Arvind SmartSpaces Ltd Management Discussions

Global economy

OverView: Global economlc growth weakened from 3.5%

In 2022 to around 3.1% in 2023 and this may have been worse but for growth from Asia, which was marked by a weaker-than- expected recovery in China and a better than expected growth in India.

The global economy was marked by a sustained weakness in USA, Britain and Japan entering a recession and most economies of Europe grappling with high energy costs, weak global consumer sentiment on account of the Ukraine-Russia war, and the Red Sea crisis resulting in higher logistics costs. A tightening monetary policy translated into

increased policy rates and interest rates for new loans.

The growth rate in advanced economies decelerated to 1.6% in 2023 but is projected to gradually increase to 1.7% in 2024 and further to 1.8% in 2025. This growth trajectory will be tempered by a modest slowdown in emerging market and developing economies, which are anticipated to decrease from 4.3% in 2023 to 4.2% in both 2024 and 2025. Global ?nflation is expected to decline steadily from 6.8% in 2023 and 5.9% in 2024, due to a tighter monetary policy aided by relatively lower international commodity pnces. Core inflation decline is expected to be more gradual; inflation is not expected to return to target until 2025 in most cases.

The US Federal Reserve approved a much-anticipated interest rate hike that took the benchmark borrowing costs to their highest in more than 22 years.

The volume of world merchandise trade is expected to increase by 2.6% in 2024 and 3.3% in 2025 after falling 1.2% in 2023. However, significant risks are on the horizon, including regional conflicts, geopolitical tensions, and economic policy uncertainties, all of which could have a considerable impact on this projection. In terms of value, the merchandise exports experienced a more pronounced decline, dropping by 5% to USD 24.01 Trn. Conversely, there was a more positive trend in commercial services exports, which increased by 9% to USD 754 Trn, partially offsetting the downturn in goods trade. The cost of Brent crude

oil averaged USD 83 per barrel in 2023, down from USD 101 per barrel in 2022, with crude oil from Russia finding destinations outside the European Union and global crude oil demand falling short of expectations.

Global equity markets ended 2023 on a high note, with major global equity benchmarks delivering double-digit returns.

This outperformance was led by a decline in global ?nflation, slide in the dollar index, declining crude and higher expectations of rate

cuts by the US Fed and other Central banks.

Outlook: Asia is expected to continue to account for the bulk of global growth in FY24-25. Inflation is expected to ease gradually as cost pressures moderate; headline inflation in G20 countries is expected to decline. The global economy has demonstrated resilience amid high inflation and monetary tightening, growth around previous levels for the next two years

(Source: World Bank).

Regional growth (%)	2024	2023
World output	3.1	3.5
Advanced economies	1.6	2.5
Emerging and developing economies	4.3	3.8

Performance of major economies, 2023

Indian economy

Overview: The Indian economy was estimated to grow 7.8% in the 2023-24 fiscal against 72% in FY22-23 mainly on account of the improved performance in the mining and quarrying, manufacturing and certain segments of the services sector. India retained its position as the fifth largest economy. As per the IMF, India is likely to become the third-largest economy in 2027 (in USD at market exchange rate) and it also estimated that Indias contribution to global growth will rise by 200 basis points in 5 years

In FY23-24, the CPI inflation averaged 5.4% with rural inflation

exceeding urban inflation. Lower production and erratic weather led to a spike in food inflation. In contrast, core inflation averaged at 4.5%, a sharp decline from 6.2% in FY22-23. The softening of global commodity prices led to a moderation in core inflation.

The nations foreign exchange reserves achieved a historic milestone, reaching USD 648.5 Bn as on April 5, 2024. The credit quality of Indian companies remained strong between October 2023 and March 2024 following deleveraged Balance Sheets, sustained domestic demand and government-led capital expenditure. Rating upgrades

continued to surpass rating downgrades in H2 FY23-24. UPI transactions in India posted a record 56% rise in volume and 43% rise in value in FY23-24.

Growth of the Indian economy

	FY21	FY22	FY23	FY24
Real GDP growth (%)	-6.6%	8.7	7.2	7.8 E

Growth of the Indian economy quarter by quarter, FY23-24

	Q1FY24	Q2FY24	Q3FY24	Q4FY24E
Real GDP growth (%)	8.2	8.1	8.4	8 E

As per the first advance estimates of national income released by the National Statistical Office (NSO), the manufacturing sector output was estimated to grow 6.5% in FY23-24 compared to 1.3% in FY22-23. The Indian mining sector growth was estimated at 8.1% in FY23-24 compared to 4.1% in FY22-23. Financial services, real estate and professional services were estimated to record a growth of 8.9% in FY23-24 compared to 71% in FY22-23.

Real GDP or GDP at constant prices in FY23-24 was estimated at Rs. 171.79 Lac Cr as against the provisional GDP estimate of FY22-23 of Rs. 160.06 Lac Cr (released on May 31, 2023). Growth in real GDP during FY23-24 was estimated at 73% compared to 72% in FY22-23. Nominal GDP or GDP at current prices in FY23-24 was estimated at Rs. 296.58 Lac Cr against the provisional FY22-23 GDP estimate of Rs. 272.41 Lac Cr. The gross non-performing asset ratio for scheduled commercial banks dropped to 3.2% as of September 2023, following a decline from 3.9% at the end of March 2023.

Indias exports of goods and services were expected touch USD 900 Bn in FY23-24 compared to USD 770 Bn in the previous year despite global headwinds. Merchandise exports were expected to expand between USD 495 Bn and USD 500 Bn, while services exports were expected to touch USD 400 Bn during the year. Indias net direct tax collection increased 19% to Rs. 14.71 Lac Cr by January 2024.

The gross collection was 24.58% higher than the gross collection for the corresponding period of the previous year. Gross GST collection of Rs. 20.2 Lac Cr represented an 11.7% increase; average monthly collection was Rs. 1,68,000 Cr, surpassing the previous years average of Rs. 1,50,000 Cr.

Indias monsoon for 2023 hit a five-year low. August was the driest month in a century. From June to September, the country received only 94% of its long-term average rainfall. The agriculture sector was expected to see a growth of 1.8% in FY23-24, lower than the 4% expansion recorded in FY22-23. Trade, hotel, transport, communication and services related to broadcasting segment are estimated to grow at 6.3% in FY23-24, a contraction from 14% in FY22-23. The Indian automobile segment was expected to close FY23-24 with a growth of 6-9%, despite global supply chain disruptions and rising ownership costs.

The construction sector was expected to grow 10.7% year-on- year from 10% in FY22-23. Public administration, defence and other services were estimated to grow by 77% in FY23-24 compared to 72% in FY22-23. The growth in gross value added (GVA) at basic prices was pegged at 6.9%, down from 7% in FY22-23.

India reached a pivotal phase in its S-curve, characterised by acceleration in urbanisation, industrialisation, household incomes and energy consumption. India emerged as the fifth largest economy with a GDP of USD 3.6

Trn and nominal per capita income of INR 123,945 in FY23-24.

Indias Nifty 50 index grew 30% in FY23-24 and Indias stock market emerged as the worlds fourth largest with a market capitalisation of USD 4 Trn. Foreign investment in Indian government bonds jumped in the last three months of 2023. India was ranked 63 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Indias unemployment declined to a low of 3.2% in 2023 from 6.1% in 2018.

Outlook:

India withstood global headwinds in 2023 and is likely to remain the worlds fastest-growing major economy on the back of growing demand, moderate ?nflation, stable interest rates and robust foreign exchange reserves. The Indian economy is anticipated to surpass USD 4 Trn in FY24-25.

Union Budget FY24-25: The

Interim Union Budget 202425 retained its focus on capital expenditure spending, comprising investments in infrastructure, solar energy, tourism, medical ecosystem and technology. In FY24-25, the top 13 ministries in terms of allocations accounted for 54% of the estimated total expenditure. Of these, the Ministry of Defence reported the highest allocation at Rs. 6,21,541 Cr, accounting for 13% of the total budgeted expenditure of the central government. Other ministries with high allocation included Road transport and highways (5.8%), Railways (5.4%) and Consumer Affairs, food and public distribution (4.5%).

(Source: Times News Network, Econom?a Times, Business Standard, Times of India)

The Interim Budget for FY24-25 underscores a strong commitment to infrastructure development, with an 11.1% increase in capital expenditure outlay to INR 11.11 Lac Cr (3.4% of GDP). These allocations align with positive trends in the financial sector, including rebounding bank credit growth and a decline in bad loans as reported by the RBI in

December 2023, indicating the readiness of healthy financial institutions to support the capital expenditure cycle. The budget also maintains its focus on capital expenditure, directing investments towards solar energy, tourism, the medical ecosystem, and technology. This consolidated approach highlights the governments strategic priorities in promoting robust economic

growth and development through targeted investment in key sectors.

Indian real est?te sector review

According to Knight Frank, the real estate industry in India is estimated to have been valued at USD 330 Bn in 2024 and is anticipated to reach USD 1.04 Trn by the year 2029, growing at a CAGR of 25.60% during this time period.

The COVID-19 pandemic significantly impacted the countrys real estate market; however, there has been a notable recovery post-pandemic. Real estate prices have shown a steady increase, with the average annual growth rate rising from 2.3% in fiscal year 2022 to 3.8% in fiscal year 2023 and further to 4.3% in the first half of fiscal year 2024 with company micro markets

growing in excess of 7% YOY in last 2 years. . Despite this upward trend in prices and the impact of higher interest rates, there has been a continued uptick in housing sales and new project launches, underscoring the resilience of income recovery and positive sentiment toward future prospects in the real estate sector.

Industry leaders and analysts predict that the Indian residential sector will continue its robust growth trajectory into CY 2024.

It is forecasted that sales will increase by 10-15%, exceeding 300,000 units this year, driven by a significant pipeline of new projects. This surge is supported by numerous reputable developers securing land for future projects and expanding into new regions to

leverage the surge in demand for housing.

The year 2023 marked a historic peak, exceeding the highs of 2010 by 24-25%. Sales momentum from 2023 is anticipated to carry on, with an expected annual growth of 10-15%, potentially reaching between 310,000 and 315,000 units.

Going forward, the real estate sector is estimated to reach USD 1.3 Trn, or 13.8% of projected GDP, by fiscal 2034 and USD 5.17 Trn (175% of GDP) by 2047, as per Confederation of Real Estate Developers Association of India. The association has projected an additional demand for 70 Mn housing units by 2030.

Industry trend

City	Project launches			Sales
	FY22-23	FY23-24	Changes	FY22-23	FY23-24	Changes
Mumbai	92,611	92,579	0%	83,921	90,314	8%
NCR	64,836	63,056	-3%	58,833	60,137	2%
Bengaluru	45,387	52,188	15%	53,090	53,789	1%
Pune	40,960	44,190	8%	43,473	50,730	17%
Hyderabad	44,577	47,139	6%	32,353	34,130	5%
Ahmedabad	21,201	22,307	5%	14,182	16,561	17%
Chennai	15,648	16,670	7%	14,522	15,220	5%
Kolkata	12,035	18,573	54%	12,791	15,435	21%
Total	3,37,254	3,56,702	6%	3,13,165	3,36,316	7%

Based on a report by CBRE, the Indian residential real est?te market is witnessing a significant shift, with over 40% of the homes sold in 2023 being from newly launched projects. This indicates a move away from the earlier preference for ready-to-move or near-completion properties.

The sale of 40% of the newly launched homes in top cities highlights a growing confidence among homebuyers in investing in new projects. This shift can be attributed to the dominance of financially robust branded developers known for their reliable project completion history over the last two to three years, especially after facing project delays in the past.

During the year gone by, Indias premium and luxury real estate market witnessed remarkable activity, demonstrating a 75% year- on-year growth primarily fueled by strong demand for properties valued at INR 2 Cr or more. This specific segment emerged as an appealing investment avenue, particularly for high-net-worth individuals (HNIs) and non- resident Indians (NRIs) seeking portfolio diversificaron amidst global economic uncertainties.

In fact properties valued at INR 1 Cr. or more grew from 26% of the market in 2022 to 40% of the market in 2024.

In terms of regional performance, the Mumbai Metropolitan Region (MMR) led with 27% of the sales

amongst top 8 cities, amounting to 90,314 units in 2023. Bangalore ranks third in the list, contributing to 18% of sales, with an estimated 53,709 units. Amhedabad and Pune showed strongest YoY growth of 17%.

Additionally, the year saw at least 97 land transactions covering over 2,707 acres nationwide, with at least 72% of the land designated for residential projects.

Finally, the interest rate cycle has also peaked and is expected to come down in the current year in response to lower ?nflation. This will result in lower borrowing cost which is very positive for real estate demand.

(Source: Economic Times, Zeebiz, Anarock)

Key demographics Ahmedabad: According to the Knight Frank Affordability Index 2023, Ahmedabad is the most affordable housing market in India. This distinction can be principally credited to the governments urban planning efforts designed at accommodating the citys expanding population. Since 2006, the municipal area of the city has extended from 186 sq km to its present 466 sq km.

This enlargement has played a critical role in maintaining an equilibrium between population growth and the citys built-up area. Ahmedabad has majorly succeeded in avoiding the high congestion often seen in the city centers of other Indian cities, while enabling low-density planned development in its outskirts.

The city witnessed a 17% increase in housing sales in the fiscal year 2023 as compared to 2022. Moreover, it witnessed an 5% increase in housing project launches. New home launches increased by 5% YoY from 21,201 units in FY22-23 to 22,307 units in FY23-24, recording a decadal high for the city. While the city saw the share of home sales valued at Rs. 50 Lac and higher increasing, it saw a decline in office space transactions in 2023.

2023 has ended on a strong note for the Ahmedabad office market as occupier sentiments have improved, and their increased willingness to ink longer term commitments bodes well for the market. Office space completions grew by 34% from 1.4 Mn square feet in CY 2022 to 1.9 Mn square feet in CY2023. Rents have also grown by 4% YoY in tandem, pushed by the record volumes seen in H2 CY23. India-facing businesses remained the dominant occupier in the city. Strong thrust by both the state and central governments to transform Ahmedabad into an economic hub, coupled with its affordable real estate and widespread connectivity infrastructure, ensures Ahmedabad as an appealing choice for office occupiers

High affordability, comparatively low prices per square foot and an improving local economic environment remain compelling drivers for the Ahmedabad residential real estate market and should help support market volumes this year.

(Source: Times of India, Knight Frank India)

Bangalore: 2023 marked another year of unprecedented growth in Bengalurus real estate sector, with residential sales volume of 54,046 units, a nine year high.

The performance is fuelled by a focused approach towards sustainability, technological progress, and significant infrastructure enhancements. Upcoming infrastructure projects include the Blue Metro Line which will connect the central Silkboard to Kempegowda International Airport, the upcoming suburban rail corridors which will connect Bengaluru to Yelahanka and the peripheral ring road, which will encircle Bengaluru, alleviating traffic.

According to Knight Frank, in terms of ticket size, the sales as well as the launches were concentrated in the mid and the premium segment. During H2 2023, 49% of the sales were concentrated in the mid segment (INR 5-10 mn) and 41% of sales were concentrated in the premium segment (above INR 10 mn), a significant improvement from 28% of the total sales during H2 2022.

