MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
Indian Economic Scenario
The Indian economy continued to exhibit a resilient performance despite global
uncertainties. The Reserve Bank of India (RBI) expects the Indian economy to be amongst
the fastest growing economies in FY 202324 led by improving macroeconomic fundamentals and
sustained momentum in domestic economy.
The improving economic indicators along with a major capex push by the Indian
Government have led to the RBI marginally improving its real GDP forecast to 6.5% for the
Fiscal 2023-24. The RBI in its latest Monetary Policy Committee meeting also decided to
pause the rate hikes after a cumulative increase of 250 basis points since May 2022. As
per IMF reports, the GDP forecast for India has been revised to 6.3% for FY 2023-24 from
6.6% earlier. The primary reason was attributed to slower consumption growth and
challenging external conditions.
Indias foreign exchange reserves were placed at $ 578.4 billion as on March 31, 2023.
To cushion rupee depreciation, RBI has been intervening in the forex market via both spot
and forward positions.
Indias GDP growth accelerated to 6.1% in the January to March 2023 quarter, lifting
the economys uptick in 2022-23 to 7.2% from the 7% estimated earlier.
(Source: Economic Times, IMF, EIU, Business Standard, McKinsey, IBEF)
Industry Structure and Developments
Indian real estate sector has witnessed high growth in the recent times with rise in
demand for office as well as residential spaces. Government of India along with the
governments of respective States has taken several initiatives to encourage development in
the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime
opportunity for real estate companies.
The residential segment exhibited a strong performance and sustained momentum during
the last fiscal despite several headwinds. The offices segment exhibited resiliency and
has started to witness gradual recovery resulting in improvement in occupancy levels
across quality assets. This recovery was primarily led by the return to normalcy and
back-to-office policies for the majority, however, certain occupiers continue to operate
on a flexible and hybrid approach. The retail segment delivered robust growth as a result
of increase in consumption and footfalls.
Opportunities
Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it
will contribute 13 per cent to countrys GDP. Emergence of nuclear families, rapid
urbanization and rising household income are likely to remain the key drivers for growth
in all spheres of real estate, including residential, commercial, and retail. Rapid
urbanization in the country is pushing the growth of real estate. Indian real estate
developers have shifted gears and accepted fresh challenges.
Threats
Indian real estate sector accounts for 13 per cent of the countrys Gross Domestic
Product and is one of the biggest and globally recognized sectors. The Indian real estate
sector is still dependent on old building techniques and hence they are over-dependent on
extensive human labour for construction activities. Whereas, high-quality building
materials such as concrete and iron slabs are used in new construction techniques. India
is touted to be the most populous country by the year 2050. More than 50 per cent of
people are urban centers and Tier 1 cities. To accommodate the population, India would
require more new cities and urban centers on a mass scale in order to provide the required
resources to the inhabitants. Segment Wise Performance
In line with Ind AS - 108 Operating Segments and basis of the review of operations
being done by the Senior Management, the operations of the group fall under the
Construction business which is considered to be the only reportable segment by the
management.
Outlook
The Indian economy is projected to grow by more than 6.7% in calendar year 2024 as per
various institutional estimates, making it one of the fastest-growing economies. Indias
growth journey could be the result of a culmination of favorable tailwinds like consistent
agricultural performance, flattening of the COVID-19 infection curve, increase in
government spending, reforms and an efficient roll-out of the vaccine, among others.
Risks and Concerns
Through land regulations, land readjustment and land pooling policies, the Government
should spare large shares of underutilized and vacant land parcels. By this, it will give
some relief to the financially aggrieved developers and help the situation of the real
estate sector improve. This calls for an urgent change or revision in the Land Acquisition
Resettlement and Rehabilitation Act of 2013. There are a lot of impending projects in the
Indian real estate market starting from public sector projects to private sector housing
colonies. There is a delay happening in the completion of these projects and the reason
for this is that the project does not get enough funding or there is a lack of technology
to complete these projects on time. Another big challenge in the Indian real estate sector
is the protracted approval process because project approvals in India take about days to
years because there is no option of a single-window clearance and it often results in time
and cost escalations.
