Ansal Buildwell Ltd Management Discussions.

We have pleasure in submitting hereunder the Management Discussion & Analysis Report on business of the Company. We have attempted to include discussions on the matters to the extent relevant.

OVERVIEW - INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian economy started the fiscal year 2018-2019. with a healthy 8.2 percent Growth in the first quarter on the back of domestic resilience. Growth eased to 7.3 percent in the subsequent quarter due to rising global volatility, largely from financial volatility, normalized monetary policy in advanced economies, externalities from trade disputes, and investment rerouting. Further, the Indian rupee suffered because of the crude price shock, and conditions exacerbated as recovery in some advanced economies caused faster investment outflows.

Despite softer growth, the Indian economy remains one of the fastest growing and possibly the least affected by global turmoil. In fact, the effects of the aforementioned external shocks were contained in part by Indias strong macroeconomic fundamentals and policy changes (including amendments to the policy/code related to insolvency and bankruptcy, bank recapitalization, and foreign direct investment).

While demonetization and GST slowed down the residential real estate sector across the country, the National Capital Region (NCR), particularly, saw a glut. Builders who couldnt complete projects were in abundance.

The Indian economy is likely to sustain the rebound in Financial Year 2018-19. Growth is projected to be in the 7.2 percent to 7.5 percent range and is estimated to remain upward of 7 percent for the year ahead. Together, these augur well for a healthy growth path for the economy. By 2019, it may become the fifth-largest economy.

The introduction of Real Estate Regulation and Development Act (RERA), which makes it mandatory for builders to register a property with the regulatory authority before marketing it, is expected to boost buyers confidence. It is bad news for small builders in the unorganized sector. The big is expected to gain market share as the small vacate the market. RERA will benefit both consumers as well as builders as it will bring transparency in the industry and confidence amongst home buyers. It will give competitive advantage to builders who are efficient in planning and execution. Real Estate Industry is going to change and it will become more transparent and efficient going forward. New set of start-ups projects will emerge to help builders to control cost, do value engineering, execute, become more cost efficient, reduce wastages, connect with investors and funding by institution. For small and fly by night builders, it is going to be difficult to operate. They have to either take a big hit on their margins or compete with efficient ones or increase their selling price which will make it difficult to sell.

An overwhelming percentage of the builders believed that RERA will bring in the much needed transparency in property dealings. The regulation, however, is good news for investments. Some felt that RERA could bring in a significant increase in Foreign Direct Investments because of transparency and organizational setup.

GST is an important and game-changing reform. GST is expected to transform India into a single market, boost revenues through better compliance and simpler procedure. GST will subsume a host of indirect taxes levied by the Centre and states, including excise duty, VAT, Service Tax, luxury and entertainment levies. This could benefit the nation in the long term, by way of a wider tax base and greater participation in the formal economy. Builders, however, were divided on the impact of GST. Some said that GST has not simplified their business operations while other said they werent sure about how the tax reforms would play out in the long run.

After demonetization, some buyers are adopting a ‘wait and watch approach. The market is facing temporary slowdown in the sector. The economy gets back to normal. However, there will be a significant long-term gains, as most of the future transactions will happen through banking channels and small builders will go back from the market.

Affordable housing could emerge as the defining trend in 2019. Demonetization alongwith the New Real Estate Regulatory Act and the Benami Properties Act, would help in eradicating the Practice of Parking black money in real estate to a great extent and bring transparency in the Industry. Besides these, the announcement made to digitize land records and all other policy initiatives are perceived to be the game changer for the industry in the coming Years.

Introduction of regulations like (Regulation and Development) Act, 2016 (RERA), Benami Transactions (Prohibition) Amendment Act, 2016, Amendments in Real Estate Investment Trusts (REITs) regulations, FDI relaxations, Goods and Services Tax(GST), Housing for all by 2022, Smart City Project and Demonetization will show mixed signs of recovery of real estate sector. The real estate sector would be more transparent, credible and attractive in the year 2019 with only organized, reputed and established Developers with good track record.

PERFORMANCE

The ongoing growth and urbanization across India demands comprehensive and integrated development of physical, institutional, social and economic infrastructure. The rapid urbanization is expected to offer significant opportunities for real estate and infrastructure development in Indian cities. Reform measures including implementation of RERA, a push to affordable housing, smart cities mission and the Benami Transactions Act have made India an investor friendly destination for the Real Estate Market. Government of India has taken several initiatives to encourage the development in this sector. This sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. It is also important to note that the real estate developers have been instrumental in changing the face of India through building state-of-the-art infrastructure, buildings, townships, shopping malls which are spread all over the country.

