GLOBAL ECONOMY
The Global World Bank has indicated that the growth in 2019 is expected to be slow to
2.6 percent, reflecting weaker than expected trade and investment at the start of the
year. Growth is projected to gradually rise to 2.8 percent by 2021, predicated on
continued benign global financing conditions and a modest recovery in emerging market and
developing economies (EMDEs). However, EMDE growth remains constrained by subdued
investment. Risks are firmly on the downside, in part reflecting the possibility of a
further escalation of trade tensions. It is urgent for EMDEs to reinforce policy buffers
and to implement reforms that boost growth prospects.
According to the World Economic Outlook also the global growth is expected to remain at
3.0 per cent in 2019 and 2020, however, the steady pace of expansion in the global economy
masks an increase in downside risks that could potentially exacerbate development
challenges in many parts of the world.
INDIAN ECONOMY
India has emerged as the fastest growing major economy in the world and is expected to
be one of the top three economic powers of the world over the next 10-15 years, backed by
its strong democracy and partnerships. Also the formation of stable government in 2019 as
well in Lok Sabha Election, would help in achieving its growth rate. Indias GDP is
estimated to have increased from 7.2 per cent to 7.5 per cent in 2019-20.
The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister
for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on
February 01, 2019. It focuses on supporting the needy farmers, economically less
privileged, workers in the unorganized sector and salaried employees, while continuing the
government of Indias push towards better physical and social infrastructure.
Numerous foreign companies are setting up their facilities in India on account of
various government initiatives like Make in India and Digital India. The prime minister of
India, has launched the Make in India initiative with an aim to boost the manufacturing
sector of Indian economy, to increase the purchasing power of an average Indian consumer,
which would further boost demand, and hence spur development, in addition to benefiting
investors. The Government of India, under the Make in India initiative, is trying to give
boost to the contribution made by the manufacturing sector and aims to take it up to 25
per cent of the GDP from the current 17 per cent.
Besides, the Government has also come up with Digital India initiative, which focuses
on three core components: creation of digital infrastructure, delivering services
digitally and to increase the digital literacy.
Among others, one aspect of the budget 2019-20 also focused on achieving green mother
earth and blue skies through a pollution-free India. It was a much-required step to shape
the poor environmental situation that the country is facing.
Also, to give a boost to the sagging economy, the Reserve Bank of India (RBI) has
lowered its repo rate to a nearly nine-year low of 5.75 percent and changed its monetary
policy stance to accommodative, leaving space for future rate cuts.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The real estate sector is one of the most globally recognized sectors. 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 for office
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 expected that this sector will incur more non-resident Indian (NRI) investments
in both the short term and the long term. In India it is expected that it will reach to a
market size of US $ 1 trillion by 2030 from US $ 120 billion in 2017 and contribute 13
(Thirteen) percent of the countrys GDP by 2025. Retail, hospitality and commercial real
estate are also growing significantly, providing the much-needed infrastructure for
Indias growing needs.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high
demand for office space in recent times. Commercial office stock in India is expected to
cross 600 million square feet by 2018 end while office space leasing in the top eight
cities is expected to cross 100 million square feet during 2018-20. Gross office
absorption in top Indian cities has increased 26 per cent year-on-year to 36.4 million
square feet between Jan-Sep 2018.
The Government of India along with the governments of the respective states has taken
several initiatives to encourage the development in the sector. The Smart City Project,
where there is a plan to build 100 smart cities, is a prime opportunity for the real
estate companies, also under the Pradhan Mantri Awas Yojana (PMAY) Urban, more than 8.09
million houses have been sanctioned up to May 2019.
Since, the Securities and Exchange Board of India (SEBI) has given its approval for the
Real Estate Investment Trust (REIT) platform, it will help in allowing all kinds of
investors to invest in the Indian real estate market. It would create an opportunity worth
Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an
increasingly well-informed consumer base and, bearing in mind the aspect of globalisation,
Indian real estate developers have shifted gears and accepted fresh challenges.
The growing flow of FDI into Indian real estate is encouraging increased transparency.
Developers, in order to attract funding, have revamped their accounting and management
systems to meet due diligence standards.
SEGMENT-WISE PERFORMANCE
The Company trades in a single business segment i.e. Real Estate Business. It operates
in sale, purchase and development of real estate projects. The Company has taken
initiative and has focused on consideration of projects. Its anticipating considerable
scope for improvement.
OPPORTUNITIES & STRENGHTS
Effect of RERA: In the year 2018, developers had concentrated on offering and finishing
the current ventures within the due date. This year 2019 will also witness significant
deals and conveyance in the real estate.
So, RERA ensures customers interests. It will be unthinkable for unreliable operators
to be in the market and just the most-dedicated players will have the capacity to explore
and growing the market. This will lead to a win-win situation for both the home buyers and
the sellers alike in the long haul.
Different Tax Incentives: Government is doing its best to help the boost of
‘reasonable housing through different tax incentives and different changes. This
will likewise accompany affordable housing subsidies, additionally improving the methods
of purchasing and offering of a home. Unlike, earlier the buyers and developers were
imposed with numerous duties, for example, service tax, VAT, and excise duty which shifted
from state to state. The lack of clarity and high costs deterred them from investing in
it.
