Art Nirman Ltd Management Discussions

GLOBAL OVERVIEW:

The global economy maintained a stable growth trajectory in CY2024, recording a GDP expansion of 3.3%, despite persistent headwinds from geopolitical tensions, trade disruptions and evolving monetary policy landscapes. Headline inflation moderated to 5.8% in CY 2024 from 6.7% in the previous year, reflecting the continued impact of tighter monetary policies and easing commodity prices.

Central banks in major economies have initiated a gradual shift toward monetary easing, with initial rate cuts introduced in late CY 2024. Further reductions are anticipated in CY 2025, which could enhance liquidity and support a recovery in private sector investment activity. While global manufacturing exhibited

signs of moderation driven by supply chain realignments and shifting demand, industrial output remained resilient. Growth was underpinned by robust activity in construction, utilities and essential services. Looking ahead, global GDP is projected to grow at a steady pace of 2.8% in CY 2025 and 3.0% in CY 2026.

The risks to global economic growth are balanced, with potential upside from quicker disinflation, slower withdrawal of fiscal support measures, robust economic expansion in China, and advancements in supply-side reforms. Conversely, downside risks include spikes in commodity prices due to geopolitical or weather-related disruptions, ongoing core inflation necessitating tighter monetary policies, potential slowdowns in Chinese growth, and potential disruptions from abrupt fiscal consolidations.

INDIAN ECONOMY:

India remained a key driver of global growth and demonstrated strong economic resilience, recording a GDP growth of 6.2% in F.Y.2024.25. Domestic demand remained strong, supported by stable private consumption and increased capital investments. The Reserve Bank of India (RBI) maintained a vigilant stance on inflation while supporting growth. Inflation moderated to 3.3%, supported by stable food prices, improved supply chain efficiencies and proactive monetary interventions.

Despite prevailing global uncertainties, including geopolitical risks and financial market volatility, Indias strategic initiatives such as diversifying export destinations, strengthening domestic manufacturing capacities and advancing structural reforms are positioning the economy more firmly within global value chains. These efforts provide a resilient foundation for sustained and broad-based growth.

L REAL ESTATE SECTOR:

1 India is undergoing rapid urbanisation, with 600 Million people-40% of the population-expected to reside in cities by 2036. Strong real estate demand is being driven by the expansion of metro

networks, upgrades to road infrastructure and overall improvements in connectivity. This urban shift is fuelling strong real estate demand, necessitating increased investment in residential, commercial and industrial infrastructure, positioning the sector for sustained growth.

The increasing adoption of Real Estate Investment Trusts (REITs) is driving sustained growth in the commercial real estate sector. Simultaneously, the residential market continues to gain momentum, recording its highest sales volume in 11 years in the first half of 2024, with total sales across the top eight cities rising by 11% year-on-year.

Commercial real estate trends show a strong focus on sustainability, flexible workspaces and technology integration. The demand for office space continues to rise, particularly in cities like Bengaluru, Hyderabad and Pune, driven by the booming tech industry. With the rapid digitalisation of the economy, data centre construction has gained momentum. Investments are being channelled into building state-of-the-art facilities to support the growing demand for cloud services, data storage and processing capabilities.

OPPORTUNITY AND THREATS:

> Opportunity:

a) Housing Demand:

- A combination of economic growth, increasing income levels, and the perception that housing prices are stabilizing has led to a notable uptick in the demand for homes.

- Hybrid working models will also continue to drive demand for larger homes.

- Employers offering flexible work options continue to be a significant factor in this trend, as it allows employees the freedom to live further from the office, thereby boosting demand for residential properties in various segments.

b) Consolidation:

- The highly fragmented Indian real estate sector has been in a prolonged consolidation phase from the past few years and the pandemic has been one important factor pushing weaker players out of business. The disruptions in the real estate sector have ensured that no new player has an easy entry into the sector. As the sector moves towards fewer big players in each region, the consolidation presents a lucrative opportunity for the existing real estate developers to cater to the rising housing

i demand.

c) Digital Real Estate Sales:

- Digital marketing tools have ascended to the throne in todays marketing scene. Digital marketing tools are required for real estate enterprises as well, regardless of the industry.

- Digital marketing tools have ascended to the throne in todays marketing scene. Digital marketing tools are required for real estate enterprises as well, regardless of the industry.

- Emerging tools such as virtual reality, augmented reality, Al powered chatbots are being extensively used to establish personalized services with prospective customers. Going ahead, it will be imperative for the developers to adapt to a tech-sawy future and the proportion of real estate business generated online is expected to only rise further.

d) Affordable Housing:

- The segment of affordable housing remains a pivotal area for developers and a primary focus for the government. As per the new Union budget, a housing for Middle Class scheme is to be launched to encourage the middle class to buy their own houses.

- The Pradhan Mantri Awas Yojana (PMAY) is close to achieving 3 crore houses, additional 2 crore houses are targeted for the next 5 years, as discussed above.

- This shows that the affordable housing market is projected to experience a surge in demand, bolstered by an anticipated economic revival and increasing income levels.

