Nila Spaces Ltd Management Discussions

GLOBAL AND DOMESTIC ECONOMY:

The global economy entered FY2025–26 on a note of cautious resilience, navigating a complex interplay of geopolitical realignments, inflationary pressures, and shifting trade architectures. According to the International Monetary Fund (IMF), global GDP growth is projected at approximately 3.2% for 2025–26, modestly above the prior years estimate of 3.1%, but still below the pre-pandemic long-term average of 3.8%. This subdued trajectory reflects structural headwinds, including demographic challenges in advanced economies, elevated public debt burdens, and persistent supply-side fragilities.

Advanced economies continue to operate below their productive potential. The United States faces headwinds from the cumulative impact of one of the most aggressive monetary tightening cycles in modern history. GDP growth for the US is projected at 1.8% in 2025–26, with elevated core services inflation continuing to complicate the Federal Reserves pivot timeline. The Eurozone, constrained by sluggish industrial output—particularly in Germany and France—is projected to grow at 1.3%. Chinas economy is projected to grow at 4.5%, recalibrating around domestic consumption and green technology exports rather than its traditional property and infrastructure model.

A defining macroeconomic theme of this period has been the emergence of trade policy uncertainty as a systemic risk. The re-imposition of broad-based reciprocal tari s by the United States has introduced supply chain fragility and raw material cost pressures globally—with direct implications for construction input costs in steel, aluminium, and smart building components. Global inflation, which peaked at 8.7% in 2022, has moderated to an estimated 3.5% in 2025; however, services inflation remains stubbornly elevated in advanced economies, while food and energy price volatility persists across emerging markets.

Country / Region	GDP Growth Rate (%)
World Avg	3.2%
USA	1.8%
Eurozone	1.3%
China	4.5%
India	6.5%
India (FY27E)	7.0%

Global liquidity has tightened substantially since 2022. While some major central banks have begun easing cycles, borrowing costs remain elevated relative to the pre-2022 decade. This environment has bifurcated real estate markets globally: premium and wellness-oriented residential segments have remained resilient due to purchaser equity strength, while a ordability-sensitive mass-market segments face significant stress in high-cost geographies. For well-positioned, sustainability-aligned developers, this environment presents a selective but meaningful window of opportunity.

INDIAN ECONOMIC SCENARIO:

Indias macroeconomic narrative in FY2025–26 is one of structural momentum underpinned by policy continuity, demographic dividend, and increasing global strategic relevance. The IMF projects

Indias GDP growth at 6.5% for FY2025–26, making it the fastest-growing major economy in the world for the fourth consecutive year. This performance is anchored by robust domestic consumption, a sustained government capital expenditure programme, a maturing financial services ecosystem, and an increasingly digitised economic infrastructure.

The Union Budget for FY2025–26 maintained the governments commitment to fiscal consolidation, targeting a fiscal deficit of 4.5% of GDP—a step-down from 5.1% in FY2024–25. This consolidation is being achieved through improved tax buoyancy: direct tax collections rose 17% year-on-year and GST collections averaged 31.82 lakh crore per month—a historic record. The Reserve Bank of India embarked on a calibrated easing cycle in early 2025, reducing the repo rate by a cumulative 50 basis points to 6.0% by March 2025, enabling a positive catalyst for residential real estate demand as home

India Key Macro Indicators - FY2025-26

Indicator	Value	Description	Context / Target Note
GDP Growth Rate (%)	6.5%	Current target and forecast	Strategic Target: Achieving Top Global Economy status
CPI Inflation Rate (%)	4.1%	Consumer Price Index Inflation	Regulatory Range: Maintain Within RBI 2-6% Band
Forex Reserves	$648 Bn	Foreign Exchange Reserves in USD	Performance Note: Historically Highest Ever Level Recorded
GST Collections (Monthly Avg.)	\u20b9 1.82 L Cr	Goods & Services Tax Collections	Collection Record: Setting a New Monthly Average Record

Indias external sector remains in a position of relative strength. Foreign exchange reserves stood at approximately US$ 648 billion as of March 2025, providing ample import cover. FDI inflows of approximately US$ 55 billion were received in FY2024–25, with manufacturing, green energy, digital infrastructure, and logistics attracting the majority of commitments. Indias innovation ecosystem—now ranked among the top 40 in the Global Innovation Index and home to the third-largest tech startup ecosystem globally—continues to attract long-term structural capital that translates directly into demand for premium commercial and residential real estate.

Indias urbanisation story remains a defining structural driver for the real estate sector. Over 41% of Indias population now resides in urban areas, projected to exceed 50% by 2036—crossing the critical tipping point that has historically catalysed large-scale housing market maturation in economies like China, South Korea, and Brazil. The governments Smart Cities Mission, AMRUT 2.0, and PM Gati Shakti National Master Plan are catalysing urban infrastructure investments that are directly supportive of real estate demand. Digital public infrastructure—UPI, ONDC, Account Aggregator—is broadening credit access for first-time homebuyers and improving the efficiency of real estate transactions.

