Country Condos Ltd Management Discussions.


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.

The Central Bank continuously eased the monetary policy following recent cuts in interest rates. However, full benefits are yet to be transmitted to the industry, which may lead to increased investments. Strong measures are being implemented to strengthen the countrys financial sector (especially banks) through the accelerated resolution of non-performing assets under a simplified bankruptcy framework.

The benefits of recent structural reforms like demonetization, GST and ongoing bank recapitalization would enhance economic stability.

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 and Dehradun.

Turning to the domestic economy, GDP growth for 2018-19 has been estimated at 6.8%. Gross fixed capital formation growth has declined sharply to 3.6%, after having been previously in the double- digits. Private consumption growth moderated. However, the overall slowdown in growth was cushioned by a large increase in the governments final consumption expenditure.

Reserve Bank of India has estimated GDP growth for 2019-20 at 7% - in the range of 6.4-6.7% in the first half of the fiscal and 7.2-7.5% in the second half of the fiscal.


The global real estate market is expected to generate a revenue of USD 4,263.7 billion by 2025, according to a new report by Grand View Research, Inc. due to the increasing demand for housing real estate space, rapid urbanization through migration in search for better amenities etc. Rapid economic development in the developing regions and countries like India, China, and many African countries have enhanced income levels and helped in the real estate market.

According to United Nations, approximately 50% of the population lives in urban areas and this figure is set to reach up to 65% in the forecast period owing to the migration into cities which turn into megacities with bustling urban amenities and lifestyle.

Global economic activity lost pace in FY19, reflecting a further slowdown in global trade and manufacturing activity. While economic activity in the US initially strengthened, factory activity and retail sales moderated. Economic activity in the Euro area remained weak due to muted industrial activity and subdued business confidence. Economic activity slowed in a number of emerging market economies as well, including in China.

The strengthening of the US dollar led to weakening gold prices; however, gold prices picked up in May 2019 on escalating trade tensions, reviving its demand as a safe haven asset. Inflation remained below the target in several economies.


The Indian real estate sector witnessed a slew of structural transformations led by Real Estate (Regulation and Development) Act, 2016 (RERA), Demonetization and GST. In the near-term, these measures generated sectoral tailwinds, which are expected to increase transparency and confidence in the sector.

According to reports, Indias real estate sector is expected to grow to US$ 1 trillion by 2030, accounting for nearly 13% of the countrys GDP. The catalysts for this growth can be attributed to rapid urbanization, increasing emergence of nuclear families and rising household incomes.

The countrys commercial realty segment, however, continues to enjoy increased capital flows. The sector also witnessed the advent of new niche markets comprising co-working spaces, warehousing, student housing and senior living.

The launch of Real Estate Investment Trusts (REITs) in India has helped institutionalize the commercial sector, empowering developers to mobilize patient long-term capital to catalyze growth across the coming decade. According to a JLL report, institutional investments during the 2014-2018 period doubled from US$ 9.4 billion to almost US$ 20.3 billion compared to the 2009-2013 period.

Indias real estate sector is projected to reach $180 billion by 2020 from $126 billion in 2015, according to a joint report by CREDAI and JLL. Housing sector is expected to contribute around 11 per cent to Indias GDP by 2020. Investment inflows in the housing sector since 2014 have been Rs 590 billion, about 47 per cent of the total invested money in real estate, it said.

India is expected to witness an upward rise in the number of real estate deals in 2019, on the back of policy changes that have made the market more transparent.

Residential Segment

During the last few years, government decisions like demonetization, GST, RERA and the Benami Transactions (Prohibition) Amendment strengthened the end user market, moderating speculation in physical markets.

The Government remains committed to enhance the role of affordable housing, strengthening its Housing for All commitment. In the recent past, this industry segment was encouraged through infrastructure status, refinancing options and tax incentives.

The year under review was marked by stability, right-sizing and right pricing of new products. Increased transparency and confidence due to recent measures strengthened the home buyers sentiment. According to reports, this segment grew 76% YOY in terms of units launched in calendar year 2019 and a modest 6% YOY growth in sales.

