Jet Infraventure Ltd Management Discussions.

Indian Economy

The Indian economy faced a challenging year in FY 2019-20. Post the general elections, the Indian economy witnessed sluggish investment momentum on the back of weak consumer sentiment, lower tax collections and fiscal slippages. The stress in the financial system due to non-performing loans led to risk aversion and low credit growth. The demand destruction in vital sectors such as real estate, automobiles, etc., led to the slowing economic growth and absence of broad-based private investment in industrial capex and infrastructure development. The onset of the global pandemic at the very end of the financial year led to the lockdown of the countrys social and economic activity, adding further impetus to the economic slowdown.

To counter these challenges, the Government along with the RBI initiated several measures both monetary and fiscal at various times during the year, viz. reduction in corporate tax rates, capital infusion into Public Sector banks, relaxation of External Commercial Borrowing guidelines for affordable housing, Realty Fund for stalled housing projects and periodic lowering of interest rates in line with an overall moderated inflation trajectory. The Governments firm commitment to substantially boost investment in infrastructure development, rural electrification, airports, railroads, water supply & irrigation, social sector, education and health is expected to provide opportunities to the various business segments; although in the near term, the Company would be required to deal with the economic fallout of the Covid-19 pandemic.

Global Economy

The global economy witnessed significant volatility in 2019-20. The continued slump in manufacturing coupled with challenges relating to growth, inflation and employment, weakened the global GDP. Driven by protectionist policies in developed economies, trade wars intensified in various pockets across the world. The year 2019-20 also witnessed delayed Brexit, an oil price war between Saudi Arabia and Russia, rising geo-political tensions in the Middle East and the onslaught of the global pandemic, leading to major lockdown measures across countries. All these effectively created recessionary conditions in the world economy towards the end of the fiscal year.

Real Estate Sector

The year 2019 has been a period of ups and downs for the Indian real estate sector. The sector witnessed the impact of the ongoing NBFC crisis resulting in liquidity squeeze and the slow pace of recovery in sales. On the other hand, the successful launch of Indias first Real Estate Investment Trust (REIT) opened new avenues for investments while multiple government sops provided relief to the housing sector.

Housing sales in 2019 saw a modest 4-5 percent annual growth with over 2.58 lakh homes sold during the year. Sustained efforts of the central government would strengthen the sector, especially affordable housing-led growth. A series of key decisions were taken by the government to revive the realty sector. In the Union Budget FY20, the government announced an additional deduction of up to Rs 1.5 lakh for interest paid on loans borrowed up to March 31, 2020, for purchase of a home valued at Rs 45 lakh.

Further, the GST rate cut was announced under the new scheme of 1 percent for affordable houses and 5 percent for other categories. Moreover, the government set up an alternative investment fund worth Rs 25,000 crore for stalled housing projects. The Union cabinet also approved changes to the partial credit guarantee scheme allowing them to purchase BBB+ or higher-rated assets from non-banking financial companies (NBFCs), and housing finance companies (HFCs).

Office leasing increased by more than 30 percent annually to cross 47 million sq. ft. during the first three quarters of 2019, surpassing its previous peak of 2018. The leasing activity stood at about 15.4 million sq. ft. during Q3 2019, rising by nearly 23 percent on an annual basis. Commercial office space continued to be the most sought-after asset class. On similar lines, warehousing and retail sectors were the next favorites for investors.

Business Overview

Our Company focuses on residential projects and it has created strong footing in the States of Maharashtra and Gujarat for executing residential projects by developing projects featuring apt model of execution. Our Company develops projects on affordable pricing, to our prospective customers, without compromising on quality construction and this is ensured by experienced project execution team and insightful architectures appointed independently. It intends to exploit the opportunities that are available in the Real Estate Sector and our operations will cover all aspects of real estate development, from the identification and acquisition of land, the planning, execution and marketing of our projects, maintenance and management of our completed developments etc. Companys next destination is upcoming Hill Station at Dharampur, Valsad known as Wilson Hills.

There is no material change in the key ratios.

Company Strengths

Company can continue to grow only by strengthening its strength and capitalizing on it. Our Strengths are:

• Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in higher premium realizations.

• Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.

• Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

• Outsourcing: Operates an outsourcing model of appointing renowned architects / contractors that allows scalability and emphasizes contemporary design and quality construction - a key factor of success.

• Transparency: Follows a strong culture of corporate governance and ensures transparency and high levels of business ethics.

• Highly skilled execution team: Employs experienced, capable and skilled design and project management teams who oversee and execute all aspects of project development.


Our business is subjected to various risks and uncertainties. Our results of operations and financial conditions are affected by numerous factors including the following:

> Over regulated environment.

> Rising cost of construction

> Demand - Supply Ratio

> Uncertain Economy

> Lack of Banking Support


With NBFCs restraining their lending to cash strapped developers, there exists a huge opportunity for organized developers with strong balance sheets and execution track records to partner smaller developers at attractive valuations.

This should also allow organized developers to increase their portfolio strength, improve market share and inspire confidence in the minds of skeptical buyers. The ongoing shake up in real estate sector is a pre-cursor to a transparent business environment driven by reforms such as RERA which is improving transparency and rising consumer activism on account of poor delivery by stressed developers.

In the last couple of years, affordable housing is the only segment where transactions seem to be happening. The trend is expected to continue. Its seen an uptick in affordable housing sector-both from supply and demand side-which leads us to believe that it would be a key driver for the residential sector in coming times. Government incentives to both developers and homebuyers are pushing supply as well as demand within the segment. In a recent announcement, the government extended the benefit of Credit Link Subsidy Scheme (CLSS) on home loans for the Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (Urban) till the end of March 2020. A homebuyer can avail a subsidy of up to Rs. 2.67 lakh on home loans under this scheme.

Road Ahead

For potential homebuyers, the year 2020 is not expected to be any different from the last few years. Prices are likely to remain stagnant and developers will continue to focus on clearing existing inventory rather than launching new projects as they continue to grapple with regulatory changes like Real estate (regulation and development) Act, 2016 (RERA), goods and services tax (GST) and overall subdued demand. In fact, 2020 is expected to be another tough year for real estate developers, given the ongoing liquidity problem, owing to the NBFC crisis and Pandemic Covid-19 effects.

In the current liquidity environment NBFCs are reluctant to continue to aggressively fund real estate developers as has been happening over the past several years. While established developers with consistent delivery track records still have ample access to capital through both debt and equity, many developers are facing significant liquidity pressure.


Our Company faces competition from various domestic real estate developers. Our competition varies depending on the size, nature and complexity of the project and on the geographical region in which the project is to be executed. We believe that our capability, experience and reputation for providing safe and timely quality services allow us to compete effectively.

Forward looking and cautionary statements

This management discussion and analysis contain forward looking statements that reflects your Companys 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.