GCCL Infrastructure & Projects Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS IS GIVEN IN A SEPARATE SECTION FORMING PART OF

THE DIRECTORS REPORT IN THIS ANNUAL REPORT.

Global Economic Outlook

Global economic activity is expected to maintain modest but uneven momentum. We project that global real GDP growth will decelerate to around 3.0% in 2025 and 2.9% in 2026, following a 3.2% advance in 2024, as rising trade frictions, persistent geopolitical and policy uncertainty, elevated market volatility, and inflation divergence reshape the global outlook.

Indian Economic Outlook

Indias economic journey over the past few years has been marked by remarkable growth and a steady rise in its position on the global stage. After overtaking the United Kingdom (UK) to become the fifth largest economy in Q1 FY23, India has continued this upward trajectory to surpass Japan in June 2025 to become the fourth largest economy in the world. With a nominal Gross Domestic Product (GDP) of Rs. 3,31,03,000 crores (US$ 3.78 trillion), Indias growth reflects a combination of strong domestic demand and policy reforms positioning the country as a key destination for global capital.

Further, India is projected to reach a GDP of Rs. 4,26,45,000 crores (US$ 5 trillion) by 2027 and is on course to surpass Germany by 2028. Rising employment and increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Real Estate Sector

The real estate sector is one of the most globally recognized sectors. It comprises four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

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.

The Indian real estate market is projected to experience a substantial increase, potentially reaching a value of US$ 5-7 trillion by the year 2047, with the possibility of surpassing US$ 10 trillion.

Housing sales across the top seven Indian cities saw a slight dip of 4% in 2024, with around 4.59 lakh units sold compared to 4.76 lakh in 2023, as per ANAROCK data.

Business Segment

The Company operates in single segment. So segment wise reporting is not applicable.

Strength of Indian Real Estate sector

1) High demand- The real estate market is seeing strong demand, and by 2025, it is predicted to expand by 15 18 million square feet. From January to March 2023, the value of home sales in the luxury residential sector increased by 151%, and in FY23, this value reached an all-time high of Rs. 3.47 lakh crore.

2) Policy Support- The government has approved FDIs of upto 100% for townships and settlement development projects. This years budget includes a 66% increase in commitment to the PM Awas Yojana.

3) Attractive investment- Being an industry with a large scope for growth, it is very attractive to the private sector and to foreign investors whose investments have risen 27% from last year.

1) Tax benefits on home loans- There is a tax deduction available on the interest paid on home loans which is used to buy a house of upto Rs. 2,00,000. This reduces the tax liability, increasing the demand for loans to purchase houses.

2) Technological Advancements- AI is expected to increase profitability in this industry by 40%. It indents on doing this through streamlining designs, analysing historical trends, forecasting future data and by giving real-time insights into market trends.

3) Potential to Diversify- With an increase in Indias globalization, the number of tourists in India increased by 106% this year. Due to this, the demand for hotels, resorts and other tourism-focused structures gives real estate a new industry to venture into.

4) Barrier to Entry- The industry has a low barrier to entry which means that more and more companies cant keep entering the industry with ease. This is one of the reasons why the industry is growing at a staggering pace of 9.2% p.a.

1) Volatility in Financial Markets- When there is an economic depression, the demand for real estate decreases and the property values stay stagnant causing a fall in the investments in this industry.

2) Unstable demand- The demand for real estate in India is very unstable since it depends on the season, location, and other circumstances.

3) Competition from other investments- The demand for other investments such as stocks, bonds, and gold are much more valuable since they can be movable and liquid which is something many people are looking for from their investments currently.

4) Regulatory Difficulties- The real estate industry has experienced problems with regulatory compliances, which has led to delays, creating a relationship gap between the firms and the consumers.