Ajmera Realty & Infra India Ltd Management Discussions

ECONOMIC OVERVIEW

The IMF World Economic Outlook forecasts global growth at 3.1% in 2024 and 3.2% in 2025. While slightly above historical averages, challenges persist. Advanced economies may see a slight decline in 2024, with modest recovery in 2025, especially in the eurozone. Emerging markets and developing economies are expected to grow steadily, though unevenly. Global inflation is projected to fall to 5.8% in 2024 and 4.4% in 2025, due to favourable supply-side factors and tighter monetary policies. Effective management of inflation and fiscal policies is essential for sustained economic stability and growth.

Global GDP Growth (%)

	2023 (e)	2024 (p)	2025 (p)
Global Economy	3.1	3.1	3.2
Advanced Economies	1.6	1.5	1.8
Emerging Markets and Developing Economies	4.1	4.1	4.2

(e) - estimate, (p) - projections

Source: https://www.imf.org/en/Publications/WEO/ Issues/2024/01/30/world-economic-outlook-update- january-2024

INDIAN ECONOMIC OVERVIEW

The Indian economy witnessed strong growth with a GDP growth of 7.6% in FY 2024. The growth was driven by strong domestic demand, proactive government policies and positive trends across key sectors. The index of industrial production (IIP) exhibited a positive trend, indicating growth momentum across various industrial sectors. Notably, the construction sector witnessed strong growth, expanding by 10.7%, while the manufacturing sector registered a growth of 8.5% which played a pivotal role in driving industrial growth and contributing to the overall economic expansion.

Additionally, robust tax revenues were recorded, with gross goods and services tax (GST) revenues for March 2024 witnessing the second-highest collection ever at Rs 1.78 lakh crores, marking an 11.5% year-on-year growth. In FY 2024, total gross GST collection exceeded Rs 20 lakh crores, demonstrating the resilience of Indias tax system and its contribution to overall revenue generation.

In terms of inflation, retail inflation eased retain the levels between 5-6% during the FY 2024, according to the consumer price index (CPI) data. This moderation in inflation rates indicated stable price levels and conducive conditions for sustained economic growth.

The Interim Budget for FY 2025 outlined key initiatives aimed at driving economic growth and development. Significant allocations were made towards capital expenditure, focusing on infrastructure development, healthcare, education and rural development. The extension of the production-linked incentive (PLI) scheme to various sectors, coupled with investments in infrastructure projects, was expected to stimulate investment, boost manufacturing and create employment opportunities.

Looking ahead, Indias economic outlook remained optimistic, with sustained momentum expected. Projections indicated a growth rate of 7% for FY 2025, as per the Reserve Bank of India (RBI). Factors such as robust investment activity, resurgence in private consumption, and positive indicators across various sectors were expected to support this growth trajectory. With favourable economic conditions and continued efforts towards reforms and development, India is poised to maintain its growth momentum and solidify its position as one of the top economies globally.

INDUSTRY OVERVIEW

INDIAN REAL ESTATE SECTOR

The real estate sector in India has undergone significant transformations supported by a growing economy, rapid urbanisation, supportive government policies, such as initiatives focused on affordable housing and smart city projects, along with tax deductions on housing loans. These factors collectively contribute to the dynamic growth and sustainability of the Indian real estate market.

The real estate sector serves as a crucial driver of economic growth and employment generation, with linkages to approximately 250 ancillary industries. Currently, Indias real estate sector contributes approximately 7.3% to the total economic output, amounting to $ 477 billion. Looking ahead, the sector estimated to reach $5.8 trillion by 2047, contributing 15.5% to the total economic output.

INDIAN REAL ESTATE MARKET SIZE FORECAST

Year	Market Size (USD Billion)	Contribution to total economic output (%)
2022	477	7.3
2030E	1,023	7.3
2047E	5,833	15.5

Source: Knight Frank - https://content.knihtfrank. com/research/2735/documents/en/india-real-estate- vision-2047-2023-10502.pdf

GROWTH DRIVERS

• Rapid Urbanisation: Escalating demand for residential properties stems from rapid urbanisation, with more individuals seeking housing in urban areas.

• Growing Disposable Incomes: Increasing disposable incomes contribute to the demand for housing, particularly in urban centres, as individuals seek upgraded living standards.

• Demand for Contemporary Office Space: The

need for modern office spaces is rising, driven by the expansion of businesses and the adoption of flexible working models.

• Hospitality and Retail Development: The demand for hospitality and retail real estate is increasing to cater to the growing consumption needs of the population.

• E-commerce Expansion: The burgeoning e-commerce sector is boosting demand for warehousing and storage facilities, driving growth in the logistics real estate segment.

