Meghna Infracon Infrastructure Ltd Management Discussions

Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. The residential real estate market in India had astounding progress in 2024, setting new sales records year on year, further demonstrating the industrys prominence as one of Indias fastest growing industries. After being affected by COVID, Tier 2 and Tier 3 cities have arisen as fresh major real estate trends, and the real estate market has set unprecedented benchmarks which continued its growth momentum amid the global slowdown. The post-pandemic picture for real estate sector is a paradigm shift from before. The pandemic has reinstated the importance of home ownership and the attitude of customers towards residential properties has seen a substantial shift. Preference for larger sized apartments, inclination towards reputed developers and a rising demand for townships projects are just some of the emerging trends. According to the Economic Times Housing Finance Summit, about three houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be 10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the countrys urban population.

Your Company has set up adequate infrastructure along with a team of professionals for carrying on the business of the company efficiently.

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Companys well accepted brand, contemporary architecture and well designed projects in strategic locations make it a preferred choice for customers. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels. Mumbai, being the largest real estate market in the country is set for a major boom, which will further add to the overall surge. For close to 5 years, Mumbai has resembled a gigantic construction site. A new coastal road, metro rail and a trans harbour link are among the many infrastructure projects that are meant to transform Indias commercial capital into a modern and efficient city. As these projects complete, new micro markets will open up in and around Mumbai, as commuting would become easier. That will boost real estate development further.

Threats

Real estate sector is a highly regulated sector and any unfavorable changes in government policies and the regulatory environment can adversely impact the performance of the sector. There are substantial procedural delays with regards to land acquisition, land use, project launches and construction approvals. Retrospective policy changes and regulatory bottlenecks may impact profitability and affect the attractiveness of the sector and companies operating within the sector. While the management of your Company is confident of creating and exploiting the opportunities, it also finds the following challenges: Unanticipated delays in project approvals; Availability of accomplished and trained labour force; Increased cost of manpower; Rising cost of construction lead by increase in commodity prices; and Over regulated environment

The residential real estate market in India had astounding progress in 2024, setting new sales records demonstrating the industrys prominence as one of Indias fastest growing industries. Your Company managed to achieve reasonable volume of sales from its ongoing projects and was able to add redevelopment projects to its portfolio during the year and has some in pipeline. Inter-alia the ongoing projects "Ashraya Heights",is successfully completed projects of the Company. Financially, we achieved solid performance, with growth in both revenues and profitability. We maintained a strong balance sheet, enabling us to pursue new opportunities while continuing to reward shareholder confidence through consistent returns.During the year company has acquired three more residential projects in prime location of Mumbai.

The Company continues to explore the possibilities of expansion in its present activities and will also make the necessary investments when attractive opportunities arise. Your Company is well placed to seize the long-term opportunity in real estate market in India.

The performance of your Company may be affected by the sales and rental realizations of its projects. These prices are driven by prevailing market conditions, the nature and location of the projects and other factors such as brand, reputation and the design of the projects. Your Company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenario.

As a part of the effort to evaluate the effectiveness of the internal control systems, your Companys internal audit system reviews all the control measures on a periodic basis and recommends improvements, wherever appropriate. The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. These systems and procedures provide reasonable assurance of maintenance of proper accounting records, reliability of financial information, protection of resources and safeguarding of assets against unauthorized use. The management regularly reviews the internal control systems and procedures.

(j) Human Resource Development

The human capital today is one of the most decisive factors in the success of a company and thus we strive for excellence in the entire employee life cycle. Your Company continuously recruits skilled professionals from various streams and undertake several initiatives to retain the talent pool. Your Company also places emphasis on development and enhancement of skills and capabilities of employees to prepare them for future challenges. As in the past, the company enjoyed cordial relations with the employees at all levels. The Company focuses on improved Employee

Engagement through several enterprise level initiatives. The Rewards and Recognition Programs here appreciate outstanding performers for their professionalism, dedication and outstanding contributions.

Ratios where there has been significant change (i.e. change of 25% or more as compared to the immediately previous financial year): All the figures mentioned hereunder are Rs. in Lakhs.

Inventory turnover is computed as cost of goods sold divided by average inventory. The ratio moves from 0.16 in FY 23-24 to 0.10 in FY 24-25 indicates sale of inventory.

Sales divided by Net Working Capital. The Ratio changes from 1.57 in FY 24-25 to 0.25 in FY 23-24, mainly on account of revenue and its corresponding impact in net working capital.

Debt equity ratio is computed as long-term Debts divided by shareholders fund.

Debt Services Coverage Ratio:

Earnings available for debt services divided by total interest and principal repayment.

Earnings available for debt services divided by total interest and principal repayment.

Net profit before tax divided by Sales. This ratio is changes from (0.71) in FY 2024-25 to 0.25 in the FY 2023-24 which indicates significantly increase in net profits of the company.

EBIT / Capital Employed. The ratio increase from (0.46) in FY 2024-25 to 0.25 in FY 2023-24 indicating high efficiency of the company.