Hemisphere Properties India Ltd Management Discussions

Economy & Industry Outlook

The world economy has already been fighting for over two years with COVID -19 pandemic and disturbance continues with regular several COVID-19 variants. Although thankfully the Omicron impacted lesser in comparison to Delta variant which created the huge loss of life in year 2021.

However, robust and innovative policy support, generous government stimulus and support packages along with quick availability of vaccines has helped economies bounce back swiftly. As per provisional estimates released by National Statistical Office (NSO), Indian economy in 2021-22 has fully recovered the pre-pandemic real GDP level of 2019-20. The real GDP growth in 2021-22 stands at 8.7 per cent, 1.5 per cent higher than the real GDP of 2019-20. Owing to recent global crisis, various international agencies, for FY 2022-23 and FY 2023-24, have revised downward the growth projections of several countries including India but the revised growth for India is still higher than that of major advanced and emerging market economies. The Government ensured a soft interest rate regime and supportive policies to support economic growth. [Source. press note dated 31" May, 2022 on provisional estimates of Annual National Income 2021-22, National-Statistical-Office, Ministry of Statistics and Programme Implementation (NSO, MoSPI)].

RBI is expected to hike interest rates in order to control inflation and continue with its accommodative stance to ensure gradual economic recovery. There is a high probability of the country?s fiscal deficit breaching the target level which was earlier pegged at 6.4% of GDP for FY2022-23. India?s core sector growth slowed to 4.3% in March after it grew 6.0% in February 2022 due to a decline in the output of coal and crude oil, while the Index of Industrial Production (IIP) rose by 1.7% in February.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. There are always some positive indicators of growth of the economy in whole especially when the whole world is facing the worst hit of CoVID-19 pandemic.

The real estate market is poised to touch Rs 65,000 crore by 2024 and by 2025, this sector is expected to contribute to 13 percent of the country?s GDP. The real estate sector is clearly demonstrating a growth trajectory and is in fact galloping into its next journey.

Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. According to Colliers India, a property consultant, institutional investments in the Indian real estate sector are expected to increase by 4% to reach Rs. 36,500 crore (US$ 5 billion) in 2021, driven by rising interest of investors towards capturing attractive valuations amid the pandemic. According to a recent report by Colliers India, private equity investments in Indian real estate reached US$ 2.9 billion in the first half of 2021, which was a >2x increase from the first half in 2020.

Exports from SEZs reached Rs. 7.96 lakh crore (US$ 113.0 billion) in FY20 and grew 13.6% from Rs. 7.1 lakh crore (US$ 100.3 billion) in FY19.

In July 2021, the Securities and Exchange Board of India lowered the minimum application value for Real Estate Investment Trusts from Rs. 50,000 (US$ 685.28) to Rs. 10,000-15,000 (US$ 137.06 - US$ 205.59) to make the market more accessible to small and retail investors.

Construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 54.17 billion from April 2000 to March 2022.

The realty sector is not going to be the same in a post-COVID world. The demand and supply dynamics would evolve and change. On the brighter side, the real estate sector has been quick to respond to changes and adapt to new technologies; this is apparent that due to digitalization there is and will be major shift in investment preferences that will continue to outlive the pandemic.

2. Government Initiates

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. Below are some of the other major Government initiatives:

• In October 2021, the RBI announced to keep benchmark interest rate unchanged at 4%, giving a major boost to the real estate sector in the country. The low home loan interest rates regime is expected to drive the housing demand and increase sales by 35-40% in the festive season in 2021.

• Under Union Budget 2021-22, tax deduction up to Rs. 1.5 lakh (US$ 2069.89) on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22.

• The Atmanirbhar Bharat 3.0 package announced by Finance Minister Mrs. Nirmala Sitharaman in November 2020 included income tax relief measures for real estate developers and homebuyers for primary purchase/sale of residential units of value (up to Rs. 2 crore (US$ 271,450.60) from November 12, 2020 to June 30, 2021).

• In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet has approved the setting up of Rs. 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).

• Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.

