Mac Charles (India) Ltd Management Discussions

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 2024 to March 2025. Some statements in this discussion describing the projections, estimates, expectations or outlook may be forward looking. Actual results may, however, differ materially from those stated because of several factors such as changes in government regulations, tax regimes, economic developments within India and abroad, exchange rates and interest rates fluctuations, impact of competition, demand and supply constraints.

1. INDIAN ECONOMY:

In 2025, India emerged as the fourth largest economy in the world, a milestone driven by sustained domestic reforms, strategic global positioning, and the continued momentum under the Governments Aatmanirbhar Bharat vision. The Indian economy demonstrated remarkable resilience and stability during FY 2024-25, navigating a complex global environment marked by geopolitical tensions, trade disruptions, and a deceleration in major economies. Despite these external headwinds, Indias Real GDP grew by 6.5%, significantly outperforming the global GDP growth rate of 3.1%. This performance enabled India to retain its position as the fastest-growing large economy globally, underscoring the strength of its macroeconomic fundamentals and the effectiveness of structural policy initiatives.

2. INDUSTRY INSIGHT:

Indias real estate sector continues its robust trajectory, contributing significantly to the countrys economic growth. By financial year 2025-26, the sector is expected to remain a key player in the broader economic landscape.

Indias real estate sector is undergoing a dynamic transformation, shaped by technological innovation, regulatory evolution and shifting consumer preferences.

3. MARKET OUTLOOK:

In FY 2025-26, Indias residential real estate market is expected to witness an ongoing shift toward premium and luxury segments. The rising affluence among the middle class, combined with more people seeking better work-life balance post-pandemic, will increase the demand for high-end residential projects. Luxury housing (above INR 1 crore) surged from 2019 to 2025, driven by higher incomes, lifestyle changes, and targeted developer efforts. Office leasing rebounded sharply in FY2025, hitting record levels. Demand surged due to GCCs, IT/ITES, e-commerce, and flexible workspaces, especially in Tier 1 cities and emerging Tier 2 hubs. Indias office market shows strong absorption and positive rental growth. The industrial and warehousing sector maintained its growth, driven by 3PL players, e-commerce, ‘Make in India, and rising logistics needs for shifting consumer and supply chain dynamics. The commercial real estate sector is set to continue its recovery and expansion. Leasing activity is projected to remain strong, with gross leasing volumes expected to touch 65-70 million sq. ft, marking a steady 5-10% growth compared to FY 2024-25. The market will continue to see demand driven by technology companies, as well as finance and BFSIfirms seeking to expand their physical presence. Office absorption in top cities like Bangalore, Hyderabad, Delhi-NCR, and Mumbai will remain solid, fueled by demand from global capability centers (GCCs), tech unicorns, and MNCs. Technology companies are projected to maintain their position as the largest contributor to leasing activity, while flexible office space operators will continue to grow, adapting to the demand for hybrid workspaces.

4. OPPORTUNITIES:

In 2025, the Indian real estate industry will be significantly shaped by the integration of advanced technologies aimed at enhancing efficiency, transparency, and customer experience. Some of the emerging trends being tokenization of real estate, prop tech innovation - automation and robotics, virtual reality (VR) and augmented reality (AR) and AI-driven sustainability. Tokenization of real estate converts physical properties into digital tokens on a blockchain, enabling fractional ownership and easier trading. In India, it enhances liquidity, transparency, and investor access, especially for retail investors. With regulatory support, it could revolutionize the market by aligning with digital transformation and financial inclusion goals. Looking ahead to FY 2025-26, investment activity is expected to grow with more platform consolidation, increased institutional participation, deeper proptech integration, and a focus on sustainable, ESG-compliant assets. The evolution of SM REITs and alternative asset classes will continue reshaping the market.

5. THREATS/ CHALLENGES:

Indias real estate sector demonstrated resilience during FY 2024–25, yet it faced a complex set of challenges, many of which are expected to persist into FY 2025–26.

Economic and financial pressures

Global economic volatility and high interest rates strained homebuyer affordability, especially in mid-income segments. Housing prices outpaced incomes, while fundraising for early-stage projects tightened, despite continued private equity activity.

Execution and cost challenges

Supply chain disruptions, rising material costs, and margin pressures challenged project viability. Developers had to diversify sourcing and manage budgets to stay on track. Growing sustainability expectations, especially for Grade A commercial assets, increased compliance costs, though ESG adoption in India remains nascent.

Regulatory and approvals hurdles

Land acquisition issues, delayed clearances, and slow approvals caused project delays and increased execution risk. While RERA improved transparency, procedural hurdles persist, especially for new developments and smaller players.

Urbanisation and infrastructure gaps

Urban expansion outpaced infrastructure development, causing congestion and strain on civic amenities, especially in Tier-2 and Tier-3 cities. Infrastructure bottlenecks impacted project viability outside metro areas.

