mahindra lifespace developers ltd share price Management discussions

4 Leasable potential for all IC&IC projects is based on management estimates. inventory in the SEZ and DTA but continues to offer lease options in the Residential & Social Zone. At the end of 2022-23, the total number of industrial customers in MWC Chennai was 69 — 24 in the SEZ and 45 in the DTA. Of these, 63 companies are currently operational; one company is expected to start operations soon. During the year, MWC Chennai also witnessed the inauguration of facilities of Hitachi Energy India and Pegatron (Taiwan based manufacturer for Apple iPhones). The city currently provides direct employment to over 50,000 people.

MWC Chennai has a healthy occupancy in its completed residential projects. Construction is also in progress in three projects, for which details have already been provided in the section on residential developments. The city has all key infrastructure and amenities for its residents such as retail and commercial centre, health, education and hospitality. As a mature project, the focus is on community building and other initiatives that enhances the liveability quotient of the city and promote it as a destination of choice.

As a part of the Mahindra Group, MWC Chennai has been at the forefront of adopting sustainable and environmentally friendly practices. It is Indias first integrated city to have achieved ‘Zero Waste to Landfill certification.

MWC Jaipur is the Companys largest integrated city project with gross area of 2,946 acres and a leasable potential of 2,011 acres across its SEZ, DTA and the Residential & Social Zone. The project is being implemented under a public-private partnership, in JV between the Company and Rajasthan State Industrial Development and Investment Corporation (RIICO). It also has a strategic partnership with International Finance Corporation (IFC), a member of the World Bank Group.

In 2022-23, it leased around 71.4 acres to 16 new and 5 existing customers — taking the cumulative net leased area to 1029.4 acres. MWC Jaipur ended the year with 130 customers — 68 in the SEZ, 61 in the DTA and 1 in Social Zone. Of these, 74 companies are operational and another 26 companies are expected to start operations in 2023-24. The remaining 30 companies are in different stages of planning and implementation.

It currently caters to a wide range of industries including IT/ITeS, e-commerce, warehousing, logistics, packaging, engineering, defence equipment, auto components, construction & tunnelling equipment and materials, ATM machines, food processing, apparel, furniture, handicrafts, jewellery and herbal products. The city currently provides direct employment to over 18,000 people.

MWC Jaipur is committed to sustainable development. It is Asias first and worlds largest project to reach C40 Climate Positive Development Program (CPDP) Stage 2. It regularly carries out several initiatives that contribute to the sustainability and enhances well-being of the communities in which it operates.

Origins Chennai is the Companys first industrial cluster project, which is being developed through its step-down subsidiary Mahindra Industrial Park Chennai Limited (MIPCL), a JV with Sumitomo Corporation. Launched in April 2019, this project in North Chennai currently has a gross area of 307 acre with a leasable potential of 227 acres. Origins Chennai is also Tamil Nadus first IGBC Platinum Certified industrial park, reflecting the strong focus on principles of sustainability employed in its design and development.

During the year, 74 acres of land was leased in the project and the enquiry pipeline remained strong. New customers include Mitsubishi Electric to whom land was leased for manufacturing air conditioners and compressors.

Development activities for common infrastructure works including roads, utilities and a bridge progressed as per schedule. Nissei Electric became operational making it the 3^rd company to commence operations at Origins. Given the positive response, the Company is planning the second stage of the project for which land acquisition is in progress.

Origins Ahmedabad is the Companys second industrial cluster project, located near Ahmedabad, Gujarat. The project has gross area of around 340 acres and a leasable potential of 255 acres. It is being developed through its subsidiary, Mahindra Industrial Park Private Limited (MIPPL), in strategic partnership with International Finance Corporation. The Company has obtained key approvals for the project and primary infrastructure development for the initial phase has been undertaken.

IC&IC business has institutionalized a customer engagement platform called ‘Coalesce to discuss operational matters and collaborate on new initiatives. Multiple customer engagement events where organised during the year to enable community building.

