KBC Global Ltd Management Discussions.

Business Environment

Global Economic Outlook

The Covid-19 pandemic led to an economic contraction in the Calendar Year (‘CY’) 2020 that was both sudden and deep compared to the previous global crises. The global economy contracted 3.3%, advanced economies contracted 4.7% whereas the emerging economies and developing markets contracted by 2.2%. China was the only major economy that grew (by 2.3%) in CY 2020. World trade volume (goods and services) declined by 8.5% and oil prices saw a sharp decline of 33% followed by a recovery in the second half of the year. Consumer prices in emerging economies increased by 5.1% whereas they were stable in the advanced economies. Global manufacturing contracted sharply in mid-2020 however, sharply recovered in the latter part of the year. Lingering uncertainties around the pandemic hindered the recovery of private investment. With the consideration of broad vaccine availability in advanced economies and some emerging economies, the global economy is projected to grow at 6% in CY 2021. Growth in the advanced economies is projected at 5.1% in CY 2021, whereas that in the Emerging Markets & Developing Economies (‘EMDE’) is expected to be 6.7%. Growth in the United States (‘US’) is expected to be 4.3% in CY 2021, regaining the pre-covid activity levels. The European Union and the United Kingdom (‘UK’) economies are expected to grow by 4.5% and 4.2% respectively in CY 2021. Among the EMDE, China is expected to grow by 8.5%, Russia and Brazil by 3% and 3.6% respectively in CY 2021. Downside risks to the outlook include resurgence of the pandemic and vaccine delays, withdrawal of policy support before recovery takes firm root and bankruptcies due to illiquidity & high debt and geopolitical trade risks such as ongoing tensions between the US and China. Source: IMF World Economic Outlook (WEO), January and April 2021, OECD Interim Economic Assessment, March 2021.

India Economic

Outlook India was one of the most severely affected countries among the emerging economies. Its Gross Domestic Product (GDP) contracted by 8% in CY 2021. While Government consumption was almost stable at (0.8)%, private consumption declined by 9.1%. Exports and imports of goods and services contracted by 9.3% and 17% respectively. The agriculture sector was resilient to the effects of Covid-19. The industrial production contracted by 11%.

India’s recovery in FY 2021-22, with estimated GDP growth of 11.5% at the beginning of CY 2021, has seen a downward revision between 9.6% and 10.5% due to rising Covid-19 infections at the beginning of FY 2021-22. Increasing unemployment, as reported by the Centre for Monitoring Indian Economy (CMIE) (7.9% in April 2021 against 6.9% in February 2021) and inflation (Wholesale Price Index 7.4% highest in last 103 months) signal a risk to the recovery. However, the outlook is expected to become more positive by the middle of the year as vaccines become more widely available. The Government spending is estimated to be higher than the previous financial year with fiscal deficit at 7.2% of GDP as against a budgeted 6.8%, mainly due to a higher food subsidy bill and lower asset sale revenue. The export outlook is cautious as exporters are focusing on domestic issues. Monetary conditions are expected to remain accommodative as inflation increases with an upside risk caused by rising global commodity prices.


Real estate sector India

Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Market Size

By 2040, real estate market will grow to 65,000 crore (US$ 9.30 billion) from 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13% to the country’s GDP by 2025.

Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

The office market in top eight cities recorded transactions of 22.2 msf from July 2020 to December 2020, whereas new completions were recorded at 17.2 msf in the same period. In terms of share of sectoral occupiers, Information Technology (IT/ITeS) sector dominated with a 41% share in second half of 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10%, respectively.

In 2020, the manufacturing sector accounted for 24% of office space leasing at 5.7 million square feet. SMEs and electronic component manufacturers leased the most between Pune, Chennai and Delhi NCR, followed by auto sector leasing in Chennai, Ahmedabad and Pune. The 3PL, e-commerce and retail segments accounted for 34%, 26% and 9% of office space leases, respectively. Of the total PE investments in real estate in Q4 FY21, the office segment attracted 71% share, followed by retail at 15% and residential and warehousing with 7% each.

