Garnet Construction Ltd Management Discussions

The Management of the Company is pleased to present this report covering the activities of the Company during the year ended on March 31, 2025.

ECONOMY OVERVIEW

Two sectors in India stand out as the primary engines of growth: real estate and infrastructure. The major reason for this is that the two components of a countrys growth are intricately interconnected, forming a symbiotic relationship that significantly influences urban development and economic advancement. By 2040, the real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the countrys GDP by 2025.

Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs. Indias real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.In FY23, Indias residential property market witnessed with the value of home sales reaching an all-time high of Rs. 3.47 lakh crore (US$ 42 billion), marking a robust 48% year-on-year increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold. Demand for residential properties has surged due to increased urbanization and rising household income. India is among the top 10 price appreciating housing markets internationally. Driven by increasing transparency and returns, theres a surge in private investment in the sector.

The Government has allowed FDI of up to 100% for townships and settlements development projects. The Union Budget 2025-26 boosts homeowners with nil tax on two self-occupied properties (earlier one) and raises TDS threshold on rent from Rs. 2.4 lakh (US$ 2,769) to Rs. 6 lakh (US$ 6,924), driving property ownership demand. In the Union Budget 2024-25, PM Awas Yojana Urban 2.0 will address housing needs for 1 crore urban poor and middle-class families with a Rs. 10 lakh crore (US$ 120.16 billion) investment.

INDIAN REAL ESTATE SECTOR

Indias real estate market is experiencing significant growth, fueled by market dynamics and supportive government actions. The residential sector is expanding rapidly, thanks to affordability programs that increase access to housing. At the same time, flexible office spaces are revolutionizing the commercial landscape, responding to evolving consumer demands. Major urban centres such as Mumbai, Pune, Hyderabad, and the National Capital Region (NCR) serve as the primary engines of this growth, reflecting their strong economies and increasing populations.

Projections indicate that the Indian Real Estate Sector will reach a trillion dollars by 2030, driven by strategic investments and innovative approaches. Incorporating technology and sustainable practices is fundamentally transforming the industry. From smart homes to data-driven decision-making and energy-efficient construction, the real estate sector in India is adopting a future-oriented and globally aligned trajectory In 2024, real estate investments throughout the Asia Pacific region experienced a 12% annual increase, reaching US$155.9 billion, as reported by Colliers. Importantly, India exhibited remarkable growth, with investments soaring by 88% year-on year, amounting to US$3 billion in the latter half of 2024.

Office properties retained their status as the preferred investment choice, capturing 47% of the market, followed by industrial and logistics assets, which constituted 27%. Mumbai emerged as a significant investment hub, accounting for nearly half of Indias total investments, predominantly driven by acquisitions of office assets.

This strong investment momentum in India aligns with JLL Indias findings, which indicate businesses invested Rs. 62,328 crore in new project development during FY25. Looking ahead, it is anticipated that the Reserve Bank of Indias lowering of policy rates and new fiscal incentives aimed at the middle class will sustain strong demand in the sector. In addition, the continuous expansion of expressways, metro networks, and commercial corridors will propel the growth of land banking.

RESIDENTIAL SECTOR

Throughout 2024, the demand from homebuyers exhibited remarkable strength, culminating in sales volumes attaining a peak not observed in the past twelve years. A total of 0.35 million units were transacted, reflecting a robust increase of 7% compared to the preceding year. Numerous markets achieved sales figures not witnessed in multiple years, with Hyderabad and Pune accomplishing unprecedented sales.

Furthermore, Mumbai recorded its highest annual and semi-annual sales in thirteen years, with a total of 96,187 units sold. Despite the upsurge in sales following the pandemic, developers have markedly escalated project launches since 2022, capitalising on robust demand. In 2024, new launches attained an 11-year peak of 0.37 million units. Developers are strategically attuning to the evolving preferences of homebuyers by offering properties that emphasise enhanced lifestyles, spaciousness, amenities and distinctive experiences. In conjunction with robust sales in 2024, property prices have experienced an increase across all markets, with Bengaluru demonstrating a year-over-year growth of 12%.

Developers are adeptly attracting buyers through an array of incentives, including financing schemes and complimentary offerings, particularly within the high-end segment. The governments housing for all initiative persistently propels policies to encourage private sector participation and enhance homebuyer financing. With a stable economy and favourable interest rates, the market is well positioned for sustained growth in the forthcoming year.

