Garnet Construction Ltd Management Discussions.


Along with the Covid-19 pandemic, which was the ultimate headliner for most of 2020, came a series of worldwide lockdowns and setbacks impacting business and lives across the globe. India, particularly, witnessed the worlds largest nationwide lockdown sending the economy in a tailspin. This was followed by a gradual reopening across the country and normalcy returned with a stoic recovery momentum across key economic segments. This growth ride was on account of the pent-up business needs in lieu of fiscal impetus and regained consumption demand. This optimistic sentiment led to record property registrations and uptick in sales velocity. Also, since the influx of PE and FDI investment is on rise in FY 2020-21, the sentiment remains bullish for the Indian economic outlook. The Indian real estate sector can expect substantial economic recovery and robust growth in the forthcoming year. There was a dip in the future sentiment score as observed in Q1, 2021. However, that gap can be justified as a mirrored response for the market uncertainties prevailing in Q1, on account of the second Covid wave. That being said, there is no cause of worry for the industry as it is well-geared to mitigate the risk on ground. The ongoing production with uninterrupted supply chains will help the sector rebound with more finished goods catering to the discerning home buyers. Furthermore, the industry has managed to avoid labourers reverse migration by reassuring them with food, shelter, and daily wages, with all the safety measures in place.


2020 was the year that changed everything, and 2021 will be the year Indian real estate adapts to that change through its time tested resilience, digital insurgency, and innovation. While 2021 may still be reeling with a pandemic-affected economy, the plans for a sector-wide recovery have already been laid out. Backed by positive economic fundamentals, healthy demand, and quality supply infusion across sectors, Indias real estate sector is prepared for robust growth. When the second wave of the pandemic erupted as a successive crisis, our faith in the nations resistance didnt waiver, and so, India did overcome the meltdown. From here, the future seems positive now. Taking cues from the key trends of the pandemic, the residential real estate sector is going to be the fastest to get back on its feet. Owing to the aspirations of our citizenry - in tier 1 and tier 2 towns alike - to own bigger and better homes having multiple facilities and amenities, the pandemic has created a strong structural trend for the countrys ever growing housing market. Conducive factors in this recovery will be the multi-year low house prices and multidecade low home loan interest rates.


The year 2020 was perfectly positioned for the Indian real estate sector to take flight. After 3 years of disruptions in the form of demonetisation, GST, RERA, and the NBFC crisis, transparency and efficiency were slowly trickling into the system. The year, if not the whole decade, will be mentioned with a recall for the pandemic, which affected every person in the country. The nationwide lockdown that followed threw markets into turmoil, bringing more pain and distress to the realty industry. In the face of this unprecedented crisis, the real estate sector displayed remarkable resilience. Once the unlocking process was initiated in the Q2 of 2020, both the residential and office markets started showing promising signs of revival. Further, uncertainties surrounding the economy reduced in the last quarter of the year, which led to an increase in the revival momentum with the markets tracing a swoosh-shaped recovery path.

The year 2021 started on a positive note for the real estate market with the residential and commercial real estate segments both reflecting healthy stats. While the residential market was recording a strong bounce from Q4 2020, the office segment was also getting back on its feet. Offices resumed operations across cities, some at full occupancy while others on a rotational or hybrid model, giving employees the flexibility of location. The onset of the pan-India vaccination drive in March, 2021 gave a further boost to the stability notion in the market. Demand continued to grow and business appeared to be moving towards pre-Covid levels. However, the growth was dampened by another wave; the rate of Covid infections in the country began to spike. As the month of March progressed, the severity of the pandemic was more pronounced and menacing than the levels in 2020. Consequently, mobility curbs and lockdown restrictions became a reality once again. With some states already having such curbs in place, offices have had to return to the work-from-home mode of operation, for the time being. The heightened damage caused by this pandemic and its resurgence have both played a key role in rekindling fear and reinforcing mobility curbs within the country.