Real Estate Market is poised to benefit from the governments policy and recent push has been towards reforms in the sector, speedy completion of several infrastructure projects, emphasis on affordable housing & enhanced usage of technology. Economic forecasts paint a positive story across private as well as public sector enterprises. The RBI survey of professional forecasters (August 2018) indicates that GDP is likely to grow at 7.4% in 2018-19, up from 6.7% in 2017-18 and is expected to accelerate further in 2019-20 on the back of support from private consumption and investment. Apart from the macro-economic indicators, real estate markets indicate overall stable growth in the medium term residential market, the key beneficiary of big bang reforms - RERA and GST - will be driven by increased transparency, consolidation and a huge push to affordable housing. We can see that almost every real estate participant wishes to partake from the affordable housing pie, because that is where the future growth story lies.

We had limited new Launches this year as projects at advance stage of construction and nearing completion were given priority for completion. Construction of commercial complex in ‘F Block, Sushant Lok-II, "Florence Triangle" has not progressed much where Casting of LGF Roof Slab (Part ‘A & ‘ B "), Under-Ground Water Tanks, Pump Room Area and STP Roof Slabs have been completed. Construction of Sewerage Sump in ramp area has also been completed. Construction of Premium Floors which are high-end four Bed Room independent floors, which were launched in "F" Block, Sushant Lok-II are also going on at the desired pace. Its R.C.C frame structure and brick work has been completed. Plaster work, Plumbing & Electrical conduiting work is completed in all the units. Fixing of doors & window frames has also been completed. Internal plaster and POP cornice work has also been completed in some units.

Commercial complex-"Boom Plaza" Situated in Sushant Lok-III is gradually getting new business outlets and good brands are trying to occupy the available space. It has consistently gained popularity and it is expected to do well in near future, being very near to new developing sectors of south Gurgaon. Local residents are happy with the products available in the commercial complex and many new clients are ready to start their business now "Club Florence" which is situated in Sushant Lok-II is doing well and the confidence of the old members has been regained with improvement in services and overall activities planned in the calendar year. Booking by members is on the increase and banqueting activities have also considerably increased. Efforts to increase Club membership & participation from corporate houses are being constantly done. Indoor sports facilities are gaining popularity with our new members, who are regularly participating in the activities. Members keenly await and want to be part of the scheduled events in the club. Operations of areas including Guest rooms, Banquet Hall, Cards room, Billiards room, Table tennis room etc are being taken care by our Hospitality team. Members are actively participating in the health Club initiatives and activities proposed and held in our Health Club building, which are held under proper guidance and supervision of professional trainers. Other regular activities like Annual Runs, plantation drives, Health Check-ups, Environmental based competitions for Children, Tambola, have become a regular part of our Club now Group housing residential project in Ansal City, Kochi by the name of "Florence Heights" has been completed and many clients have moved in till date. This Eleven storey Group Housing residential complex has a total built-up area of approx. 1,00,000 sqft and it has come-up very well with water front on two sides. Association of the Residents of the Complex has also been formed who are taking active part in managing the affairs themselves. Development works in area beyond Thodu (river let) in the main Township Project has also started where we are proposing to construct towers for the mid segment of the society. Plans have been prepared and are ready for submission. Construction work in second phase of "City Homes" Project, which are smaller flats of approx. 1,000 sft area is also in progress. RCC work for Over Head water Tank(OHWT) and machine room roof slab has been completed in plot No-174. External plaster, Wood work, Internal electrical plumbing, waterproofing etc is in advance stage and nearing completion. Clients have also started constructing their own Villas & Houses. Sale of balance plots is also expected to pick- up now and certain restrictions due to some regulations with respect to building plans have been taken-up and cleared with the authorities. Measures for procurement of balance land within Ansal City are also being taken. Plans for developing a club building at the entrance of Ansal city has also been freezed and Submission drawings are being made ready. Augmenting the existing Club facilities at "Ansal Riverdale" is still under consideration which can help in increasing the foot fall in our Riverdale Club. Handing over of Roads to Municipality is also under consideration.

"Florence Apartments", a Group Housing project on collaboration basis at Jammu has been completed. Eighty One (81) members have registered their properties with the authorities and Seventy (70) families have already shifted into new flats. External electrification works has been completed with 600 KW permanent electrical load sanctioned, tested and commissioned. Construction of Over Head water Tank (OHWT) has been completed while as LT Panel & DG set (160 KVA) has also been commissioned. Sewage Treatment Plant(STP), Pump Room and Swimming Pool are all functional. Clearance from Pollution control board is pending.