The rise of the gig economy and changing lifestyle preferences have made branded co-working and co-living spaces highly sought after among Bengalurus young professionals and students. These spaces offer community, affordability, and flexibility, catering to the preferences of Gen Z consumers. While the tech sector primarily dominates the citys employment profile, the economic activities of Bengaluru are diverse. The city hosts many non-tech industries such as life sciences, defence and aerospace, educational institutions, consulting firms etc. which keep the citys income growth well balanced, thus driving the consumption demand including that for real estate.

The traditional East and South East Bengaluru micro-market continued to lead sales comprising a share of 39% of the total sales in the city in 2023. This micro- market is connected to the large employment hubs located in Electronic City, Outer Ring Road (ORR) etc. Additionally,

the ongoing construction of the metro-lines, i.e., Yellow Line on the Hosur Road and the extension of Purple Line to Bannerghatta Road, enhances transport infrastructure of this micro-market. The North Bengaluru micro-market is an evolving and one of the rapidly growing clusters in the city. In 2023, the micro-market saw 22% of sales, with a sharp rise in the absolute volumes. The Blue Line metro connecting North Bengaluru via ORR is one of the fastest developing metro projects in the city and is expected to be operational from 2026. Further, the operation of Kempegowda International Airport Terminal 2 has led to infrastructure investment in this pocket.

Bengalurus real estate developers have been pioneers in creating mixed-use townships over the last two decades, blending offices, retail, leisure facilities, and sometimes even educational and healthcare facilities within residential communities. This model has revolutionised the

concept of work-life balance, offering residents the convenience of short commutes and onsite amenities. Bengalurus market has warmly embraced this model, with an increasing number of such developments on the horizon.

Pune: Punes progress as a flourishing Information Technology hub, coupled with the governments focus on infrastructure development, has positioned the city as a crucial housing destination. Several pivotal infra developments are taking place in Pune, including the ring road project, the expansion of the metro line, and the ongoing Pune international airport project.

In 2023, Punes real estate market displayed continued growth, achieving its highest-ever residential sales figures in the last eleven years. The total sales in the Pune residential sector surged 13% YoY to reach 49,266 units.

The most popular category among residential purchases was properties priced between Rs. 50

Lac and Rs. 1 Cr, accounting for 34% of all housing transactions by the years end. Properties in the Rs. 25 Lac to Rs. 50 Lac price range were also in high demand, making up 31% of the sales, falling merely short off the leading category.

Moreover, apartments sized between 500 to 800 square feet represented a significant 40% of the market share by the end of 2023.

(Source: Hindustan Times, Knight Frank India)

Mumbai: Mushrooming infrastructure advancements, characterised by the completion of the Worli connector and the trans-harbor link, and enhanced connectivity, attributed to metro expansion and several other local infrastructure developments is

contributing to Mumbais real estate dynamism.

The expanding metro network line, like MetroLine5 (Thane-Bhiwandi- Kalyan), which is linking Thane to Mumbai, and the improving social and physical infrastructure development are key factors driving buyer preference for Thane as a residential location.

The upcoming Navi Mumbai International Airport, slated to open in March 2025, is driving rapid growth in demand for property around Taloja, Old Panvel and Karjat.

The Mumbai Metropolitan Region (MMR) has experienced an acute rise in housing sales, as well as, completion of residential projects in CY 2023 despite the high home loan interest rates and a spike in property prices in the country. The

region also witnessed the highest completion of housing units in CY 2023 at 1,43,500 units. MMR saw a 40% jump in housing sales in CY 2023. A total of 1,53,870 houses were sold in MMR in CY2023 as against 1,09,730 units sold in CY2022.

(Source: Livemint, Anarock)

Mumbais rank has improved to 8^th on Knight Franks PIRIs index in 2023 as compared to 37^th rank in 2022 which is a phenomenal jump of 10% year-on-year growth in terms of annual luxury residential price rise. This jump has marked a place for Mumbai in the worlds top 10 leading luxury residential markets.

Growth drivers

Favourable macro-economic factors: The anticipation of Indias economy growing by 73% and increased investments signal a robust economic environment, fostering higher consumer confidence and spending power. This, in turn, boosts demand for real estate, as more people invest in housing and commercial spaces. Job creation from economic expansion enhances demand for office and residential properties. Consequently, the real estate sector benefits from heightened domestic and international investment ?nflows.

(Source: livemint)

Supported by a growing economy, the real estate sector in India has transitioned significantly.

Indias real estate sector enjoys forward and backward linkages with approximately 250 ancillary industries, and is one of the highest employment generators after the agriculture sector, accounting for 18% of the total employment. In terms of output, the market size of Indias real estate sector is currently estimated at USD 482 bn contributing 7.3% to the total economic output.. By 2034, Indias real estate sector is expected to expand to USD 1.5 tn contributing 10.5% to the total economic output.

(Source Knight Frank)

Most preferred asset class: In

2023, highest level of investments were made in the Indian real estate sector since 2020. The number for these investments stood at USD 5.4 Bn, which is 10% higher in comparison to 2022. The office segment continued to contribute the largest to the segment with 56% share in total inflows. Furthermore, the popularity of real estate as an investment option is expected to grow among the Indian population. Despite the growth and popularity of digital investment options, traditional asset classes like real estate continue to hold their ground in terms of demand and investment attractiveness.