• As of January 31, 2021, India formally approved 425 SEZs, of which 265 were already operational. Most special economic zones (SEZs) are in the IT/ BPM sector

2.1 Also India is among the fastest-growing major economies in the world and the real estate sector is the second largest employment generator, and third largest sector in terms of FDI flow and also spurs the overall economic growth.

2.2 According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025. Home sales volume across eight major cities in India jumped by 2x to 61,593 units from October 2020 to December 2020, compared with 33,403 units in the previous quarter, signifying healthy recovery post the strict lockdown imposed in the second quarter due to the spread of COVID-19 in the country.

2.3According to the Economic Times Housing Finance Summit, about 3 houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be ~10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the country?s urban population.

2.4 Part of government initiatives play major role in development of this industry. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies especially in tier 1 cities owing to rapid urbanization. Recent Government initiatives in the real estate sector including the Pradhan Mantri Awas Yojana, the Smart Cities Mission, the Atal Mission for Rejuvenation and Urban Transformations and Make in India, coupled with regulatory changes such as the introduction of RERA and GST are expected to have a huge impact on the real estate industry.

3. COMPANY?s INSIGHT

In 2002, the Government of India conducted a disinvestment exercise in respect of 25% of its shareholding in the equity share capital of VSNL (currently known as Tata Communications

Limited), wherein in terms of the bid for the disinvestment required a separate value to be ascribed to lands to be retained with VSNL and to exclude the value of certain Land parcels, held by VSNL. Panatone was the successful bidder in the disinvestment process and subsequently, entered into the VSNL SPA and the VSNL SHA. In terms of the disinvestment bid, the VSNL SHA and VSNL SPA, the Land parcels identified were required to be hived off or demerged into a separate entity.

As a result, Hemisphere Properties India Limited was incorporated in 2005 as a real estate company. During FY 2012-13, Government of India acquired 51.12% equity stake in HPIL after the decision of Cabinet. Earlier, the Company was in administration of Department of Telecommunications and further after the Cabinet decision dated April 06^th, 2018 the administration of HPIL was transferred from Department of Telecommunication to Ministry of Housing & Urban Affairs. The Mumbai Bench of National Company Law Tribunal and Ministry of Corporate Affairs approved Scheme of Arrangement & Reconstruction between Tata Communications Limited & Hemisphere Properties India Limited on 12.07.2018 and 05.08.2018 respectively.

The Land located in 4 major cities ie. Delhi, Pune, Chennai and Kolkatta were transferred under the Scheme. The Promoter of the company i.e. President of India holds 51.12% shares.

In terms of the Scheme of Arrangement, following transferred:

1. All rights, title and interest in the Land parcels were transferred to our Company;

2. All assets and liabilities pertaining to the Land parcels were transferred to our Company at their book value;

3. All debts, liabilities, taxes, duties and obligations pertaining to the Land parcels were transferred to our Company, except for any property taxes arising prior to the effective date, which would continue to be the liability of TCL;

4. Certain amounts held as deposits in respect of properties in Chennai and Greater Kailash, New Delhi, were transferred to our Company;

5. The shareholders of TCL, as on the record date, were entitled to receive one Equity Share in lieu of every one equity share of TCL held by them.

The main objects of our Company contained in our Memorandum of Association are as follows:

i. To construct, acquire, hold, manage, develop, administer, protect, reserve and to deal in any other manner with properties, including sale and purchase thereof, whether such properties are in the nature of land or building (semi-constructed or fully constructed) or partially land and partially buildings, any where in India and if permitted by applicable legislations, outside India as well.

ii. To collect and settle revenue, rental, lease charges and such other charges as may be payable by any entity against legitimate use of such properties by persons, companies, agencies and administrations for the services provided and to utilise the same for furtherance of activities of the Company.

iii. To carry out business of developing, holding, owing, leading or licensing real estate, consultancy in real estate and property of all kinds and for this purpose acquiring by purchase or through lease, license, barter, exchange, hire purchase or otherwise, land or other immovable property of any description or tenure or interest in immovable property.

iv. To carry out the business of building construction and development of commercial building, industrial shed, offices, houses, buildings, apartment, structures, hotels or other allied works of every description on any land acquired howsoever by the company, whether on ownership basis or as a lessee or licensee and to deal with such construction or developed or built premises by letting out, hiring or selling the same by way of outright sale, lease, license, usufructuary mortgage or other disposal of whole or part of such construction or development or built premises.

