mpdl ltd share price Management discussions


Annexure-5

The Management of MPDL LIMITED is pleased to present its analysis report on its performance and future outlook.

1. INDUSTRY OVERVIEW

Industry Structure and Developments

The real estate sector plays a vital role in the Indian economy, contributing to approximately 6-8% of its GDP. This underscores the sectors significant role in driving economic growth and job creation, making it an essential component of the countrys overall development. The sector offers a wide range of opportunities, including the option of purchasing, as well as commercial leasing options like office space, mall space, warehouse, and industrial leasing. The commercial segment has experienced robust demand from private equity investors. Indias rapid urbanisation, with an expected 50% of the population living in cities by 2050, presents enormous potential for the sector, leading to surging demand for both residential and commercial real estate across various Indian cities. As a major employment generator and a critical contributor to the countrys economic growth, the Indian real estate sector has a promising future ahead. Retail demand across investment-grade malls, prominent high streets and standalone developments has grown consistently since 2020. The year 2022 reported take-up of nearly 4.7 msft, a Y-o-Y growth of 21%. Leasing activity was primarily driven by Bangalore and Delhi-NCR, with the two cities together accounting for a 60% share. During 2022, retail space take-up in Bangalore was led by primary leasing in newly completed malls. Primary leasing in new malls to remain the chief driver of retail space demand going forward as well. The resumption of economic activity in 2022 post pandemic relaxations led to the release of pent-up demand and a gradual acceleration of return-to-office (RTO) plans by occupiers, which in turn propelled leasing momentum. The office sector in India thus witnessed a remarkable recovery in 2022 from pandemic lows, even as the focus shifted from the pandemics retraction and vaccination coverage to new macroeconomic and geopolitical challenges. The leasing activity in 2022 was led by Bangalore, Delhi-NCR, Mumbai and Hyderabad, with a cumulative share of almost 75%.Hospitality firms boosted their expansion plan due to a strong recovery in demand.

OPPORTUNITIES AND THREATS

Opportunities

Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13 per cent to countrys GDP. Rapid urbanization in the country is pushing the growth of real estate. Indian real estate developers have shifted gears and accepted fresh challenges.

Securities and Exchange Board of India (SEBI) has also given its approval for the Real Estate Investment Trust (REIT) platform, which will allow all kind of investors to invest in the Indian real estate market. It would create an opportunity worth Rs. 1.25 trillion (US$ 19.65 billion) in the Indian market in the coming years.

Threats

Indian real estate sector accounts for 13 per cent of the countrys Gross Domestic Product and is one of the biggest and globally recognized sectors. The Indian real estate sector is still dependent on old building techniques and hence they are over-dependent on extensive human labour for construction activities. Whereas, high-quality building materials such as concrete and iron slabs are used in new construction techniques. India is touted to be the most populous country by the year 2050. More than 50 per cent of people are urban centers and Tier 1 cities. To accommodate the population, India would require more new cities and urban centers on a mass scale in order to provide the required resources to the inhabitants.

SEGMENT WISE REPORTING

During the year under review, Company has received the income interest from banks. Financial performance with respect to operational performance is as follows:-

The financial highlights are as under: -

(Rs. in lakhs)

Sales for the year 2023 434.78
Profit after tax 349.46
Paid up equity share capital as on 31st March,2023 741.25

OUTLOOK

The Global economy saw promising indications of resilence and vigour, even in the face of significant challenges arising from the Covid-19 pandemic and the Russia-Ukraine conflict. Despite the obstacles encountered, there are notable reasons to be optimistic, especially in developing countries, as we forge ahead. Despite high inflation, Indian economy achieved GDP Growth rate of 7.2 % in the FY 2022-23. The Indian economy is projected to grow by more than 6.7% in calendar year 2024 as per various institutional estimates, making it one of the fastest-growing economies.

