Ruchi Infrastructure Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

Ruchi Infrastructure Limited (the Company) is primarily engaged in the business of storage infrastructure and renewable energy, viz.

(a) Liquid storage facilities for handling bulk storage of liquid commodities such as edible oils, petroleum products, bitumen, paraffins, liquid chemicals, with transfer via pipeline etc.

(b) Warehousing facilities including storing agri commodities such as wheat, maize, soybean, cotton, chana etc. as well as extending customised warehousing facility for various industries dealing in E-commerce and FMCG, including cement, white goods, soap, adhesive, paint, etc. and

(c) Renewable Energy - The Company has set up wind energy projects in MP including through a wholy-owned subsidiary.

With a 7,516 km coastline, India is strategically positioned on global maritime highways. It handles over 850 million tonnes of cargo annually across its network. The port infrastructure in India is anchored by 12 major ports (administered by the Union Government) and over 200 notified minor and intermediate ports (managed by coastal states).

The upcoming Major Ports in the same league are the 13^th Major Port (Vadhavan, Maharashtra) and the 14^th Major Port (Galathea Bay, Great Nicobar Island). India has 277 total berths across its 12 major ports that can handle vessels up to the size of Very Large Crude Carriers (VLCCs), of which 89 are operated under Public-Private Partnership (PPP) models. These 12 major ports handle the majority of cargo, while 217 non-major (minor) ports are controlled by state maritime boards.

The countrys maritime sector plays a crucial role in its overall trade and business development. The tank terminals around the country are managed by private companies with some built on private land in the proximity of a port and others are built on land leased by a port trust. All government ports in India have delegated the operation of tank terminals to private companies and there is healthy competition between them at most locations.

Liquid storage tank terminal facility business is increasing in India amid challenges like increasing traffic and limited storage capacities. Construction of tanks for storage of edible oil, black oil, chemicals, LPG, etc., has increased gradually in recent years. Industries such as petrochemicals, chemicals, synthetic fibers, power generation, food processing and pharma are in requirement of cost effective handling solutions for the same.

Government is keen and giving top priority to port-led infrastructural development so that the immense potential of Indian coastline strength can be harnessed to the fullest. Indias port infrastructure is gearing up to handle this additional traffic of chemicals and other liquids. Liquid cargoes i.e. crude oil, petroleum products, LPG, acids, edible oil, chemicals, etc. are handled by most ports in India.

Improving the standard of living in India would mean unleashing demands for construction goods, consumer goods, automobiles and electronics, all of which would have a positive impact on the growth of the Indian chemicals industry and ultimately a similar impact on the liquid storage tank terminal facility business in India.

With the planned capacity expansion by many petrochemical units and chemical plants, there is a need for more tanks. Increased activity has already been witnessed in this sector as operating chemical tanks has evolved as a viable business model at many locations.

Indias warehousing industry has emerged as one of the most significant pillars of the countrys infrastructure and logistics ecosystem. Indias warehousing industry has recorded strong growth in recent years and continues to attract substantial domestic as well as international investment. According to various studies and industry references, the Indian warehousing market is currently estimated at approximately USD 25-27 billion during 2025-26, while various industry projections estimate the market size to reach approximately USD 40 billion by 2031. The sector is expected to maintain a compound annual growth rate (CAGR) ranging between 7% and 9%, depending upon the specific warehousing segment and geographical region.

Over the last few years, the sector has undergone substantial transformation due to the rapid expansion of e-commerce, organized retail, manufacturing activities, quick commerce platforms, and integrated supply chain systems. Warehousing is no longer considered merely a storage activity, rather, it has evolved into a strategic business function that supports efficient inventory management, distribution, transportation, and last-mile connectivity. The increasing penetration of digital commerce, rising urban consumption and growth in industrial production have significantly enhanced the demand for organized and technologically advanced warehousing facilities across the country.

Indias warehousing and logistics sector is growing steadily, supported by economic development, industrial activity and changing customer needs. The expansion of e-commerce, organised retail, manufacturing, third-party logistics (3PL) and faster delivery services has made warehousing, an important part of the overall supply chain, rather than simply a storage facility.