Internal Financial Control Systems and Their Adequacy
The Company has a proper and adequate system of internal financial controls,
commensurate with its size and business operation. It ensures timely and accurate
financial reporting in accordance with applicable accounting standards, safeguarding of
assets against unauthorized use or disposition and compliance with all applicable
regulatory laws and Company policies.
Internal Auditors of the Company review the internal financial control systems on a
regular basis for its effectiveness, and necessary changes and suggestions are duly
incorporated into the system. Internal audit reports are also reviewed by the Audit
Committee of the Board.
Discussion on Financial Performance with respect to Operational Performance
a) Share Capital: The Companys issued and subscribed share capital consists of Equity
Share capital. The paid-up share capital of the Company as at 31st March, 2023, stood at
503598000/- comprising of 503598000 Equity Shares of 1/- each.
b) Non-Current Assets & Non- Current Liabilities: During the year under review, the
Non-Current Assets and Non-Current Liabilities stood at 7138.31 Lakhs and 168.24 Lakhs
respectively.
c) Current Assets & Current Liabilities: During the year under review, the Current
Assets and Current Liabilities stood at 5446.39 Lakhs and 6990.06 Lakhs respectively.
During the year under review, the Company registered total revenue of 1533.44 lakh as
compared to 4362.26 lakh for the previous year and Profit before Tax stood at 158.73
lakh for the year under review as compared to 3233.81 lakh for the previous year.
Material Developments Human Resources / Industrial Relations
The timely availability of skilled and technical personnel is one of the key
challenges. The Company maintains healthy and motivating work environment through various
measures. This has helped the Company to recruit and retain skilled work force which would
result in timely completion of the projects. The Company has cordial relation with the
employees and contractors of the company. The staff has the depth of experience and skills
to handle companys activities. Skilled team of workers and other professionals ensure
superior quality standards during every stage of work. The total employee strength as on
March 31, 2022 was 19.
Details of significant changes in key Financial Ratios & Return on Net worth
Pursuant to amendment made in schedule V to the Listing Regulations, details of
significant changes (i.e. change of 25% or more as compared to the immediately previous
financial year) in Key Financial Ratios and any changes in return on net worth of the
Company (on standalone basis) including explanations therefor are given below:
| Particulars |
FY ended 31st March, 2023 (in %) |
FY ended 31st March, 2022 (in %) |
Changes Between CY & PY |
Explanation |
| Debtors Turnover |
2867.92 |
8720.76 |
2767.92 |
Decline because of decrease in Sale volumes. |
| Inventory Turnover |
0.33 |
1.89 |
-99.67 |
Decline in account of decrease in c of goods sold in line with volumes. |
| Interest Coverage Ratio |
50.56 |
395.17 |
-49.44 |
Decline is due to decrease in proce compare to the last FY Year. |
| Current Ratio |
0.79 |
0.73 |
-99.21 |
Not Applicable |
| Debt Equity Ratio |
0.41 |
0.19 |
-99.59 |
The increase is on account of incre in short term debts. |
| Operating Profit Margin (%) |
112.93% |
74.35% |
12.93% |
The increase is on account of incre in non-operative expenses. |
| Net Profit Margin (%) |
5.02% |
57.90% |
-94.98% |
Decline is on account of decrease i sale volumes. |
| Return on Net worth (%) |
29.35% |
50.34% |
-70.65% |
Decline is on account of decrease i Profit Margin. |
Cautionary Statement
The above Management Discussion and Analysis contains certain forward looking
statements within the meaning of applicable security laws and regulations. These pertain
to the Companys future business prospects and business profitability, which are subject
to a number of risks and uncertainties and the actual results could materially differ from
those in such forward looking statements. The risks and uncertainties relating to these
statements include, but are not limited to, risks and uncertainties, regarding
fluctuations in earnings, our ability to manage growth, competition, economic growth in
India, ability to attract and retain highly skilled professionals, time and cost over runs
on contracts, government policies and actions with respect to investments, fiscal
deficits, regulation etc. In accordance with the Code of Corporate Governance approved by
the Securities and Exchange Board of India, shareholders and readers are cautioned that in
the case of data and information external to the Company, no representation is made on its
accuracy or comprehensiveness though the same are based on sources thought to be reliable.
The Company does not undertake to make any announcement in case any of these forward
looking statements become materially incorrect in future or update any forward looking
statements made from time to time on behalf of the Company.
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