adhbhut infrastructure ltd share price Management discussions

India economy recovered quickly from the Pandemic and further growth is expected to be supported by solid domestic demand and in capital investment. The International Monitory Fund and RBI estimate real GDP growth of 6.8% in 2022-2023 & 6.1 % in 2023-24. The lower growth in 2023 is due to the rising Central Bank rates to combat inflation and the war that took place in Ukraine.

The Indian Economy too encountered headwinds during the year, following the sharp rebound in domestic economic activity during the previous F.Y 2022-2023, was a year of normalization with demand in many sectors gradually moderated yet remaining robust.

The market is expected to continue growing as farmers adopt modern farming practices and seek solutions to protect their crops from various threats.

The Indian Economy remains optimists in terms of Growth opportunities.

The Real Estate Industry in India is estimated at USD 265.18 billion in 2023, and is expected to reach USD 828.75 billion by 2028, growing at a CAGR of 25.60% during the forecast period (2023-2028).

The Company has followed all legal and Regulatory Compliances requirement and has implemented all statutory requirements.

Your Company believes that demand conditions in the real estate sector are exhibiting early signs of improvement, and signs of declining interest rates as well as renewed activity in the lending and public capital markets are expected to ease funding pressures. As your Company continues to build on its core business of real estate development and leasing, your Company believes that it is well placed to achieve its targets of reducing its overall indebtedness, executing its real estate development and leasing operations and taking advantage of a potential revival in economic growth and its resultant positive effects on the real estate sector. Expansions are required to be made in developing Shopping Complexes.

Foreign institutional Investors have also shown confidence in the country s construction and are showing up investments in India. This is a positive sign and will open new areas of growth and development.

The Company has followed all legal and Regulatory Compliances requirement and has implemented all statutory requirements.

Nirmala Sitharaman, the finance minister, delivered the Indian Union Budget 2023 2024 on February 1st, 2023. The budget placed a lot of emphasis on many industries, particularly real estate, which has a big influence on the Indian economy. The following are some significant real estate-related announcements:

Affordable Housing: To assist the development of affordable housing, the government has allocated an allocation of Rs. 26,000 crores for the Pradhan Mantri Awas Yojana (PMAY). Initiatives like the Pradhan Mantri Awas Yojana (PMAY), which aims to provide affordable housing for all, have fueled demand in the residential real estate segment. Foreign investors are increasingly recognizing the potential of India s real estate market. The commercial real estate sector, in particular, has seen significant interest from global investors. Growing urbanization, the rise of the middle class, and the expansion of sectors like e-commerce and technology have created a demand for office spaces, logistics facilities, and retail outlets.

Real Estate to Receive Infrastructure Status: The government has declared that the real estate industry would receive infrastructure status, which will facilitate developers access to financing and stimulate the industry.

Cheaper Rental Home Complexes: The government has also unveiled a plan for the construction of such complexes, which would offer migratory workers and the urban underprivileged affordable housing choices.

Development of Affordably Priced Real Estate Investment Trusts (REITs): The government has announced a plan to create Affordably Priced REITs, which would offer real estate investment options and aid in addressing the rising housing demand.

The government has announced the implementation of a single-window clearance system, which would speed up and increase transparency in the process of getting permissions for real estate developments. This will aid in cutting down on project time and expense and encourage the real estate industry s expansion.

Real Estate Investment Trusts (REITs) Regime: The government has declared the implementation of a REITs regime, which will offer investment possibilities in the real estate industry and aid in addressing the rising housing need.

Lastly, One of the biggest game changing policy implementation was the introduction of the Real Estate (Regulation and Development) Act (RERA)) which has put a semblance of order in the real estate sector by boosting investor confidence and streamlining the builder response by framing their responsibilities and duties. Moreover, foreign investors who are watching the Indian real estate market have also witnessed how the Indian housing trends are changing in favour of urban dwellings. The resurgent middle class has also led to a boom in the demand for urban housing. In addition, this is not just limited to the metros. It has spread to tier two and tier three towns as well. The returns and margins are so good in Indian real estate that many global institutional investors are now eying the Indian real estate market like never before. The government s move to allow 100% FDI in construction, and development projects has also boosted the investors confidence in the sector.