INDUSTRY SCENARIO

The Indian real estate sector is undergoing a period of qualitative transformation, moving from a volume-driven growth model to one characterised by value creation, sustainability, and experiential di erentiation. Estimated at approximately US$ 330 billion in FY2025–26, the sector is projected to reach US$ 1 trillion by 2030, positioning real estate as one of Indias most significant wealth-creation industries.

Residential real estate continues to be the primary growth engine. FY2024–25 witnessed record-high housing sales in the top eight cities, with an estimated 3.2 lakh units sold—representing a 12% increase over the prior year. Notably, the luxury and premium segments—properties priced above 31 crore—accounted for over 25% of total sales by value for the first time, reflecting a structural shift in buyer preferences toward larger, better-amenitised, and wellness-oriented homes.

The wellness real estate segment has emerged as one of the most compelling growth niches within the broader residential market. Post-pandemic, homebuyers have fundamentally recalibrated their preferences, prioritising biophilic design, air quality, natural light, fitness infrastructure, mental wellness spaces, and community-building amenities. Global research by the Global Wellness Institute estimates the wellness real estate market at over US$ 438 billion globally, with India representing one of the fastest-growing sub-markets.

Commercial real estate, particularly grade-A office space, is experiencing strong demand driven by

Indias emergence as a global GCC hub. Over 1,700 GCCs currently operate in India, expected to grow to 2,400 by 2030—generating robust occupier demand in key IT corridors and driving a steady increase in commercial real estate valuations.

Sustainability and green building have transitioned from di erentiators to baseline expectations in the premium segment. GRIHA, LEED, and IGBC certifications are increasingly demanded by buyers and institutional investors. The carbon footprint of the built environment, which accounts for approximately 40% of global energy-related emissions, is under increasing regulatory and investor scrutiny. Developers who authentically integrate sustainability into project design, certification, and community management are commanding significant premium pricing and faster absorption.

D. COMPANY OVERVIEW AND BUSINESS PERFORMANCE

Nila Spaces Limited is a forward-looking real estate company headquartered in Ahmedabad, dedicated to creating sustainable, future-ready developments that deliver long-term value to all stakeholders. The Company operates with a strong commitment to Environmental, Social, and Governance (ESG) principles, upholding the highest standards of corporate governance while conducting business with integrity, transparency, and ethical discipline.Driven by innovation and responsible development practices, Nila Spaces strives to create thoughtfully designed spaces that enhance quality of life and contribute meaningfully to society.

Nila Spaces Limited continues to strategically position itself to capitalize on the evolving opportunities within Indias dynamic real estate sector. Building on a strong foundation in a ordable housing, the Company is progressively expanding into emerging real estate segments shaped by rapid urbanization, changing lifestyle preferences, and increasing technology integration.

Nila Spaces Limited is a forward-looking real estate company headquartered in Ahmedabad, dedicated to creating sustainable, future-ready developments that deliver long-term value to all stakeholders. The Company operates with a strong commitment to Environmental, Social, and Governance (ESG) principles, upholding the highest standards of corporate governance while conducting business with integrity, transparency, and ethical discipline.

Driven by innovation and responsible development practices, Nila Spaces strives to create thoughtfully designed spaces that enhance quality of life and contribute meaningfully to society.

Nila Spaces Limited continues to strategically position itself to capitalize on the evolving opportunities within Indias dynamic real estate sector. Building on a strong foundation in a ordable housing, the Company is progressively expanding into emerging real estate segments shaped by rapid urbanization, changing lifestyle preferences, and increasing technology integration.

Backed by deep market insights, the Company has identified significant growth potential in innovative asset classes such as:

• Co-living spaces

• Co-working environments

• Serviced apartments

• Shared-use and flexible real estate formats

These concepts are gaining traction among modern consumers who value flexibility, community-driven living, and technology-enabled experiences. In response, Nila Spaces is aligning its business strategy to not only address current housing demands but also reimagine the future of urban living.

While a ordable housing remains a core pillar, the Company is now bridging the spectrum from budget to premium offerings, enabling it to cater to a wider demographic and contribute to inclusive urban development.

Although ESG reporting is not yet a statutory requirement for the Company, sustainability and responsible governance are deeply embedded in its operational philosophy. Nila Spaces views ESG as a critical driver of long-term value creation.

The Company is in the process of developing a comprehensive internal ESG framework in collaboration with industry experts. This framework focuses on:

• Carbon footprint reduction

• Resource e ciency and sustainable construction

• Social impact and community development

Additionally, Nila Spaces has engaged an independent agency to audit its carbon emissions and is actively exploring carbon credit mechanisms to further strengthen its environmental stewardship. The Companys governance framework is built on the principles of transparency, accountability, and ethical conduct. It ensures that all decisions are aligned with stakeholder interests and long-term sustainability goals.