Residential and Commercial Sectors

Growth 2021 packs great potential for both residential and commercial real estate businesses. The last few years saw the office spaces gaining traction in most cities with IT/ITeS players contributing to majority of the leases. The warehousing sector is also expected to spread territorially in the time to come. Rapid urbanisation and white-collar migration will further growth in the commercial sector, which, in turn, will translate into higher residential demand. With concepts like Housing for All, affordable housing will continue being a key growth driver in real estate.

Rise in Co-living and Co-working Spaces

Over the past few years, there has been a prominent shift in the buying pattern of customers, especially the millennial customers. They have a greater inclination towards co-living spaces, which are more dynamic as compared to the usual rented spaces. On the other hand, the gradual but promising rise in gig- based economy has led to a higher demand for co-working spaces in major cities like Bengaluru, Hyderabad, and Pune. This trend is set to grow in 2021 too. As per a Knight Franks report, the co-living concept is gaining widespread acceptance in India, and even though the concept is novel, it is expected to stay. This trend will strengthen the organised rental market in cities like Bengaluru, NCR, and Pune, just the way co-working spaces worked for shared office spaces.

Technology Reshaping the Sector

Smart technology and innovation is no longer at distance from the real estate sector. In terms of construction, the key players are anticipated to adapt latest technologies like data gathering, artificial intelligence, and machine learning. Pre cast solutions will revolutionise the traditional construction practices through technology, automation and value engineering. These will play a key role in redefining the Indian realty sector. With the improving construction quality, technology will also help boost timely completion of projects, and smart homes will continue leading the customers choice. With more and more ambitious projects populating the sector, we expect high growth in this particular segment. As per industry estimates, the Indian smart home market, currently valued at about $893 Million, is expected to grow manifolds in the next five years


The retail sector has been the worst-affected segment in this Covid-19 crisis. The pandemic-induced lockdown had forced all malls to temporarily shut down affecting their business adversely. Malls have been amongst the last to open in 2020 during the unlocking phase, and the fear of virus has kept the consumer footfalls down. As a result, the PE investment dropped by 76% in 2020. Several mall owners in India had announced a partial/full-rent waiver for the lockdown period in 2020, taking a major hit on the revenues. Some had extended this partial waiver for the rest of the financial year, also offering to waive off a portion of the minimum guarantee or a fixed portion of rents, readjusting to a higher percentage of revenue share. Significant losses to retailers and the fear of eviction forced mall owners to enter into such arrangements. The retail sector was barely starting to recover from the crisis, when the second wave of Covid-19 infections struck the nation in March-April, 2021. The new lockdown in several parts of the country has forced retail assets to shut down again. This derailment is limited to certain states presently, but, if it spreads to other states, it may lead to a much bigger loss damaging a majority of the retail asset owners. Such high levels of uncertainty have kept investors away from retail assets, and only one major deal was transacted in Q1 2021. In Q1 2021, PE investments in retail assets jumped to US$ 484 Million from US$ 220 Million in 2020, owing to the monumental deal between Blackstone and Prestige, which involved multiple retail, office, and hospitality assets as part of the larger transaction.



The Indian real estate sector has been in a consolidation phase from the past few years and has picked up its pace, given the several reforms and disruptions it witnessed. After the IL&FS default, NBFCs have been mandated by RBI to reduce their exposure to real estate sector, which has created funding issues for smaller real estate developers, who anyway do not have access to bank funding. In such cases, these players face a double whammy: Issues with funding, on one hand, and existing deal cancellations due to halt in construction activity, on the other hand. This opens up new avenues of growth for organized developers, who can show a proven track record with healthy balance sheets, to take over the projects of smaller developers at attractive valuations. It allows them to increase their portfolio, offerings, and improve home-buyer confidence. The ongoing consolidation is expected to accelerate further amidst the pandemic, and established, well capitalized players stand to gain further market share.

Affordable Housing

Affordable housing remains of interest to housing players and the government as well, given the fact that housing options are scanty for the economically weak and low-income segments. The governments constant push for affordable housing has shifted the focus from high-end and luxury segments to the affordable segment. According to ANAROCK research, during the past 5 years, the share of launches in the affordable segment across the top 7 cities of India, has risen. This participation is expected to increase further in the near future owing to subsidies provided by the Government to promote affordable housing. Via the Union budget of 2021, the Government announced several measures to boost affordable housing demand. They rolled out additional tax benefits of up to 1.5 lakh on interest paid for affordable housing loans till March 2021.

