Country Condos Ltd Management Discussions

OVERVIEW:

The Real Estate Sector is one of the most globally recognized sectors. Its impact on the overall economy has been deepening over the past few years, mainly because of the rising population on the demand side and enhanced government initiatives as an enabler. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

The Indian economy continued to exhibit steady growth and remained among the fastest growing emerging economies, with a focus on the continued implementation of structural and financial sector reforms and efforts to reduce public debt.

In India, real estate is the second largest employer after agriculture and is slated to grow at 30 percent over the next decade. It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term. Bengaluru is expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Hyderabad, Chennai, Goa, Mumbai, Delhi, Lucknow, Jaipur, Surat, Indore, Varanasi, Kolkata, Visakhapatnam and Dehradun.

ECONOMIC OVERVIEW:

GLOBAL ECONOMY:

In CY2024, the global economy displayed notable resilience despite uneven momentum across regions and sectors and grew at 3.3% as per International Monetary Fund s (IMF) World Economic Outlook. Headline inflation moderated to 5.8% in CY2024 towards central bank targets, prompting the first wave of policy rate cuts in major economies. Labour markets, though slightly softened, remained tight, with unemployment near historical lows. Strong nominal wage growth, combined with easing price pressures, improved real household incomes. However, private consumption remained subdued, reflecting weak consumer sentiment and elevated uncertainty.

Rising geopolitical tensions, particularly in Eastern Europe and the Middle East, added further uncertainty, disrupting global trade, investment flows, and financial markets. These factors continued to cast a shadow over business confidence and long-term investment decisions. The growth rate of these economies, which stood at 1.6% in CY 2024, is anticipated to remain sluggish at 1.7% to 1.8% over the next two years due to policy tightening, financial sector turmoil, high inflation, the ongoing conflict between Russia & Ukraine and Israel and Gaza.

The slow growth rate persists amidst a cost-of-living crisis triggered by disruptions in energy and food markets due to Russia s conflict in Ukraine, coupled with global monetary tightening to address inflationary pressures and reduced fiscal support. However, the resilience seen in the United States and several significant emerging market economies, along with continued fiscal support in China, will bolster global growth.

Inflation rates are declining more rapidly than anticipated across most regions, supported by tight monetary policies. Combined with a modest uptick in economic activity, this sets the stage for a softer-than-expected economic slowdown.

Global inflation is projected to decrease from an estimated 5.9% in CY 2024 to 4.5% in CY 2025, primarily due to accelerated disinflation in advanced economies. Declining inflationary pressures vary by country but generally stem from reduced core inflation, influenced by ongoing tight monetary policies, softened labor markets, and impacts from lower energy prices. The IMF forecasts a 2.3% decline in oil prices in CY 2025, while non-fuel commodity prices are expected to drop by 0.9%. Heightened tensions in the Gaza-Israel region, which accounts for approximately 35% of global oil exports, could lead to supply shocks if the conflict escalates. Continued trade distortions and geopolitical fragmentation are anticipated to persist, exerting pressure on global trade levels.

The risks to global economic growth are balanced, with potential upside from quicker disinflation, slower withdrawal of fiscal support measures, robust economic expansion in China, and advancements in supply-side reforms. Conversely, downside risks include spikes in commodity prices due to geopolitical or weather-related disruptions, ongoing core inflation necessitating tighter monetary policies, potential slowdowns in Chinese growth, and potential disruptions from abrupt fiscal consolidations.

Diverging regional growth patterns

- United States expanded by 2.8%, supported by resilient consumption, strong public spending, and stable exports.

- Eurozone posted modest growth of 0.9%, weighed down by weak investment in Germany and declining external demand.

- China faced headwinds from sluggish consumption and continued stress in its property sector, with knock-on effects across Asia and Europe.

- India stood out as a bright spot, maintaining robust growth and reinforcing its position as a key engine of global expansion.

Outlook for CY2025 and beyond

The global economy enters CY2025 at a delicate inflection point. While inflation has eased, escalating tariff measures, particularly between the US and its trading partners, have raised effective tariff levels to a century-high, delivering a significant shock to global trade.

Inflation and policy dynamics

Global headline inflation is projected to average 4.3% in CY2025, easing to 3.6% in CY2026. While inflation estimates have been revised upwards for advanced economies, emerging markets are expected to benefit from more stable price conditions. In this environment, central banks may need to maintain a cautious stance, balancing support for growth with the need to anchor inflation expectations.

Going forward, policymakers will need to strike a careful balance between fostering growth and maintaining inflation discipline. While easing inflation could create room for monetary loosening, trade-related disruptions and climate-linked shocks remain key risks. Structural reforms, shifting demographics, and the transition to a low-carbon economy will significantly influence growth paths, with regional dynamics and policy frameworks playing an increasingly pivotal role in shaping emerging opportunities

INDIAN ECONOMY:

Amid global uncertainties, India s economic fundamentals remain firmly anchored. Infrastructure expansion, robust real estate activity, and rapid digitalisation have continued to act as key growth multipliers across sectors. Strong agricultural output, rising household incomes, and government-backed initiatives in financial inclusion and affordable housing have provided further impetus to consumption.

In FY 24-25, India recorded a growth rate of 6.5%, underpinned by a recovery in rural demand, sustained Government investments in infrastructure and the continued buoyancy in the services sector. As per the world bank, India will remain resilient and grow at 6.3% in FY 25-26 led by strong domestic demand, a dynamic service sector, and a gradual revival in private sector investment. The macroeconomic environment remained stable, supported by a contained retail inflation rate of 4.6% - the lowest since FY 18-19, narrowing fiscal deficit and manageable current account, and healthy foreign exchange reserves, bolstering investor confidence

The Reserve Bank of India s calibrated monetary policy, which included two repo rate reductions of 25 basis points each in February and April 2025, signalled a pro-growth orientation while maintaining inflation discipline.

