Gallops Enterprise Ltd Management Discussions

Review of the Global Economy

Global economic growth in CY25 remained moderate at 3.3%, broadly in line with CY24 but below pre-pandemic averages. The global economy continues to face challenges from policy shifts, trade distortions, geopolitical tensions and structural uncertainties.

The recent conflict in West Asia involving the USA, Israel and Iran has intensified humanitarian and economic disruptions, affecting infrastructure, supply chains and regional stability. Tensions around the Strait of Hormuz have further destabilised global energy markets, with crude oil prices rising above US$100 per barrel, contributing to higher inflation, fuel costs, shipping expenses and transit times.

The IMF, in its April 2026 report, projects global growth of 3.1 % in CY26, a downward revision of 0.2 percentage points from its January forecast, assuming a short-lived conflict. A prolonged escalation could further weaken global growth, sustain inflationary pressures and disrupt supply chains, particularly in energy-importing economies such as India.

Central banks continue to remain cautious on monetary easing amid persistent inflationary pressures. Against this backdrop, the near-term economic outlook remains cautious, with the trajectory of the West Asian conflict emerging as a key monitorable. A swift de-escalation could restore market stability and improve business sentiment, while prolonged conflict may adversely impact energy prices, supply chains, inflation and global growth.

Review of the Indian Economy:

In CY25, the Indian economy continued to outperform global peers, maintaining its position as the fastest-growing major economy. The RBI estimates FY26 real GDP growth at 7.7%, while growth for FY27 has been projected at 6.6% amid geopolitical and trade-related uncertainties. The World Bank, IMF and ADB have projected FY27 growth in the range of 6.5%-6.9%, reflecting continued resilience.

Growth remains supported by strong domestic consumption, government capital expenditure, robust credit growth and resilient economic indicators. Inflation remained largely benign in FY26, although higher energy prices could create some upside risks. The RBI reduced the policy rate from 6.25% to 5.00% during CY25 and has subsequently maintained rates, balancing growth support with inflation management.

Fiscal consolidation, infrastructure spending, manufacturing incentives and structural reforms have further strengthened Indias medium- term growth prospects. However, geopolitical tensions in West Asia and trade uncertainties with the US remain key risks. Given Indias high dependence on imported crude oil, elevated energy prices and disruptions around the Strait of Hormuz could increase inflation, widen the current account deficit, raise logistics costs and pressure the rupee.

Overall, Indias growth outlook remains positive, supported by strong domestic demand, sustained reforms and public investment. Continued focus on infrastructure, ease of doing business, innovation, skill development, exports, private investment and macroeconomic stability will be critical to sustaining long-term and inclusive growth.

India Real Estate Industry Overview:

Despite external and domestic challenges in CY25, India continued to outperform global peers, with the real estate sector emerging as a key driver of economic growth. While residential real estate led the initial post-pandemic recovery, commercial leasing gained strong momentum, with CY25 witnessing record-high net office space absorption. The hospitality sector also delivered robust performance, supported by record occupancy and Average Daily Rates, strong domestic travel and recovering international tourism. Retail remained buoyant, driven by strong footfalls across malls and high streets, although supply continues to lag demand.

Across segments, increasing professionalisation, brand consolidation, adoption of global best practices and stronger corporate governance have improved transparency, developer accountability and investor confidence.

Looking ahead, rising incomes, urbanisation, infrastructure development and increasing discretionary spending are expected to support sustained growth in residential, commercial and mixed-use real estate. Over the next decade, the sector is expected to play an increasingly important role in GDP growth, employment generation, capital formation and Indias broader urban and economic transformation.

Opportunities:

Despite concerns of a cyclical peak after a prolonged five-year upcycle, the underlying fundamentals of Indias residential real estate sector remain strong. The persistent shortage of quality housing and relatively low homeownership levels provide significant scope for further growth. Rising disposable incomes and improving affordability are expected to bring more households into the homeownership market, supporting steady and sustainable demand. Consequently, the current upcycle appears to be driven by structural factors rather than being purely cyclical. The sector remains at an early stage of a multi-decade housing growth cycle, offering substantial headroom for long-term expansion.

Threats and Challenges:

- Affordability Pressure Risk

A sustained gap between rising housing prices and income growth could weaken affordability and lead to delayed home purchases, particularly among first-time buyers in the mid-income and affordable housing segments.

- Cost Inflation and Margin Pressure

Geopolitical uncertainties and supply chain disruptions could drive higher input costs, particularly for cement, steel and labour. Such cost inflation may affect project viability and compress developer margins, especially for fixed-price projects.

