Mac Charles India Ltd Management Discussions

Mac Charles (India) Limited Financial Year 2025-26

Our Company has been reporting consolidated results considering the results of its subsidiary. This discussion, therefore, covers the financial results and other developments during April 2025 to March 2026. Certain statements in this report describing projections, estimates or expectations may be forward-looking. Actual results may differ materially due to changes in government regulations, tax regimes, economic conditions, exchange and interest rate movements, competitive dynamics and other factors. Readers are advised to exercise independent judgment.

1. GLOBAL ECONOMIC OVERVIEW:

The global economy grew approximately 3.4% in CY 2025, supported by technology-led capital deployment, accommodative financial conditions and continued fiscal spending across major economies. Regional performances diverged - the US expanded on the back of technology investment, Europe recovered gradually through fiscal support, while Chinas growth relied primarily on exports amid subdued domestic demand.

Trade activity remained firm in technology-adjacent sectors, though geopolitical tensions - including escalating conflict in the Middle East in early CY 2026 - introduced fresh uncertainty around energy prices and inflation. Central banks maintained a cautious monetary policy stance in response.

Outlook:

The IMF projects global growth at 3.1% in CY 2026 and 3.2% in CY 2027, with inflation expected to moderate toward 4.4% in CY 2026. Near-term risks include energy market disruptions and trade policy uncertainty. Medium-term, accelerating investment in AI, digital infrastructure and advanced manufacturing is expected to support productivity and capital flows across both advanced and emerging economies.

2. INDIAN ECONOMY:

India remained one of the fastest-growing major economies globally in FY 2025-26, with real GDP expanding 7.7% - accelerating from 7.1% in FY 2024-25. Growth was primarily driven by the secondary and tertiary sectors, which grew 8.8% and 9.3% respectively. Gross Fixed Capital Formation expanded 8.2%, reflecting sustained investment momentum.

Inflationary pressures remained broadly manageable, supported by prudent monetary management and easing supply-side constraints. Macroeconomic stability was underpinned by healthy banking sector fundamentals, improving corporate balance sheets, comfortable foreign exchange reserves and rising FDI inflows. Continued government emphasis on infrastructure and productive capital expenditure supported investment activity across sectors.

Outlook:

The RBI projects real GDP growth at 6.6% for FY 2026-27, supported by resilient private consumption, sustained credit flows and continued government capital expenditure. CPI inflation is projected at 4.6%, with adequate food grain stocks and policy support expected to mitigate upside risks. Near-term headwinds include global supply chain disruptions, elevated energy prices and geopolitical uncertainty. Over the medium term,

investments in infrastructure, manufacturing and digital transformation are expected to strengthen Indias growth trajectory.

3. INDIAN REAL ESTATE INDUSTRY OVERVIEW:

The Indian real estate sector maintained strong growth momentum in FY 2025-26, supported by rapid urbanisation, rising disposable incomes and expanding infrastructure across major cities. The sector is among the largest contributors to Indias GDP, driven by sustained demand across residential, commercial and mixed-use developments. The Indian real estate market was valued at approximately USD 532.6 billion in 2025 and is projected to reach USD 1,264 billion by 2034, expanding at a CAGR of 10.1% during 2026-2034.

Pan-India housing sales value reached approximately ?7.3 lakh crore in CY 2025, reflecting 8% year-on-year growth. Average ticket sizes rose to approximately ?1.47 crore, reflecting a structural shift toward value-led and premium residential development. Although unit sales moderated to approximately 4.98 lakh units, developers maintained disciplined launches at around 5.43 lakh units.

The commercial segment sustained strong momentum, with Indias top eight office markets recording aggregate net absorption of approximately 307.7 million sq. ft. over 2021-2025, significantly exceeding fresh supply of 236.1 million sq. ft. Growth of Global Capability Centres (GCCs) and flex space operators remained key drivers of occupier demand.