Support will come from other areas. Household consumption is expected to improve as continued disinflation will prop up the purchasing power of consumers. Secondly, healthy rabi sowing and good kharif output assuming a normal monsoon will support agricultural income. Thirdly, prospects of fixed investment remain bright owing to an upturn in the private capex cycle, improved business sentiments, healthy balance sheets of corporates and banks as well as the government s continued thrust on capital expenditure. A sustained economic growth will lead India to become the 3^rd largest and an upper middle-income economy in years to come.

The Government has also been promoting schemes such as the Urban Infrastructure Development Fund (UIDF). This underscores the Indian government s focus on bolstering the infrastructure sector, which, in turn, will be a multiplier for the economic growth. Additionally, by rolling out housing schemes such as the PM Awas Yojana, the Government of India is assisting its citizens with affordable housing facilities. In FY 2025, the construction sector has clocked a growth rate of 10.7%. This expansion is likely to positively impact other allied sectors and further fuel the growth of the domestic economy.

Despite of war in Ukraine and the staggering inflation, the Indian equity market had a comparatively stellar year. The government s focus on infrastructure development with initiatives like the National Infrastructure Pipeline and Atmanirbhar Bharat Abhiyan are expected to create opportunities. However, the effects of geo-political tension rising around the world pose a threat to the economic growth of the Country and clouds of uncertainty are still hovering around World economic growth.

Under PM GatiShakti Master Plan, the National Highway Network will develop 25,000 Kilometers of new highways network which will be worth ? 20,000 Crore (US$ 2.67 billion). Increased government expenditure is expected to attract private investments, with a production-linked incentive scheme providing excellent opportunities. Consistently proactive, graded and measured policy support is anticipated to boost the Indian economy.

Although the short-term outlook appears challenging due to rising interest rates, external supply shocks, and geopolitical tensions, we believe the government is taking appropriate measures to ensure a sustainable growth trajectory for the country. The union budget presented this year strongly supports the long-term growth of India s real estate sector through its focus on urban infrastructure and the digital economy. The government s significantly expanded capital expenditure target for the year is expected to generate job opportunities and stimulate higher economic activity.

INDUSTRY CONTEXT:

The real estate sector is one of the most globally recognized sectors. The real estate sector comprises four sub sectors -housing, retail, hospitality and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

India s real estate sector reflects the broader optimism surrounding the country s economic future. According to the IMF s World Economic Outlook, April 2025, India s GDP has more than doubled to $4.19 trillion, from $2 trillion in 2014, propelling the country from the tenth to the fourth largest economy in the world and is on course to become the third largest by FY 30-31, growing at a sustained pace of around 6.7%. This growth trajectory is powered by a convergence of long-term drivers: expanding middle class, accelerating urbanisation, increasing disposable income, rapid digital adoption, and continued structural reforms.

Flagship government initiatives such as the Smart Cities Mission, Housing for All, and the Real Estate (Regulation and Development) Act (RERA), have enhanced transparency, improved regulatory oversight and strengthened investor confidence across the real estate value chain.

Real estate is a key contributor to India s GDP and employment generation. According to Knight Frank, the sector is expected to grow from $300 Billion in CY2024 to $650 Billion by CY2025, reaching $1Trillion by CY2030 and potentially $5.8 Trillion by CY2047

In 2014, the Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which has allowed all kind of investors to invest in the Indian real estate market. It would create an opportunity worth ? 1.25 trillion (US$ 19.65 billion) in the Indian market in the coming years. Responding to an increasingly well-informed consumer base and bearing in mind the aspect of globalization, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family-owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralized processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The improved sales momentum has lifted confidence among realty developers, pushing them to launch more projects as indicated by the rise in new offerings across markets.

This growth reflects not only the demand for housing and office spaces but also the sector s deep linkages with over 200 allied industries from cement and steel to logistics, finance, and consumer goods. Sustained demand across residential, commercial, and industrial real estate, combined with the expansion of India s corporate sector and a services-driven economy, is reinforcing the sector s long-term outlook.

Real Estate Sector

As India advances towards inclusive and sustainable urban development, real estate will continue to serve as a critical enabler, shaping cities, creating jobs, and building physical and social infrastructure needed to support a rapidly evolving population.

The residential sector is expected to grow significantly, with the central government aiming to build 25 million affordable houses in urban areas across the country by 2025, under the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs. Expected growth in the number of housing units in urban areas will increase the demand for commercial and retail office space.

India s real estate sector is witnessing a healthy increase in demand in 2025 and this momentum is expected to hold for the rest of the year. From commercial spaces to the residential market, the overall market outlook is a bright one for the real estate industry.

India s housing market continued to perform strongly in CY2024, driven by robust demand, particularly in the mid and high-end residential segments, and supported by rising aspirations, increasing purchasing power and growing consumer confidence. Sustained momentum in homebuyer interest propelled annual residential sales to a new all-time high, reflecting the deep-rooted structural strength of India s housing demand.

Government-led policy interventions have played a critical role in enhancing housing affordability and encouraging homeownership. The Union Budget for FY 25-26 introduced meaningful personal income tax reductions, increasing disposable incomes and driving demand for affordable housing, particularly across India s fast-developing urban centres. Such reforms are contributing to a more inclusive, broad-based and geographically balanced growth trajectory for the real estate sector.