RISKS AND CONCERNS

Through land regulations, land readjustment and land pooling policies, the Government should spare large shares of underutilized and vacant land parcels. By this, it will give some relief to the financially aggrieved developers and help the situation of the real estate sector improve. This calls for an urgent change or revision in the Land Acquisition Resettlement and Rehabilitation Act of 2013. There are a lot of impending projects in the Indian real estate market starting from public sector projects to private sector housing colonies. There is a delay happening in the completion of these projects and the reason for this is that the project does not get enough funding or there is a lack of technology to complete these projects on time. Another big challenge in the Indian real estate sector is the protracted approval process because project approvals in India take about days to years because there is no option of a single-window clearance and it often results in time and cost escalations.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control system, commensurate with the size of its operations. Adequate records and documents are maintained as required by laws. The Companys audit Committee reviewed the internal control system. All efforts are being made to make the internal control systems more effective.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Company is engaged in the business of Real Estate, hence the revenue is generated from sale of commercial area is Rs. 434.78 Lakhs and the other income form the interest received from loans or advances given to associates is Rs. 41.95 Lakhs. Th total Income of the Company has been at Rs. 476.73 Lakhs. The Company has made profit of Rs. 349.46 Lakhs.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The company recognizes the fact that manpower is the most vital resource for the real estate sector. The company ensures that its employees are provided the best working environment and compensated with attractive remunerations. Employees are encouraged to be innovative and involved to pursue their goals which are allied with the larger interest of the company. Since the operations of the company are not going on large scale presently, therefore, only Eleven (11) -employees are employed by the company as on March 31, 2023.

DETAILS OF SIGNIFICANT CHANGES (i.e. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING

During the financial year 2022-23, there are some significant changes in key financial ratios as compared to previous financial year. The Key financial ratios have been shown below:

KEY FINANCIAL RATIOS

F.Y 2022-23 F.Y 2021- 22 Change (%)

Reasons for Changes

Current Ratio 1.13 2.03 -44.41 Increase in Short Term Borrowing during the Current FY resulting increase in Current Liability, due to which Current ratio of the Company has fallen in comparison to PY.
Debt Equity Ratio 0.93 0.52 78.32 Due to increase in borrowing during the Current FY, Debt Equity Ratio of the Company has increased in comparison to PY which indicate high financial risk.
Debt Service coverage ration 1.13 -0.75 -251.07 Debt coverage ratio increases in comparison to the previous PY, due to positive PAT in CY.
Return of Equity Ratio 0.06 -0.02 -440.04 Company is having a positive return on equity due to increase in PAT
Inventory Turnover ratio 0.01 0.15 -92.22 Since Sales booked on % completion method hence % of variance Changes accordingly
Trade Receivable Turnover ratio 1.13 2.31 -51.34 Since Sales booked on % completion method hence % of variance Changes accordingly
Trade Payable Turnover ratio 0.34 1.21 -71.71 Less Purchases During the current year
Net Capital Turnover Ratio 0.50 0.20 149.92 Due to the decrease in Working Capital of the Company
Net Profit ratio 0.58 -0.17 -444.30 Increase in profit after tax
Return on capital employed 0.05 -0.02 -424.96 Increase in Earnings before Interest and Tax
Return on Investment 0.03 -0.01 -369.72 Increase in Earnings before Interest and Tax

2. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statement of the company is prepared as per the prescribed Indian Accounting Standards and reflects true & fair view of the business transactions and there is no division in following the treatment prescribed in any Indian Accounting Standard (Ind-AS) in the preparation of financial statements of the Company.

3. CAUTIONARY STATEMENT

Certain statements made in the management discussion and analysis report relating to the

Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities over which the Company does not have any direct control.

FOR AND ON BEHALF OF THE BOARD

MPDL LIMITED

Sd/-

Sd/-

Rajesh Paliwal

Santosh Kumar Jha

Chairperson of the Company

Whole Time Director

DIN: 03098155

DIN : 10052694

Date: 11.08.2023

Place: Gurugram