Cineline India Ltd Management Discussions.


Global economy

The year 2020 was marked by the spread of the novel coronavirus (COVID-19), which was declared as a global pandemic by the World Health Organisation (WHO). To contain the spread of this virus, countries across the world opted to close down their international borders, which not only disrupted global trade but also brought the global economy to its knees. The global trade volumes in 2020 contracted by 8.5%, leading to the contraction of the world economy by

3.3%. Major economies across the word saw a slowdown in economic activities, leading to a contraction of GDP to as low as 9.9% in 2020 in countries like UK.

Region-wise growth estimates (%)

Region 2019 2020 (E) 2021 (P)
World 2.8 (3.3) 6
Advanced Market Economies (AMEs) 1.6 (4.7) 5.1
Emerging Markets and Developing Economies (EMDEs) 3.6 (2.2) 6.7

During 2020, Brent crude oil prices averaged US$ 41.69 per barrel compared to US$ 64 per barrel in 2019, clocking a steep y-o-y decline of ~35%. However, the crude prices are projected to recover to US$ 62.26 and US$ 60.74 per barrel in 2021 and 2022 respectively, on the back of consistent demand.

With the beginning of vaccine roll-outs across the world by the end of 2020, and lockdowns being lifted in a phased manner across various countries, the world economy is expected recover in the foreseeable future. Though the second wave of the COVID-19 pandemic has proved to be challenging across some countries, the world is better prepared to withstand the challenges and counter the pandemic, on the back of the experiences gained in 2020.

With the global fiscalsupport up to US$ 12 trillion and extensive rate cuts, coupled with liquidity injections, the global economy is expected to recover faster. On the back of this optimism, the global GDP growth for 2021 and 2022 is projected at 6% and 4.4% respectively. In line with the recovery of economy, the global trade volumes are expected to grow by 8.4%in2021. impact of the (Source: IMF, WEO, EIA)

Indian economy

India opted for a nationwide lockdown in late-March 2020 to contain the spread of the COVID-19 pandemic. This lockdown brought the economic activities to a standstill and disrupted the trade across the country. However, on the back of various financial stimulus announced by the government, the economy gradually started recovering post the lifting of lockdown restrictions. The government provided two specific financial stimulus during 2020-21 Rs.20 trillion of COVID-19 relief package and Rs.2.65 trillion of comprehensive financial package.

Further, the Reserve Bank of India opted for rate cuts twice during the fiscal and announced the moratorium extension and deferment of loan repayments, to counter the liquidity crunch across the country. The Government also announced the ‘One nation, one ration card’ scheme in 2020-21, enabling migrant labourers to access basic necessities from any part of the country.

On the back of this abovementioned measures, the Indian economy saw a fast recovery in the second half of 2020-21. The country’s GDP is estimated to have contracted by 7.3% during 2020-21 compared to a growth of 4.2% during the previous fiscal. Further, due to increasing food prices, the consumer price inflation of India was estimated at 6.2% for 2020-21 compared to 4.8% in 2019-20.

GDP growth year wise

GDP growth (%) 2017-18 2018-19 2019-20 2020-21 (E) 2021-22 (P)
India 6.7 6.1 4.2 (7.3) 9.5

The year 2020-21 saw the exchange rate of US dollars stand at an average between Rs.72 and Rs.73 per US dollar. Coupled with steady dollar prices, and increasing gold reserves and foreign currency assets, India’s foreign exchange reserves stood at a record high of US$ 590.18 billion in 2020-21.

The last quarter of FY 2020-21 saw a huge uproar from the second wave of the COVID-19 pandemic, which wreaked havoc across the country. To counter this, the country focused on rapid vaccination of the masses. However, starting the next fiscal at a lower GDP quantum, the country is expected to see a decent growth of 9.5% in its GDP in 2021-22, which was projected at 12.5% before the significant wave. Further, the consumer price inflation of India is also expected to moderate from 6.2% in 2020-21 to 4.9% in 2021-22, owing to recovery of global trade and moderated pricing across food and all consumer durable products.