Urbanisation and infrastructure expansion

India s accelerated urbanisation is being matched by a significant increase in infrastructure investments. The government s capital expenditure on infrastructure has more than doubled from Rs.5 lakh crore in FY 2021-22 to Rs.11.11 lakh crore in FY 2024-25 with a strong focus on improving roads, railways and aviation networks. These upgrades are transforming connectivity, unlocking the real estate potential of Tier II and Tier III cities, and creating new corridors of opportunity for developers and homebuyers alike.

Technology redefining real estate

The integration of artificial intelligence (AI), digital platforms, and virtual engagement tools is transforming the way real estate is designed, marketed and transacted. AI-powered property analytics, smart home solutions and immersive virtual site visits are improving transparency, enhancing customer experiences and streamlining operations. As the industry becomes increasingly data-driven and digitally enabled, real estate transactions are evolving to be more seamless, personalised and efficient.

Residential Real Estate Market

The real estate market continues to create significant opportunities for both domestic and international investors. Overall, the residential sector remains a focal point for growth, fuelled by sustained demand. The stable economic and interest rate scenario, along with the still strong momentum, hold enough tailwinds for the market. The government remains committed ensuring housing for all and is taking steps to spur private sector participation and enable easier access to financing for homebuyers in this segment.

In CY2024, India s residential real estate sector scaled new heights with sustained strong demand. A clear shift toward premiumisation is visible with buyer preferences evolving, driven by aspirations for an enhanced lifestyle. According to Knight Frank, the residential market has had a tremendous run since the pandemic in 2020 with sales volumes in the primary market growing at an annualised rate of 23%. Increased savings during lockdowns, minimal income disruptions in mid and high-income brackets, household wealth creation and robust economic growth have fuelled demand. Market sentiments have also been positive largely due to an upbeat economic outlook, with India demonstrating growth and stability in a still volatile global economic and geopolitical environment.

In CY2024, 3.51 lakh units got sold, representing a 7% growth. Most markets were at multi-year highs, except for NCR, which saw a marginal decline. Launches also kept pace, with 3.73 lakh units coming into the market aligned with changing lifestyle preferences for more space, amenities and differentiated experiences. As a result, the contribution of inventory above Rs.1 Crore could see a visible increase. The Quarters to Sell (QTS) level continued to fall steadily to 5.8 quarters from 10 quarters three years ago, indicating a strong demand momentum. Despite the increasing inventory level, the fall in QTS indicated an expanding industry size. Prices grew across markets, with Bengaluru recording the highest at 12% YoY.

The real estate market experienced an unprecedented surge in CY 2025, surpassing expectations and setting new records. This has created significant opportunities for both domestic and international investors, driving the economy forward. Overall, the residential sector remains a focal point for growth, fueled by sustained demand and stable economic conditions.

The shift toward premium housing remains a defining trend in NCR s residential market. Properties priced above Rs.1 crore accounted for nearly 80% of total sales volume, compared to less than 40% three years ago. This growth is indicative of sustained demand for spacious homes with state-of-the-art amenities, driven by affluent homebuyers prioritising quality living spaces. Within this segment, the Rs.1-2 crore and Rs.2-5 crore bracket saw the most significant activity, supported by well-established developers offering projects in strategic locations. In contrast, the segments below Rs.50 lakh continue to show a shrinking trend.

The residential market in Mumbai is poised for continued growth, driven by strong consumer demand furled by ongoing infrastructural developments, rising affluence and evolving consumer preferences. In CY2024, the market retained its top position, with 96,187 units sold and almost an equal number of units launched. Mumbai benefits from a thriving economic ecosystem, positioned as the centre for finance, commerce and industry. Further, completion of infrastructure projects such as the Mumbai Coastal Road, Metro Line 3 and the Mumbai Trans Harbour Link provides additional fillip to demand.

Bengaluru s residential real estate market in CY2024 continued its trajectory of robust performance, bolstered by consistent demand across various segments. Sales grew by 2% to 55,362 units. More importantly, there was heightened activity across premium housing segments with ticket sizes Rs.1-5 crore contributing over 50% to volumes, indicating a shift in buyer preferences towards upscale housing, driven by Bengaluru s affluent demographic from its thriving IT and startup ecosystems.

Pune continued to be a dynamic real estate market, balancing affordability with premium offerings with sales of 52,346 units, up 6% YoY, supported by strong demand from IT professionals, infrastructure development and evolving buyer preferences. New launches increased substantially by 40% in CY2024 to 59,548 units, highlighting rising developer confidence. The Western Zone, including prominent areas like Hinjewadi and Baner, dominated with a significant share of total launches, leveraging its proximity to IT hubs and enhanced connectivity.

Pune s inventory levels increased by 18% YoY in CY2024 but QTS remained healthy at 3.7 quarters, reflecting quicker absorption and strong buyer demand. Prices grew by 6% to Rs.4,778/ sq. ft

Office Market

The office market across major Indian cities sustained its record-breaking momentum, with annual transaction volumes surpassing 71.9 million sq. ft. the highest so far. As a result, vacancy levels also dropped to 15%, the lowest since the pandemic. The positive sentiment around the economy has been the primary driver of occupier activity in the office market.

Transaction volumes in major markets of Mumbai, NCR, Bengaluru, Pune and Ahmedabad scaled record highs in CY2024. Bengaluru led with 18.1 million sq. ft. of leasing, followed by NCR, Mumbai and Hyderabad at 12.7 million sq. ft., 10.4 million sq. ft. and 10.3 million sq. ft., respectively.

Hyderabad, on the other hand, led with completions of 15.6 million sq. ft., followed by Bengaluru with 12.4 million sq. ft. out of total completions of 50.6 million sq. ft. Overall, completions were comparatively subdued as development interest continues to be largely focused on residential projects and vacancy levels remained above pre-pandemic levels.

While the overall transacted volume has been on a steady uptrend, its underlying constituents have changed substantially over time. Third party IT services had been a prominent driver of office space demand previously, but India-facing businesses have been anchoring demand in recent years due to the strategic business need to be aligned with the growing Indian market. India-facing businesses accounted for 36% of the total volume transacted during CY2024 and Global Capability Centres (GCC) took up 31% of the total transactions.

UNION BUDGET 2025-26 TAKEAWAYS

The Union Budget for 2025-26 continued to emphasise infrastructure development and housing while providing a boost to disposable income to drive consumption, setting a favourable backdrop for a more inclusive and balanced real estate growth story.

The Government introduced personal income tax cuts by rejigging the income tax slabs and raising the rebate cap, increasing disposable income and, in turn, stimulating demand for affordable housing, especially across emerging urban centres.

It announced a second Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, with an allocation of Rs.15,000 crore, to resolve project delays due to financial constraints. This move is expected to benefit homebuyers awaiting possession and also inject fresh capital into stalled projects. By enhancing liquidity in the sector, this initiative is expected to attract more investments into this space.

Aligned with its vision of housing for all , the Government launched the Pradhan Mantri Awas Yojna Urban 2.0 (PMAY-U 2.0) with a proposed allocation of Rs.19,784 crore, up 36% from Rs.13,670 crore estimated in the previous budget. Over 88 lakh homes have already been completed under the first phase of PMAY-U. This initiative presents a big opportunity for developers. Private players can participate in creating well-planned, sustainable housing projects with Government support.

The Government s infrastructure investments, with a strong emphasis on enhancing roads, railways, and aviation network, are improving connectivity, unlocking real estate potential in Tier II and Tier III cities, creating new growth corridors for developers and homebuyers alike. The newly introduced H1 lakh crore Urban Challenge Fund will further incentivise cities to boost urban development by raising funds through municipal bonds and Public-Private Partnerships.

Viksit Bharat@2047

With the Indian economy witnessing sustained growth, it is on track to reach USD 5 trillion by FY 2028. By FY 2047, the domestic economy is estimated to be worth USD 30 trillion. In FY 2024, the Prime Minister of India announced its vision of building a Viksit Bharat@2047, with the objective of creating a prosperous Bharat possessing state-of-the-art infrastructure and facilities.

Impact of Viksit Bharat on different sectors of the economy

Infrastructure

To realise the vision of a Viksit Bharat, the Indian government is prioritising the creation of best-in-class infrastructure. Major efforts include the development of the Middle East-Europe Economic Corridor, which will further drive the Indian government s Viksit Bharat initiative.

Housing

The Pradhan Mantri Awas Yojana (PMAY), focused on housing development and urbanisation, will also contribute to the Viksit Bharat 2047 initiative. Further, PMAY will offer citizens affordable housing solutions, develop metropolitan and urban areas and empower underserved communities.

Transportation

The development of transport infrastructure will rationalise the high logistics costs through improved nationwide connectivity and mobility, thus enabling India to realise its vision of becoming Viksit Bharat by 2047.

Housing

The PM Awas Yojana announced plans for 2 crore houses in the future, but details about the urban wing were lacking. Additionally, a target of 1 crore houses for rooftop solarization was set, offering urban households 300 units of free electricity monthly. The Budget highlighted a new scheme for middle-class urban residents in rented housing, slums, chawls, or unauthorized colonies, allowing them to buy or build their own homes.

Urban Reforms

The ongoing municipal reforms featured an incentivization package and a fifty-year loan to states, with a focus on capital project utilization and urban planning reforms to boost municipal bond creditworthiness.

Climate change and real estate sector

The real estate sector in India, a key contributor to the country s GDP and employment, is increasingly facing the multifaceted impacts of climate change. Rising temperatures, erratic monsoons, flooding, and extreme weather events are not only disrupting construction timelines and increasing operating costs but are also reshaping demand patterns for housing and commercial infrastructure. As climate change increasingly affects economies and this sector, there are both physical and transitional risks that could harm assets and the markets they are part of, either directly or indirectly. The impact of climate change on real estate portfolios can be chronic, reflecting long-term trends, or acute, indicating severe short-term occurrences, and vary by location or in response to efforts to shift towards a low-carbon economy.

The urgency for drastic measures is underscored by the observable effects of climate change, such as rising temperatures and sea levels, and increased frequency of extreme weather events. In addition, climate change exacerbates risks to occupational health and safety, with high temperatures already contributing to a 1.4% loss in working hours in 1995. Studies suggest that without addressing climate change, and with an expected temperature increase of 1.3?C by 2030, we could see a productivity loss of 2.2%, equating to 80 million full time jobs.

In CY2022, emissions from buildings, covering both operational (26%) and embodied emissions (7%), accounted for about a third of total energy system emissions. The emissions intensity of cement production has increased by close to 10% since 2015. The rest stems from direct on-site emissions, predominantly from electricity use for lighting and air conditioning. Over the past decade, operational energy consumption in buildings has surged due to rising urbanisation, increased cooling demand, and expanding commercial floor space. India s building sector energy consumption has more than doubled since 2000. There s a significant yet unexplored opportunity to reduce emissions, hindered by the ongoing reliance on fossil fuel-driven assets, the absence of potent energy-efficiency mandates, and a deficit in investments towards sustainable buildings.

Climate change is also influencing regulatory and financial frameworks that govern the sector. With India s commitment to achieve net-zero emissions by 2070, there is growing emphasis on incorporating climate resilience and sustainability into urban development policies. Real estate firms must urgently implement innovative strategies to adapt their buildings, operations, workforce, products, and services to these significant and impending changes.

