Harig Crankshafts Ltd Management Discussions

DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, your Company was inoperative. Your Directors are continuously looking for the avenues for future growth of the Company in its business operations and necessarily measures are taken by directors to make the companys growth to higher level. Your directors ensure you to the best of their ability that coming years will be boon to the Company as well as you, being stakeholders. Further, company has changed its Main Objects to real estate developer and civil engineering related services and accorded shareholders consent through Postal Ballot.

The Financial statements are prepared in compliance with the requirements of Companies Act, 2013 and the Indian Accounting Standards prescribed by the Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 (Act) read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act and rules made thereunder.

REVIEW OF INDIAN ECONOMY

Domestic demand has traditionally been one of the strong drivers of Indian economy. After a brief lull caused by Covid-19 pandemic, the domestic demand is recovering. Consumer confidence surveys by Reserve Bank / other institutions points to an improvement in consumer confidence index, which is a precursor of improving demand. India has a strong middle-class segment which has been the major driver of domestic demand. Factors like fast paced urbanization and improving income scenario in rural markets are expected to accelerate domestic demand further. PFCE as a percentage of GDP increased to 58% during FY 2022 and FY 2023 while in FY 2024 it settled at 56%. There are two factors that are driving this domestic demand: One the large pool of consumers and second the improvement in purchasing power. As per National Statistics Office (NSO), Indias per capita net national income (at constant prices) stood at INR 1.06 lakhs in FY 2024 against 99,404 in FY 2023 and 87,623 in FY 2018. This increase in per capita income has impacted the purchasing pattern as well as disposable spending pattern in the country. Consumer driven domestic demand is majorly fueled by this growth in per capita income.

From FY 2024-29, Indias per capita GDP is projected to grow at a compound annual growth rate of 9.4%. This growth will be driven by the service sector, which now accounts for over 50% of Indias GDP, marking a significant shift from agriculture to service.

INDIAN REAL ESTATE INDUSTRY OVERVIEW

The construction sector is a key component of the Indian economy with linkages across more than 250+ sub sectors. Construction, the second largest economic activity in India (after agriculture) contributes around ~9.1% to the national GDP. Further, India is poised to become the third largest construction market in the next 2-3 years on the back of stable economic growth as the real estate sector has emerged to be a critical engine in the countrys growth story. The construction sector, along with the output generated from real estate services and ownership of dwellings, contributes nearly 14.3% to the economys total output (at constant prices) in FY 2023.

It is the second largest employment generator in India with nearly 71 million people in 2023 which is expected to cross 100 million by 2030. The booming construction industry is a significant job creator, directly employing millions of workers across various disciplines like engineering, construction, architecture, and skilled labor. Additionally, the sector indirectly supports numerous job opportunities in associated industries like manufacturing, transportation, and logistics. High employability of the sector is due to chain of backward and forward linkages that the sector has with other sectors of the economy. It provides impetus to other manufacturing sectors like cement, bitumen, iron and steel, chemicals, bricks, paints, tiles among others. A unit increase in expenditure in construction sector has a multiplier effect on other sectors with a capacity to generate income as high as five times in other sectors. Construction Sector Growth Trend

The construction sector contribution to national economy has steady improved over the years and by FY 2024 it is estimated to account for nearly 9.1% of national Gross Value Added (GVA). In actual terms, the GVA by construction sector reached approximately INR 14.5 trillion in FY 2024, registering.

OPPORTUNITIES & THREATS

The real estate sector shows promise with a projected 9.2% CAGR from 2023 to 2028. 2024 is drive growth with urbanization, rental market expansion, and property price appreciation.

Major impediments can be attributed to procedural formalities in land acquisition, obtaining environment, foreign and wildlife clearances, clearance from Railways (for over bridge and under bridge construction) and delays in financial closure. There are numerous government agencies involved from which clearances/approvals/permissions are required to be obtained before the utilities can be shifted or relocated. This takes a great deal of time. There are cumbersome procedures involved and sometimes the relevant laws and regulations are also not very clear.

As per the report published by Ministry of Statistics and Programme Implementation (MoSPI), 449 infrastructure projects, each requiring an investment of INR 1.5 billion or more, experienced cost overruns totalling INR 5,010 billion as of March 2024. This represents an 18.65% increase over the original implementation cost. Of the 1,873 projects monitored, 779 are delayed, with 202 of these projects facing delays of 1-12 months, 181 delayed by 13-24 months, 277 by 25-60 months, and 119 by more than 60 months. The average delay across these projects is approximately 36 months.

