SRM Contractors Ltd Management Discussions

ANNEXURE VII TO DIRECTORS REPORT

BUSINESS OVERVIEW

SRM Contractors Limited is a leading engineering and construction company specializing in the development of roads, bridges, tunnels, slope stabilization, and miscellaneous civil infrastructure projects across India. With a strong presence in challenging terrains, particularly in the Union Territories of Jammu & Kashmir and Ladakh, successfully worked in temperatures ranging from 45?C to -30?C, ensuring reliability in the harshest climates, we deliver high-quality projects as on EPC contractor, item-rote contractor, and subcontractor. Our proven track record and technical expertise position us as a trusted partner for complex infrastructure projects in diverse and demanding environments.

We are an ISO 9001:2015 certified company and are also registered as class A contractor with Public Work (R&B) Department, Jammu & Kashmir. We are pre-qualified to bid independently on projects, tendered by departments of governmental authorities and other entities funded by the GoI, of contract value up to 30,000 lakhs and 50,000 lakhs for EPC contracts pertaining to construction of roads (including bridges) and for construction of tunnel respectively. As a result of the growth of our road and tunnel construction business as well as the recent government initiatives and support to develop the infrastructure of union territories of Jammu & Kashmir and Ladakh, we have further forayed into executing other infrastructure projects such as standalone bridges, larger slope stabilization works and other miscellaneous civil construction activities in order to capitalize on such rising opportunities. Recently, we have also been awarded with a contract for slope stabilization work in the state of Uttarakhand.

As an EPC contractor, the scope of our services includes detailed engineering of the project, procurement of construction materials, plant and machinery, construction and execution of the project and its operation and maintenance in accordance with the contractual provisions. Our manpower, resources and fleet of machinery and equipment, together with our engineering capabilities, enables us to execute a large number of projects simultaneously. We believe that our resources, quality of work and project execution skills have enabled us to enhance our relationships with existing clients and helps us to further secure projects from new clients.

We undertake contracts independently or whenever required, through our project-specific joint ventures with other infrastructure and construction entities when a project requires us to meet specific eligibility requirements in relation to certain large projects, including requirements relating to particular types of experience. Our Company also undertakes sub-contracting assignments from third party major infrastructure and construction entities.

As on date, the company has completed 36 road projects, 6 tunnel projects, 4 slope stabilization projects and 2 miscellaneous civil construction projects.

As of the latest assessment, SRM Contractors Limited has tenders under evaluation and in the pipeline totaling approximately 5,252 crore. This includes tenders valued at 1,636 crore under the Hybrid Annuity Model (HAM) projects.

The company continues to actively pursue and evaluate new opportunities to expand its project portfolio and enhance shareholder value.

SEGMENTAL REVIEW AND ANALYSIS

Your Company was having more than two decades of experience in infrastructure and civil construction work. Your company is mid-size private sector company engaged in the business of Construction of Road projects on Bill of Quantities (BOQ) and EPC basis.

The business of our company is segregated into the following 4 core service verticals-

1. Road Projects- We specialize in constructing highways, bridges and road re-alignments particularly in high altitude and landslide prone regions. Our expertise includes widening and restoration of critical road infrastructure.

2. Tunnel Projects- Our company excels in the EPC execution of tunnel projects including new tunnel construction and widening, stabilization and avalanche protection. Expanding into Uttarakhand, Himachal Pradesh and North-east India.

3. Slope Stabilization- As a leader in geotechnical solutions, SRM designs and constructs advanced slope-retaining systems, such as reinforced soil walls, RE Wall and Rock Fall Protection. Key achievements include:

(a) Indias Tallest Reinforced Soil Wall with railway roading: Delivered for the Udhampur-Srinagar- Baramulla Rail Link (USBRL) project in Reasi, Jammu & Kashmir.

(b) Strategic Acquisition: Acquired stake in Maccaferri Infrastructural Private Ltd., a subsidiary of Officine Maccaferri Spa (Italy), enhancing our capabilities in geotechnical and environmental solutions.

4. Miscellaneous Civil Construction- Our portfolio includes drainage systems, irrigation projects, food control infrastructure, and residential developments, executed for government clients across India.

OPPORTUNITIES AND OUTLOOK

SRM Contractors Limited is entering its next growth phase with a clear focus on disciplined expansion, capability deepening, and superior execution. Over next few years, SRM aims to diversify its revenue mix beyond traditional EPC projects, scale its presence in value-accretive Hybrid Annuity Model (HAM) road projects, and strengthen its leadership in geotechnical and environmental engineering solutions particularly in slope stabilization through both organic initiatives and strategic partnerships. IPO proceeds have been leveraged to expand operations and bidding capacity for large projects.

Joint ventures and subsidiary models position the Company for diversified project portfolios across EPC and tunnelling contracts. The robust order book and strong government push for national infrastructure growth project a favourable outlook for FY 2025 26.

Strategic Acquisition: SRM has acquired stake in Maccaferri Infrastructure Private Limited to accelerate its presence in geotechnical solutions. This transaction enhances SRMs design-build capabilities in slope stabilization, erosion control, retaining structures, and soil reinforcement, enabling the Company to deliver end-to-end solutions from investigation and design to execution and monitoring.

Integrated Offerings: Combine SRMs project delivery muscle with advanced geosynthetics, systems, and technical know-how to serve highways, railways, hydropower, mining, and urban infrastructure. Government projects in Jammu & Kashmir and Ladakh continue to drive demand for civil infrastructure services.

RISK AND CONCERN

Construction sector is viewed as a service industry. It generates substantial employment and provides growth impetus to other manufacturing sectors like cement, bitumen, iron and steel, chemicals, bricks, paints, tiles etc.

Geopolitical tensions in the Union Territories could delay project execution.

Climatic challenges such as snowfall and difficult terrain pose risks to timely completion. Inflation and price volatility in key construction materials like cement and steel may affect margins. Dependency on government clearances and contracts for a significant share of revenue creates concentration risk.

The Company has implemented a comprehensive risk management framework that identifies, assesses, and mitigates major operational and financial risks.

Risk in Construction needless to mention, with huge money, comes the company of big risks. Construction is a high-risk business. Or is it? This is a classic dilemma, which haunts every participant in the business. The Project owner, construction companies, consultants, bankers and financial institutions, vendors & suppliers and even the service providers, each has his own fears of facing risks in the conduct of business. The magnitude of the risks is indeterminate at times. What needs to be determined is:

a. The proportion of real versus perceived risks. b. The monetary quantification of risks. c. The real import and the impact of a type of risk.

Construction, as a large economic activity, has now started drawing attention from several quarters, and work in right earnest has begun on such aspects, which, though vital, remained neglected all this while. Evolution of techno-commercial grading systems, Institutional Systems for performance surveillance, designing of Insurance/ non-insurance backed products, and several other such services and support systems are being designed and practiced to continuously improve the performance of the Industry as a whole.

HUMAN RESOURCE DEVELOPMENT

The Company views its human capital as a strategic asset and invests in continuous training, performance appraisals, and welfare initiatives. As of March 31, 2025, SRM Contractors Limited maintained a harmonious and productive work culture with no industrial disputes. The organization fosters safety, compliance, and career growth for its workforce across project sites and corporate functions.