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, 2026.

Indian Economy Overview

Indias economy continues to demonstrate resilience and momentum, supported by strong domestic consumption, sustained government capital expenditure, and structural reforms. Despite global macroeconomic uncertainties, India remains among the fastest growing major economies, underpinned by favorable demographics, rising urbanization, and increasing formalization of the economy.

Retail inflation, which had seen intermittent pressures driven by food prices, has moderated over the course of the year, aided by calibrated monetary policy actions by the Reserve Bank of India (RBI).

Core inflation remains relatively stable, providing room for steady economic activity while maintaining price stability. Interest rates, while elevated compared to the ultra-low levels of earlier years, have largely stabilized, offering greater visibility for long-term investment decisions.

In the Union Budget 2026-27, our Finance Minister continued the governments focus on long-term growth for the real estate sector by significantly boosting public capital expenditure, which supports urban infrastructure and enhances connectivity-key drivers of housing demand beyond the top metros. Major initiatives include leveraging REITs and monetization of public sector real estate assets to deepen institutional investment, and enhanced spending on urban development that could unlock new residential and commercial opportunities across Tier-2 and Tier-3 cities. While the budget did not introduce sweeping new tax cuts for homebuyers, the policy emphasis on affordable housing, infrastructure expansion, and streamlined reality regulation aims to strengthen market fundamentals and attract investment, helping the sector recover momentum after recent sales softness. Additionally, provisions affecting NRI property transactions aim to simplify compliance and reduce friction in cross-border real estate deals.

Indian Real Estate Sector

The Indian real estate sector is undergoing a structural transformation marked by improved transparency, stronger balance sheets, and increasing institutional participation. Regulatory reforms such as RERA, GST, and digitization of land records have enhanced buyer confidence and improved governance standards across the sector.

Demand across residential, commercial, and retail segments remains healthy, supported by urbanization, rising disposable incomes, and expanding employment opportunities. While construction costs and financing conditions remain areas of focus, developers with prudent capital allocation and strong execution capabilities are well positioned to benefit from the sectors long-term growth trajectory.

Trends in the Indian Real Estate Market

Indias household consumption expenditure, a key proxy for spending capacity has been rising steadily, reflecting both higher incomes and evolving lifestyles. According to the latest Household Consumption Expenditure Survey by the Ministry of Statistics & Programme Implementation (MoSPI), Monthly Per Capita Consumption Expenditure (MPCE) for urban India increased to around Rs. 6,996, while rural Indias MPCE rose to Rs. 4,122 in 2023-24, up from the previous year. This points to sustained growth in consumption, with urban residents spending more across food, non-food and discretionary categories.

Source: https://www.credaincr.org/iismgmt/all-images/Policypdf/pdf_1753099631.pdf

Urban consumption has historically been higher due to larger incomes and access to services and discretionary spending options. Growth in non-food components such as conveyance, clothing, entertainment and durable goods has been robust, indicating that a growing share of spending in cities is now beyond mere essentials. These trends signal expanding purchasing power in urban areas and an increasingly diverse consumer base beyond necessities

Residential Sector

The residential market has witnessed sustained demand, particularly in the mid-income and premium housing segments. End user demand continues to outpace speculative activity, reflecting a shift towards real, utility-driven purchases. Stable interest rates, improving affordability, and lifestyle driven housing preferences have supported steady sales momentum.

Industry surveys indicate that homebuyers now prefer 3BHK and larger configurations, driven by rising disposable incomes, work-from-home requirements, and multigenerational living trends, marking a clear move away from compact housing.

Premium and lifestyle-led projects offering gyms, landscaped open spaces, co-working zones and smart features have seen faster absorption and stronger price appreciation, with premium housing accounting for a significantly higher share of total residential sales in major cities.

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.

Place: Mumbai

Date: September 5, 2026

Managing Director

DIN: 00205146