Digital transformation and cybersecurity risks

The shift to tech-driven real estate, including smart homes and digital transactions, heightened cybersecurity risks, requiring developers to invest in data protection and process adaptation.

Evolving consumer preferences

Evolving consumer preferences, such as the demand for smart homes and sustainable living, present a challenge for developers to quickly adapt to new trends. Failing to meet these expectations can lead to reduced market competitiveness and lower demand for outdated properties.

Global and political volatility

Geopolitical tensions, commodity price swings, and global capital flow uncertainties dampened investor sentiment, particularly affecting cross-border investments. These external macro factors posed risks to transaction volumes.

6. SEGMENT WISE PERFORMANCE AND FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Factors used to identify the entitys reportable segments, including the basis of organisation:

The Company has diversified into electricity generation through Wind Turbine Generators (WTG) for captive consumption and sale of electricity to the GESCOM, HESCOM & Group Cative., and third-party consumers. Further, the Company has earningson investments .

Geographical Information

The geographic information analyses the Companys revenue and Non-Current Assets by the Companys country of domicile and other countries. As the Company is engaged in Development of Real Estate property in India, Windmill and Rental income, it has only multiple reportable geographical segments.

Information about major customers

Apart from the above, no other customers constituted 10% or more of the total revenue of the Company for the years ended March 31, 2025, and March 31, 2024.

7. RISKS AND CONCERNS:

Industry Risk:

The Indian real estate sector operates within a highly intricate regulatory framework, subject to oversight by central, state, and local authorities. Developers are required to comply with a wide array of laws and regulations governing land acquisition, property transfers, registration, and land usage, which often vary significantly across different states. These disparate regulatory frameworks pose substantial challenges in project execution, particularly when managing multi-state developments. Moreover, frequent changes in regulations, coupled with delays in obtaining necessary clearances, can disrupt project timelines and undermine investor confidence, thereby introducing considerable legal and operational risks.

General Economic Conditions:

The Real Estate and Construction industry is vulnerable to economic fluctuations, local market conditions, and regulatory changes. In Bangalore, infrastructure projects like the metro expansion have driven demand for both residential and commercial properties. However, rising interest rates can reduce affordability, while exchange rate volatility impacts foreign capital flows. Government policies like RERA and shifting consumer preferences for sustainability further shape market dynamics.

Socio-Political Risks:

In addition to economic risks, real estate sector is largely exposed to socio-political risks, both domestically and internationally. Events such as political instability, diplomatic tensions, terrorism threats, and pandemics like COVID-19 can disrupt market confidence and project timelines. Extreme weather conditions and natural calamities, such as floods or earthquakes, can damage properties and affect construction, supply chains, and demand. These risks can impact the demand-supply balance, increase operational costs, and disrupt business continuity, necessitating effective risk management strategies.

Company Specific Risks:

The Company specific risks remain by and large the same as mentioned hereinabove. Further, it cannot have effective marketing leverages. The industry in general has a high operating leverage.

8. INTERNALCONTROL SYSTEMS AND THEIR ADEQUACY :

Internal information systems ensure smooth information to facilitate proper control. Adherence to the systems is then validated through the process of internal audit. The Company has adequate system of internal audit control to ensure that all the assets are safeguarded and protected. Regular internal audits are conducted by the professional Chartered Accountant firm and reports submitted by these Internal Auditors are periodically reviewed by the Audit Committee of the Board. The findings and compliance/s are reported to the apex level management on a periodic basis. The Company has constituted an in-house Committee for timely implementation of internal audit recommendations. The Company has clear systematic process and well-defined roles and responsibilities for people at different hierarchical levels. This ensures appropriate information on to facilitate monitoring.

9. DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS: As reported last year, the Company is operating with 35 employees in various roles.

The Company believes that the quality of the employees is the key to its success in the long run and is committed to provide necessary human resource development and training opportunities to equip them with skills, enabling them to keep pace with ongoing technological advancements and evolve. Employees are provided with an opportunity to grow and prosper. In the meantime, all efforts are being made to control costs to maintain the present level of profitability.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

The details of significant changes (i.e., change of 25 % or more as compared to the immediately previous financial year) in key financial ratios, alongwith the explanation, are furnished below:

Change in Return on Net Worth:

Return on net worth during the financial year 2024-25 is INR 4077.09 million as compared to INR 4337.42 million for the financial year 2023-24.

11. DISCLOSURE OF ACCOUNTING TREATMENT:

The Company has followed all relevant Accounting Standards while preparing the Financial Statements.

12. CAUTIONARY STATEMENT:

The views and futuristic statements contained in this report are the perception of management and subject to certain risks and uncertainty that could cause actual results to differ materially from those such statements. Readers should carefully review the other information in this Annual Report and in the Companys periodic reports. The Company undertakes no obligation to publicly update or revise any of these futuristic statements, whether because of latest information, future events, or otherwise.