Moreover, investor sentiment is shifting toward environmentally responsible developments. Institutional and retail investors are beginning to factor climate risk into asset valuation, leading to a potential decline in the premium of properties in high-risk zones and a surge in demand for buildings that meet environmental and social governance (ESG) criteria. Governments, policymakers, investors, and the general populace are shifting their views on climate change and are taking bold actions. The creation of tools that encourage eco- friendly building practices and the widespread acceptance of green building certifications are helping more areas to align their construction activities with the goals of the Paris Agreement. While the surge in investments is indeed encouraging, it also highlights the necessity of engaging with additional external partners to leverage technology effectively, ensuring seamless operations, accountability and transparency. As India progresses towards its net-zero goals, integrating climate considerations across all sectors will be crucial to building a resilient and sustainable economy.

BUDGET 2025 26 - KEY TAKEAWAYS FOR CLIMATE ACTION

The Union Budget 2025 26 reflects India s commitment to climate action through several key initiatives. While it emphasises renewable energy and clean transportation, it also highlights the need for more comprehensive strategies in industrial decarbonisation and agricultural sustainability to achieve India s long term climate objectives.

The Ministry of New and Renewable Energy received a significant budgetary boost, with allocations increasing from Rs.19,100 crore in the previous fiscal to Rs.26,549 crore. This funding supports flagship schemes such as the PM Surya Ghar and the Green Hydrogen Mission, aiming to expand renewable energy infrastructure.

In addition, the Nuclear Energy Mission was allocated Rs.20,000 crore, emphasising the development of small modular reactors to enhance energy security. Investments in solar PV manufacturing, the Green Energy Corridor, and battery energy storage systems further demonstrate the Government s integrated approach to increasing non-fossil fuel capacity and meeting growing energy demands.

The Budget provided support for green steel (<2.2 tonnes of CO2 emission for every tonne of steel produced), including a sixfold increase in the specialty steel Production Linked Incentive (PLI) scheme from Rs.55 crore to Rs.305 crore. Initiatives like the restructured Shipbuilding Financial Assistance Policy and the establishment of a Rs.25,000 crore Maritime Development Fund are steps toward promoting sustainable practices. Nonetheless, sectors like cement, despite allocations for infrastructure development under the PM Gati Shakti master plan, lack targeted green initiatives, indicating a need for more comprehensive industrial decarbonisation strategies.

The transportation sector witnessed a notable increase in funding for electric mobility, with allocations rising from Rs.4,435 crore to Rs.5,322 crore. The PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme received Rs.4,000 crore to accelerate electric vehicle adoption. The PM-eBus Sewa Scheme s funding also increased significantly, supporting the expansion of electric bus operations. To bolster domestic EV manufacturing, the Government removed import duties on 35 items essential for EV battery production, aiming to strengthen the electric vehicle ecosystem. However, the non-renewal of the Electric Mobility Promotion Scheme, which previously offered subsidies for advanced battery-fitted EVs, suggests a shift in policy focus.

IMPACT OF CLIMATE CHANGE ON REAL ESTATE SECTOR

Due to the nature of business, the real estate sector is a significant contributor to the GDP of India. It is also responsible for nearly one-fifth of the nation s emissions, and 33% of total energy consumption. Considering India s rigorous climate objectives, including the goal of Net-Zero by 2070, the Indian real estate sector is required to act quickly and effectively. As climate change increasingly affects economies and this sector, there are both physical and transitional risks that could harm assets and the markets they are part of, either directly or indirectly.

Real estate portfolios are exposed to various risks, including the impact of climate change, which can cause damage to properties through extreme weather events. These impacts can be chronic, reflecting long-term trends, or acute, indicating severe short-term occurrences, and vary by location or in response to efforts to shift towards a low-carbon economy. The urgency for drastic measures is underscored by the observable effects of climate change, such as escalating temperatures, rising sea levels, and increased frequency of extreme weather events. Additionally, environmental hazards adversely affect the ability to provide safe, healthy, and adequate working conditions, alongside job availability. Climate change exacerbates risks to occupational health and safety, with high temperatures already contributing to a 1.4% loss in working hours in 1995. Studies suggest that without addressing climate change, and with an expected temperature increase of

1.3?C by 2030, we could see a productivity loss of 2.2%, equating to 80 million full-time jobs. Recognizing their contribution to climate change, real estate firms must urgently implement innovative strategies to adapt their buildings, operations, workforce, products, and services to these significant and impending changes.

In recent years, there s been a noticeable uptick in worldwide investments aimed at diminishing the energy consumption of buildings. This move by the real estate sector towards minimizing its environmental footprint marks a positive trend. Governments, policymakers, investors, and the general populace are shifting their views on climate change and are taking bold actions to counteract its effects. The creation of tools that encourage eco-friendly building practices and the widespread acceptance of green building certifications are helping more areas to align their construction activities with the goals of the Paris Agreement.

OPPORTUNITIES, THREATS AND CHALLENGES:

OPPORTUNITIES:

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Company s well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.

Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2026, it will contribute 13 per cent to country s GDP. Emergence of nuclear families, rapid urbanization and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial and retail. Rapid urbanization in the country is pushing the growth of real estate. Indian real estate developers have shifted gears and accepted fresh challenges.

Housing Demand

A combination of economic growth, increasing income levels, and the perception that housing prices are stabilising, which has led to a notable uptick in housing demand. Potential buyers, previously on the sidelines, are now entering the market as first-time homeowners while existing homeowners are looking for larger spaces. The shift towards remote and hybrid work models is further influencing the desire for more spacious living arrangements. Employers offering flexible work options continue to be a significant factor in this trend, as it allows employees the freedom to live further from the office, thereby boosting demand for residential properties in various segments.

