Nila Spaces Ltd Management Discussions

GLOBAL AND DOMESTIC ECONOMY:

In 2024, the global economy continued its fragile recovery, war situations is Middle East Countries, from the compounded crises of the past few years, including the COVID-19 pandemic, the Russia-Ukraine conflict, inflation shocks, and supply chain disruptions. According to the International Monetary Fund (IMF), global growth is estimated at 2.6% in 2024 and projected to improve slightly to 2.7% in 2025. Although recession risks have diminished in major economies, the global growth trajectory remains below the long-term average of 3.0%.

Advanced economies like the United States and the Eurozone are experiencing slowed but stable growth, while emerging markets and developing economies are grappling with financial conditions, debt overhangs, tighter and geopolitical tensions and especially uncertainties because of threat of heavy Reciprocal Tariff likely to be imposition by the present USA Government. Such likely imposition may invite slowdown in economies globally.

The United States is projected to grow at 1.4% in 2025, while the Eurozone is expected to grow at 1.2%. Chinas growth is projected to be 4.6% amid stimulus measures and a gradual recovery from property sector stress. Global inflation is on a downward path, falling from a peak of 8.7% in 2022 to 5.2% in 2024 and expected to decline further to 3.9% in 2025. However, core inflation remains sticky in several economies due to high wage growth and supply-side bottlenecks. Monetary policy remains tight globally, with major central banks keeping interest rates elevated to control inflation. Quantitative tightening (QT) is reducing liquidity in the system, impacting capital flows to emerging markets. The effects of prolonged high interest rates include elevated debt servicing costs, restrained investment appetite, and rising concerns about financial stability in vulnerable economies.

Geopolitical risks, especially in the Middle East due to Israel Gaza war and at Europe due to Ukraine Russia War, continue to pose threats to energy markets and global trade. Additionally, climate-related shocks are becoming more frequent, impacting food production and inflation, especially in low-income economies.

INDIAN ECONOMIC SCENARIO:

Fastest Growing Economy: India continues to be one of the fastest-growing major economies in the world, with

GDP growth expected at 6.4% in FY2025, driven by resilient domestic demand, robust capital expenditure by the government, and a stable macroeconomic environment. The Indian economy is benefiting recovery across sectors such as manufacturing, services, and construction. High-frequency indicators such as GST collections, UPI transaction volumes, and E-Way bills reflect strong consumer sentiment and business activity.

Inflation Control & Monetary Policy: Inflation management remains one of the key pillars of Indias macroeconomic policy framework. The Reserve Bank of India (RBI) has pursued a calibrated approach to monetary tightening since mid-2022 to anchor inflation expectations and stabilize prices. While headline inflation has moderated from its peak in 2022, core inflation particularly in the food and services sectors remains a challenge.

To tackle inflation, the RBI maintained a repo rate of 6.5% through most of FY2024 25, emphasizing data-dependency and cautious optimism. Liquidity normalization was achieved through open market operations (OMOs) and variable rate reverse repos (VRRRs), ensuring systemic liquidity remained in balance without stifling growth.

On the supply side, the Government of India undertook a series of measures to stabilize food prices, such as:

Strategic release of buffer stocks of wheat, rice, and pulses to control price spikes.

• Imposition of export bans and stock limits on essential food items like onions, rice, and sugar to ensure domestic availability.

Promotion of crop diversification and support to horticulture through programs like PM Krishi Sinchai Yojana and National Food Security Mission.

The Ministry of Petroleum and Natural Gas worked to moderate fuel prices through rationalization of excise duties, strategic crude purchases, and promotion of alternative energy sources.

Moreover, Indias inflation targeting framework under the Monetary Policy Committee (MPC) with an inflation target of 4% (?2%) has strengthened credibility. The RBIs proactive communication and forward guidance have helped in anchoring inflation expectations in financial markets.

As a result of these coordinated efforts, headline inflation has steadily come down to around 5.3% in early 2025 from above 7% in 2022. Volatility in food inflation, often influenced by climate factors like El Nino, remains a concern, but is being mitigated through enhanced agri-logistics, digital mandi platforms, and cold chain infrastructure.

The synergy between fiscal and monetary policy has contributed to macroeconomic stability, allowing India to pursue growth without jeopardizing price stability a rare balance among large emerging markets.

Foreign Exchange Reserve: The countrys foreign exchange reserves remain strong at over US$ 640 billion, and the current account deficithas narrowed due to higher service exports and remittance inflows. India continues to attract Foreign Direct Investment (FDI) across sectors, with a special focus on digital infrastructure, manufacturing, and renewable energy.

INDIAN GDP GROWTH FORECAST TREND

Policy Initiatives & GDP: Major policy initiatives like Production Linked Incentive (PLI) schemes, Gati Shakti, and

Make in India are driving structural reforms. The real estate sector, supported by affordable housing schemes and a thriving startup ecosystem, is also contributing significantly to economic

Private consumption, contributing over 55% to Indias GDP, continues to rise, backed by increasing disposable income, urbanization, and growth in tier-2 and tier-3 cities. Corporate balance sheets remain strong, and bank credit growth has picked up, particularly in the retail and MSME segments.

