Hubtown Ltd Management Discussions.


Your Company is one of Indias leading real estate companies, engaged in the business of execution and development of real estate projects and currently operates both - on its own and through its subsidiaries / joint ventures / associate companies, partnerships firms and public private partnerships encompassing the construction and development of Residential and Commercial Premises, and Build Operate Transfer (BOT) Projects. The Company has a Western India focus with presence in major cities such as Mumbai, Thane, Pune, Ahmedabad, Surat, Vadodara and Mehsana.


(Includes projects being developed / to be developed through subsidiaries / associates / joint ventures / public-private partnerships)

Residential: Projects Completed:

Hubtown Heaven – Matunga (East) ‘A and ‘B Wings Hubtown Sunstone – Bandra (East) – Phase – I
Hubtown Gardenia – Mira Road Hubtown Sunmist - Andheri (East) ‘A Wing
Hubtown Countrywoods Phase II – Kondhwa, Pune Hubtown Greenwoods – Thane Phase - I
Hill Crest – Andheri (East)
Hubtown Vedant – Sion (East) – Phase – I

Ongoing Projects:

Hubtown Seasons – Chembur Hubtown Serene – Bandra (East)
Hubtown Greenwoods – Thane Phase – II Hubtown Celeste – Worli
Hubtown Heaven – Matunga (East) ‘C Wing Hubtown Premiere – Andheri (West)
Hubtown Vedant – Sion (East) – Phase – II Rising City – Ghatkopar-Mankhurd Link Road
Hubtown Sunstone – Bandra (East) – Phase – II Twenty Five South – Prabhadevi
Hubtown Countrywoods Phase III – Kondhwa, Pune

Future Projects

Hubtown Divinity – Thane ; Hubtown Square – Thane;

Commercial: Ongoing Projects

Hubtown Solaris Phase – II – Andheri (East) ; Joyos Hubtown – Surat

Joyos Hubtown – Ahmedabad ; Joyos Hubtown–Mehsana; Joyos Hubtown – Vadodara Hubtown Viva – Phase – II, Jogeshwari (East);

IT SEZ and Township: Ongoing

Sunstream City Phase – I - Mulund-Thane


The Management Discussion and Analysis, forming part of the Board Report for the year under review as prescribed under Regulation 34 (2) (e) read with Schedule V to the SEBI Listing Regulation is discussed here in below :


The Coronavirus (COVID-19) pandemic, is now a truly global phenomenon with more than a third of the worlds population living under some sort of lockdown/quarantine. Globally, the outbreak of COVID19 has disrupted peoples lives, interrupted businesses and jeopardized decades of development progress.

The level of uncertainty in the economy is currently at an all-time high and the trajectory of the recovery is difficult to forecast. Although there has been no cohesive global policy response, individual countries have taken major steps to try to cushion their people and economies through this difficult period.

Amid countries applying extreme measures to contain the Coronavirus outbreak, businesses have come to a grinding halt across the world, forcing monetary agencies to slash growth forecasts for the global economy. This would be the deepest global recession since World War II, and almost three times as steep as the 2009 global recession. The World Economic Outlook has estimated global growth to decline by 5.2% in 2020 before recovering by 4.2% in 2021.


On March 25, 2020, India initiated the largest lockdown in the world, restricting 1.3 billion people. This was further extended three times in order to break the chain of transmission of corona virus and contain the COVID-19 pandemic. The COVID-19 has been at the centre of the loss of lives and livelihood on a massive scale in India. Economic activities across India have taken a hit due to the ongoing COVID-19 pandemic. Businesses and industries have remained shuttered for over three months now amid the ongoing nationwide lockdown. Even as restrictions have been eased across some parts of the country, especially with respect to domestic travel and business operations, states with a higher case burden are struggling to deal with the crisis.

The Indian economy registered a sharp fall with GDP growth for FY2020 at an 11 year low of 4.2% lower than the government projection of 5% in both, first and second advance estimates. According to Asian Development Bank, Indias GDP growth is projected to contract by 4.0% in FY 2021 before recovering sharply to 6.2% in FY 2022, on the assumption of recovery from the pandemic in the second half of 2020. However, a prolonged COVID-19 pandemic that would push the global economy into a deep recession, would further slow the growth of the Indian economy.

With the present lockdown scenario in India, consumption and investments are expected to be severely impacted in the first quarter of FY2021.