- Calibrated Supply Response

Amid evolving demand conditions and rising input costs, developers may take a cautious approach to new project launches, potentially resulting in supply-demand imbalances across certain micro-markets.

Financial Performance:

During the year under review, the company has earned a Total Income of Rs. 5.14 Lakhs as compared to that of Rs. 5.48 Lakhs in the previous financial year. The Total Expenditure of Rs. 0.53 Lakhs were incurred during the year under review as compared to that of Rs. 23.11 Lakhs in the previous financial year. The net profit for the year under review has been Rs. 4.61 lakhs as compared to the loss of Rs. 17.63 Lakhs in the previous financial year. Your directors are continuously looking for avenues for future growth of the company.

Details of Significant Changes in Key Financial Ratios (Standalone Basis):

Outlook and Growth Strategy:

Structural demand drivers and favourable industry dynamics are expected to support robust housing demand over the medium to long term. Housing remains a fundamental need, and the availability of quality products at affordable price points is expected to translate latent demand into sustained pre-sales. As developers increasingly align offerings with evolving consumer preferences, demand conversion is expected to remain healthy across market cycles.

Indias long-term growth outlook remains positive, supported by policy reforms, manufacturing expansion, supply-chain diversification and a resilient services sector. Rising incomes, increasing employment opportunities and improving job security are expected to strengthen consumer confidence, with homeownership increasingly viewed as both a long-term financial asset and a source of security.

A supportive policy environment, including calibrated interest-rate reductions and targeted tax incentives, is expected to further stimulate housing demand, particularly in the affordable and mid-income segments.

Industry consolidation is also creating opportunities for established and branded developers with strong balance sheets, execution capabilities and customer trust. We remain well positioned to leverage these trends, with a focus on delivering sustainable long-term growth while maintaining prudent leverage. Expansion into new projects and micro-markets across MMR, Pune and Bengaluru is expected to further strengthen our growth trajectory.

While residential real estate will remain our primary growth engine, we will continue to expand our annuity income portfolio to diversify revenues and reduce exposure to development-cycle volatility. We target a significant expansion in recurring annuity income over the next six years, with BTS-led shell data centres at Palava expected to be a key contributor. Palava offers strategic advantages, including contiguous and expandable land, reliable power and water infrastructure, and strong fibre connectivity, positioning it as an attractive data centre destination. The business is expected to be funded through a combination of operating cash flows and parallel land monetisation, enabling sustainable and non-dilutive value creation for stakeholders.

Risk and concerns:

Competition Risk

While the number of active real estate developers has declined significantly over the past decade, driven largely by regulatory formalisation through measures such as RERA, demonetisation and GST, the sector is witnessing increasing participation from large, well-capitalised players attracted by Indias long-term urbanisation and real estate growth potential. Their entry could intensify competition for prime land parcels, customers and market share, potentially increasing acquisition costs and putting pressure on margins for established developers.

Cyclicality of the Residential Real Estate Industry

The residential real estate sector is inherently cyclical and sensitive to changes in macroeconomic conditions, regulatory policies and supply- demand dynamics. The Indian housing market is currently in the fourth or fifth year of a strong multi-year upcycle. However, any near-term moderation or temporary pause in this cycle could lead to lower transaction volumes and temporarily affect sales momentum and overall industry performance.

Economic Slowdown

Housing demand in India is closely linked to economic growth and sustained employment generation. Any significant deterioration in employment conditions, including job losses, slower job creation or stagnant wage growth, could weaken consumer confidence and affordability, resulting in slower housing demand and reduced transaction volumes.

Climate Risk

Climate change presents a growing and multi-dimensional risk to the real estate sector. Rising sea levels, increasing temperatures and the growing frequency and intensity of extreme weather events could adversely impact property durability, construction activities and supply chains. Over the long term, these climate-related risks may also affect the habitability and attractiveness of certain locations, potentially impacting asset values and project viability.

Internal Financial Control Systems and their Adequacy:

Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safeguarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal audit programs adopted by the Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management. The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.

Human Resources:

The Company believes in creating a place where every human being connected feels valuable and able to work efficiently. Company taking initiatives for employees at all levels to update their knowledge and upgrade their skills and abilities. As on March 31, 2026, the Company had total 2 full time employees. The industrial relations have remained harmonious throughout the year.

Cautionary Note:

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future based on subsequent developments, information or events.