MANAGEMENT DISCUSSION AND ANALYSIS REPORT
OVERVIEW OF THE ECONOMY
The Indian economy has proven to be remarkably resilient in the face of deteriorating
global situation. India will be the fastest-growing economy among the seven largest
emerging markets and developing economies, despite a challenging external environment,
said the World Bank in its global economic prospects report. The World Bank stated in its
"Navigating the Storm" report in November 2022 that Indias economy is
relatively insulated from global spillovers compared to other emerging markets. This is
partly because India has a large domestic market and is relatively less exposed to
international trade flows." Indian economy is expected to be the fastest growing
major economy worldwide at 6.5-7% for the year ending March 2023. Indias growth continues
to resilient despite some signs of moderation in growth, says World Bank in its latest
India Development Update, the update notes that although significant challenges remain in
the global environment, India was one of the fast-growing economies in the world. The
World Bank has forecasted GDP growth at 6.3% for the Financial Year 2023-24.
INDUSTRYSTRUCTURE AND DEVELOPMENTS
Real estate sector is one of the highest employment generators after agriculture sector
in India. It comprises Residential, Office, Retail, Hospitality and Industrial. Real
estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from
US$ 200 billion in 2021. It will contribute 18-20% to countrys GDP by 2030 according to a
joint report by NAREDCO and E&Y. The report further states that there is a favorable
demand-supply gap which will propel the growth of this sector. Additional 25 million units
of affordable housing are required by 2030, highlights the Naredco and EYjoint report.
With the rise of the corporate environment, the demand for office space and urban and
semi-urban accommodation has increased, assisting the growth of this business. Emergence
of nuclear families, rapid urbanization and inflating disposable income of individuals are
attributable to the higher demand for residential properties, expanding e-commerce sector
in the country is catalyzing demand for warehousing facilities. According to Savills
India, real estate demand for data centers is expected to increase by 15-18 million sq.ft.
by 2025. With fractional ownership becoming more widespread, Non-Resident Indians (NRIs)
and millennials wanting to invest in residential property will fuel the 2023 real estate
market. Infrastructure spending on the roads, metro railway and other amenities have
sustained realty growth in India. The industry has faced a series of challenges like
rising construction costs, skyrocketing inflation, successive rate hikes by RBI etc but
despite these obstacles, the sector managed to achieve substantial growth in recent.
According to a report, Indias real estate market is expected to exhibit a growth of rate
(CAGR) of 9.2% during 2023-28.
OPPORTUNITIES
The residential real estate market continued its upward trajectory in FY23 (sales
growth of 15% year-on- year for the top eight real estate clusters) despite pressure from
higher input costs, increasing mortgage rates, and the domestic and global
recession," according to India Ratings and Research (Ind-Ra). Ind-Ra expects the
sales momentum to continue and housing sales to increase by 9% year over year, supported
by a steady, healthy demand. Affordable housing continues to remain a significant
opportunity for developers and key focus area of the Government. The Government continues
focus on the affordable housing and the budget 2023-24 includes 79,000 crores for PM Awas
Yojana (PMAY) houses. This represents a 66% increase over the previous year. This will
provide opportunities to developers to enter in this segment. Demand for leasing space
from IT, ITes and retail business is expected to increase. E-commerce and third party
logistic will continue to invest in warehousing, making it one of the fastest growing
commercial real estate segment providing more opportunities for developments.
Redevelopment of existing society buildings is also providing huge opportunities in the
sector particularly in Mumbai.
THREATS
• The Indian real estate sector is still highly unorganized with lots of middle
men and, together with increased construction costs - both material and labour which has
been putting pressure on the cost of projects and profit margins.
• Non-availability of land within city limits along with rising land and
construction costs, making affordable housing projects unviable.
• The lengthy and complex approval process leads to a high gestation period which
eventually results in project costs escalation and any amendments in various rules and
regulations can adversely impact new launches and increase in the cost of the projects.
Retrospective applicability of policy changes may impact the profitability.
• Finance plays an imperative role in the construction industry, liquidity crisis
or any adverse move by the banking sector towards the lending policy on the real estate
loans may adversely impact the execution of the projects and increase the cost of
borrowing.
• Acute shortage of skilled workforce at all levels.
• Increase in supply due to various incentives provided by the Government, leads
to increased competition amongst the sellers, which drives down the property prices.
OUTLOOK
The rising demand for residential properties, along with the growing infrastructural
development that provides enhanced connectivity via roads, air, and railways, is primarily
driving the India real estate market. The Indian real estate market is expected to exhibit
a CAGR of 9.2% during 2023-2028. Moreover, the increasing need for contemporary office
spaces and the emerging trend of urban and semi-urban lodging are acting as other
significant growth inducing factors. Furthermore, the expanding ecommerce sector in the
country is catalyzing the demand for warehousing facilities, which is providing a positive
thrust to the market. Besides this, with the growing use of telecommunication services and
the implementation of 5G and data localization norms, there is a rise in the need for data
storage facilities. This, in turn, is positively influencing the demand for resilient data
center infrastructure and consequently bolstering the market growth.
RISKS AND CONCERNS
The Companys ability to foresee and manage business risks is crucial in achieving
favorable results. While management is positive about the Companys long term outlook, we
are subject to few risks and uncertainties as given below:
Market price fluctuation : The performance of your company may be affected by the sales
at a price which are driven by prevailing market conditions, the nature and location of
the projects.
Price risk of the input material : The primary building materials like steel and cement
are subject to price volatility due to general economic conditions, competition,
production levels, transportation costs and domestic and import duties and any adverse
impact of rise in input cost will have impact on the profitability of the Company.
Development & regulatory risk : Development depends on several factors which
include receipt of required approvals, weather conditions, labour availability, material
shortages etc. and any of these factor may have an adverse impact on execution.
Economic risk : Any adverse change in any macroeconomic variables like GDP growth,
interest rates, inflation, changes in tax, trade, fiscal and monetary policies etc. may
adversely impact the Companys business, profitability and financial condition.
Health and safety risks : Real estate Companies constantly face the risk of injury or
illness to the Companys or third parties construction workers.
SEGMENT WISE OR PRODUCT WISE PERFORMANCE
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.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Your Company has a system of internal controls which is commensurate with the size and
nature of operations. These controls ensure that all the assets are safeguarded and
protected against loss from unauthorised use or disposition and that the transactions are
authorised, recorded and reported diligently. There are well established policies and
procedures in place across your Company.
Audit Team consists of well experienced Members, which constantly review various
aspects of control systems and conduct audit under well laid down audit programmes to
ensure effectiveness of the controls. The said audit team continuously review the control
system and undertakes audit of special areas in-depth.
MATERIAL DEVELOPMENTS IN HUMAN RELATIONS / INDUSTRIAL RELATIONS
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.
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 |
|
DIN:00205146 |
| Place: Mumbai |
|
| Date: September 5, 2023 |
|
+91-9892691696