Sector Consolidation

The Indian real estate sector, characterised by its highly fragmented nature, has been undergoing a significant phase of consolidation for several years. This consolidation has been accelerated by various factors, including the pandemic, which has effectively sidelined less robust participants. The current environment in the real estate industry poses challenges to the entry of new competitors. With the trend leaning towards a smaller number of dominant developers in each region, this period of consolidation offers an attractive chance for current real estate firms to meet the increasing demand for housing.

Affordable housing

Affordable housing remains a pivotal area for developers and a primary focus for the government. The PMAY is close to achieving 3 crore houses, and an additional 2 crore houses are targeted for the next 5 years, as discussed above. This shows that the affordable housing market is projected to experience a surge in demand, bolstered by an anticipated economic revival and increasing income levels.

Digital Real Estate Sales

Since the pandemic, marketing efforts in real estate have expanded beyond attracting new customers and building brand awareness to include creating personal connections digitally. Thanks to technology that allows property purchases online, developers have seen strong sales, even during lockdown periods. They are using digital tools to engage with potential buyers, present project details, offer virtual tours and target Non-Resident Indians (NRIs) to increase sales. Advanced technologies like virtual reality, augmented reality, and AI-driven chatbots are increasingly being employed to offer tailored services to potential clients. The share of real estate transactions conducted online is likely to increase further, requiring developers to remain aligned with the advancements in digital technologies.

THREATS & CHALLENGES:

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

Unanticipated delays in project approvals;

Availability of accomplished and trained labour force; Increased cost of manpower;

Rising cost of construction lead by increase in commodity prices; Growth in auxiliary infrastructure facilities; and Over regulated environment.

The Indian real estate sector is still dependent on old building techniques and hence they are over-dependent on extensive human labour for construction activities. Whereas, high-quality building materials such as concrete and iron slabs are used in new construction techniques. India is touted to be the most populous country by the year 2050. More than 50 per cent of people are urban center and Tier 1 cities. To accommodate the population, India would require more new cities and urban center on a mass scale in order to provide the required resources to the inhabitants.

The geo-political war between Ukraine-Russia and Israel-Iran slowing global economy, tightening fiscal policy mired with badly managed/failure of few major players in banking and finance sectors around the world suggest a possible moderation in business confidence and investment. Uncertainty over the global trade environment and volatility in the financial markets have softened the global trade and protracted war in Ukraine poses further downside risks to this forecast. The short-term economic outlook for many European countries has deteriorated sharply giving headwinds for mild recession.

On April 22, 2025, after the attack at civilians and tourists at Pahalgam, Jammu & Kashmir, India, the Indian economy has dipped but The2025India Pakistan conflictwas a brief armed conflict betweenIndiaandPakistanthat began on May 07, 2025, after India launched missile strikes on Pakistan, in a military campaign codenamedOperation Sindoor.India said that the operation was in response to thePahalgam terrorist attackin Jammu and Kashmir, Indiaon April 22, 2025 in which 26 civilians were killed. India accusedPakistan of supporting cross-border terrorism, which Pakistan denied, which has lead to Indian economy crises.

Regulatory Hurdles

The real estate industry is subject to extensive regulations, and any negative adjustments in governmental policies or the regulatory framework can negatively influence the sector s performance. Significant delays in procedures related to acquiring land, determining land use, initiating projects, and obtaining construction approvals are common. Changes in policy applied retrospectively, along with regulatory obstacles, could affect profitability and diminish the appeal of both the sector and the companies active within it.

Monetary Tightening and Funding Issues

The lending to real estate developers by the NBFCs and HFCs was already limited after the IL&FS crisis and the pandemic has further deteriorated the liquidity situation for weaker developers who had to resort to alternative funding in absence of long-term loans from banks.

In recent years, the landscape of real estate financing has shown a marked divergence. Well-established developers with lower debt levels have continued to secure funding with relative ease, benefiting from the selective approach of lenders, while those with weaker financial standings have encountered challenges in accessing capital. The performance of the real estate sector is intricately connected to the broader economic recovery and the prevailing monetary policies. The RBI has adopted an accommodative stance for now to bolster economic growth but has kept a hawk eye on the inflation trajectory. The central bank could reverse its stance, which may pose challenges for the real estate sector in the form of higher housing loan costs and an escalation in financing costs for developers.

Shortage of Manpower & Technology

As the country s second-largest employment provider, the real estate sector relies significantly on manual labour. The pandemic severely impacted this sector due to labour shortages, disrupting project completion schedules. Consequently, there s a pressing need for the adoption of alternative construction methods that are less dependent on manual labour and more on technology.

COMPANY STRENGTHS:

Your Company continues to capitalize on the market opportunities by leveraging its key strengths. These include:

1. Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in higher premium realizations.

2. Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.

3. Strong cash flows: Has built a business model that ensures continuous cash flows from their investment and development properties ensuring a steady cash flow even during the adverse business cycles.

4. Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

5. Outsourcing: Operates an outsourcing model of appointing globally renowned architects/contractors that allows scalability and emphasizes contemporary design and quality construction a key factor of success.

6. Transparency: Follows a strong culture of corporate governance and ensures transparency and high levels of business ethics.

7. Highly qualified execution team: Employs experienced, capable and highly qualified design and project management teams who oversee and execute all aspects of project development.

HUMAN RESOURCES:

The timely availability of skilled and technical personnel is one of the key challenges. The Company maintains healthy and motivating work environment through various measures. This has helped the Company to recruit and retain skilled work force which would result in timely completion of the projects. The Company has cordial relation with the employees and contractors of the company. The staff has the depth of experience and skills to handle company s activities. Skilled team of workers and other professionals ensure superior quality standards during every stage of work. The total employee strength as on March 31, 2025 was 79 (Seventy-Nine Only).

