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IITL Projects Ltd Management Discussions

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Jul 18, 2024|12:00:00 AM

IITL Projects Ltd Share Price Management Discussions

INDIAN ECONOMY:

Despite sluggish global economy, India is poised to become the worlds fastest-growing economy. Indias GDP growth was recorded at 7.2% for FY 2023 - making it the fifth largest economy globally in terms of nominal GDP (US dollars).

A strong rebound of private consumption and higher capital expenditure has been witnessed in the Financial Year 2022-2023, which in turn resulted in providing boost to production activity. The aggressive investments towards creating infrastructure, creating an amicable environment for investments by major companies around the globe, and rapid growth across various markets have kept Indias economy shielded from global headwinds. For instance, the Government has been aggressively promoting investments across multiple important sectors through its successful production-linked incentive (PLI) scheme, which has led to a sharp jump in output, and therefore, reduced Indias dependency on imports.

However, inflation headwinds were also felt by the Indian economy with increase in crude oil prices and interest rate hikes by the Reserve Bank of India to control inflation. The Indian rupee weakness against the US dollar added to the inflationary pressures.

INDUSTRY OVERVIEW:

Despite rising construction costs and a record hike in the repo rate (250 bps) in 2022, the real estate sector has seen a considerable upswing. After a protracted period of economic stagnation, the real estate industry is making a phenomenal comeback - registering unprecedented growth. After two long years of pandemic-related lockdowns and subsequent economic turmoil, the industry has experienced a comprehensive recovery this year.

The residential real estate market in India has been on a strong recovery path as the economy emerged from the pandemics shadow. While low interest rates and comparatively low residential prices sparked the revival in demand, the momentum in residential sales sustained even as interest rates rose. The residential market breached a nine-year high in terms of annual residential sales in 2022 in an inflationary environment that caused increasing concerns on economic growth across the world. Thus, while the momentum looked strong, it remained to be seen if it would sustain in 2023.

OVERVIEW OF REAL ESTATE INDUSTRY IN INDIA:

The growing awareness of home ownership and the governments favourable affordable housing schemes has led to significant growth in the affordable housing segment. With people realising the long-term potential of owning a house, v/s renting led to sustainable growth in the segment. An increase in earning potential, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial growth in the sector.

According to the report by Economic Times, Banks may surrender their firstclaims over assets and cash flows to new lenders willing to infuse priority funding. Since most banks with exposure to stuck projects are reluctant to lend more, completion of such projects is dependent on funding from new lenders. Infusion of fresh capital from new lenders will enable to revive stuck housing projects that have left millions of home buyers across the country in the lurch. The residential real estate market in India had astounding progress in 2022, setting new sales records of 68% YoY, further demonstrating the industrys prominence as one of Indias fastest-growing industries. After two years affected by COVID,

Tier 2 and Tier 3 cities have arisen as fresh major real estate trends in 2022, and the real estate market has set unprecedented benchmarks which continued its growth momentum from 2021 amid the global slowdown.

The property market in India is estimated to exhibit a compound annual growth rate (CAGR) of 9.2% during the period between

2023 and 2028. In 2021, the size of the Indian property market was USD 200 billion. Projected growth by 2030 for the sector is USD 1 trillion. The real estate sector is expected to contribute 13% of the countrys total GDP by 2025.

BUSINESS PERFORMANCE:

The Company is engaged in construction of residential and commercial complex in the National Capital Region (NCR). It has acquired a plot of land on long term lease, under Builders Residential Scheme (BRS) of the Greater Noida Industrial Development Authority (GNIDA). The construction has been completed and the flats are handed over to the purchasers. Apart from constructing its own project, the Company is also engaged in construction of residential flatsthrough Joint Venture Partnership Firms and these firmshave been allotted plots of land on long term lease basis, under Builders Residential Scheme

(BRS) of the New Okhla Industrial Development Authority (NOIDA), Greater Noida Industrial Development Authority

(GNIDA) and Yamuna Expressway Industrial Development Authority (YEIDA). The total lease hold area allotted to the

Company alongwith the Joint Venture Firms is around 2,65,000 sq. meters. Apart from Express Park View II and The Golden Palm Village, other projects have been completed.

