KMF Builders & Developers Ltd Management Discussions

REAL ESTATE SECTOR

The Indian real estate sector continues to present significant opportunities for long- term growth, supported by urbanisation, infrastructure development, evolving housing requirements and increasing demand for residential and commercial properties. The sector has undergone significant structural changes in recent years, with regulatory reforms promoting greater transparency, accountability and financial discipline.

At the same time, the sector continues to face challenges relating to financing costs, rising construction and input costs, regulatory compliance, delays in approvals and execution, and changing customer demand. Increasing competition and consolidation have strengthened the position of larger and financially stronger developers, while also creating opportunities for companies that adopt a prudent approach towards project selection and execution. Global trade uncertainties, including changes in US tariff policies, may have an indirect impact on commodity prices, construction inputs and supply chains.

Overall, the sectors long- term prospects remain positive, although companies are required to remain cautious and financially disciplined while evaluating opportunities and responding to changing market conditions.

RESIDENTIAL REAL ESTATE MARKET

The Indian residential sector has been grappling with subdued demand for the past few years While certain measures such as the consecutive rate cuts by the RBI, the reduction of GST rates to 1% for affordable housing and 5% for others and the setting up of an Alternative Investment Fund (AIF) have helped home- buyer sentiments, theyve had little impact on the sales for the sector.

The residential real estate market continues to be influenced by consumer sentiment, interest rates, availability of housing finance, property prices and general economic conditions. Although demand has shown improvement in certain markets and segments, the recovery remains uneven and varies depending upon location, affordability and the nature of the projects.

BANGALORE

Bangalore continues to be an important real estate market, supported by its large employment base, presence of the IT and services sector, urbanisation and continuing infrastructure development. However, the market remains competitive and is influenced by property prices, availability of finance, interest rates and prevailing economic conditions.

While the city continues to provide opportunities in the residential real estate segment, developers need to carefully assess market demand, project viability and funding requirements before undertaking new projects. The competitive environment may continue to place pressure on smaller developers, particularly where projects require significant upfront investment and a longer gestation period.

OPPORTUNITIES CONSOLIDATION

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Companys well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.

DIGITAL REAL ESTATE SALES

With the rapidly evolving marketing landscape, digital marketing tools have emerged as important tools for real estate companies to amplify their sales and reach out to customers globally. With a sharp focus on building consumer experience and connection through digital means, established brands will be ahead of the curve, giving a competitive edge to their business Social media platforms can be extensively used to promote listings, maintain relationships with existing customers and find new prospects. The lockdown due to COVID19 has forced real estate companies to focus much more on digital marketing and online platforms.

THREATS & CHALLENGES

Regulatory Hurdles, unfavourable changes in government policies and the regulatory environment can adversely impact the performance of the sector. There are substantial procedural delays with regards to land acquisition, land use, and construction approvals. Retrospective policy changes and regulatory bottlenecks may impact profitability and affect the attractiveness of the sector and companies operating within the sector. The NBFC crisis further deteriorated the liquidity situation for smaller developers like us who had to resort to alternative funding in absence of long term loans from banks. While established developers with lean balance sheets continue to have funding access, many developers are facing significant liquidity pressure.

OUTLOOK

The Company remains focused on identifying and evaluating suitable business opportunities in the real estate sector. The management continues to monitor developments in the sector and assess opportunities that are commercially viable and aligned with the Companys objectives.

The real estate sector continues to offer opportunities supported by urbanisation, infrastructure development and evolving demand across residential and commercial segments. The Company intends to leverage suitable opportunities as they arise and take appropriate strategic decisions based on prevailing market conditions, available resources and the risk- return profile of such opportunities.

The management remains cautiously optimistic about the long- term prospects of the real estate sector and is committed to pursuing sustainable growth while maintaining a prudent approach towards investments and business expansion.