Mahindra Lifespaces has identified certain priorities — which has been articulated as the Companys brand promise of ‘Crafting Life — to drive long-term growth in its key businesses. One common underlying theme to drive efficiencies is to institutionalise the use of digital and technology-based solutions. Over the years, these priorities have been imbibed in all key operating areas.

MLDLs activities in this area encompass marketing and brand building efforts to generate enquiries, convert them into actionable leads and to drive sales. The Companys efforts during the year can be structured into three broad themes.

First, create differentiated products considering the changes in the needs and preferences of customers, while at the same time setting benchmarks in sustainable developments. Some of these are presented below. One important aspect of the product development process at Mahindra Lifespaces is that sustainability is in-built right from the design process, which enables it to maximise the benefits and communicate it with the customers in terms of enhanced liveability and long-term savings.

Mahindra Lifespaces has been at the forefront of environment-friendly and sustainable developments in the Indian real estate sector. It has had a 100% Green portfolio of residential projects since 2014 and is committed to Net Zero (Energy, Water & Waste) Developments by 2030. 2022-23 saw significant movement towards this goal:

In April 2022, MLDL launched Mahindra Eden, Indias first net zero energy residential project, in Bengaluru. While its energy demand will be met from renewable sources including both on-site solar and wind energy systems as well as purchase of green energy, its unique design features will save over 18 lakh units (kWh) of electricity annually.

The project is certified by IndianGreen Building Council (IGBC) for ‘Net Zero Energy Buildings. It also features 74% self-sufficiency in water, 84% biodiversity preservation and 90% waste diversion from landfills.

This marks a major milestone in Mahindra Lifespaces sustainability journey and its pledge to build only net zero projects from 2030 onwards.

In July 2022, MLDL, through its subsidiary Mahindra Bloomdale Developers Limited, launched Mahindra Nestalgia — Punes first biophilia-inspired homes. Inspired by human beings instinctive connect with nature, elements of the project incorporate environmental elements, natural shapes and forms in architecture and landscaping as well as abundance of natural light and open spaces. These nurture an active and healthy lifestyle reminiscent of childhood, while building a sustainable future.

Mahindra Lifespaces contributes to Mahindra-TERI Centre of Excellence, its joint research facility with The Energy and Resources Institute (TERI) to create innovative energy efficient solutions for the Indian construction industry. Over 200 building materials have been tested so far for their thermal properties and the database has been made available online for the benefit of the construction community. Another initiative currently underway is Sky Modelling to understand local sky conditions for more energy efficient and sustainable building designs.

Second, focus on digital content and social media to generate pull for the brand and improve the quality of leads. In 2021-22, its ‘Crafting Life campaign video which was released and promoted in digital media, achieved over 46 million impressions and around 23 million video views. It also ran several digital advertisement campaigns for its new project launches, generating tremendous reach and visibility among prospective buyers. With these efforts, MLDLs organic leads increased considerably during the year. The Company also recorded high levels of interest and offtake in its newly launched projects

. It won the ‘Digital Marketing Campaign of the Year at the 14^th Realty+ Excellence Awards 2023 for Happinest Tathawade, Pune.

Third, the channel partner network was strengthened considerably to around 12,000 at the end of 2022-23, up from 10,500 in the previous year. The Company has a mobile app for channel partners called ‘HappiEdge which was relaunched during the year. It contains all project marketing material and has tools for lead management and transaction processing. While majority of the sales are generated through its channel partner network, the Company has also invested in digital assets for direct sales as well as building corporate partnerships and referral network. These alternative channels contributed around 30% of total sales in 2022-23.

Mahindra Lifespaces brand promise of ‘Crafting Life manifests the belief that purchase of a home is not merely the delivery of a physical structure but the starting point of a journey. In that context, providing an industry-leading experience is a vital part in making the entire home buying journey a fulfilling experience for its customers. At MLDL, customer centricity is at the core of this approach, and all activities and processes in the entire consumer lifecycle are built around it. Some of the key initiatives and achievements during the year include:

Improve Response time: The Company has set a benchmark of an average turnaround time (TAT) of less than 1 day. With an average TAT of less than half a day, this was comfortably achieved in 2022-23 through a combination of better processes, automation and intensive training of service executives. More importantly, only a small proportion of requests went beyond the 1 day. 1,880 registrations were completed by the Company during the year.