(Source: Colliers, Business Standard)

Supportive demographics: The demand for real estate as the preferred asset class is primarily driven by millennials between 25 and 40 years of age. According to a survey, 52% of millennials chose real estate as their preferred asset class, higher than the other age groups. The Generation X cohort between 41 and 56 years follows with 30%, while Generation Z, aged between 6 and 24 years and Baby Boomers, aged between 57 and 75 years, make up 11% and 7%, respectively. This highlights the changing preferences of investors and underscores the need for real estate developers to cater to the requirements of millennials, who are showing significant interest in investing in real estate.

(Source: Anarock report)

Market up-cycle and strong baseline: The CY23 residential demand was at a 15yr high, leading to an all-time low inventory overhang and a decadal high average pricing growth of ~15% YoY, based on a report by Anarock. The real estate sector is anticipated to continue its upward trajectory, bolstered by shifts in lifestyle, a growing demand for modern facilities, and the

widespread adoption of flexible working arrangements. This growth is fundamentally fuelled by consumer demand, lending it a layer of durability. The introduction of new properties is further propelling this upward trend, backed by a solid underlying demand. Moreover, the process of industry consolidation is providing a boon to established firms, which is a double growth engine in addition to GDP growth.

Increasing investment:

Investments from Non-Resident Indians (NRIs) in Indias real estate sector are expected to account for 20% by 2025. This increase in demand stems from various factors, both financial and emotional. While sentimental attachment has traditionally spurred NRIs to buy property in India, the availability of world-class amenities within the country now provides substantial reasons for investing in quality real estate. This blend of emotional and practical motivations is reshaping the landscape of NRI investments in the Indian real estate market.

Consumer confidence: RERA (Real Estate Regulation and Development Act) played a crucial role in boosting the Indian real estate sector by promoting transparency and accountability.

It increased consumer confidence and encouraged developers to complete projects on time, which improved the overall quality of construction. RERA also streamlined the industry by ensuring that developers comply with regulations and preventing fraudulent practices. A survey conducted by Magicbricks revealed that 71% of homebuyers

prefer to invest in RERA-registered projects, indicating that RERA has become a crucial factor in homebuyers decision-making.

Fractional ownership: The market size of fractional ownership in India is projected to reach USD 8.9 Bn by 2025 from a valuation of USD 5.4 Bn in 2020. This, in turn, is anticipated to increase demand for real estate, as more people invest in housing and commercial spaces. Job creation from economic expansion enhances the demand for office and residential properties. Ultimately, the real estate sector benefits from heightened domestic and international investment inflows.

(Source: Knight Frank, NoBroker, Economic Times, Business Standard)

Union Budget allocation

The governments Interim Budget for FY24-25 includes plans to launch a new initiative aimed at assisting eligible middle- income individuals and families currently residing in rented accommodations, chawls, slums, and unauthorised colonies in purchasing or constructing their own homes. This move is expected to significantly boost housing availability for the middle-income group.

Additionally, efforts to enhance infrastructure and connectivity are anticipated to further stimulate demand for residential and commercial real estate nationwide. As per the announcement by the Finance Minister, construction of an additional 2 Cr homes will be planned over the next five years under the Prime Minister Awas Yojana - Gramin (PMAY Rural), with the budget for PMAY being

increased to Rs. 80,671 Cr for the fiscal year 2024-25, up from Rs. 79,590 Cr in the previous year.

Positive steps are taken forward towards a fostering growth in the housing markets with developments, which include the creation of two crore additional homes and the introduction of a housing scheme for deserving middle-income individuals. Moreover, the announcement of a Rs. 1 Lac Cr research fund for sunrise sectors is expected to spur private sector-driven innovations and increase the demand for commercial real estate.

An 11% rise in the infrastructure spending is projected to strengthen the growth of various real estate sectors across different regions. Plans to expand multi- modal corridor connectivity, including new railway lines and doubling the capacity of airports and ports, are likely to significantly

impact the real estate sector by enhancing accessibility and promoting development.

The expansion of Metro Rail and Namo Bharat initiatives is set to accelerate urbanisation, creating new micro-markets around metropolitan areas. Since its inception in June 2015, the PMAY mission has aimed to provide housing for all, offering central assistance to eligible families through states, Union Territories (UTs), and Central Nodal Agencies (CNAs).

The governments ongoing focus on affordable housing, infrastructure enhancement, and improved connectivity has begun to show results, with growth observed in tier 2 and 3 cities as well as in the outskirts of major metropolitan areas.

(Source: Economic Times)

Company overview

Arvind SmartSpaces Ltd (ASL), established in 2008 in Ahmedabad as a fully owned subsidiary of Arvind Limited, serves as the real estate division of the Lalbhai Group, a USD 1.7 Bn conglomerate. ASL focuses on developing residential spaces such as villas, apartments, and plots aimed at middle and high- income consumers. Its portfolio includes integrated townships featuring executive golf courses, villas, apartments, along with retail, commercial, and recreational facilities. Additionally, ASL selectively engages in commercial and industrial projects. As of the fiscal year FY23-24, ASL successfully completed projects totalling 4.9 Mn square feet, with ongoing projects amounting to 26.9 Mn square feet and future projects totalling approximately 43.5 Mn square feet.