Key macro indicators reflect stability:

CPI Inflation (Mar 2025): ~5.3%, within RBIs target range

• Forex Reserves (Apr 2025): US$ 643 billion

2% of GDP CurrentAccountDeficit GDP FiscalDeficit

• GST Collections (Mar 2025): Rs. 1.78 lakh crore (2nd highest ever)

India has also improved its rankings in innovation, logistics, and ease of doing business. On the external front,

Indias export performance is gaining traction through diversification into electronics, pharmaceuticals, chemicals, and engineering goods. Services exports, particularly in IT and digital services, continue to bolster the current account. India remains a preferred FDI destination, with inflows exceeding US$ 52 billion in FY2024-25, driven by electronics manufacturing, EVs, renewable energy, and logistics.

PLI Scheme: The countrys PLI (Production Linked Incentive) schemes continue to attract major global players. The real estate sector has witnessed increased traction, driven by digitization, growing interest in fractional ownership, and increased participation from REITs and institutional investors. Government measures such as

SWAMIH Fund II, tax sops for affordable housing, and urban rejuvenation projects are boosting confidence. Indias innovation ecosystem is thriving, with record startup formations and a strong uptick in patent filings. India now ranks among the top 40 in the Global Innovation Index, and has become the 3rd largest ecosystem for tech startups globally. The governments Digital India and Skill India initiatives are further building the foundation for a modern, knowledge-driven economy.

Financial Market: In the financial markets, domestic institutional investors have played a stabilizing role. Retail participation in mutual funds and equity markets has grown considerably, reflecting increasing financial literacy and savings mobilization. The bond market is also gaining depth with greater participation from corporates and foreign investors.

Sustainability Boost: Sustainability and climate resilience have been brought to the fore with Indias commitment to net-zero emissions by 2070. FY2025 witnessed large-scale solar, wind, and green hydrogen projects gaining traction. The governments Green Bond issuances and sovereign climate fund are mobilizing capital for environmental priorities.

The policy environment remains broadly supportive of inclusive growth, with continued emphasis on women-led development, agricultural reforms, digitization of public services, and improved logistics efficiency. Programs such as PM Gati Shakti, PM KUSUM, PMAY, and Digital Public Infrastructure (DPI) have become critical pillars of Indias transformation journey.

Going forward, Indias economic trajectory is poised for sustainable and inclusive expansion. With a young demographic, a tech-savvy population, a strong reform agenda, and a resilient macro framework, India is set to emerge as a leading engine of global growth over the next decade.

INDUSTRY SCENARIO:

The Indian real estate sector continues to be one of the most prominent sectors globally, consisting of key segments like housing, retail, hospitality, and commercial. The growth trajectory of this sector remains strongly supported by urbanization, evolving demographic trends, and economic recovery. As the sector adapts to modern challenges and technological innovations, there is a growing emphasis on sustainable development and digital transformation.

In FY2025, the sectors momentum is reinforced by the demand for both residential and commercial properties, with the urban landscape undergoing rapid development. The demand for office spaces remains steady, while residential and affordable housing markets are seeing robust growth, driven by the ongoing trend of nuclear families, rising disposable incomes, and the push for smart city initiatives.

The Indian real estate market is on a strong growth trajectory. By FY2025, it is expected that the sector will contribute significantly to Indias GDP, with real estate estimated to generate a contribution of approximately 13% by the end of the year. This growth is being fuelled by strong government policies such as the Real Estate Regulatory Authority (RERA) and affordable housing initiatives, which are providing a more transparent and accessible environment for both buyers and developers.

Key Growth Drivers and Opportunities:

1. Economic Trends and Indicators: Indias economic performance in FY2025 is projected to sustain a growth rate of around 7.0%, according to Fitch Ratings. Despite global economic uncertainties, the real estate sector is benefitting from stable interest rates, GDP growth, and urbanization. Real estate continues to be a vital part of the economy, with substantial contributions to employment and income generation across multiple sectors.

2. Government Policies and Regulatory Reforms: The Governments continued focus on affordable housing and infrastructure development, alongside policies like RERA and the Goods and Services Tax (GST), has enhanced transparency and efficiency. Additionally, initiatives like "Housing for All" and smart cities are helping address the rising demand for housing and infrastructure, especially in emerging urban centers.

3. Technological Advancements: The integration of Artificial Intelligence (AI), Machine Learning (ML), and automation continues to revolutionize the real estate sector in India. AI and data analytics are playing a significant role in investment decision-making, property valuations, and customer experience optimization.

The increased adoption of digital platforms, virtual reality, and automation in property sales, management, and customer service is transforming the industry, making it more efficient and customer-centric. Virtual reality (VR) and augmented reality (AR) will be making property tours more fun and convenient. VR allows buyers to take a full tour of a property without ever leaving their home, saving time and effort. With AR, you can see how a property would look with your personal touch whether its adding furniture, changing the decor, or even planning a renovation before you even make a decision. Its all about helping you visualise the possibilities.

4. IoT Integration: The Internet of Things (IoT) is bringing smart homes into the real estate spotlight. From smart water meters to security systems that you can control remotely, IoT devices are making life easier and more energy-efficient.

5. Interest Rates and Monetary Policies: Stable interest rates have bolstered investor confidence and homebuyer activity, particularly in the residential segment. Lower borrowing costs have also supported the construction of new projects, contributing to the overall supply in the market. The Reserve Bank of Indias stance on monetary policy will continue to play a critical role in shaping market conditions.

6. Demographic Shifts and Urbanization: Urban migration is at an all-time high, with over 40% of Indias population now residing in urban areas. This shift is further exacerbated by the growing millennial population and their demand for modern, tech-enabled spaces. The rising number of working professionals and the growing middle class is pushing demand for both residential and commercial properties in tier-1 and tier-2 cities.