Performance Management System:

Your Company has adopted a holistic approach to the performance management process that focuses on three broad categories - Nurture & Engage, Connect & Coach, Capability Building & Development.

The process begins with the Annual Goal Setting exercise that provides clarity to all employees about their targets. Goal setting ensures a commitment from all employees to achieve higher business milestones and alignment to the organization s goals at a macro level. The process is followed by a formal Mid Year Review and the Annual Review and Rating exercise.

The essence of the performance management process is Continuous Performance Management (CPM). CPM is an agile, modern, human centered approach of evaluating and improving employee performance. It fosters a forward-looking mindset and has an emphasis on real time, frequent check-ins and documentation. It is an approach that breaks the stereotype of formal later date discussions, rather it lays emphasis on spot feedback. The continuous check-ins help create an environment of trust, strengthen relationships, build communication and provide remedial coaching to the employees thereby assisting them to realize their full potential.

The Succession Planning helps in identifying the Critical Roles and High Potential employees who can take up these roles in the future. The process ensures business continuity, creates a pipeline for future leaders and provides employees with a defined growth path and an opportunity for a structured and focused learning.

Your Company has a robust Career Development framework that gives employees the power to define aspirations and take charge of their career. They can discuss their development needs and aspirations with their managers and carve a development plan for the future. Your Company extends the required assistance to employees and provide them with opportunities that can facilitate employees to grow both personally and professionally. This enables employees to achieve their career goals and in turn creates a set of motivated, valuable and skilled workforce.

Learning & Development:

The Learning & Development function aims to foster a culture of continuous collaboration and learning. The blended approach to Learning helps in development of Technical, Behavioral, Leadership as well as General Management skills.

Mental Wellness:

Mental wellness is a positive state of mental health. It ensures that individuals think, feel and act in ways that will create positive impact on their personal and professional life. Keeping this in mind, your Company launched 24/7 Employee Assistance Program (EAP).

This program offers professional counseling services to all employees seeking help in managing concerns related to their life. It supports employees who experiences problems that affect their well-being and performance at work. These sessions are conducted privately and ensures complete confidentiality.

For the benefit of all employees, your Company organized the mental wellbeing session facilitated by professional counsellors covering certain real-life issues and topics like managing disagreements, dealing with lockdown situations, parenting, time management, work life balance, stress management and others.

This program has greatly assisted employees during the current unprecedented and challenging times. It has enabled them to manage stress, handle challenges and build stronger relations. This has led to a happier, healthier, focused and more productive workforce.

Health and Safety:

Your Company is always committed to the health and safety of its employees. Your Company provides a clean, hygienic and conducive work environment to all employees. All offices and sites go through regular sanitation, social distancing norms are followed, sanitizers are placed at various locations, visitors entries are minimized, wearing masks is mandatory. Weekly mailers are sent to educate employees regarding safety measures to be practiced during all the times.

Benchmarking:

It is your Company s constant endeavor to improve its processes and policies. Your Company strives to improve its policies and processes on a continuous basis and benchmarking as a tool assists in achieving the same. It helps to identify actionable insights and stay up to date with Human Capital trends.

Fun at work:

The Fun at Work Committee focuses on innovative initiatives to engage the workforce as enjoying work and ensuring camaraderie is a key element of employee happiness. Celebrations around festivals and cultural activities break the monotony at work and help people to have a more positive mind set, higher levels of wellbeing and better mental health.

OUTLOOK:

The global economic outlook for FY 25-26 is marked by heightened uncertainty. Escalating trade tensions, tariff wars, and increasing protectionism have weighed heavily on trade and investment flows. These developments have prompted downward revisions in global growth projections, with investor sentiment dampened by geopolitical volatility and weakening cross-border cooperation. However, as per a report by the World Bank, India remains a bright spot - projected to grow at 6.3% in FY26.

Amidst this challenging global environment, India is emerging as a net beneficiary. The global shift in supply chains, driven by a need to diversify manufacturing away from China, has opened up substantial opportunities for India, supported by its competitive labour costs, improving infrastructure, expanding production capabilities, and large, English-speaking workforce. Crude oil prices have also declined in recent months, offering macroeconomic tailwinds for India as a net importer and helping ease inflationary pressures. These factors are boosting domestic consumption, containing input costs and maintaining fiscal stability, reinforcing India s position as a bright spot in an otherwise subdued global landscape.

Against this backdrop, India s growth outlook remains resilient. Strong domestic demand, a dynamic services sector, and a gradual revival in private sector investment continue to anchor economic momentum. Government led initiatives, such as increased capital expenditure on infrastructure, the PLI schemes to boost manufacturing, and the accelerated formalisation of the economy through digital platforms, are expected to yield long-term productivity gains.

The Union Budget FY 25 26 reinforces this positive outlook by prioritising urban infrastructure and affordable housing. It introduces several enabling measures, including enhanced tax incentives for homebuyers, higher TDS thresholds on rental income, and additional income-tax rebates. These initiatives are poised to stimulate the real estate sector, generate employment, and catalyse growth across ancillary industries.

According to World Bank, India is projected to grow by 6.3% in FY 25-26, retaining its position as the fastest growing major economy in the world. This growth trajectory underscores India s emergence as a stable, scalable, and investment-friendly economy.

In this evolving economic context, the real estate sector is poised for structural growth. The contribution of real estate to India s GDP is set to rise significantly in the coming years, reflecting its critical role in employment generation, capital formation, and urban development. With policy support, demographic tailwinds and growing investor confidence, the sector is undergoing a structural and sustained transformation.