Also, in order to encourage real estate developers into focusing on affordable housing projects, the Government has extended the date of approval for these projects for availing tax holiday on profit earned by developers by one year till March 2021.

Digital Real Estate Sales

In the modern marketing landscape, digital marketing tools have claimed the throne. Irrespective of the industry, their usage has become popular, and so, for real estate companies too, digital marketing tools are needed. With a sharp focus on building consumer experience and connection through digital means, established brands will be ahead of the curve, with a competitive digital-enabled edge for their businesses. According to the report Real Estate in a Digital Age, around 94% of millennials and 84% of baby boomers searched for their future homes online. Social media platforms can be extensively used to promote listings, maintain relationships with existing customers and find new prospects. Covid-19 has forced real estate companies to focus much more on digital marketing and online platforms.

Monetary Easing

The real estate sector performance has always been closely linked to the countrys economic fundamentals and monetary policies. The Reserve Bank of India cut its benchmark repo rate by 250 bps since February 2019 to 4.0%, which is the lowest ever repo rate, in its attempt to support the slowing economy from further deterioration due to Covid-19. Monetary easing initiatives are expected to provide an impetus to housing demand and encourage home buyers and real estate developers, once the economy revives.


Regulatory Hurdles

Unfavorable changes in government policies and the regulatory environment can adversely impact the performance of the sector. There have been procedural delays with regards to land acquisition, land use, project launches, and construction approvals, which cost resources, financials, and time. Retrospective policy changes and regulatory bottlenecks may impact profitability and affect the attractiveness of the sector and companies operating within the sector.


The Company is engaged in construction and sale of industrial as well residential plots only, hence the segment wise reporting is not applicable. Financial Performance of the Company for the year under review has already covered under the Directors Report.


The Company has proper and adequate system of internal control procedure commensurate with its size and nature of the business so as to ensure that all assets are safeguarded from loss, damage or disposition and ensure that all transactions are authorized, recorded and reported correctly and adequately.

All operations parameters are periodically monitored and strengthened. The Company continuously upgrades these systems in line with best accounting practices. The internal control system is further supplemented by a programme of internal audit conducted by an independent firm of Chartered Accountants.

The Audit Committee of the Board of Directors reviews the effectiveness of internal controls and suggests improvements for strengthening them whenever required.


Employees are the key to achieve the Companys objectives and strategies. The Company provides to the employees a fair equitable work environment and support from their peers with a view to develop their capabilities leaving them with the freedom to act and to take responsibilities for the tasks assigned. The Company strongly believes that its team of capable and committed manpower, which is its core strength, is the key factor behind its achievements, success and future growth. We are continuously working to create and nurture an organization that is highly motivated, result oriented and adaptable to the changing business environment.

The industrial relations remained cordial during the year.


The company recognizes that effective risk management is crucial to its continued profitability and longterm sustainability of its business. The company is committed to adopt good corporate governance, which promotes the long-term interests of all stakeholders, creates self-accountability across its management and helps built trust in the Company. A robust internal financial control system forms the backbone of our risk management and governance. In line with our commitment to provide sustainable returns to our stakeholders, your company has formalized clearly defined systems to manage its risks within acceptable limits by using risk mitigating techniques and have framed policies for timely addressing key business challenges and leveraging of business opportunities.


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

Date: September 2nd , 2021



The Members of

Garnet Construction Limited

We have examined the compliance of the conditions of Corporate Governance by Garnet Construction Limited for the year ended 31st March, 2021 as stipulated in Chapter IV of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) with the BSE Limited.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our Examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance.

It is neither an audit nor an expression of the opinion on the financial statements of the Company. In our opinion and based on the information and according to explanations given to us and the representations made by the management and to the best of our knowledge and belief, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the Chapter IV of the Listing Regulations.

Place : Mumbai For Poddar A. & Associates
Date : 2nd September, 2021 Chartered Accountants
Firm Regn No: 131521W
M. No: 107258