7. The Rise of multigenerational Living: Although Indians have lived in traditional joint families for centuries, the newer generations are discovering fresh interest in this way of life. This has resulted in the new trend of multigenerational living gaining momentum in India, and its expected to grow even stronger in

2025. With rising costs, many families are choosing to live together, benefiting from shared utility bills, the ability to care for ageing parents, and support in child-rearing. This shift is driving the demand for homes that accommodate the diverse needs of all family members, from toddlers to grandparents. Jogging tracks and a variety of other sports facilities, along with clubhouses and recreational centres set within green spaces, have become essential. These features are necessary to cater to the diverse needs of all community members.

8. Sustainable and Green Building: Sustainability in the last few years has gained the right kind of attention it deserves and as we head into 2025, the focus on green, energy-efficient buildings is only growing. Homebuyers are increasingly drawn to eco-friendly designs and energy-saving features, and developers are stepping up to meet the demand with sustainable materials and construction methods. At Modern Spaaces, were fully embracing the green revolution. Our projects showcase sustainable features like solar panels, rainwater harvesting, open spaces, and native trees connecting residents with nature and boosting energy efficiency. Were committed to building homes that are sustainable, energy-efficient, and environmentally responsible because we believe a greener home leads to a brighter future for everyone.

9. Indias Senior Living Market:Indias senior living market is setto expand rapidly, currentlyvalued at approximately

1.66 2.49 lakh crore, and is expected to grow significantly to 9.96 lakh crore by 2030. This growth is driven by a rising ageing population, which is expected to make up 21% of Indias total population by 2050 and is supported by changing family dynamics like children settling abroad or moving to different cities within India and greater financial independence among seniors, especially in urban areas. Programs like the Atal Vayo Abhyuday Yojana (AVYAY) provide funding for Senior Citizen Homes, aiming to improve the quality of life for seniors. Added benefits, such as tax incentives, reduced development charges, and flexible zoning, will encourage more senior living projects.

Market Insights:

The total value of the Indian real estate market in 2025 is estimated to be around $300 billion, which is approximately

24 lakh crore (Indian Rupees). In FY2025 and is expected to expected to reach US$ 1 trillion in market size by

2030. The Indian real estate market is projected to experience a substantial increase, potentially reaching a value of US$ 5-7 trillion by the year 2047, with the possibility of surpassing US$ 10 trillion. Indias residential market is expected to witness further price hikes driven by limited supply and sustained demand in both luxury and mid-range housing. The commercial real estate sector is witnessing robust growth, especially in metro cities, where demand for office spaces and retail properties is rising sharply due to the growing trend of hybrid work models. While the residential real estate market saw a significant upswing in FY2024, with home sales touching an all-time high, the sector is expected to maintain steady growth in FY2025. The demand for affordable housing remains high, and developers are focused on meeting the housing shortage. According to recent estimates, the country still faces a deficit of nearly 10 million housing units in urban areas, which is likely to grow as urbanization continues. In terms of private equity investment, Indias real estate sector continues to attract attention, with an estimated $5 billion in private equity investments expected in FY2025. These investments are focused on affordable housing, logistics, and the growing commercial real estate sector.

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 short -age 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.

THE COMPANY:

Nila Spaces Limited is a forward-looking real estate company headquartered in Ahmedabad, committed to sustainable development and leveraging the latest technologies to deliver long-term value for all stakeholders. The Company place a strong emphasis on Environmental, Social, and Governance (ESG) principles, uphold the highest standards of corporate governance, and conduct business with unwavering ethics and integrity. Through innovation, best practices, and responsible development, Nila Spaces strives to create spaces that enhance lives and contribute positively to society.

Nila Spaces Limited continues to strategically position itself to capitalize on the evolving opportunities within

Indias dynamic real estate sector. With a proven track record in delivering affordable housing, the Company is now expanding into emerging segments shaped by shifting lifestyle preferences, rapid urbanization, and the growing integration of technology in daily life. Our deep market insights have revealed significant potential in innovative formats such as co-living, co-working spaces, service apartments, and other shared-use models.

These concepts are gaining momentum as modern consumers seek flexible, tech-enabled, and community-driven environments. In response, Nila Spaces is aligning its business strategy to not only meet current housing needs but also reimagine the future of urban living.

Although ESG (Environmental, Social, and Governance) reporting is not yet a statutory requirement for us, it is deeply embedded in our operational philosophy. We view sustainability and responsible governance as essential to long-term value creation. Our internal ESG framework, currently being developed in collaboration with industry experts, guides our initiatives in carbon minimization, resource efficiency, and social impact. The Company has also engaged an independent agency to audit carbon emissions and is actively exploring carbon credit mechanisms to further strengthen our environmental stewardship.

Our Governance Framework upholds transparency, accountability, and ethical conduct at all levels. It ensures that decisions are made responsibly and in alignment with stakeholder interests. The Company has already formed strategic partnerships, including one with a reputed player in the co-working space domain, reinforcing our commitment to entering high-potential market verticals. We see significant business growth opportunities in these unique asset classes, fueled by the ongoing digitization of workspaces and lifestyle transformations.

Furthermore, we are researching on building platforms that democratize property investment, making real estate more accessible to a wider investor base. Initiatives include:

• Studio Units: Compact, self-contained living spaces suited for individual buyers or rental income.

• Fractional Ownership Models: Enabling multiple individuals to co-own a single property asset.

• Blockchain Integration: Exploring the use of blockchain to streamline transactions, enhance security, and facilitate transparent ownership models.