Past year changes to shape whats to come: There have been many changes set by the
legislature, including RERA and GST which will influence the market in 2019 as well. For
both, home buyers and builders, these changes will create a different outlook on how
business is done. There were some unavoidable issues for home buyers when it came to
investing in under-developed projects, but now with full transparency, home buyers and
designers can have a simple business.
PMAY to take care of housing for all: The yearning design of the Prime Minister to
construct homes for all by 2022 will definitely get a noteworthy financial change. This
will make 60 million new houses and 2 million occupations throughout the following 4-5
years. Each task is presently getting enrolled under PMAY conspire, the urban real estate
segment will see a significant lift in 2019. Affordable housing could rise as the
characterizing pattern in 2019.
Favorably low home interest: The excess liquidity has driven the RBI to rejig the key
loaning rates. Resultantly, the home advance loan costs that were recorded at around 9.5
percent per annum in 2016 have now been skimming in the range between 8.5-8.9 percent.
That makes for impressive savings in the EMI costs, empowering individuals to benefit
from minimal home loans and turn into a mortgage holder. It is normal that the home
advance rates will stay low for the following few quarters and may even descend further.
Affordable housing plans: The budget of 2019 also has proposals that could benefit and
boost the real estate sector in the year 2019-2020. The focus was on affordable housing.
One such initiative was to award the infrastructure status to affordable housing.
Middle-income home buyers have a lot of motivations to celebrate after the centre
modified the carpet area of homes for the MIG category under the PMAY (Pradhan Mantri Awas
Yojana) scheme. The middle-income buyers would now be able to possess a greater and better
house.
THREATS & CHALLENGES
Adhering the Regulatory Compliances: In 2018, we saw many new regulatory standards and
laws by the administration which affected the real estate market, positively and
negatively. So in 2019 as well, developers will confront the effect of RERA by limiting
themselves to new development and concentrating more on finishing the ongoing projects. As
the supply of properties will expand, builders will confront the challenge of finishing
the task on a specified due date.
The concept of Single Window Clearance: The significant problem a real estate developer
faces is the property clearance and as a rule, takes 18 months to three years. The lions
share of the work is to procure approvals from specialists who take a very long time to
answer. Single Window Clearance is the greatest test faced by the developers. So
actualizing this strategy wont just cut down the project delay but additionally the cost
of the task execution as well.
To get a Home Loan Interest limit: The home loan interest tax is the real issue imposed
on the home buyers. The government needs to raise the limit to 5 lakh from the present 2
lakh for every annum. So this will surely give a big break to home buyers in saving cash
on the home loan. The higher the interest on home loan fee, the lower the demand for
property, causing a ripple impact.
The GST Rate: Since the foundation of GST, the real estate market has been confronting
tremendous barrier because of high GST rate. As buying a home is an immense investment,
the legislature ought to cut down the GST rate to urge home buyers to put resources and
investment into new activities.
Out of the considerable number of difficulties assessed by the real estate sector of
India, two issues have recently been tended to on a full scale. The annihilation of a
mind-boggling tax structure with the usage of GST and tending to inventory pile-up by
executing the RERA (Real Estate Regulatory Authority) bill.
Rising Input Cost: The real estate industry is a capital and work focused sector,
accordingly, an ascent in the cost of work makes issues in the development of the project
in focus. Besides, uncalled for routine with regards to specific segments of merchants and
concrete industry by raising the cost, makes issues in the completion of the project
venture more prominent.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The internal control system is looked after by Directors themselves, who also looked
after the day to day affairs to ensure compliances of guide lines and policies adhere to
the management instructions and policies to ensure improvements in the system.
The Internal Audit reports are regularly reviewed by the management. The Company has
proper and adequate internal control system commensurate with the size of the business
operations geared towards achieving efficiency in its various business operations,
safeguarding assets, optimum utilization of resources and compliance with statutory
regulations. Efforts for continued improvement of internal control system are being
consistently made in this regard.
The internal audit programme is reviewed by the Audit Committee at the beginning of
each financial year and quarterly progress reports are placed before the Committees. The
Company continued its efforts to define its control mechanisms and to align its processes
with best practices in these areas.
FINANCIAL AND OPERATIONAL PERFORMANCE
During the year under review, your Company has registered a consolidated turnover of
Rs. 236.59 Lacs (Previous year Rs. 49.65 Lacs) which results net losses of Rs. 1732.16
Lacs (Previous year net losses of Rs. 440.71 Lacs).
HUMAN RESOURCES
The Company values and appreciates the dedication and drive with which its employees
have contributed towards improved performance during the year under review. The relations
with workers and staff are cordial during the year under review. All issues pertaining to
staff matters are resolved in harmonious and cordial manner.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the Companys
objectives, expectations, predictions and assumptions may be ‘forward looking within
the meaning of applicable securities laws and regulations. Actual results may differ
materially from those expressed herein. Important factors that could influence the
Companys operations include global and domestic economic conditions affecting demand,
supply, price conditions, change in governments regulations, tax regimes, the laws and
other factors such as litigation and industrial relations.
|
By the Order of the Board |
|
FOR ALCHEMIST REALTY LIMITED |
|
Sd/- |
Sd/- |
|
Vinay Kumar Mittal |
Ajay Arora |
| Dated: 30.08.2019 |
Managing Director |
Director |
| Place: New Delhi |
(DIN: 00287042) |
(DIN: 02577621) |
+91-9892691696
