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 |
|
+91-9892691696
