Manjeera Constructions Ltd Management Discussions

Industry Structure and Developments The Global Economy

The global economy witnessed several headwinds in the reported year. While volatility in commodity prices weighed on economic growth, geopolitical disequilibrium further strained the supply chains. On the other hand, central banks resorting to calibrated interest rate hikes further impacted economic activity. Furthermore, tightening global financial conditions exacerbated fiscal and debt vulnerabilities in developing nations. These factors cumulatively declined global growth from 3.4% in CY22 to 3.2% in CY23. However, the global economy still remained resilient while navigating the tumultuous CY23.

Over 85% of central banks resorted to calibrated interest rate hikes to rein in inflation. While the tight monetary policies weighed upon global growth, it successfully prevented an economic downturn.

Projections indicate modest growth of approximately 2.8% for economies such as Ghana and around 1% for South Africa. These estimations are expected to enhance productivity and ensure better services in these regions. As the Company is looking forward to expanding its operations into these markets, the Company stands to gain from these favourable forecasts.

Global growth is expected to hold steady at 3.2% in CY2024 and maintain this rate into CY2025. Inflation is projected to decline in most regions owing to unwinding of supply-side pressures and easing of restrictive monetary policies. Global headline inflation is also anticipated to decline to 5.9% in CY24.

For advanced economies, growth is projected to decline slightly from 1.6% in CY23 to 1.7% in CY24, before rising to 1.8% in CY25. This highlights the impact of restrictive monetary policies and withdrawal of fiscal support. On the other hand, the world trade is estimated to grow to 3.0% in CY24 and 3.3% in CY25. However, the projection is expected to stay persistently below the historical average of 4.9%.

(Source: IMF, Deloitte 2024 economic outlook)

The Indian Economy

The Indian economy maintained its positive growth trajectory despite a sluggish global economy. In FY24, Indias GDP touched 8.2% with Current Account Deficit (CAD) at 1.9% of GDP. There have been various primary drivers for GDP growth. Strong domestic demand and continuous government spending, coupled with rising exports, substantial increase in private consumption, growing focus on infrastructure development and a positive investing environment have augured well for the Indian economy.

India, one of the fastest growing major economies in the world, is an attractive destination for foreign investments. Moreover, the governments proactive stance to implement favourable fiscal policies have lend stability to the Indian economy. The introduction of flagship programmes like Make in India, Aatmanirbhar Bharat, Smart City Mission, Digital India and the PLI scheme have enabled growth across different sectors.

Several high-performance indicators point towards robust growth in the Indian economy. Increasing capex, strong tax revenue collections, growing domestic demand and surging capacity utilisation across sectors, coupled with a thriving food industry have bolstered the growth of the industry. Furthermore, stable repo rates, government bond yields and healthy foreign exchange reserves indicate towards macroeconomic stability in the forthcoming years.

The Government of India has allocated 3.3% of its GDP to the infrastructure sector in FY24, focusing on the transport and logistics segments. The aim of these initiatives is to augment economic growth of the country. The total budgetary outlay for infrastructure-related ministries has increased from around INR 3.7 Lakh crores in FY23 to INR 5 Lakh crores in FY24, offering investment prospects for the private sector across various transport sub-segments.

INDUSTRY OVERVIEW

It is projected that by 2040, the Indian real estate market will grow to INR 65,000 crore from INR 12,000 crore in 2019. The sector is expected to reach a value USD 1 trillion ad compared with USD 200 billion in 2021.

The Indian real estate sector, a cornerstone of Indias economic progress, is undergoing transformative shifts influenced by policy reforms, technological advancements, and evolving consumer preferences. Currently the real estate sector in India is performing very well, post being overall slow for few years and then suffering with the impact of the Covid-19 Pandemic. The sector contributes close to 7% to the countrys GDP and is a primary contributor to employment. It is projected that the sectors contribution to the GDP will grow to 13% by 2025.

OUTLOOK

The Indian real estate sector continues to demonstrate resilience, supported by favourable demographics, rapid urbanisation, increasing infrastructure investments and policy initiatives of the Government. Demand across residential and commercial segments continues to remain robust, particularly in key metropolitan and emerging urban centres.

Pursuant to the approval and implementation of the Resolution Plan, the Company is well positioned to leverage its established brand value, project portfolio and extensive experience in the real estate sector. The management is committed to reviving ongoing projects, strengthening governance standards and restoring operational and financial stability.

While challenges relating to market conditions, regulatory approvals and financing environment continue to persist, the management remains optimistic that the implementation of the approved Resolution Plan will provide a strong foundation for future growth.

Risks and Concerns

The successful implementation of the approved Resolution Plan and restoration of normal business operations remain one of the key focus areas for the Company. The management continues to monitor various internal and external risks including market conditions, regulatory environment, liquidity management, project execution and macroeconomic developments.

In a recent analysis, we find that financial conditions are indeed an important driver of commercial real estate prices, and they help to explain the divergent performance of the sector across regions during the pandemic.

In general, economies with easier financial conditions (that is, lower real interest rates and other market conditions that make it easier to obtain financing) saw a smaller decline in commercial property prices during the pandemic and a faster recovery. Commercial property prices have also been higher in countries which implemented relatively less stringent public containment measures to control the spread of the virus, rolled out larger fiscal support packages, and have a higher vaccination rate.

