MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Our Company has been reporting consolidated results considering the results of its
subsidiary. This discussion, therefore, covers the financial results and other
developments during April 2022 to March 2023. Some statements in this discussion
describing the projections, estimates, expectations or outlook may be forward looking.
Actual results may, however, differ materially from those stated because of several
factors such as changes in government regulations, tax regimes, economic developments
within India and abroad, exchange rates and interest rates fluctuations, impact of
competition, demand and supply constraints.
1. GLOBAL ECONOMY
Global economic activity is experiencing a broad-based and sharper-than-expected
slowdown, with inflation higher than seen in several decades. The cost-of-living crisis,
tightening financial conditions in most regions, Russias invasion of Ukraine, and the
lingering COVID- 19 pandemic all weigh heavily on the outlook. Global growth is forecast
to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is
the weakest growth profile since 2001 except for the global financial crisis and the acute
phase of the COVID-19 pandemic.
International trade faced challenges due to disruptions in supply chains, reduced
demand, and trade tensions. Some sectors, such as e-commerce and technology, thrived,
while industries heavily reliant on global supply chains faced difficulties. The recovery
in global trade was gradual, with some regions rebounding faster than others.
Inflation emerged as a concern during this period. A combination of factors, including
supply chain disruptions, rising commodity prices, and increased demand, led to
inflationary pressures in many economies. Central banks responded by closely monitoring
inflation levels and considering policy adjustments.
Emerging market economies faced both challenges and opportunities. While some countries
struggled with the impact of the pandemic, others capitalized on structural reforms,
diversified trade relations, and robust domestic demand to drive growth. However,
vulnerabilities remained in countries heavily reliant on sectors like tourism and
commodities.
The pandemic resulted in a significant increase in global debt levels as governments
implemented fiscal stimulus measures to support their economies. While such measures were
necessary to prevent a deeper economic downturn, the long-term implications of elevated
debt levels remain a concern.
2. INDIAN ECONOMY
The overall growth was robust and is estimated to be 6.9 percent for the full year with
real GDP growing at around 7.7 percent for the fiscal year 2022/23. There were some signs
of moderation in the second half of FY 22/23. Growth was underpinned by strong investment
activity bolstered by the governments capex push and buoyant private consumption,
particularly among higher income earners. Inflation remained high, averaging around 6.7
percent in FY22/23 but the current-account deficit narrowed on the back of strong growth
in service exports and easing global commodity prices.
3. INDUSTRY INSIGHT
The commercial real estate industry in India has experienced a mix of challenges and
opportunities in recent years.
The demand for office spaces in India has been strong, driven by sectors such as
information technology, e- commerce, and financial services. Companies have been expanding
their operations, leading to increased leasing activity in major cities like Bengaluru,
Mumbai, and Delhi-NCR.
The concept of co-working spaces continues to gain popularity in India, catering to
startups, freelancers, and small businesses. Co-working operators expanded their presence,
offering flexible workspaces and amenities. However, the COVID-19 pandemic and the shift
to remote work temporarily affected the demand for such spaces.
Remote work and economic uncertainties led to reduced office space requirements,
resulting in a slowdown in leasing activity and increased vacancy rates. However, as the
situation stabilizes, companies are gradually returning to physical office spaces.
The commercial real estate industry in India is experiencing technology-driven changes.
Smart buildings, energy efficiency measures, and digitization of property management
processes are becoming increasingly important. Additionally, evolving workforce
preferences, such as the desire for flexible work arrangements, are influencing office
space requirements.
In the midst of this uncertainty, we hold an optimistic outlook on various aspects
related to the Commercial Real Estate industry. Our company has strategically invested in
the construction of a top-tier Commercial Tower in the central business district of
Bangalore. Our aim is to create an iconic office building that will be leased to prominent
global multinational corporations (MNCs) and other esteemed clients, further enhancing our
presence in the market.
Our Project is committed to offering exceptional office spaces and amenities to
renowned corporations globally, including those in India. Bangalore continues to be a
prominent technology hub, attracting our desired customer base. The cost advantage and
affordable rentals in India remain advantageous factors. Furthermore, the increasing
significance of technology in the global economy has provided additional benefits to
technology companies. Our Projects objective is to provide a premium product and a
comprehensive business ecosystem in a prime location within Bangalores central business
district (CBD). This guarantees sustained demand and reinforces the resilience of our
project, particularly during uncertain times.
