ANNEXURE E
1. Global Economy
The global economy remained uncertain with continued disruption in the supply chain,
increased commodity prices due to the geo-political uncertainties and ebbing of the
Pandemic. Supply disruptions, commodity price rises and pent-up demand have led to a high
inflationary environment forcing Central Banks across the globe to adopt aggressive
tightening monetary policy, resulting in a steep rise in the interest rates. Focused
actions on returning inflation to targeted levels have started to exhibit some green
shoots, however, Central Banks and the Policymakers continue to keep a close watch on
these aspects.
As per the estimates of International Monetary Fund (IMF), the global growth should
bottom out at 2.8 percent this year and expected to rise to 3 percent in 2024. Further,
slowdown is concentrated in advanced economies especially United Kingdom and the Euro
area, whereas Emerging and Developing countries are already showing signs of recovery and
are expected to grow faster.
The IMF also forecasted that the Global headline inflation is expected to fall from 8.7
percent in 2022 to 7 percent in 2023 supported by lower commodity prices. However, it
continues to keep a close watch on downside scenarios primarily due to the financial
sector turmoil and the continuing geo-political tensions.
2. Industry Structure & Developments
The theme over the last year has been uncertainty, inflation, higher interest rates,
and resilience. We came into the year with continuously rising interest rates and
unrelenting inflation. While the global tech industry went through layoffs at a large
scale, India was exceptionally resilient in business and in retaining employees. The
uncertainty brought some pause to our clients, but they eventually wanted to take up
office space. This uncertainty was also a huge factor in clients wanting flexibility that
co-working spaces inherently provide. Therefore, conventional leases continue to compete
with this recently significant portion of the market. The demand for office space has
certainly bottomed out, but it is growing gradually, at best. Industrial land assets have
certainly seen an uptick in demand as Indias Manufacturing sector is burgeoning again.
3. Indian Real Estate: Opportunities and Challenges /Threats/
Strategies
Challenges/Threats
• Rising Interest Rates
Over the past year RBI (and global central banks) have raised interest rates to curb
inflation at a faster pace than we have seen in decades. Our largest cost head is finance
cost, so this is certainly deeply impacting us.
• Supply in Noida Office Space
While our micro market has [finally] rebound in office space demand, we fear that the
sheer number of upcoming properties on the Noida-Greater-Noida Expressway will soon lead
to over-supply, again.
• The Road Ahead/Positive Approach
Weve been blessed with fantastic bankers to help cushion the rising cost of finance.
This year we strive to enhance occupancy levels and improve cashflow management. There has
been a significant uptick in property values, and even more pronounced deal flow. So,
weve been able to strike deals to liquidate some of our industrial assets at prices
favourable compared to the rental yield. This will eliminate the debt in our company, and
leave room for further reinvestment. Of course, our subsidiary will still carry debt,
since that is integral to the business model to enhance RoE.
Weve built new relationships with fantastic clients that should last a long time. This
is really the key to enhance the value of our asset and have a healthy business going
forward.
4. Segment-wise/ Product-wise Performance
You are already aware that, your Company has significant presence in Noida, UP. Your
Company along with its subsidiary/associate companies etc. have range of Commercial real
estate leasing, Factory space leasing, and Facility Management business.
Commercial Office Space: Existing tenants have extended their lease periods, and
multiple prestigious new companies have taken up space in our facility. Some old tenants
that had left during COVID have occupied some seats in our new co-working space in
collaboration with Awfis. We hope to have higher occupancy in the coming months.
Industrial Assets: Weve already made deals to liquidate the last of our industrial
property in Ludhiana, and the asset in Greater Noida. These transactions take time, and
weve got highly reputed buyers to execute these transactions. We take this as a sign of a
booming manufacturing demand for both of these locations, and Make-in-India as well.
Financial Investment Portfolio: We still have a sizeable holding in Hero MotoCorp
that continues to pay dividend quite reliably. We look to reduce the concentration risk in
one stock, but still grow this portfolio through good, diversified investment.
5. Outlook and Strategy
Our business resumes growth, even if it is gradual. Were pleased to see the quality of
clients were able to get in our Sector 62, Noida facility.
The key elements of the strategy of the Company are the following:
• Cost Optimization and Cash Management:
• The Company strives towards creating efficient cost structures in line with the
scale of the business. We expect to generate healthy cash flows to further deleverage the
balance sheet and increased shareholders value.
• Company to consider sale /exit from non-core assets /slow moving investments if
fetching better value and to reduce the debt.
• The Company is improving its financial parameters through better performance and
ensures repayment of principal amount to reduce the interest burden.
• Upon continuous feedback from shareholders, company gave a substantial dividend
last year. This will be considered again as cashflows allow, and the company is striving
toward improving this position.
6. Outlook on Risks and Concerns
The Company is exposed to a number of risks such as economic, regulatory, taxation and
environmental risks as well as sectoral investment outlook. Some risks that may arise in
the normal course of business and could impact its ability to address future developments
comprise credit risk, liquidity risk, counterparty risk, regulatory risk, commodity
inflation risk and market risk. The Companys strategy of focusing on key products and
geographical segments is exposed to economic and market conditions. The Company has
implemented robust risk management policies that set-out the tolerance for risk and your
Companys general risk management.
