Kesar India Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

The world economy is showing signs of cautious optimism. According to the IMF, global growth is expected to stay steady at 3.2% in 2024 and 2025, matching the rate of 2023. While emerging markets might experience a slight slowdown, global inflation is anticipated to ease, decreasing from 6.8% in 2023 to 5.9% in 2024 and further to 4.5% by 2025.

Despite a generally positive outlook, potential risks remain, including persistent inflation and tensions. On the brighter side, we’re seeing a decline in unemployment, productivity gains, and signs of inflation slowing down. These trends highlight the global economy’s resilience as it continues to adapt and grow in 2024 despite ongoing challenges.

Several key factors have shaped the current global economic landscape. The post-COVID-19 recovery fueled growth as pent-up demand surged, restrictions eased, and vaccination programs rolled out, boosting GDP across various regions. However, inflation remains high, disrupting supply chains and driving up demand. Energy prices also spiked, contributing to the inflationary pressures central banks raised interest rates, which impacted investment flows.

Global stock markets have been volatile, influenced Russia-Ukraine conflict. This war has strained the global economy, leading to significant rises in oil and natural gas prices, which, in turn, have driven up inflation and disrupted global supply chains.

Emerging markets have seen mixed results, with outcomes varying based on each country’s circumstances. Some have benefitted from higher commodity prices, while others face challenges like currency devaluation and mounting debt. This diversity highlights the complexity of the global economic landscape and the importance of understanding the nuances in different regions.

India’s economy grew by 7.2% in fiscal year 2023, down from the previous year’s 9 remains a strong performer, now projected to be the world’s fifth-largest economy in 2023, according to the IMF’s World Economic Outlook. Among the top 10 global economies, India’s growth is the highest, with particularly strong performances in manufacturing, which grew by 13.9%, and construction, which grew by 13.3%.

The Indian real estate market in 2023-24 is experiencing a phase of significant growth and transformation. Despite global economic uncertainties, the sector continues to remain resilient and impact the economy positively.

The residential real estate market has seen a robust recovery post-pandemic, with demand being fueled by a combination of factors. These include historically low interest rates in the earlier part of the year, a shift towards homeownership, and increased demand for larger living spaces due to the work-from-home trend. Urban areas, especially tier 1 and tier 2 cities, have seen a surge in new projects and sales, with Mumbai, Bengaluru, and Pune leading the way. Affordable housing continues to be a key driver, supported by government initiatives like the Pradhan Mantri Awas Yojana (PMAY).

However, factors restricting growth include rising interest rates, which have started to moderate demand, particularly in the mid-segment housing market. Price appreciation has been observed in many regions, although it remains modest compared to the pre-pandemic boom.

The commercial real estate sector is also showing signs of recovery, with a steady increase in leasing activity. The IT and ITES sectors continue to be the primary drivers of office space demand, especially in tech hubs like Bengaluru, Hyderabad, and Chennai. Additionally, the rise of co-working spaces and flexible office solutions has gained momentum as companies adopt hybrid work models.

Retail real estate is bouncing back as well, with a revival in footfall and consumer spending, particularly in premium shopping destinations. The warehousing and logistics segment has emerged as a star performer, driven by the boom in e-commerce and a shift towards organized retail. This segment is expected to continue its upward trajectory with increasing investments and the development of Grade

A warehousing facilities.

The sector does face challenges, including rising construction costs due to inflationary pressures, regulatory changes, and the impact of interest rate hikes on borrowing costs. Additionally, the performance of the real estate market is closely tied to broader economic conditions. An overall slowdown in GDP growth or consumer sentiment could impact the sector.

Looking ahead, the Indian real estate market is expected to remain a key contributor to the country’s economic growth. The government’s focus on infrastructure development, including smart cities and improved connectivity, will continue to support the sector. The demand for sustainable and green buildings is also rising, reflecting a shift towards more eco-friendly and energy-efficient real estate solutions. Overall, 2023-24 is poised to be a year of steady growth, with opportunities across various segments of the market.

This surge in manufacturing is a significant improvement from the previous quarter’s 4.7%. Robust government spending has kept domestic demand strong, but S&P notes concerns about a global slowdown affecting India’s export demand. Rising interest rates, driven by the Reserve Bank of India’s rate hikes, are also impacting business, with lending rates now higher than in the five years preceding the pandemic. er tax (B-C)

In this section, we will analyze the performance of our Company in the past year. We will take a close look at our revenue, expenses, profits, and losses to give you a clear picture of how we fared in the market.

Our total revenue amounted to 5,399.55 lacs, which can be attributed to our revenue from operations and other incomes. When compared to the previous financial witnessed a substantial increase of 349.86% as compared to the previous financial year.

The Company achieved a turnover of Rs. 53.41 Crore for the year ended 31 March 2024, as against Rs. 15.18 Crore for the previous year, on a Standalone and Consolidated basis. The turnover for the year ended 31 March 2024 grew by 249.86% on a standalone as well as consolidated basis compared with the previous year. With an encouraging order book in hand and good market potential in all the business verticals we operate in, your Company is poised for future growth.

Kesarlands continued to enhance a comprehensive system that helps promptly identify risks that affect the Company, assess their materiality, and take measures to minimize both the likelihood of risks being realized and losses they can lead to. The Company has a unified risk assessment and management methodology: goals, objectives, and principles of setting up and operating the corporate risk management system. Risk management is applied across all management levels and functional and project areas.

With the current global market scenario, especially within the real estate foray, there are a number of challenges that the company is exposed to

• Demand for capital requirement: The real estate business demands capital despite the volatility in demand and the turbulence of the pre and post-COVID-19 economic market. We continue to forage through these rough waters and emerge with a positive outlook. Our team and management work vehemently to cushion these uncertainties with a robust growth strategy and risk mitigation plan.

• Rising Construction Costs: Inflationary pressures are impacting profit margins for developers and potentially delaying project completions.

• Interest Rate Hikes: Increased borrowing costs due to rising interest rates are affecting both developers’ ability to finance new projects and consumers’ willingness to take on home loans, leading to a potential slowdown in demand

• Regulatory Changes: Ongoing regulatory shifts, such as stricter RERA compliance and changes in taxation policies, add complexity to the market, requiring developers to navigate new rules and adapt their strategies. . We continue to adapt and stay abreast of these changes with our best foot forward due to an experienced team, sound legal advisory, and ethical practices.

• Economic Uncertainty: The real estate market is closely tied to the overall economy. Any slowdown in GDP growth or a decline in consumer confidence could dampen demand for both residential and commercial properties.