Project developed by the Company:-

Express Park View I (EPV): The Companys Project viz, ‘Express Park View I has been developed and completed.

The Project comprises of multi-storey towers/ buildings, having residential flats along with other common services and facilities.

The Project overall comprises of 4 towers of total 334 residential flats, of which 326 residential flats

31, 2023. Residents Welfare Association (RWA) was formed and the complex is now completely handed over to the Residents Welfare Association duly constituted under the Provisions of the Societies Registration Act, 1860.

Projects developed / being developed by the Company through Joint Venture Partnership Firms:

Brief particulars about the business of each of the Joint Ventures / Associate Company are given hereunder:-

1. The Hyde Park - This project is jointly developed by the

Company with Nimbus Projects Limited and is held under the Joint Venture Firm viz. IITL-Nimbus The Hyde Park, Noida. The Project comprises of 2092 residential and 58 commercial units. The project has been successfully completed and completion certificates have been received. The flats have been handed over to purchasers and the RWA is formed.

All the 58 commercial units, and out of total 2092 residential flats 2090 have been sold as on March 31, 2023.

IITL-Nimbus The Hyde Park, Noida had total outstanding loan of 16,27,94,964/- availed from its Lender, Industrial

Investment Trust Limited (IITL). The entire outstanding loan amount was repaid by IITL-Nimbus The Hyde Park, Noida to IITL on September 10, 2022 and the total outstanding interest amount of 2,63,71,000/- as on June 30, 2022 and all future interest amount thereafter was waived off as per One Time Settlement entered by IITL-Nimbus The Hyde

Park, Noida with IITL.

2. The Golden Palms - This Project is jointly developed by the

Company with Nimbus Projects Limited and is held under the Joint Venture company viz. Capital Infraprojects Private Limited (CIPL). The project comprises of 1403 residential and 52 commercial units. The project has been successfully for completed and completion certificate the entire project comprising of 12 residential towers and one studio apartment tower. The physical possession of flats is in progress, formation of RWA is completed and affairs of the

Golden Palms Society are lawfully handed over to the RWA who is now administering and running the same w.e.f. April 01, 2022. and also to Out of total 52 commercial units 47 units and out of total 1403 residential flats 1375 flats have

31, 2023.

Upon receipt of the requisite approvals from the Board of Directors, Preference Shareholders and the Equity

Shareholders in June 2022, CIPL carried out variation in the terms of 2,25,00,000, 0% Non-Convertible Redeemable PreferenceSharesissued byCIPL withrespecttoextending has finalized the lay out plan of its upcoming the period of redemption by further 3 years.

3. Express Park View-II - This Project is jointly developed by the Company with Nimbus Projects Limited and is held under the Joint Venture Firm viz. IITL Nimbus The Express Park View (EPV II). The Project was initially launched in two phases i.e. Phase I & Phase II. The Phase I comprise of

10 towers and have 1320 residential flats. The Completion received.Certificate For the remaining three towers, firm has already applied for Completion Certificate.

The Phase II comprises of 39 commercial units.

All the 39 commercial units and out of total 1320 residential flats, 1199 flats have been sold as on March 31, 2023.

The Firm has undertaken construction of low rise apartments, in Phase III, under the name and style of THE EXPRESS PARK

VIEW-II LOW RISE APARTMENTS". It is proposed to construct 310 flats in 16 towers (G+4). The RERA registration is completed and the construction work has begun.

IITL-Nimbus Express Park View (EPV II) had total outstanding loan of 24,77,51,455/- availed from its Lender, Industrial Investment Trust Limited (IITL). The entire outstanding loan amount was repaid by IITL- Nimbus Express Park View (EPV II) to IITL on December 30, 2022 and the total outstanding interest amount of 14,11,57,242/- as on June 30, 2022 and all future interest amount thereafter was waived off was waived off, as per One Time Settlement entered by IITL-Nimbus Express Park View (EPV II) with IITL.