The Company has taken over the possession of land parcel and have arranged security for preventing any kind of encroachments. The Company has filed for the mutation application for Chennai, Chattarpur, Pune. The application shall be applied in other States after receiving remaining sanctioned funds from Ministry of Finance.

4. FUTURE GOALS

The Company is in initial phases of its operations and has higher plans for the growth and development of land. The Management of Company has initiated the process of Mutation of the land parcels and the Company with the help of administrative Ministry is foreseeing the process to expedite the process.

The Management is evaluating the options such as development of demand centres on land parcels due to anticipated demand of Data Centre in near future. The Company has also conducted due diligence on all the land parcels of the Company. The Company is in process to evaluate the farm housing in Chattarpur and approvals from various authorities are in process and initiated the process of demand discovery under present land use. Further, the Company is in between discussion with other Public Sector Undertaking on development plans of the Company. The Management with the concurrence of Ministry of Housing and Urban Affair will evaluate each land parcel and examine all available options available for further development of the Land. We will consider the proposals for growth in order to generate maximum revenue.

The Company received in-principle approval from Ministry of Finance for ? 751.00 crores for the payment towards stamp duty to give effect transfer of Title in the name of our Company and meet the need of other working capital requirements in due course of business. The Company till date has received ?180 crore in form of equity and loan, the remaining money shall be received in tranches or in lumpsum as per the decision of Ministry of Finance.

In past years, the net worth of Company was negative, We believe that the commencement of our operations will allow to generate revenue from operations and to increase our net worth.

5. FINANCIAL PERFORMANCE

The following table sets forth certain information with respect to our results of operations as per our Financial Statements for the periods indicated:

(Rs in Lakhs)

Particulars	FY 2021-22	FY 2020-21	FY 2019-20
	Amount	% of Total Revenue	Amount	% of Total Revenue	Amount	% of Total Revenue
REVENUE
Revenue from operations
Other income	315.98	100	36.5	100	9.90	100
Total Revenue	315.98	100	36.5	100	9.90	100
EXPENDITURE
Employee benefits expenses	26.00	8.23	10.80	29.58	4.55	45.95
Finance cost	581.97	184.18	131.68	360.76	23.47	237.20
Depreciation, amortization expenses and Other expenses	1571.88	497.47	902.39	2472.30	84.05	848.99
Total Expenses	2179.84	689.87	1044.88	2862.68	112.07	1132.53
Profit before exceptional and extraordinary items and tax	(1863.86)		(1008.3 8)		(102.71)
Exceptional items	-				-
Tax Expenses	-				-
Current tax	-				-
Deferred tax	(377.81)		(263.04)		(26.42)
Total Tax expenses	(377.81)		(263.04)		(26.42)
PROFIT FOR THE PERIOD	(1486.05)		(745.34)		(75.74)

6. ANALYSIS OF FINANCIAL POSITION

The details of Financial Performance with respect to Operational Performance has been fully explained in the Directors? Report

Information pursuance to schedule-V of SEBI (LODR) Regulations 2015 - (i) There is no significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios viz. Debtors Turnover Ratio , Inventory Turnover Ratio), Interest Coverage Ratio, Current Ratio (Debt-Equity Ratio, Operating profit margin and Net profit margin during the year 2021-22 as compared to the previous year 2020-21.

ii. The ratios are as under:

Particulars	Financial Ratios	Remarks
	FY 2021-22	FY20-21
Debtors Turnover	-	-	-
Inventory Turnover	-	-	-
Interest Coverage Ratio	(2.20)	(6.66)	The company has not generated any revenue from operations but interest expense is being incurred to meet working capital requirements.
Current Ratio	0.23:1	0.21:1	The current ratio has changed due to funds received from the GOI for payment of stamp duty.
Debt Equity Ratio	0.166:1	0.0982:1	The equity of the company has changed during the FY 2021-22 due to issue of share to the preference shares to GOI.
Operating Profit Margin(%)
Net Profit Margin (%)	(765.44)

7. SEGMENT-WISE PERFORMANCE

The Company does not have any other segment.