4. MARKET OUTLOOK
The commercial real estate market in India is expected to experience steady growth,
particularly in prime locations and major cities. The demand for office spaces remains
strong, driven by sectors such as technology, e- commerce, and financial services.
Co-working spaces are also expected to play a significant role in the commercial real
estate sector.
Even amidst a highly volatile global macro environment, India continues to attract more
and more global companies to set up and grow their offshore captive centers. Morgan
Stanley, in its recently published report ‘Why This is Indias Decade, has
highlighted off shoring as one of the key "megatrends" which will continue to
fuel Indias growth. The dual drivers for this phenomenon are structural, namely Indias
abundant STEM talent and the cost efficiency offered by Indias gateway cities, relative
to more expensive and less scalable markets globally. These global captives continue to
pursue premium-quality wellness-focused properties, to attract and retain talent and to
grow their presence in India.
5. OPPORTUNITIES
The commercial real estate sector in India presents several opportunities for growth
and investment. The demand for office spaces in India is expected to continue growing,
driven by sectors such as technology, e- commerce, and financial services. With companies
expanding their operations and increasing workforce, there is a need for high-quality
office spaces in prime locations.
The concept of co-working spaces has gained popularity in India, providing flexible and
collaborative work environments. This trend presents opportunities for developers and
operators to cater to the needs of startups, freelancers, and small businesses.
Technology-driven solutions are becoming integral to the commercial real estate sector.
Incorporating smart technologies, energy-efficient designs, and digital platforms can
enhance the efficiency and sustainability of buildings, attracting tech-savvy tenants and
investors. While major cities like Mumbai, Delhi, and Bangalore offer significant
opportunities, there is also potential in emerging markets and tier-II cities. These
locations are experiencing rapid urbanization and economic growth, presenting
opportunities for commercial real estate development. The introduction of REITs in India
has opened up avenues for retail and institutional investors to invest in
income-generating commercial properties. REITs provide liquidity, transparency, and
diversification benefits, attracting more investors to the sector.
6. THREATS/ CHALLENGES
Unfavorable changes in government policies and the regulatory environment can adversely
impact the performance of the sector. Retrospective policy changes and regulatory
bottlenecks may impact profitability and affect the attractiveness of the sector and
companies operating within the sector.
The sector can be impacted by delays in multiple approval processes which need to be
undertaken for every project.
7. SEGMENT WISE PERFORMANCE AND FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
• Factors used to identify the entitys reportable segments, including the basis
of organisation:
The Companys 100% subsidiary Company is operating a three-star hotel at Kochi, Kerala,
this business was sold in March 2022.
The company has divested its non core assets resulting in a profit on sale of Rs 210.69
cr.
The Company has diversified into electricity generation through Wind Turbine Generators
(WTG) for captive consumption and sale of electricity to the GESCOM, HESCOM & Group
Cative., and third-party consumers. Further, the Company has earnings on investments.
For management purposes, the Company has multiple reportable segments namely:
Development of Real Estate , Windmill, Rental Income and others.
Financial performance of the Company is as under:
| PARTICULARS Segmentwise Turnover/Revenue |
Financial Year ended 31-03-2023 |
Financial Year ended 31-03-2022 |
| a) Sale of Electricity |
108.27 |
105.55 |
| b) Office Rentals |
3.62 |
114.22 |
| c) Others |
1014.56 |
1153.94 |
| Total Revenue |
1126.45 |
1373.71 |
| Profit/( Loss ) before Depreciation ,Finance Cost & Tax |
997.10 |
1239.59 |
| Less Depreciation |
19.13 |
26.36 |
| Less Finance Cost |
325.30 |
59.58 |
| Profit/( Loss ) before tax |
652.67 |
1153.65 |
| Profit/( Loss ) for the year |
589.75 |
1110.32 |
| Total Comprehensive Income |
588.52 |
1109.74 |
| Earning Per Share - basic & Diluted- Rs |
45.02 |
84.75 |
• Geographical Information
The geographic information analyses the Companys revenue and Non-Current Assets by the
Companys country of domicile and other countries. As the Company is engaged in
Development of Real Estate property in India, Windmill and Rental income, it has only
multiple reportable geographical segment.
