Lancor Holdings Ltd Management Discussions

The general industrial overview with regard to demand for property and its purchase has apparently not significantly altered although the dark clouds with regard to the uncertain USA tariff regime for the time being seems to have abated but replaced by war in West Asia were a huge number of potential customers live with their livelihoods becoming uncertain.

In our last report we had written about war in Ukraine which had insulated our country against very high fuel cost due to supply being made to us at a concessional price from Russia. This situation has changed with ban/restriction on Russias oil imports imposed by USA and hence the Government not having increased the pump price in any significant way has caused tremendous budget management pressures on the union budget. The free trade agreement between USA and India is still lingering without agreement and it is anybodys guess about who is losing by this.

The Operation Sindoor having been paused for by the Government has kept Pakistan in check with their nefarious intention against our country. In our previous directors report we had mentioned the operation Sindoor could become basis for affecting friendly relationship between India and USA.

Unfortunately from February of this year the State of Israel and USA have relentlessly attacked Iran who in turn have attacked almost every Persian Gulf Country resulting in widespread destruction and closure of the Straits of Hormuz thereby disturbing the oil and gas supply to India and other countries from the Middle East. This is affecting the lives of 3 to 4 million Indians who are working in Middle East by creating uncertainty all around about their employment etc. India which relies on over 100 billion dollars of remittances from these Indian citizens living in these territories will sooner or later get hard pressed for funds as economic activity in those territories get contracted and therefore works and jobs at least for short term become scarce.

In our last report, on economic overview we had stated that once we win the commercial property case in the Supreme Court the company may approach the capital market for further augmentation of the capital. We are actively studying this but no final decision has been taken. However in the interim funds would become available to the company from private debt funds which the company will have to resort to finance the land owner and premium FSI payment while the company could approach the Banks/Financial Institutions for construction finance. The situation is still not clear has to how this uncertainties with regard to the wars etc are going to play out and the company is cautiously approaching this aspect of business its potential and how to finance the same.

The company in the last 12 to 18 months completed several marque projects as stated in the previous report namely Infinys, Rathirupa, Hiranmayi, Homeleigh, Sahana, Sankalp and Bagya. All these projects are in Chennai city and the company was able to understand its marketing positioning and pricing power from the way these projects were priced, sold and the feedback it received from its customers.

In our previous report we had stated that the company has concluded negotiation for large city projects and as of today they are both under implementation. The company has been making payment of required funds to the owners and is in custody of the two projects. Of the two projects, the company has received all the approvals for one project and the construction is underway whereas the other being a marque project is being evaluated by the authorities for approval for construction and in the next 2 months all sanctions will be available in hand.

The company has now more or less concluded the documentation with regard to the third project which is a twelve storied building having 180 apartments in one of the best residential location in South Chennai. These three projects over a period of next 24 to 30 months will yield a turnover of over Rs.492 crores as stated in the last report.

Apart from the above currently the company is now in the process of completing negotiation for several re-development projects some of which are very large. This is apart from the said Rs.492 crores were documentations have been completed and the projects are in various stages of implementation.

The Company is now in full control of the Sriperumbudur property and has started various developments on the same for both senior citizens and others. The company has successfully completed Phase-II of Harmonia Senior villa project and a 5 storied apartment complex for seniors named "Harmonia Pavilion" is under progress.

Additionally the company is contemplating Phase-III of the Harmonia senior villa project numbering about 48 in all and this will be premium segment. As the demand accelerates it will add new phases to Harmonia villas for seniors for which lands are available with the company.

It appears on the basis of the current economic condition existing the development of remaining 9.5 lakhs sq.ft of land into high rise apartment of 14 to 15 floors height is going to be a long drawn affair and therefore the company will look at alternatives which may include sale of land as plotted land property for which demand is very high.

The companys plotting of Sriperumbudur land has been well received and there is tempting opportunity to develop raw land into housing plots and the company has learnt the fundamental of this trade. It is not very clear whether the new airport for Chennai is going to be in the vicinity of Sriperumbudur which may have dampening effect on demand for projects, lands etc., However the widening of the Thiruvallur road is proceeding at fast pace which will be helpful to the buyers and residents of our properties in Sriperumbudur whereas the Expressway to Bangalore is proceeding at snails pace thereby bypassing so many completion schedule revision.

The company is very bullish on Sriperumbudur and might even consider buying some more additional lands which is adjoining the existing ownerships so that it can use this land as plotted land and sell them at handsome profit.

The company is all the time looking for commercial properties and it has not ventured into any, in view of the high investment required, although quite profitable.

The Tamilnadu Apartment Ownership Act is still not implemented as on the date of writing this report. The 2 of 3 large redevelopment projects of the company will bypass the Tamilnadu Apartment Ownership Act and go on the basis of 100% consent instead of 2/3rd consent as envisaged under the act.

The company is now going into the situation of having opportunity to sell 1,07,000 sft of plotted lands and is now preparing for getting approval for plotting of further lands the company owns in Sriperumbudur. As stated earlier these plots will fetch handsome returns.