binny ltd Management discussions

i) Industry structure and developments:

With the decision to exploit its vast urban land bank, the Company has entered the real estate sector. This transfor- mation is being undertaken because the Company understood the growth potential of the sector, and is in a position best-leverage the opportunities. While over 75% of the real estate market in India is related to residential housing, The Company is determined to largely focus on this segment while also developing a mixed portfolio that includes commercial property, retail, entertainment and hospitality.

The primary focus is on best utilising the land asset in Perambur, Valasaravakkam and Chengelput area given the locations demand and land usage regulations.

Self-sufficient integrated developments are the future of Indian real estate as prospective homeowners increasingly prioritize and seek proximity to essentials within walking radius. Our focus has been to create a sense of place and a robust framework for multiple asset types including residential, commercial, retail and civic buildings. Our developments offer different users distinct opportunities for social and cultural exchange in a people-centric and innovation-driven sustainable environment. Our careful approach includes creating a sense of belonging, brighter living experience, technological innovation, thoughtful amenities, safety, security and sustainability.

ii) Opportunities and threats:

The residential real estate segment in India has witnessed significant growth in the first decade of this millennium. Thereafter the impact of the global economic crisis was felt by the sector, there was a slowdown and decline in demand, subsequently the demand has started picking up gradually and the industry is in a phase of consolidation. Growth in commercial real estate has been driven largely by the flourishing service sector in the Country, especially the IT and IT enabled services (ITeS). While the real estate sector has strong fundamentals, it continues to be highly dependent on economic cycles. For the residential sector, the prevailing economic condition has a major impact on individuals buying power and the level of income related uncertainties that determine investment risk taking capabilities.

For the commercial segment, the relationship is even more direct, as improved economic activity requires more people to be employed that leads to demand for more office space.

Since May 2022, the RBI has hiked rates cumulatively by 140 basis points (bps) in quick succession, lifting policy rates now to 5.4 per cent, which is a touch above pre-pandemic levels of 5.1 per cent.

While the short-term outlook seems challenging given external supply shocks and geopolitical tension, we do be- lieve the government is doing the right things to ensure a sustainable growth path for the country. The union budget presented this year was very supportive of the long-term growth of the real estate sector in India through its focus on urban infrastructure and the digital economy. The governments sharply expanded capital expenditure target for the year is expected to create job opportunities and higher economic activity.

iii) Segment-wise or product-wise performance:

Not Applicable

iv) Outlook:

By all indications, the Real estate sector will have turnaround in the next year or so. Indian economy is finally turn- ing the corner though GDP growth is pegged at 7% during 2022-2023 fiscal year according to analysts at Morgan Stanley. The Indian Economy, they said, is set for its best run over a decade, as pent-up demand is being unleashed, which was beset with muted sentiments owing to general economic downturn over the last couple of years. The turnaround in sentiment actually began after a series of incremental reforms and announcements, which benefits Indian industry as well as the real estate sector.

Some of these measures include the incentives announced by RBI for infrastructure financing, the reduction in in- terest rates on home loans, incentives for affordable housing, announcement of a framework for REITs (Real Estate Investment Trusts) and relaxation of norms for foreign direct investment in construction. The Governments initiative in relaxing complex FDI norms will lead to higher foreign inflows and more liquidity for the sector.

Covid -19 impact on Residential Real Estate

During COVID-19 outbreak, the Real Estate Sector witnessed major disruptions due to construction delays and financing issues. However, the Company is backed by a strong Joint Development Partner, committed employees and a resilient business model based on which the impact may not be as significant as it has been on other local players. The revival of consumer sentiment could take longer than what was initially anticipated considering de- pletion of personal savings of most individuals and aspiring businesses. However, Covid-19 has also presented an opportunity for the integrated township project in a unique way. Greater family bonding during lockdown has increased the desire for providing an improved quality of life for their loved ones.

The pandemic has led to a paradigm shift in the attitude of customers towards residential properties. The uncertain- ty caused by the pandemic has reinstated the importance of home ownership. New trends emerged as a result of the pandemic such as preference for larger sized apartments, inclination towards reputed developers and a rising demand for township projects.

v) Risk and concerns:

While the management of The Company is confident of creating and exploiting the opportunities, it also finds the following challenges:

• Macro-Economic Risks: Interest rates, inflation and exchange rate risks are amongst the important macroeco- nomic indicators.

• Liquidity Risk: The time required for liquidity of project can vary depending on the quality and location of the property.

• Other Risks: Unanticipated delays in project approvals, Availability of accomplished and Trained labour force, increased cost of manpower, rising cost of construction, etc.,

Market instability and uncertainty may create a slight flutter for the sector. The Current economic outlook, though not dim, seems bleak and can hamper the industry growth. Continuous change in policies will tend to affect invest- ment as well.

vi) Internal Control system and their adequacy

The Company has adequate internal control systems commensurate with its size and nature of business and com- plexity 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.

vii) 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.

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

The Companys streamlined reporting system ensures efficiency. The Company continues with the job appraisal system ensuring overall growth of the employees of the Company. The Company still invests in training and devel- opment of its employees. The thrust of the Company has been on talent improvement through training programmes. Industrial relations have continued to be cordial throughout the year.