Retail real estate and warehousing segment attracted private equity (PE) investments of US$ 220 million and US$ 971 million, respectively, in 2020. Grade-A office space absorption is expected to cross 700 msf by 2022, with Delhi-NCR contributing the most to this demand.

Housing launches were 86,139 units across the top eight Indian cities in the second half of 2020. Home sales volume across eight major cities in India jumped by 2x to 61,593 units from October 2020 to December 2020, compared with 33,403 units in the previous quarter, signifying healthy recovery post the strict lockdown imposed in the second quarter due to the spread of COVID-19 in the country.

According to the Economic Times Housing Finance Summit, about 3 houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be ~10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the country’s urban population.


Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. Indian real estate attracted U$ 5 billion institutional investments in 2020, equivalent to 93% of transactions recorded in the previous year. Investments from private equity (PE) players and VC funds reached US$ 4.06 billion in 2020. The real estate segment attracted private equity investments worth 23,946 crore (US$ 3,241 million) across 19 deals in Q4 FY21. Investments in the sector grew 16x compared with 1,470 crore (US$ 199 million) in Q4 FY20. In value terms, these investments were 80% of that in 2020 and 48% of 2019, according to a report by Knight Frank. Exports from SEZs reached 7.96 lakh crore (US$ 113.0 billion) in FY20 and grew 13.6% from 7.1 lakh crore (US$ 100.3 billion) in FY19.

According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development and construction activities) stood at US$ 42.97 billion between April 2000 and September 2020.

Some of the major investments and developments in this sector are as follows:

? According to Anarock, housing sales in seven cities increased by 29% and new launches by 51% in Q4 FY21 over Q4 FY20

? Demand for residential real estate revived in Q4 FY21 as homebuyers took advantage of low mortgage rates and incentives rendered by developers. Residential sales in this quarter recovered to >90% volumes recorded in 2020 across the top seven cities.

? Blackstone is one of the largest private market investors in India, managing about 3,694 crore (US$ 50 billion) of market value in the real estate sector. The company anticipates investing > 1,625 crore (US$ 22 billion) in the next 10 years.

? In 2021, working remotely is being adopted at a fast pace and demand for affordable houses with ticket size below 40-50 lakh is expected to rise in Tier 2 and 3 cities, leading to an increase in prices in those geographies.

? In April 2021, HDFC Capital Advisors (HDFC Capital) partnered with Cerberus Capital Management (Cerberus) to create a platform that will focus on high-yield opportunities in the residential real estate sector in India. The platform seeks to purchase inventory and provide last-mile funding for under construction residential projects across the country.

? In March 2021, Godrej Properties announced it would launch 10 new real estate projects in Q4.

? In March 2021, Godrej Properties increased its equity stake in Godrej Realty from 51% to 100% by acquiring equity shares from HDFC Venture Trustee Company.

? In January 2021, SOBHA Limited’s wholly owned subsidiary, Sabha Highrise Ventures

Pvt. Ltd. acquired 100% share in Annalakshmi Land Developers Pvt. Ltd.

? In November 2020, Accor, a leading hospitality group, to launch seven new properties in India by 2022.

? In November 2020, Prestige Estates Projects Ltd. sold a large portfolio of office, retail and hotel properties to Blackstone for Rs. 12,745 crore (US$ 1.7 billion).

? In November 2020, Taj Group partnered with real estate company Ambuja Neotia Group to launch three new hotels two in Kolkata and one in Patna.

? The Godrej Group has forayed into the financial services industry with Godrej Housing Finance (GHF) through which it hopes to build a long-term and sustainable retail financial services business in India, aiming for a balance sheet of 10,000 crore (US$ 1.35 billion) in the next three years.

? In October 2020, Brookfield Asset Management made a massive investments in India through a US$ 2 billion real estate deal. Brookfield will buy 12.5 million square feet of commercial real estate assets from privately held developer RMZ Corp. The purchase includes rent-yielding office space and commercial co-working space.