• Telecommunication Infrastructure: The growing use of telecommunication services necessitates the development of data centres and storage facilities, creating additional demand in the real estate market.

CITY-SPECIFIC REAL ESTATE OVERVIEW

MUMBAI

Mumbai, the financial capital of India, boasts a dynamic real estate market driven by its status as a major economic and commercial hub. With a blend of historical significance and modern infrastructure, Mumbai attracts residents and businesses alike, making it one of the most sought-after real estate destinations in the country.

Factors Driving Residential Growth

• Suburban Market Momentum: The Eastern and Western suburbs drove Q1 launches, with major developments concentrated in areas like Sion, Chembur, Kandivali, and Andheri.

• Segment Dominance: Mid-segment properties continued to dominate launches, accounting for 61% of quarterly launches, while high-end and luxury segments contributed 19%.

• Infrastructure Development: Advanced stages of projects like Metro Line 3 and Mumbai Trans HarbourLink Road are expected to boost high- end and luxury segments in South Central and Western Prime submarkets.

• Quoted Capital Values: Capital values witnessed a 3-6% increase across all submarkets, with rising demand from redevelopment projects and infrastructure improvements contributing to the growth.

Factors Driving Office Space Demand

• Suburban Market Leasing: Q4 witnessed strong leasing volumes, particularly in submarkets like Central Suburbs and Lower Parel, driven by fresh demand.

• Sector-wise Contribution: BFSI and Professional Services sectors remained major contributors to quarterly leasing volumes, with 25% and 21% shares, respectively.

• Supply Constraints: Limited supply entering the market amidst strong demand led to a sharp drop in vacancy rates, indicating a supply-deprived office market in Mumbai.

• Rental Growth: City-wide rentals saw a slight uptick, with key submarkets like Worli, Lower Parel and Malad Goregaon experiencing relatively stronger growth due to increased leasing activity in superior-grade assets.

Source: https://www.cushmanwakefield.com/en/ india/insights/mumbai-marketbeat

BENGALURU

Bengaluru, the Silicon Valley of India, embodies a vibrant real estate market fuelled by a major IT and technology hub. As one of the fastest-growing cities in Asia, Bengaluru attracts professionals from across the country and the globe, driving demand for residential and commercial properties. The citys real estate market is characterised by dynamic growth, with both established and emerging submarkets witnessing significant development activities.

Residential Segment Performance Trend

Factors Driving Residential Growth

• Rapid Urbanisation: Bengalurus status as a preferred destination for professionals has led to a continuous influx of migrants, driving demand for residential properties.

• Infrastructure Development: Ongoing

infrastructure projects, including metro expansions and road developments, enhance connectivity and accessibility, further boosting the appeal of residential properties.

• IT Hub Proximity: Proximity to major IT parks and tech campuses such as Electronic City, Whitefield and Manyata Tech Park drives demand for residential units, particularly among the citys workforce.

• Developer Activity: The presence of reputed developers and the emergence of mid-sized players contribute to a diverse range of residential offerings catering to various segments of the market.

Factors Driving Office Space Demand

• Tech Industry Growth: Bengalurus dominance as a technology hub attracts a steady stream of businesses, both domestic and international, leading to sustained demand for office spaces.

• Expansion of Multinational Corporations: The

city continues to witness expansions and new setups by multinational corporations, particularly in sectors such as IT, finance and engineering.

• Talent Pool Availability: The presence of a skilled workforce, drawn from the citys renowned educational institutions and diverse talent pool, reinforces Bengalurus appeal as a preferred location for corporate offices.

• Infrastructure Investments: Infrastructure developments, coupled with the governments focus on creating business-friendly policies, support the growth of commercial real estate in key business districts such as the Outer Ring Road (ORR) and Central Business District (CBD).

• Startup Ecosystem: Bengalurus thriving startup ecosystem fosters innovation and entrepreneurship, leading to a steady demand for flexible office spaces and coworking environments.

Source: https://www.cushmanwakefield.com/en/

india/insights/bengaluru-marketbeat

Industry trends and opportunities

COMPANY OVERVIEW

Ajmera Realty is a leading real estate company in India known for its commitment to excellence and customer satisfaction. With over 55 years of experience, Ajmera has delivered over 20.3 million square feet of projects and built more than 46,000 homes. The Company has been a pioneer in township development, shaping communities in key regions like Mira Road, Andheri, Borivali, and Wadala in Mumbai and some key projects in Bengaluru. With a substantial land bank of 11.1 million square feet, Ajmera is well-positioned for future growth through both organic and inorganic expansions. This strategic approach reflects Ajmeras commitment to sustainable and scalable development, aiming for significant growth in the coming years.

