below which provides order book position:

Maximum Project Duration	Upto36 Months	Short Duration Projects 12 Months
Maximum Project Size	Around Rs. 360 Crore	Low Tickets Projects Rs. 16 crore
EBITDA Margins	12 -13 %	Superior Profitability
		Projects Irrigation project

nation in 2047. Company has huge opportunity to in cash the opportunity and be a leading infrastructure company in India. Your Company continues to stay focused in three business segment of infrastructure, water management and building. These sectors are also of prime importance for the government. Below are few initiative by Government for its impetus to infrastructure/ growth for improving the quality of life and these initiatives also provides opportunity for the Company: Your Company continues to focus towards growth and expects an improved performance in the financial year 2025-26.

Growth Strategies

The Company has prudent selection of its business segments, withfocus on government contract, which ensures strong delivery even in tough environment. The Company remains to be pure play niche EPC Company. It has strong presence in the fast-growing micro-markets of South India and has spread its footprints in Maharashtra, MP and UP, Chhattisgarh for geographical diversification. It is also looking continuously opportunity at various places. Highways, Roads & Bridges, Civil Construction in Water Management, Irrigation and Power projects help the Company in diversified portfolio presence. Further, Companys focus on small government projects with superior project execution skills with short tenure provides strong revenue visibility.

The Company has de-risked business, which ensures superior profitability projects as below:

The Company similarly has mix of the project from different segments with varied project durations. The below table would represent the project duration and representation in percentage for each of them:-

Project Duration	Upto 12 Months	Upto 24 Months	Upto 36 Months
Building	0	392.03	0
Infra	120.10	542.19	1182.00
Water Management	430.58	60.56	35.40

The Company also ensures its efficient operation through its business cycle, which comprises of small ticket size projects coupled with stringent onsite operational control, which accelerates project completion, which helps the company to raise milestone bill faster ensuring enhance liquidity.

The Company has large talent pool comprising of over 403 plus employees. It has good captive equipment of around Rs. 150.86 Crores. It also has strategic sub-contracting partnership for project and applies accurate project modelling through cutting edge IT tools. These culminates and ensures efficient operations.

RISKS AND CONCERNS

Mitigation of risks is the whole end-compassing requirement. Broadly speaking, Construction/ Infrastructure Projects face the following type of risks:

General Economic / Sector Risks: We derive and expect to derive substantially all of our revenue from infrastructure projects in India. Accordingly, we are heavily dependent on sustained economic development that we operate in and government policies relating to infrastructure development. It is also significantly dependent on budgetary allocations made by central and state governments, participation from multilateral agency sponsored developments, public bodies as well as access to private sector funding. Macro-economic factors in India relating to the infrastructure sector will have a significant impact on our prospects and results of operations. Our results of operations are and would continue to be dependent on the policies adopted by the central and state governments.

Bidding and execution capabilities: Infrastructure project development for large projects in India involves a process of pre-qualifying of interested bidders based on technical and financial strengths. Pre-qualifications criteria are based on factors such as relevant past achievement of project execution, net worth, cash accruals etc. After a project is awarded, completion on time is subject to various factors. We target for efficient project management and execution through efficient deployment of equipment and resources, quick decision-making capabilities by on site project managers, strong relationships with suppliers and sub-contractors and coordination between project sites and the head office. We monitor the progress of project execution in terms of time, cost, quality, efficiency, manpower resources and deployment of plant and equipment. Our ability to continue to execute contracts effectively, as our business grows, is important to our strategy and results of operations.

Completion risk: This is the risk that the project may not be completed on time, or at all, due to various reasons such as cost overruns, technology failure, force majeure, etc. We ensure timely mobilization of site team and other requirements and also ensure timely availability of material/ labour/ equipment in a coordinated manner. We have also in place a Monitoring system to monitor the requirement of drawings/ clearances needed from client and ensure that these are communicated in advance and also documented.

Resource risk: This risk includes the non-availability of raw materials for the project operation. It also includes the risk that the raw material prices might move adversely.We draw up the project cost estimates based on site conditions, expected duration of the project, seasonal cost/ availability factors while quoting. We also negotiate better rates from suppliers/ service providers, leveraging on the volumes across sites.

