Gyan Developers & Builders Ltd Management Discussions.

a. Industry Structure & Development:

Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. On February 29, 2020, India formally approved 417 special economic zones (SEZs), of which 238 were already in operation. Majority of the SEZs are in the IT/ ITeS sector.

b. Opportunities:

Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13 per cent to countrys GDP. Real Estate stock in India was expected to reach 3.7 million square feet (msf) in 2019, with addition of 200 msf during the year. Emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanisation in the country is pushing the growth of real estate. Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones.

c. Segment-wise analysis

Your Company is dealing in only one segment i.e., buying and selling of vacant land.

d. Outlook:

India Ratings and Research (Ind-Ra) has maintained a negative outlook on the overall real estate sector for 2020-21 (April March). The stimulus packages provided by the government for the sector does not provide much hope given the limited financial flexibility of and reduced credit availability to companies.

e. Threats, Risks, and concerns

The outbreak of a novel strain of coronavirus (i.e. COVID-19) across the world has since spread to almost entire India. The number of reported cases of COVID-19 in India, as well as the number of reported deaths because of COVID-19, significantly increased post April 2020. The COVID-19 outbreak could become more severe and result in a more widespread health crisis and/or result in a global recession because of disruptions of economic activity. Several governments revised GDP growth forecasts for 2020 downward in response to the economic slowdown caused by the spread of COVID-19, and it is possible that the outbreak of COVID-19 may cause a prolonged global economic crisis or recession. Any of these factors may have a material adverse effect on your Companys financial condition and results of operations.

f. Internal control systems and their adequacy

Your Company has in place, adequate internal control systems and procedures commensurate with the size and nature of our business. These procedures are designed to ensure that:

* An effective and adequate internal control environment is maintained across the Company.

* All assets and resources are acquired economically, used efficiently and are adequately protected.

* Significant financial, managerial and operating information is accurate, reliable and is provided timely, and

* All internal policies and statutory guidelines are complied with.

g. Key Financial Ratios:

Particulars 2019-20 2018-19 Change %
Debtors Turnover Ratio# Nil Nil Nil
Inventory Turnover Ratio@ 23.82 48.27 (49.36)
Interest Coverage Ratio* NA NA NA
Debt Equity Ratio* NA NA NA
Current Ratio 5.53 21.73 (74.58)
Operating Profit Margin 9.25% 4.62% 100.22%
Net profit margin 6.79% 3.37% 101.48%
Return on net worth (%) 1.86% 1.66% 12.05%

# The debtors turnover ratio is NIL since the consideration of sales is fully received.

* The Company does not have any debt. Hence, Debt equity & interest coverage ratio is NA

@ The lower inventory turnover ratio is in view of low sales in the Second half of the financial year.

h. Material developments in human resources/industrial relations front, including number of people employed

The Company is continuously endeavoring to align the employees objectives with the business objectives of the organisation through its HR policies, process and other development initiatives to achieve its organizational goals. Industrial relations have been cordial.