The total original cost of these projects was INR 26,875.3 billion, while the anticipated completion cost is now INR 31,888.5 billion. To date, INR 17,116.4 billion has been spent, which is about

53.68% of the projected total cost. Delays are attributed to various factors, including land acquisition issues, delays in obtaining environmental clearances, and infrastructure support challenges.

Additionally, COVID-19 lockdowns, delays in project financing, changes in project scope, and equipment supply issues have also contributed to the setbacks. The report also notes that many projects lack updated cost estimates and revised commissioning schedules, indicating that the extent of delays and cost overruns may be under-reported.

While we remain well placed to capture the opportunities, few challenges may have an impact on the industry in the near term. We always keep a watchful eye for any of challenges which, if they fructify, can impact the upward trajectory of the industry. Our strong management team in consultation with the board takes mitigating actions in light of such challenges i.e. increased interest rates, geo-political tensions, supply chain disruptions, Indias slowdown, job sentiment, and home price increases, affecting affordability.

RISK AND CONCERN

While risk is an inherent aspect of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for the same. Economic slowdown and changes in regulatory environment may impact the construction industry or real estate market adversely affecting the Companys operations.

Indias housing demand is closely linked to job sentiments which in turn is related to overall health of the economy. On account of the steep increase in policy rates, we have seen global growth come down with talks of some of the developed economies getting into a recessionary zone. Slowing global growth coupled with RBIs policy rate hikes, have seen slowing down of the Indian economy. Any worsening of job sentiments in a slowing economy either due to loss of white collar jobs or inadequate salary growth could lead to slower housing demand.

Our company is one of the real estate companies by pre-sales with over more than two decades of experience of delivering high quality homes with world class lifestyle. Over time we have built a consumer brand which is perceived as luxury by consumers in all the segments. We are mainly focused on the housing segment with expanding presence in logistics and warehousing as well. We also develop commercial real estate, as part of mixed-use developments in and around our larger residential projects to bring vibrancy to our residential developments and provide walk-to-work options for our residential customers.

Over time we have built unique strengths which have helped us grow to become the largest residential real estate company and will enable us to continue our growth trajectory.

The Company is positioned to capitalise on the growing market opportunities. In such situations, the Company reviews its policy every quarter with focus on achieving its key business objectives in the given policy framework covering growth, profitability and actions taken to address these risks.

FUTURE OUTLOOK

As the Indian economy expands, people have more money to spend, driving demand for new homes, office spaces, and retail outlets. This fuels construction activity across various segments. A robust economy attracts domestic and foreign investments in infrastructure projects like power plants, transportation networks, and industrial parks. This translates into significant construction contracts and boosts the industry. Growth in sectors like IT, e-commerce, and manufacturing creates a need for specialized commercial spaces, warehouses, and production facilities, further stimulating construction.

Consequently, Indias construction market is expected to be the second largest globally by 2030, with construction sector GVA expected to grow to INR 21.8 trillion, projected to grow at 7.2% CAGR between FY 2024-30. Separately, projections by the United Nations indicate that Indias population will reach 1.64 Bn by 2047, with 51% living in urban centres. A growing young population migrating to cities creates a demand for new housing units, student accommodation, and rental properties. This puts pressure on existing infrastructure and necessitates construction of new schools, hospitals, and public transportation systems.

Thus, acknowledging the fact that good infrastructure is critical to support overall economic growth, infrastructure remains a thrust area for the government. The Government plans to develop smart cities with improved infrastructure, sustainable living spaces, and efficient waste management systems. The construction sector is set to witness a robust growth, driven by higher budgetary allocation on infrastructure on yearly basis and flagship infrastructure projects like NIP, PM Gati Shakti, Smart Cities, Swachh Bharat Mission, and metro rail expansions.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions authorized, recorded and reported correctly. The internal control is supplemented by extensive program of internal audits, review by management and documented policies, guidelines and procedures.

INDUSTRIAL RELATIONS AND HUMAN RESOURCES DEVELOPMENT

The industrial relations have been cordial and satisfactory. We recognize the importance of Human resources and give full respect for its development and are committed to the development for human resource. There are continuous efforts to make the organization a great place to work.

DISCLOSURES

During the year, the Company has not entered into any transaction of material nature which affects the Financials of the Company.

CAUTIONARY FORWARD LOOKING STATEMENTS

Statements in annual report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute “forward looking statements” within the meaning of applicable laws and regulations. Although the expectations are based on assumptions, the actual results might differ.