Fact Enterprise Ltd Management Discussions

FACT ENTERPRISE LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS (A) ORGANIZATION PROFILE: YOUR COMPANY is an ISO 9001:2000 certified real estate development Company in India, engaged in business of construction, development and redevelopment of buildings, shopping complexes, etc., mainly in Mumbai and its suburbs. Our focus is mainly on real estate redevelopment, which includes Society redevelopment, private redevelopment and redevelopment of Cess Properties, which gives the Company the benefit of lower initial expenses on land acquisitions. Our projects includes both commercial malls/shopping Complexes as well as residential projects. We have an integrated team of professionals. Starting with Construction, Fact Enterprise Limited pursued a strategy of vertical integration and diversified in media, for the future prospects of this Company. With reference to our entry into the field of media and entertainment, YOUR COMPANY has been successful in conducting a 2nd addition of beauty pageant for teenage girls by the name of FACT UNIVERSAL TEEN PAGEANT. YOUR COMPANY also launched another show called Fact Supermodel which was telecasted worldwide in one of the famous TV channel. Both of these shows got good response from the audience in terms of the TRP which enhances the brand value of the Company in the media industry. Your Company has also tied up with the known production house to produce movies. Company has completed production process to movie called Main Krishna Hoon and will be released by Eros International soon. Company has also started producing another movie Kaanch of which first schedule has already been completed and company expects that movie will be completed in next year. (B) Overall View: India continues to be second fastest growing economy in the Asia Pacific Region. Despite the global meltdown effect of the past two years, the growth rate of Indian economy is estimated to be around 8% and it is expected to sustain the same until year 2020. Infrastructure development integrated with real estate development has been the backbone of such sustained growth and continues to be the focal point for our economy. Your Company has sustained growth and aspires to do so in the coming years. Real estate sector witnessed a turnaround with signs of economic stabilization and moderate growth in global economic performance during the fiscal year. Property markets in India began to exhibit for a short while signs of revival during the time. With the return on liquidity in the real estate sector and firm prices in the recent months, cash flows of realty players improved resulting in resumption of construction of stalled projects and a few new launches as well. Presently industry is facing lack of director and confidence, and is in consolidation phase. Post sub prime crisis in the west and meld down in Middle East, Asia continues to be growth area of the global economy. Reserve bank of Indias recent increase in lending rates will invariably lead to higher cost of funds for both developers as well as for end users. This coupled with slowdown in demand and a tightening liquidity situation will keep capital values under pressure. The city of Mumbai is one of the prime business and commercial centers in the world. Mumbai city is bestowed with the problems of old buildings, slums & chawls which appear as dark spots on its white sheet creating infrastructure bottle necks. Fact Enterprise Limited has aimed to utilize these extra incentives to construct and generate FSI in years to come. Fact Enterprise Limited has established itself into the western suburban of Mumbai city where the population has witnessed a steep rise in the recent past. The Company has identified some of its projects of construction of commercial/residential retail malls for which Company plans to augment long term resources of near about to 35 to 40 Crores. Media, the fourth estate, when entwined with the entertainment component represents an effective facet of consumers in India. Technology has played a key role in influencing the entertainment industry, by redefining its products, cost structure and distribution. (C) Segment-wise Performance: Your Company has identified segments reporting in terms of AS 17 issued by Institute of Chartered Accountants of India (ICAI), these are Construction /Property, Construction /Finance & Media. The Company has made an investment of Rs.2256.90 Lacs in the field of Consultancy /Finance /Investments /Media. Rs.379.50 lacs in construction/or property development activities and Rs.366.03 lacs in media segment in the current financial year. (D) Outlook for the Company: Your Company shall continue to lay thrust for obtaining optimum results and minimize expenses in their business ventures to achieve better results in the coming years. (E) Opportunities and threats: 1) Opportunities: * Introduction of new projects in the gamut of Companys activities. * Improvement in the Global Economic Situation * Various Stimulus packages by Governments globally for growth for the Infrastructure Sector. * Launch of various Beauty Pageant Shows like us * Production of Part Animated Movie which has been untouched avenue in entertainment segment * Increasing disposable income in the hand of young individuals thereby leading a huge viewer ship space. * Marketing of DVD, CD as home Video Segment has becoming more profitable. 