Nimbus Projects Ltd Management Discussions.

Introduction

The real estate sector is one of the most globally recognized sectors. Real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investments in both the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Market Size

Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the countrys GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high demand for office space in recent times. Commercial office stock in India is expected to cross 600 million square feet by 2018 end while office space leasing in the top eight cities is expected to cross 100 million square feet during 2018-20. Gross office absorption in top Indian cities has increased 26 per cent year-on-year to 36.4 million square feet between Jan-Sep 2018. Co-working space across top seven cities has increased sharply in 2018 (up to September), reaching 3.44 million square feet, compared to 1.11 million square feet for the same period in 2017.

Investments/Developments

The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. Private Equity and Venture Capital investments in the sector have reached US$ 1.47 billion between Jan-Mar 2019. Institutional investments in Indias real estate are expected to reach US$ 5.5 billion for 2018, the highest in a decade.

According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 25.04 billion in the period April 2000-March 2019.

Some of the major investments and developments in this sector are as follows:

• New housing launches across top seven cities in India are expected to increase 32 per cent year-on-year by 2018 end to 193,600 units.

• In September 2018, Embassy Office Parks announced that it would raise around Rs 52 billion (US$ 775.66 million) through Indias first Real Estate Investment Trust (REIT) listing.

• New housing launches across top seven cities in India increased 50 per cent quarter-on-quarter in April-June 2018.

• In May 2018, Blackstone Group acquired One Indiabulls in Chennai from Indiabulls Real Estate for around Rs 900 crore (US$ 136.9 million).

Government Initiatives

The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies. Below are some of the other major Government Initiatives:

• Under the Pradhan Mantri Awas Yojana (PMAY) Urban, more than 8.09 million houses have been sanctioned up to May 2019.

• In February 2018, creation of National Urban Housing Fund was approved with an outlay of Rs 60,000 crore (US$ 9.27 billion).

• Under the Pradhan Mantri Awas Yojana (PMAY) Urban 1,427,486 houses have been sanctioned in 2017-18. In March 2018, construction of additional 3,21,567 affordable houses was sanctioned under the scheme.

SECTOR WISE ANALYSIS

Residential Real Estate: Affordable Housing Plays Pied Piper

The fallout of RERA and GST was still very visible in 2018-19, but the dust began to settle. With developers and brokers accepting the new market realities and beginning to fall in line, the residential sector began to regain visibility and viability. Transparency and accountability - never the defining characteristics of Indian real estate - became the ‘new normal this year, and the market reacted positively.

Even though sales and new supply picked up q-o-q across the top cities, the issue of stalled projects showed few signs of resolution in 2018-19. However, a number of landmark court judgments strongly indicated that the Indian legal system is awake and aware of the problem. 2018-19 was a year where consumers, previously held hostage by lack of efficient regulation, finally felt that they are being heard and represented. As is always the case, the process of resolving a problem starts with acknowledging that a problem exists.

Average property prices remained largely static across the top 7 cities in 2018-19. In fact, average property prices at the pan-India level saw only 1% increase in 2018-19 as against the previous year, from INR 5,491 per sq. ft. in 2017-18 to INR 5,545 per sq. ft. in 2018-19.

Affordable housing, backed by a series of government sops during 2018-19 , kept the residential supply momentum ticking. In sharp contrast to earlier years where the ‘affordable tag was considered down-market and avoidable, 2018 saw almost every real estate developer - regardless of market footprint and previous category orientations - eager to take a bite out of the affordable housing pie.

Affordable housing accounted for the lions share of this supply with over 41% of the new supply coming into this category. Ready-to-move-in properties garnered maximum buyer interest.

Commercial Real Estate: Steady Growth

In terms of market traction, commercial real estate retained its status as the most buoyant sector in 2018 -19 across major cities. Demand for Grade A office space saw new highs and vacancy levels declined in prime locales.

Big-bang boosters like the start-up revolution and Smart Cities scheme helped create a lucrative environment for businesses to work and expand, inevitably increasing demand for office spaces. Proactive government policies further increased the ease of doing business in India, revving up the confidence of global entities.