? In October 2020, Rajasthan-based realty developer, Bhumika Group, announced its plans to invest 450 crore (US$ 60.81 million) in two residential and one retail project in Udaipur, Alwar and Jaipur, respectively.

? In October 2020, Australia’s REA Group Ltd. announced its agreement to acquire a controlling interest in Elara Technologies Pte. Ltd, the owner of Housing.com, PropTiger.com and Makaan.com.

? In September 2020, RMZ Corp. sold 12.8 million square feet real estate assets to a fund managed by the Brook eld Asset Management for 15,000 (US$ 2 billion).

? According to the property consultant, Anarock, India is likely to have 100 new malls by 2022. Of this number, 69 malls in will be built in the top seven metropolis and the remaining 31 malls will be in Tier 2 & 3 cities.

? In March 2020, the Government approved proposals from TCS and DLF to set up SEZs for IT sector in Haryana and Uttar Pradesh.

? Blackstone crossed US$ 12 billion investment milestone in India.

? Puravankara Ltd, a realty firm, plans to invest around 850 crore (US$ 121.6 million) over the next four years to develop three ultra-luxury residential projects in Bengaluru, Chennai and Mumbai.

? First REIT, which raised 4,750 crore (US$ 679.64 million), was launched in the early 2019 by global investment firm Blackstone and realty firm Embassy group.

? In January 2020, RMZ Corp entered into a strategic and equal partnership with Mitsui Fudosan (Asia) Pte Ltd to expand its business footprint.

Government Initiatives

? Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives:

? Under Union Budget 2021-22, tax deduction up to 1.5 lakh (US$ 2069.89) on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22.

? The Atmanirbhar Bharat 3.0 package announced by Finance Minister Mrs. Nirmala Sitharaman in November 2020 included income tax relief measures for real estate developers and homebuyers for primary purchase/sale of residential units of value (up to 2 crore (US$ 271,450.60) from November 12, 2020 to June 30, 2021).

? In October 2020, the Ministry of Housing and Urban Affairs (MoHUA) launched an affordable rental housing complex portal.

? On October 27, 2020, the government announced the application of Real Estate (Regulation & Development) Act, 2016 in the union territory of Jammu & Kashmir. This has paved the way for any Indian citizen to buy non-agricultural land and property, as opposed to the eligibility of only local residents earlier.

? In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet has approved the setting up of 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).

? Government has created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.

References: Media Reports, Press releases, Knight Frank India, VCCEdge, JLL Research, CREDAI-JL, Union Budget 2021-22.


Robust demand

Demand for residential properties has surged due to increased urbanisation and rising household income. India is among the top 10 price appreciating housing markets internationally.

The real estate sector is expected to grow significantly, with central government aiming to build 20 million affordable houses in urban areas across the country by 2022, under the ambitious Pradhan Mantri Awas Yojana ( PMAY) Scheme of the Union Ministry of Housing and urban Affairs.

Expected growth in the number of housing units in urban areas will increase the demand for commercial and retail office space.

Increasing Investments

Indian real estate attracted U$ 5 billion institutional investments in 2020, equivalent to 93% of transactions recorded in the previous year. The real estate segment attracted private equity investments worth 23,946 crore (US$ 3,241 million) across 19 deals in Q4 FY21.

Real Estate sector in India is forecast to reach US$ 650 billion, representing 13% of India’s GDP by 2025. Co-living market size across India’s top 30 cities is expected to grow more than double to reach US$ 13.92 Billion by 2025 from current size of US$ 6.67 Billion.

Policy support

Under Union Budget 2021-22, tax deduction up to 1.5 lakh (US$ 2069.89) on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22.

Attractive opportunities

Growing requirement of space from sectors such as education and healthcare, Ecommerce and logistics.

Driven by increasing transparency and returns, there’s a surge in private investment in the sector.

Net Absorption of Office Space (2020) (million sq. ft.)


Unavailability of land

There is a large share of underutilised and vacant land parcels that the Government should spare for development through land regulations, land readjustment and land pooling policies. This will help the real estate sector grow and improve the situation of financially aggrieved developers. There is a growing call to change or revise the Land Acquisition Resettlement and Rehabilitation Act of 2013.