Sources: IMARC Group India Real Estate Market Report 2025 CRE Matrix Insights Report ANAROCK India Residential Real Estate Sector Annual Report 2025 ANAROCK India Office Market Annual Update 2025 .

KEY GROWTH DRIVERS:

Driver	Description
Rapid urbanisation	Increasing migration to urban centres driving demand for residential and commercial real estate. Tier-II cities accounted for approximately 44% of recent land acquisitions nationally.
Government policy support	PMAY-U 2.0 targets 1 crore additional urban households over five years. RERA has improved transparency and buyer confidence across the sector. RBI repo rate reductions have improved home loan affordability.
Premiumisation	Demand shifting toward mid-premium and luxury segments across MMR, Bengaluru and NCR. Average ticket size growth of approximately 8% YoY nationally in CY 2025.
GCC and commercial demand	Indias position as a global GCC hub supporting sustained office leasing demand. GCC leasing grew 33% YoY in MMR and 30.8% YoY in Chennai during 2025.

Driver	Description
Institutional capital	AIF cumulative fundraising grew from USD 1.9 billion in 2015 to USD 75.4 billion by December 2025. Residential projects accounted for approximately 47% of real estate-focused AIF allocation over 2021\u20132025.

KEY MARKET RESTRAINTS:

Restraint	Description
Rising construction costs	Steel, labour and logistics cost escalation continues to pressure project margins. Mid-sized developers are more exposed given limited procurement scale.
Land availability	Limited land in prime urban locations increases project costs. Complex acquisition processes and JDA structures add execution risk.
Regulatory complexity	Multiple clearance requirements and inconsistent state-level implementation of regulations continue to delay project timelines.

Source: ANAROCK Reports 2025 KPMG India Real Estate Report SEBI AIF Data (December 2025) - sebi.gov.in

4. BENGALURU REAL ESTATE MARKET:

As Mac Charles (India) Limiteds primary operating market, Bengalurus real estate fundamentals remain supportive for both commercial and residential assets.

Commercial Office Market - CY 2025

Bengaluru retained its position as Indias largest office market by net absorption, accounting for 26% of total national office leasing in CY 2025. Net absorption increased marginally by 1% year-on-year to 14.95 million sq. ft., while new supply grew 12% to 14 million sq. ft. Average vacancy declined to 12.0% from 12.3% in 2024, reflecting a balanced demand-supply environment. Average office rentals increased 9% year-on-year to ?102 per sq. ft. per month.

GCC leasing activity remained a key demand driver, with Bengaluru accounting for 38% of Indias total GCC leasing - recording 12.32 million sq. ft. of GCC transactions in 2025. Co-working operators contributed 26% of total leasing, while IT-ITeS maintained a 30% share. Among key micro-markets, the Central Business District commanded rentals of ?130-250 per sq. ft. per month.

Source: ANAROCK India Office Market Annual Update 2025 - https://websitemedia.anarock.com/media/India_Office_Market_Annual_Update_2025_bec8b7647a.pdf

Residential Market - CY 2025

Bengalurus residential market witnessed strong supply-side expansion, with new launches reaching a historic high of 74,250 units. Sales volumes moderated slightly to 62,200 units from a peak of 65,200 units in 2024, with

inventory overhang increasing to 13 months from a record low of 9 months in 2023 - though remaining significantly below the elevated levels observed in 2020-21.

The market has undergone a significant premiumisation shift. The ?1.5 crore-?2.5 crore segment emerged as the dominant launch category, accounting for 45% of new supply in 2025 compared to 24% in 2024. Bengaluru accounted for 37% of Pan-India launches in this segment. The share of launches above ?2.5 crore also increased to 15%, reflecting structural demand for premium residential assets supported by the citys technology and GCC-led employment base.

Source: ANAROCK Indian Residential Real Estate Sector Annual Report 2025 - https://websitemedia.anarock.com/media/Indian_Residential_Real_Estate_Sector_Annual_Report_2025_a92bee0 199.pdf

5. BUSINESS OVERVIEW:

Mac Charles (India) Limited is engaged in the ownership and management of commercial real estate assets, wind energy generation, and real estate development activities. The Company has historically operated as a hospitality and commercial real estate asset owner and has expanded its objects to include real estate development in line with its long-term value creation strategy.