Tech-enabled Initiatives: Initiatives for better customer experience across the lifecycle include development of AI bot to handle customer queries and digital site visit form which is fully integrated with the Companys CRM. Several processes were automated to bring down response times. The Company is also upgrading its customer website and mobile app.

Customer Engagement: Mahindra Lifespaces has curated exclusive events that allow the customers to experience their flats during construction. It has also entered into multiple alliances for value added services to augment the living experience by nurturing community engagement. It organised five such customer engagement events across different locations.

MLDLs customers have appreciated these efforts. The consistent improvement in the customer net promoter scores is a testimony to its successful efforts to build a customer centric organisation.

Mahindra Lifespaces considers high-quality and timely execution of projects as its key strategic and operational priority. Over the years, its focus on building robust processes and standard operating procedures (SOPs) in line with total quality management principles have enabled it to deliver projects that meet the expectations of customers. Further, details are presented below. During the year, Construction World conferred MLDL with ‘Indias Top Builder award under the National category at the ‘17^th Construction World Architect & Builder Awards 2022.

The Company has adopted the principles of Total Quality Management (TQM) under the banner of ‘The Mahindra Way (TMW) — the Mahindra Groups integrated approach to promote excellence in all spheres of its operations. Both residential and IC&IC businesses are at Stage 4 in the Service category of this assessment in 2022-23.

The organisation is ‘Integrated Management System certified since 2013 complying to standards of ISO 9001 - Quality Management System; ISO 45001- Occupational Health and Safety Management System; and ISO 14001 - Environmental Management System.

The Company has an established ‘Quality Policy which is deployed through quality objectives for each function. All processes starting from land acquisition to facility management are in place. Its quality management system based on Plan-Do-Check-Act (PDCA) approach has been instrumental in improving quality of its products, thereby leading to defect free delivery and enhanced customer satisfaction.

The Company took several measures in 2022-23 to further improve project execution and related processes:

The scope of Operational Excellence Squad was expanded beyond civil and MEP during the year to include fixtures, fittings and finish. This cross-functional team evaluates chronic issues at project sites based on data, carries out root cause analysis and presents possible solutions. These are then translated into a policy to be followed across projects sites bringing greater standardisation.

A two-volume Technology Manual was launched during the year. This manual covers technical knowhow on every activity done on project sites from conceptualisation to handover and enables greater standardisation as well as effective troubleshooting.

Stage Pass system introduced in the previous year was expanded to all projects during the year. The methodology has been very effective in tracking progress at the unit-level, streamlining inspection and handover processes to improve on-time delivery.

Introduced Reverse Training methodology where employees at the lowest level with practical experience train the workmen in everyday tasks.

The Company has always looked to deploy innovative technologies in construction to enhance quality and reduce construction time. This includes large-scale adoption of ‘Stay-in-Place Formwork as well as introduction of tech-enabled solutions such as holographic computing and robotics. In 2022-23, it started use of ground granulated blast-furnace slag and high-volume fly ash in concrete as well as low viscous epoxy grout for crack treatment. The Company also expanded the adoption of latest waterproofing techniques and use of marine ply doors across multiple projects.

Mahindra Lifespaces has an ‘inclusive safety culture which involves perceiving risks and rectifying it systematically. Its projects have reached a maturity level in use of personal protective equipment, housekeeping, adherence to systems and aims to eliminate unsafe acts by proactive reporting of incidents. There is suitable awareness among operatives at all levels which has paved the way for a good safety culture in the organisation. In 2022-23, it launched several campaigns to increase connect with workers and recognise them for proactive approach towards safety. This included ‘Safety Observation Tour where visitors noted potential risks which were immediately acted upon and a ‘Quarterly Safety Campaign where one area was taken-up for improvement every quarter. It also institutionalised a pan-India rating system for its projects based on reporting of safety-related risks and incidents.

