MANAGEMENT DISCUSSION AND ANALYSIS REPORT
(a) Industry structure and Outlook :
With the liberalization and opening up of the economy, large number of corporate and
multinational companies have entered into the housing construction activities. This has
been instrumental for the housing construction industry getting more and more organized
and structured and as a result, the industry has started adopting new standards in terms
of quality, professionalism, timely delivery and after sales service. In the changing
scenario, even the players in the un-organized sector are compelled to adopt the changes
in the industry and therefore the housing industry has become not only competitive but
also customer-services oriented, which has enormously benefited the end-user customer and
promote long term interest of Housing Industry. Using the latest technology, methods, and
providing better service to the clients is become concomitant of the real estate industry.
The change is observed in the current financial year, the shifting in the demand from
high cost and large size luxury specification houses to moderate and low profile houses,
the new units will be needed over the next decade to meet the demand among middle and
lower middle income group and same will be concentrated in 8 to 10 tier II and tier III
city in the country and such cities will emerge as growth centre.
Of late, builders and developers are offering schemes of constructing bungalows and row
houses in the hinterland of nature as a second home on affordable price with luxurious
amenities which is attracting the investors from Tier-I and Tier-II city.
The housing construction industry has also started adopting new design technology for
better earthquake resistance. Further, due to improvement in the quality of basic
materials as well as introduction of new finishing materials, the overall quality and
appearance of the finished products has been improved substantially. The housing
construction industry has also started adopting mechanized construction methods which help
speedier completion of the projects.
To enhance quality basic comforts, endeavours are made by Builders and Developers to
provide in the residential and commercial complex basic necessities such as continuous
water supply, un-interrupted electricity, cooking gas, fire-fighters/fire-extinguishers,
etc.
(b) Strengths, Opportunities, Weaknesses And Threats :
i) Strengths :
• Capability to carry out large scale construction.
• Professional Management.
• In-house set up for architectural designs, project services and marketing.
• Number of options to finance housing and real estate projects such as Initial
Public Offering (IPOs), Foreign Direct Investment (FDI), Venture Capital, Private Equity,
Alternative Investment Market (AIM).
• Large population base, rising disposable income, rapid urbanization, nucleus
families.
• Culture of nuclear family extended periphery of urban and suburban which enhance
the scope of real estate activities. Rise in per capita income of such families create
aspiration of quality of life.
• One of the fastest growing real estate markets in the world.
ii) Opportunities :
• Adequate demand for housing, especially in the real user-segment.
• As a parallel development, besides FDI, real estate funds are expected to pump
money into the real estate sector.
• Prevalent government policies to encourage and promote housing construction
Industry.
• Rapid urbanisation.
• Proposed law to reform the unregulated construction industry, enables the future
deals more obvious and transparent, in turn it attracts great deal of capital,
particularly from the upper and middle income categories.
• Entrance of real estate mutual funds in the capital market. Simultaneously to
spur reforms in the property market.
• The shifting in the demand from big houses to small houses is an opportunity for
the Company.
• Witnessing tremendous growth in Tier-I and Tier-II cities.
iii) Weaknesses :
• Housing sector is not accorded the status of an industry.
• Rent Control Act.
iv) Threats :
• Rising prices of basic and ancillary inputs.
• Increased competition due to entry of multinational and other foreign bodies
through Foreign Direct Investment route.
• Proposed Bill on reform on unregulated construction and real estate industry may
create legal intricacies which lead to market distortion and may discourage inflow of
capital in the industry from the enthusiastic entrepreneur.
• Imposition of VAT/Service Tax on sale transaction which increase the cost of the
product for the customer.
• Approvals required from multiple agencies are now highly time consuming and
circuitous procedures lead to project delays and affect the marketability of the projects.
• Economic slowdown may impact the growth of real estate sector.
• Interest rates and credit squeeze reality sector may create financial
bottle-necks in the long run.
• The pressure is on all the factors of cost of production which has cascading
effect on the cost of construction.
• The general policies either at national level or state level providing
sufficient impetus to construction and real estate industry, on-going reforms may prove to
be boon for constructions and real estate industry.
c) Outlook :
The experts in housing industry believe that future of the industry is having huge
potential to grow. The housing industry is taking cue for the following positives :
• Increase of urban population in the years to come.