The Companys flagship commercial asset, Embassy Zenith in Bengaluru, is a fully leased Grade A office building representing a significant long-term strategic holding. The Company also operates wind turbine generators (WTGs) for captive consumption and sale of electricity to GESCOM, HESCOM and third-party consumers.

Segment-wise, the Company reports revenues across office rentals, electricity generation (windmill) and other income streams. The Company continues to evaluate opportunities for development of its existing real estate assets and addition of new development projects in line with its strategic priorities.

6. OPPORTUNITIES:

The Company is positioned to benefit from several structural opportunities across its operating segments:

Commercial real estate: Bengalurus sustained GCC-led office demand, declining vacancy rates and 9% YoY rental growth create a favourable backdrop for rental income appreciation and asset value enhancement at Embassy Zenith.

Real estate development pipeline: The Companys existing land and asset base provides optionality for development of premium residential and mixed-use projects.

SM REITs and fractional ownership: Evolving SEBI regulations around Small and Medium REITs (SM REITs) and fractional ownership platforms are expanding the investor base for commercial real estate assets, potentially unlocking monetisation opportunities.

Proptech and asset optimisation: Adoption of building management technology, energy efficiency improvements and smart infrastructure investments are expected to improve operational performance and occupier experience at commercial assets.

Energy segment growth: Increasing state-level demand for renewable power supports sustained electricity generation and sales to GESCOM, HESCOM and group captive consumers under the Companys existing power purchase arrangements.

7. RISKS AND CONCERNS:

Risk	Description
Regulatory and approval risk	The real estate sector operates under a multi-layered regulatory framework spanning central, state and local authorities. Delays in project clearances or changes in land use regulations can impact development timelines and project viability. RERA compliance requirements continue to evolve across states.
General economic conditions	A slowdown in Indias economic growth, rising interest rates or tightening liquidity conditions could dampen commercial office demand, reduce new leasing activity and affect home buyer affordability. The Companys revenue base is concentrated in Bengaluru, making it sensitive to local market conditions.
Concentration risk	The Companys commercial revenue is substantially dependent on a single asset \u2014 Embassy Zenith. Any material deterioration in occupancy, tenant credit quality or rental reversion at this asset could have a disproportionate impact on financial performance.
Construction and input cost risk	Development activity is exposed to volatility in construction material prices (particularly steel and cement), labour availability and logistics costs. Cost overruns can compress project margins, particularly for mid-scale developers with limited procurement leverage.
Energy market risk	The windmill segment is subject to variability in wind resource availability, DISCOM payment timeliness and changes in state-level power procurement policies. Delays in GESCOM and HESCOM receivable collections can impact working capital.
Financing and interest rate risk	The Companys cost of borrowing is sensitive to RBI policy rate movements. Any material increase in interest rates, or tightening of credit availability to the real estate sector, could increase financing costs and affect project feasibility for new development activities.
Socio-political and external risks	Geopolitical events, natural calamities or public health emergencies can disrupt construction supply chains, dampen buyer sentiment and affect project delivery timelines.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company maintains an internal control framework commensurate with the scale and nature of its operations. Internal information systems are designed to ensure accurate, timely reporting and support management oversight across business segments. Compliance with internal controls is validated through periodic internal audits conducted by a professional Chartered Accountant firm, with reports reviewed by the Audit Committee of the Board.

Audit findings, compliance status and implementation of recommendations are reported to senior management on a periodic basis. The Company has defined roles, responsibilities and approval hierarchies across organisational levels to support accountability and reduce operational risk. The Audit Committee reviews the adequacy and effectiveness of internal controls as part of its regular oversight function.