Project overview

Arvind SmartSpaces Ltd is focused on the development of real estate projects in the residential, commercial and industrial segments. As of March 31, 2024, the Companys ongoing and pipeline projects are categorised into mid-segment projects (81%), premium/luxury projects (14%) and affordable projects (5%).

Companys strengths Strong promoter relationships:

Arvind SmartSpaces Ltd (ASL) benefits from its strong promoter links as it is integrated within the Lalbhai Group, which includes leading entities like Arvind Limited and Arvind Fashions Limited under the same brand umbrella. The parent companys ownership, ~50.4% of ASL, underscores its trust and investment in ASLs future. The presence of shared Directors across the companies Boards further cements this relationship, offering robust support to ASL.

Streamlined operations with low fixed costs: ASL has strategically kept its fixed costs minimal by

centralising essential operations as it delegated non-essential tasks and construction work to external parties. This approach is supported by a lean in-house team of approximately 400 employees and the execution of 68% of its projects through joint development efforts.

Credit rating enhancement:

ASLs creditworthiness has seen a positive shift, with Indian Ratings and Research upgrading its Long- Term Issuer Rating to IND A+/ Stable and assigning a positive outlook. This upgrade reflects the Companys strong financial collections, which have favourably impacted its pre-sales to net debt and net debt to working capital ratios. Thanks to robust internal cash flows and a reduction in debt, ASL is positioned to manage debts, paving the way for substantial growth.

Strong sales and steady cashflow

In the fiscal year 2024, Arvind SmartSpaces Limited (ASL) recorded a significant rise in its pre-sales, which rose to Rs. 1,107 Cr, supported by the sales of ongoing projects and the launch of new projects or additional phases. This enabled a net operating cash flow of Rs. 458 Cr.

Diversified geographic presence across varied ticket size

ASLs projects are moderately diversified in terms of ticket size and geographic presence. Of its current projects, 14% are luxury, 81% are mid-segment and 5% are for affordable housing. The Company has its key focus set on residential projects with a strong presence in Ahmedabad and Bangalore. During the year, ASL entered Surat with a ~Rs. 1,100 Cr horizontal multi asset township project. This will be the third city in Gujarat where ASL operates, apart from Ahmedabad and Gandhinagar. ASL is exploring opportunities for diversificaron in the Pune and Mumbai Metropolitan Region, a desire to expand beyond Ahmedabad and Bangalore.

Horizontal development

The pandemic and the shift towards hybrid work models have significantly altered peoples preferences in housing and real estate, with a growing demand for larger, independent homes that emphasise health and security.

This period also witnessed an increased desire to own land, offering homebuyers more control and flexibility, especially in the plotting sector where built-to- suit options have become more prevalent.

According CBRE, low density housing or horizontal developments namely Villas and Plotted development remain popular in premium category. Encouraged by the larger trend of flexible-work-environments, buyers are increasingly looking for spacious private living spaces, thereby driving the demand for plotted developments and villas. Key features of such developments include a deep focus on design, personal open areas, modern amenities, uncrowded recreational facilities, and adequate green landscapes - all confirming to the buyers emerging need to pursue a superior lifestyle.

Luxury real estate has long served as a coveted asset class for discerning homebuyers reflecting their aspirations and evolving lifestyle preferences.

Early primarily characterised by standalone bungalows in marquee locations, luxury real estate is now represented by branded horizontal developments (premium plots and villas), penthouses and sky villas within large townships.

The product is designed as a holistic amalgamation of premium customisations, robust infrastructure integrated with smart technology which seamlessly compliment the homebuyers multifaceted living. Contemporary horizontal development effectively addresses the desire for smart, secure,

luxurious living while also fostering a sense of community.

Developers face both opportunities and challenges in creating large horizontal developments, such as complex land acquisition and navigating regulatory hurdles. However, with a long-term perspective, these projects can offer substantial

returns through scale and development of new infrastructure.

Arvind SmartSpaces has been a pioneer in the plotting, villa, villament and township sectors since the pre-pandemic era, capitalising on the popularity of second homes in Ahmedabad. Following the pandemic, ASL has further cemented its position

with offerings designed to inspire, featuring amenities like golf courses and luxury clubhouses, etc. Arvind SmartSpaces is well-placed to capitalise on the growing interest in this real estate segment on account of its proven track record and innovative offerings.

The Arvind brand

The Arvind brand name carries significant recognition across the nation due to the Lalbhai Groups extensive history of over 120 years across a diverse range of industries such as textiles, apparel, advanced textiles, water management, omnichannel retail, telecommunications, and heavy industry. It operates as a USD 1.7 Bn conglomerate under professional management, the Arvind brand is well-regarded for its commitment to values, integrity, strong governance, and

corporate social responsibility. This reputation benefits Arvind SmartSpaces in numerous business activities, including forging joint development agreements, exploring new cities and markets, establishing business partnerships, and cultivating deeper connections with customers, service providers, partners, investors, and lenders.

Financial overview

Arvind SmartSpaces and its subsidiarles are primarily engaged in residential segment operating in and around Ahmedabad, Bangalore and Pune market. The Company is currently executing 21 projects through own land, joint ventures and joint development model. The Company successfully executed 12 projects till date, completing ~4.9 Mn sq. ft.