Indian real estate sector, which was already struggling to re-emerge from the past turbulence of structural changes brought in by demonetization, RERA, GST, IBC, and subvention scheme ban, policy reforms, and the liquidity crisis, is now set to witness another major fallout arising out of the COVID-19 pandemic.

The real sector has come to a standstill from the start of the lockdown, and is not expected to fully operationalize for another 3 quarters. As evident, project sites are shut or working at minimal capacity and construction activity has virtually stopped; Site visits from customers have also virtually stopped - immediately impacting sales and cash inflows. Also, new project launches have been deferred for an unknown period. According to JLL India report, total institutional investments in financial year 2019-2020 witnessed a decrease of 13% at $4.26 billion - the lowest in four years. The decline was influenced by several events, including the COVID-19 outbreak and several high-profile issues in the domestic banking and finance sectors in late 2019 and early 2020.

According to KMPG report titled "COVID-19: React, adapt and recover - The new reality", Indias real estate sector is estimated to face losses of as much as 1 Lakh Crore by the end of the current financial year (2020-21) due to the the COVID-19 pandemic. The pandemic will dampen real estate activity in the next 6-12 months and things are likely to change only after 18-24 months.


Banks in India has reduced lending since the Global Financial Crisis started in the year 2008. The developers in India then started to depend more on NBFCs for their fund requirements. But in September 2018, IL&FS, a core investment company with institutional shareholders across the world, defaulted on its debt, of which major portion of amount was owed to public sector banks. The knock-on effect triggered a series of defaults, exposing hundreds of investors, banks and mutual funds associated with IL&FS.

Other firms, including Dewan Housing Finance Corporation Ltd. (DHFL), Indiabulls Housing Finance Ltd defaulted on their loans like IL&FS to various banks and institutions, further added to the pain of developers.

A government crackdown on banking-sector malpractice, combined with growing credit risk among developers, has seen banks pull the plug on real estate lending. With the non bank financial sector in similarly dire straits, developers now have nowhere to turn for finance.


Residential :

The unprecedented crisis put across by the current COVID-19 pandemic has certainly impacted the Indian residential real estate significantly. The sector had already been grappling with subdued demand for a long time and the liquidity crisis in 2019 and COVID-19 has made things more difficult for the sector. According to Knight Frank report, the total sale volume in top eight cities of India increased by 1 percent in 2019 to around 2,45,800 units as the sector was impacted by prolonged crisis in the NBFC sector. Housing demand has moved to user segment, and there are virtually no investors in the residential space. Investor participation in the overall demand has fallen to as low as 5-10 per cent.

The residential markets revival hinges on the intensity, duration of a pandemic, government support and concessions. To boost home-buyer sentiment, RBI announced consecutive rate cuts, and the government announced reduction of GST rates to 1% for affordable housing and 5% for others and the setting up of an Alternative Investment Fund (AIF), but these measures had little impact on the sales for the sector.

According to the KPMG report, in the residential sector, pre-COVID-19 challenges related to subdued demand and liquidity pressures will continue causing slowdown in sales in the short to medium term. With a screeching halt to site visits, discussions, documentation and closures, the early indicators depict that the residential real estate sector is likely to face a tough time for the next few quarters and the sectors recovery has been pushed further away by at least few quarters.

Commercial :

Commercial real estate, like residential real estate, is also not immune to the Covid-19 fallout. Corporate occupiers are seen delaying their purchase or leasing decisions. Various MNC and businesses are testing the waters of the work-from-home option. If proved successful/permanent, it could impact leasing activities in the future. The impact of COVID-19 in the form of shutdown of retail outlets and malls as also entertainment and fitness centers has put commercial real estate deals on a wait-and-watch mode.

According to ANAROCK Research, the magnitude of the current slowdown on office segment is tough to predict, as the world, particularly the First World, is still reeling under the impact of the virus. Considering the present scenario and assessment of past global crises in the last decade, it is estimated that supply and net absorption will be significantly lower in 2020.

However, there seem to be some opportunities arising in real estate space in the industrial sector in warehousing and data centers as technology focused companies in these spaces increase volumes.