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Company has well accepted brand, contemporary architecture, well-designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your company is ideally placed to further strengthen its development potential by acquiring new land parcels.

Leading experts in the Indian property market is viewing 2023-24 as a booming year for the industry. According to them, in the next nine months, there will be 10-15% hike in sales collectively in residential, commercial, and retail segments. With the demand for housing on the rise, it s a sure bet to invest in residential real estate. Likewise, both commercial and retail segments are rapidly expanding, thanks to the immense growth in the respective sectors. Obviously, for investors, it is the right time to add real estate in their portfolio.

a) Commercial Real Estate: The commercial real estate segment, including office spaces, shopping malls, and warehouses, offers significant growth opportunities in the Indian real estate sector. With the growth of e-commerce, there is an increasing demand for warehouses and logistics parks.

b) Co-Living and Co-Working Spaces: Co-living and co-working spaces are gaining popularity in India, especially in urban areas. Developers who focus on this segment can cater to the growing demand for flexible and affordable living and working spaces.

c) Affordable Housing: The affordable housing segment is a significant opportunity in the Indian real estate sector. The government s focus on providing Housing for All by 2022 has created a huge demand for affordable housing. Developers who focus on this segment can benefit from government incentives and tax breaks.

d) Real Estate Investment Trusts (REITs): REITs have been introduced in India to provide investors with an opportunity to invest in the Indian real estate market. Developers can benefit from REITs by monetizing their assets and attracting long-term investors.

e) Technology-Enabled Real Estate Services: Technology is playing an increasing role in the Indian real estate sector, with the development of online property portals, virtual property tours, and digital marketing. Developers who adopt technology can improve their marketing efforts and attract a wider audience.

Overall, the Indian real estate sector offers significant opportunities for developers, investors, and home-buyers. Developers who focus on affordable housing, commercial real estate, co-living and co-working spaces, and adopt technology can benefit from the growing demand in these segments. Investors can benefit from the potential returns from the Indian real estate market through REITs.

? Challenges a) Regulatory Environment: India s real estate industry has historically been characterized by a lack of transparency and weak regulations. This has led to fraudulent practices such as delayed project completion, misappropriation of funds, and conflicts between developers and buyers.

b) Land Acquisition: Land acquisition is a major challenge for real estate development in India. The process is complicated, time-consuming, and often leads to disputes between developers, landowners, and government authorities.

c) Financing: Access to financing is another major challenge for real estate developers in India. Banks are often hesitant to lend to the industry due to high levels of default risk, and interest rates can be prohibitively high.

d) Construction Delays: Delays in project completion are a common problem in the Indian real estate industry. This can be due to a variety of factors, including delays in obtaining approvals, shortage of skilled labor, and supply chain disruptions.

e) High Inventory Levels: Oversupply of properties in some markets has led to a buildup of inventory, which has resulted in lower prices and lower demand.

f) Lack of Professionalism: The Indian real estate industry is often criticized for a lack of professionalism, with developers often failing to deliver on promises and providing poor customer service.

g) Lack of Infrastructure: Lack of infrastructure, including roads, water, and electricity, is a major challenge for real estate developers in many parts of India. This can make it difficult to attract buyers and tenants.

The Company addresses these risks through a well structured framework which identifies desired controls and assigns ownership to monitor and mitigate the risks.

Your Company continues to capitalize on the market opportunities by leveraging its key strengths. These include:

a) Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in higher premium realizations.

b) Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.

c) Strong cash flows: Has built a business model that ensures continuous cash flows from their investment and development properties ensuring a steady cash flow even during the adverse business cycles.

d) Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

e) Outsourcing: Operates an outsourcing model of appointing globally renowned architects/contractors that allows scalability and emphasizes contemporary design and quality construction a key factor of success.

f) Transparency: Follows a strong culture of corporate governance and ensures transparency and a high level of business ethics.

• Political uncertainty

From the cold war period, maximum developing countries are feeling the threat of global polarization. Although, the threats are not visible but there is an undercurrent of uncertainty looming around real estate. The change of leadership affects heavily on the taxation system which has direct link to real estate sector. When the throne gets shifted to another leader, the economical environment gets influenced. Sometime, the new leadership may halt the taxation reforms inducted by his previous leader. Tread war between countries are also another bigger threat to the real estate companies.

