Sathlokhar Synergys E&C Global Ltd Management Discussions

Corporate Overview

Founded in 2013, Sathlokhar Synergys E&C Global Limited has systematically engineered its growth to become one of Indias premier turnkey Engineering, Procurement, and Construction (EPC) companies. The fiscal year 2025 (FY25) represents a watershed moment in our corporate journey, marked not only by record operational and financial performance but also by our successful listing on the National Stock Exchange (NSE) in August 2024. This transition to a publicly listed entity culminates a decade of building deep sectoral expertise, fostering enduring client relationships, and establishing a formidable pan India presence. Today, Sathlokhar operates at the forefront of Indias infrastructure development, with 38 active projects spanning five key industrial states. Our core value proposition is rooted in a unique, vertically integrated "Design Build Deliver" business model, which provides end to end ownership of the project lifecycle. This model is powered by two strategic in house entities: Archivo Infra Inc., our dedicated design and architectural arm established in 2018, and Sathlokhar Industries Private Limited, our state of the art Pre Engineered Building (PEB) manufacturing unit launched in 2023. This integration is not merely an operational choice; it is the central pillar of our competitive advantage. By controlling critical aspects of design, fabrication, and project management, we deliver complex, large scale projects with industry leading speed, uncompromising quality, and significant cost efficiencies, thereby creating sustained value for our clients and stakeholders.

Economic Overview

The operating environment in FY25 was shaped by a global economy navigating significant headwinds. Major international agencies, including the World Bank and the International Monetary Fund (IMF), projected a moderation in global GDP growth to a range of 2.3% to 3.0%. This slowdown was attributed to a confluence of factors, including heightened trade tensions, persistent policy uncertainty across major economies, and lingering geopolitical risks that collectively dampened investment and consumer sentiment. Consequently, growth forecasts were downgraded for a majority of emerging market and developing economies (EMDEs), which faced a more challenging external environment characterized by volatile capital flows and weaker demand. This global context of uncertainty and moderated growth serves to highlight the exceptional nature of Indias economic performance. As multinational corporations and global investors search for resilient growth avenues, the contrast between the slowing global economy and Indias dynamic expansion becomes increasingly stark. This divergence elevates Indias strategic importance as a primary destination for foreign direct investment (FDI), as capital naturally flows towards markets offering superior growth prospects and macroeconomic stability. This dynamic directly benefits the industrial and infrastructure construction sectors, which are primary recipients of such investment, creating a favorable demand environment for companies like Sathlokhar.

FY25 emerged as a year of resilience and revival for the Indian economy, with GDP growth rebounding to a projected 7.1 to 7.3% amidst global uncertainties. Key pillars such as domestic consumption, industrial investments, and government infrastructure outlays powered economic momentum. The implementation of landmark initiatives like the National Infrastructure Pipeline (NIP), PM Gati Shakti, and Production Linked Incentive (PLI) schemes significantly boosted Indias global competitiveness, rejuvenating sectors from manufacturing to green energy. Tailwinds from robust FDI inflows and heightened urbanization further catalyzed growth, positioning India as the fastest expanding major economy and elevating demand for integrated engineering and construction solutions.

The Engineering, Procurement, and Construction (EPC) sector in India stands at a structural inflection point, poised for a multi year growth cycle. The market opportunity is substantial, with the Indian EPCM market projected to expand from US $ 69.28 billion in2025 to US $ 126.91 billion by 2030, reflecting a compound annual growth rate (CAGR) of 12.87%. This growth is intrinsically linked to Indias national ambition to transform its economic landscape, particularly the goal of expanding the manufacturing sectors contribution to US$1 trillion by FY26. This target necessitates a massive wave of investment in greenfield factories, industrial parks, and associated infrastructure, creating a direct and sustained demand pipeline for integrated EPC solutions.

The governments proactive and strategic policy interventions act as a powerful force multiplier, catalyzing unprecedented demand for the EPC sector. Key initiatives have created a clear and robust roadmap for infrastructure development:

• National Infrastructure Pipeline (NIP): Launched in 2019 with an initial outlay of _111 trillion, the NIP has undergone a significant expansion. As of March 2025, its scope has widened to encompass over 13,000 projects with a total projected investment of _185 trillion (approximately US$2.2 trillion). This provides the EPC industry with a high visibility, multi year demand pipeline of unparalleled scale, with a significant concentration in the transport, energy, and urban infrastructure sectors.

• PM Gati Shakti & Production Linked Incentive (PLI) Schemes: These two flagship programs work in tandem to create a virtuous cycle of growth. The PM Gati Shakti National Master Plan provides a digital, integrated platform for coordinated infrastructure and logistics planning, reducing execution bottlenecks and improving efficiency. Simultaneously, the PLI schemes incentivize domestic and global manufacturers to "Make in India" by investing in new production capacities across strategic sectors. This symbiotic relationship ensures that as private manufacturing investment grows, it is supported by world class infrastructure, driving a concurrent demand for EPC services.