The Golden Palm Village - This plot of land near F1 racing track was allotted and scheduled to be developed by IITL Projects Limited jointly with Nimbus Projects Limited and is held under the Joint Venture Firm viz. IITL-Nimbus The Palm Village for Residential flats from Yamuna Expressway Industrial

Development Authority (YEIDA). The construction work was planned but due to slow market sentiments it could not proceed even though efforts were to redesign the project. In line with the Project Settlement Policy (PSP) launched by YEIDA, the firm has surrendered partial project land admeasuring 47843.70 sq. meters out of total project land area of around 102995.70 sq.mts.

Surrender deed for the same was executed on November 30, 2021. The deed was executed pursuant to the application made by the firm under clause 4(G) of the PSP Scheme, 2016 floated by the Government of Uttar Pradesh.

IITL-Nimbus The Palm Village, the Joint Venture Firm had requested the YEIDA to demarcate the balance piece of land admeasuring 55152 sq. mts in favour of the firm give the physical possession of the same. However, on August 04, 2022, YEIDA directed the Firm to surrender additional landsoldasonMarch admeasuring 7375.48 sq. mts to YEIDA in view of revised calculation as per the Project Settlement Policy (PSP) and accordingly enter into the Settlement Deed for the same. YEIDA has handed over the physical possession of balance land admeasuring 47776.522 sq. mts to the Firm.

The firm

Housing Project to be launched in the name of "THE PALM VILLAGE- AEROCITY" consisting of total 702 studio apartments,

376 low rise apartments and 44 commercial apartments.

Due to paucity of funds, IITL Nimbus The Palm Village was not able to repay the loan and interest to its Lender, Industrial Investment Trust Limited (IITL) and therefore entered into the following terms for One Time Settlement of the outstanding loan of 3,00,00,000/-: A. 25% of the outstanding loan amount to be paid upfront by

IITL Nimbus The Palm Village;

B. Pursuant to the approval of the Shareholders, the Company will enter into One Time Settlement with IITL Nimbus The Palm Village on the following terms: a. The firmwill repay the balance outstanding loan amount on or before March 31, 2023. b. The entire amount of accrued interest outstanding upto September 30, 2022 amounting to 2,42,13,511/- to be waived off. c. The amount of interest payable from 01.10.2022 to

31.03.2023 also to be waived off. d. The firm has reiterated their commitment to remit the outstanding principal amount.

Upon receipt of the approval from the Shareholders of Industrial

Investment Trust Limited vide Postal Ballot on January 10,

2023 in connection with settlement of outstanding Loan of

3,00,00,000/-, the Firm repaid the entire outstanding Loan on

March 14, 2023 and the total outstanding interest amount of

2,42,13,511/- as on September 30, 2022 and all future interest amount thereafter was waived off, as per One Time Settlement entered by IITL-Nimbus The Palm Village with IITL.

RISKS AND CONCERNS:

The Company and its Joint Ventures are engaged in the business of Real Estate. The real estate industry like any other industry is exposed to certain risks that are particular to the business and the environment. Demand for residential units is driven by combination of factors like location of the project, property price, interest rate, economic condition, income levels, rise in nuclear families, greater access to credit/housing loans. The sector is also prone to competition. Competitors with different schemes for the buyers are emerging in the industry. The Company has formulated a Risk Management Policy. The Company tries to identify, evaluate, analyze and prioritize risks in order to address and minimize such risks. This exercise facilitates identifying high level risks and implement appropriate solutions for minimizing the impact of such risks on the business of the Company.