• Interest rate

When interest rates rise, it has firm impact on residential real estate markets. This rise will reduce the demand of new home among the customers and in this way; the real estate industry goes dry. The prices of the homes get elevated and in this way, they won t affordable as before. The growth of interest rate will reduce the demand of homes among potential customers.

• Economy and housing affordability

When the economy goes down, the affordability of the home goes up. In this way, the budget of the home get increased which has a direct negative impact on the customer purchase power. Once, the affordability of the homes gets reduced; customers will feel the heat and they will halt their plan to purchase new homes.

• Change of demography

Change of demography also impacts negatively on the real estate market. When the demands of homes get increased for certain demographic division, the prices get automatically elevated. On the other hand, if the demands get decreased, the prices get decreased too.

• Loss of middle class society

At the present time, in developing countries, there is a huge drop of middle class society. Needless to mention, this class is known as the potential consumer of real estate market.

• Troubled Technology

Presently, there is a huge adoption of technology in the reality sector. These are including robotic, AI, driver less cars, high speed and sophisticated communication systems are reducing the demand of mega structure homes and increasing the living of capsule homes.

• Natural Disaster

Housing is always a matter of several thousands of dollars. Once the home gets destroyed with natural disaster, the owner may not able to build another one. This is the main reason for which, the demand of homes get decreased specially in disaster prone areas.

• Energy and water crisis

Energy is the backbone of life. While going to choose a perfect home, owners first check whether that area sufficient supply of energy and water or not. If there is any shortage of water or energy, the plan for purchasing home get turned down.

• Infrastructure

All most all the home owners prefer to purchase their homes in highly developed areas. Cities are the first choice for purchasing homes. However, if there is poor infrastructure, people won t agree to purchase the homes in those areas.

• Immigration

Immigration issue is always looming as a biggest threat to the home buyers. There are several countries like USA those have laws to oust foreigners. If a foreigner is not sure about his future, why they will invest on housing? This is the main reason for which, real estate sector face threat from these kinds of laws.

The Company deals in only one segment i.e. Real Estate. Therefore, it is not required to give segment wise performance.

The Revenue from Operations is 211.61 Lakhs for the financial year 2022-23.

Profit/Loss before Tax: The Loss before Tax for 2022-23 is 1,145.69 Lakhs as compared to Loss before Tax of Rs. 105.96 Lakhs in 2021-22.

Profits/Loss after Tax: The Loss after Tax for 2022-23 is 1,166.99 Lakhs as compared to Loss after Tax of Rs. 105.96 Lakhs in 2021-21.

10. INTERNAL CONTROL SYSTEMS

The company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly; applicable status, the code of conduct and corporate policies are duly complied with.

The Company has an internal audit department which conducts audit in various functional areas as per audit programme approved by the Audit Committee of Directors. The internal audit department reports its findings and observations to the audit committee, which meets at regular intervals to review the audit issues and to follow up implementation of corrective actions.

The committee also seeks the views of statutory auditors on the adequacy of the internal control system in the company. The audit committee has majority of independent directors to maintain the objectivity.

11. HUMAN RESOURCES DEVELOPMENT

Employees are the key to achieve the Company s objectives and strategies. The Company provides to the employees a fair equitable work environment and support from their peers with a view to develop their capabilities leaving them with the freedom to act and to take responsibilities for the tasks assigned. The Company strongly believes that its team of capable and committed manpower, which is its core strength, is the key factor behind its achievements, success and future growth.

We are continuously working to create and nurture an organization that is highly motivated, result oriented and adaptable to the changing business environment. The industrial relations remained cordial during the year.

12. KEY RATIOS

Key financial ratios are given below:

13. STATUTORY COMPLIANCES

The Whole Time Director makes a declaration to the Board of Directors every quarter regarding compliance with provisions of various statutes as applicable. The Company Secretary ensures compliance with the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and compliance with the guidelines on insider trading for prevention of the same.

CAUTION STATEMENT

Statement in this Management s Discussion and Analysis detailing the Company s objectives, projections, estimates, expectations or predictions are forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company s operations include global and Indian

demand-supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Company s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.