Mahindra Lifespaces is focused on growing its presence in both its key businesses.

The Companys medium-term objective is to achieve annual sales of2,500 crore in the residential business and annual leasing of 500 crore in the IC&IC business by 2025.

The Company has a strong balance sheet and has access to debt for its growth at extremely competitive rates. As on 31 March 2023, debt at IND-AS consolidated level stood at 265 crore and the average cost of debt during 2022- 23 was 8.2%. Consolidated cash balances stood at273.6 crore at the end of the year. The Company also has access to capital through partnerships spanning all its business segments. It has a track record of successful partnerships with: (i) Actis and HDFC Capital for residential developments and (ii) Sumitomo Corporation, Japan, and International

Finance Corporation (IFC) for IC&IC projects.

During the year, MLDL entered into another agreement with Actis to establish a Joint Venture (JV) platform for developing industrial and logistics real estate facilities across India. As a part of the agreement, the Company will contribute upto 100 acres of land in the two Mahindra World Cities with a built-up potential of over two million square feet to be acquired and developed by the JV platform over time, subject to requisite approvals. This opens-up business opportunities in the Built-to-Suit (BTS) industrial and warehousing space as well as accelerates land monetisation in its existing industrial projects.

In the residential business, the Company made two land acquisitions during the year which should amount to around 3,100 crore in terms of gross development value:

1. Pimpri, Pune: Acquired 11.38 acres of land in April 2022, which was launched as Mahindra Citadel in 2022-23 itself. The project has a development potential of 2.77 million square feet (msft), of which 0.51 msft was launched in November 2022, within seven months of the acquisition.

2. Singasandra, South Bengaluru: Acquired 4.25 acres of land to develop a residential project with a development potential of 0.46 million square feet (msft).

As mentioned earlier, in 2022-23 MLDL forayed into the society redevelopment space with its maiden redevelopment deal of two adjacent residential societies in Santacruz West — one of the prime residential neighbourhoods in Mumbai. This redevelopment project has a development footprint of around 0.14 million square feet and has a revenue potential of 500 crore. In fact, the Companys efforts in this area gathered momentum and it bagged another redevelopment project since the close of the financial year, in April 2023. This project is located in Malad West, a prominent residential and commercial locality in western Mumbai, and has a revenue potential of around 850 crore.

Mahindra Lifespaces has a healthy pipeline of land deals and will continue to evaluate further opportunities in the residential business through asset light models including joint development and JVs with landowners. As noted earlier, it also sees considerable opportunities for redevelopment projects and acquisition of stressed assets. The Company has dedicated teams in place to evaluate opportunities in this respect.

In the industrial business, its focus is on accelerating the leasing activity and increasing deal sizes across its existing projects. It is also working on expansion of Origins Chennai and establishing a new industrial cluster project in Pune, Maharashtra, to benefit from the opportunities in the market. Both these projects are in the land aggregation and planning stage.

Mahindra Lifespaces approach towards use of technology has been to improve efficiencies, provide a competitive advantage and enable scale. Accordingly, it has deployed appropriate IT infrastructure and solutions across all its key business, administrative functions as well as project sites.

MLDLs IT infrastructure includes SAP ERP for its core and peripheral business functions, which is fully integrated with SFDC — the Companys integrated sales, servicing and communications platform. It also includes primary and disaster recovery data centres, audio-visual communication tools and access to specialised industry specific software for project management.

Its efforts to institutionalise use of digital and technology-based solutions in key activities such as sales, project management and customer servicing has already been discussed in the respective sections of this report. Some key developments in 2022-23 included extending the SFDC platform to the IC&IC business and implementation of an online asset tracking system for tagging assets across the Company. In the area of analytics and dashboarding, a new set of marketing dashboards were implemented, with a more complete roll-out scheduled to take place in the next year. It is also working on a new customer portal and mobile app which is also expected to be launched in 2023-24.