2) Threats: * Lack of Brand presence * Depressed prices has affected Real Estate Market during the year and there Could be a Spill over effect. * Variations in viewers taste and preferences. * Competition from the peers. * Valuation methodology and accounting practice in broadcasting business may change. * Spat of New TV Channels has been launched every year. (F) Risks & Concerns: * Macro Economic factors including economic and political developments. * Natural Calamities which affect the Industrial Sector Generally. * Dependence on availability and performance of subcontractors. * Lack of geographical presence as operations are only Mumbai based. * Lack of adequate infrastructure Facility Long gestation period (life cycle) of projects from land acquisition to completion of the project. Lack of accuracy in estimating overall risks, market cycles, revenue or costs in respect of a project, may adversely affect our projects too. * Delay in execution of redevelopment projects due to unavoidable delay in receiving required consents from the concerned authorities. * Volatility of share prices on listing. (G) Future Outlook: Mumbai being the commercial hub of India, need for housing has been on an upwards trend since years. As the standard of living of masses has improved, need for good and permanent housing has also increased. This situation has given an impetus to real estate developers like YOUR COMPANY, as our main focus is on slum rehabilitation, a boost to provide permanent dwellings to slum rehabilitants. (H) Companys Strategy: * Our projects are self financing i.e. Sales and bookings begin at the initial stage of our projects which facilitates us to construct the projects and develop new projects without taking any help of external finances. * Maintaining a tight control over costs, improving cost to income ratios * Increasing productivity across all functions. * We tend to enter into joint ventures with experienced concerns for handling bigger projects for building brand equity and expansion of our business. We do not have any technical or other collaboration. * We hire contractors who bring in necessary equipments, plant and machinery etc. as per the project requirements. * We focus on building superior infrastructure, using best quality and most cost effective economic materials. The Contractors hired are experienced and use technology evolving in construction sector and hence implement new projects faster and in a more efficient manner. * We conduct marketing of our projects through real estate agencies, site office. Advertisement mediums like: bill boards, newspapers, participation in property exhibitions and most convincing word of mouth through our existing customers. (I) Internal Control Systems and their Adequacy: Your Company has a proper and adequate system of internal controls, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and commercial transactions are authorized. Recorded and reported correctly. The internal controls are supplemented by an extensive programme of internal, external audits and periodic review by the management. The system is designed to adequately ensure that financial and other records are reliable for presenting financial information and other data and maintaining accountability of assets. (J) Human Resources: Human resource is the most performing asset of any organizations. We believe that business is a byproduct of relationships. Regular training and development programmes are conducted for the employees to help them in improving their performance levels and in ultimately increasing the level of performance of the Company. Good congenial environment prevails in Your Company. Performance appraisal of employees is done on a regular basis. Our employees have an Opportunity of participation for giving suggestions towards various management decisions. This helps them to improve their decision making power, increases their motivation and morale which ultimately results into increasing their productivity. (H) AWARDS AND RECOGNITIONS: * Indian Economic Studies has conferred upon M/s. Fact Enterprise Limited an excellence award for its incredible performance and also has graced Mr. Rajiv Kashyap., Managing Director of the Company by granting Udyog Ratna Award. * All India Achievers Foundation has conferred upon Mr.Rajiv Kashyap, an All India Achievers Award. * Mr. Rajiv Kashyap has also been graced with awards like Best Citizen Awards, Best Corporate Citizen Award. * Mr. Rajiv Kashyap has been honored with Pride of Asia Award which was organized by the Integration of Peace Society at Dubai (UAE).