An increase in earning potential, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial growth in the sector. With suited economic growth, the premium housing segment will also witness higher demand in the years to come. Mumbai, Delhi-NCR, Hyderabad and Bangalore are expected to remain on investor s radar in FY2025-26.

Unlike the past year, the real estate sector is now picking up with home buyers willing to make the move. With most workers displaced during the lockdown now back, construction activity has resumed and work is moving at a faster pace to fulfill commitments.

The demand for residential property has in fact also been guided by the concept of work from home as families are now looking out for an upgrade as individual space becomes a crucial factor.

At Country Condo s, this macro environment aligns well with our trajectory. Having demonstrated strong performance over the last three to four years, we are well-positioned to capitalise on emerging opportunities. Our strategy, grounded in disciplined growth, customer centricity and sustainability ensure that we remain at the forefront of India s real estate evolution creating long-term value for all stakeholders.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an adequate internal control system, corresponding with the size and nature of its business. The system of internal control is supported by documented policies, guidelines and procedures to monitor business and operational performance which are aimed at ensuring business integrity and promoting operational efficiency. It ensures timely and accurate financial reporting in accordance with applicable accounting standards, safeguarding of assets against unauthorized use or disposition and compliance with all applicable regulatory laws and Company policies.

The Company has an Internal Auditor who oversees the entire internal audit function. Internal Auditors of the Company review the internal financial control systems on a regular basis for its effectiveness and necessary changes and suggestions are duly incorporated into the system. However, given the size of its operations in terms of nature of its business, it also uses services of independent audit firms to conduct periodic internal audits in line with an audit plan that is drawn at the beginning of the year. This audit plan, prepared by the Internal Auditor, is approved by the Audit Committee and the Board of Directors.

Internal audit reports are placed periodically before the Audit Committee of the Board of Directors, which reviews the adequacy and effectiveness of the internal control systems and suggests improvements for strengthening them.

The Company has also focused on upgrading the IT infrastructure both in terms of hardware and software. In addition to the existing ERP platform, the Company is presently reviewing the process documentation to ensure effectiveness of the controls in all the critical functional areas of the Company.

SEGMENT WISE PERFOMANCE:

The Company is primarily engaged only in the business of sale of Plots under Real Estate Segment in India. As per the Indian Accounting Standard 108 on Segment Reporting, the Board would like to inform that under the real estate segment total Revenue was 1670.69 Lakhs only. The Total Profit Before Tax for the Company was 83.47 Lakhs only & Total Profit After Tax for the Company was 59.75 Lakhs only.

Financial performance overview

Analysis of financial statements for FY 2024-25 is provided below:

Key Financial Ratio Analysis:

In accordance with SEBI (Listing Obligations and Disclosure requirements 2018) (Amendment) Regulations 2018, the Company is required to give details of significant changes (Change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.

A comparative table showing synopsis of FY 2024-25 versus FY 2023-24 of Key Financial Ratio is provided below:

Ratios	Numerator	Denominator	Current year	Previous year	Variance (in %)	Explanations / Remarks
Current ratio (in times)	Total current assets	Total current liabilities	3.02	3.60	16.22	Decrease in Ratio is due to increase of current liabilities
Debt-Equity ratio (in times)	Debt consists of borrowings and lease liabilities*	Total Equity	0.00	0.01	100.00	Changes in Ratio due to reduction in total Debt
Debt service coverage Earning for Debt Service = ratio (in times)	Debt service = Interest Net Profit before taxes + Non-cash operating expenses + Interest + Other non-cash adjustments	7.20 and lease payments + Principal repayments*		11.42	36.97	The company has
						sufficient earnings in servicing the debt on time
Return on equity ratio (in %)	Profit for the year less Preference dividend (if any)	Average total equity	9.60	14.92	35.66	Return on equity decreased due to decrease in Profit
Inventory Turnover Ratio (in times)	Cost of goods sold OR sales	Average Inventory	0.19	0.48	60.27	Inventory Turnover changes due to increase of closing inventory.
Trade receivables turnover ratio (in times)	Revenue from operations	Average trade receivables	N.A	N.A	-	(No Trade receivables). As the company Selling its products only after receiving the advance from Customers.
Trade payables turnover ratio (in times)	Purchase of Services and other expenses	Average trade payables	N.A	N.A	-	Since average trade payables are very neglizable hence not considered
Net capital turnover ratio (in times)	Revenue from operations	Total Equity	2.15	3.26	34.03	Decrease in ratio due to decrease of Revenue.
Net profit ratio (in %)	Profit for the year	Revenue from operations	4.46	4.57	2.48	Net profit ratio decreased due to decrease in Sales and Other Income
Return on capital employed (in %)	Profit before tax and finance costs	Capital employed = Tangible Net worth + Lease liabilities + Deferred tax liabilities	9.60	14.84	35.28	Decrease in ratio due to decrease of Profit
Return on investment (in %) -Unquoted	Income generated from invested funds	Average invested funds in treasury investments	N.A.	N.A.	-	Ratio not applicable as there is no income generated from invested funds
Operating Profit ratio	Earnings before Interest, Tax and Amortization	Net Operating Sales	5.42	5.20	4.26	Increase in ratio due to Increase of Operating income
Return on Net worth	Net Income	Shareholders equity	11.67	16.97	31.22	Decrease in ratio due to Decrease of Sales

CAUTIONARY STATEMENT:

This Management Discussion and Analysis contain forward looking statements within the meaning of applicable security laws and regulations that reflects your Company s current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors. 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. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, 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.

This Management Discussion and Analysis contain forward looking statements within the meaning of applicable security laws and regulations that reflects your Company s current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward-looking statements as a result of many factors. 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. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, 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.