Long-pending infrastructure projects

Indian real estate market is rigged with examples of delayed and long-pending infrastructure projects, be it the public sector projects or private sector housing colonies. The major reason behind the delay is the uneven funding and lack of technologies to complete them on time. Besides, the protracted approval process is also a considerable challenge. Project approvals in India range from days to years due to the absence of a single-window clearance option, which results in time and cost escalations.


By 2050, India will be the world’s most populous country, with over 50 percent of people living in urban centers and Tier 1 cities. To sustain such a big population, India requires more new cities and urban centers on a large-scale to provide all necessary resources to the inhabitants. Thus, nationwide construction in the housing sector is essential.

Outdated building techniques

Indian real estate is the only sector in the world that still uses old building techniques and is overly dependent on extensive human labour. This, in turn, results in regular maintenance. On the contrary, new construction techniques require high-quality building materials such as concrete and iron slabs, which involve less human participation. Therefore, it is crucial that developers rely on modern building techniques as this will reduce not only the construction time but also the labour cost and ensure faster deliveries.

Surge in Covid-19 cases may derail real estate from recovery path

Amid a dramatic spike in the number of new Coronavirus cases in India, the demand for residential real estate in India might be thrown off track.

The surge in cases during the COVID-19 second wave, has resulted in large parts of India, especially in Delhi, Maharashtra, Rajasthan, Odisha and Gujarat, now being under restrictions which included partial lockdowns, weekend lockdowns, night curfews, etc.

The demand for housing in India might also impact amid a change in stance in the banking system.

According to a recent report by QuantEco Research, the second wave of COVID-19 would hit the Indian economy by prompting people to save, rather than spend. This is in contrast with the first wave in 2020, when the contraction in economic growth was driven primarily by supply disruptions due to a prolonged nation-wide lockdown. This would particularly impact home purchases in the country that require big-ticket investments.

Housing affordability seen increasing

As India continues with its Coronavirus vaccination drive, the positive impact of the inoculation programme will also be seen in the country’s real estate segment.

If the improving housing affordability is any cue, India’s residential real estate sector is likely to witness better sales and supply in the January-March period of 2021, the lingering impact of the Coronavirus pandemic on the sector notwithstanding.

Amid the RBI continuing to keep the repo rate unchanged at 4%, home buyers can currently get home loans for as low as 6.65% annual interest. This is in contrast with the average home loan interest rate of 8% seen in January 2020. Price growth in the housing segment has also been under pressure in the past one year, due to the impact on demand.

In a report titled ‘India Real Estate Outlook A new growth cycle’, property brokerage firm JLL

India has also indicated that new housing supply in 2021 would continue to be in the affordable and mid-segment, with developers attempting to reap the benefits of strong pent-up demand.

With most rating agencies making an upward revision in India’s growth forecast, the recovery in the country’s housing sector may also be better and earlier than expected.

On March 24, 2021, Fitch Ratings revised India’s growth estimate for fiscal 2021-22 to 12.8%, from its previous estimate of 11%, saying that ‘a stronger carryover effect, a looser fiscal stance and better virus containment’ have led to the upgrade in growth projection. Many other rating agencies and global think-tanks, including Moody’s Analytics and the Organisation for Economic Co-operation and Development (OECD), have also made upwards revisions in India’s growth forecasts, amid the domestic inoculation programme against the virus picking up pace.

With the economy picking up and employment witnessing stability, the existing momentum in housing sales could sustain in the year 2021, the brokerage firm opined.


Your Company has established adequate internal control procedures, commensurate with the nature of its business and size of its operations. These controls have been designed to provide a reasonable assurance regarding maintenance of proper accounting controls for ensuring orderly and efficient conduct of its business, monitoring of operations, reliability of financial reporting, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, protecting assets from unauthorised use or losses, prevention and detection of frauds and errors, and compliance with regulations. To provide reasonable assurance that assets are safeguarded against loss or damage and that accounting records are reliable for preparing financial statements, the Management maintains a system of accounting and controls, including an 28 Karda Constructions Limited internal audit process. Internal controls are evaluated by the Internal Auditor and supported by the Management reviews. All audit observations and follow up actions thereon are tracked for resolution by the Internal Audit and Business Control function and reported to the Audit Committee.