Retail :

Corona virus pandemic amid an economic slowdown has hit Retail Sector also very badly. Retailing as a business is seasonal, highly dependent on consumer spending and during the current years vacation season. During the lockdown, owing to COVID - 19 pandemic, Indians were either locked down in homes or prohibited to congregate, as a result there was muted buying and muted spending on eating out, recreation and entertainment. Not only the lockdown but also social distancing combined with the overall economic gloom and employment uncertainty are likely to bear an impact on consumer spending.

COVID-19 outbreak has added enormous pressure to the already delicately poised Indian retail sector. New completions will be deferred, leasing activity will be delayed and rentals have already come under pressure, vacancies may see a momentary rise and the sectors growth rate will be slowed.


Opportunities :

The current lockdown, owing to the Coronavirus crisis, has massively impacted the world economy including real estate. However, there lies an opportunity in every crisis, and Covid-19 looks no different.

Your Company has projects in affordable housing, projects with good amenities which are close to completion, and offices with lower ticket size for office and retail to suit the requirement of customers with different requirements.

1) Increase in demand from NRIs :

Over the years, demand from NRIs has become an important driving factor of the real estate market in India. Especially since the establishment of RERA, international buyers have gained confidence to invest in the properties that are registered under RERA, which secures their investment, even while settled abroad.

In the current COVID-19 scenario, it is expected that NRIs shall be again interested to buy homes in India and this may eventually raise demand.

Also demand of NRI as investors has increased as the investment opportunities in USA and Europe have fallen due to the severity of the pandemic. Moreover, with the rupee plummeting against dollar, recent stock market volatility and reports of recession hitting market has brought a renewed interest among NRIs to invest in the Indian real estate assets for long-term, especially in the prime locations. All this has led to NRIs having more disposable money to realize investments in Indian markets.

2) Increase in demand for Affordable Housing :

Affordable housing continues to remain a significant opportunity for developers and a key focus area for the government. There is a major shortage of supply in affordable housing stock , especially housing that caters to the economically weak and low-income segments. The Government of India has been pushing for the affordable housing segment. Great emphasis has been laid on the affordable housing segment as around Rs 1.5 Crore affordable homes have been built in the last five years under the Pradhan Mantri Awas Yojna (PMAY) and 1.95 crore are being further built as part of Phase-II.

The demand for affordable housing is expected to increase further in the near future owing to subsidies provided by government to promote affordable housing. In Budget 2020, the government announced several measures to boost affordable housing.

Additional deduction of up to Rs 1.5 Lakh for interest paid on housing loans borrowed for purchase of affordable homes, extended upto March 31, 2021.

The Government of India has announced an Alternative Investment Fund (AIF) of 25,000 for the stalled Affordable and Middle Income houses which will benefit the affordable housing sector. Further, the Public Private Partnership (PPP) model introduced by the government for affordable homes has also provided a boost to the affordable housing market.

Expecting delays in project completion and extending support to the builder community, the government has announced that developers could get project deadlines extended by six months through the RERA citing the force majeure clause.

Your Company is developing several optimally sized and priced apartments at several prime locations in Mumbai.

3) Increase in demand for lower ticket size office / retail :

COVID-19 pandemic has enforced the concept of ‘Work from Home (WFH) into an officially mandated, strictly enforced rule. Even as the Coronavirus crisis eventually recedes, many employers will have discovered that they dont need large office buildings, and many employees will have discovered that they dont need to be in the office every day or spend hours commuting. Businesses will realise they dont need big setup for office when their employees can work just as efficiently from home and they dont have to come to office every day. This will lead to increase in demand for office / retail with low ticket size. Your Company is developing 4 projects in Gujarat (Ahmedabad, Mehsana, Vadodara and Surat) which cater to this segment.

4) Value for open spaces and gated communities :

The lockdown has connected people to Nature again. The need for fresh air and open spaces has gained popularity in the lockdown. In order to enjoy the openness, people might start looking for larger balconies, terrace spaces, garden spaces, amenities and sit-outs. This pandemic has also brought in a sense of comfort as gated communities have taken extreme measures to _ght the pandemic, controlled access, blocking of solicitation, ensure supply of essentials, community helping for the elderly staying alone, pet care, etc. which are not possible for stand-alone houses and buildings has brought about a greater sense of community.

Your Company is developing projects to suit the demand of open space in Chembur & Ghatkopar and is expecting to do well from sales.