(Source: RBI, WEO)


Indian real estate industry

The year 2020 was expected to be the dawn of the real estate market, post a sluggish growth for the past 3 years caused by demonetization, GST, RERA and the NBFC crisis. However, with the onset of the COVID-19 pandemic, India saw series of nationwide and state-wise lockdowns, which impacted the real estate sector across the country. Further, the migration of labour to their individual hometowns posed as another major challenges amidst the lockdowns, which delayed and postponed most real estate projects during 2020-21. The first half of 2020 was adversely impacted by the pandemic.

However, in the second half of the year 2020, the country’s real estate market started showing signs of revival on the back of proactive interventions from the government.

Residential real estate industry

The number of new launches in the Indian residential real estate sector stood at 1,46,628 units in 2020, contracting by 34% on a y-o-y basis, which validates the delay in completion of projects in 2020 owing to several headwinds propagated by the COVID-19 pandemic. Similarly, the sales in the Indian residential real estate sector stood at 1,54,434 units in 2020, contracting by 37% on a y-o-y basis owing to decline in demand primarily owing to the decline in the per capita disposable income coupled with a liquidity crunch across the country.

The number of launches in the Indian residential real estate market in Mumbai Metropolitan Region (MMR) in 2020 stood at 50,303 units, registering a y-o-y decline of 37%. Further, the sales of residential real estate projects in the MMR region stood at 48,688 units in 2020, registering a y-o-y decline of 20%. The average price of residential projects in MMR in 2020 stood at Rs.6,787 per square feet, which moderated by 3.2% on a y-o-y basis. Low home loan rates, regulatory interventions such as the further relaxations in RERA completion deadlines and more aggressive measures such as the stamp duty cut by the Maharashtra government would help the market survive and sustain amidst these trying times. The near-term outlook on sales remains cautiously optimistic, owing to the fact that buyers are increasingly looking for good deals against the backdrop of a slowly stabilising economic environment.

With the increasing traction in work from home, the demand for a study/working space has increased in the last one year extensively. This has reversed the trend of shrinking apartment sizes.

Average size if apartments in new launches

Micro-market 2014 (In sq. ft.) 2019 (In sq.ft.) Shrinkage (20M-19) H22020 (in sq ft) increase (2019-H2 2020)
Navi Mumbai 857 685 20% 722 5%
768 611 24% 671 10%

Affordability matrix

Affordability matrix is the ratio of EMI to income for households across various markets. During 2020, not only has the housing prices across markets reduced but also the home loan interest rates, in turn, moderating the housing affordability matrix of India.

EMI to Income Ratio

City 2010 2015 2020
Mumbai 93% 94% 61%
NCR 53% 51% 38%
Bengaluru 48% 48% 28%
Pune 39% 38%
Chennai 51% 43% 26%
Hyderabad 47% 39% 31%
Kolkata 45% 44% 30%
Ahmedabad 46% 36% 24%

Commercial real estate industry

The completions of Indian office market in 2020 stood at 35.5 million square feet, a contraction of nearly 42% on a y-o-y basis owing to the delay in completion of projects amidst the COVID-19 disruptions. Further, the quantum of office space sold in the country in 2020 stood at a 6-year low of 39.4 million square feet, a contraction of 35% on a y-o-y basis. The year 2020 ended with a vacancy rate of 15.5%. The net absorption of office spaces across the top seven cities in India in 2020 stood at 25.82 million square feet compared to 46 million square feet in 2019, registering a 44% contraction on a y-o-y basis. In Q1 of 2020, the net absorption was pegged at 8.80 million square feet, which declined drastically to 3.32 million square feet and 5.43 million square feet in Q2 and Q3 of 2020. However, on the back of operation heading towards normalcy coupled with the availability of vaccines, the net absorption improved to 8.27 million square feet in Q4 2020.

The new completions in MMR office market in 2020 stood at 5.3 million square feet, contracting by a minor 2%. However, the sale of office space in MMR in 2020 stood at 6 million square feet, a contraction of 38.3% y-o-y. This decline was largely on account of 2 primary reasons employees were dependent on the road and rail network to reach their respective workplaces, which was an issue amidst the lockdown and the partial lockdowns; offices in MMR were permitted to operate at a maximum workforce capacity of 30%. On account of these two major hindrances, companies have been forced to keep a majority of their workforce on work-from-home (WFH). Further, the weighted average rental in MMR for 2020 stood at Rs.116 per square feet per month, declining by 5.6% on a y-o-y basis, indicating cautiously optimistic outlook in the near future. The vacancy rate in MMR at the end of 2020 was pegged at 19.8%.

