AMJ Land Holdings Ltd Management Discussions

The Companys business of real estate development for housing project in Pune (i) Through its firm, AMJ Land Developers in which the Company holds 95% stake and (ii) A wholly owned subsidiary of AMJ Realty Limited, located in Pune. The Company is also in the business of generation and supply of power from its three windmills of aggregate 4.6 MW, located in Maharashtra, out of which two windmill are on the government forest land leased out to the Company.

The area in and around Pune has rapid housing development to address needs of larger size homes and apartments by the customers and such demand and supply both are constantly growing the prices of homes in Pune have increased differently in different pocket of the city in past years but demand remain stable in spite of inflationary pressures in the economy.

The 7th residential tower being constructed by the firm having 2 and 3 BHKs offering in ‘GREENS having area of about 1,48,000 Sq. ft., is expected to complete around mid of financial year 2024-25. 8th residential tower having 128 larger size apartments of 3 and 4 BHKs with aggregate area of about 1,65,000 Sq.ft., in ‘GREENS has been launched in October 2023, and also received promising response and bookings from customer. The construction has commenced in October 2023 and is expected to be completed in 2026-27.

A part of land and buildings owned by the Company at Thergaon, Pune is leased to Pudumjee Paper Products Limited under Leave & License Agreement until January 2026.

The Power generated by the three wind mills, is supplied in the first half to Maharashtra State Electricity Distribution Company Limited (MSEDCL), a State Discom, and thereafter customers under Open Access arrangements in view of restrictions put in by MSEDCL.

The segment-wise financial performance is given in the Companys Accounts.

Real Estate Industry, Structure, Outlook, Risk and Concerns:

The real estate industry is vast and multifaceted and dominated majorly by unorganised players where large players are usually organised ones having their corporate structure with ‘widely held public shareholding. Various players in the industry develop either their own land or develop on another landowners land in consideration of sharing of revenue or profits or constructed area etc., for various kind of developments such as for housing, commercial, infrastructure etc. As urbanisation grows and land becomes more expensive, the challenges of acquiring land also increase substantially, specifically in satisfying landowners expectations and clear legal title of land.

The development potential of land is governed by Development Control Regulations of local authorities and vary depending on the area and precise location with reference to width of the road, many of such variations are sudden and without any notice or transitory permission. Currently, in Maharashtra at many places Unified Development Control and Promotion Regulations brought in by the state are applicable, which amongst others, attempts to determine on uniform basis for all cities and towns etc., the extent of development potential which can be had considering basic FSI, premium FSI, TDR etc.

Redevelopment of old buildings at many places has also assumed considerable importance in view of higher potential of development and newer amenities, which the residents of old buildings would prefer to have whose expectations and stiff competition amongst developers is also growing.

AMJ Land Holdings Limited (AMJLH) holds an industrial land of about 47 acres at Pune, out of which large portion is currently used by Pudumjee Paper Products Limited (PPPL) for operating its paper manufacturing plant under Leave and License Agreement, until PPPL vacates the site. Besides, the Company currently is carrying on real estate development through its subsidiary and partnership firm. The Company constantly keeps on evaluating proposals, which are either for redevelopment or for greenfield project since the Company has adequate resources and objective to undertake one or more such kind of midsize development.

Whilst Pune market in which currently the Company operates for development, has a constant and ever growing demand for housing, commercial and infrastructural requirements. Peoples migration from different parts of the country into Pune for education and employment in various industries is a continuous sources of addition to net population which currently stand over 65 lakhs comprised in two Municipal corporations. Besides, the adjoining areas fall under Pune Metropolitan Regional Development Authority (PMRDA), which also offers opportunity for greenfield development as the housing within the city, as a result of expensive land, becomes more unaffordable to middle class. The Company currently operates for greenfield housing development for upper middle class and is willing to avail opportunity for any development for any segment of middle class.

Although, the redevelopment projects compared to greenfield project require lesser capital in view of the land becoming vacant by demolishing old buildings, the residents of old buildings have more concerns and therefore are more demanding for their financial security for successful completion of new buildings, which tend to increase the capital requirement and becomes more expensive for development.

The Housing sector in Pune on an average rises over 5% per annum and except for lean period when demand remains subdued owing to recessionary conditions or adverse conditions of nationwide economy but, the continuous growth in requirement of housing eventually makes up the shortfall of the lean period and therefore outlook of industry always remains positive and growth oriented.

The legal issue for clear and marketable title of the land both for greenfield and redevelopment projects is a big challenge combined with the unduly high expectation of landowners either for outright sale or joint venture arrangement or development arrangements. In relations to ancestral land, the problem is more complex for the reason that there are large families who need to be satisfied for their varying demands and concluding such deal often consumes considerable time and resources for a developer who is fully compliant for clean and marketable title. Timely permissions and excessive regulations, which suffers from clarity, are concerns which often delays the development which is otherwise well planned, for no fault of developer whereas his obligations to customer for timely deliveries, remain unaltered, in spite of such delays.

Internal control system and their adequacy are considered to be quite appropriate and adequate in each of the subsidiaries having regard to their current nature and scale of business. Such control systems and their adequacy is periodically examined by internal auditor.

The firm has recognised profit before tax from sale of apartments is Rs. 1,323.87 lakhs (under Indian Accounting Standard) following percentage completion method of accounting which has yielded 28.19% as EBITDA compared to 29.75% of last year. This is in line with profitability earned by many organized players.

The Company and the firm employed 33 Persons as at year end 31st March 2024 (last year 32) and there has been no material development in human resources, industrial relations front since skilling up of the human resource and their exposure to different aspects of project, is a constant practice followed by the Company.

Key Financial Ratios:

Cautionary statement :

Statements made in this Report, especially those in Management Discussion & Analysis describing the Companys objectives, estimates, projections and expectations may constitute Forward looking statements within the meaning of applicable laws and regulations. The Companys actual results, achievements may differ materially from those projected in any such forward looking Statements.