Tivoli Construction Ltd Management Discussions

Macroeconomic Review

India remains a key contributor to economic growth and urban development. The Indian real estate market, valued at approximately Rs.54.96 lakh crore (US$650 billion) in 2025, is projected to reach Rs.553.38 lakh crore (US$5.80 trillion) by 2047, supported by rapid urbanisation, rising incomes, infrastructure development and increasing institutional participation. The sector contributed approximately 7.3% to Indias GDP and remains the second-largest employment generator in the country. Institutionalisation of the sector has also strengthened, with more than Rs.1.35 lakh crore (US$16 billion) unlocked through REITs and InvITs. Indias urban population is projected to increase from 522.4 million in 2025 to 607.3 million by 2030, providing sustained demand for residential real estate, affordable housing and urban infrastructure. Housing demand has increased significantly, with housing sales value across leading cities expected to exceed Rs.6.65 lakh crore (US$75.25 billion) in FY2026, compared with approximately Rs.5.59 lakh crore (US$63.26 billion) in FY2025. The commercial office segment has also demonstrated strong momentum, with gross office leasing reaching approximately 83.30 million sq. ft. in 2025, while leasing in HI 2026 across the top nine cities reached 45.50 million sq. ft., registering a 9.6% year-on-year growth.

The outlook for the broader real estate ecosystem remains positive, supported by growth in commercial, retail, hospitality and emerging asset classes such as data centres. Institutional investment continues to provide further impetus, with approximately Rs.1.50 lakh crore (US$1.70 billion) invested in Indias real estate sector dining Q1 2026, representing a 37% year-on-year increase. Commercial real estate accounted for approximately 94% of total institutional investment during the quarter, reflecting sustained investor confidence. The tourism and hospitality ecosystem is also expected to support real estate demand, with tourism contributing approximately Rs. 15.74 lakh crore (US$190.10 billion) to Indias GDP in FY2024 and accounting for 5.22% of total GDP. Foreign Tourist Arrivals stood at approximately 9.15 million in 2025, further supporting demand for hospitality and allied infrastructure. Continued government initiatives, digitalisation of land records, regulatory reforms, infrastructure investment and increasing participation of institutional capital are expected to enhance transparency and investor confidence. Overall, the convergence of urbanisation, infrastructure development, technology and institutional investment is expected to support the medium- to long-term growth of Indias real estate sector.

Indias Construction and Infrastructure Sector

Indias infrastructure sector continues to be a key driver of economic growth, supported by strong public capital expenditure, policy initiatives and increasing private sector participation. Under the Union Budget 2026-27, the capital investment outlay for infrastructure has been increased to Rs.12.22 lakh crore (US$138.3 billion), representing an 11.5% increase over die revised estimate for FY2025- 26. The allocation to the Ministry of Road Transport and Highways stands at Rs.3.10 lakh crore (US$35.1 billion), while die Governments Second Asset Monetisation Plan targets recycling of Rs.10 lakh crore (US$115.34 billion) during 2025-30. Indias National Highways network expanded to 1,46,560 km in FY2026, with 9,380 km constructed during the year. The logistics sector, valued at approximately US$240.5 billion in 2025, is projected to reach US$527.5 billion by 2033, at a CAGR of 10.9%, supported by initiatives such as PM GatiShakti, the National Logistics Policy and development of logistics parks.

Infrastructure development is also being strengthened across railways, ports, aviation, energy and digital connectivity. Indian Railways recorded freight loading of approximately 1,700 mtilion tonnes in FY2026, compared with 1,614.90 million tonnes in FY2025, representing a growth of 5.27%, whtie passenger traffic reached 7.38 billion. As of March 2026, approximately 99.6% of the broad-gauge railway network had been electrified. Indias major ports handled approximately 914.73 million tonnes of cargo during FY2026, comprising 701.28 million tonnes of overseas cargo and 213.45 million tonnes of coastal cargo. The countrys installed electricity capacity reached 542.36 GW as of May 2026. including 291.53 GW from non-fossil fuel sources. Digital infrastructure is also expanding, with approximately 6,94,711 km of optical fibre cable laid and 2,14,843 Gram Panchayats provided with broadband connectivity.