Retail real estate industry

The retail market of real estate sector has been adversely impacted by the disruptions induced by the COVID-19 pandemic in 2020. With various states across the country on partial and full lockdowns, the retail real estate of each state has been suffering. With the restrictions on shopping mall operations across various states, and the footfall in malls being capped, the sector has been in the doldrums throughout the year. Owing to these challenges the launch of new malls stood at mere 5 in 2020, against a pre-COVID estimate of 54 new malls in 2020 with an area of 22.2 million square feet, of which, 35 were expected to be seen in the top 7 cities. However, on the back of drop in rentals and prices, the outlook for retail real estate space looks good, wherein it is expected to recover. By the end of 2021, 14 new malls covering an area of 5.9 million square feet is expected to be operational in India.

Growth drivers


The population of India stood at 1.38 billion in 2020, accounting for 17.7% of the total world population. This quantum is expected to increase to 1.64 billion by 2050, thus driving the need of residential space, thus, contributing towards the growth of the real estate space in the country.


India’s urbanisation rate stood strong at 35% in 2020, which is expected to grow 50 bps on a y-o-y basis to reach 40% by 2030. The consistent increase in the urbanisation rate of the country is expected to consistently drive the demand for residential, commercial and retail real estate in the country.


As per the Census of 2011, the size of India’s households is gradually declining owing to the increase in nuclear families.

This phenomenon is more visible in rural areas with a 29% increase, against the backdrop of 9% growth in urban areas. Nuclearisation is expected to add about 6-7 million households per year, in turn, driving the real estate market of the country.

Government impetus

Housing for All With the objective of reviving the residential real estate market of the country, the Government has increasingly focused on its ‘Housing for All’ mission by 2022, wherein the objective is to provide affordable housing by constructing ~1 crore urban houses and 1.95 crore rural households by 2021-22. The government also supported housing demand by incentivising home buyer through the Credit Linked Subsidy Scheme (CLSS), providing an interest subsidy up to Rs.2.67 lakhs.

Budget allocation

The Union Budget 2021-22, the total budget expenditure and capital allocation towards the Ministry of Housing and Urban Affairs are as follows:

2019-20 Actuals 2020-21 RE 2021-22 BE Change (Annualised) (Actuals 2019-20 to BE 2021-22)
Revenue 22,749 36,482 28,822 13%
Capital 19,305 10,309 25,759 16%
Total 42,054 46,791 54,581 14%

(Rs. in crore)

Notes: BE Budget Estimate; RE Revised Estimate

Tax deduction With consistent focus on affordable housing, the Government extended the additional deduction of interest up to Rs.1.5 lakh for purchase of affordable housing property, to 31st March 2022.

This is further expected to drive the real estate growth in the market.


As a part of the Kanakia Group, Cineline India Limited is one of the most renowned real estate players in Mumbai, on the back of its ability to identify properties with robust returns across markets such as Mumbai and Nagpur. The Company’s modus operandi comprises identifying and acquiring such commercial properties, and renting out retailing, parking and advertising model spaces. Cinelne India Limited has a diversified with presence in the renewable energy business as well, wherein the Company owns and operates 1 windmill at Gujarat and 1 in Maharashtra with a power generation capacity of 0.6 MWA and 1.6 MWA respectively. This business vertical not only ensures a de-risked business but also aids the Company in making its mark in its sustainability focus.

Our rental assets comprise the following:

7 theatres in Mumbai, 1 theatre in Nasik and 1 theatre in Nagpur, leased to PVR Limited on a long-term basis, ensuring revenue sustenance.

1 mall in Nagpur, namely Eternity Mall, with high footfall owing to the spread of brands available coupled with the frequent engagement initiatives by the Company. This helps the Company earn from not just rentals, but also car parking and advertising.

