VSF Projects Ltd Management Discussions

GLOBAL ECONOMY

India is the fastest growing major economy in the world according to the IMFs World Economic Outlook Update July 2025. The IMF projects that Indias economy will grow at 6.7% in 2025 and 6.4% in 2026. In terms of GDP, India is currently the worlds fifth largest economy, and is expected to surpass Japan to become the fourth largest in 2025, with a nominal GDP of USD 4.187 trillion. It is slated to become the third largest in the coming years. Occupying the second position is China. China is the worlds second fastest growing major economy with a projected GDP growth rate of 4.0% in 2025, revised downward from earlier estimates.

INDIAN ECONOMY

For the current fiscal year 2024 25, Indias nominal GDP at current prices is estimated at approximately 330.68 lakh crores (about US$ 3.96 trillion), rising from the previous years revised figure of 301.23 lakh crores (around US$ 3.60 trillion). The estimated nominal GDP growth rate for 2024 25 stands at 9.8%, reflecting continued strong expansion though slightly moderating from the 13.9% nominal growth seen in 2023 24. These figures highlight Indias ongoing economic momentum, supported by resilient domestic demand and robust investment, keeping the country firmly ranked as the worlds fifth-largest economy Indias export sector displayed robust performance in April June 2025, with total exports of goods and services reaching US$ 210.31 billion, reflecting a 5.94% increase over the previous year. Merchandise exports accounted for US$ 112.17 billion, and services exports marked a strong rise to US$ 98.13 billion. The period saw significant growth in electronic goods exports, which surged by nearly 47% year-on-year, alongside steady gains in pharmaceuticals and moderate improvement in engineering goods. The leading export categories by share included mineral fuels (nearly 20%), electrical machinery and equipment (almost 9%), and engineering goods, followed by consistent contributions from pharmaceuticals and marine products. This export momentum, supported by favorable domestic factors, contributed to resilient GDP growth. In the second half of FY25, Indias GDP expansion is being propelled primarily by strong domestic demand for both consumption and investment, combined with the governments sustained emphasis on capital expenditure and infrastructure projects. The construction and real estate sectors have shown particularly strong growth on the back of large-scale infrastructure investments. Meanwhile, the agriculture sector rebounded due to a favorable monsoon, while services and financial sectors continued their upward trend, underpinned by rising employment, positive consumer sentiment, improved tax collections, and record foreign direct investment. Despite global trade challenges and some softness in manufacturing, these combined domestic and external drivers have positioned India to maintain GDP growth in the 6.5 7% range for FY25, confirming its resilience as one of the worlds fastest-growing large economies.

INDUSTRY OVERVIEW

Industry accounts for 30.8% of Indias GDP and employs over 12.3 crore people. In 2024 25, the industrial sector is estimated to grow by 6.2%. The increase in the capital expenditure of the central government in the post-pandemic period has crowded in investment from the private sector, which has provided a stimulus to industrial growth. The sector has been helped by pent-up demand, export stimulus, and strengthening of corporate balance sheets.

The importance of electronics manufacturing has been increasing. India aims to achieve USD 300 billion in electronics manufacturing with USD 120 billion in exports by 2026. High growth on both fronts indicates that India is on track to achieve these targets. Production-linked incentive schemes will help attain economies of scale in domestic production of electronics goods. UNCTAD joined hands with seven global, regional and national associations representing over 7,000 special economic zones (SEZs) to launch a global alliance on 17 May 2025. SEZs are geographically delimited areas within which governments promote industrial activity through fiscal and regulatory incentives and infrastructure support. During FY25, more than one-fourth of all India cargo volumes was routed through APSEZ ports. This significant contribution by APSEZ underscores its active role in driving Indias growth trajectory. It also shows that Indias largest port operator comfortably surpassed its cargo volume guidance of 390 MMT 410 MMT provided at the start of the financial year.