The infrastructure outlook remains positive, with India planning infrastructure expenditure of approximately US$1.72 trillion (Rs.143 trillion) during FY2024-30, focused on power, roads, renewable energy and other strategic sectors. PM GatiShakti has integrated 44 Central Ministries and 36 States/Union Territories, while 208 major projects valued at approximately Rs.15.39 lakh crore have been assessed for coordinated infrastructure planning. Continued investments in roads, railways, ports, airports, industrial corridors, renewable energy, logistics and digital infrastructure are expected to improve connectivity, reduce logistics costs, attract private and institutional capital and create significant employment opportunities. These developments are expected to provide a strong foundation for sustained growth across the real estate, construction, industrial, commercial and allied sectors and support Indias long-term economic development.

Opportunities and Threats

As India prepares for an acceleration in policy reforms, our Company is optimistic that the demand for real estate will continue to be strong in the medium to long term.

Risks & Opportunities

• Risks:

• Rising unsold inventory in mid-income housing.

• Global geopolitical tensions and Al-driven employment shifts impacting buyer sentiment.

• Continued affordability challenges in sub-Rs. 10 mn housing.

• Opportunities:

• Expansion of GCCs and flexible workspaces sustaining office demand,

• Premium housing demand supported by urbanisation and infrastructure projects,

• Institutionalisation of real estate via REITs and disciplined capital flows enhancing transparency and investor confidence.

Outlook

The Indian real estate sector is expected to maintain its growth momentum in 2026, supported by resilient occupier demand, improving economic conditions, favourable financing environment and evolving consumer preferences. The commercial office segment is expected to remain strong, with net absorption projected at approximately 55 million sq. ft. (MSF) during 2026, while tight vacancy levels are likely to support gradual rental growth. The retail segment is also expected to witness renewed activity, wilh approximately 5.9 MSF of Grade A mall space expected to be added during the year, driven by demand from fashion, food and beverage and entertainment segments, as well as continued expansion by domeslic and international brands. In the residential segment, premiumisation is expected to remain a key trend, with new launches projected to exceed 300,000 units, supported by rising incomes, NRI participation and improving affordability. The reduction in policy interest rates by more than 100 basis points during 2025 is also expected to support recovery in demand from midsegment homebuyers.

The logistics and industrial segment is expected to remain resilient, with leasing activity projected to exceed 50 MSF for the fourth consecutive year in 2026, supported by 3PL, e-commerce and manufacturing demand. Rentals across major markets are expected to increase by approximately 5- 7%, aided by healthy demand and relatively tight vacancies. The data centre segment is also emerging as a significant growth area, with installed colocation capacity expected to reach approximately 1.7 GW by the end of 2026, supported by increasing adoption of artificial intelligence, cloud services and digital infrastructure, with Tier-II cities increasingly attracting edge data centre investments. Institutional investor sentiment is expected to remain favourable, with institutional investments in Indian real estate having exceeded US$7.5 billion in 2025, an all-time high. Continued growth in REITs, diversification across office, residential, logistics and industrial, retail and data centres, and supportive government policies are expected to strengthen capital flows and further institutionalise the Indian real estate market.

Recent Government Initiatives and Investments in Infrastructure

• Higher Public Capital Expenditure: Under the Union Budget 2026-27, public capital expenditure has been increased to Rs.12.22 lakh crore (US$138.3 billion), representing an 11.5% increase over the revised estimate of FY2025-26, reinforcing the Governments focus on infrastructure-led economic growth.

• Roads and Highways: The allocation to the Ministry of Road Transport and Highways has been increased to Rs.3.09.875 crore (US$35.1 billion) in FY2026-27. The allocation towards roads and bridges stands at approximately Rs. 1.21.999 crore (US$13.81 billion). Indias National Highway network has expanded to 1,46,560 km as of December 2025, with 9,380 km constructed dining FY2026.

• Railway Infrastructure: Indian Railways recorded freight loading of approximately 1,700 million tonnes in FY2026, compared with 1,614.90 million tonnes in FY2025, registering a growth of 5.27%. As of March 2026, approximately 99.6% of the broad-gauge railway network had been electrified, strengthening the efficiency and sustainability of the rail network.