Development works in Project titled "Ansal City- Amritsar", Punjab, which is spread over an area of about 70 acres has been completed. Civil works of STP(Phase-I) and construction of U/G water tank has also been completed. Twenty Four (24) nos. of Units have been handed over to clients. Offer of Possession for four hundred seventy three(473) plots have been sent to customers. Street poles and Installation of HT/LT equipment has also been completed. Development of Park No 3 and cricket ground completed while development work for park No 5 & 6 is under progress. Development works for making Hockey field operational are also in Progress. Individual plot owners have also started constructing houses on their respective plots. Construction work on sample Villas (2 Nos) & Royal Villas (3 Nos) have been completed, while for Seven nos of Royal villas it is under progress. Part completion certificate has been received from Competent Authority (PUDA).

For Group Housing residential project namely "Florence Estate" in Amritsar Construction of Site office and Sample flat has already been completed. Demarcation and Zoning has also been approved. This project is spread over an area of 17 acres(Approx.) of land and development works are to commence shortly.

In "Florence City" Project Pathankot, Construction of two Sample villas have been completed. Zoning Plans are already applied for approval. Cost estimate of bridge has been received and part payment has already been made to the Authorities. External public health services like sewerage and drainage work have started while work for electrification, road and horticulture work is in progress. Construction of villas is in full swing.

Township project namely "Ansal City", in Jaipur, Rajasthan has a total site area of approximately one hundred(100) acres. Linking of scattered land is being explored and it is being negotiated with the parties. Govt. has abolished 90(B) and has changed it to 90(A) which pertains to sanction of the Project.

Revised Layout plan of the scheme has been approved for another township Project in Jaipur titled "Florence Town" which is on One hundred fifty(150) Acres of land. It is a Joint Venture Project situated on Phagi Road, Jaipur and the collaboration is with M/s. JKD Pearl Developers. Patta Camps by JDA have been organized for "A", "B", "C", "E" & "F" Blocks. Electrical scheme in block "B" & ‘C has been completed, while it is in progress in Block "A". Roads have been laid upto WBM level in Block "B". Carpeting work in block "A" & "C" is completed. Main park has been developed and Horticulture work in other areas is also in progress.

"Ansal Basera City", Jhansi, UP is a Township project spread over an area of Approximately 80 acres of land for which development works are in full swing. Three Nos of Imperial Villas have been approved by JDA. Structural, Brick-work and plaster work have been completed while finishing work is in progress in two Villas. The revised estimate for External Electrification scheme and Electric load has been submitted to UPPCL. With reference to EIA approval, SEIAA has de-registered the project due to violations of EIA rules. Thereafter the case was represented to MOEFF and a personal hearing on 16th January 2018 the committee constituted by MOEFF on cases of violations directed to inspect the site. The representative of regional office had visited site on 24.12.2018 and report has been submitted to MOEFF. Now, the case has been heard in SEAC on 30.04.2019 and TOR issued. The project has also been registered under RERA with Real Estate Regulatory Authority.

"Ansal Basera Estate", Jhansi, UP, is another Row Housing project on Gwalior road for which we have constructed high-end Villas.Under ground water Tank(UGWT) is now operational. Electrical sub-station has also been energised and is operational now Release of balance load for three Sub-Stations has been approved from the Electrical department. STP has been installed and ready for operation. Balance development works like boundary wall , rain water harvesting and culvert have been started. Building plans of all plots have been sanctioned. Building plan for Club Building and one commercial plot have also been submitted to JDA for approval. Application has been processed and Submitted to JDA for Completion Certificates of eighty one (81) Nos Villas and it is being regularly pursued with JDA, Jhansi. Possessions to ninety Villa owners have been given and three Villas are ready for possession.

A Collaboration project namely "Ansal Aditya Aryan Vatika", Gwalior had been planned for development of Farm Houses and is spread over an area of approx. 150 acres. Routine maintenance works for horticulture and landscape at main entrance gate/ site office and sample cottage is being completed. Work held-up due to some legal issues regarding the purchase of patta land, which are currently going-on in supreme court.

A Group Housing residential project in SADA, Gwalior, MP had been allotted through competitive bidding. State Government had sent reply on representation and denied to approve the conceptual plan as it was submitted along with the financial bid. Our company has filed a writ appeal in the M.P High Court to set aside the cancellation order by SADA and has allowed us to develop the Project as per the original conceptual plan submitted. Group Housing / residential plots of 41.94 acres were allotted through competitive bidding to Ansal Buildwell Ltd by SADA, Gwalior. Court has admitted the writ appeal and asked the State to file the reply, which is still awaited.

