Cemantic Infra-Tech Ltd Management Discussions

Industry Structure and Developments:

The real estate industry is an industry that involves the development, ownership, and management of property. It consists of various players such as developers, architects, lenders, and property managers, who are involved in different phases of producing or managing real estate. This industry plays a significant role in the nations economy. It includes all types of construction activities such as residential, commercial, and infrastructure construction. The construction industry is highly interlinked with other industries; hence it plays a crucial role in stimulating economic activity. However, the construction industry is highly susceptible to economic fluctuations and is majorly impacted during economic downturns and recessions. In addition, during economic downturns and recession, there is significant economic decline, which is often characterized by reduced economic activity, falling GDP, and high unemployment rates.

Indias construction industry is a massive economic driver valued at roughly $790 billion, contributing nearly 8% to the national GDP. As the countrys second-largest employer supporting tens of millions of jobs, growth is heavily propelled by public capital outlays, rapid urbanization, and government programs like the Smart Cities Mission. Indian Construction Industry is segmented by Sector (Commercial Construction, Residential Construction, Industrial Construction, Infrastructure (Transportation) Construction, and Energy and Utility Construction).

Indias economy continued to demonstrate resilience during the year under review, with GDP growth of around 8.2% recorded in Q2 FY 2025-26, supported by robust public capital expenditure, moderating interest rates and improving investor sentiment, despite continuing global trade and geopolitical uncertainties. Better demand conditions, a rationalized GST structure, expanding investment in infrastructure, continuing positive effects of reform policies and improved credit off-take have kept the real estate industry on a steady growth path, with Hyderabad continuing to outperform most other major cities in India.

Indias real estate sector has traditionally been a significant contributor to the countrys GDP, accounting for 13% of the total GDP during 2025-2026. Going forward, it is expected to 15% by 2030, making it one of the major drivers of the countrys economic growth.

Real estate at Hyderabad refers to the buying, selling, and development of residential, commercial, and land properties within the Hyderabad Metropolitan Region, regulated by TSIRERA and HMDA. In FY 2025-26, the market recorded 51,089 property registrations worth 34,420 crore, with average residential prices reaching 9,430 per sq. ft. making Hyderabad Indias top-tier real estate destination for homebuyers, NRI investors, and long-term wealth builders.

Effective 22nd September, 2025, the GST Council rationalized the indirect tax structure into a simplified framework, moving from four slabs to primarily two slabs of 5% and 18% (with a separate 40% slab for luxury and sin goods). As part of this reform, GST on cement was reduced from 28% to 18%, marking one of the most significant tax relief measures for the construction sector since the introduction of GST in 2017. Since cement and steel together account for nearly 40-45% of total construction costs, this rate rationalization is expected to meaningfully reduce input costs, improve cost predictability and support affordable and mid-segment housing over the medium term.

The Union Budget 2026-27 reinforced the Governments continued focus on infrastructure-led growth, with several measures having a direct and indirect bearing on the construction and real estate sector:

2026-27, up from 11.20 lakh crore in FY 2025-26, continuing the sustained scale-up in infrastructure investment and creating downstream demand for construction materials and services.

Infrastructure Risk Guarantee Fund: A new fund has been proposed to provide prudently calibrated partial credit guarantees to lenders during the high-risk construction phase of infrastructure and real estate projects, aimed at strengthening private developer confidence and easing access to project finance.

Focus on Tier-II and Tier-III Cities: The Budget proposes the creation of City Economic Regions (CERs) across Tier-II, Tier-III cities and temple towns, with dedicated funding support over five years to upgrade urban infrastructure, positioning these cities as the next wave of real estate growth beyond the metros.

High-Speed Rail and Connectivity: Development of new high-speed rail corridors, including the Hyderabad-Bengaluru and Hyderabad-Chennai corridors, along with new Dedicated Freight Corridors and multimodal logistics parks, is expected to improve regional connectivity and unlock real estate demand along these corridors.

REIT-led Asset Monetisation: The Government proposes to accelerate recycling of real estate assets held by CPSEs through dedicated REITs, which is expected to deepen the real estate investment ecosystem and improve liquidity in the sector.

These regulatory updates and budgetary measures show the governments commitment towards a sustainable, efficient and growth-oriented construction and real estate sector. Industry stakeholders can now capitalize on all the new opportunities and contribute to the nations development goals by staying informed and adapting to all these changes.

Hyderabads real estate sector has continued to demonstrate remarkable stability during the year under review, outperforming most other major cities in the country. The citys residential market held steady through H1 2025-26 with sales volumes broadly maintained even as several large Indian cities recorded a slowdown, while average residential prices rose by an estimated 7-9% year-on-year.

The Real Estate Regulatory Act (RERA) was aimed at ensuring accountability and infusing transparency and uniformity in practices prevalent in the real estate sector and has been very widely adopted by Governments and Corporates alike, bringing greater credibility to the sector.

Incentives for affordable housing, coupled with the rationalized GST rate on key construction inputs, have supported demand for the under-construction segment, a trend which is expected to continue through 2026-27 as well. In terms of city, Hyderabad (West Hyderabad - Madhapur, Gachibowli, areas adjoining ORR) along with other cities like Bengaluru, Chennai and Mumbai are expected to continue driving demand, supported by sustained hiring by GCCs and IT/ITeS companies and continuing flexible work arrangements that leave more spendable and investible income in the hands of the working class.