At its core, real estate fulfils one of the most fundamental human needs shelter. Our goal is to create inclusive, resilient, and vibrant communities. We believe that collaboration among developers, governments, investors, and citizens is key to unlocking the sectors full potential. Nila Spaces long-term strategy is anchored in sustainability, innovation, inclusivity, and governance excellence creating enduring value for residents, investors, and society alike.

VIDA Residential Project at GIFT City

The VIDA residential project in GIFT City blends urban living and sophistication, catering to modern professionals with luxury, technology, and a focus on consumer experience. It stands out by using virtual reality to showcase its offerings, departing from traditional real estate methods. Nestled financial hub, VIDA offers various GIFTCitys apartment options with contemporary designs, green bridges, rooftop terraces, and a vertical green facade. Nila

Spaces collaborates with Blocher Partners India to redefine urban living, emphasizing spacious homes, modern amenities, and community spaces inspired by natural patterns. Members enjoy bespoke concierge services through

‘Quintessentially, along with upscale solutions like an Automated Waste Collection System and an exclusive sky park with a jogging track.

VIDA represents the real estate industrys technological expansion, with a focus on environmental, social, and governance (ESG) aspects.

The project comprises of 496 residential units out of which 402 Units have been sold as on 31 March 2025. The Company has received overwhelming response for the project and is thankful to the esteemed home buyers for their confidence and trust towards the Company.

Co Working Space Project at GIFT City:

Your Company has developed commercial spaces of 5000 sq mtr. at GIFT City SEZ area to develop co working office space in collaboration with DEVx Accelerator Limited. The co working spaces building offers small to medium to large size office spaces solutions to varied customers at GIFT City.

Upcoming Residential Project at 26-C GIFT City:

During the year your Company has successfully won a bid for a significant residential building development project located at building footprint 26-C at GIFT City Gandhinagar involving development rights of approx. 5.22 lakh sq. ft. The Company proposes to develop a premium residential scheme on the land so allotted.

VisionX Program:

VisionX is a corporate accelerator program proposing to make investment in emerging start-ups through an appropriate Prop-tech focused investment vehicle. The program envisaging investment of ~INR 8 Crore over a period shall provide a strategic investment opportunity for NILAS PACES to diversify the portfolio of RE activities. The program aims at supporting entrepreneurs on a grassroot level to ensure scalability in operations and act as a catalyst to the innovation in the Real Estate sector in the form of upcoming Prop-tech. This program works to create a strong all-inclusive ecosystem of Prop-tech including mentorship, advisory, investment, training, networking, support community, and infrastructural supports etc.

VisionX, managed by Awfficacy Capital, is a first-of-its-kind initiative in the Indian real estate sector, offering a unique blend of financial backing and strategic guidance tailored exclusively for prop-tech startups. This program provides early-stage ventures with the resources they need to scale, focusing on four key areas: business planning, strategy development, market research, and product/tech innovation. Your Company, through VisionX

Program, has made its first strategic investment by acquiring a 30% stake in VirtSpaces Private Limited. This marks a significant step in Nila Spaces commitment to nurturing the revolutionizing the real estate industry with its cutting-edge mobile virtual reality solutions. By offering immersive, high-quality visual renderings, VirtSpaces allows clients to explore properties in unprecedented detail.

FINANCIAL RESOURCES:

The foremost source of finance of your Company has traditionally been internal accruals and borrowings from banks. However, at present your Company is totally debt-free. Your Company deems it sufficient to address the ongoing business endeavours.

JOINT VENTURES:

In order to share risk and cost, experience and expertise your Company develops certain projects in association with other and has formed associates and joint ventures. This provides a larger scale to your Company to work on

. Your Company looks upon them as partners in its progress and shares with them the rewards specific of growth. It is your Companys endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and cooperation with each other, consistent with consumer interests.

SEGEMENT WISE AND FINANCIAL PERFORMANCE OF OPERATIONS:

The entire operations of the Company constitute a single segment i.e. "Construction and Development of Building for sale and other Real Estate activities" as per Ind AS 108 "Operating Segments" specified under Section 133 of the Annual Report2024-2025.Thefinancial performance of the operations thereof may please be referred in the Directors Report section under the head "Review of Operations and Financial Performance".

KEY FINANCIAL RATIOS:

The detailed discussion on financial performance is captured in the Directors Report section of this Annual Report, while analysis of key ratios is furnished further. The detailed financial performance is discussion on captured in the Directors Report section of this Annual Report, while analysis of key ratios is furnished further.

Ratio	FY2025	FY2024	Detailed explanation
Debtor Turnover	33.84	162.63	The increase in average accounts receivable rate outpaced the growth in sales, leading to a decline in the trade receivables turnover ratio.
In Days	0.09	0.45
Inventory Turnover	1.39	0.95	The increase in sales led to an improvement in the
In Days	262.59	385	inventory turnover ratio as compared to the previous year.
Interest Coverage Ratio	0.00	0.00	The company carries very little debt.
Current Ratio	1.83	1.97	The increase in current assets outpaced the increase in current liabilities compared to the previous year, resulting in an improvement in the current ratio.
Debt Equity Ratio	0.00	0.00	The company carries very little debt.
Operating Profit Margin	20.80%	10.77%	Improved operational efficiency to an increase in the operating profit ratio.
Net Profit Margin	11.20%	7.46%	Improvedoperationalefficiency and higher other income contributed to an increase in the net profit ratio.
Return on Net worth	25.28%	10.92%	The increase in netprofitled to an improvement in Return on net worth.