OPERATIONAL OVERVIEW

In FY 2024, the Company demonstrated robust sales performance with the Manhattan project, leading to the next phase at Wadala. The Company launched the Greenfinity - AB and Eden in Mumbai which contributed 17% of total sales value of FY 2024.

Additionally, the Company acquired six projects through joint ventures (JV), joint development agreements (JDA), and redevelopment models, located in Vikhroli, Bhandup, Versova, Yogi Nagar, Bandra, and Electronic City - Phase 2. In these regions, the launch pipeline expanded to 1.9 million square feet with a gross development value (GDV) of 4,570 crore.

The Company achieved a milestone by delivering over 1,000 possessions within 24 hours for projects in Mumbai and Bangalore.

The total sales value consists of Rs 1,017 cr out of which, Mumbai market accounts for 81% , while Bangalore contributes 19% of sales value. The Company continues to focus on strategic growth and value creation in these key markets.

PROJECT-WISE OPERATIONAL HIGHLIGHTS

<td >Mumbai Mumbai

Project	Location	Carpet Area Sold (Sq. ft.)	Sales Value (Rs Cr)	Avg. Realisation Rate (/Sq. ft.)	Collections (Rs Cr)
Aeon, Zeon, Treon	Mumbai	3,720	10	25,740	24
Manhattan	Mumbai	1,79,866	560	31,157	180
Sikova	Mumbai	15,704	34	21,427	98
Greenfinity - CD	Mumbai	7,603	19	24,891	39
Prive	Mumbai	4,528	25	54,800	41
Greenfinity -		17,655	48	27.300	5
AB Eden	48,998	125	25.300	34
Nucleus - Resi	Bangalore	19,363	20	10,400	45
Nucleus - Comm	Bangalore	12,032	9	7,400	9
Luganno & Florenza	Bangalore	1,63,622	167	10,216	95
Total		4,73,091	1,017	21,487	570

FINANCIAL OVERVIEW

In FY 2024, the Company delivered a strong performance with sales value reaching 1,017 crores and sale area of 4,73,091 square feet. This led to a significant increase in revenue to Rs 708 crores, with a 61% year-on-year growth. The growth was driven by a combination of factors including rising demand for quality homes, successful new launches and strong sales momentum of existing projects. The Company also witnessed a remarkable growth in EBITDA to Rs 209 crores, with 56% year-on-year increase. Similarly, profit after tax (PAT) witnessed 44% year-on- year growth, reaching Rs 103 crores, resulting in a PAT margin of 15%. Despite aggressive business development activities, the Company maintained stability in its debt at Rs 780 crores, improving the debt equity ratio to 0.9x. These achievements reflect the Companys prudent financial management in its expansion efforts, showcasing its commitment to sustained growth and value creation.

Abridged consolidated profit and loss account

Particulars	March 31, 2024	March 31, 2023
Revenue from operations ( crore)	700	431
Other income ( crore)	8	10
Total income ( crore)	708	441
Total expenditure ( crore)	499	345
Profit before tax ( crore)	139	96
Tax expenses ( crore)	35	25
Profit after tax ( crore)	104	72
Non-controlling interest ( crore)	1	0
Adjusted Profit After Tax ( crore)	103	72
Basic EPS ( /share)	28.94	20.23
Diluted EPS ( /share)	28.94	20.23

Abridged Consolidated Balance Sheet

Liabilities	March 31, 2024	March 31, 2023
Shareholders Funds	866	774
Minority Interest	128	119
Borrowings	807	826
Others	113	187
Provisions	24	14
Total liabilities	1,963	1,920
Assets March 31, 2024 March 31, 2023
Trade receivables	215	137
Inventories	1,157	1,175
Loans and advances	77	280
Cash and bank balances	78	40
Others	437	287
Total assets	1,963	1,920

Key Financial Ratios

Particulars	March 31, 2024	March 31, 2023	Variance	Reasons
Current ratio	10.19	8.63	18%	Due to Efficiency in operations and decrease in Current Liabilities
Debt-equity ratio	0.80	1.02	(21%)	Better Debt management
Debt service coverage ratio	0.60	0.67	(11%)	Better Debt management
Return on Equity (ROE)	12.55%	9.64%	30%	Due to increase in the efficiency in operations and Profitability
Inventory turnover ratio	0.60	0.40	51%	Due to increase in revenue.
Trade payable turnover ratio	6.91	4.17	66%	Due to improvement in payment cycle.
Trade receivables turnover ratio	3.98	2.15	86%	Due to Better Realisation of Trade Receivable and increase in revenue

INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT

The Company continues to maintain robust internal control systems to ensure the accuracy of financial reporting, operational and strategic objectives achievement, and compliance with laws and regulations. Leveraging an Enterprise Resource Planning (ERP) system, the company standardizes processes and automates operations. These internal control systems aim to ensure efficient asset acquisition, utilization, and protection. Additionally, the Company maintains a strong risk management system to assess and

mitigate risks promptly, ensuring timely reporting of any potential issues.