7. Internal Control Systems and Adequacy
The Companys internal controls are commensurate with nature, size and complexities of
operations. These internal control systems ensure compliance with all applicable laws and
regulations and facilitate optimum utilization of available resources as also protect the
interests of all stakeholders. The Company has clearly defined policies, standard
operating procedures (SOPs), financial and operational delegation of authority (DOA) and
organizational structure for its business functions to ensure a smooth conduct of its
business.
8. Discussion on Financial Performance with respect to Operational Performance
The details of the financial performance of the Company are reflected in the Balance
Sheet, Statement of Profit & Loss and other Financial Statements, appearing
separately. Highlights are provided below:
(Rs. in Lakhs)
| Particulars |
March 31, 2023 |
March 31, 2022 |
| Total Income |
3225.03 |
2854.86 |
| Profit Before Tax |
767.65 |
758.34 |
The financial performance of the Company has been further explained in the Boards
Report of the Company for the Financial Year 2022-23 appearing separately. The financial
statements have been prepared in accordance with the requirement of Companies Act 2013,
and applicable accounting standards as notified by Ministry of Corporate Affairs
(MCA).
9. Material developments in Human Resources / Industrial Relations front,
Including number of people employed.
The Companys core focus areas are building organizational capability and capacity,
leveraging and nurturing key talent, encouraging meritocracy and enhancing people
utilization in alignment with its business strategy. The Company is undertaking the
following steps:
• Strengthening and diversifying the advisors and consultants: Were bringing in
specialists from real estate and other industries who will enhance all domains, while
keeping costs low, especially fixed costs. Key advisors have been brought in across
functions including Finance, Business Development, Project Management and execution,
Marketing, IT and Hospitality.
• Various training and coaching programmes are being implemented to refresh and
enrich its existing talent pool. The Company leverages diversity of knowledge,
qualification, skill, professional experience, culture, geography and sectoral
understanding to enhance its competitiveness. The Company believes in creating an
inclusive environment, where diverse perspectives can enrich strategic perspectives. To
enhance inclusiveness at work, our ‘gender sensitivity workshops sensitise the
environment in strengthening our conduct towards women colleagues. The Companys holistic
wellness programme sensitised employees around work-life balance and importance of a
healthy lifestyle, emotional, physical well-being and prevention of diseases. Regular
medical checks, structured monthly health programmes, health bulletins, health talks and
awareness campaigns were periodically conducted. The Company also rolled out a structured
program to vaccinate all its employees and their families along with contractors/
partners staff & their families.
10. Details of significant changes in key financial ratios along with detailed
explanations thereof, including:
| S. No. |
Particulars |
Financial Year 2022-23 |
Financial Year 2021-22 |
| 1 |
Current Ratio (in times) |
1.29 |
1.61 |
| 2 |
Debt Equity Ratio1 (in times) |
0.08 |
0.10 |
| 3 |
Debt Service Coverage Ratio (in times) |
0.83 |
2.25 |
| 4 |
Return on Equity Ratio2 (in %) |
0.04% |
0.37% |
| 5 |
Trade Receivables Turnover Ratio3 (in times) |
11.73 |
6.42 |
| 6 |
Trade Payables Turnover Ratio (in times) |
17.84 |
15.60 |
| 7 |
Net Capital Turnover Ratio (in times) |
4.87 |
6.32 |
| 8 |
Net profit Ratio4 ( In %) |
0.70% |
8.62% |
| 9 |
Return on Capital employed (in %) |
2.41% |
2.35% |
| 10 |
Return on Investment (in %) |
7.03% |
5.56% |
1Due to increase in repayment of borrowing & lease liabilities during the
current year.
2Profit for the current year declined due to deferred tax recognised on account
of lapse of unused tax loses.
3Due to reduction in trade receivables on account of bad debts written-off during
the current year.
4Due to increase in income from invested funds during the current year.
11. Details of any change in Return on Net Worth as compared to the immediately
previous financial year along with a detailed explanation thereof
| Ratio |
FY 2022-23 |
FY 2021-22 |
Change % |
Reason for change |
| Return on Net Worth |
0.04% |
0.37% |
-89.19% |
Profit for the current year declined due to deferred tax recognised on account of
lapse of unused tax loses. |
11. Cautionary Statement
Certain statements in the Management Discussion and Analysis describing the Companys
views on the industry, expectations/ predictions and objectives etc. may be forward
looking within the meaning of applicable laws and regulations. Actual results may differ
from those expressed or implied in these statements. The Companys operations may,
inter-alia, be affected by the supply and demand situations, input prices and
availability, changes in Government regulations, tax laws, government or court decisions
and other factors such as industry relations and economic developments, possible risk of
lockdown and/or restrictions in certain geographies with the resurfacing of Covid-19 etc.
Investors should bear this in mind when considering the above statements.
On behalf of the Board of Directors Majestic Auto Limited
|
Mahesh Munjal |
| Date: July 28, 2023 |
(Chairman & Managing Director) |
| Place: Delhi |
(DIN: 00002990) |
+91-9892691696
