B&B Realty Ltd Management Discussions.

The Indian economy has been a star performer for many years. However, the excellent track record has run aground for the past two financial years. Financial year 2020-21 (FY 21) was the year of COVID-19 During the previous financial year, FY 20, the Indian economy had faced several challenges, including the lull in the economic activities due to the general elections. Post the elections, the economy continued to be plagued with a liquidity crisis choking the credit flow to the economy, poor consumer sentiment, which saw a dip in the demand generation, etc. Yet the powerhouse that India is, it managed to show a 4.2% growth in its GDP.

The fiscal year began with a lockdown, which immediately saw a large scale exodus of the migrant population from the cities. This along with the pandemic, saw companies and the overall Indian economy facing multiple issues like shortage of labour, job losses, salary cuts and demand plummeting as consumers adopted a ‘wait and watch attitude in uncertain times. The net result- clear impact on the economy and companies across industries and this was visible in extremely poor first quarter results. The strength of the Indian economy was visible in the second half of the fiscal as many companies reported their best quarters ever. However, all this could not save the economy form COVID 19.


The real estate sector comprises of four key segments- Residential, Commercial, Retail and Hospitality

The impact of COVID 19 pandemic was clearly visible on the residential segment. The first quarter of fiscal was a washout for the players as demand saw a steep fall of 79%. As the lockdown was lifted and government and the Reserve Bank took steps to enhance liquidity and encourage banks to extend home loans at cheaper rates, along with developers offering promotional discounts in order to offload the excess unsold inventory COVID 19 left a profound impact on the Retail Segment. With lockdown in the first quarter of the fiscal, consumer spends took a major hit during the quarter. As the unlocking process began, the retail segment did see traction, though at a much subdued level.

Budget 2020-21 for Real Estate

Even when the Indian economy is grappling with a major financial stress caused directly and indirectly by the COVID- 19 pandemic, the Union budget 2021-22 seems expansionary in nature that promises economic growth and entails strengthening of infrastructure. With several direct financial reliefs already announced during 2020, the budget 2021-22 is primarily focused on enhancing the Atmanirbhar Bharat ideology which is expected to be a boon for the Indian economy in the long-run.

As far as the real estate sector is concerned, the Budget 2021-22 provides little impetus in the short-term other than extension of some tax exemptions for affordable housing. Having said that, some key measures such as investment in roads and metro lay down the long-term benefits for the growth of the real estate sector.

Despite the fact that the real estate industry was expecting a number of immediate demand-side pushes for the sector from which are not there in the budget, the real estate stocks are up and indicating a positive sentiment from the sector. The good news is that direct tax is not changed at all hence not putting any extra burden on the peoples spending power.

Some of the highlights of the Budget 2021-22 that are likely to impact real estate are:

1. Extension of Interest exemption up to Rs. 1.5 Lakhs for Affordable Homes up to March 2022

Section 80EEA was introduced in FY 2017 for promoting affordable home ownership among the population. Accordingly, the govt. provided an additional income tax deduction of Rs. 1.5 Lakhs for home loans (in addition to the regular exemption of Rs. 2 Lakhs under Section 24B) for the purchase of an affordable house sanctioned till 31st March 2021; which has now been extended till 31st March 2022.

2. Extension of tax holidays for developers for Affordable projects

In order to boost the supply of affordable houses, the budget allowed the affordable housing projects to avail a tax holiday for one more year — till 31st March 2022.

3. New tax exemptions to developers on developing Affordable Rental Housing for Migrant Workers

The budget 2021-2022 also targets the promotion of Affordable Rental Housing for migrant workers. For this, new tax exemptions for notified Affordable Rental Housing Projects have been proposed.

4. Increase in safe harbor limit for primary sale of residential units

In order to incentivize home buyers and real estate developers, it is proposed to increase the safe harbour limit from 10% to 20% for the specified primary sale of residential units. By doing this, the budget enabled the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers.

5. Debt Financing of InVITs and REITs by Foreign Portfolio Investors

The budget proposed to enable debt financing of InVITS and REITs by foreign portfolio investors by making suitable amendments in the relevant legislations. This will ease access of finance to InVITS and REITs thus augmenting funds for infrastructure and real estate sectors.

6. Relief on advance tax liability on dividend income from REITS/InVITS:

The budget states that the advance-tax liability on dividend income shall arise only after the declaration/payment of dividend. Hence, from now onwards, the dividend paid to Real Estate Infrastructure Trusts or Infrastructure Investment Trusts (REIT/InvIT) shall be exempt from TDS. It is also proposed to clarify that deduction of tax on incomes including dividend income of Foreign Portfolio Investors may be made at treaty rate. It is also proposed to exempt dividend payment from levy of Minimum Alternate Tax (MAT) for foreign companies if the applicable tax rate is less than MAT.


Regulation 17 of the Listing Regulations requires as a part of Corporate Governance the listed entities to lay down a Code of Conduct for Directors on the Board of an entity and its Senior Management. The Code lays down the standard of conduct which is expected to be followed by the Directors and by the employees in their business dealings and in particular on matters relating to integrity in the workplace, in business practices and in dealing with stakeholders. The term "Senior Management" shall mean personnel of the Company who are members of its core management team excluding the Board of Directors.

Philosophy of the Code:

The Board of Directors ("the Board") and the Senior Management of B & B Realty Limited (herein after referred as "Company") subscribe to the following Code of Conduct adopted by the Board. The code expects from the Board and the Senior Management of the company and envisages:

1. Use due care and diligence in performing their duties of office and in exercising their powers attached to that office;

2. Act honestly and use their powers of office, in good faith and in the best interests of Company as a whole;

3. Not to make improper use of information nor take improper advantage of their position as a Director/Senior Manager.

4. Not to allow personal interests to conflict with the interests of the Company.

5. Recognize that their primary responsibility is to the Company shareholders as a whole but they should (where appropriate) have regard for the interests of all stakeholders of the Company;

6. Not to engage in conduct likely to bring discredit upon the Company; and

7. Be independent in judgement and actions, and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board of Directors

8. Ensure the confidentiality of information they receive whilst being in office of Directors/ Senior Manager and is only disclosed if authorised by the company, or the person from whom the information is provided, or as required by law.