• Information about major customers
| Business segment |
Customer |
| Windmill |
Vikas Telecom Pvt. ltd. |
| Rental Income |
LG and Inmobi |
Apart from above no other customers constituted 10% or more of the total revenue of the
Company for the years ended March 31, 2023 and March 31, 2022.
8. RISKS AND CONCERNS Industry Risk
The real estate sector in India is heavily regulated by the central, state and local
governments. Real estate developers are required to comply with a number of laws and
regulations, including policies and procedures established and implemented by local
authorities in relation to land acquisition, transfer of property, registration and use of
land. These laws often vary from state to state.
General Economic Conditions:
The Real Estate and Construction Industry is prone to impact due to fluctuations in the
economy caused by changes in global and domestic economies, changes in local market
conditions, competition in the industry, government policies and regulations, fluctuations
in interest rates and foreign exchange rates and other social factors.
Socio-Political Risks:
In addition to economic risks, your Company faces risks from the socio-political
environment, internationally as well as within the country and is affected by events like
political instability, connect between nations, threat of terrorist activities, occurrence
of infectious diseases, extreme weather conditions and natural calamities, etc., which may
affect the demand and supply activity.
Company Specific Risks:
The Company specific risks remain by and large the same as mentioned hereinabove.
Further, it cannot have effective marketing leverages. The industry in general has a high
operating leverage.
9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Internal information systems ensure smooth information to facilitate proper control.
Adherence to the systems is then validated through the process of internal audit. The
Company has adequate system of internal audit control to ensure that all the assets are
safeguarded and protected. Regular internal audits are conducted by the professional
Chartered Accountant firm and reports submitted by these Internal Auditors are
periodically reviewed by the Audit Committee of the Board. The findings and compliance/s
are reported to the apex level management on a periodic basis. The Company has constituted
an in-house Committee for timely implementation of internal audit recommendations. The
Company has clear systematic process and well-defined roles and responsibilities for
people at different hierarchical levels. This ensures appropriate information on to
facilitate monitoring.
10. DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS
As reported last year, the Company is operating with 6 employees in various roles post
closure of its Hotel operations in October 2019.
The Company believes that the quality of the employees is the key to its success in the
long run and is committed to provide necessary human resource development and training
opportunities to equip them with skills, enabling them to keep pace with ongoing
technological advancements and evolve. Employees are provided opportunity to grow and
prosper. In the meantime, all efforts are being made to control cost to maintain present
level of profitability.
11. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
The details of significant changes (i.e. change of 25 % or more as compared to the
immediately previous financial year) in key financial ratios, alongwith the explanation,
are furnished as under:
| Sl.No |
Particulars of ratio |
Ratio for the FY 2021-22 |
Ratio for the FY 2020-21 |
Extent of change over the previous year in % |
Explanation for significant change (more than 25 %) |
| 1 |
Debtors turnover |
7.42 |
20.71 |
(64%) |
Basis change in revenue from operatioms |
| 2 |
Inventory turnover |
- |
- |
- |
- |
| 3 |
Interest coverage |
3.07 |
20.81 |
(85%) |
Basis change in finance cost and profit |
| 4 |
Current ratio |
24.27 |
.95 |
2455% |
Basis change in bank balances other than cash and cash equivalents. |
| 5 |
Debt Equity |
1.11 |
.43 |
158% |
Basis change in debetures issued during the year |
| 6 |
Operating profit Margin (%) |
- |
- |
- |
|
| 7 |
Net profit margin (%) |
52% |
81% |
(36%) |
Basis change in profit |
Change in Return on Net Worth
Return on net worth during the financial year 2022-23 is INR 4739.26 Million as
compared to financial year 202122 INR 4021.13 Million.
8. DISCLOSURE OF ACCOUNTING TREATMENT:
The Company has followed all relevant Accounting Standards while preparing the
Financial Statements.
9. CAUTIONARY STATEMENT
The views and futuristic statements contained in this report are the perception of
management and subject to certain risks and uncertainty that could cause actual results to
differ materially from those such statements. Readers should carefully review the other
information in this Annual Report and in the Companys periodic reports. The Company
undertakes no obligation to publicly update or revise any of these futuristic statements,
whether because of latest information, future events, or otherwise.
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