FUTURE OUTLOOK & OPPORTUNITIES:

The future of the real estate industry in India holds both challenges and opportunities, shaped by various factors including economic trends, regulatory reforms, technological advancements, and changing consumer preferences.

The growing flow of FDI in Indian real estate is encouraging increased transparency. Developers, to attract funding, have to revamped their management systems and accounting to meet due diligence standards. Expected growth in the number of housing units in urban areas will increase the demand for commercial and retail office space. A report by Concorde outlines a robust Compound Annual Growth Rate (CAGR) of 9.2% for the real estate sector from 2023 to 2028. Several emerging trends in the Real Estate Sector which can to your Company to accelerate growth are as below.

Embracing Next-Gen Technologies: AI, ML, AR & VR

The convergence of Artificial Intelligence (AI), Machine Learning (ML), Augmented Reality (AR), and Virtual Reality the way real estate operates. While real estate remains inherently a "touch-and-feel" industry (VR)isredefining where physical site visits are crucial, immersive technologies like AR and VR are enabling more interactive, curated digital experiences. Prospective buyers can now explore properties virtually, enhancing their decision-making journey. AI, on the other hand, is playing a transformative role across functions from market analytics and customer engagement to personalized recommendations and automation. AI-powered voice bots are streamlining client communication, delivering timely and relevant information, thereby significantly increasing the conversion rate from enquiry to sale. Integration of 3D modeling, AI-driven design tools, and immersive visualization is revolutionizing everything from project planning to post-sales service. Leveraging Generative AI (GenAI), the Company is delivering highly personalized property suggestions aligned with customer preferences.

Nila Spaces is proactively incorporating these technologies across its operations, confident in their power to enhance efficiency, customer experience, and future growth.

Rise of Flexible Workspaces and Co-Working Solutions

Nila Spaces, in collaboration with a strategic partner, has successfully developed and operates a co-working office complex at GIFT City, offering flexible workplace solutions suited for startups, SMEs, corporates, and

MNCs alike. Co-working spaces are emerging as a preferred asset class in commercial real estate, driven by post-pandemic shifts in work culture, the rise of hybrid models, and increased outsourcing by global companies. This trend is gaining traction beyond metros, extending into Tier 2 cities such as Ahmedabad,

Indore, Kochi, Coimbatore, and Jaipur cities equipped with modern infrastructure and strong talent pools.

Key factors fuelling this expansion include:

Post-COVID, India remains a top global outsourcing destination due to low-cost office infrastructure and a skilled workforce.

Uncertainty around long-term leases has pushed corporates to embrace flexible workspaces to support hybrid workforces.

Larger enterprises and MNCs increasingly adopt flexible models to reduce overhead and enhance agility.

A continued preference for physicaloffices, with a focus on optimizing space through a blend of traditional and flexible setups.

Advantages of Flexible Workspaces:

Cost Efficiency: Studies show 20 22% cost savings over a 3-year period for a 100-seat flexible office.

• Flexible Tenures: Companies avoid long lock-ins and can tailor lease durations.

• Scalability: Easily expand or reduce workspace based on business needs.

• Dynamic Work Environments: Boost creativity and productivity through varied settings.

• Networking Potential: Shared spaces enable cross-industry collaboration and innovation.

Expanding into Co-Living and Urban Shared Living Models

Recognizing emerging urban lifestyle trends, Nila Spaces is exploring a range of shared living solutions, including co-living, joint accommodations, service apartments, parking solutions, and compact urban homes. As per JLL,

Indias co-living market is expected to grow at a 17% CAGR, reaching nearly $40 billion within five years. With rapid urban migration, rising millennial populations, and a growing preference for rental living over ownership, co-living presents immense opportunities. The concept resonates particularly with young professionals, entrepreneurs, and students, offering affordability, convenience, and community. The mindset shift from owning to sharing is paving the way for scalable and organized co-living ecosystems. While still evolving, this space holds strong long-term potential, especially in major metro cities.

Fractional Ownership: Democratizing Real Estate Investment

The fractional ownership model is revolutionizing access to premium real estate. This concept allows multiple investors to co-own high-value assets, significantly reducing entry costs and enhancing portfolio diversification.

Driven by a desire for steady returns and asset-backed investments, this model is attracting retail investors and unlocking untapped segments of the market. To support this innovation, SEBI introduced the Small and Medium REIT (SM REIT) framework in March 2024:

Minimum investment lowered from 25 lakh to 10 lakh.

Asset size under SM REIT to range between 50 crore and 500 crore.

• Minimum of 200 investors per scheme, ensuring wider participation.

This development is expected to promote transparency, standardization, and liquidity, enabling a structured and investor-friendly ecosystem for fractional real estate. Indias fractional ownership market is valued at $500 million today and is projected to exceed $5 billion in AUM by 2030 a tenfold growth trajectory.

Tokenization of Real Estate: The Next Frontier

A natural extension of fractional ownership, real estate tokenization involves converting physical property assets into digital tokens on blockchain platforms. These tokens represent ownership stakes, enabling real-time trading and enhanced liquidity something traditional real estate lacks.

Tokenization drastically reduces entry barriers and transaction costs while enhancing transparency. Investors can hold these tokens in digital wallets or demat accounts and trade them on approved secondary platforms, making property investment more seamless and accessible.

However, regulatory clarity remains a major hurdle. Despite the current gap in formal rules, Nila Spaces is actively exploring tokenization models in consultation with industry experts to unlock greater value from its real estate assets in a secure and compliant manner.