8. OPPORTUNITIES & CHALLENGES

8.1 Opportunities

Over the past few years, the government has supported in the development of India and promoted business opportunities within the country, including various policies made and initiatives, such as relaxation in Foreign Direct Investments (FDI) limits, improving ease of doing business, Housing for All, Make in India, Smart City and Start-up India. The major opportunities for our land parcel are:

1. Housing Demand 2 Sector Consolidation

3. Demand of vacant land in metro cities

4. Minimum Litigation

5. Direct Administration of MoHUA

The Company is in under the administrative control of MoHUA and board of directors has been appointed by MoHUA, who are excelled in handling the work related to estate and property. The Company will thrive on formulation of plans which are in pipe line.

Following are the sectors which are high in Demand:

Retail Space

i. Rise in demand due to foray of FDI in multi brand retail.

ii. Organized retail sector is growing by 25-30% annually.

iii. The retail segment is expected to remain steady in the medium to long term backed by strong supply pipeline and growth in absorption rate.

Housing Space

i. GOI aiming "Housing for All by 2022"- robust housing demand and has increased its focus on Pradhan Mantri Awaas Yojana,especially in rural areas

ii. Rise in transition of kuccha housing to puccka housing in rural areas.

iii. Public-Private Partnership policy contributing to address the rise in housing shortage in cities at affordable rates.

iv. Growth in population and rapid urbanization.

v. Rise in disposable income.

vi. Easy availability of finance.

vii. Developers are focusing more on affordable and mid range categories to meet the huge demand.

Hospitality Space

i. Indian and International hotel chains are expanding. Expansion is expected to boost the sector.

ii. Service apartments along with hotel rooms, business parks and even retail arcade are rising under make in India programme.

iii. Tax incentives for hotels and higher Floor Space Index (FSI) are helping in the growth of the hospitality space.

iv. Government?s efforts to promote tourism especially in Tier2 and Tier3 cities are generating a strong demand for hotels, especially budget hotels.

Commercial Space

i. India?s commercial space is one of the most well-organized markets in the Asia- Pacific region, with the introduction of Real Estate Investment Trust (REITs) structure it will become more efficient.

ii. Few large players with pan India presence dominate the market.

iii. Change in operating model - shift from sales to lease and maintenance

iv. Rapid growth in service sector driving demand.

v. Increase in demand for commercial space due to robust business growth and optimism in Indian economy, especially in tier-II cities.

vi. It is the most preferred asset classes in real estate by the investors over the last few years and has attracted about 80% of the total investment made in the sector.

Government Initiatives and Budget 2022

The government has implemented several policies to support the sector. The government has also relaxed FDI norms which may translate into more funds inflow. Real estate is the fourth largest sector in terms of FDI inflows and this fiscal the sector witnessed strong inflows. Government support and implementation of various policies lead to transparency and boosted confidence, especially of foreign investors.The Government of India along with various state governments have taken regulatory reforms and initiatives that were aimed at driving transparency, governance and financial discipline required to boost and support the development of the real estate sector. Few of such policies and initiatives are:

Pradhan Mantri Awas Yojana (PMAY) - This is further divided into four schemes. First is the ‘Housing for All Scheme? with the vision to provide homes for the economically weaker sections of the society. The interest rate for the PMAY scheme starts at 6.50% p.a. and can be availed for a tenure of up to 20 years. The implementation period of the PMAY-Urban scheme has been extended until 31 December 2024. The decision was made by the Union Cabinet after requests from Union Territories and states. Earlier, the aim was to provide houses by March 2022. The Mission covers the entire urban area consisting of Statutory Towns, Notified Planning Areas, Development Authorities, Special Area Development

Authorities, Industrial Development Authorities or any such authority under State legislation which is entrusted with the functions of urban planning & regulations. All houses under PMAY(U) have basic amenities like toilet, water supply, electricity and kitchen. The Mission promotes women empowerment by providing the ownership of houses in name of female member or in joint name. Preference is also given to differently abled persons, senior citizens, SCs, STs, OBCs, Minority, single women, transgender and other weaker & vulnerable sections of the society. A PMAY(U) house ensures dignified living along with sense of security and pride of ownership to the beneficiaries.

