Dilip Buildcon Ltd

Dear Shareholders,

I sincerely hope that all of you are safe and in good health. I am delighted to write to you at the end of what has been yet another turbulent year. Global supply chain disruptions, high input prices, and geopolitical tensions characterized the year which started with a more severe COVID-19 pandemic. Against such a challenging backdrop, DBL's business remained resilient, shouldered by our diverse business segment and experienced Board & Management team.

As a result of war and pandemic, crude oil prices have increased, fueling inflation. This has severely impacted businesses, trade, manufacturing, infrastructure, and employment opportunities. One of the main concerns was controlling the shooting inflation, which was also getting sticky and was negatively affecting individuals and businesses alike. In April 2022, retail inflation increased by 7.8%, and wholesale prices by 15%. Adding to this, a shortage of raw materials and strained supply lines contributed to inflationary pressures.

Amidst such a market scenario, your Company couldn't remain unaffected. Due to soaring inflation, the price of the raw material and other input costs increased manifolds. There were logistical bottlenecks, supply-chain constraints, and a few other short-term operational hurdles for the Company to address.

Believing in its capability to steer through obscurities, your Company persevered these challenges only to emerge even stronger. Keeping the focus on Building for Tomorrow, your Company managed to remain resilient and committed to its collective goals.

Infrastructure Sector – Bedrock of Nation's Growth

As India moves into its next phase of growth, infrastructure plays an important role. Therefore, the government focus on infrastructure spending and plan to invest about

102 lakh crore in infrastructure projects by 2024-25. In the Budget for 2022-23, the Government earmarked an amount of 68,000 crore for the Ministry of Road Transport and Highways. Among all ministries in 2022-23, this is the highest increase over revised estimates. The Gati Shakti programme launched by the Government is focused on the expansion of roads, railways, ports, airports, mass transport, waterways and logistics infrastructure.

In 2021-22, the country completed 10,457 km of national highways, compared to 13,327 km in 2020-21, according to the Ministry of Road Transport and Highways. Due to the disruption caused by the second and third waves of the pandemic, along with an unusually long rainy season, road completion declined significantly. These factors prevented NHAI from constructing the 12,000 km of highways it had envisaged last year, although it awarded a record number of highways to be constructed in FY22-23.

The government places a high priority on infrastructure spending because it multiplies economic growth. Accordingly, the government has increased capital spending by 35% for FY23, compared to FY22's 5.5 trillion. New hybrid annuity policies have been simplified to provide further stimulus. This demonstrates the government's commitment to improving the infrastructure sector with significant increases in allocations for urban development and connecting cities.

The Year in Review

By the end of FY22, there was a substantial inflow of new projects, continuing the general trend of previous years. The road sector accounted for the lion's share of your Company's influx of orders. In FY21-22, the number of road projects awarded increased by 22% (12,731 km). NHAI and the Ministry of Road Transport and Highways (MoRTH) awarded 5,113 km of road projects in March 2022, which was almost six times more than the previous month.

Despite improvement in project awarding, delays in government payments, shortages of raw materials, and labor shortages slowed project execution. During peak working season, unseasonal rains along with cyclones resulted in a marked slowdown in construction activities.

COVID-19's second wave also had an impact on it. Average daily construction slowed further due to a surge in input prices. Due to this, the earlier delay could not be compensated, which resulted in a drop in productivity. Construction of highways fell by a fifth Y-o-Y at 29 km per day compared with the goal set at the beginning of the fiscal year at 40 km per day, which was subsequently revised to 33 km per day in November - December.

We achieved major milestones during the year:

• Completed 12 projects during the year

• Projects completed across 8 states in road and mining sectors

• 5 New projects won during the year

• Projects won across 3 sectors & 5 different states.

All other projects are progressing well and we expect to complete them on schedule.

Building for Tomorrow

As we move forward, we are prioritizing our strategy around three broad areas - continued focus on the road sector, moving up the value chain, diversifying into other sectors within the infrastructure space, and maintaining steady growth. As part of our efforts to improve profitability and deleverage the balance sheet, we maintain strict cost controls. We will continue to look at opportunities beyond the road sector like railways, metro, tunnels, mining, and airports to diversify our order book. Several projects have been identified for these sectors in India's infrastructure plans. In the coming years, we will focus on exploring and tapping into these new business opportunities that will contribute to the top line of our company. Additionally, we are leveraging digitalization to enhance efficiency in our processes and expect this to be one of our key drivers in the future. With our capabilities and rich market experience, we are optimistic about the future.

To conclude, I would like to thank all of our stakeholders, including employees and associates as our joint efforts help us continue on our growth journey. We are entering the new fiscal with optimism that together we can overcome any challenge to ensure growth and sustainability.