Mahindra Lifespaces recognises that success is directly linked to the quality of talent. People are heart and soul of the organisation, and their skills, knowledge, and commitment contribute significantly to its growth. The Companys commitment to nurturing talent and creating a positive work environment has helped in achieving its organisational goals.

2022-23 saw considerable activity and success on the talent acquisition front. Rigorous selection processes and streamlined recruitment practices enabled it to attract candidates who are qualified and at the same time aligned with its values and culture. Focus was not just on skills and experience necessary to drive the company forward, but also on ensuring diversity and inclusivity, resulting in a more vibrant and dynamic workforce. As it operates in a traditionally male dominated industry, special focus is on gender diversity. During the year, 15 women civil engineers were hired as Graduate Engineer Trainees. The percentage of women working as full-time associates stood at 22% at the end of the year, compared to 16.7% a year ago.

Investing in the growth and development of our employees has been a top priority. MLDL has implemented comprehensive learning and development programs aimed at enhancing skills, fostering innovation, and promoting personal and professional growth. Important areas in 2022-23 were technical training, leadership development and soft skills. These were delivered through a blend of in-house training, external workshops and online learning platforms. Special efforts were made in Quality, Safety and Sustainability which were driven on a quarterly calendar. Other notable efforts include launch of Engineers Handbook and Engineers Toolkit for the projects team and an AI-based conversational sales training solution for customer acquisition.

Employee engagement continues to be a key focus area. During the year, the Company undertook several initiatives to promote a positive work environment and strengthen the bond between employees and the organisation. These included fostering effective communication channels, promoting employee well-being through wellness offerings and encouraging active lifestyle as well as effective employee recognition programmes. During the year, it launched an employee of the month award to recognise outstanding performers.

As on 31 March 2023, Mahindra Lifespaces together with its subsidiaries had 580 associates on its rolls. The Company endeavours to keep its workplaces safe, transparent and friendly for people to work in. It has a policy on Prevention of Sexual Harassment at Work (POSH) which is aligned to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were no complaints related to POSH or violation of human rights during the year under review.

As a part of its CSR activities, Mahindra Lifespace and its subsidiaries contribute to local communities by focusing on the following areas: girl child education, women empowerment and skill development, environment and sustainability, health and social security. Besides working with partners, the Company also encourage volunteering by employee for CSR activities. Volunteering work amounting to over 550 person-hours was recorded during the year.

Some of the key initiatives carried out in 2022-23 are given below.

Girl Child Education: As a part of ‘Nanhi Kali, Mahindra Groups flagship programme for girl child education, it sponsored education of 168 girls in 2022-23. Another project for "Enabling Education for Girls in Schools of Rajasthan" was implemented by Mahindra World City, Jaipur, in 12 government schools across 8 villages. In 2022-23, it also supported education of 450 school children through provision of classroom infrastructure in a government school.

Women Empowerment and Skill Development: MWC Jaipur contributed for education of underprivileged children, vocational skill development programmes and formation of self-help groups. Around 34 rural youth were trained in various vocational skills and 165 women were helped in developing skills and formation of self-help groups in 2022-23, taking the total beneficiaries under the project to 2,457 rural youth and 1,911 women, since the inception of this programme.

Environment & Sustainability: Around 36,693 trees were planted under the Mahindra Groups tree plantation initiative called ‘Mahindra Hariyali. In another initiative, over 15,000 saplings of rare trees were planted by Mahindra Water Utilities Limited in Tirupur. 50 LED fixtures were successfully installed in 5 villages and 6 high mast lights were installed in 6 villages, thereby impacting the lives of 28,000 people under its C40 initiative. A solid waste management project was kicked-off in Chengalpet village near MWC Chennai.

Health and Social Security: This included donation of an ambulance to a government hospital in Rajasthan, supporting mid-day meal program for 91,000 school children, provision of safe drinking water thereby positively impacting lives of 13,500 people, renovation of children park catering to 3,500 children. In another major programme, it is supporting construction of old age home for 100 destitute and differently abled women senior citizens.

Table 3 gives the abridged profit and loss statement of Mahindra Lifespaces.

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