Concurrently, office real estate in most Tier I cities emerged as strong investment options for producing higher yields than the other segments of real estate. The increasing presence of institutional investors in Indias commercial real estate space helped improve governance, making it more structured and transparent.

Retail Real Estate: Quality Malls Push Growth

2018-19 saw further liberalization of FDI policies, repositioning Indian retail on the global investment map and attracting a large number of global retailers into the country. In H1 2018, private equity investments into Indian retail swelled to over $300 million, denoting a bracing growth of 54% over the previous year.

Worryingly or encouragingly (depending on ones viewpoint) online retail also witnessed exponential growth in 201819. In fact, online retailing is now expected to be at par with physical retail over the next 5 years. With India positioned to become the worlds fastest-growing e-commerce market, online retail in the country is driven by robust investments and deepening internet penetration in the country.

Other Sectors

The logistics & warehousing sector transformed rapidly in 2018-19 after the Government granted the coveted infrastructure status to logistics in November 2017. In fact, warehouse stock supply is expected to see substantial increase over the next two years owing to implementation of GST, the Governments determined infrastructure push and increased interest from national and international investors. Overall, strong economic fundamentals, proactive reforms and increasing use of technology will continue to boost the sector.

Besides conventional sectors, 2018 also saw the emergence of alternate asset beyond senior living. Student housing and co-living, barely mentioned or considered in previous years, drew considerable interest not only from industry watchdogs but also institutional funds.

All in all, 2018-19 was a mixed bag of hits and misses.

Road Ahead

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralized processes to source material and organize manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.

Financial Review

a) Standalone results of operation: During the financial year under review, your Companys standalone revenue from operations is Rs. 465.40 Lakh as compared to revenue of Rs. 733.22 Lakh in last year, a decrease of 36.53 %. The standalone loss after tax of your Company is Rs. 1552.57 Lakh compared to loss of Rs. 783.53 Lakh in last year, registering an increase of 98.15 % over the last year.

All the above said decrease in revenue and increase in loss after tax are due to loss in partnership firms, with which the Company is developing all the projects. The projects undertaken by the Company are under final stage of development. The Company is expected to complete these projects by next year and as a result, revenue and profit will be generated and financial position & ratios are expected be improved.

b) Consolidated Results of operation: During the financial year under review, your Company has consolidated its Financial Statements w.r.t. to its associate Companies viz Capital Infraprojects Private Limited and Golden Palm Facility Management Private Limited. The Companys consolidated revenue from operations is Rs. 465.40 Lakh as compared to revenue of Rs. 733.22 Lakh in last year, a decrease of 36.53%. The consolidated loss after tax of your Company is Rs. 2177.72 Lakh compared to loss of Rs. 1136.82 Lakh in last year, registering an increase of 91.56% over the last year. The individual performance of these associates Companies have been discussed under in relevant head of this report.

Ratio:

Standalone

Consolidated

For the year ended 31st March 2019 For the year ended 31st March 2018 For the year ended 31st March 2019 For the year ended 31st March 2018
Debtors Turnover Ratio (No. of Days) 5.45 4.35 5.45 4.35
Inventory Turnover Ratio (No. of Days) 0.03 0.15 0.03 0.15

Standalone

Consolidated

For the year ended 31st March 2019 For the year ended 31st March 2018 For the year ended 31st March 2019 For the year ended 31st March 2018
Interest Coverage Ratio -0.80 -0.02 -1.53 -0.49
Current Ratio 2.98 5.42 2.98 5.42
Debt Equity Ratio 0.93 1.80 0.93 1.80
Operating Profit Margin (%) -0.77 -0.01 -1.47 -0.31
Net Profit Margin (%) -1.74 -0.65 -2.44 -0.94

Business Performance

The Company is engaged in construction and development of residential complex in National Capital Region (NCR) through SPVs. The status of current projects undertaken by the SPVs is furnished hereunder:

EXPRESS PARK VIEW I: The Company is pleased to deliver its very first project namely "Express Park View" situated at Plot 10B, Sector CHI V, Greater Noida. Flats are being delivered to the allottees and the process of execution of sub-Lease Deed in favour of the allottees has been started and till 31st March, 2019 the Company has executed 297 Sub-Lease deeds in favour of the respective allottees. This Project consists of 332 flats in totality, out of which the Company has sold out 318 flats as on 31st March, 2019.