5) Digitalization:

Most real estate businesses are currently highly dependent on physical visits, face-to-face discussions and transactions. COVID-19 lockdown has accelerated technology-led home buying in India. In order to avoid physical contact and reduce the risks of contagion, a lot of focus will be placed on technology including product display, discussions, comparison and transactions. This will allow the real estate professionals to develop a fast and transparent process by helping the clients with maximum information and visualization and establishing a greater connect with the client.

Virtual site visits, property selection, negotiation and purchase process can now be done digitally. Real estate will see new trends in the real estate market due to COVID-19 such as enhanced adoption of online portals, shift from brick and mortar to click and tap, adoption of remote-working technology with more emphasis on robotics and unmanned vehicles, etc.


1) Delay in Finishing the Projects: The Company is majorly dealing with SRA including 3 projects in Andheri, 3 in Bandra, 1 in Sion and 1 in Worli (all in Mumbai). Vacating the land for construction and getting the required approvals are cumbersome and time consuming procedures and require heavy investment in working capital. Due to the ongoing COVID-19 pandemic, The demolition of the slum tenements is long legal road, which has delayed vacating of the plots for construction. Furthermore, due to the ongoing issues in the real estate industry, financing is not available easily for SRA projects, which has resulted in further delays in construction and finishing of the projects.

2) Shortage of Labour: Due to Pandemic and continuous lockdown, migrant labour staying in the city of Mumbai have moved back to their native place. There is an acute labour shortage being faced by the entire industry right now, which is expected to remain throughout the duration of the pandemic. This will result into further delay in finishing the project.

3) Delay in Revenue Generation and Cash Inflows:

The working or self-employed customers are facing pay-cuts and falling disposable incomes due to the COVID-19 pandemic.. There has been a marked rise in the number of customers delaying due payment / installments has affected the budgeted cash inflows of the company and may ultimately result in delayed completion of the projects. Furthermore, your Company expects a small number of cancellations of bookings made especially in under construction projects due to the delays and customers inability to make the scheduled payments. Your Company also expects that new bookings and new revenue generation will be slow this year as potential customers will not be as willing to visit sites, customers loan eligibility may be impacted and customers will also be expecting substantial discounts on current prices.

4) Increased Costs:

Due to shortage of labour in Mumbai, your Company expects that labour prices will continue to remain high for the next 6 months, which will impact profitability of the Company. Your Company also expects that the Company shall be able to get financing facilities at higher rates, given the crisis in the NBFC and Banking sector and the overall reduction in real estate by the major lenders in this space.


Real Estate Specific Risks :

• Fluctuations in market conditions may affect the ability to sell units at expected prices, which could adversely impact revenues and earnings.

• Competition from existing as well as new players, both domestic as well as foreign.

• Increase in interest rates may dampen the growth rate of demand for housing units.

• Real estate price cycles have the maximum impact on the margins of the developers.

• Unfavourable changes in government policies would affect the growth of the real estate sector.

• Liquidity Risk : Liquidity crisis on account of stoppage of lending funds to real estate sector by banks, financial institutions and other lending agencies, leading to stoppage of development activity.

• Operational Risks : Longer gestation period for acquisition of land, non-availability of critical raw materials such as cement and steel, failure to comply with rules and regulations.

• Shortage or sharp increase in prices of building materials could impact the project schedule and impact thereby the revenues and margins.

• Delays in obtaining approvals from regulatory authorities.

• Economic uncertainty and political fluidity can adversely impact the economy.

• Human Resource Risk high attrition of skilled/trained manpower.

• Retrospective policy changes and regulatory bottlenecks could impact the performance of real estate companies.

• Legal and statutory risk - ownership and land title issues.

Concerns :

• Stalled Projects : Stalled housing projects continue to be stumbling blocks in the growth of the residential real estate sector, especially with buyer staying away from risky under-construction projects, thus depriving them of realizing the full benefits of the governments interest subsidy scheme under Pradhan Mantri Awas Yojna.

• Liquidity Crunch : The ongoing NBFC crisis post IL & FS default has made things even more difficult for the developer community.

• High Cost of Capital : In the absence of bank finance the developers had been resorting to PE funding to finance land purchases. This financing route increases the cost of capital drastically.

• Scarcity of Land : The non-availability of land within city limits along with rising land and construction cost is leading to an increase in the overall cost of the project, thus making the projects unviable.

• Complex Approval Process : The lengthy and complex approval process leads to a long gestation period which eventually results on project cost escalation by 20 to 30 percent.