2 commercial properties in Mumbai, which attract good rental income

Financial performance

The Company’s revenue during FY 2020-21 stood at Rs.4,366.56 lakhs compared to Rs.4,221 lakhs in FY 2019-20, registering a growth of 3.45% y-o-y. The EBITDA of Cineline India Limited stood at Rs.3,460.40 lakhs in FY 2020-21 compared to Rs.3,340.27 lakhs in FY 2019-20, clocking a y-o-y growth of 3.60% on the back of improved cost reduction. profitafter tax Further, our (PAT) stood at Rs.792.36 lakhs in FY 2020-21 compared to Rs.764.13 lakhs in FY 2019-20, registering a 3.69% y-o-y growth.

Key financial ratios

Particular FY 2020-21 FY 2019-20
Debtor Turnover Ratio 7.36 11.12
Interest Coverage Ratio 1.81 1.82
Current Ratio 2.56 0.55
Debt Equity Ratio 1.43 1.40
Operational Profit Margin 73.06% 72.99%
Net Profit Margin 18.15% 18.10%
Return on Net Worth 6.51% 6.69%


With the Indian economy heading towards recovery in 2020-

21 and the increasing investment towards improving the real estate across the country coupled, the country’s real estate sector is expected to finally expected to head for a recovery as well. On the back of various growth drivers such as increasing population and rapid nuclearisation coupled with increasing need of affordable housing and rising aspirations of the masses, the real estate sector is poised to grow in the medium and long term.

Against the backdrop of this outlook for the sector, the Company is positioned well to take advantage of the recovery in the medium and long term. On the back of decisive measures, the Company is not only deleveraging its balance sheet, but is also ensuring long term revenue and margin sustenance. The Company is also undertaking various cost optimisation measures to ensure sustained flow of funds.


Being a very capital-intensive sector, and with the country suffering from liquidity crisis, the Company was subject to adverse impact from these challenges. Further, owing to the lockdowns and trade disruptions across the country owing to the COVID-19 pandemic, the risk of project delays and unavailability of labour and materials were some other risks that we faced during the year. However, owing to the long-term lease of the Company in the retail space, the Company was relatively cushioned from the adversities. The revenues earned from the parking and advertising in its mall operations were impacted owing to the restriction on malls being operational and restrictions on footfall at malls. However, we are optimistic of these operations bringing in incremental revenues with the country heading towards normalcy in the near future. Further, the Company also ensured right investments on right assets in right locations, on the back of its capable and experienced team.

Human Resources

The Company believes in people being the most crucial asset in running a successful business. The Company focuses on treating the employees with utmost fairness and are on a constant endeavour to align their personal goals with that of the organisation. In doing so, the Company has focused on providing adequate opportunities for professional and personal growth of its employees, in addition to training and enhancing the skills and capabilities of the employees. The Company strives to create and maintain a safe, conducive, and engaging work environment to enhance employee morale and boost their productivity. Amidst the headwinds of a global pandemic, Cineline has also been proactively engaging with its employees to keep them motivated. The Company also has in place a well-designed appraisal system to align individual efforts with long-term strategy and growth objectives of the Company. The

Company’s employee strength stood at 27 people as on March 31, 2021.

Internal control system

The company has established a well-maintained internal control framework that covers various aspects of governance, compliance, audit, control and reporting. These internal controls play an integral role in adhering to various regulatory compliance, preventing frauds, safeguarding finances, and maintaining the reliability of financial reporting. The Company’s internal audit team periodically conducts an audit of internal control systems and shares the findings with the Company’s management who in turn initiates prompt corrective/mitigating measures to maintain accuracy and adequacy of the internal controls.

Cautionary Statement

The Management Discussion and Analysis contains statements describing the Company’s objectives, projections, estimates and expectations, which may be forward-looking in nature. These statements are made within the meaning of applicable laws and regulations and are based on informed judgments and estimates. There cannot be any guarantee of previous performance continuity as future performance also involves risks and uncertainties. These may include but are not limited to the general market, macroeconomic, interest rates movements, competitive pressures, technological and legislative developments, and other key factors that may affect the Company’s business and financial performance.