• Development of new urban areas, horizontal growth of Tier II and III cities, and
effective utilization of prime land in large Tier I cities.
• Increase in number of middle class families.
• Expected increase in working population.
• Expected increase in income levels.
• Several other factors, such as rising incomes, evolving preferences. Emergence
of nucleus families, tax incentives and home loan at competitive rates.
• The growth of new nuclear families out of split of joint families has extended
the urban locality into extended suburbs which enhances the scope of development of real
estate. Your Company is well placed to maximize the social economic trends of rapid
urbanization emerging and aspiration of quality lifestyle of nuclear families due to rise
in per capita income.
• Demographic and economies reform are driving Indias growth. Indias work force,
on its way to becoming the youngest in the world, is expected to grow continuously over
the next three to four decades.
• The Company is mainly focusing on construction of mass housing complexes with
all basic and social infrastructural facilities with an objective to provide shelter to
all segments of the society. The demand for housing in "Actual-user-Segment" is
rising in Mumbai and its extended suburbs, where the Company is developing its major
housing projects.
d) Risk and Concerns :
Even though, the Company has been so far successful in getting bookings for flats in
its various mass housing projects in the initial launch period, after creating the basic
infrastructural facilities, the changing trend in the housing sector whereby the customers
prefer purchase of ready flats than booking of flats at the ground level is one of the
major concern.
In the changed scenario, the Company is necessitated to either ploy its financial
resources which further squeezes its liquidity position, or hive-off its on-going new
projects to other developers for the timely completion of projects. This entails element
of financial risk till the flats are booked. The alternative way is to embrace Joint
Venture Model for project.
To contain inflationary elements in the economy, the Government of India and Reserve
Bank of India has initiated fiscal and monetary measures. One of them is to increase the
rate of interest which has direct impact on the loan disbursement by the Banks and Finance
Companies.
VAT and Service Tax added in cost cascading effect in booking of residential and
commercial properties. Further Banks and Finance Companies check minutely documents
submitted for the disbursement of loans, making the process cumbersome and deter the
sanctions of the loans.
e) Internal Control Systems and their adequacy :
The Company has a proper and adequate system of internal controls to ensure that all
the assets are safeguarded and protected against loss from unauthorised use or
disposition, and that transactions are authorised, recorded and reported correctly.
A strong internal audit function and effective Audit Committee of the Board have
strengthened the Internal Control within the organisation.
f) Material developments in Human Resources :
In mass housing business activities, role of employees is very vital. The Companys
motto is to function economically, achieve the planned target in time and deliver quality
products. Economy-Time-Quality aspects are pervasive in all activities of the Company.
As policy, the Chairman frequently conducts meetings of employees to appraise them
about future plans of the Company. This provides an open forum for staff to express their
views on various matters. It provides valuable feedback to assess opportunities, threats,
strengths and weaknesses. The growth and development of the organisation is based on
growth and development of human resources though it is long, painstaking process, but it
is committed goal of the organisation.
We believe that people are the most valuable assets of the Company as they contribute
to the accomplishment of the business objectives. It is the Companys promises to deliver
the culture that enhances employees morale. Facilitates effective performance through
personal and professional development and challenges the employees potential.
All the endeavours are made at the site and office to motivate the employees to
participate effectively in support of the Companys principles, values and visions to meet
the enshrined goals of the organization.
The Company continued to knit in the core values namely customer focus, sustain the
growth, total quality and integrity and all action and human resources practices. The
business dynamics and challenges for increasing the need to focus and retaining the right
talent while pruning the Companys cost effectiveness. Focusing on running the lean and
efficient outfit. The idea is retaining the best talent through transfer and meritocratic
evolution process. To bring the competence of the employees, the policy of investing in
knowledge, training and development is continued and is being reviewed and followed
regularly. Deserving employees are observed minutely and objectively for appreciation in
terms of promotions and monetary rewards.
The number of persons directly employed by the Company is 108.
Cautionary Note : Certain Statements in the Management Discussion and Analysis
Report may be forward-looking and are stated as required by applicable laws and
regulations. Many factors and variables may affect the actual results which could be
different from that the Directors envisage in terms of the future performance and outlook.
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