OFFICE SECTOR

Driven by optimistic economic sentiments, the office market in India experienced a remarkable surge in 2024, achieving an exceptional annual transaction volume of 6.68 million square meters (71.9 million square feet). This figure surpassed the previous peak in 2019 by a substantial 19%, affirming the markets vigorous recovery and even exceeding the near record volumes observed in 2023. The robust economic outlook has served as the primary catalyst for this ongoing occupier activity, propelling the market back onto its pre-pandemic growth trajectory.

In 2024, Mumbai, the National Capital Region (NCR), Bengaluru, Pune, and Ahmedabad recorded the highest annual office transaction volumes. Indias three largest office markets, Bengaluru, NCR, and Mumbai, collectively represented 57% of the total transacted area, considerably exceeding the national growth rate of 21%. These markets have emerged as the principal catalysts for the Indian office markets record-setting performance. Although total office transaction volumes have consistently increased, the primary drivers have shifted. While IT services previously dominated, India-focused businesses and Global Capability Centres (GCCs) are now anchoring demand.

In 2024, India facing businesses accounted for 36% of transactions, and GCCs for 31%. Despite global economic volatility, this sustained demand highlights Indias strong positive business sentiment.

OPPORTUNITIES & THREATS OPPORTUNITIES

The Indian real estate industry has undergone significant changes in recent years, driven by factors such as the growth of the Indian economy, urbanization, and increased demand for housing and commercial spaces.

The industry has also faced various challenges, such as regulatory issues, a lack of transparency, and a slowdown in demand in certain segments.

OPPORTUNITIES

* Affordable Housing: The affordable housing segment is a significant opportunity in the Indian real estate sector. The governments focus on providing "Housing for All" by 2022 has created a huge demand for affordable housing. Developers who focus on this segment can benefit from government incentives and tax breaks.

* Commercial Real Estate: The commercial real estate segment, including office spaces, shopping malls, and warehouses, offers significant growth opportunities in the Indian real estate sector. With the growth of e-commerce, there is an increasing demand for warehouses and logistics parks. The Company firmly believes that there will be rise in demand and growth due to various implementations. The Company think the demand should remain strong in the medium to long term. The Company understands in order to remain competitive and to continue being a trusted partner to our customer we need to expand our scope of services and capabilities. The Company believes there will be strong growth and increase demand in the trading segments.

The Company expects better results in this sector due increasing rising income and growth of service sector The Companys long-term view on this Segment is positive. The Company faced lot of economic challenges in Infrastructure sector.

THREATS

* Economic conditions Company projects exposed to challenges to different economic conditions, trade policies, local laws, political environment and also includes challenges like timely completion of projects and to maintain a smooth balance between returns and risk. In addition to this, there are risks associated to operating in different geographies in terms of terrain, sociopolitical and engineering factors.

* Land Acquisition: Land acquisition is a major challenge for real estate development in India. The process is complicated, time-consuming, and often leads to disputes between developers, landowners, and government authorities.

* Construction Delays: Delays in project completion are a common problem in the Indian real estate industry. This can be due to a variety of factors, including delays in obtaining approvals, shortage of skilled labor, and supply chain disruptions.

* Cost of people The major risk is to retain existing talent and attract new talent. The need to strengthen and improve leadership pipeline is an important priority to keep up with the fast paced growth of the Company.

* Regulatory environment The Company is exposed to risk attached to various statutes and regulations. The Company is mitigating these risks through regular review of legal compliance carried out through internal and external compliance audits. Our ability to manage, evolve and improve our operational, financial and internal controls across the organization and to integrate our wide spread operations and derive benefits from our operations is key to our growth strategy and results of operations.

* Collection of receivables from our clients There are usually no delays associated with the collection of receivables from our clients. Our operations involve significant working capital requirements and prompt collection of receivables affect favorably to our liquidity and results of operations. However, there can be no assurance that any such development would not adversely affect our business.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control commensurate with the activities is supplemented by continuous review by the management. The internal control system is designed to ensure that every aspect of the companys activity is properly monitored.

CAUTIONARY STATEMENT

Management Discussion and Analysis detailing the Companys objectives, outlook and expectations have "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied depending upon global and Indian demand supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.

	For and on behalf of the Board
	Kishan Kumar Kedia
	Managing Director
Place: Mumbai	DIN:00205146
Date: September 6, 2025