RISK MANAGEMENT

The Company takes a proactive risks management approach and keeps an eye on the trends and uncertainties that could impact the real estate sector. Economic downturns and geopolitical events can impact property demand and market dynamics. Through comprehensive risk management strategies, the Company aims to navigate these challenges while upholding its reputation as a trusted industry leader.

Risks and mitigation measures

Risk Category	Risk Description	Mitigation
Economic Risk	Fluctuating demand for properties influenced by macroeconomic conditions can impact cash flow management and profitability.	- Diversifying property portfolio
		- Conducting market research
		- Maintaining strong financial position
Regulatory Compliance Risk	The real estate industry in India is highly regulated, making it challenging for the Company to obtain necessary approvals and permits for projects. Frequent changes in government policies could affect operations and profitability.	- Adapt strategies
		- Ensure due diligence
		- Establish strong internal controls for compliance
Competition Risk	In an intensely competitive market, the Company faces pressure from both established players and newcomers.	- Monitor competitors
		- Differentiate offerings
		- Maintain customer loyalty
Financial Risk	Financing projects can pose a challenge due to the considerable capital investment required and potential fluctuations in interest rates or credit availability.	- Manage sources of funds
		- Monitor interest rates
		- Ensure credit availability
Social Risk	Real estate development carries significant environmental and social impacts, and failing to manage these responsibly can lead to reputational damage and financial penalties.	- Manage environmental and social impacts
Technological Risk	Online portals offer services such as virtual tours and property listings, challenging the traditional business model of the Company.	- Adapt to online portals - Embrace technology to remain competitive

Human Resource

The backbone of Ajmera Realty & Infra India Limited is its human capital, which drives its core growth strategy. The company places a high emphasis on attracting and retaining a skilled workforce dedicated to various real estate development tasks, ranging from sales to construction. Leveraging its strong brand reputation, Ajmera Realty attracts top talent within the industry and invests significantly in employee training to ensure successful project execution and personal growth. The HR department plays a pivotal role in aligning the companys priorities and objectives with the dynamic market landscape.

Training and Employee Welfare Initiatives

Ajmera Realty has implemented a robust training system aimed at equipping employees with the necessary skills and knowledge to excel in their respective roles. Regular feedback, performance appraisals, and recognition of exceptional performance are integral components of this system. The company places great importance on recognizing and rewarding outstanding performance through its employee recognition program, ensuring that employees feel valued and supported in their professional development.

Employee Health and Safety

Ensuring the health and safety of its workforce is paramount for Ajmera Realty. The Companys dedicated safety team conducts regular safety inspections and risk assessments to identify and mitigate potential hazards. Additionally, Ajmera Realty prioritizes the well-being and mental health of its employees by fostering a supportive and inclusive work culture, promoting a healthy work-life balance, and providing resources for employee well-being.

Continuous Communication Policy

The Company promotes an inclusive growth culture by ensuring each employee is treated equally irrespective of their age, gender and background. The Companys commitment to inclusivity motivates individuals to engage in voluntary projects beyond their primary responsibilities, fostering opportunities for creative thinking skills enhancement. This proactive and inclusive approach establishes a seamless connection between various initiatives, fostering a harmonious and collaborative work environment.

OUTLOOK

With strong growth indicators in the real estate sector, Ajmera Realty anticipates sustained growth momentum. Revenue visibility from ongoing and upcoming projects remains robust, with OC received projects expecting to generate Rs 116 crore over the next 6 months and ongoing projects would be contributing Rs 1,744 crore over the next 30 months. The Companys total revenue potential stands at Rs 6,430 crore, from existing and potential launches. Additionally, the Companys owned land bank presents significant development potential, particularly in Wadala and Kanjurmarg. Financially, the Company is well-positioned to capitalise on these opportunities, ensuring sustained profitability and value creation.

The Company aims to achieve a 5x growth trajectory through unlocking its land bank development potential and low-capex acquisitions such as joint ventures (JVs), joint development agreements (JDAs), or development agreements (DAs). The company maintains an optimistic outlook, expecting strong sales activity supported by dynamic policy measures, improved infrastructure, and a positive business environment.

CAUTIONARY STATEMENT

In this Management Discussion and Analysis, statements describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements, within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.