As part of its growth strategy, Nila Spaces has entered into strategic partnerships, including collaborations with reputed players in the co-working space segment. These alliances reinforce the Companys commitment to entering high-potential verticals and leveraging the ongoing digitization of workspaces and lifestyle ecosystems.

Innovation and Future Initiatives

Nila Spaces is actively exploring innovative platforms aimed at democratizing real estate investment and enhancing accessibility for a broader investor base. Key initiatives under consideration include:

• Studio Units: Compact, self-contained spaces designed for individual ownership and rental yield opportunities

• Fractional Ownership Models: Enabling multiple investors to co-own high-value real estate assets

• Blockchain Integration: Leveraging blockchain technology to enhance transaction transparency, security, and ownership e ciency

• These forward-looking initiatives reflect the Companys commitment to integrating technology with real estate to unlock new value propositions.

At its core, real estate addresses one of humanitys most fundamental needs—shelter. Nila Spaces Limited remains committed to developing inclusive, resilient, and vibrant communities across the housing spectrum.

The Company firmly believes that collaboration among developers, government bodies, investors, and citizens is essential to unlocking the full potential of the real estate sector.

Anchored in sustainability, innovation, inclusivity, and governance excellence, Nila Spaces is focused on creating enduring value for residents, investors, and society at large.

PRANA - Redefining Luxury Wellness Living

PRANA is a landmark luxury wellness residential development in GIFT City, Gandhinagar, designed to integrate holistic well-being with modern urban living. Inspired by global longevity principles and Blue Zone concepts, PRANA goes beyond conventional housing to offer a lifestyle centered on health, balance, and sustainability.

The project comprises G+28 floors with 696 residential units, designed to accommodate over 2,000 residents, along with retail and managed apartment components.

PRANAs design philosophy places wellness at its core, incorporating biophilic architecture, advanced air and water purification systems, circadian lighting, and sustainable infrastructure such as energy-e cient systems and rainwater harvesting. The development promotes a longevity-focused lifestyle through dedicated spaces for fitness, meditation, community engagement, and nutrition.

A comprehensive range of amenities, including a Wellness & Longevity Club, co-working spaces, recreational facilities, and concierge services, enhances the overall living experience.

PRANA is aligned with leading global standards such as the WELL Residential and EDGE Advance Certification, reinforcing its commitment to health, sustainability, and ESG principles.

As GIFT Citys first wellness-centric luxury development, PRANA sets a new benchmark in real estate—offering a future-ready living environment where luxury is defined by well-being, sustainability, and quality of life.

VIDA – Future of Urban Living

VIDA, by Nila Spaces Limited, is a next-generation mixed-use development in GIFT City, Gandhinagar, designed to seamlessly integrate living, working, and leisure within a vibrant urban ecosystem. Defined by its iconic twin towers, sky bridges, and an expansive 18,000 sq. ft. Sky Park, VIDA reimagines modern urban living with a strong focus on connectivity, convenience, and community.

The project offers a thoughtfully curated mix of residences, coworking spaces, and over 65,000 sq. ft. of lifestyle amenities, catering to evolving urban lifestyles while promoting well-being and social interaction.

Currently in its advanced stages of construction, VIDA is nearing completion, with handover expected shortly—marking the transition from vision to a future-ready living reality.

VIDA has achieved IGBC Platinum Certification, reflecting its strong commitment to sustainability. Key features include green-integrated façades, vertical landscaping, sky bridges functioning as ecological corridors, rooftop green spaces, and energy-e cient design principles. VIDA stands as a contemporary benchmark for sustainable, connected, and lifestyle-driven urban development.

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.

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 , 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 accelerator 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 future of prop-tech innovation. VirtSpaces is 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 specific operations. Your Company looks upon them as partners in its progress and shares with them the rewards 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.

SEGMENT 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 Report 2025-2026. The financial 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 discussion on financial performance is captured in the Directors Report section of this Annual Report, while analysis of key ratios is furnished further.