The financial year 2023-24 was a strong year for the Company marked by highest bookings, collections and new project additions while maintaining a robust Balance Sheet. In FY23-24, ASL registered a booking value of Rs. 1,107 Cr, a YoY growth of 38%, where the number of units sold stood at 1241 units. Bangalore bookings stood at Rs. 420 Cr, contributing 38% to the total annual bookings. Further, new launches continued to perform well in new micro markets. In FY23-24, ASL launched four projects successfully including Uplands 2.0 & 3.0, Forest Trails, Arvind Orchards and Rhythm Of Life, which contributed 71%

(Rs. 784 Cr) by annual booking value.

In FY23-24, ASL recorded its highest annual collection of Rs. 876 Cr, a YoY growth of 46%; highlighting the strong operational cycle of new sales, construction and delivery. During the year, Operating Cash Flows stood at Rs. 458 Cr as against Rs. 201 Cr last year. The net-debt equity ratio on a consolidated basis as on March 31, 2024 is (0.10) compared to (0.07) as on March 31, 2023. During the year, ASL consolidated revenue from operations grew by 33% to Rs. 341 Cr and Profit attributable to equity holders increased by 62% to Rs. 41 Cr.

FY23-24 was a historic year for the Company from a project addition perspective with a cumulative new business development topline potential ~Rs. 4,150 Cr* added during the year. ASL added four projects in Ahmedabad, and one each in Bengaluru and Surat.

? In Q1, ASL signed a 500 acre project in NH 47 South Ahmedabad with a revenue potential of ~Rs. 1 450 Cr. This was under 50% revenue share model

¦ In Q1, ASL signed a 204 acre project in Bavla, South Ahmedabad with a revenue

potential of ~Rs. 850 Cr* This was under 55% revenue share model. Projects Uplands 2.0 & 3.0 were successfully launched in Q2

? Further, in Q1, ASL signed an agreement with the subsidiary of Arvind Ltd under the Development Management (model to develop a 16-acre township at Moti Bhoyan with a revenue potential of Rs. 116 Cr

¦ In Q2, ASL acquired a new high rise project in Bengaluru with a top line potential of ~Rs. 400 Cr*. The project is spread across 4.3 acre and has a saleable area of 46 Lac sq ft. The project is acquired on an outright basis

? In Q3, ASL added new horizontal project in Ahmedabad spread over ~40 acre with a top-line potential of ~Rs. 250* Cr. The Rhythm Of Life project, was successfully launched in Q4

? In Q3, ASL entered Surat with a ~Rs. 1 100 Cr horizontal multi asset township project. The project is spread over 300 acres and signed under the joint development model with a 55% revenue share

Project portfolio

The description of all completed projects of the Company until the close of FY23-24 is provided below.

State	Project	Total Saleable (Sq ft)	Booked (Sq ft)	Unsold Inventory (Sq ft)	Booking Value (Rs. Cr)	Revenue Recognised (Rs. Cr)	"Collectons (Rs. Cr)	Average Price (Price till date) Rs. / Sq ft
Gujarat	Aavishkaar	5,45,468	4,16,465	1,29,003	117	109	112	2817
	Alcove	10,32,660	9,84,150	48,510	25	25	25	251
	Citadel	1,01,859	1,01,859	-	55	56	55	5,407
	Megaestate	59,180	24,994	34,186	8	8	8	3,265
	Megapark	5,01,222	4,61,484	39,738	27	27	27	575
	Megatrade	82,526	74,737	7,789	31	29	30	4,134
	Parishkaar /Trade Sq	9,15,809	9,15,809	-	254	254	254	2,776
Karnataka	Expansia	1,40,268	1,40,268	-	75	75	75	5,358
	Oasis	5,72,262	5,51,754	20,508	315	311	313	5,710
	Skylands	4,91,113	4,91,113	-	267	267	267	5,443
	Sporcia	5,01,491	4,99,990	1501	235	235	234	4,692
	Total	49,43,858	46,62,623	2,81,235	1,409	1,396	1,400	-

The description of all ongoing projects of the Company is provided in the table below:

State	Project	Total Saleable (Sq ft)	Booked (Sq ft)	Unsold Inventory (Sq ft)	Booking Value (Rs. Cr)	Revenue Recognised (Rs. Cr)	"Collectons (Rs. Cr)	Average Price (Price till date) Rs./Sq ft
Gujarat	Chirping Woods	13,39,092	11,07,653	231439	131	-	92	1186
	Forreste IV	29,58,846	23,98,781	5,60,064	343	29	287	1429
	Forreste 5	9,43,164	4,56,231	4,86,933	100	3	36	2,196
	Fruits of Life	17,45,853	15,05,286	2,40,567	146	-	112	967
	Highgrove	43,77,033	24,34,536	19,42,497	232	60	213	951
	Uplands 20 &30 Adroda	67,50,136	50,08,779	17,41,357	392	-	77	784
	Rhythm Of Life	7,98,858	6,08,490	1,90,368	70	-	1	1,150
	Uplands One	31,92,901	29,62,984	2,29,917	516	437	483	1742
	Uplands Two	12,89,128	10,73,841	2,15,287	327	57	244	3,043
Karnataka	Belair	4,69,620	3,72,275	97,345	236	-	174	6,350
	Edge	1,68,224	56,994	1,11,230	40	-	25	7,077
	Forest Trails (Sarjapur D)	8,52,129	2,24,435	6,27,694	100	-	29	7,070
	Orchards	5,70,200	3,12,763	2,57,438	163	-	21	2,673
	Greatlands	9,52,854	7,38,089	2,14,765	300	-	221	4,063
Maharashtra	Elan	1,34,952	61,588	73,364	43	-	38	6,941
	Total	2,65,42,990	1,93,22,725	72,20,265	3,139	586	2,053	-

