Binny Ltd Management Discussions

• Industry structure and developments:

Real estate development in Chennai during 2023-2024 was characterized by significant growth, especially in residential projects, driven by major infrastructure improvements like the Chennai Metro Phase 2 expansion and the development of the Pallavaram-Thuraipakkam Road. Key development areas include OMR (Old Mahabalipuram Road), Pallavaram, and Sholinganallur.

Chennais residential real estate market has experienced significant growth in 2024, supported by robust sales momentum and a surge in new launches. Moreover, declining inventory was effectively balanced with an increase in fresh options for homebuyers.

• Infrastructure-Driven Growth: Major government infrastructure projects are significantly impacting real estate values and driving demand in connected areas.
• Integrated Townships/Gated Communities: The market is seeing increased demand for self-sufficient, amenity- rich gated communities and integrated townships.
• As mentioned in the earlier report, the Companys main focus is on the three land parcels in Perambur (North Chennai), Valasarawakkam (West Chennai) and Chingelpet (Adjoining district of Chennai (South)

• The demand for both residential and commercial properties remains strong, with a variety of options available including apartments, villas, and plots. The area has a good mix of ready-to-move and under-construction projects catering to families and professionals.
• Chennai Market Performance: Valasaravakkam›s boom is part of a larger positive trend in the Chennai real estate market, which saw a 34% growth in housing sales and a 12% increase in average residential prices city- wide in 2023.
• Valasaravakkam is well-connected via major roads like Arcot Road and the Inner Ring Road, offering seamless

access to IT and industrial zones

The real estate outlook for Perambur in 2023-2024 (and continuing into 2025) is positive, marked by steady price appreciation and high demand driven by robust infrastructure development and excellent connectivity.

Perambur is a mature locality with a good mix of residential and commercial spaces, and established amenities like schools, hospitals, and the popular Spectrum Mall. The presence of the Integral Coach Factory (ICF) also reinforces its status as a significant hub.

Homebuyers in 2023-2024 continued to prioritize suburban areas with good access to amenities and transport, a trend that works in Peramburs favour.

Our Joint Development partner viz. SPR Group is developing a large-scale integrated township

• Market of India: A large-scale, first-of-its-kind organized wholesale and retail centre will become a major trade hub, potentially rivalling trade centres in other countries.
• Integrated Lifestyle: The development includes residential towers, a 1.5 million sq. ft. mall, the Shri Ram Universal School, and numerous amenities, aiming to create a self-sufficient community that attracts residents and businesses.
• Infrastructure & Connectivity: Its strategic location offers excellent connectivity via road and railways, with a metro station planned nearby, enhancing its accessibility and property values.
• Employment Opportunities: The various commercial and retail projects within SPR City are expected to generate significant employment opportunities, further boosting the local economy

Chingleput (Chengalpattu) is poised for strong real estate growth, driven by its strategic location as an emerging suburb of Chennai, significant infrastructure projects, and a surge in demand for mid-end and high-end housing. This growth is part of a broader, robust trend in the Southern India real estate market during 2023-24.

• Infrastructure Development: Chingleput is a major beneficiary of extensive infrastructure enhancements in the Chennai Metropolitan Area (CMA). Proposed and ongoing projects that are expected to boost its real estate appeal include the Chennai Metro Rail Phase 1 extension, the Chennai Peripheral Ring Road, GST Road widening, and new flyovers. These developments improve connectivity, making the area more attractive for residents and businesses.
• Proximity to Chennai: As a rapidly growing urban centre on the periphery of Chennai, Chinglepet serves as a viable alternative to the main city, attracting those seeking larger homes and a better quality of living without sacrificing connectivity.
• Industrial and Economic Hub: Chinglepet is a significant industrial and public works hub, with ongoing efforts by the Tamil Nadu government to attract further investments in sectors such as electronics manufacturing, R&D, and Global Capability Centres (GCCs). This economic activity creates job opportunities, which in turn drives demand for housing and commercial spaces.
• Residential Demand Shift: There is a notable shift in consumer preference towards mid-end and high-end residential properties, a trend observed across Tamil Nadu and expected to continue in Chinglepet. Demand for functional homes and integrated township developments with amenities is high.
• Government Initiatives & Policy Support: Favourable government policies and initiatives at both the state and national levels, such as the Pradhan Mantri Awas Yojana (PMAY-U) for affordable housing and the allocation of funds for urban development, are fostering a conducive environment for real estate growth