Market traction could have been better but was impacted by the recent turmoil in the NBFC sector, which caused some stress to cash starved developers. Whilst, the launches and sales there was limited upward movement in realizations and pricing. Stronger traction was witnessed for completed projects owing to lower risk and non-applicability of GST on completed inventory, enhancing attractiveness.

Office Segment

The countrys Commercial realty segment reported strong growth. Capital inflows validated confidence in the countrys growth story. As per reports, Indias grade A office space offering stood at a substantial 49.26 million square meter (msm) [530 msf] and likely to surpass the previous benchmark of 65.06 msm (700 msf).

Indias office space absorption is expected to rise gradually across the near-to-medium term owing to robust economic fundamentals and a positive investor sentiment.

The Commercial Office space is marked by evolving occupier trends, mostly driven by a rise in co-working demand. Co-working spaces no longer address only start-ups and SMEs, rather a substantial demand emanating from large mainstream Corporates. The principal drivers of co-working spaces comprise savings in upfront operational costs and a flexibility in scaling or downsizing requirements. This trend is also helping developers in launching small office spaces and widening the tenant mix. Besides, quality standards in commercial offices are rising, marked by increased safety, sustainability and wellness as demanded by multinational tenants and space owners.

Retail Segment

Indias retail industry continues to get progressively organised, moving towards experiential retail where the key to success will be increasingly influenced by competent mall management and a healthy tenant mix.

As per recent JLL reports, the Grade A retail stock is expected to grow to nearly 9.57 msm (103 msf). Delhi-NCR leads commercial realty stock creation, accounting for approximately 32% of the total retail space in India.

Besides, quality-driven malls have been consistently reporting superior occupancy levels and steady growth in trading densities. The changing landscape of the retail segment has prompted the adoption of consumer analytics to decode consumer preferences and enhance the shopping experience.


The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies. Below are some of the other major Government Initiatives:

1. Pradhan Mantri Awas Yojana

Some of the recent reforms and policies taken by the Government of India related to real estate sector include the Pradhan Mantri Awas Yojana (PMAY) with the government sanctioning over 3.1 million houses for the affordable housing segment in urban regions till November 2017. Of this, about 1.6 million houses have been grounded and are at various stages of construction, and about 0.4 million houses have been built under the mission.

2. PPP policy for affordable housing

PPP policy for affordable housing was also announced on 21 September 2017 for affordable housing segment to provide further impetus to the ambitious ‘Housing for all by 2022 mission.

3. Real Estate (Regulation & Development) Act, 2016

With the enactment of Real Estate (Regulation & Development) Act, 2016, it is anticipated that accountability would lead to higher growth across the real estate value chain, while compulsory disclosures and registrations would ensure transparency.

4. Goods And Service Tax

New norms stipulated a one-time option to continue with existing slabs (effective rate of 12% for regular and 8% for affordable housing) with input tax credit or switch to new slabs (5% for regular and 1% for affordable housing) without input tax credit for under-construction or ongoing realty projects.

New projects mandatorily have to be in 5% slab for regular segment and 1% slab for affordable segment without any input tax credit. New norms are applicable for residential properties only, while there has been no change for commercial properties.


The year 2019 as we all know has set a new benchmark for the Indian real estate sector. The implementation of demonetisation in November 2016 had the entire economy reeling until the first quarter of 2017 and the realty segment was not pardoned either, with land sales reaching stagnation due to more involvement of cash transactions. However, this eventually helped reduce land prices thereby making the end products more affordable to the consumers. By April 2017, when the markets were looking to stabilise, RERA and GST were announced in succession which again caused some inertia due to confusion among buyers and developers alike, with both awaiting the final set of RERA notifications/legislation from their respective state regulatory bodies.


1. Different Tax Incentives:

New norms stipulated a one-time option to continue with existing slabs (effective rate of 12% for regular and 8% for affordable housing) with input tax credit or switch to new slabs (5% for regular and 1% for affordable housing) without input tax credit for under-construction or ongoing realty projects.

New projects mandatorily have to be in 5% slab for regular segment and 1% slab for affordable segment without any input tax credit. New norms are applicable for residential properties only, while there has been no change for commercial properties.

2. Past year changes to shape whats to come:

There have been many changes set by the legislature, including RERA and GST which will influence the market in 2019 as well. For both, home buyers and builders, these changes will create a different outlook on how business is done. There were some unavoidable issues for home buyers when it came to investing in under-developed projects, but now with full transparency, home buyers and designers can have a simple business.