The continued growth in consumption, manufacturing and distribution activities in Tier-II and Tier-III cities, along with improving connectivity and the growing need for decentralised supply chains, is expected to support and boost demand for modern warehousing facilities.

Indias renewable energy sector continues to expand, supported by increasing demand for clean power and Government initiatives for renewable energy adoption. Indias cumulative installed wind power capacity stands at approximately 58.14 GW as of July, 2026, which is 4^th largest in the world. The continuing RPO/RCO framework is expected to support renewable power demand over the coming years.

However, the sector is also facing challenges such as competitive tariffs, project costs, grid connectivity, power offtake, financing requirements, actual generation performance, operational risks like thefts, etc. Therefore, while the long-term outlook for renewable energy remains favourable, the commercial viability of individual projects needs to be evaluated carefully based on specific factors like captive consumption, project-specific economics, generation potential and power-sale arrangements. INDUSTRY OUTLOOK

India is the sixth largest chemicals market in the world and the third largest in Asia. Rising consumerism in the domestic market as well as cost competition and proximity to many developing Asian economies are driving the increase of chemicals production in India. Nitric acid is one of the major chemicals with different grades available in the market such as Diluted Nitric Acid (DNA) 60%, Concentrated Nitric Acid (CNA) 98%, Strong Nitric Acid (SNA) with 64%, 68%, and 72% used in different applications in multiple industries. The major demand for Nitric Acid is derived from the fertilizer industry to produce Ammonium Nitrate. Domestic manufacturer consumes Nitric Acid for captive use to produce nitrate-based fertilizer. Demand for nitric acid application has recently improved in the electronic industry & steel industry also. With government initiatives such as Make in India and reducing the import of explosives from the overseas countries, the domestic end-user such as Ordnance Factory and some private players are focusing on enhancing their production output, which is anticipated to fuel the demand for nitric acid in the coming years.

Indias warehousing market is expanding rapidly, projected to scale past USD 40 billion by 2031, driven by e-commerce acceleration, supply chain consolidation post-GST, and government infrastructure programs like Make in India, Gati Shakti, etc. Major investments in dedicated freight corridors, multi-modal logistics parks, and highway expansions are cutting transit times and lowering overall supply chain friction. Over 60% of national e-commerce demand now originates outside major metros, shifting focus to emerging logistics hubs like Indore, Lucknow, Nagpur, and Jaipur. The Indian warehousing market is segmented into hardware/system, software, and services. The services segment is projected to dominate the market due to its ability to offer customized logistics solutions tailored to individual business needs. This trend is propelled by the significant growth in e- commerce and retail sectors.

This industry is typically service oriented. As companies increasingly look for efficiencies in their supply chain operations, demand for 3PL providers in warehousing segment is increasing, and value-added services such as inventory management, order fulfillment, and last mile delivery solutions is on the rise, this sector is getting more advanced and complex and tough competition is arising among existing competition. The Indian warehousing market is poised for robust growth over the next five years, driven by the rapid adoption of e-commerce, technological advancements, and continued Government support for logistics and infrastructure development. This favorable growth outlook is expected to encourage companies operating in the warehousing sector to expand their capacities and modernize their facilities. Investments in well-equipped warehouse facilities, advanced technology, efficient processes, and skilled manpower will be essential for meeting evolving customer requirements and strengthening operational efficiency.

Over the years, growth is likely to be driven by increasing renewable purchase obligations, competitive bidding, wind-solar hybrid projects, repowering of ageing wind farms, corporate demand for green power and continued investment in transmission and grid infrastructure. The International Energy Agency expects Indias wind generation to grow at an average annual rate of 8.2% through 2030, while renewable capacity expansion is expected to accelerate substantially.

