Conart Engineers Ltd Management Discussions

Annexure II

I. ECONOMIC OVERVIEW

a) Global Economy

The global economy witnessed a blend of opportunities and challenges. It persisted with challenges and uncertainties arising on account of inflation dynamics, rising geo-political tensions leading to supply-chain disruptions and pace of post pandemic recovery. However, economists believe that several growth opportunities lie ahead, which are well supported by resilient performance by Central Banks in controlling inflation, major emerging markets showing consistent and strong growth outlook along with soaring capital markets across the globe. According to the latest projections by the International Monetary Fund (IMF), the global economy is slated to grow at 3.2 percent in 2024 and holding steady, even for 2025. The IMF also expects the global headline inflation to decline to 5.9 percent in 2024 and sequentially to 4.5 percent by the end of 2025

b) Indian Economy :

As per projections by the IMF, growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025 with the robustness, reflecting continuing strength in domestic demand and a rising working-age population. The resilient growth demonstrated by the economy has led to expectations that the Indian economy may become the third largest in the next few years.

II. INDUSTRY OVERVIEW

The outlook is driven by a confluence of multiple factors including increasing urbanization, shifting demographics, aspirational lifestyle and supportive economic growth in the country. A number of factors are adding further impetus to the growth of the industry. The growth can be attributed to a growing residential demand, expected growth in sustainable workplaces, rising consumption and needs of a growing population with higher income levels. The overview and outlook for different segments of the industry is given below:

a) Residential Segment

The Indian residential segment has undergone major structural transformations over the last decade. The sector saw multiple challenges including demonetization, implementation of Goods and Services Tax (GST) and Real Estate (Regulation and Development) Act, 2016 (RERA), Non-Banking Financial Companies (NBFCs) crisis and the COVID-19 pandemic. However, today, the sector is touching new highs with the support of strong policy interventions such as RERA which have made the sector more transparent and customer centric; a strong economic momentum and an ardent desire of owning and upgrading homes. As per the recent report, published by Knight Frank and Confederation of Indian Industry, Indias urbanisation rate over the next decade is expected to reach 42.50% from 36.50%, which implies a significant rise in demand of households and expansion of cities, across the country.

It is estimated that the share of leading developers has almost doubled in the last 7 years. This trend is expected to continue as the industry grows.

b) Office Segment

The office segment witnessed robust growth in activity(ies), as an outcome of robust domestic growth as well as renewed demand from the occupiers.

The luxury segment continued to experience rising resurgence, primarily driven by rising income levels, aspirational lifestyle and growing consumption trends in the country. Realising the notable growth in the luxury segment, numerous foreign retailers have entered and continue to explore the country tocapitalise on this growth. It is expected that this segment should continue to exhibit strong growth momentum, though demand seems to be primarily driven for quality malls at established locations.

III. OUTLOOK AND STRATEGY

The business exhibited a strong performance and continues to deliver well across all parameters. As Indian economy continues its strong growth trajectory, the real estate sector is poised to deliver a healthy performance across all segments. The Company remains focused and committed to drive growth by bringing high quality new products across both its business i.e. development as well as the rental business. The Company continues to follow its stated strategy of maintaining a leadership position by delivering low-risk, consistent and profitable growth. Key pillars of the strategy are outlined below:

• Development business: The Company intends to continue to scale-up its new product offerings, while focusing on developing margin accretive products. The Company is focused on tapping multiple geographies including its core market of Gurugram and Delhi, existing land bank across multiple cities including Chandigarh Tri-city and Goa and newer markets including Mumbai.

• Rental business: The Company remains focused on growing the rental portfolio by capturing the organic growth potential along with new products across, both office and retail segments. The Company expects to maintain its growth trajectory and achieve double-digit growth in its portfolio through organic growth, coupled with new developments. The positive outlook towards the retail business has led to a development of new retail destinations and the Company expects to double its retail presence over the next few years.

• Cash management: Strong growth in the business has led to a healthy cash flow generation. The Company intends to put enhanced focus on steady free cash generation on a consistent basis. Backed by strong growth and high margin products, the development business has achieved a healthy net cash position at the end of the fiscal. The Company intends to strengthen this existing position going forward.