The real estate sector is a regulated sector and any unfavourable changes in government policies and the regulatory environment can adversely impact the performance of the sector. There are procedural delays with regards to land acquisition, land use, project launches and construction approvals. Any policy changes and regulatory bottlenecks may impact profitability and affect attractiveness of the sector and companies operating within the sector.

RESULTS OF OPERATIONS AND STATE OF COMPANYS AFFAIRS:

The total Income of the Company for the financial year ended on March 31, 2023 is 729.26 lakhs as compared to previous year which was 1,971.10 lakhs. On consolidation basis, the income of the Company for the financial year ended on March 31, 2023 increased to 148.85 lakhs as compared to 122.95 lakhs in the previous year and net loss accounted to 299.21 lakhs in the current year as compared to previous year net profit of 1,065.74 lakhs. During the year under review, total comprehensive expense is 298.93 lakhs as compared to total compressive income of 1065.93 lakhs in the previous year.

KEY FINANCIAL RATIOS

Ratios

2022-23 2021-22
Debtors Turnover* 2.90 2.13
Inventory Turnover 0.31 0.27
Interest Coverage Ratio** 44% 321%
Current Ratio*** 20% 16%
Debt Equity Ratio -149% -158%
Operating Profit Margin (%)**** 32% 30%
Net Profit Margin (%)***** -41% 54%
Price Earnings ratio****** (2.71) (0.79)
Earnings Per share******* (6.0) 21.41
Details of any change in Return NA (Net NA (Net

on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

worth of the Company is negative) worth of the Company is negative)

** Interest Coverage ratio decrease as EBIT reduces in current period ***Current ratio increase as decrease of current liability in current period ****Operating Profit Margin decrease as Operating Income reduces in current period

Change in Price Earnings Ratio is due to major change in Earning per Share.

Change in Earnings Per share is due to increase in loss

INTERNAL CONTROL:

A system of internal control is in place to ensure proper checks and balances in the operations of the Company and to safeguard its assets and interests. There are clear demarcation of roles and responsibilities at various levels of operations. An internal audit firm has been engaged to conduct internal audit of transactions regularly and submit their reports to the management. All audit observations are discussed by the Management with the Auditors for follow-up action and for improvement in the process. The

Audit Committee and the Board regularly review the same.

Adequate care has been taken to ensure due adherence to the

Internal Financial Control over Financial Reporting under Section 143 (3) of Companies Act, 2013.

HUMAN RESOURCES:

The Company considers Human Resource as key drivers to the growth of the Company. The Company has performance-based appraisal system. There was one employee in the Company as on March 31, 2023.

OUTLOOK:

Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Growth of global economy is poised to remain weak by historical and Russias standards, as the fight difference to the Companys war in Ukraine weigh on activity. In view of pent-up demand spike, lingering supply disruptions, and commodity price spikes, monetary action was taken by various central banks.

Indian economy is projected to deliver robust growth of 5.9% for FY 2024, highest amongst the emerging economies, driven by strong private sector investment supported by improvement in transport infrastructure and logistics. To drive the virtuous cycle of infrastructure investment and job creation, the Union Government has considerably increased the capital expenditure outlay to 10 Lakh Crore, which is 33% higher than the previous year. The increase in infrastructure spending, especially in tier II and tier III cities is anticipated to have a substantial effect on the

Indian economy, generating new employment opportunities and stimulating growth.

Overall, the demand conditions in India remain conducive to supporting economic activity. India is boost to face the coming financial year with confidenceimparted by underlying and overall macroeconomic stability, while being on the alert against geopolitical and geo-economic risks.

CAUTIONARY STATEMENT:

The Statements made in ‘Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on whether express or implied. Several factors thatcould make significant would include demand and supply, government regulations and taxation, natural calamities and such factors beyond the

Companys control. The Company and the Management shall not be held liable for any loss, which may arise as a result of any action taken on the basis of the information contained herein.

For and on behalf of the Board
IITL Projects Limited
Dr. Bidhubhusan Samal
Chairman
(DIN: 00007256)

Date : August 18, 2023

Place : Mumbai

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