Majestic Auto Ltd Management Discussions

1. Global Economy

The global economy witnessed a blend of opportunities and challenges. It persisted with challenges and uncertainties arising on account of inflation dynamics, rising geo-political tensions leading to supply-chain disruptions and pace of post pandemic recovery. However, economists believe that several growth opportunities lie ahead, which are well supported by resilient performance by Central Banks in controlling inflation, major emerging markets showing consistent and strong growth outlook along with soaring capital markets across the globe.

According to the latest projections by the International Monetary Fund (IMF), the global economy is slated to grow at 3.2 percent in 2024 and holding steady, even for 2025. The IMF also expects the global headline inflation to decline to 5.9 percent in 2024 and sequentially to 4.5 percent by the end of 2025, leading to a soft landing.

2. Industry Structure & Developments

The theme over the last year has been, inflation, higher for longer interest rates, and optimism. We came into the year with high interest rates and unrelenting inflation. While the tech industry is still working out its work from office hopes against the reality, the office space demand saw robust growth. Additional demand from local growth and development of infrastructure, along with a global trend of moving GCCs (Global Capability Centres) have driven up occupancy in and around our area.

Industrial land assets have certainly seen an uptick in demand as Indias Manufacturing sector is burgeoning. We have seen the gains of this through property transactions in the last year already. The Residential Real Estate sector witnessed a strong growth in the past couple of years and is poised for an assuring growth in the future. The outlook is driven by a confluence of multiple factors including increasing urbanization, shifting demographics, aspirational lifestyle and supportive economic growth in the country. A number of factors are adding further impetus to the growth of the industry. The growth can be attributed to a growing residential demand, expected growth in sustainable workplaces, rising consumption and needs of a growing population with higher income levels.

3. Indian Real Estate: Opportunities and Challenges /Threats/ Strategies

Challenges/Threats

• Ageing Leases and Furnishings/Fitouts Depreciated Some of our leases with existing clients might get matured and require capex for leasing again soon. The fitouts are depreciated and old, and there will be some cost to the churn of clients that is inevitable.

• Supply in Noida Office Space

While our micro market has [finally] rebound in office space demand, we fear that the sheer number of upcoming properties on the Noida-Greater-Noida Expressway will soon lead to over-supply again.

• The Road Ahead/Positive Approach

There has been robust growth in leasing/occupancy, a significant uptick in property values, and even more pronounced deal flow. So, weve been able to strike deals to liquidate some of our industrial assets at prices favourable compared to the rental yield. This has eliminated the debt in our company, and we have room for further reinvestment. Of course, our subsidiary will still carry debt, since that is integral to the business model to enhance RoE.

Weve built new relationships with fantastic clients that should last a long time. This is really the key to enhance the value of our asset and have a healthy business going forward.

4. Segment-wise/ Product-wise Performance

You are already aware that, your Company has significant presence in Noida, UP.

Your Company along with its subsidiary/associate companies etc. have range of Commercial real estate leasing, Factory space leasing, and Facility Management business.

Commercial Office Space:

Existing tenants have extended their lease periods, and multiple prestigious new companies have taken up space in our facility. Some old tenants that had left during COVID have occupied some seats in our new co-working space in collaboration with Awfis. We hope to have higher occupancy in the coming months.

Industrial Assets:

Weve already made deals to liquidate the last of our industrial property in Ludhiana, and the asset in Greater Noida. These transactions take time, and weve got highly reputed buyers to execute these transactions. We take this as a sign of a booming manufacturing demand for both of these locations, and Make-in-India as well.

Financial Investment Portfolio:

We have liquidated most of our sizeable holding in Hero MotoCorp. We look to reduce the concentration risk in one stock, but still grow this portfolio through good, diversified investment.

5. Outlook and Strategy

Our business resumes robust growth. Were pleased to see the quality of clients were able to get in our Sector 62, Noida facility. The key elements of the strategy of the Company are the following:

• Strategic CapEx for enhancing total revenue:

• The Company strives towards creating efficient cost structures in line with the scale of the business. We expect to generate healthy cash flows to further deleverage the balance sheet and increased shareholders value.

