National Standard (India) Ltd Management Discussions

Cautionary Statement

Statements in this report on Management Discussion and Analysis may be forward looking statements within the meaning of applicable laws or regulations. These statements are based on certain assumptions and reasonable expectation of future events. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax regimes, economic developments within India and other incidental factors. The Company assumes no responsibility in respect of the forward-looking statements herein, which may undergo changes in future on the basis of subsequent development.

(a) Industry structure and developments: Indian Economic Overview

While global economy managed to fend off hard lending, India stood out with GDP growth significantly surpassing expectations while retaining the tag of fastest growing major economy. Indias 8.2% GDP growth rate in FY24 (Source: RBI) was underpinned by robust services and manufacturing sectors. Despite the remarkable GDP growth, growth in rural economy remained elusive as inflation affected the rural populace the most. Hopes of revival in the rural growth is pinned on above average monsoon forecast by India Meteorological Department. Indias macro stability as reflected in comfortable current account balances and progress towards bringing fiscal deficit to pre-covid level have helped in attracting strong capital flows.

RBI estimates Indias GDP growth rate for FY25 at 7.2% following a stellar performance in FY24. World Bank revised its CY24 GDP estimate for India to 6.6% from 6.3% earlier, driven by robust performance in first quarter of the year. Lower than FY24 GDP estimates is attributable to the expectation that government would continue on its fiscal glide path and curtail spending on infrastructure creation. However, expectation of continuing political leadership providing policy continuity, government support for manufacturing industry through PLI scheme, comfortable corporate balance sheets and rising capacity utilizations across industries is expected to spur private capex. FY24 was a watershed moment for Indias manufacturing industry as three semiconductor facilities broke ground during the year. This will further help in attracting investment in affiliated industry.

However, Indian economy still faces a major challenge emanating from external environment as India is reliant on its trade partners for its energy and commodity needs. Geopolitics is constantly in a flux which pose risks to commodity and energy prices and could hurt Indias current account balance if these prices go northward and sustain there.

Indian real estate industry overview

Indian real estate has seen diverging trends as compared to global peers. Higher interest rates dented housing sales, layoffs and weak consumer sentiment impacted office and retail space leasing in advanced economies. India on other hand witnessed surge in housing demand, accompanied by recovery in office leasing despite global slowdown in IT/ITes spending. Retail real estate continues to perform well driven by upbeat consumer spending.

As India transitions from a low-income to a mid income country, the real estate sector in India is poised to play a significant role in driving economic growth and be significant beneficiary of the growing economy, as it has other economies that have undergone similar transformations. The real estate sectors strong linkages with various industries such as steel, cement, and other construction materials will create numerous employment opportunities, thereby stimulating demand for housing. Healthy balance sheet of large developers will allow India Real Estate sector to grow in sustainable manner.

(b) Opportunities

Affordable and mid-income segment of the housing market has lot of scope over the longer term. As India moves from a low-income economy to a mid-income economy, this segment of the market will grow faster. Residential real estate is consolidating in favour of organised and branded developers at an accelerated pace.

Though the industry is in the early stages of a multi-year upcycle, challenges may arise like cost increase due to geopolitical tensions, increase in interest rates, constant regulatory changes, recession in economies etc., which, if they fructify, will impact this upward trajectory. Further, the lending to real estate developers by the NBFCs and HFCs was already limited after the crisis in real estate sector and the pandemic has further deteriorated the liquidity situation for many developers who had to resort to alternative funding in absence of long-term loans from banks.

However, the Company does not have any construction projects as on the date of this report and does not plan to undertake a new project.

Segment–wise or product-wise performance

The Company operates in single segment of real estate development.

(c) Outlook

The real estate sector is one of the most globally recognized sectors. In India, real estate is the second largest employer after agriculture and is slated to grow substantially over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial.

The growth of this sector is well complemented by the growth of 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. It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term.

(d) Risks and concerns

The real estate sector is heavily dependent on manpower. There is a need for development of technologically less labour-intensive alternative methods of construction. Further, the increase in land prices, inputs costs are also risks to the industry. Higher interest cost would dent margins and may have a direct effect on the customers cash flow as well.

Increase in end product prices coupled with tight liquidity may impact demand. The various taxes and levies would add to the costs and this is likely to squeeze margins as end product prices may not go up correspondingly.

The company has a Risk Management Policy, which is being periodically reviewed.

(e) Internal control systems and their adequacy.

The internal control commensurate with the activities is supplemented by continuous review by the management. The internal control system is designed to ensure that every aspect of the companys activity is properly monitored.

(f) Discussion on financial performance with respect to operational performance.

The details of financial performance and operation performance are given in the directors report.

(g) Material developments in Human Resources / Industrial Relations front, including number of people employed.

The Company does not have any employee. The KMPs are deputed by the holding company.

(h) Details of Significant Changes in key financial ratios:

Significant Changes in Key Financial Ratios:	2024	2023	% Change	Reason for change
(i) Debtors Turnover:	19.43	1.97	886%	Increase in Trade Receivables Turnover Ratio is mainly due to increase in revenue and decrease in average trade receivable compared to last year.
(ii) Inventory Turnover:	6.89	2.76	150%	Increase in Inventory Turnover ratio is due to increase in sales compared to last year.
(iii) Interest Coverage Ratio	N.A	N.A.	N.A	N.A.
(iv) Current Ratio:	30.89	27.39	13%	Improvement in Current ratio is due to reductions in Current Liabilities.
(v) Debt equity Ratio:	N.A	N.A.	N.A.	N.A.
(vi) Operating Profit Margin (%)	0.53	0.43	23%	Change in Operating profit Margin is due to increase in revenue and operating profit as compared to previous year.
(vii) Net Profit Margin (%)	0.69	0.48	45%	Increase in Net Profit Ratio is due to increase in profit after tax compared to last year.

(a) Disclosure of Accounting Treatment:

In preparation of these financial statements, the Company has followed the prescribed Indian Accounting Standards and no different treatment had been followed.