Strategic Presence in Smart Cities: Focus on GIFT City

Smart cities are at the heart of Indias urban transformation, and GIFT City (Gujarat International Finance Tec-City) stands as a pioneering model. As Indias first operational greenfield smart city and IFSC (International Financial Services Centre), it offers numerous strategic benefits:

A global financial and IT hub with SEZ and DTA zones.

State-of-the-art infrastructure and integrated "walk-to-work" urban planning.

• Excellent connectivity: 20 minutes from Ahmedabad Airport, metro link, NH-48 proximity, and near the upcoming bullet train station.

Indias first "Platinum-rated" greenfield smart city.

Having a footprint in such a strategic location positions Nila Spaces at the forefront of Indias next-gen urban development. The Company remains committed to harnessing the full potential of GIFT City and other emerging zones to deliver innovative, future-ready real estate solutions.

Sustainability and ESG Initiatives

At Nila Spaces Limited, sustainability is deeply embedded in our core business strategy. The Company continues to make significant strides toward integrating environmental, social, and governance (ESG) norms into every aspect of its operations. Recognizing our role in shaping a sustainable future, we are committed to creating value not just for our stakeholders, but also for the planet and communities we serve.

We have taken multiple proactive steps to minimize our carbon footprint. These include the adoption of energy-efficient technologies, the transition towards renewable energy sources where feasible, and conscious efforts to reduce emissions across our operations. Our developments are designed with sustainability in mind, minimizing environmental impact at every stage from planning to execution. Resource conservation is a key pillar of our sustainability agenda. We encourage rainwater harvesting, use recycled and locally sourced construction materials, and have incorporated efficient water and waste management systems in our that natural resources are used judiciously and responsibly.

We actively promote green building concepts across our projects. Our developments Our development for project

VIDA adhere to the highest environmental standards, and we strive to achieve green certifications such as IGBC. These buildings offer energy efficiency, better indoor air quality, and a healthier environment for occupants.

Our environmental management systems are geared towards pollution control, biodiversity conservation, and maintaining ecological balance. Landscaping and green zones are integral to our project designs, and we ensure compliance with all environmental regulations. Integrity and transparency are the cornerstones of our business. We uphold the highest standards of ethics in every business transaction and interaction. Regular training, clear codes of conduct, and internal audits help reinforce a culture of compliance and accountability. We are committed to maintaining the highest standards of corporate governance. Our governance framework is designed to safeguard stakeholder interests, ensure transparency, and foster long-term trust. The Board of Directors, supported by well-structured committees, oversees the Companys strategic and ESG goals.

Our business policies reflect a balanced approach to profitability and sustainability. We have adopted practices, promote employee well-being, support community development initiatives, and ensure that environmental and social considerations are part of our decision-making process. Although not mandatorily required, the Company has proactively and as a good corporate governance practice, prepared a detailed Report on Business Responsibility & Sustainability Reporting (BRSR) and is readily available for download at the website of the Company at https://nilaspaces.com/pdf/annual_report/BRSR.pdf. Since it is not mandatory, the report is not made part of this annual report.

THREAT, RISKS & CHALLENGES:

As is typical in expanding business activities your Company has become a subject to a variety of risks, challenges, and threats. It is recognized that risks are not only inherent to any business but are also dynamic in nature. Further, the Company is susceptible to certain risks arising out of various activities undertaken in the normal course of business. There are many constraints affecting the smooth functioning of the industry in which your Company operates. The table below provides a brief overview of the most significant risks and your companys approach to managing them.