• Company to consider sale /exit from non-core assets /slow moving investments if fetching better value and to reduce the debt.

• The Company is improving its financial parameters through better performance and ensures repayment of principal amount to reduce the interest burden.

• Upon continuous feedback from shareholders, company gave a substantial dividend last year. This will be considered again as cashflows allow, and the company is striving toward improving this position.

6. Outlook on Risks and Concerns

The Company is exposed to a number of risks such as economic, regulatory, taxation and environmental risks as well as sectoral investment outlook. Some risks that may arise in the normal course of business and could impact its ability to address future developments comprise credit risk, liquidity risk, counterparty risk, regulatory risk, commodity inflation risk and market risk.

The Companys strategy of focusing on key products and geographical segments is exposed to economic and market conditions. The Company has implemented robust risk management policies that set-out the tolerance for risk and your Companys general risk management.

7. Internal Control Systems and Adequacy

The Companys internal controls are commensurate with nature, size and complexities of operations. These internal control systems ensure compliance with all applicable laws and regulations and facilitate optimum utilization of available resources as also protect the interests of all stakeholders. The Company has clearly defined policies, standard operating procedures (SOPs), financial and operational delegation of authority (DOA) and organizational structure for its business functions to ensure a smooth conduct of its business.

8. Discussion on Financial Performance with respect to Operational Performance

The details of the financial performance of the Company are reflected in the Balance Sheet, Statement of Profit & Loss and other Financial Statements, appearing separately. Highlights are provided below:

The financial performance of the Company has been further explained in the Boards Report of the Company for the FY 2023-24 appearing separately. The financial statements have been prepared in accordance with the requirement of Companies Act 2013, and applicable accounting standards as notified by Ministry of Corporate Affairs (MCA).

9. Material developments in Human Resources/Industrial Relations front, Including number of people employed.

The Companys core focus areas are building organizational capability and capacity, leveraging and nurturing key talent, encouraging meritocracy and enhancing people utilization in alignment with its business strategy. The Company is undertaking the following steps:

• Strengthening and diversifying the advisors and consultants: Were bringing in specialists from real estate and other industries who will enhance all domains, while keeping costs low, especially fixed costs. Key advisors have been brought in across functions including Finance, Business Development, Project Management and execution, Marketing, IT and Hospitality.

• Various training and coaching programmes are being implemented to refresh and enrich its existing talent pool. The Company leverages diversity of knowledge, qualification, skill, professional experience, culture, geography and sectoral understanding to enhance its competitiveness. The Company believes in creating an inclusive environment, where diverse perspectives can enrich strategic perspectives. To enhance inclusiveness at work, our ‘gender sensitivity workshops sensitise the environment in strengthening our conduct towards women colleagues.

The Companys holistic wellness programme sensitised employees around work-life balance and importance of a healthy lifestyle, emotional, physical well-being and prevention of diseases. Regular medical checks, structured monthly health programmes, health bulletins, health talks and awareness campaigns were periodically conducted. The Company also rolled out a structured program to vaccinate all its employees and their families along with contractors/ partners staff & their families.

Details of significant changes in key financial ratios along with detailed explanations thereof, including:/ 1.

10. Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof

The increase in return on net worth can be attributed to two significant factors this year.

1) There was a substantial gain on Sale of land (held as inventories) of Rs 2372 lakhs in current financial year.

2) Gain of Rs 1506 lakhs from treasury operation carried out by the Company during the current financial year (as compared to loss of Rs. 17 lakhs incurred during previous financial year). together, these factors have significantly increased the return on net worth of the Company.

Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys views on the industry, expectations/ predictions and objectives etc. may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied in these statements. The Companys operations may, inter-alia, be affected by the supply and demand situations, input prices and availability, changes in Government regulations, tax laws, government or court decisions and other factors such as industry relations and economic developments, possible risk of lockdown and/or restrictions in certain geographies. Investors should bear this in mind when considering the above statements.