Mega Nirman & Industries Ltd Management Discussions.

REAL ESTATE AS DEVELOPERS:

Your Board of Directors are in the process of commencing project "under the housing for all" which are to be located in West Bengal, Kolkata and Neemrana by the end of 2017 and early 2018. The reason is that we have many approvals and subsidies that have to be applied and received before we commence the said schemes.

More so the current market situation and condition of the real estate has been very slow, and the movement and liquidity issues are a major crunch, hence MNIL had to also slowdown on the real estate property development.

The management has the vision, the required experience and is in the process of generating the required resources to promote the real estate business aggressively. To improve the financial resources more efforts are being put to create resources, for which we are going to provide collaterals and may even pledge our shares as second collateral.

The management is working on multiple avenues to generate funds, the management is processing and exploring alternative model and are sure to achieve the desired objectives. We are very positive that this new blood and the enthusiasm in the management team, there is hope that the company will experience a complete turnaround, in this new scope of business.

FUTURE PROSPECTS:

The Real Estate and construction sector plays a crucial role in overall development of Indias core infrastructure. India is the second largest populated country in the world which means that there is huge potential in the real estate sector in India. Overall, the long-term view for the Indian real estate sector is positive since its fundamental demand drivers - increasing urbanization, favorable demographics, growth of the services sector and rising incomes are still intact. The long term demand projection for real estate is certainly healthy given the housing shortage. In the short term, the demand for optimally priced and quality real estate is expected to grow.

MNIL is fully focused in providing Affordable housing for lower, medium and premium houses, with a measureable outlook & maximum penetration in the segment. We also have plans to primarily focus on the redevelopment sector, under the slum rehabilitation schemes especially in Kolkata.

Despite challenging environment, the management of your company is continuing its efforts to bring forth favorable results and hence looks in the intricacies of designing, developing and construction of the project with an eye to perfection.

OPPORTUNITIES AND THREATS:

Opportunities:

There are good opportunities available in the real estate market in India since prices of property under the affordable housing has increased and also because the government is subsidizing the houses pan India, under their housing for all model.

The Government has been pragmatic and supportive in its approach in reducing interest rate on housing and providing finance through bank and various government bodies at much lesser rate. We are hopeful that the demand for affordable is going to be occupying the industry for the next few years.

Our new management has committed to turnaround the company and make it profitable at an early date by their sincere efforts, business acumen, experience and resources on emerging opportunities in the current scenario of the real estate industry.

Threats:

The slowdown of consumer demands and reduction of real estate prices, the credit squeeze by the Reserve Bank of India to Real Estate Development Company is likely to slow down the momentum of growth on capital gearing of the company.

FINANCIAL PERFORMANCE OVERVIEW

1. Balance sheet analysis:

A comparative table showing synopsis of FY 2017 vs. FY 2016 is provided below:

Particulars 2017 2016 Increase / (Decrease) % Increase / (Decrease)
EQUITY AND LIABILITIES
Shareholders Fund
Share capital 33,475,000.00 33,475,000.00 - -
Reserves and surplus 9,209,249.92 8,988,712.15 220537.77 2.4535
Net worth 42,684,249.92 42,463,712.15 220,537.77 0.00
Non- current liabilities - 209,268.00 (209,268.00) (100)
Current liabilities 5,64,305.03 4,96,230 68075.03 1.37
Total 43248554.95 42470767.13 79344.8 0.1868
ASSETS
Non-current assets 1,54,68,395.29 1,59,82,913.67 (514518.38) (3.2192)
Current assets 2,77,80,159.66 2,71,86,296.48 593863.18 2.18
Total 43248554.95 43169210.15 79344.8 0.18

2. Profit and Loss analysis:

A comparative table showing synopsis of FY 2017 vs. FY 2016 is provided below:

Particulars Year ended March 31, 2017 Year ended March 31, 2016 Increase / (Decrease)
Income 36,10,208.50 24,01,296.00 1208912.5
Total Expenditure (30,43,197.32) (1,96,9350.68) 1073846.64
Net Profit/(Loss) before Tax & Depreciation 5,67,011.18 4,31,945.32 135065.86
Depreciation (149,505.00) (2,17,684.00) (68179)
Net Profit/(Loss) after Depreciation before Tax 4,17,506.18 2,14,261.32 203244.86
Provision for Income Tax-Current (1,37,095.03) (1,40,919.00) (3823.97)
Provision for Deferred Tax (59,873.38) 22,944 (82817.38)
Profit for the period 2,20,537.77 96,286.32

SEGMENT WISE PERFORMANCE:

The Company has mainly one reportable business segment; hence no further disclosure is required under Accounting Standard (AS) 17 on segment reporting.

OUTLOOK, RISKS AND CONCERNS:

The management has positive outlook of the Company. Our Company is planning to explore new avenues of business including participation in joint venture with others having similar real estate development projects, we are also exploring and arranging funds by infusing further capital or long-term borrowings. Barring unforeseen circumstances, management is confident that performance of the Company would improve in the years to follow.

INTERNAL CONTROL SYSTEMS:

The Company has adequate Internal Control systems, which provide, inter- alia, reasonable assurance of recording the transactions of its operations in all material respects and providing protection against misuse or loss of Company assets.

HUMAN RESOURCES:

The management shall create policy of Human Resources to achieve biggest advantage to the Company for turnaround. The Company plans with prudent knowledge management leading to enhanced skills and capabilities and market ability to promote real estate business in the current time. MNIL shall evaluate performance management system, which reinforces its work ethics and results in profitability to enhance the shareholders value.

CAUTIONARY STATEMENT:

The statements made in this report describe MNILs objectives, expectations and projections that may be forward looking statements. The actual results might differ materially from those expressed or implied depending on the economic conditions, government policies and other incidental factors, which are beyond the control of the Companies Management.