3. PMAY to take care of housing for all:

The yearning design of the Prime Minister to construct homes for all by 2022 will definitely get a noteworthy change financially with $1.3 trillion. This will make 60 million new houses and 2 million occupations throughout the following 4-5 years. Each task is presently getting enrolled under PMAY conspire; the urban real estate segment will see a significant lift in 2019. Affordable housing could rise as the characterizing pattern in 2019.

4. Clean Capital:

Because of the absence of transparency in the area, it was hard to get a spotless capital from monetary foundations. In any case, circumstances are different since RERA and Demonetization have had an impact as there has been an entire change in the process of purchasing and offering of a home. Investors and monetary foundations have opened up the road for clean capital. This unquestionably demonstrates the positive picture in 2019.


1. Job loss in other sectors affect the Indian real estate sector majorly:

People earning in the bracket of Rs. 2 million and Rs. 8 million per annum are the major investors in the Indian real estate sector. They thus make up for a huge portion of the factors responsible in the sectors growth. Most people in this category are employees in IT and other service sector companies. According to IIFL (2017) Indias IT and BPO sector employs over 4 million people. However, recently according to many reports, employees working in the middle management of these industries are at a higher risk of job loss due to increased automation and artificial intelligence tools (Money Control, 2019). This affects their ability to purchase a premium or mid-premium house. Thus the issue of job loss has hit the sector directly, and demand for housing will continue to drop (particularly in cities) as a result.

2. Inventory pile-up in the Indian real estate sector:

The pile up has been caused due to a number of reasons like fall in demand, litigation issues, failure to deliver projects on time, poor planning, etc. This has resulted into 2,50,000 units of unsold residential houses in Delhi-NCR alone. Most of the builders consider unsold flats as work in progress but until the property is sold, they have to pay high interest rate. This also delays launch of new projects.

3. Low rental yield from the Indian real estate sector

Rental yields in India is among the lowest in the world at 2.2% (Equity master, 2016). This makes buyers looking for property only as investment somewhat skeptical of purchasing. Also gross rental income in the major cities Mumbai, New Delhi, and Bangalore are quite poor despite a consistent rise in property prices (Shanu, 2016; Singh, 2017). This indicates that real estate in India is overpriced in some locations, making it a dull investment option. Thus low rental yield is a major challenge for real estate.

4. High interest rate :

While compared to countries such as USA and the UK, Indias banks are found to give loans at 7-8% higher rates. Currently the rate of interest hovers around 10% which is 3-4 times higher than the interest rate charged by US banks for purchasing a property (IBEF, 2008). The higher the interest rate the lower the demand for property, causing a ripple effect.

5. Difficulty in getting bank loans and delay in possession:

Home loan seekers commonly face difficulties in procuring a loan from banks and non-banking financial institutions (NBFCs). The top reason is facing rejection of application due to lack of knowledge about documentation and lack of required credit score. Another reason is lack of required sum for down payment on the loan. Furthermore, dilemma in choosing the interest rate, time taken for property evaluation and the lengthy loan disbursement process (Financial Express, 2016). In most cases banks approve loans quickly, they take much longer to disburse the loan. During this period customers are faced with increased costs and waning interest on the property. Despite the launch of friendly mobile applications and instant customer service, this issue remains grave in the financial sector.


1. Changing demographics:

Aging and urbanizing populations are changing competitive dynamics and creating new markets in real estate.

2. Pricing uncertainty:

With few transactions taking place in the real estate market, valuations are a problem for existing owners, as well as buyers and sellers.

3. Global economic and market fluctuations:

Due to capital flows and business expansion, the real estate industry has become a truly global industry and, as such, is increasingly susceptible to global market fluctuations.

4. Economic vulnerability and regulatory risks in developing markets: developing markets are a key focus for global real estate firms but regulatory risk in these markets is constantly changing as authorities seek to jump start economies.


