Medi-Caps Limited is a flagship Company of central Indias
renowned Medi-Caps group. After serving to the humanity for more than four decades through
its quality pharma products, Company entered into the real estate business. The Company
started its first project "MEDI-CAPS BUSINESS PARK" with focus on city centric
developments well spread-out across central India region. In upcoming era Companys
focus will be on Strategic Land acquisition and developing the premium residential and
commercial properties. The strength of the Company has been to follow a debt free
financial structure to ensure efficient Return on Equity. INDUSTRY STRUCTURE AND
DEVELOPMENTS
The effect of the pandemic was huge on the real estate sector,
accordingly after the pandemic; real estate sector witnessed a huge pickup across the
major property hubs of the metros, the tier one, and tier two cities. Housing finance
companies, banks which are lending to retail loans have increased their amount of lending
by also about 12% to 15% on an average; this itself indicates that there is a increase in
potential buyer in this sector. As research says the system will change so 2023-2024 is
going to see a boom year for real estate as concerned a 15% growth and finance companies
are very interested to lend more to retail loans because the NPAs in retail loans have
fallen to less than 1.5% of all the banks/housing finance institutions which is the lowest
NPA in any sector whatsoever of lending that takes place in the financing sector. So all
in all looks like a positive boom in upcoming years. The Indian real estate market is one
of the most quickly evolving and fast-growing sectors in the countrys economy. With
increasing urbanization and growing incomes, the real estate sector in India has bloomed
over the recent past and become a significant contributor to the economy. With the
increasing demand for homes, prominent builders have made slight adjustments to pricing,
leading to expectations of future house price predictions on an upward trajectory. As we
have already seen, the property market in India is poised to grow immensely in 2023 as
well as in the years to come. According to reports, in the period from 2023 to 2028, the
sector will register a compound annual growth rate of 9.2%. Since work-from-home and
hybrid models have already gained popularity, there is a growing tendency among customers
to move away from the city and opt for larger homes in the suburbs. Yet another trend is
the integration of living spaces and office spaces. Developers now offer dedicated office
spaces in the clubhouse or as a separate space. In addition to this, they also offer
provisions for home offices in individual units.
OPPORTUNITIES
Supportive Government policies and initiatives have opened the doors
for immense opportunities in the real estate sector in India. Some of the major Government
initiatives to encourage development in the real estate sector are as follows: ? The Real
Estate Regulatory Authority introduced the Real Estate (Regulation and Development) Act
(RERA), which came into existence in March 2016. Intended to provide transparency and
accountability in the sector, RERA protects the interest of all the stakeholders involved
and ensures speedy resolution in case of disputes. Naturally, buyers are more confident
investing their money in the market. ? An amendment to the existing Benami Transactions
Act gave teeth to the act, making it more stringent. The act further enhanced Indias
status as an investment destination by instilling professionalism, accountability, and
greater transparency in transactions. ? The Union Budget 2022-23 emphasized the need to
develop Mega-Cities as well as a greater emphasis on Tier 2 and Tier 3 cities. These
cities are expected to become economic highfliers in the near future. In 25 years, about
half of the worlds population will most likely be living in cities. To prepare for
this, orderly urban growth is essential. The government seeks to assist and collaborate
with the states in developing urban capacity. ? The Finance Minister anticipates 9.2
percent GDP growth in the fiscal year 2022-23. With a planned capital investment of Rs 7.5
lakh crore, these indications might increase market cash liquidity, directly influencing
the real estate industry.
THREATS
Though property market in India is one of the most booming sectors, it
is not devoid of challenges and risks. The major threats borne by the Companies in the
real estate sector are: ? One of the biggest challenges faced by the sector is the high
dependency on workforce. As per reports, in 2023, there was a 15-25% shortage of workforce
in the construction sector. ? Increased price of construction materials. ? With banks
setting stringent norms for real estate lending, it is difficult for developers to finance
their projects. Yet another concern is liquidity, if the asset is not being sold within
the set timeframe, it will result in loss for the developer. ? With growing awareness
about the need for sustainability practices to protect the environment, property
developers are finding ways to be compliant, resulting in increased cost, and time.