Financial performance (Standalone)

Equity Share Capital	The equity share capital of the Company as on March 31, 2024, stood at Rs. 4,534.40 Lac compared to Rs. 4,531.20 Lac as on March 31, 2023.
Net debt-equity ratio	The net debt equity ratio of the Company as on March 31, 2024, was at (0.10) compared to (0.07) as on March 31, 2023.
Revenue	The revenue from operations of the Company was Rs. 15,07787 Lac in the FY23- 24 against Rs. 11,72 7 81 Lac in FY22-23, an increase of 29% over previous year.
EBITDA/Operating Margin	EBITDA margin during the financial year FY23-24 stood at 50% compared to 46% for the previous financial year.
Finance Costs	Interest and financial charges for the financial year FY23-24 was Rs. 572.69 Lac compared to Rs. 556.64 Lac in the previous year, marginal increase of 3%.
Net Profit	Net profit available for appropriation for the year FY23-24 stood at Rs. 5,513.34 Lac compared to Rs. 3,82731 Lac in the previous year.
Earnings Per Share (EPS)	The Companys Basic Earnings Per Share (EPS) during the current year was Rs. 12.17 compared to Rs. 8.71 in the previous year and Diluted EPS is Rs. 12.05 as compared to Rs. 8.41 in the previous year.
Debtors Turnover	The Companys debtors turnover ratio during the current year was 66.26 compared to 73.35 in the previous year.
Inventory Turnover	The Companys inventory turnover ratio during the current year was 0.23 compared to 0.33 in the previous year.
Interest Coverage Ratio	The Companys interest coverage ratio during the current year was 1.37 compared to 0.91 in the previous year.
Current Ratio	The Companys current ratio as on March 31, 2024 was 1.12 compared to 1.07 in the previous year.
Debt-Equity Ratio	The Companys debt equity ratio as on March 31, 2024 was 0.11 compared to 0.10 in the previous year mainly on account of net increase in term loan by INR 1,034 Lac during the year.
Net Profit Margin (%)	The Companys net profit margin ratio during the current year was 36% compared to 32% in the previous year.
Details of any change in Return on Net Worth	The Companys return net worth ratio as on March 31, 2024 was 12% compared to 9% in the previous year mainly due to increased revenue from operations.
Financial performance (consolidated)
Equity Share Capital	The equity share capital of the Company as on March 31, 2024, stood at Rs. 4534.40 Lac compared to Rs. 4,531.20 Lac as on March 31, 2023.
Net debt-equity ratio	The Net debt equity ratio of the Company as on March 31, 2024, was at 0.10 compared to 0.07 as on March 31, 2023.
Revenue	The revenue from operations of the Company was Rs. 34117.72 Lac in the FY23-24 against Rs. 25,591.68 Lac in FY22-23.
EBITDA/Operating Margin	EBITDA margin during the financial year FY23-24 stood at 34.53% compared to 21.38% for the previous financial year.
Finance Costs	Interest & Financial Charges for the financial year FY23-24 was Rs. 4093.81 Lac compared to Rs. 1,399.47 Lac in the previous year, a increase by 293%, which was predominantly on account of redemption of debentures of 80 Cr during the year.
Net Profit	Net profit available for appropriation for the year FY23-24 stood at Rs. 5109.08 Lac compared to Rs. 2782.71 Lac in the previous year, an increase of 84%.
Earnings Per Share (EPS)	The Companys Basic Earnings Per Share (EPS) during the current year was Rs. 9.17 compared to Rs. 5.83 in the previous year and Diluted EPS is Rs. 9.09 as compared to Rs. 5.63 in the previous year.
Debtors Turnover	The Companys debtors turnover ratio during the current year was 123.89 compared to 130.23 in the previous year.
Inventory Turnover	The Companys inventory turnover ratio during the current year was 0.08 compared to 0.15 in the previous year.
Interest Coverage Ratio	The Companys interest coverage ratio during the current year was 2.23 compared to 0.89 in the previous year.
Current Ratio	The Companys current ratio as on March 31, 2024 was 1.24 compared to 1.55 in the previous year.
Debt-Equity Ratio	The Companys debt equity ratio as on March 31, 2024 was 0.17 compared to 0.29 in the previous year mainly on account of Repayment of debt & increased profitability during the year.
Net Profit Margin (%)	The Companys net profit margin ratio during the current year was 15.37% compared to 11.25% in the previous year.
Details of any change in Return on Net Worth	The Companys return net worth ratio as on March 31, 2024 was 15.96% compared to 8.39% in the previous year mainly due to increased profitability during the year.