Despite the favorable long-term outlook, the Indian wind and renewable energy sector faces several challenges that could impact project execution, profitability and cash flows. Transmission and grid constraints, Tariff and competitive pressure, Intermittency and energy storage requirements, equipment and technology risks, operational risks like thefts, Policy and regulatory changes, increasing competition from solar and hybrid projects are the key threats for the sector. Companies with strong project execution capabilities, efficient assets, diversified portfolios and robust financial resources are likely to be better positioned to mitigate these risks.

Going forward, the Company will selectively evaluate opportunities based on long-term PPAs, open access or other assured power-sale arrangements. Any new investment will be considered only after evaluating generation potential, power tariff, project cost, expected returns, financing requirements and operational risks. In the near term, the Companys focus will remain on maintaining the existing wind assets, controlling theft and generation losses, improving operational performance and assessing their economic viability. The Company will adopt a cautious and selective approach towards any new wind capacity addition. BUSINESS STRATEGY; OPPORTUNITIES AND THREATS

(a) Liquid Storage Business Vertical : Your Company has storage infrastructural facilities at strategic locations across the country. Your Company is exploring a number of options to leverage the strengths of the Company viz. being the major player in the bulk liquid storage industry, having experienced and well-trained manpower, well equipped security and strategic alliance with third parties. This year Company has expanded its liquid storage capacity and the revenue from the expanded capacity is expected to be added up in coming years. Major Port Trust Authorities keep floating new tenders for interested investors for using land (captive /3rd Party) for creating additional liquid storage capacity, which may impact the efficiency of occupation of storage tanks.

(b) Ware house Storage Business : The Warehouse Storage Business continues to be a strategically important business vertical of the Company and has undergone significant transformation and diversification over the past few years. During FY 202526, the Company remained focused on optimizing utilization of its existing assets, strengthening and diversifying its customer portfolio, increasing the contribution of stable and non-agricultural customers, and enhancing the overall quality and sustainability of earnings. This sustained performance and progressive diversification have further strengthened the Companys position as one of the leading warehousing and storage service providers in Madhya Pradesh. During the year, the Company developed/commissioned approximately 23,200 Sq. Ft. of additional storage capacity and selectively evaluated customized warehousing opportunities aligned with specific customer requirements. These initiatives are aimed at enhancing asset productivity and utilization, improving revenue visibility and stability, strengthening customer relationships and further improving the quality of earnings. The Company continues to progressively diversify beyond traditional agricultural storage by expanding its presence across non-agricultural, institutional and other organized customer segments, thereby building a more balanced and diversified customer portfolio.

The Indian warehousing and logistics sector continues to undergo structural transformation, creating opportunities for organized and professionally managed warehousing infrastructure. Against this backdrop, the Company will remain focused on optimizing utilization of existing assets, further diversifying its customer base, strengthening operational efficiency and cost discipline, and selectively pursuing capacity expansion and customized warehousing opportunities. At the same time, the Company remains cognizant of increasing competitive intensity, seasonal demand, location-specific demand fluctuations, evolving customer requirements and operating cost pressures. Accordingly, the Company will adopt a disciplined approach towards future growth and investment, with decisions guided by demand visibility, asset utilization potential, customer commitment, expected returns and overall commercial viability. The Companys objective will remain focused on achieving sustainable, quality-led and profitable growth while enhancing the productivity of its existing asset base and creating long-term value for its stakeholders.

(c) Renewable Energy : The Companys Renewable Energy Business is focused on a stable and long-term asset base. The Company operates a 10.8 MW wind power project. In addition, a 14.7 MW wind power project established by the Companys wholly owned subsidiary is also operational. Both projects have demonstrated satisfactory operating performance over the years. The Company has initiated appropriate corrective and security measures to strengthen the protection of project assets and minimise operational disruptions. Generation, capacity utilisation and overall project performance are being closely monitored, and necessary measures are being undertaken to restore operations and improve asset utilisation.

Going forward, the Company will continue to selectively evaluate opportunities in the Renewable Energy sector, leveraging its experienced operational and management capabilities. Any future investment or expansion decisions will be evaluated comprehensively, taking into consideration market demand, project feasibility, expected returns, capital requirements, operational risks and long-term commercial sustainability. The Companys approach will remain focused on sustainable, disciplined and risk-adjusted growth in the Renewable Energy sector.