Ratio	FY2026	FY2025	Detailed explanation
Debtor Turnover	156.89	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	2.33	2.24
Inventory Turnover	1.37	1.39	Inventory turnover ratio remained largely stable during the period, indicating consistency in inventory management and sales realization
In Days	266.42	262.59
Interest Coverage Ratio	16.44	3,371.82	The Company availed a term loan during the year against negligible borrowings in the previous year resulted in lowering Interest coverage ratio.
Current Ratio	3.33	1.81	Current ratio improved due to higher current assets and lower current liabilities, reflecting improved short-term liquidity.
Debt Equity Ratio	0.32	0.00	The Company availed a term loan during the year and having balance of 3 5,342.36 lakhs against negligible borrowings in the previous year, while shareholders\u2019 equity grew by 18.3% on retained profit of 3 2,660.73 lakhs. The percentage variance is not meaningful, the borrowings in the previous year having been negligible.
Operating Profit Margin	29.75%	20.80%	Improved operational e ciency resulted in increase in operating Profit Margin
Net Profit Margin	16.35%	11.20%	Improved operational e ciency and higher other income contributed to an increase in the net profit Margin.
Return on Net worth	26.90%	25.28%	The Company availed a term loan during the year against negligible borrowings in the previous year resulted in lowering Interest coverage ratio.

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 offer tremendous opportunities 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 (VR) is redefining the way real estate operates. While real estate remains inherently a touch-and-feel industry 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 coworking 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 fueling 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 physical o ces, 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 325 lakh to 310 lakh.

Asset size under SM REIT to range between 350 crore and 3500 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.

Nila Spaces lists GIFT City VIDA on Alt DRX platform:

Nila Spaces has listed its GIFT City residential project VIDA on the Alt DRX platform, making it the first tokenized asset under Alt DRXs Gujarat Tri-City Investment Opportunity. The listing enables resident

Indians to invest in the project starting at the equivalent of one square foot in digital ownership.

Residential real estate in Indias top urban markets carries ticket sizes of 375 lakh to 33 crore, with multi-year lock-ins and limited liquidity. Property tokenization converts these assets into tradeable digital real estate. The VIDA listing allows micro-ownership down to 1 sq ft. A digital transaction layer replaces paperwork with faster settlement, allowing investors to enter and exit when it suits them. Each token is backed by stamp-duty-paid, legally enforceable real estate. The Company believes that every Indian should have access to real estate as part of their investment portfolio, and that tokenization enables investors to participate in developments with as little as one square foot in digital ownership. Project VIDA on Alt DRX opened the door to capital appreciation anchored in a real underlying asset.

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-e cient technologies, the transition towards renewable energy sources where feasible, and conscious e orts 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 e cient water and waste management systems in our projects. These measures ensure that natural resources are used judiciously and responsibly.

We actively promote green building concepts across our projects. Our developments 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 inclusive 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 www.nilaspaces.com under the investor segment. 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 projects	Any employee, labour, worker is 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 to your Company\u2019s construction	Person or persons are hurt or injured as a result of your Company\u2019s 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 requirements 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/client\u2019s requirements and your Company\u2019s quality standards. Your Company\u2019s overall approach to quality management assures conformance and performance to the highest level.
Interest rate risk	Your Company\u2019s interest costs are impacted by market rates.	Your Company\u2019s 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 Company\u2019s Principal\u2019s ability to pay can have an impact on the financial result.	As per your Company\u2019s 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.
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 Company\u2019s operations are world class in terms of e ciency, cost and waste avoidance. Your Company has developed proprietary knowledge to construct with di erent technologies, while the management provides highest importance to the Quality perspective to ensure long- term sustainable growth.
Economic downturn	Your Company\u2019s 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 Company\u2019s 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 \u2013 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 as fires, 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 compliance risks	Your Company aims to avoid the 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 Company\u2019s 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 Company\u2019s 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 project site	Fire, flood or natural disaster could result 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 Company\u2019s construction strategy aims to assure adequate insurance, so that your Company is not financially affected. While, the loss prevention programmes, protect your Company\u2019s 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 project	A major incident during which a significant amount of local environmental damage occurs leading to fines, loss of reputation, etc.	Your Company\u2019s Quality Management System is certified to ISO 9001 : 2015 and works to assure that all such material risks are identified and 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 risks \u2013 extreme weather events	Extreme weather events disrupt project execution.	Requirements for emergency response plans at all sites include flood risks etc. See also mitigations mentioned hereinabove.
Corrupt or fraudulent actions carried out by your Company\u2019s representatives	Your Company\u2019s employee or employees fail to adhere to your Company\u2019s Code of Conduct and related policies and requirements and act in a fraudulent or corrupt manner leading to financial 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 with applicable laws	The diverse nature of your Company\u2019s business and operations means that 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 Company\u2019s reputation.	Your Company has put in place comprehensive and robust compliance programme which is based on your Company\u2019s 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 relating to our business activities	In connection with the revenue of your Company and in the purchase of materials and services from our suppliers, consultants, etc. large potential liabilities may occur in case of e.g. late delivery, delivery of defective products, unfulfilled service commitments and incorrect advice. 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 Company\u2019s liabilities are included in contracts.	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 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 a airs of your Company and clearly delineates the roles, responsibilities and authorities at each level of its three-tiered governance structure and key functionaries 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 ongoing 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 e orts 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 di er 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.