Jamshri Realty Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

India is now the worlds fifth largest economy in terms of nominal GDP and the third largest in terms of purchasing power parity (PPP). It is estimated that, by 2027, India will become the 3rd largest Economic Superpower of the world, surpassing Germany and Japan reaching a GDP of 5.4 trillion US dollars. (IMF, 2023).

Indias Gross Domestic Product (GDP) in FY 2023-24 is estimated at 7.6%, in comparison to 7.0% in FY 2022-23. However, RBI has projected real GDP growth for FY 2024-25 at 7.0%.

This rapid growth in GDP will increase Indias credibility and attract more FDI - Foreign Direct Investment. It will lead to an increase in job opportunities, per capita income, productivity, exports and hence boost the Economy.

The Reserve Bank of India (RBI) expects manufacturing to maintain its momentum and services to grow above the pre-pandemic trend.

FY 2023-24 was a year of good results and growth for the industry. Being driven by favourable demographics, increasing employment, higher disposable incomes of a young middle class, robust domestic demand, increased investments and improving infrastructure and connectivity.

The outlook for FY 2024-25 remains positive.

REAL ESTATE SECTOR

The Indian real estate market, has proven to be inflation-proof, in FY 2023-24

Many malls are closing and becoming ghost malls. However developers are bullish on retail space as per the numbers released by JLL. Although online shopping is witnessing high growth, the offline players majorly malls and high street developers are offering more than just shopping. The focus will now be towards experience-led retail. The offering would include a wider range of services in entertainment, food, activities and experience and all these will fall under an organized retail experience.

The retail space will see a significant increase and add approx 45 million sqft between 2024-2028 in the top seven cities. In the past decade, the average size of retail projects was around 3,91,099 sqft. This is expected to rise by 30% in the coming years.

Furthermore, improved infrastructure and connectivity are transforming Tier 2 cities into vibrant economic hubs and investment hotspots. With the development of highways, expressways, metro rail networks, and airports, these cities are becoming more accessible and interconnected, attracting businesses, industries, and investors.

The rise of Tier 2 cities as emerging IT and manufacturing hubs is further driving demand for commercial and industrial real estate. With companies expanding their operations and setting up offices, manufacturing facilities, and warehouses in these cities, there is a growing need for commercial and industrial spaces.

The developers are bullish as the malls have performed well by maintaining good occupancy, footfall and conversion rate. *reference articles in Mint, ET Edge and other News Articles.

Your company is on a similar outlook by offering an integrated experience with retail, entertainment and food. Your company is also taking efforts to bring in more footfall and conversion of the same.

OUTLOOK, OPPORTUNITIES AND THREATS

OUTLOOK

The companys registered office, real estate development, Hospitality business are located at Solapur.

The Lessees / Licensees signed in the previous year have now started doing business and have started meeting their estimates of sales from the premises. This positive outlook has also opened doors for other brands and enquiries for space are being requested.

OPPORTUNITIES

The company is also trying to bring in more IT/ITes clients to Solapur. As part of this effort your company is also planning a coworking space so as to give the flexibility and ease of doing business to its clients. Office/space demand which your company can offer to its prospective clients, gives them an ease of doing business with all inclusive costs without them worrying over the day to day maintenance and tuning of the premises. This co-working platform will also enable the companies to test the viability of Solapur as a prospective base for their operations, without worrying about the daily admin and opex costs like electricity, housekeeping, security, internet etc.

We feel that there are substantial opportunities and potentials available at Solapur specially post the improvement in air connectivity by the planned commercial air service to start in 2024.

THREATS

However we must be aware of the threats to the business for example change in IT employment trends, Government policies, international trends etc.

Conversely there are also new employment opportunities coming up in the service sector as well as in other tech based industries which may require a steady supply of qualified talent for which Solapur has many options.

Your company is offering a holistic approach that is retail, lifestyle, office, wellness all within walking distance. We strongly feel that such integrated campuses will be the future of the push to take jobs to Tier II and Tier III cities in India.

PERFORMANCEAND FUTURE OUTLOOK

Your Company has already begun letting out some of its space for commercial purposes and is in discussions with some prospective clients as well for retail.

The performance of your company segment wise:

For Property & Related Services your company earned during the year Rs. 317.32 lakh (FY23 Rs. 177.12 lakh) and for Hospitality Services your company earned during the year Rs. 241.28 lakh (FY23 Rs. 225.40 Lakh). The total area let out during the year approx 50,000 sqft (fy23 20,000 sqft)

Our company is now working towards its plan of redeveloping its campus for Hospitality, F & B, Retail and Entertainment under the name of Jamshri Avenue. It offers retail, food, entertainment, office space all in one campus. This kind of model is the only model in Solapur and hence the company believes it will benefit from the same.

In addition to partnering with renowned brands, your company is also negotiating agreements with local restaurants for them to establish their outlets on our premises. This strategic initiative aims to provide our campus community with an array of culinary choices, enhancing the dining experience and offering diverse cuisines while promoting local entrepreneurs.

RISKS AND CONCERNS

Your Company has entered into a new sector. Further it will be exposed to the Industry specific risks faced by the Real Estate Sector. In the course of its business the Company will be exposed to stiff competition from other established developers in the market. In addition, it is exposed to certain market related risks such as increase in interest rates, customer risks, changes in the government policies, etc. However, with the competitive advantages, as aforementioned, the Company is well poised to mitigate all such risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board of Directors of the Company has laid down adequate internal financial controls which are operating effectively. The policies and procedures adopted by the Company ensures orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparations of reliable financial information. The Company has a robust system of internal controls in place which is commensurate with the size and nature of business. It plays a critical role in managing operational risks. The scope includes inputs received through internal audits, compliance with accounting standards, risk management and different control systems. The report is also presented to the Audit Committee for feedback and further improvements.

FINANCIAL AND OPERATIONAL PERFORMANCE

Please refer to the Director Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT.

The Company continues to have cordial and harmonious relations with its employees. The Company credits its growth and success to the dedication, loyalty and hard work of its employees at all levels. It considers its employees as an integral part of its family. The goal is to ensure that all the employees are engaged, motivated and working towards achieving the Companys strategic objectives.

DETAILS OF SIGNIFICANT CHANGES (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

The company for its development activities including landscape, road, retail, IT office had to borrow money whose income benefit should arise in the coming years. The company will be increasing its revenue from the current FY and thereby make all efforts to lower the loss.

CAUTIONARY STATEMENT

Certain statements in the “Management Discussion and Analysis” section may be forward looking and are stated as required by applicable laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook.