Medi Caps Ltd Management Discussions.



Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. The real estate market is perhaps, one of the fastest growing in the world owing to constant demand for better spaces. As the world continues to grow and change with times, so do their requirements in terms of housing, businesses, and more. They seek the best for themselves, and the ability to show it through the place where they work, reside, or just enjoy.

The impact of Coronavirus on the Indian real estate sector was stifling to the point that it brought property transactions to a near-halt last year when the nation went into a complete lockdown between March and June 2020. Since then, the market has taken several strides towards recovery, and just when it seemed the revival was not far, the country has been struck by yet another wave of the virus, this time, far more fatal.


The Real estate sector in India commands high importance in the Governments agenda due to its position as the second-largest employer after agriculture. This is reflected in the series of reforms that the Government has rolled out for the sector over the last few years to improve formalization, increase customer-centricity, reduce regulatory complexities, minimize compliance costs and taxation, and enhance access to capital.

The corona scare brought Indias burgeoning real estate sector to a grinding halt in 2020. The harsh outcomes of the countrywide lockdown including migration of labourers surfaced and covid-induced distress engulfed the realty segment. The unprecedented turnaround of events hit the segment hard. Despite the destructive impact of the Pandemic, Indian Real estate sector is projected to cross US$ 1 trillion by 2030 from US$ 120 billion in 2017 in market size and claim a share of 13% in the countrys GDP by 2025. Indian Real estate sector will witness 19.5% CAGR from 2017 to 2028 in terms of size.


The Indian real estate sector has been in a consolidation phase from the past few years and picked up pace resulting from several reforms and disruptions in the sector. Despite the short-term dislocation caused by COVID, the Company believes that the long-term trends are intact, and will lead to significant opportunities in the Real Estate Sector. Emergence of nuclear families, rapid urbanisation, rising household income, and low home mortgage rates are likely to remain the key drivers for growth in all spheres of real estate, including residential & commercial. By 2025, Real Estate will contribute 13 percent to countrys GDP.


The external threats borne by the Companies in real Estate Sector which are out of the control are as follows:

• Capital Market Risk

• Technology and workflow

• Infrastructure

• Land availability


The real estate market is the second-highest employment generator in the country after agriculture. The sector is deeply interlinked to as many as 220 allied sectors. The sector accounts for nearly 6-7 per cent of the economy and is set to account for nearly 13 per cent by 2025 if all reform measures announced are executed well. Atmanirbhar Bharat and the increase in FDI are indicative of a strong recovery of commercial real estate towards the second half of the year. The improvement in the economic scenario, boosted by positive reform initiatives, will back the growth,


The Company has permanently closed its manufacturing unit and entered into real estate sector. The Company will perform in one segment only; hence no information is reportable under this head.


With a vision to collaborate, connect, express and contribute, your Company has an agile corporate office structure, where the focus is towards adopting the best practices and being more environmentally conscious. Efforts have been taken to leverage technology to the maximum to achieve the vision. Your Company encourages an open working culture and the office is designed to further aid inter-department coordination and collaboration. The Company always focuses on the nurture and growth of its single most significant asset, the human capital, the care for its employees begins with the creation of an encouraging and motivating work environment that creates a feeling of belongingness and ownership. An inspired and committed workforce is essential for delivering a superlative customer experience and achieving the Companys business goals. It has, therefore put in place the necessary Human Resource management practices to achieve this people goal. The Companys policy is to inspire workplace with an agile and high culture to attract, develop the best talent Being a 37 year old Group we have built on the strong values of trust integrity and respect for others. Since the Company took strategic step to permanently discontinue the production/manufacturing facilities of the Company, the company has laid off the employees for downsizing the organization and as there was insufficient work for employees to do and simultaneously the position being abolished. Medicaps has always focused on growth & satisfaction of all in every aspect. We look forward to make Medicaps a truly inspiring workplace in times to come.


Your Company believes that its Members are among its most important stakeholders. Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development. The Board strongly believes that the current market scenario would offer attractive business development opportunities in the real estate sector and re-investing the capital in such opportunities would create more wealth and value for the shareholders in long term.


Your Company enjoyed during the year under review cordial relationship at all levels.


Though it is not possible to completely eliminate various risks associated with the business of the Company, efforts are made to minimize the impact of such risks on the operations of the Company. For this, the Company has established a well-defined process of risk management which includes identification, analysis and assessment of various risks, measurement of probable impact of such risks, formulation of the risk mitigation strategies and implementation of the same so as to minimize the impact of such risks on the operations of the Company. An enterprise wide risk evaluation and validation process is carried out regularly and the review of the risk management policy is also carried out at regular intervals by the Risk Management Committee and the Board of Directors and Financial risk is reviewed by our Audit Committee, so as to ensure that the new risks which might have arisen or the impact of the existing risks which might have increased are identified and a proper strategy is put in place for mitigating such risks.


The Company has put in place various internal controls for different activities so as to minimize the impact of various risks. Also, as mandated by the Companies Act, 2013, the Company has implemented the Internal Financial Control (IFC) framework to ensure proper internal controls over financial reporting. Apart from this, a well-defined system of internal audit is in place so as to independently review and strengthen these internal controls. The Audit Committee of the Company regularly reviews the reports of the internal auditors and recommends actions for further improvement of the internal controls.

The Companys Internal Control Systems are attuned to the dynamics, volume, and complexity of all the business transactions and resources involved in its complete operations. They are designed to ensure accurate and reliable financial information with proper records and safety of the Companys assets, along with highlighting financial risks, if any. The Company has put in place processes and controls to ensure compliance with all the laws and regulations at the corporate and project levels. Statutory and Internal Audit by reputed CA firms are also done regularly as per mandated timelines and procedures, and findings are reported to the board and regulators.


The Company had permanently discontinued its manufacturing/production activities w.e.f 21st Nov., 2019 and entered into Real Estate Sector. The company had executed an agreement with the M/s Tirupati Reality & Developers on 12111 October, 2020 for Project named Medicaps Business Park. The company will build a commercial complex in the name and style of Medicaps Business Park on the surplus land available admeasuring about 87,479 Sq. Ft and the construction of about 1,13,569 Sq. Ft . However due to pandemic outbreak some of the necessary approvals are pending from various Govt, departments due to which the real estate project is delayed. Hence the information under this head cannot be reported in entirety.

Details of Significant Changes in Key Financial Ratios:

Key Ratio 2019-20 2020-21 Change Variance (in %) Reason for more than 25% Variance
Interest Coverage Ratio -966.23 -36.54 929.69 96.22 Recovered losses incurred in the P.V.
Current Ratio 12.04 13.78 1.74 14.43 Liabilities decreased
Debt Equity Ratio 0.03 0.03 0.00 -4.25 Company repaid entire debt
Net profit Margin -0.70 1.52 2.22 315.74 Recovered losses incurred in the P.V. due to discontinuation of Manufacturing Activities
Return on Networth (Any change) -12.80 0.02 12.82 100.14 Recovered losses incurred in the P.V. due to discontinuation of Manufacturing Activities
Operating Profit Margin -0.76 -0.15 0.61 80.03 Closure of operations
Debtors turnover Ratio 4.09 0.29 -3.81 -92.98 No Receivables
Inventory Turnover Ratio 1.45 0.00 -1.45 -100.00 Average Inventory decreased in the company

* On 21" Nov., 2019 the company has permanently discontinued the manufacturing/production activities of empty hard gelatin capsule shell in die company. The ratios have been calculated accordingly and hence there is significant upward/downward increase/decrease in the ratios of the company.

13. Cautionary Statement

Some of the Statements in Management discussion and Analysis describing companys objective may be forward looking statement within the meaning of applicable Securities law and Regulations. Actual results may differ substantially or materially from those expressed or implied. Important factors that could influence companies operation include various global and domestic economic factors.