SEGMENT WISE OR PRODUCT-WISE PERFORMANCE
On standalone basis the Company will perform in one segment only; hence
no information is reportable under this head. However on Consolidated basis Company have
two reportable segments i.e. real estate in parent company and pharma division in wholly
owned subsidiary. Further segment performance is given in note no. 26 of consolidated
financial statement.
OUTLOOK
Leading experts in the Indian property market is viewing 2023-24 as a
booming year for the industry. According to them, in the next nine months, there will be
10-15% hike in sales collectively in residential, commercial, and retail segments. With
the demand for housing on the rise, its a sure bet to invest in residential real
estate. Likewise, both commercial and retail segments are rapidly expanding, thanks to the
immense growth in the respective sectors. Obviously, for investors, it is the right time
to add real estate in their portfolio.
Ever since Indias property market was thrown open for foreign
direct investment, the sector has been witnessing a significant inflow of investments. Of
late, it has been touching new heights. For instance, in the period from 2017 to 2022
there has been a three-fold increase in foreign institutional inflows, attracting USD 26.6
billion. This amounts to 81% of the total investments in the sector during the period
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 Company has implemented
robust risk management policies that set-out the tolerance for risk and your
Companys general risk management.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
In line with the size, scope, and complexity of its operations, the
Company has a strong internal financial control system. It has put in place sufficient
controls, processes, and policies to ensure the orderly and efficient conduct including
adherence to policies, asset protection, fraud detection and prevention, accuracy and
completeness of accounting records. Internal controls over financial reporting have been
created using the proper frameworks, ensuring the accuracy of the Companys financial
statements and lowering the risk of error. Regular internal audits and checks ensure that
responsibilities are discharged effectively; that gives business valuable insights to act
decisively quickly These internal control systems ensure compliance with all applicable
laws and regulations. The Company has clearly defined policies, and organizational
structure for its business functions to ensure a smooth conduct of its business. 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.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
As informed earlier the Company is currently operating under real
estate sector. Companys first project "MEDI-CAPS BUSINESS PARK" is now
ready to be delivered and getting huge response in the market; and management hopes that
this will be a great step which will establish the Company as a key player of real estate
sector. Company is expecting revenue from this dream project in F.Y. 2023-24 accordingly
In F.Y. 2022-23 Company has derived a profit from continuing operations of Rs. 25.72 lakhs
only.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES
Our personnel, in our opinion, are our most valuable assets and are
essential to attaining both our vision and growth goals. Diversity, inclusivity, equal
opportunity, non discrimination, meritocracy, and freedom of expression are the
cornerstones of our workplace culture. In order to provide the best possible working
conditions for our employees, we regularly review our human resources practices.
DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS:
| Key Ratio |
2021-22 |
2022-23 |
Change |
Variance (in %) |
Reason for more than 25% variance. |
| Interest Coverage Ratio |
- |
- |
- |
- |
No interest expenses were incurred during the
year. |
| Current Ratio |
197.73 |
194.66 |
-3.07 |
-1.55 % |
N.A. |
| Debt Equity Ratio |
- |
- |
- |
- |
N.A. |
| Net Profit Margin (%) |
- |
- |
- |
- |
N.A. |
| Return on Net worth (any change) |
-0.0012 |
0.0024 |
0.0036 |
292.86% |
During the year the company earned a profit
which resulted into better ROE. |
| Operating Profit Margin (%) |
- |
- |
- |
- |
N.A. |
| Debtors turnover Ratio |
- |
- |
- |
- |
N.A. |
| Inventory Turnover Ratio |
- |
- |
- |
- |
N.A. |
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.
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