RISKS AND CONCERNS

Government policies have always played very important role. Despite that the policies are progressive in the infrastructure segment owing to various factors including infrastructural needs, demand-supply gap, economic growth, technological advancement to achieve operational/cost efficiencies and equitable view towards various stakeholders. In case Government of India introduces new amendments in existing import / export policies, development of new Port infrastructure in near vicinity of existing Ports. Such policy amendments, operational hazards and risks, natural disasters, pandemic situations may impact business dynamics.

The Company continues to witness regular warehousing demand across its Tier-III locations and does not currently anticipate any significant letting-out risk in its existing warehouse portfolio. Nevertheless, given the relatively smaller market size and limited depth of the customer base in certain Tier-III locations, there remains a possibility of temporary vacancy or slower re-leasing of space in the event of customer exits or reduction in storage requirements. Any such vacancy could result in lower utilisation and may have a moderate impact on revenue until new customers are engaged.

The Company continues to face cost pressures arising from the increase in construction and development costs. Prices of key inputs, including cement, steel, aluminum, labour, diesel, equipment rentals, plumbing and electrical fixtures, have increased over time. However, rental rates in the warehousing sector, particularly in Tier-III markets, may not increase proportionately due to prevailing market conditions and competitive dynamics.

Companys Wind Energy Business has recently been operating at lower utilisation levels due to theft incidents at the project site. The Company is taking appropriate measures to strengthen site security and safeguard the project assets. The impact on generation and utilisation will continue to be monitored, with appropriate corrective measures being undertaken to restore operations and improve asset utilisation.

INTERNAL CONTROL SYSTEM AND ADEQUACY THEREOF

The Companys internal control systems are adequate and ensure that all corporate policies are strictly adhered to and that transparency is maintained at all levels and functions throughout the organization. Systems have been put in place at all levels to ensure optimum usage of resources and to minimize risks across all activities undertaken by the Company. The internal control systems are designed to ensure the safety of all assets of the Company and also to ensure that all transactions are carried out as per the documented policies, guidelines and procedures. Detailed framework of internal financial controls and adequacy thereof is included in the Directors Report.

ENERGY CONSERVATION

Your Company is focused towards the energy conservation at macro as well as micro level. Its renewable energy business is already generating approximately 30 million green energy units (including generation of subsidiary company) which is sufficient to light up around 11,000 homes for a year. Further, at micro level and as a continuous process, Company is actively pursuing towards reducing its carbon footprint by way taking small measures including but not limiting to usage of only 5 star rated components/equipment in office space.

KEY FINANCIAL RATIOS ANALYSIS

1) Debtors Turnover ratio has reduced in financial year 2025-26 as compared to the previous year due to better recoveries.

2) Hand-made soap division (being the only business line, carrying inventory) was closed during the financial year 2025-26, hence, the comparison of ratio is irrational and not noted above.

3) Interest coverage ratio has increased in financial year 2025-26 as compared to the previous year due to higher profit and prepayment of vehicle loans.

4) Current Ratio has increased in financial year 2025-26 due to variation in classification of substantial part of current liabilities pertaining to Preference Shares into non-current liabilities during the financial year 2025-26.

5) Debt Equity ratio has improved in financial year 2025-26 due to prepayment of vehicle loans.

6) Operating profit margin has decreased during the financial year 2025-26 as compared to previous year due to increase in depreciation and other expenses.

7) Net Profit Margin has increased during the financial year 2025-26 due to higher Sales and other income.

8) Return on net worth has increased in financial year 2025-26 as compared to the previous year due to higher profit.

SEGMENT PERFORMANCE

The detailed analysis of operations and financial results is provided in the Directors Report. The financial statements have been prepared in accordance with notified Ind AS. The detailed segment-wise performance is given in Note No. 48 to the standalone financial statements of the Company. There were no material changes/developments in human resources requirement during the year under review.