INFRASTRUCTURE AND CONSTRUCTION THE LONGTERM OPPORTUNITY

Increase in infrastructure investment provides a critical push to the potential growth of the economy. The central government has given increased impetus to infrastructure development and investment in recent years when capital expenditure by the private sector has been subdued. Capital expenditure in 2025 26 is targeted at 11.11 lakh crore, up 11.1% from 10 lakh crore in 2024 25. To sustain the investment drive, the National Infrastructure Pipeline (NIP) has provided a forward-looking roadmap of investible projects of around 102 lakh crore between 2019 20 and 2024 25. Currently, the NIP has 13,995 projects with a total investment of more than 225 lakh crore under different stages of implementation. The transport sector constitutes more than half of these projects.

FINANCIAL PERFORMANCE

VSF Projects (VSFPROJ.) is one of Indias leading companies with a history of 30 years. Over this span, the company built strong capabilities and established widespread credentials for success of project delivery across wide spectrum of sectors within the infrastructure industry. It is this pedigree that has helped the Company re-invents itself to meet the challenges of different times and deliver value to all stake-holders.

The Companys core business is providing Engineering & Construction services for large projects across sectors like Power (Thermal, Solar), Transportation (Roads, Bridges etc.) Water (Irrigation and water supply) and Industrial Projects.

OPPORTUNITIES & THREATS

Infrastructure Industry:

The continued trust on infrastructure projects including highways / express ways and Power will bring lot of opportunities for India and your Company. General: According to Survey, Indias economic growth in FY 2025 has been principally led by private consumption and capital formation and they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. Still, private capex soon needs to take up the leadership role to put job creation on a fast track. It also points out that the upside to Indias growth outlook arises from (i) limited health and economic fallout for the rest of the world from the earlier surge in Covid-19 infections in China and, therefore, continued normalization of supply chains; (ii) inflationary impulses from the reopening of Chinas economy turning out to be neither significant nor persistent; (iii) recessionary tendencies in major Advanced Economies (AEs) triggering a cessation of monetary tightening and a return of capital flows to India amidst a stable domestic inflation rate below 5.4 per cent; and (iv) this leading to an improvement in animal spirits and providing further impetus to private sector investment. The Survey says, the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been remarkably high, over 29.8 per cent, on average during Jan-Nov 2024, supported by the extended Emergency Credit Linked Guarantee Scheme (ECLGS) of the Union government. It adds that the recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme (ECLGS) is easing their debt servicing concerns.

RISKS & CONCERNS

1. Infrastructure sector is dependent on political stability. 2. Contract Payment Risk 3. unorganized Sector 4. Shortage of Labour and Employees. 5. Coal Shortages

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The philosophy we have with regard to internal control systems and their adequacy has been formulation of effective systems and their strict implementation to ensure that assets and interests of the Company are safeguarded; checks and balances are in place to determine the accuracy and reliability of accounting data. The Company has a well-defined organization structure with clear functional authority, limits for approval of all transactions. The Company has a strong reporting system, which evaluates and forewarns the management on issues related to compliance. Company updates its internal control system from time to time, enabling it to monitor employee adherence to internal procedures and external regulatory guidelines.

HUMAN RESOURCES

Human wealth is the ultimate wealth in for any industry. The Company recognizes this fact and understands that employees are one of the most important sources for sustained growth of any business. Quality personnel delivering their optimum potential for the organization is the key differentiator. The Company maintained good relations with its employees and there was no unrest in the Company at any point of time. Industrial relations in the organization continued to be cordial and progressive.

HEALTH AND SAFETY

The Company places considerable emphasis on health and safety throughout its operation and displays commitment to ensure the high standards being maintained in compliance with applicable laws and regulations.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

PARTICULARS	2024-25	2023-24
Total Income (Including other income)	42.88	25.56
Total Expenses	69.86	40.93
Profit Before Tax	-26.98	3,534.63
Profit After Tax	-29.41	3,534.52
Earnings per share	-0.23	53.74

KEY RATIOS:

FORWARD LOOKING / CAUTIONARY STATEMENT:

Certain statements in the Management Discussion & Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future event, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting domestic demand supply conditions, finish goods prices, changes in Government Regulations and Tax regime etc. The Company assumes no responsibility to publically amend, modify or revise any forward looking statements on the basis of subsequent developments, information or events.

	BY THE ORDER OF THE BOARD
	For VSF Projects Limited
	Sd/-
	Bobba Narayana Murthy
	Chairman and Managing Director
	(DIN: 00073068)
Place: Hyderabad
Date :14.08.2025