"Ansal Akshat City" a plotted colony has been planned in Maharajpura, Gwalior, MP. It is spread over an area of 80 acres. Application / Proposal for Exchange of Government Land has been re-directed by Commissioner to Collector for Land report and it is pending with Tehsildar. Application / Proposal for Exchange of Government Land has been re-directed by Commissioner to Collector for Land report and it is pending with Tehsildar. This is to be forwarded for approval of State Government. Demarcation, possession and other related issues are under process with Farmers and the concerned revenue department. Fencing of Land is being completed.

"Ansal Crown Heights", is a Joint Venture Group Housing residential Project in Sec-80, Faridabad with M/s Crown Group, Faridabad. External electrification and Fire fighting work for Phase-I are under Progress. Presently three contractors are working on the Project. Licence of the project has been revalidated upto 17.09.19 and Building plans of all towers have been re-validated upto 6.12.2019.Structure work of EWS block-B (terrace floor) has been substantially completed. NOC from pollution board, Haryana has been received. The application for completion certificate of Phase-I comprising of Tower nos. 7,8,9,10, convenient shopping and EWS has been submitted to T & CP Chandigarh. Proposed date of completion for Phase-I is 31st Dec 2019 while as for Phase-II it is 31st Oct 2020.

"Royal Heritage" the PMC project with M/s Pivotal Group, Faridabad is a Group Housing Project in sector-70, Faridabad. Construction for Tower no. 4, 5, 6, 7, 8, 9,10,11,12 & 12-A has been completed in all respects and handing over has already started. Repair work has been completed in Tower No14,15 & 16.Laying of tiles is in progress in tower No-18 while internal and external plaster work is in progress in Tower no. 1,2,19 & 20. Horticulture, Sewer, Storm water drainage and Road works are in Progress at main entrance.

For the "Meadows Project" Kullu which we had signed as a Project Management Consultancy (PMC) with M/s Pacific Group there is no further progress and no construction work is going on at site. Land owners i.e M/s Kuldevi Infrastructure Pvt. Ltd have initiated necessary legal action against the Developers( M/s Pacific Group) in this regard.

The work on our Sub Contracted Spillway Project at Thoubal, Manipur has been completed in spite of continuous instability & insurgency. Spillway work has been completed. Gantry Crane has been erected. All four radial gates are working mechanically. For intake and water conductor system, work for hoisting arrangement is pending due to non payment of bill from IFCD. Work will be completed only after receipt of payment. For payments arbitration case is already going on in Court.

For the already completed C-Dot Project two sets of claims are under arbitration. Arbitrator has been appointed for setting aside the claims for the secretariat building/complex at Dispur, Guwahati. Statement of facts and claims are to be submitted to the arbitrator tribunal.

Claims have also been submitted to our client (NEIGRIHMS) for the construction of Housing complex in Shillong. Arbitration is under process and hearing for Bank Guarantee case is also scheduled.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company is putting in place standard operating procedures specific to the various processes of business. The effectiveness of internal control mechanism is reviewed by independent Internal Auditors at regular intervals.

The Company has formulated a Policy framework on internal control for identifying and rectifying internal control weaknesses and to monitor the same and report to corporate management. The Company has Audit Committee consisting of independent directors having expert knowledge and vast experience in the field of their area of operations. They do periodic review accounting records and various statements/Accounts prepared by the accounting department. They advise time to time to the senior management of the Company and interact with them.

During the year under review, four meetings of Audit Committee were held to review, inter alia, the internal audit/controls alongwith management comments and follow up actions thereon.

It reviewed, inter-alia the adequacy and effectiveness of the internal control systems and monitored implementation of Internal Audit recommendations.

Your Company has in place adequate Internal Control systems and procedures commensurate with the size and nature of business. These procedures are designed to ensure that:

• Effective & Adequate Internal Control environment is maintained across the Company.

• All assets and resources are acquired economically, used efficiently and are adequately protected.

• Significant financial, managerial and operating information is accurate, reliable and is provided timely; and

• All internal policies and statutory guidelines are complied with.

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that transactions are authorised, recorded and reported correctly.

The Board of Directors had appointed M/s Shailender K. Bajaj & Co., Chartered Accountants, 2E/45, Connaught Place, New Delhi-110 001 represented by Mr. Shailender Bajaj as internal auditors of the Company to effective internal control/audit to cover various risks as they will identify in the process of internal audit, monitor and advise Audit Committee/Board of Directors from time to time to take strategic steps to control them.

The Companys internal control systems are further supplemented by an extensive programme of internal audit by an independent department of competent executives and periodic review by Management.

The Company has clearly laid down policies, guidelines and procedures which form part of its internal control system.