During the year the revenue from real estate segment stood at 7,683.78 Lakhs as compared to revenue of 10,265.14 Lakhs of FY 2019-2020.

Further during the reporting period company has made revenue of 890.52 Lakhs from consulting services provided for project management.

During the reporting period the income earned from contractual works in hand was 3,381.18 Lakhs as compared to income of 1,099.17 Lakhs of FY 2019-2020.


The Company had 78 permanent employees as on March 31, 2021 at various levels. The Company has a HR Policy in place and encouraging working environment. The Company has continued to focus on various aspects like employee training, welfare and safety thereby maintaining a constructive relationship with employees.


Performance highlights


In accordance with SEBI (Listing Obligations and

Disclosure requirements 2018) (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 sector specific financial ratios:

Ratios FY 2020- 2021 FY 2019- 2020 Explanations
Trade Receivables Turnover 5.75 9.75 Average Trade receivables has been decreased during FY 2020-2021.
Current Ratio 2.66 2.99 There is slight reduce in current ratio as compared to last year
Net Debt Equity Ratio 0.75 0.96 There was repayment of debt in current financial year which resulted into reduce in debt equity ratio
Net Profit Margin % 15.71 8.07 Net profit margin has increased in current financial year
Return on Net Worth % 17.84 9.68 Return of Net worth margin has increased in current financial year


FY 2020-21 was an eventful year for the real estate sector which witnessed pandemic led disruption in Q1 FY 2020-21 and a strong bounce back during the second half of the year. The pandemic has forced the developers to change their legacy business models and the players who focus on innovation and digital transformation in realty will lead the way for the sector. We expect FY 2021-22 to start with weakness in the first quarter due to the significant impact of the second wave followed by a strong recovery thereafter and this will set the base for a multi-year growth cycle for the real estate sector.

Because of the inherent risks and uncertainties in the social and economic scenarios, the actual events, results or performance can differ materially and substantially from those indicated by these statements. Karda Constructions Limited disclaims any obligation to update these forward-looking statements to reflect future events or developments.

The real estate market in India has incurred significant investment opportunities since the past decade, driven by high growth due to rising demand for residential as well as office spaces. Company has witnessed ups and downs of its share price during the financial year, but its growth has been visible. Overall, the COVID-19 virus outbreak had a shattering impact on India’s economy in general and its real estate sector, in particular an area of work that requires human contact inherently.

As low interest rates and stamp duty reductions are being viewed as the biggest reasons for the revival, so far, the developer community opines that banks must continue to maintain rates at the present levels.

We believe that further rationalisation of stamp duty will also be instrumental, in keeping the momentum. There might be a period of slowdown after the ‘panic buying’ till April 2021, As we enter 2021-2022, the momentum of historic sales could slow a bit but will remain strong to narrate a positive story. Unlike the past year, the real estate sector is now picking up with home buyers willing to make the move.

Company’s most workers displaced during the lockdown now are back and construction activity has resumed and work is moving at a faster pace to fulfil commitments.

The real estate sector is like a cog in the wheel driving India’s economy. Infrastructure development and housing are major players known to be crucial in reviving a country’s economy in recession. The sector will have to adopt innovative ways of dealing with the requirements. While homes will continue to be sold, they will now be done with creative disruption. This reinvention will include technology playing a lead role in meeting altered norms being considered by home buyers.

The concept of leverage is important to the "profitability" factor of real estate development. With this the company intends to focus more on entering into joint venture agreements for project. Company would plan to launch new projects after assessing the location in terms of connectivity and social infrastructure, exact demand profile, the competitions projects, and the development pattern in and around the location.

Diversification is an extremely important process. Company along with two main segments of real estate development and contractual work contract orders segment, has started setting foot in providing consultation services for project management.