• Renewables Push: Indias ambitious target to achieve 500 GW of non fossil fuel based energy capacity by 2030 is a primary growth driver for the Power EPC segment. The market for power EPC is forecast to reach US$39.1 billion by 2033, fueled by investments in utility scale solar parks, wind farms, and energy storage solutions. Sathlokhar is strategically positioned to capitalize on this trend, underscored by its status as an authorized channel partner for Tata Solar Power, a leader in the renewable energy space.

• The competitive landscape of the EPC industry is being reshaped by several critical trends. Digital Transformation, including the mandated use of Building Information Modeling (BIM) and the adoption of ERP systems for real time project monitoring, is no longer a choice but a necessity for efficiency and transparency. Concurrently,

• Green & Sustainable EPC has become a baseline requirement, with clients and regulators demanding adherence to stringent ESG norms, the use of eco friendly materials, and energy efficient designs. Finally, the adoption of

• Modular & Prefabricated Construction is accelerating, driven by the need for greater speed, cost certainty, and quality control, particularly in sectors like warehousing and industrial facilities.

• The convergence of massive, policy driven infrastructure demand and a parallel surge in private manufacturing capex is creating a significant challenge for the industry: a potential execution bottleneck. The sheer scale of planned projects threatens to strain the availability of skilled labor and create volatility in supply chains, which are noted as key industry threats. In this capacity constrained market, the ability to guarantee execution certainty becomes the most potent competitive advantage. Companies that have proactively invested in mitigating these risks are best positioned to win. Sathlokhars strategic investments in vertical integration specifically, its in house PEB fabrication unit (Sathlokhar Industries) and design arm (Archivo Infra) directly address these supply chain and coordination risks. This physical integration, combined with digital control through a SAP integrated ERP system, provides real time monitoring and allows the Company to credibly promise and deliver on speed and quality. Therefore, our integrated business model is a direct strategic response to the primary risk factor in the current market, transforming a potential industry wide threat into a source of our distinct competitive differentiation.

In FY25, Sathlokhar delivered a record breaking performance that underscored its sectoral leadership and robust execution capabilities. The Company successfully capitalized on the strong industry tailwinds, translating a healthy order book into exceptional financial results while maintaining a disciplined approach to capital management and profitability.

The Companys financial performance in FY25 was characterized by strong, broad based growth across all key metrics. Total revenue from operations witnessed a significant increase of 62.47% year on year (YoY), rising to _401.83 Cr from _247.32 Cr in FY24. This top line growth was a direct result of strong execution across 38 active projects, the deepening of relationships with marquee clients, and a strategic expansion of our service offerings and geographical footprint. This growth was achieved profitably, demonstrating our focus on operational efficiency and value engineering. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew to _59.94 Cr, a substantial increase from _35.93 Cr in the previous fiscal year. The EBITDA margin remained healthy and stable at 14.92%, indicating our ability to manage input costs and project overheads effectively even while scaling operations rapidly. Consequently, Profit After Tax (PAT) surged by 63.68% YoY to _42.77 Cr, compared to _26.13 Cr in FY24, reflecting strong bottom line performance. Our capital efficiency metrics remained outstanding and continued to improve. Return on Capital Employed (ROCE) stood at a robust 32.7%, while Return on Equity (ROE) is 24.8% in FY 25 as compared to 64.47% in FY24.

Our financial achievements are a direct outcome of our unwavering commitment to operational excellence. In FY25, we successfully executed a diverse portfolio of major projects, demonstrating our capability to deliver complex engineering solutions at scale across multiple sectors and geographies. These projects serve as tangible proof of our technical expertise and project management prowess.

Key projects that defined our year include the _338.36 Cr Civil, PEB, and Infrastructure works for Reliance Consumer Products Limited in Andhra Pradesh; the _274 Cr integrated Civil, PEB, and MEP project for Muthiah Beverage and Confectionery Pvt Ltd (a partner for Reliance Campa Cola) in Karnataka; and the high tech _109 Cr MEP project for electric vehicle manufacturer Vinfast Auto India Private Limited in Tamil Nadu. These engagements with industry leaders underscore the trust they place in our ability to meet stringent quality standards and aggressive timelines. This trust is validated by direct client feedback. In an appreciation letter, Mr. Muthiah Muralidharan, Chairman of Muthiah Beverage, commended Sathlokhar for its "professionalism and strong commitment to delivering high quality work" and highlighted the "coordination and seamless integration" of numerous complex systems, from civil structures to advanced MEP and processing utilities. This third party validation is a testament to the effectiveness of our integrated delivery model.

Sathlokhars vertically integrated business model is our most significant competitive differentiator. By controlling key stages of the value chain, we mitigate external risks, enhance efficiency, and deliver superior value to our clients.

• Sathlokhar Industries (PEB Unit): Our in house PEB and steel fabrication unit, with a capacity of 300 MT per month, provides a formidable competitive moat. It ensures a timely and reliable supply of critical structural components, insulating our project timelines from external market volatility and supply chain disruptions. This control over fabrication also allows us to maintain stringent quality standards and protect our project margins from input cost fluctuations, a key risk in the EPC sector.

• Archivo Infra Inc. (Design Arm): Our in house design and engineering capabilities enable us to offer a true "Design Build" solution. This model is increasingly preferred by industrial and commercial clients as it offers a single point of accountability, significantly compresses project timelines by overlapping design and construction phases, and creates opportunities for value engineering from the projects inception. This integration fosters innovation and ensures that constructability is embedded in the design from day one.

Opportunities abound across sectors buoyed by policy momentum, robust private and global investor participation, and evolving infrastructure needs. Growth segments include industrial parks, sustainable warehousing, healthcare, green urban transportation, and large scale solar and wind parks. Demand for turnkey solutions that offer speed, technology integration, ESG focus, and cost competitiveness is at an all time high.

However, challenges persist: regulatory reviews and land acquisition delays, skilled labor shortages, input cost inflation, supply chain volatility, and intensifying competition including entry of global EPC majors. Compliance with new ESG norms, digital data security, and evolving safety standards further raise operational complexity. Companies equipped with integrated delivery, robust risk controls, and adaptive talent strategies will best navigate these headwinds.

Human Resource

Sathlokhar recognizes that people are our greatest asset, particularly as talent, technology, and safety become critical differentiators in EPC. In FY25, the workforce expanded to over 3,000, including 300+ professionals across project management, engineering, digital, and specialist functions. In sync with the latest industry trends, AI driven tools have augmented talent acquisition and upskilling, but the company remains focused on a "human first" workplace integrating diversity, equity, and inclusion (DEI), wellness programs, and continuous learning to foster innovation and high performance. Gender and community diversity have improved, in part due to blind recruitment and skill based hiring, ensuring that teams reflect the communities Sathlokhar serves. Employee engagement is deepened through transparent communication, rewards systems, and leadership development. Rigorous EHS protocols promote health and safety, with zero tolerance for compliance breaches. Operating in multiple states, HR policies ensure adherence to both central and state regulations, supporting flexibility, compliance, and sustained long term engagement.

Sustainability is woven into Sathlokhars core strategy and operations. Projects incorporate renewable energy solutions, energy efficient materials, water conservation, and waste management, aligning with the green ambitions of both clients and regulators. The Company holds ISO 9001, 14001, and 45001 certifications, and is an "A Grade" Electrical & MEP contractor, reflecting high standards in quality, environmental responsibility, and safety. FY25 saw further expansion of community impact programs including kidney health, breast cancer relief, and education initiatives for underserved communities near project sites. Sathlokhars integrated model strives for net positive impact by combining engineering innovation, ESG values, and stakeholder collaboration in every project delivered.

Robust internal controls anchor Sathlokhars financial and operational integrity. The Company utilizes a SAP integrated ERP to manage project budgeting, procurement, billing, and receivables. Multi level approvals, automated alerts for anomalies, and strict delegation of authority collectively minimize risk. Continual reviews by internal and external auditors validate process integrity and regulatory compliance. Regular audits are supplemented by real time cyber and data security measures, keeping customer and project data secure. The compliance environment is further bolstered by risk based audit trails, management review processes, and frequent Board level oversight ensuring resilience as the company scales up operations.

Risk management is integral to Sathlokhars governance. Risks spanning project delays, cost volatility, contractual complexities, regulatory changes, and cyber events are continuously assessed and mitigated through a combination of contract structuring, insurance, coordinated project management, supply chain partnerships, and comprehensive compliance regimes. Digital monitoring enables real time identification of deviations, allowing swift corrective action. By maintaining a diversified project and client base and prudent financial strategy, Sathlokhar preserves flexibility to respond swiftly to changing sectoral, regulatory, and economic conditions.

This MD&A contains forward looking statements, including those concerning projections, expectations, and business strategies. Actual results may differ materially from those expressed due to external and internal risks, such as economic fluctuations, regulatory changes, supply chain challenges, and unforeseen events. Sathlokhar assumes no obligation to update forward looking statements post publication and advises stakeholders to exercise caution and not place undue reliance on such statements.