2019 is expected to be a year of consolidation of products and services in the sector - with the impacts of all policy initiatives taken in 2019-20 beginning to take shape in the coming year. More joint ventures/joint developments will be the order of the day with financially distressed developers being taken over by larger players and presenting the industry with a fresh line up of competitors. Completion of existing projects will be prioritized over launching new ones, hence, 2019 looks promising for a good supply of houses across major Indian markets. In order to achieve this, developers will be remodeling their business processes to streamline delivery and allied services, without stretching themselves too much in terms of debt or scope of work.

The Governments efforts to boost "affordable housing" by conferring "infrastructure status" to this segment and announcing various tax incentives will continue to attract more prominent developers to realign their products to compete in this category. The Union Cabinets decision to increase the carpet area of affordable units to 120 sq.m and 150 sq.m for MIG-I (income category 6-12 Lakhs per annum) and MIG-II (income category of 12-18 Lakhs per annum) segments respectively, coupled with an interest subsidy of upto 4%, will benefit both buyers and sellers as options increase for the former and inventories are cleared for the latter. Affordable housing will therefore become an important segment in every developers portfolio in 2019. Developers could also be focusing on their niche expertise in the new year, specializing in the various segments of real estate, e.g., plotted developments, residential projects, townships, and commercial spaces; and hence, specialist service providers could be emerging in each of these categories.


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.

The Company has an Internal Auditor who oversees the entire internal audit function. 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 is primarily engaged only in the business of sale of Plots under Real Estate Segment and the Hospitality Services to its Mysore Road Club located at Bengaluru in India has been stop with effect from 1 October, 2018. As such, the Company operates only in a single segment namely Real Estate Segment and Hospitality Segment has been discontinued and was carried out till half year only.

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 Rs. 1915.82 Lakhs only & Hospitality segment total Revenue was Rs. 117.27 Lakhs only. The Total Profit Before Tax for the Company was Rs. 75.51 Lakhs only & Total Profit After Tax for the Company was Rs. 52.27 Lakhs only.


The Company achieved a turnover of Rs. 2033.09 Lakhs only and The Total Profit Before Tax for the Company was Rs. 75.51 Lakhs only & Total Profit After Tax for the Company was Rs. 52.27 Lakhs only.

Given the highly specialized nature of the Companys business and the large number of locations where it operates, attracting and nurturing the right talent is at the core of your Companys strategy for success and growth. Accordingly, the HR function is organised into three key areas: customer acquisition, resort operations and corporate functions. During the year, focus was on building capabilities through a structured approach to drive the Companys performance. This encompassed implementing changes across all components of the HR function: recruitment, employee engagement, reward and recognition, skill upgrading, talent management, organisational culture and employee relations. The Company organizes a TOP GUN training program where promising young employees are trained to become next level managers. There are 54 permanent Employees on the Rolls of the Company as on 31 March, 2019.


Presently the Company enjoys cordial relations with employees and believes that human resources are invaluable asset. The Board wishes to place on record its appreciation to all employees for their efforts and cooperation for the performance and growth of business during the year.


There were no fresh loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

The details of the existing Guarantees are given below: a) The Company has given the Corporate Guaranty to Vijaya Bank, Bank of India and Union Bank of India in respect of Term Loan availed by M/s. Country Club Hospitality & Holidays Limited.

The details of the Property given as Collateral securities are as follows. Companys Immovable property situated at No.20/1-524, Sy No: 20/1, Geddanahalli, Attibele Hobli, Anekal Taluk, Bangalore District Pin-562107. b) The Company has given the Corporate Guaranty to Central Bank Of India in respect of Term Loan availed by M/s. Country Club Hospitality & Holidays Limited.

The details of the Property given as Collateral securities are as follows.

Companys Immovable Property Situated at Sy No:101/3,102/3,103/1,103/2 & 103/17, Kumbalgodu, Kengeri Hobli beside Mc.dowell Unit near Mysore Road under BBMP, Bangalore.


Your Directors thank the Companys customers, vendors, investors, business associates, bankers and other agencies for their support to the Company.

We wish to place on record our appreciation for the untiring efforts and contributions made by the employees at all levels to ensure that the Company continues to grow and excel.

Finally your Directors record their deep sense of gratitude to all the shareholders for the abundant confidence reposed in the Board of Directors.

For and on behalf of the Board
Date : 13 th August, 2019 DIN: 01905757 DIN: 00115553