Risk Explanation	Mitigation approach
Pandemic risk Any epidemic/pandemic can cause interruption in the execution and business	Your Company categorizes Project sites into High, Medium and Low based on perception of such risk and the sites are mandated to be operated with strict adherence to the government/HSE guidelines. Your Company focuses to ensure the health and safety of all employees, labourers, suppliers and channel partners, while initiating stringent measures to control costs and strengthen cash flows.
Health and Safety at Any employee, labour, worker is projects hurt or killed by an accident at work.	Apart from the QMS, project execution policy/ processes, loss prevention programmes, insurance, etc. your Company ensures to initiate development and construction of the Project, only post identifying, defining and addressing all such risk propositions and dynamics. Your Company also ensure to share sufficient knowledge about such risks and imparts adequate training to all the employees, labourers, workers, so as to tackle such risks. Zero accident programs supported by proactive near miss reporting aims at the avoidance of all workplace accidents.
Health and Safety related Person or persons are hurt to your Companys or injured as a result of your construction Companys construction failure or defect. Stability/sturdiness of the structure is compromised.	Your Company follows strict design and validation rules for all projects, and fully adheres to Principal/client/NBC specific for safety and structural sturdiness. Your Company ensures implementation of detailed instructions of the Project Principal/client, Architect, Structural Engineer, PMC, etc. to ensure the fulfilment of Principal/clients requirements and your Companys quality standards. Your Companys overall approach to quality management assures conformance and performance to the highest level.
Interest rate risk Your Companys interest costs are impacted by market rates.	Your Companys liquidity and borrowing are managed by professional at Senior management level. The interest rate exposure of your Company is reduced by matching the duration of investments and borrowings.
Credit risk Your Companys Principals ability to pay can have an impact on the financial result.	As per your Companys policy only well- established institutions/ corporates are approved as counterparties. Exposure per counterparty is continuously monitored.
Liquidity risk Acceptable liquidity levels are required in order to achieve desired financial results.	In addition to its own liquidity, your Company enjoys credit facilities with the largest Bank of the country as well as other banks/financial institutions of high-standing and good repute.
Risk Explanation	Mitigation approach
Competitor risk Competitors find ways to bid at dramatically lower cost or bid to construct with better functioning/ latest technologies.	Your Company aims to be the cost and value leader, meaning striving to innovate and bring new and increased value through the innovation to our customers while at the same time working to assure that your Companys operations are world class in terms of efficiency, cost and waste avoidance. Your Company has developed proprietary knowledge to construct with different technologies, while the management provides highest importance to the Quality perspective to ensure long- term sustainable growth.
Economic downturn Your Companys customers could be impacted by a major economic downturn resulting in lower demand for their respective projects.	Your Company has a highly diversified and well balanced customer base. The risk is therefore spread very widely on customer, regional and industrial sector/segment perspective. Your Companys flexible business model is capable to set operational priorities in the face of changing economic scenario. Your Company uses market data intelligence to follow and anticipate developments allowing proactive management of changing market conditions.
Execution risk It depends on various factors e.g. labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities, weather conditions, and absence of contingencies such as litigation.	Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and repute contractors.
Input cost fluctuations Significant changes in raw material costs can impact the profitability.	Your Company has established a proficient supply chain which assures raw materials are purchased in a highly competitive manner. Raw material cost indexes could also be included in contractor/supplier agreements.
Supply chain disruption External factors such fires, as extreme weather events, natural disasters, water stress, war or pandemic illness to mention a few, could result in disruption of supply and impact on revenue and profit.	Your Company has intentionally set up a flexible supply chain and works to avoid dependence on a single source or production location. The supply chain tracks issues e.g. extreme weather events, natural disasters, water stress, war or pandemic illness, etc. as these may impact the supply. In addition your Company focuses on working with suppliers that have adequate insurance for both production and transports.
Material source or type Your Company aims to avoid the compliance risks use of hazardous substances in its products and processes; your company also strives to avoid negative social impacts within the extended supply chain. Legislations have been and are being introduced in these aspects, failure to meet with direct or customer requirements of these legislations could result in costs as well as loss of business for your Company.	Your Companys majority Principal/client are government bodies and the material used by your Company is subject to stipulations of the client, BIS specifications, laboratory checks, inspection by independent third-party e.g. Project Management Consultant, etc. Hence, environment, health and safety risks have already been considered while deciding such stipulations.
Labour disputes Industrial disputes lead to industrial action with impacts your Companys ability to meet Principal/client demands.	Your Company maintains an open and positive relationship with all the employees, sub- contractors, workers, etc.; as exemplified by not a single instance of any such dispute so far.
Loss of a major Fire, flood or natural disaster could result project site in the temporary loss of a construction operation, in addition to the reconstruction and remediation costs; this could put time schedule, cost and revenues at risk.	Your Companys construction strategy aims to assure adequate insurance, so that your Company is not financially affected. While, the loss prevention programmes, protect your Companys tangible and intangible assets through active risk management. Your Company is operating on about 19 projects across Gujarat and Rajasthan. Hence, if one project is taken out of action, others could provide support.
Major incident at A major incident during which a a project significant amount of local environmental damage occurs leading to fines, reputation, etc.	Your Companys Quality Management System is certified to ISO 9001 : 2015 that all identifiedand such loss material of risks are effective counter-measures are implemented in order to mitigate them. This includes actions to mitigate the risk as well as emergency response plans to assure the impacts of any incident are minimized.
Climate change Extreme weather events disrupt project risks extreme execution. weather events	Requirements for emergency response plans at all sites include flood risks etc. See also mitigations mentioned hereinabove.
Corrupt or Your Companys employee or employees f r a u d u l e n t fail to adhere to your Companys Code actions carried of Conduct and related policies and out by your requirements and act in a fraudulent C o m p a n y s or corrupt manner leading to financial representatives penalties and reputation damage.	Your Company takes a proactive approach to assure awareness of demanded ethical standards by education, compliance programmes including anti-corruption, antifraud and antitrust. The work to follow up adherence is facilitated by the whistle blower function and a risk-and incident based audit system.
Non-compliance The diverse nature of your Companys with applicable business and operations means that laws your Company is required to adhere to numerous laws and regulations related to all aspects of its activities. Failure to meet these requirements could lead to legal and financial consequences as well as damage to your Companys reputation.	Your Company has put in place comprehensive and robust compliance programme which is based on your Companys Code of Conduct. The compliance programme is put in place to ensure that applicable laws and regulations are identified, understood and adhered to.
Legal risks In connection with the revenue of relating to your Company and in the purchase of our business materials and services from our suppliers, activities consultants, etc. large potential liabilities may occur in case of e.g. late delivery, delivery of defective products, unfulfilled service commitments and incorrect advice.	Your Company has put in place policies, procedures and training programs in order to make sure that legal risk relating to our business activities are identified and that risk decisions are taken on the appropriate level. In addition, independent professional legal counsels support your Company in identifying and handling legal
Therefore, it is important that all such risks are identified, that risk decisions are taken on the appropriate level and that carefully worded contractual provisions aiming at reducing your Companys liabilities are included in contracts.	risks. The legal counsels work closely with the Senior management and provide contract drafting and negotiation support, claim and litigation management, support, training and general advice.