A sharp tightening in financial conditions could thus put the commercial real estate sector under renewed pressure, especially in regions where economic growth prospects are weak and if stringent containment measures need to be put in place to curb new waves of infections.

Our analysis also suggests that trends catalyzed by the pandemic, such as working from home and e-commerce, have an impact on commercial real estate prices.

Developments

During the Financial Year under review, the Company continued to focus on preservation of value of its assets and maintaining continuity of its business operations under the framework of the Corporate Insolvency Resolution Process ("CIRP").

Subsequent to the approval of the Resolution Plan by the Honble National Company Law Tribunal, Hyderabad Bench, Court-II, vide its Order dated 26th March, 2025, and implementation thereof, the Company has entered into a new phase of revival and restructuring.

The Company is presently focusing on strengthening its operational capabilities, improving execution efficiencies, enhancing cost competitiveness and rebuilding stakeholder confidence. The management is also evaluating opportunities for revival and completion of existing projects while exploring new avenues for sustainable growth.

The key aspects of the business philosophy of the Company continue to be quality construction, timely execution, customer satisfaction and long-term value creation.

Segment-Wise Performance

The Company has two separate business segments - Real Estate and Construction Contracts. These are reportable segments in accordance with the IND AS 108 issued by the Companies (Indian Accounting Standards), Rules, 2015. The Segment wise results are given at Note No.37 to the financial statements.

Strengths and Opportunities

• Wide range of expertise spanning over 37 years in the construction sector, professional and competent senior management team.

• Well established brand recognition and goodwill.

• Diversified product mix ranging across residential, commercial and retail and Hospitality space.

• Strategically located projects with high selling potential. Identifying customer requirements and developing quality products.

• The Companys brand image has further improved with a recall value owing to its presence for a longer period and its commitment to quality and timely completion of projects.

• The experience and expertise gained in its field of activities have enabled the company to fast identify and create opportunities for new businesses.

Weaknesses and Threats

• Changes in government policies and regulatory framework.

• Delays in statutory approvals and clearances.

• Volatility in interest rates and financing conditions.

• Cyclical nature of the real estate industry.

• Successful implementation of the approved Resolution Plan and restoration of normal business operations remain critical to the Companys future growth strategy.

Internal Control Systems

During the period under review, the affairs of the Company were administered in accordance with the framework prescribed under the Insolvency and Bankruptcy Code, 2016 and thereafter pursuant to implementation of the approved Resolution Plan. The management continues to strengthen its internal control framework and governance mechanisms to support the future growth and operational requirements of the Company.

Financial Performance & Operational Review

During the Financial Year under review, the affairs of the Company continued to be managed in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016. The primary focus remained on preserving the value of the assets of the Company and facilitating the successful completion of the Corporate Insolvency Resolution Process.

Subsequent to the approval of the Resolution Plan by the Honble National Company Law Tribunal, Hyderabad Bench, Court-II, the Company has commenced implementation of the approved Resolution Plan and is taking necessary steps towards operational revival and strengthening of its financial position.

The financial performance of the Company for the Financial Year 2024-25 is summarized below:

Human Resources and Industrial Relations

The Companys Human Resource philosophy is to establish, build and retain a strong performance and competency driven culture with greater sense of accountability and responsibility. The Company has been focused to create an environment that assists the employees to enhance their sense of pride in what they are doing thereby contributing to better productivity. The Company through its effective HR policies and systems has always encouraged its workers to innovate and apply new ideas to achieve quantum leaps in both size and scale of operations. The company has focused on employee lifecycle for good human resource management and feels proud of the commitment, competence and dedication shown by its employees in all areas of business.

The Company recognises that its employees are one of its most valuable assets and remains committed to fostering a culture of integrity, professionalism and accountability. During the year under review, industrial relations remained cordial and harmonious.

Following the implementation of the approved Resolution Plan, the Company is also in the process of strengthening its organisational structure to support its future business objectives.

Corporate Social Responsibility (CSR)

Your Company is committed to conduct business in an accountable manner that creates a sustained positive implication in society and it endeavours to make a positive contribution towards social cause. Your Company, in association with the Vasavi Foundation for Empowerment, has made several contributions for supporting, imparting training to persons who have an excellent academic record and limited financial means in the previous years. However, due to inadequate profits/losses in the previous 3 years the provisions of Section 135 of the Companies Act, 2013 ceased to apply to the Company. Hence, the Company did not contribute towards CSR activities for the Financial Year 2023-24.

Cautionary Statement

Certain statements in the MDA concerning future prospects may be forward-looking statements, which involve a number of underlying identified / non-dentified risks, and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macro-environment, global pandemic like COVID-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain statements in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only as of the date on which it was made.

IMPLEMENTATION OF RESOLUTION PLAN

Pursuant to the approval of the Resolution Plan by the Honble National Company Law Tribunal, Hyderabad Bench, Court-II, vide its Order dated 26th March, 2025, the Company has commenced implementation of the approved Resolution Plan. The management remains focused on strengthening governance standards, restoring operational stability, improving financial discipline and maximizing stakeholder value through the effective implementation of the Resolution Plan.

The Company believes that the approved Resolution Plan provides a strong platform for business revival and sustainable long-term growth.