PMAY(U) adopts a cafeteria approach to suit the needs of individuals based on the geographical conditions, topography, economic conditions, availability of land, infrastructure etc. The scheme has hence been divided into four verticals as given below:

i. In-situ Slum Redevelopment (ISSR):

Central Assistance of Rs. 1 lakh per house is admissible for all houses built for eligible slum dwellers under the component of ISSR using land as Resource with participation of private developers. After redevelopment, de-notification of slums by State/UT Government is recommended under the guidelines.

Flexibility is given to States/Cities to deploy this Central Assistance for other slums being redeveloped. States/Cities provide additional FSI/FAR or TDR to make projects financially viable. For slums on private owned land, States/Cities provide additional FSI/FAR or TDR to land owner as per its policy. No Central Assistance is admissible in such case.

ii. Credit Linked Subsidy Scheme (CLSS):

Beneficiaries of Economically Weaker Section (EWS)/Low Income Group (LIG), Middle Income Group (MIG)-I and Middle Income Group (MIG)-II seeking housing loans from Banks, Housing Finance Companies and other such institutions for acquiring, new construction or enhancement* of houses are eligible for an interest subsidy of 6.5%, 4% and 3% on loan amount upto Rs. 6 Lakh, Rs. 9 Lakh and Rs. 12 Lakh respectively. The Ministry has designated Housing and Urban Development Corporation (HUDCO), National Housing Bank (NHB) and State Bank of India (SBI) as Central Nodal Agencies (CNAs) to channelize this subsidy to the beneficiaries through lending institutions and for monitoring the progress. The scheme for MIG category has been extended upto 31st March, 2021.

iii. Affordable Housing in Partnership (AHP):

Under AHP, Central Assistance of Rs. 1.5 Lakh per EWS house is provided by the Government of India. An affordable housing project can be a mix of houses for different categories but it will be eligible for Central Assistance, if at least 35% of the houses in the project are for EWS category. The States/UTs decide on an upper ceiling on the sale price of EWS houses with an objective to make them affordable and accessible to the intended beneficiaries. State and cities also extend other concessions such as their State share, land at affordable cost, stamp duty exemption etc.

iv. Beneficiary-led Individual House Construction/ Enhancement (BLC-N/ BLC-E):

Central Assistance upto Rs. 1.5 lakh per EWS house is provided to eligible families belonging to EWS categories for individual house construction/ enhancement. The Urban Local Bodies validate the information and building plan submitted by the beneficiary so that ownership of land and other details like economic status and eligibility can be ascertained. Central Assistance, along with State/UT/ ULB share, if any, is released to the bank accounts of beneficiaries through Direct Benefit Transfer (DBT) by States/UTs.

In Budget 2022, the Rs 48,000 crore is allocated to the Pradhan Mantri Awas Yojna (PMAY). Placing focus on bringing transparency in the realty sector as well as affordable housing for everyone will play a crucial role in providing a much-needed boost to this industry. Also, it is the main highlight in the budget for the sector.

i.Real Estate (Regulation and Development) Act [RERA]:

The introduction of RERA in 2016 with an intent to protect the interest of the homebuyers was a great move to help the latter recline a bit. Nothing short of a game changer for the real estate sector, RERA since its primitive year, helped to revive the buyer?s confidence and drive momentum in the real estate market.

Demonetisation: Introduced on 8th November, 2016, the demonetisation move of the government, putting a sudden ban on the then existing Rs 500 and Rs 1000 currency notes was indeed a difficult move for many to deal with. And though, it did bring about multifarious challenges, it also eliminated some of the prevalent malpractices in the real estate industry and helped to enhance transparency in the sector.

Amendment to Benami Transactions (Prohibition) Act: Aimed towards regulating the unaccounted money into the economy, the said Act is expected to bring lucidity in the ownership of property and result into bolstering investor confidence.

Real Estate Investment Trust (REITs): Approved by the Securities and Exchange Board of India (SEBI), REIT is a platform to pool money from investors all across the country. The introduction of REITs is aimed towards allowing the investors to make safe investments into the real estate of India, and the amount so collected will subsequently be utilised towards the development of commercial properties in order to generate income.

ii. Foreign Direct Investment in Real Estate: The government?s decision to allow 100 percent FDI under the automatic route is a predominant step not only to enhance the scope of foreign investors but also to induce some of the international trade practices into the Indian real estate market.

iii. Smart Cities - Smart Cities Mission is an urban re-development program by the Government of India with the mission to improve and modernize 100 cities across the country. The improvements will be in the form of better utilities(power, water, sewage, waste management, etc.), ease in transportation and commute, digitization and governance making the cities people friendly and self-sustainable. The Union Ministry of Urban Development in collaboration with respective state governments is responsible for the implementation of this scheme.

iv. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) - AMRUT was formed in June 2015 with a view of providing basic services such as water supply, sewerage, urban transport, etc. to households as well as building amenities that contribute towards improving the quality of life for all. A total of 500 cities will be considered for development under this scheme. The government has allocated a budget of ?500 billion for a five year period from fiscal 2016 to fiscal 2020. The Maharashtra state government has included a total of 43 cities under this scheme that will be undertaken for development during the five year period. Mumbai, Thane, Kalyan-Dombivali, Navi Mumbai, Pune, are amongst the key cities selected under this initiative.

v. Make in India -The Make in India campaign was launched in 2014 with an objective to promote India as an investment destination and global hub for manufacturing. Under this initiative, the government has managed to attract significant investment commitments from several countries and companies. The 2018 Make in India event recorded investment commitments of ?15.5 trillion, with Maharashtra accounting for about ?8 trillion on investment commitments. To accommodate and drive this industrial growth in the country, several industrial corridors have also been planned and are in various stages of implementation. Some of the key industrial corridors are Delhi-Mumbai Industrial Corridor (DMIC), Bengaluru-Mumbai Economic Corridor (BMEC), Chennai-Bengaluru Industrial Corridor (CBIC), Visakhapatnam-Chennai Industrial Corridor (VCIC) and Amritsar-Kolkata Industrial Corridor (AKIC).

8.2 Risks And Concerns

1. Registration of Titles in Name Of Company

The land is demerged into HPIL through order of Demerger and in land records maintained by various Revenue Authorities, the Land parcels continue to be registered in the name of the erstwhile VSNL or its successor entity, TCL, including in the registers of various registrars, sub-registrars and other land records at the respective locations.

The Scheme of Arrangement has directed the transfer of all Land parcels recorded in the Scheme of Arrangement to our Company, including all title to such Land parcels, we may be required to undertake additional compliances in order to transfer the Land parcels to the name of our Company and to perfect our title to the Land parcels.

2. Approval from Changing the Land Use

The Land constitute agricultural/ non-agricultural as well as mixed use lands. We may be required to seek consent of relevant authorities for change in use of the land, prior to being able to transfer or develop the same. There can be no assurance that any such approval, whether for recording of our name in the relevant land records or change in use, will be available to us, in a timely manner or at all.

Failure to perfect our title to the Land parcels may impact our ability to transfer or develop any part of the Land and therefore we may be unable to derive any value from our holding of the Land parcels. Imperfections in our title to the Land may also render us liable or susceptible to competiting claims of title to the Land parcels, which in turn may cause expenditure of additional time and money by our Company and TCL in defending or contesting any such claims.

3. Exposure due to on-going Litigations

Our Land are subjected to certain disputes with regard to title and other claims. If any of these claims are determined adversely against our Company or our interests, we may be required to relinquish claims to all or part of the Land parcels or may be required to pay compensation to such claimants. Any such adverse determination would impact our ability to develop or transfer the Land and any amounts to be paid out may require additional infusion of funds from our Promoter or from other sources, which may not be available to us on commercially viable terms or at all.

