BEML Land Assets Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS Industry Structure The real estate sector stands as a cornerstone of the global economy, encompassing a spectrum of activities vital for property development, transactions, and management. Within the diverse landscape of India and across the globe, key aspects consistently drive its operations, shaping urban environments and meeting diverse needs. The real estate sectors multifaceted nature hinges on the concerted efforts of diverse stakeholders, driving growth, innovation, and sustainability in the global economy. The demand and supply dynamics would evolve and change. On the brighter side, the real estate sector has been quick to respond to changes and adapt to new technologies. This is apparent that due to digitalization there is and will be a major shift in investment preferences that will continue to outlive the pandemic.

Government undertook several initiatives and reforms for growth of real estate business. Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces.

Companys Insight

GovernmentofIndia has proposed for disinvestment of 26% of its shareholding in the equity share capital of BEML Limited, which involves undertaking and implementing the Demerger of identified surplus/ non-core assets of the BEML Limited. For demerger, transfer and vesting of identified surplus/ non- core assets, BEML Land Assets Limited (BLAL) was incorporated on 15.07.2021.

On 28.07.2022, MCA had passed order approving the Scheme of Arrangement for demerger of “BEML Land Assets Limited” (Resulting Company). In compliance with MCA order, BEML Limited had fixed 09.09.2022 as record date for issuing shares of Resulting Company in the ratio of 1:1 and same were issued to all shareholders whose name were recorded in the Register of Members of BEML on the above said date. Further, the said shares were listed on both stock exchanges (BSE & NSE) and trading therein has started on 19.04.2023.

The Promoter of the company i.e. President of India through Dept. of Defence Production, Ministry of Defence holds 54.03% shares in BLAL.

Central Government has amended Indian Stamp Act, 1899 granting exemption on payment of stamp duty for transfer of title deeds from one Government company to another Government company in the demerger process. Hence, Company has applied to various State Governments for stamp duty exemptions for taking forward the registration of title deeds. The Land properties of the Company are located in different parts of India which title deeds are under transfer from BEML to BLAL as per the Scheme of Arrangement.

OPPORTUNITIES & CHALLENGES

Opportunities

Over the past few years, the Government has supported the economic development and promoted business opportunities within the country, including various policies made and initiatives, such as relaxation in Foreign Direct Investment (FDI) limits, improving ease of doing business, Housing for All, Make in India, Smart City and Start-up India. The major opportunities for our land parcels are:

1. Housing Demand

2. Sector Consolidation

3. Demand of vacant land in metro cities

Additionally, revenues generated from premiums and activities linked to real estate will remain a substantial income stream for the Government. These funds play a crucial role in driving further socioeconomic progress throughout the nation. Investments in real estate contribute to refined urban planning, upgraded public amenities, and expanded job prospects, nurturing an environment conducive to overall economic advancement. The real estate sector stands as a significant driver of employment, presenting a myriad of job opportunities spanning various skill levels. From unskilled labour to seasoned professionals such as architects, engineers, and property managers, the sector offers a diverse spectrum of roles. With offerings encompassing residential, commercial, retail, and industrial properties, real estate caters to a broad range of investor preferences and demands, further enriching its significance in the economic landscape.

RISKS AND CONCERNS

Nevertheless, the industry grapples with its fair share of hurdles. Regulatory intricacies present substantial challenges, with compliance hurdles and approval procedures frequently causing project delays and cost escalations. Moreover, the sector is vulnerable to liquidity constraints stemming from periodic fluctuations in the real estate market, which can disrupt cash flows and jeopardize project feasibility for developers and investors alike. Additionally, elevated inventory levels in specific regions and segments may result in an accumulation of unsold properties, negatively impacting market sentiment and price equilibrium.

o Registration of Titles in Name of Company The surplus land is demerged into BLAL through order of Demerger. The Land parcels continue to be registered in the name of BEML Limited including in the registers of various registrars, sub-registrars and other land records at the respective locations.

The Scheme of Arrangement has directed the transfer of all Land parcels recorded in the Scheme of Arrangement to the BLAL, including all title to such Land parcels. The Company may be required to undertake additional compliances in order to transfer the Land parcels to its name and to ensure its title to the Land parcels.

o Approval for Changing the Land Use The Land constitutes industrial as well as mixed use lands. We may be required to seek consent of relevant authorities for change in use of the land. o Monetary and Funding Issues

There has been a contrasting trend in real estate lending over the past few years wherein reputed, low leveraged developers continued to enjoy easy access to liquidity as lenders remained selective and weaker developers struggled with limited sources of capital. Real estate sector performance is closely linked to economic recovery and its monetary policies. The Reserve Bank of India has so far maintained accommodative stance as it tries to support economic recovery. However, going ahead we expect to see monetary tightening as the Central Bank tries to control inflation in the country. A nascent economic recovery along with rising interest rates could impact the real estate sector in the near term as cost of housing loans shoots up with rise in the cost of funding for the developers, who are already facing margin pressure due to commodity cost inflation.

OUTLOOK

The Indian real estate sector brims with promising opportunities for expansion. Rapid urbanization and a burgeoning young population create fertile ground for real estate development, particularly in the realms of affordable housing and integrated townships. Embracing technological advancements provides yet another avenue for advancement; integrating virtual reality, Al-driven property search platform and smart home solutions can significantly enhance customer experiences and streamline operational efficiency for developers. Moreover, the escalating demand for eco-friendly and sustainable properties opens up possibilities for developers to embrace green building practices, catering to the burgeoning segment of environmentally conscious consumers. Historically, the real estate sector has served as a significant asset class for Indians, offering avenues for wealth creation and financial security. As more individuals recognize the potential of real estate investments to not only accumulate wealth but also elevate their lifestyles, both residential and commercial properties gain prominence over other traditional asset classes. The tangible and intangible benefits of property ownership, including rental income, capital appreciation, and the sense of security it provides, continue to entice a growing number of investors. Amidst Indias ongoing economic growth and the aspirations of its burgeoning population, the role of the real estate sector remains pivotal in job creation, infrastructure development, and overall economic progress. With the government persistently implementing supportive policies and streamlining regulatory frameworks, the real estate sector is poised to assume an increasingly vital role in shaping Indias future growth trajectory. By fostering a robust and sustainable real estate ecosystem, the nation can harness its demographic dividend and pave the way for a prosperous and inclusive future.

SEGMENT-WISE PERFORMANCE

The Company does not have any other segment.

FINANCIAL PERFORMANCE

The discussion on financial performance is as below: (% in Lakhs)

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

BLAL has in place adequate internal financial controls with reference to financial reporting in compliance with the provisions of Section 134(5)(e) of the Companies Act, 2013 and such internal financial controls were operating effectively during the year. The Statutory Auditors submit a report on internal financial controls over financial reporting along with their Audit Report on the financial statement every year.

HUMAN RESOURCE DEVELOPMENT

As on 31.03.2024, the Company has four employees. Out of four employees, one employee is posted on deputation basis and three employees on contract basis.

CAUTIONARY STATEMENT

Statements made in the Management Discussion & Analysis Report describing the Companys objective, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Such statements reflect the Companys current views with respect to the future events and are subject to risks and uncertainties. Actual results may differ from such expectations, projections and so on whether express or implied. The Company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.