• Urban Infrastructure and Housing: The allocation to the Ministry of Housing and Urban Affairs has increased by approximately 50% to Rs.85,522 crore (US$9.68 billion) in FY2026- 27, supporting urban development and housing initiatives. Under the Smart Cities Mission, 94% of 8,067 projects had been completed as of June 2025, involving investments of approximately Rs.1.64 lakh crore (US$19.14 billion).

• Integrated Infrastructure Development: The PM GatiShakti National Master Plan has brought together 44 Central Ministries and 36 States/Union Territories and assessed 208 major projects worth approximately Rs.15.39 lakh crore (US$178.89 billion), supporting coordinated development of multimodal infrastructure and improved logistics efficiency.

• Energy and Digital Infrastructure: The Union Budget 2026-27 has allocated Rs.29,997 crore (US$3.39 billion) to the Ministry of Power, while Rs.73,991 crore (US$8.37 billion) has been allocated to the Department of Telecommunications and IT. Indias total installed electricity capacity reached 542.36 GW as of May 2026, including 291.53 GW from non-fossil fuel sources, supporting the countrys transition towards cleaner and more sustainable infrastructure.

• Infrastructure Risk and Private Participation: The Government has proposed an Infrastructure Risk Guarantee Fund and a dedicated pipeline of PPP-led projects to strengthen private sector participation and provide greater confidence to investors in infrastructure projects. The Second Asset Monetisation Plan also targets recycling of approximately UO lakh crore (US$115.34 billion) during 2025-30 for investment in new infrastructure projects.

• Logistics and Multimodal Connectivity: Indias logistics market, valued at approximately US$240.5 billion in 2025, is projected to reach US$527.5 bilhon by 2033, representing a CAGR of 10.9%. Continued development under PM GatiShakti, tbe National Logistics Policy and multimodal transport corridors is expected to enhance connectivity, reduce logistics costs and support industrial and commercial growth.

Key Highlights for FY 2026-27

• Resilient economic growth: Indias economy continued to demonstrate strong resilience during FY2026-27. Real GDP grew by 7.8% year-on-year in Q1 FY2026-27, supported by robust domestic consumption, investment and government expenditure. Gross fixed capital formation increased to 34.3% of GDP, reflecting strengthening investment activity.

• Infrastructure-led growth: The Union Budget 2026-27 continues to emphasise infrastructure-led development, with public capital expenditure budgeted at Rs. 12.22 lakh crore (US$138.3 billion). The Governments continued focus on roads, railways, urban infrastructure, logistics, energy and digital infrastructure is expected to support economic activity and create opportunities across the real estate and construction ecosystem.

• Real estate investment strengthens: Institutional investment in Indian real estate reached approximately US$1.9 billion in Q2 2026, taking HI 2026 investment to US$3.5 bilhon, up 6% year-on-year. Domestic investors continued to play a significant role, while office assets remained the preferred investment category, followed by data centres and mixed-use developments.

• Office market remains resilient: Indias office sector recorded approximately 43 million sq. ft. (MSF) of gross leasing in HI 2026, the highest first-half leasing volume on record, representing 5% year-on-year growth. Global Capability Centres (GCCs) accounted for approximately 38% of leasing activity, while flexible workspace operators recorded 8.4 MSF of leasing. Pan-India office vacancy declined to 13.7% in Q2 2026, indicating continued demand for quality commercial space.

• Commercial real estate continues to attract capital: Office assets accounted for approximately 64% of institutional real estate investment in Q1 2026, with institutional investment reaching US$1.6 billion, the strongest first-quarter deployment since 2021. Domestic institutions accounted for approximately 76% of Q1 investment, reflecting increasing depth of domestic capital markets.

• Diversification of real estate asset classes: Investor interest is increasingly extending beyond conventional office assets to data centres, logistics and industrial, residential, retail and hospitality. Data centres are emerging as an important alternative investment segment, while REITs continue to support institutionalisation, liquidity and professional management of income-generating real estate assets.

• Residential and consumer-led demand: Residential real estate continues to benefit from urbanisation, improving household incomes and evolving consumer preferences, with premium and lifestyle-oriented housing remaining important growth segments. The broader real estate outlook is supported by continued demand across residential, commercial, retail and logistics assets.