9. SEGMENT-WISE AND FINANCIAL PERFORMANCE:

The Companys operations span three reportable segments: office rentals (commercial real estate), sale of electricity (wind energy), and other income. Consolidated financial results for FY 2025-26 and FY 2024-25 are set out below:

Rs in Millions

Particulars	FY 2025- 26	FY 2024- 25
Sale of Electricity	86.13	96.51
Office Rentals	1016.91	1.80
Other Income	685.40	632.71
Total Revenue	1788.44	731.02
PBDFTE (Pre-Dep, Finance, Tax & Exceptional Item)	1551.72	422.54
Less Depreciation	206.16	21.48
Less Finance Cost	1195.66	991.81
Less Exceptional Item	607.20	-
Profit / (Loss) Before Tax	(457.30)	(590.75)
Tax Expenses	-	-
Profit/( Loss) for the year	(457.30)	(590.75)
Total Comprehensive Income / (Loss)	(468.16)	(587.91)
Basic & Diluted EPS (\u20b9)	(34.91)	(45.09)

10. KEY FINANCIAL RATIOS:

The following table sets out significant changes (25% or more) in key financial ratios for FY 2025-26 compared to FY 2024-25, along with management explanations:

Sl.	Ratio	FY 2025- 26	FY 2024- 25	Change (%)	Explanation
1	Debtors Turnover	56.06	5.38	942%	The variance is majorly on account of increase in revenue due to revenue

Sl.	Ratio	FY 2025- 26	FY 2024- 25	Change (%)	Explanation
					from lease of Embassy Zenith building
2	Inventory Turnover	Not Applicable	Not Applicable	-
3	Interest Coverage	1.30	0.43	140%	The variance is majorly on account of increased revenue from operations due to leasing of single building owned by the Company i.e. Embassy Zenith during the year
4	Current Ratio	1.32	4.62	(71 %)	The variance is majorly on account of non-convertible debentures being payable within 12 months.
5	Debt-Equity Ratio	3.22	2.57	25.29%	The increase is majorly on account of new borrowings obtained during the year
6	Operating Profit Margin	79%	- 214%	137%	The variance is majorly on account of increase in revenue due to revenue from lease of Embassy Zenith building
7	Net Profit Margin	- 26%	- 81%	68%	The variance is majorly on account of increase in revenue due to revenue from lease of Embassy Zenith building

11. HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company operated with 20 employees across various functions as at March 31, 2026. The Company recognises human capital as a key enabler of long-term value creation and is committed to providing development opportunities, enabling employees to keep pace with evolving business requirements and technological change.

Employee relations remained stable during the year, with no material industrial disputes. The Company continues to invest in training and capability building to support operational efficiency across its commercial real estate, energy and development business segments.

12. OUTLOOK:

The near-term outlook for the Companys operating segments is as follows:

Commercial real estate: Embassy Zenith remains fully leased. Continued rental growth in the Bengaluru CBD/off-CBD office market and sustained GCC demand are expected to support stable and growing rental income over the medium term.

Real estate development: The Company is evaluating development opportunities across its existing asset base. Any new project launches will target the premium residential segment, consistent with Bengalurus prevailing demand profile.

Wind energy: Electricity generation and sales to GESCOM, HESCOM and group captive consumers are expected to continue.

Capital structure: The Companys finance cost burden remains a priority area for management attention. Any material progress on debt restructuring or refinancing will be disclosed in accordance with applicable regulatory requirements

The Companys medium-term strategy focuses on optimising returns from existing assets, selectively expanding the development pipeline and improving capital efficiency. Notwithstanding near-term macro uncertainties, the structural demand environment for commercial real estate in Bengaluru and the broader Indian real estate sector remains supportive.

CAUTIONARY STATEMENT:

The views and forward-looking statements in this report reflect managements current perception and are subject to risks and uncertainties that could cause actual results to differ materially. Readers should review this report in conjunction with the Companys financial statements and other disclosures in this Annual Report. The Company undertakes no obligation to publicly update or revise any forward-looking statement