• Restrictive development norms : Low floor area ratio, density norms, ground coverage, parking provision also pose a challenge for the real estate.

• High Cost of emerging technology absorption


The COVID-19 pandemic has undoubtedly changed the way people live and work for the foreseeable future, and new trends will emerge that will become part of our ‘new normal. While the traditional segments of residential and commercial real estate are sure to be struggling for the next 6-9 months, new trends and opportunities are already starting to take shape as governments, businesses and communities begin to adjust to the post pandemic environment. But equally, there will be other consequences to the pandemic that will surprise us and that are not yet possible to predict.

Social distancing, health and hygiene shall become an important part of peoples life. There will be noticeable and a positive shift in trends from renting to buying. People living in a rented accommodation in a non-gated community have realized the importance of open space, health, hygiene and well-ventilated homes during lockdown.

Real estate developers will have to evolve newer products including opportunity to make smart homes with office / study rooms with provisions to install all essential gadgets, good lighting, sound proof the room which shall be isolated from other rooms by providing separate entry and exit. Furthermore, there shall also be certain newer trends which Developers shall have to adopt including innovative and newer land uses like data centres, warehousing, etc, which will be geared towards the future and faster growth industries.

There will also be consolidation in the real estate industry as smaller players grapple to deal with the liquidity crisis and increasing competition from larger organized players.

The demand shall further rise for ready to move in units and the units nearing possession (1 yr.) as new launches likely to be deferred by another six months, and due to high level of uncertainty around under construction units.


The Company recognizes that its people are the key to the success of the organization and in meeting its business objectives. The Human Resources function endeavors to create a congenial work environment and synchronizes the working of all the departments of the organization to accomplish their respective objectives, which in turn helps the Company to build and achieve its goals and strategies. Employee relations during the year remained cordial. The Company had 296 employees on its payroll as on March 31, 2020.


The Company has adequate internal control systems, commensurate with the size and nature of its business. Well documented policies and procedures to monitor business and operational performance are supported by IT systems, all of which are aimed at ensuring business integrity and promoting operational efficiency. A firm of internal auditors appointed by the Company conducts periodical audits to ensure adequacy of internal control systems, adherence to management policies and compliance with laws and regulations. Their scope of work includes internal controls on accounting, efficiency and economy of operations. The internal auditors also report on the implementation of their recommendations. Reports of the Internal Auditors are regularly reviewed at the Audit and Compliance Committee meetings. The Audit and Compliance Committee also reviews the adequacy and effectiveness of the internal control systems and suggests improvements, when so required.


In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25 % or more as compared to the immediately previous financial year) in key financial ratios.

Sr. No. Particulars of Ratio Ratio 2019-20 Ratio 2018-19 Percentage Change
i Debtor Turnover Ratio 0.28 1.17 76.07 %
ii Inventory Turnover Ratio 0.02 0.38 94.74 %
iii Interest Coverage Ratio 0.72 1.03 (30.10) %
iv Current Ratio 0.97 1.03 (5.83) %
v Debt Equity Ratio 0.39 0.43 (9.30) %
vi Operating Profit Margin 1.75 % 0.30 % 483.33 %
vii Net Profit Margin (23.28) % (1.71) % (1261.40) %
viii Return on Networth (3.69) % (0.41) % (800) %

Reasons for change in 25% or more in key financial ratios as compared to the immediately previous financial year:

1. Debtor Turnover Ratio : During the year, one of the joint venture entity in which the Company was a Co-venturer was dissolved resulting in substantial decline in receivables thereby resulting in improved Debtors Turnover Ratio.

2. Inventory Turnover Ratio: Sale of Finished properties recognized as per IND AS 115 "Revenue from Contracts with Customers". decreased as compared to previous year whereas inventory increased.

3. Interest Coverage Ratio : The interest coverage ratio has decreased due to lower EBITDA on account of lower sales realization during the year under review.

4. Operating Profit Margin : The increase in operating profit margin is due to higher operating profit during the year under review.

5. Net Profit Margin : Net Profit Margin has further declined due to lower Profit After Tax (PAT) on account of decrease in Revenue recognized as per the IND AS 115 "Revenue from Contracts with Customers as compared to previous year.

6. Return on Networth : Return on Networth has further declined due to lower Profit After Tax on account of lower sales realization.