Operating risk: This is a risk that the project costs would escalate. It also includes the risk that the project will have operational problems. We ensure an elaborate study of the site conditions and the scope of the project and involve cross functional teams at the tendering stage to capture all variables across different processes. The Plan for project execution is then done elaborately with process linkages.

Casualty risk: This is the risk of physical damage to the project equipment. It also includes liabilities to third parties on account of accidents at the project site. Site risk: This is the risk that the project site might have legal encumbrances. It also includes the risk that the site has technical problems.

Cost Management: We have experienced that our operating expenses constitute a major chunk of our total income. Our operating costs which relate to project costs mainly comprise cost of inputs, labour, fuel expenses, sub-contracting expenses and usage of various machinery. These costs are subject to volatility and may fluctuate owing to reasons beyond our control. Our ability to handle these costs in an effective manner will impact our results of operations.

Competition: We face significant competition for the award of projects from a large number of infrastructure companies who also operate in the same regional markets as us. Further, some of our competitors are larger than us, have stronger financial resources or a more experienced management team, or have stronger engineering capabilities in executing technically complex projects. Competition from other infrastructure companies will continue to have a significant impact on our ability to successfully bid for projects at price levels which would generate desire returns for us.

The Company has taken a number of initiatives such as deployment of risk mitigation strategies, superior execution of projects and astute cost management to deal with an overall environment dominated by high interest rates, sluggish demand, liquidity issues and higher input costs. The Company has adopted a pragmatic approach to navigate through the turbulent times and had cut down on overhead expenses and optimally stretched its available resources, making it lean yet effective in order to improve its operational efficiencies.

RISK MANAGEMENT POLICY

Risk Management is an integral part of the business process. The risk management process, inter alia provides for review of the risk assessment and mitigation procedure and timely report to the management and review of the identified risks at periodical interval to assess the progress of control measures. The Audit committee of the Board reviews the risk management efforts periodically.

The company follows the following risk management framework: n Risk identification n This function involves pre-emptive strategies to identify potential risks and evolve a framework for mitigation n Risk assessment and analysis n Risk assessment is the objective evaluation of the quantitative and qualitative value of risk related to the uncertainties of a specific situation n Proactive risk governance measures n This requires the organization to ascertain action plans to address identified issues and forestall potential damage n Comprehensive risk reporting n Record the causes and mitigation measures for future reference The reporting systems ensure precise monitoring for quick decision making and smooth running of the operations. Prompt attention is drawn to any risk related function which is then closely monitored to enable appropriate decision making to avoid problems/ regain stability within the shortest possible time.

INTERNAL CONTROLS AND THEIR ADEQUACY

Your Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. It has documented procedures covering all financial, operating and management functions. These controls have been designed to provide a reasonable assurance with regard to maintaining proper accounting controls, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with best practices in these areas as well. Thesystems are periodically reviewed for identification of control de_ciencies and formulation of time bound action plans to improve efficiency at all the levels.

Company conducts internal audit through a firm of independent firm of qualified chartered accountant who are given access to all records and information. The Audit committee of the Board reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the company, recommendations made for corrective action and the internal audit reports. The committee reviews with the statutory auditors and the management, key issues, significant processes and accounting policies. The company continues its efforts in strengthening internal controls to enable better management and controls over all processes.

Your Company have a proper Whistle Blower Policy and proper vigil mechanism for Directors and Employees.The policy enablesdirector and employees to report their genuine concerns, generally impacting / affecting business of our Company, including but not limited to improper or unethical behavior / misconduct / actual or suspended frauds / violation of code of conduct. The policy provides adequate safeguard against victimization to make easy for employee/ director to report any issue.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

Our continued success will depend in part on our ability to retain and attract key personnel with relevant skills, expertise and experience. We are aware of the challenge in attracting and retaining the best of talents in the industry. All our HR policies and practices are aligned with the overall organizational strategy. Presently, our company has more than 403employees at various levels under its direct employment. We have in place a well-drawn out HR Policy and a working environment encouraging innovation, cost reduction and a time bound completion of projects along with measures targeted to emerge as a merit driven organization in these challenging times. The management has been paying special attention to various aspects like employee training, welfare and safety thereby strengthening the human resources.