• Infrastructure and logistics ecosystem: Continued investment in transport connectivity, multimodal infrastructure and logistics is expected to improve the efficiency of supply chains and support industrial and commercial development. The Governments infrastructure push, together with private sector participation and institutional capital, is expected to remain an important growth catalyst for the real estate sector.

• Outlook: The combination of strong economic growth, infrastructure investment, GCC expansion, urbanisation, domestic institutional capital and diversification of real estate asset classes provides a favourable medium- to long-term environment for the Indian real estate industry. At the same time, global geopolitical developments, energy prices, interest rates, inflation and currency movements remain key factors that could influence investment decisions and market conditions during FY2026-27.

Real Estate in India

Indias real estate sector in Q1 2026 reflects a clear divergence between office and residential markets. The office segment achieved record leasing volumes of 2.77 mn sq m, driven by strong demand for Grade A assets and the expansion of Global Capability Centres (GCCs), which accounted for nearly half of total leasing. Cities like Mumbai and Hyderabad recorded historic highs, while vacancy levels compressed to 13.9%, sustaining rental growth across major markets. This resilience underscores Indias rising strategic importance in global supply chains and its attractiveness for institutional investors.

In contrast, the residential market entered a consolidation phase, with sales moderating to 84,827 units (down 4% YoY) and launches continuing to outpace absorption. The slowdown was most pronounced in the sub-INR 10 mn category, where affordability pressures are evident, while higher ticket-size segments (>INR 10 mn) showed robust growth. Unsold inventory rose to 519,846 units, with the Quarters-to-Sell metric edging up to 6.0, signaling slower absorption. Developers are responding with demand-side incentives, but sustained price appreciation remains a challenge for volume growth.

Overall, while the office market demonstrates strength and expansion, the residential sector highlights affordability concerns and cautious buyer sentiment. This divergence suggests that management strategies must balance capitalizing on institutional office demand with targeted measures to support affordability and absorption in housing

Risks and Concerns

The real estate industry is exposed to various economic, regulatory and market-related risks. Key risks include fluctuations in land, cement, steel and other input costs, interest-rate movements, availability and cost of financing, changes in government policies and regulations, labour and construction costs, and fluctuations in customer demand. Delays in approvals, project execution and infrastructure development may also affect project timelines and profitability.

The Company remains conscious of these risks and continues to monitor changes in the economic, regulatory and competitive environment. The Company also places emphasis on sound corporate governance, prudent financial management, regulatory compliance and effective project planning to mitigate potential risks.

Internal Control Systems and their Adequacy

The Company has an adequate system of internal control commensurate w ith the size and nature of its operations. The internal control framework is designed to safeguard the Companys assets, ensure accuracy and reliability of accounting records, promote operational efficiency and support compliance with applicable laws, rules and regulations.

The Company regularly reviews its internal control mechanisms and operational practices in line with changes in the regulatory and business environment. Appropriate measures are undertaken, wherever necessary, to strengthen controls, improve processes and ensure continued compliance with applicable statutory and regulatory requirements.

Financial Performance with respect to Operational Performance

During die year under review, the Company incurred a loss of Rs.1,07,390. as compared to a profit of Rs.10,24,054 in the previous year. The change in financial performance reflects the Companys operating and financial position during the year under review. The Company continues to focus on strengthening its operations, improving efficiency and pursuing sustainable business opportunities.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

a. Debtors Turnover : NIL

b. Inventory Turnover : NIL

c. Interest Coverage Ratio : NIL

d. Current Ratio:

e. Debt Equity Ratio : NIL

f. Operating Profit Margin (%) :NIL

g. Net Profit Margin (%) or sector-specific equivalent ratios, as applicable : Not Applicable

h. details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof: Not Applicable

Cautionary Statement: The statements in this management discussion and analysis describing the outlook may be "forward looking statement" within the meaning of applicable laws and regulations. Actual result might differ substantially or materially from those expected due to die developments that could affect the Companys operations. The factors like significant change in political and economic environment, tax laws, litigation, technology, fluctuations in material cost etc. may deviate the outlook and resull.