We may not be able to assess or identify all the risks and liabilities associated with such land, such as faulty or disputed title, unregistered encumbrances or adverse possession rights. In addition, title insurance is not available in India to guarantee title or development rights in respect of land. The absence of title insurance, together with the challenges involved in verifying title to land, may increase our exposure to third party claims to such land. As a result, the uncertainty of title to land makes acquisition and real estate development projects more complex and may impede the transfer of title, expose us to legal disputes and adversely affect the valuation of the land involved. In addition, we may also face the risk of illegal encroachments on the land parcels owned by us. We may be required to incur additional costs and face delays in our project development schedule in order to clear such encroachments. Disputes relating to land title can take several years and considerable expense to resolve if they become the subject of legal proceedings and their outcome can be uncertain. If we, are unable to resolve such disputes, the title to and/ or interest in,such land may be affected. An inability to obtain good title to any plot of land may adversely affect the development of a project for which such plot of land is critical and this may result in the write-off of expenses incurred in relation to such development. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Further, in the event of any loss of contiguity of the land parcels constituting the Land on account of any adverse determination, we may not be able to maximise the value of the Land, or seek any premium that may be available for a single large parcel of land as compared to multiple smaller parcels. Failure to retain or acquire and provide such parcels of land may cause a delay or force us to abandon or modify our development of Land parcels. Additionally, we may be asked to pay premium amounts for acquiring certain large parcels of land. If we experience delay in or are unable to acquire the remaining undivided rights from other co-owners, we may not be able to develop such land. Accordingly, our inability to acquire or maintain and offer continuguous parcels of land may adversely affect our business prospects, financial condition and results of operations.

4. Monetary and Funding Issues

There has been a contrasting trend in real estate lending over the past few years wherein reputed, low leveraged developers continued to enjoy easy access to liquidity as lenders remained selective and weaker developers struggled with limited sources of capital. Real estate sector performance is closely linked to economic recovery and its monetary policies. The Reserve Bank of India has so far maintained accommodative stance as it tries to support economic recovery. However, going ahead we expect to see monetary tightening as the central bank tries to control inflation in the country. A nascent economic recovery along with rising interest rates could impact the real estate sector in the near term as cost of housing loans shoots up with rise in the cost of funding for the developers, who are already facing margin pressure due to commodity cost inflation.

5. Shortage of Manpower and Technology

As the second largest employer in the country, the real estate sector is heavily dependent on manual labour.During the pandemic, the sector was badly hit due to labour availability issues which affected project completion timelines. Hence, there is a need for development of technologically less labour intensive alternative methods of construction

6. Market Condition for largest Pune land parcel

Our largest parcel of Land parcels, aggregating to 524 acres is currently located in the PMR. As a result, our business, financial condition and results of operations will be heavily dependent on the performance of, and the prevailing conditions affecting, the real estate markets in the PMR. The real estate markets in these regions may be affected by various factors outside our control, including prevailing local and economic conditions, changes in the supply and demand for properties comparable to those we develop, changes in the applicable governmental regulations, demographic trends, employment and income levels and interest rates, among other facto? These factors may contribute to fluctuations in real estate prices and the availability of land in the PMR and may adversely affect our business, financial condition and results of operations. These factors can also negatively affect the demand for and valuation of our Land.

7. Business Collaborator/Partner and Customer

Our ability to identify suitable partners or customers for development of the Land is a vital element of our business and involves certain risks, including appropriate financial resources and creditworthiness. We will be required to carry out independent assessment processes for identification of potential partners or customers for the Land which may include a due diligence exercise to assess the creditworthiness of any potential partner or customer, prior experience in developing such projects, suitability for development, development potential and ability to market. Our assessment processes will be required to be based on information that is available or accessible to us either through publicly available means or our diligence and assessment exercises. There can be no assurance that such information is accurate, complete or updated. Any decision based on inaccurate, incomplete or outdated information may result in certain risks and liabilities, which could adversely affect our business, financial condition and results of operations.

8. Downfall in the Prices of Land and Development rights

The availability of developable land, has been increasing across real estate markets in India and therefore, alternative or cheaper land as compared to the Land in each of the markets where we own Land poses substantial challenges.

In addition, the use and development of land is subject to regulations by various local authorities. For example, if a specific parcel of land has been deemed as agricultural land, no commercial or residential development is permitted without the prior approval of the local authorities. Such restrictions could lead to further limitation of development of the Land parcels.