• Opportunities and threats:

Chennais Real Estate presents several opportunities such as

• Strong market growth: The market is expected to see continued growth in residential and commercial sectors, with projected property price increases of 5–7% by the end of 2025.
• Infrastructure development: Projects like metro expansion and new expressways are creating new growth corridors and increasing property values in previously underdeveloped areas.
• Economic growth: Chennai›s status as an economic hub is fuelling demand for housing and commercial spaces, attracting both domestic and international interest.
• Diverse housing options: Opportunities exist in both the luxury and affordable housing segments, catering to different buyer needs.
• Rental market: The rental market is strong, offering high rental returns compared to property prices.

• Traffic congestion: As the city expands, traffic congestion in key areas is a growing concern, which can affect the liveability and connectivity of properties.
• Natural disasters: Chennai is vulnerable to floods and cyclones, particularly in low-lying areas, making a thorough assessment of drainage and safety measures crucial before purchasing.
• Rising costs: Challenges include increasing construction costs and the need to navigate regulatory hurdles.

• Segment-wise or product-wise performance:

Not Applicable

• Outlook:

The robust real estate market translated into increased lending activity and a positive outlook for bank finance throughout 2023 and 2024.

• Increased Credit Flow: Total bank credit outstanding to the real estate sector rose to a record high in 2023. The total amount of housing credit in India expanded by 12.7% in 2023-24.
• Bank Dominance: Banks continued to dominate the housing loan market, holding a significant market share (around 74.5% as of March 2024). Their advantage in cost of funds and extensive reach facilitated this dominance.
• HFC Performance: Housing Finance Companies (HFCs) also showed healthy growth, with loan portfolios expanding by 13.2% in 2023-24. They are expected to maintain strong growth in the subsequent years, with the retail segment as a key driver.
• Improved Asset Quality: The asset quality for HFCs saw a sharp improvement, with gross non-performing assets (GNPA) decreasing significantly from a peak in March 2022 to a much lower level by March 2024, indicating effective risk management and a healthier market.

• Risk and concerns:
• Inflation and interest rates: High inflation and rising interest rates increased the cost of borrowing, making it more expensive to finance projects and purchase homes, and reduced overall affordability.
• Market volatility and economic uncertainty: The unpredictable economic environment created hesitations for investors and buyers, impacting market confidence.
• Liquidity issues: Some sectors faced low liquidity and potential issues with the availability of debt, affecting both developers and investors.

• Supply chain disruptions: Ongoing disruptions impacted the availability of construction materials, leading to cost volatility.
• Labour shortage: A shortage of skilled labour in the construction and property management sectors was a significant challenge.
• Construction costs: Volatile construction costs made it difficult to accurately underwrite new projects and added to development risk.

• Regulatory changes: Frequent and unpredictable changes in real estate regulations across different government levels created uncertainty and compliance challenges.
• Legislative risk: Potential legislative changes could impact the market and property values.
• Zoning and environmental issues: For land development, challenges related to zoning laws and environmental regulations posed significant risks

• Internal Control system and their adequacy

The Company has adequate internal control systems commensurate with its size and nature of business and complexity of operations. Internal Auditors conduct regular audits and report to the Audit Committee, thus ensuring the adequacy and effectiveness of Internal Control. The observations of the Internal Auditors are reviewed periodically on a quarterly basis and due compliances ensured. The exceptional items are reported to the Board.

• Discussion on financial performance with respect to operational performance.

Financial performance with respect to operational performance is discussed in the main part of the Report.

• Material Developments in Human Resources / Industrial Relations front, including number of people employed.

There was no significant development in Human Resources. The Company has a structured job appraisal and training systems and as we expand, there this robust systems and processes in place. The Industrial relations remained cordial throughout the year.