Your Company is operating in a business which is cyclic in nature and in which; the price is mainly driven by the demand and supply factors. It is not largely based on the cost of the product. Timely supply of raw material like cement, steel, bricks are essential for timely completion of the projects. Shortage of labour and raw material may delay the execution of projects of the Company. The real estate projects are capital intensive in nature. The

Companys business requires long-term commitment of capital to meet the financial requirement of long-term projects. Further, timely availability of skilled and technical personnel is also one of the key challenges. Real-estate projects are mainly dependent on the economic scenarios and any adverse events affecting the whole economy may deteriorate the industry as well. Any significant change in government policy in promoting Affordable Housing could pose a threat. Further, the approval process and time for projects are generally uncertain which may delay the execution and thereby affect financials. Your Company has in place an effective risk management mechanism to identify potential risk and its timely mitigation.

CORPORATE GOVERNANCE:

Your Companys Corporate Governance philosophy is based on the total transparency, integrity, fairness, equity, accountability and commitments to the values. Your Company is committed to the best governance practices that create long term sustainable shareholder value. With the object of your Company to conduct its business in a highly professional manner and thereby enhance trust and confidence of all its stakeholders, your Company has devised a complete compliance of Corporate Governance norms. Your Company firmly believes that definite

Corporate Governance leads to the optimal utilization of resources and enhances the value of the enterprise and an ethical behaviour of the enterprise leads to honouring and protecting the rights of all the stakeholders. Sound Corporate Governance practices and ethical business conduct always remain at the core of your Companys value system.

The Annual Return for the FY2025 is available at the website of your Company at www.nilaspaces.com under the investor segment. A separate report on Corporate Governance is provided together with a Certificate from the

Practicing Company Secretary of your Company regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations. A Certificate of the CEO and CFO of your Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is part of this Annual Report.

WORK CULTURE AND HUMAN RESOURCES:

The management believes in team work and a corporate environment which is self-motivating. Your Company has successfully developed a work force of people over a period of time. The top management is acting as the governing force in creating and maintaining the corporate work culture. The businesses that your Company engages in are primarily people-driven. Our Vision is to raise our own benchmarks with every successive endeavour and it is possible only by making every employee a fully engaged and aligned team member. Your Company continues to remain focused on reinforcing the key thrust areas i.e. being the employer of choice, building an inclusive culture, building a strong talent pipeline, building capabilities in the organization and continuing to focus on progressive employee relations policies. Accordingly, our HR policies are centered around the creation of an environment that attracts, nurtures and rewards high-caliber talent. Young engineers gain the opportunity to operate on the frontlines of technology and associate with projects of scale and complexity. We drive sustainable growth and have been instrumental in bringing in thought leadership in building strong employee relations. There is no material development in HR. Your Company continued to build on the Diversity and Inclusion agenda through building leadership capability and recognizing line managers who provide a simple, flexible and respectful work environment for their teams. Your Company is developing future leaders and having the best people practices. A structured leadership development initiative has helped to build a robust talent pipeline at all levels. Our HR organisation is well-geared towards attraction and retention of engineering talent in an ecosystem that provides long-cycle professional development opportunities in various facets of civil urban infrastructure and caters to career building aspirations of talent at all levels.

INTERNAL CONTROL SYSTEM:

The Corporate Governance Policy guides the conduct of affairs of your Company and clearly delineates the roles, responsibilities and authorities at each level of itsthree-tiered governance structure and keyfunctionaries involved in governance. The Code of Conduct commits management to financial and accounting policies, systems and processes.

The Corporate Governance Policy and the Code of Conduct stand widely communicated across the Company at all times, and, together with the ‘Strategy of Organisation, Planning & Review Processes and the Risk Management Framework provide the foundation for Internal Financial Controls with reference to your Companys Financial

Statements. Such Financial Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by management and approved by the Audit Committee and the Board. These Policies are supported by the Corporate Accounting and Systems Policies that apply to the entity as a whole to implement the tenets of Corporate Governance and the Significant Accounting Policies uniformly across the Company.

The Accounting Policies are reviewed and updated from time to time. These, in turn are supported by a set of divisional policies and SOPs that have been established for individual businesses. Your Company uses ERP System as a business enabler and also to maintain its Books of Account. The SOPs in tandem with transactional controls built into the ERP Systems ensure appropriate segregation of duties, tiered approval mechanisms and maintenance of supporting records. The Information Management Policy reinforces the control environment. The systems, SOPs and controls are reviewed by divisional management and audited by Internal Audit whose findings and recommendations are reviewed by the Audit Committee and tracked through to implementation. Your Company has in place adequate internal financial controls with reference to the Financial Statements. Such controls have been tested during the year and no reportable material weakness in the design or operation was observed. Nonetheless your Company recognises that any internal financial control framework, no matter how well designed, has inherent limitations and accordingly, regular audit and review processes ensure that such systems are reinforced on an on-going basis. Your Company has also put in place comprehensive systems and procedural guidelines concerning other areas of business, too, like budgeting, execution, material management, quality, safety, procurement, asset management, human resources etc., which are adequate and necessary considering the size and level of operations of the Company. The management has been making constant efforts to review and upgrade existing systems and processes to gear up and meet the changing needs of the business.

Cautionary Statement on Forward-Looking Information

This Management Discussion and Analysis (MDA) contains certain forward-looking statements, estimates, and projections that reflect the Companys current views with respect to future events, financial performance, business strategies, industry developments, and opportunities. These statements are based on assumptions, expectations, and information currently available to the Company, most of which are derived from publicly available secondary sources deemed reliable at the time of preparation. However, actual results may differ materially from those expressed or implied due to various risks, uncertainties, and unforeseen events, including but not limited to economic conditions, market dynamics, regulatory changes, competitive pressures, operational challenges, and force majeure events. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update or revise any statements in this report, whether as a result of new information, future events, or otherwise, except as required under applicable laws and regulations.