The financial year 2025-26 remained more dynamic and less predictable than initially anticipated, with continuing shifts in global trade and tariff policy dominating the global economic and geopolitical narrative, alongside evolving regulatory, fiscal and tax policies domestically. Additionally, geopolitical tensions persisted in several parts of the world through the year. Despite this, real estate markets in India, and particularly in Hyderabad, proved resilient, albeit with a diverse range of impacts across geographies, markets and asset types.

The outlook for the real estate sector remains encouraging. With increasing urbanisation, sustained public capital expenditure, moderating interest rates and continued institutional and foreign investment, the housing and commercial real estate industry is poised for continued, if measured, growth over the medium term, even as legacy stalled projects in select markets remain a challenge that requires continued policy attention.

Hyderabads real estate market remains well positioned for continued growth, driven by its strong IT and GCC-led office sector, ongoing infrastructure development and proactive State Government policies. While select micro-markets are witnessing softer sales, the overall market outlook remains positive, with a clear shift in buyer preference towards premium and mid-segment housing. Emerging corridors are attracting both residential and commercial development, making them attractive investment destinations.

The Company believes that demand conditions in the real estate sector are exhibiting clear signs of continued improvement and the Management is positive that the Company will be able to secure some small or medium sized housing projects in the near future, and be able to take advantage of the ongoing revival in economic growth and its resultant positive effects on the real estate sector over the medium term. The Company shall continue to strive to acquire new projects to increase sales and profitability. However, the Company has not carried on any business activity during the Financial Year under review.

The Company works in an environment which is affected by various factors, some of which are controllable while some are outside the control of the Company. Owing to the nature of the industry, it is exposed to a variety of risk factors. These risks include waning support for multilateral approaches; the escalation of trade policy disputes; financial instabilities linked to elevated levels of debt; and rising climate risk, as the world experiences an increasing number of extreme weather events. The Company has developed a robust risk management framework consisting of identification, assessment, mitigation and monitoring of risks, which in turn reduces the volatility due to unfavourable internal and external events and facilitates risk management. The Management identifies the following risks:

Economic risk: Economic downturns, fluctuations in interest rates, and industry-specific risks can affect property values and rental income. To mitigate these risks, the Company stays informed about economic trends, conducts comprehensive market research and remains selective in the projects it evaluates for future investment.

Execution Risk: Real estate investments involve various regulations and legal complexities. The Real Estate and construction projects are subject to various execution risks like regulatory hurdles, delay in receipt of approvals, and availability of labour and raw material, etc. Any such delay may result in cost overruns and impact the Companys operations unfavourably. The Company continues to seek appropriate legal advice and conducts thorough due diligence before undertaking any project.

Liquidity Risk: The cautious approach of Bankers and financial institutions towards mid-sized real estate companies continues, with disbursals to the sector remaining measured. Developers continue to find it a challenge to raise funds for projects through conventional routes and are, at times, forced to explore alternative financing routes, which in turn increases the cost of capital. Inadequate funding resources may have an impact on the liquidity position of the Company. There also continues to be a degree of mismatch between supply and actual demand in terms of unit and ticket size in certain micro-markets.

Rising Input Cost: The real estate industry is a capital-and labour-intensive sector; accordingly, a rise in the cost of labour creates challenges in project execution. While the recent rationalisation of GST on cement and other key materials is expected to provide some relief, volatility in the cost of steel and other key inputs continues to pose a risk to project viability and completion timelines.

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that all transactions are authorised, recorded and reported correctly. The systems are updated and monitored on a continuous basis. The Companys internal control systems are further supplemented by Internal Audit conducted by competent finance executives and periodic review by Management. The Company has clearly laid down policies, guidelines and procedures which form part of its internal control system.

The Audit Committee of the Company consists of Independent Directors who possess expert knowledge and vast experience. They periodically review accounting records and various Accounts/statements prepared by the accounting department. They advise the senior management of the Company on any precautionary steps to be taken, as required from time to time. During the year under review, four meetings of the Audit Committee were held to review, inter alia, the internal audit/controls along with management comments and initiated follow-up actions thereon.

The Paid-up Share Capital of your Company as on 31st March 2026, is Rs. 25,06,56,300/- divided into 2,50,65,630 Equity Shares of Rs. 10/- each with Voting Rights.

The Company has no secured loans at the end of the Financial year 2025-26.

The Fixed Asset (Net Block) as on 31st March 2026 amounts to Rs. 1,83,027/-

Manpower is the biggest strength in any sector. The Company has maintained cordial relations with its employees across all levels of the organisation during the period under review. Human resource continues to be core strength and the Company always endeavours to work towards having a satisfied workforce. The key HR objective is to ensure that our employees are aware of the role they are expected to play in the organisation to be able to drive organisational momentum. Going ahead, the Company will continue to invest in its people to strengthen its delivery model.

As on 31st March, 2026, the manpower strength of the Company was 5 members, comprising professionals from diverse backgrounds like engineering, finance, taxation, secretarial, legal, management, business, supervisors, and skilled and semi-skilled workers.

The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation, etc. The shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the Company.