> Threats:

a) Competition: In the course of its business the Company is exposed to stiff

competition from other developers in the market and from Asian and global buyers

b) Regulatory Hurdles: Real estate sector is highly regulated sector any unfavorable changes in the government policies and the regulatory environment can adversely impact the performance of the sector.

c) Shortage of Labour and Technology: Being the second largest employer in the country, the construction sector is heavily dependent on manual labour. During the pandemic, the sector was badly hit due to labor availability issues which affected the project completion timelines. Hence, there is a need for development of technologically less labour intensive alternative methods of construction.

e) Others: it is exposed to certain market related risks, such as increase in interest rates and foreign currency rates, customer risks, global wars.

SEGMENT / PRODUCT WISE PERFORMANCE:

Company operates into single segment of construction of various Residential and Commercial schemes.

> Company has also got works contract from Art Club Private Limited for Club Babylon, by this contract company will enter in new division of construction segment apart from houses and shops.However the club is not owned by the company but experience of club construction will provide immense future opportunity for the company and also will add noted recognition to the company inindustry. The club is now fully operational with full luxurious facility for the members and guest. This year till the date company gave 90 rooms for the use to the club.

> Company has entered into development contract to redevelop the old society and build new 104 residential flats and 45 commercial shops with the name of New Ashiyana Apartment Co-Op. Housing Society Ltd. Which situated at Bhimjipura, New Vadaj, Ahmedabad, Gujarat. But company revised the development agreement with Vishnudhara Developers Up and also revise the planpass and now the project is to construct 86 commercial + 6 flat (flat for old memeber) with the name New Ashiyana Apartment Co- Op. Housing Society Ltd. 75% work of the whole project is completed till the date.

> Company has entered into work contract for the development of Shree Vishnudhara Essence for construction of 160 residential flat which is situated at Thaltej, Ahmedabad. Almost 75% work is completed.

> Company has entered into work contract for the development of Omkar Enclave for construction of 160 residential flat which is situated at Ranip, Ahmedabad. Almost 95% work is completed till the date, will get BU till the September, 2025

> Company has entered into redevelopment contract for the project name 24 HIG Shree Vishnudhara Nidhi Apartment, Naranpura, Ahmedabad. This project taken by the company with the government tender. This work is on PPP (Public Private Partnership) base. Out of the total work almost 10 % work completed. Out of the total units, FSC (Free sale component) is 36 unit residential and 18 units commercial also get RERA number. Out of total FSC k unit 7 units already sold by the company.

Following Projects are on starting phase:

> Company has entered into redevelopment contract for the project name 100 HIG Shree Vishnudhara Nidhi Residancy, and Shree Vishnudhara Nandi Apartment Ahmedabad. This project taken by the company with the government tender which pass on October, 2023. This work is on PPP (Public Private Partnership) base. It covered 11022.66 sq. mtr. Land for construction of residential flats and shops. 100 HIG covered 236 unit of 3 BHK Luxurious Apartments and 63 shops. Out of the total units, FSC 136 unit of 3 BHK Luxurious Apartments and 3 unit of shops.

And company have applied for plan pass.

While Shree Vishnudhara Nandi Apartment which is part of 100 HIG covered 70 residential 4 BHK luxurious Apartment. And company have applied for plan pass.

OUTLOOK:

FY 2024-25 will be known for its resilience. Post-pandemic, there has been a notable shift in the operational landscape of developers, emphasizing responsiveness to end-user demand and embracing innovation and digital transformation. We anticipate that FY2025-26 will sustain this positive sales momentum, underpinned by a robust structural framework, consistent demand, and housing loan rates that, while somewhat elevated, remain relatively affordable.

RISKS AND CONCERNS

The Real estate market is inherently a cyclical market and is affected by macroeconomic conditions, changes in applicable government schemes, project cost, consumer financing and liquidity etc. Your Company has taken sufficient care to maintain quality of the construction which differentiates company products from market. Flowever any economic downturn in the years to come, may adversely impact the business.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has in place adequate internal financial controls with reference to financial statements. The Board has inter alia reviewed the adequacy and effectiveness of the Companys internal financial controls relating to its financial statements.

DISCUSSION ON FINANCIAL PERFORMANCE WITH REFERENCE TO OPERATIONALPERFORMANCE:

Your Company has achieved total revenue of INR 2738.52 Lakh/- The aggregate revenue of the Company decreased compared to PY 2023 24.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONSFRONT ETC

There is no major development in the Human Resources Employed by the Company.

DISCLOSURE OF ACCOUNTING TREATMENT

During the year, the Company has not adopted any accounting treatment which different from that prescribed in an Accounting Standards.

DETAILS OF SIGNIFICANT CHANGES fl.E. CHANGE OF 25% OR MORE AS COMPAREDTO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS.ALONG WITH DETAILED EXPLANATIONS THEREFOR. INCLUDING:

Particular	FY ended on 2025	FY ended on 2024	changes between current &past	Explanation if changes more than 25%
Debtors /Turnover	0.09	0.10	-6.47
Inventory/T urnover	0.76	0.74	3.48	“
Interest Coverage Ratio (EBIT/Int Exp)	2.88	3.31	-12.76
Current Ratio (Current Assets/curre nt Liability)	5.57	3.99	39.68	Major change in Inventory and loan in CA
Debt Equity Ratio (total Liabi/total equity)	0.48	0.08	484.82	Borrowing and other non current liabilities
Operating Profit Ma profit(EBIT)/ sales)	11.13	4.96	124.40	Interest exp increased and profit increased
Net Profit Margin (%)(net profit/sales	7.28	3.44	111.63	Sale decreased and profit increased