shubhlaxmi jewel Management discussions

INDUSTRY OVERVIEW:

The real estate sector in India has come a long way by becoming one of the fastest growing markets in the world. It is not only successfully attracting domestic real estate developers, but foreign investors as well. The growth of the industry is attributed mainly to large population base, rising income level, and rapid animation.

The sector comprises of four sub-sectors housing, retail, hospitality and commercial. While housing contributes to five- six percent of the countrys gross domestic product (GDP), the remaining three sub-sectors are also growing at a rapid pace, meeting the increasing infrastructural needs.

The real estate sector has transformed from being un organized to a dynamic and organized sector over the past decade, Government policies have been instrumental in providing support after recognizing the need for infrastructure development in order to ensure better standard of living for its citizens. In addition to this adequate infrastructure forms a prerequisite for sustaining the long term growth momentum of the economy.

The Indian real estate sector if one of the most globally recognized sectors. In the country, it is the second largest employer after agriculture and is slated to grow at 30 percent over the next decade. It comprises four sub sectors housing, retail, hospitality and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand foroffice space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investments in the near future, as a survey by an industry body has revealed a 35 percent surge in the number of enquiries with property dealers. Bengaluru is expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. Private Equity (PE) funding has picked up in the last one year due to attractive valuations. Furthermore, with the Government of India introducing newer policies helpful to real estate, this sector has garnered sufficient growth in recent times.

REAL ESTATE MARKET:

The real estate sector in India is being recognized as in infrastructure service that is driving the economic growth engine of the country. The Indian real estate market size is expected to touch US$180 billion by 2020. Foreign direct investment (FDI) in the sector is expected to increase to US$ 25 billion in the next 10 years, from present US$ 4 billion.

According to Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received foreign direct investment (FDI) equity inflows to the tune of US$ 23,874.1 million in the period April 2000- September 2014.

The Indian real estate market size is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 percent to the countrys gross domestic product (GDP). Also, in the period FY 2008-2020, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 percent. Retail, hospitality and commercial real estate are also growing significantly, providing the much needed infrastructure for Indias growing needs.

Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 percent likely in the next five years, followed by Bengaluru and Delhi National Capital Region (NCR). Also Delhi NCR was the biggest office market in India with 10 million sq ft out of which 88 million sq ft were occupied. Sectors such as IT and ITeS, retail consulting and e- commerce have registered high demand for office space in recent times. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. The industrys growth is linked to developments in the retail, hospitality and entertainment (hotels, resorts, cinema theatres) sectors, economic services (hospitals, schools) and information technology (IT) enabled series (like call centers) etc., and vice versa.

The sector is divided into four sub-sectors:

Housing

Retail

Hospitality

Commercial

The housing subsector contributes five-six percent to the countrys gross domestic product. Meanwhile, retail, hospitality and commercial real estate are also growing significantly catering to Indias growing needs of infrastructure.

The Indian real estate market size is expected to touch US$ 180 billion by 2020.

India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million sqft of office and industrial space.

CHALLENGES:

The key challenges that the Indian real estate industry is facing today are:

Lack of clear land titles.

Absence of title insurance

Absence of industry status

Lack of adequate sources of finance

Shortage of labor

Rising manpower and material costs

Approvals and procedural difficulties

BUSINESS OVERVIEW:

Our Companys business activities may be classified as follows:

Trading in real estate by way of acquiring interests in various real estate projects such as flats,and land

OUR COMPETITIVE STRENGTHS:

Leveraging on our strong management team/ experience and relationships

Our Company is managed by a team of competent personnel having knowledge of core aspects of our Business. We believe that our management team has a long-term vision and has the ability to achieve long term grow the four Company. We believe that the strength four management team and their understanding of the industry will enable us to continue to take advantage of current and future market opportunities.

PRESENCE IN CERTAIN AREAS OF MUMBAI SUBURBS:

A substantial amount of our business activities are concentrated in certain areas of Mumbai suburbs such as Mira Road and Naigaon. We believe that we have good knowledge of the environment in these areas which assist us in identifying opportunities. Our Company believes that these areas are having tremendous growth potential since the said areas are still to be developed and are an attractive real estate market in terms of returns on investment and depth of demand for real estate developments.

CONTINUED FOCUS IN REAL ESTATE ACTIVITIES:

We intend to continue our focus in the real estate activities. We believe that the areas where we have focused our real estate activities are an attractive market in terms of return of investment and depth of demand for real estate developments.

FOCUS IN NEW AREAS:

Although, we have historically focused our business activities in Mumbai suburbs such as Mira Road and Naigaon. We are in process of establishing our presence in other areas of Mumbai suburbs.

TO CONTINUE EXPANDING OUR BUSINESS BY INCLUDING NEW SERVICES:

We intend to explore opportunities to expand our operations by developing new verticals within our existing lines of business. Further expanding our offerings will help us to build on existing diversification of our business.