9. Implication of joint development agreements and similar agreements with third parties.

We may enter into joint development agreements, joint venture arrangements, development management agreements, and similar arrangements with third parties for the development of some of the Land parcels and we by virtue of such agreements, may cede development rights to a portion or all of the Land parcels.

We may have limited ability to impose conditions on the developing agencies or joint venture partners, including for timely payment of consideration. In the event that we are unable to agree to commercially suitable terms or find joint venture or joint development partners who are unwilling to meet our commercial and other terms, we may be unable to develop or transfer the Land parcels or portions thereof. Moreover, development agreements that we enter into or the leases in respect of leasehold lands may impose certain liabilities and obligations on us or may be subject to fulfilment of certain conditions. For instance, in some cases, we may be required to obtain the necessary legal and regulatory approvals for the execution of a project.We may enter into joint ventures and other similar arrangements with third parties for the joint development of the Land parcels in the future. The terms of some of these agreements may require us and our partner to take the responsibility for different aspects of the project. For instance, we may be required to incur certain costs related to development of the project while our joint venture partner may be responsible for obtaining the regulatory approvals for the project. In the event that any of the conditions to which we are subject pursuant to the joint development agreements are not satisfied, the land may not be developed in a timely manner or at all.

The success of the development of the Land parcels will be significantly dependent on the satisfactory performance by our joint development and joint venture partners. If these entities fail to perform their obligations satisfactorily, we may be required to make additional investments, become liable or responsible for the obligations of these entities in the project or be subject to litigation by such partners, which could result in reduced profits or, in some cases, significant losses and a diversion of our management?s attention and time.

The inability of a joint development or joint venture partner to continue with a project due to financial or legal difficulties could mean that we would bear increased, or possibly sole, responsibility for the development of the relevant project. This may have a material adverse effect on our business, financial condition and results of operations.

10. Uncertainty in Law, rules & Regulations

Our business and financial performance could be adversely affected by changes in law or interpretations of existing, or the promulgation of new, laws, rules and regulations in India applicable to us and our business. The Government has introduced several incentives to promote the construction and development of affordable housing. We may not be able to realize these benefits if there is a change in law or in interpretation of law resulting in the discontinuation or withdrawal of these tax benefits. There can also be no assurance that the Central Government or the State Governments may not implement new regulations and policies which will require us to obtain additional approvals and licenses from the governments and other regulatory bodies or impose onerous requirements and conditions on our operations. Any new regulations and policies and the related uncertainties with respect to the implementation of such new regulations may have a material adverse effect on all our business, financial condition and results of operations. In addition, we may have to incur capital expenditures to comply with the requirements of any new regulations, which may also materially harm our results of operations. Unfavourable changes in or interpretations of existing, or the promulgation of new, laws, rules and regulations including foreign investment laws governing our business, operations and group structure could result in us being deemed to be in contravention of such laws and may require us to apply for additional approvals. We may incur increased costs and other burdens relating to compliance with such new requirements, which may also require significant management time and other resources, and any failure to comply may adversely affect our business, prospects and results of operations. Uncertainty in the applicability, interpretation or implementation of any amendment to, or change in, governing law, regulation or policy, including by reason of an absence, or a limited body, of administrative or judicial precedent may be time consuming as well as costly for us to resolve and may affect our business, prospects and results of operations.

11. We are subject to extensive government regulation and if we fail to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required to operate our business, our business and results of operations may be adversely affected.

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

HPIL has in place adequate internal financial controls with reference to financial reporting in compliance with the provisions of Section 134(5) (e) of the Companies Act, 2013 and such internal financial controls over financial controls were operating effectively. Internal Financial Controls over

10. HUMAN RESOURCE DEVELOPMENT

Our Company as on date only has Five employees and on boarded few consultants for handling work. However, with we are planning to engage more human resource for smooth functioning of operations.

11. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. Our Company has not taken any treatment which is different from the applicable Ind AS. The fact has been disclosed in Standalone Financial statements

12. CAUTIONARY STATEMENT

This management discussion and analysis contain forward looking statements that reflects your Company?s current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward looking statements as a result of many factors