PROSPECTS& FUTURE OUTLOOK

In 2018, developers largely focused on clearing existing inventory and adjusting to the new policy requirements. The increased transparency and accountability has created a more efficient environment which has found favor with both domestic and institutional investors. The stringent measures enforced by Real Estate Regulatory Authority (RERA) have erased out non serious players and only credible developers with proven track record are driving the market now This is expected to continue in 2019 as well and we will see established names further capitalize on their brand to strike joint development deals with smaller players.

Affordable and mid-income housing took centre stage in 2018 and this will continue to drive residential housing both in Metro and Tier 2 cities. There been an uptick of almost 15-20 percent with preference for ready to Move-in units owing to RERA and GST benefits. The massive push for improvement in infrastructure by the Government of India (GOI), including significant capital expenditure for roads, railways, development of smaller airports and expansion of schools and hospitals at the outskirts will benefit this segment further. This will provide better connectivity and have a multiplier effect thereby allowing developers to explore new projects in the peripheral areas of the cities at much cheaper prices.

The commercial space in real estate is expected to remain the most buoyant force in the sector. Growing demand for Grade A office spaces across major cities, including new sectors like co-working spaces that is further expected to push the demand for commercial properties. The governments push towards promoting start-ups and developing smart cities will create a lucrative environment for businesses to work and expand. Developers focus will further shift to customer centricity through the use of technology and digital platforms in the coming year. Social Media like YouTube videos, twitter feeds and similar trends have also become a game changer for the real estate sector. This will help the companies to customize as per the ever evolving needs of the end user and prospective buyers.

OPPORTUNITIES AND THREATS

The long term view on the Indian Real Estate Industry is positive, as fundamental demand drivers such as increasing urbanization, favourable demographics, growth of the service sector, and rising incomes are still intact.

Demand-supply gap in affordable housing exists, with demand fuelled by tax incentive and growing middle class with higher savings. Increasing demand for commercial and office space especially from the rapidly growing Retail, IT and Hospitality Sectors etc., also exists.

Real estate business of the Company is dependent on the performance of the real estate market in India. Fluctuations in market conditions may affect capacity of the Company to sell projects at expected prices, which could unfavorably effect our revenues and earnings.

The Company may not be able to increase the prices of its products in order to pass costs on to its customers in the background of inflation, and its profits might decline.

Potential limitations on the supply of land could reduce revenues of the Company or negatively impact the results of its operations

The business is subject to extensive statutory or governmental regulations. Change in the business policies of the Government, may have effect on the prospects of the business.

Work stoppages and other labour problems could adversely affect the business.

Sanctioning process through the authorities is slow and time consuming. Fluctuations in market conditions may affect our ability to sell our projects at expected prices, which could adversely affect our revenue and earnings. Potential limitations on the supply of land could reduce our revenue or negatively impact the results of Companys operations.

RISK AND CONCERNS

A big risk which the developers are facing is price risk. Real estate price cycles have the maximum impact on the margins of the developers, because land costs account for a large portion of the constructed property. The other risk to which the developers are exposed is demand risk which indicates the ability to sell properties based on location, brand, track record, quality and timelines of completion. Most real estate developers try to address this risk by undertaking market surveys in order to assess the demand for their properties. There is Finance Risk also. Low availability of funds is also a major risk for real estate industry. Uncertain interest rates lead to uncertainty in the real estate market. Demonetisation may dampen the growth rate of demand for housing units. Change in Government Policies including change in Tax structure will also affect the Progress of the Real Estate Industry.

The impact of the Real Estate (Regulation and Development) Act, 2016 is very uncertain. It is very difficult to say how the Real Estate Market and consumers will react upon it.

Although major initiatives in the infrastructure of road and transportation have been made, yet the availability of Power still needs the attention of policy makers.

The lack of uniformity in the regulatory environment concerning the real estate, as also the availability of quality manpower, and reliable databases on industry, are concerns that need to be addressed for attracting FDI inflows in the industry.

CAUTIONARY STATEMENT

Statements in this report on Managements Discussion & Analysis are based on certain assumptions and expectations of future events. Some statements may be consistent and repetition of the earlier years as there was no change in the circumstantial positions. Actual results could, however, differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global as well as domestic demand-supply conditions, raw material cost & availability, changes in Government regulations and tax structure, economic development within India and world-wide and other relevant factors.

Registered Office:
118, Upper First Floor, Prakashdeep Building
7, Tolstoy Marg, New Delhi-110 001 For & on behalf of the Board
ANSAL BUILD WELL LTD.
(GOPAL ANSAL)
Dated: 30th May, 2019 Chairman cum Managing Director
Place: New Delhi