THE HYDE PARK - Close vicinity with proposed Metro station, Express way, shopping complexes, Educational hub & hospital are the major highlights of the project- The Hyde Park Noida and is adjoining a large cluster of premium Housing Projects on one side and green area on the other side. The lease hold area allotted to the project is around 60348.53 Sq.mt. and is situated at Sector 78, Noida. Project consists of approx. 2044 flats in total. It was previously scheduled to be completed in two phases. Plan for Phase-II was modified and is now proposed to be completed in two stages of three towers each. As of now the construction of the whole project is completed and the firm has also obtained the completion Certificate for the whole project comprising of 23 Residential towers and a commercial complex and the possession of flats & commercial shops is in full swing. Till March 2019 1978 flats were sold by the firm and 1817 allottees have taken the physical possession of their flats. As on 31st March Company has executed 1256 Sub-Lease Deed in favour of the allottees.

THE GOLDEN PALMS - IT corridor, Malls and Golf course are the major highlights of the project - Golden Palms, Noida. Living at Golden Palms is full of luxurious amenities with plush lifestyle surrounded by 80% greenery with variety of palms, flowers, hedges and ground cover. The lease hold area allotted to the project is around 39999.76 Sq.mt. and is situated at Plot No - GH - 01/E, Sector 168, Noida. Project consists of approx. 1408 flats of varying sizes including Studio Apartments. It is scheduled to be completed in three phases. As of now the construction of the whole project is completed and the completed has also obtained the completion Certificate for the whole project comprising of 13 Residential towers including commercial Area and the possession of flats & commercial shops is in full swing. Till March 2019, 1106 flats were sold by the firm and 715 allottees have taken the physical possession of their flats. As on 31st March Company has executed 287 Sub-Lease Deed in favour of the allottees.

EXPRESS PARK VIEW (EPV -II) - This Project is jointly developed by the Company with IITL Projects Limited. The Project was initially launched in two phases i.e. Phase I & Phase II. The construction of Phase I comprising of 10 towers of total 1320 residential flats was taken up and 729 flats have been sold as on date. Firm has received Occupancy Certificate for three towers I,J & K. And 271 allottees have taken possession of their flats as on 31st March 2019. Due to slowdown of the market the construction of Phase II could not be preceded. The Phase I comprising of 10 towers is proposed to be released in three stages constituting of 3, 4 and 3 Towers.

THE GOLDEN PALM VILLAGE - This plot of land near F 1 racing track was allotted and scheduled to be developed by the Company jointly with IITL Projects Ltd for Residential flats from Yamuna Expressway Industrial Development Authority (YEIDA). The construction work was planned but due to slow market sentiments it could not proceed even

though efforts were to redesign the project. Now in line with the recently launched Project Settlement Policy (PSP) by YEIDA, the firm has made an application under Project Settlement Policy (PSP) to Yamuna Expressway Industrial Development Authority (YEIDA) for partial surrender of project land admeasuring around 30995.70 sq. metres out of total project land area of around 102995.70 sq.mtr which is principally accepted by YEIDA and the application is under process with them for final disposal. The firm is evaluating options for development.

SWOT ANALYSIS

Strengths- The Brighter Picture

India has always been a resilient market with great fundamentals for real estate and springing back positively. By virtue of the strong and increasing demand due to our large population base, this sector has grown continually and is expected to stay steady for long. FDI in various sectors will continue to fuel the economy and open more doors. The newly Real Estate Regulation Act will bring about more transparency in the long term, hence making investments more attractive.

The above fundamentals automatically creates demand for more housing and also tend to support infrastructure such as retail, office, hospitality, health care, entertainment and lifestyle business.

Weakness- the other side of the Coin

Rapid urbanization is good for the growth but there are loopholes within the entire system. The biggest of them is the lack of regulations in our country. Over the past one decade, the country is trying to regulate countrys fragmented and irregular built environment. Though there have been a few milestones of success, such as the opening of the foreign direct investments for the real estate sector, implementation of Real Estate Regulation Act, 2016. However, this cannot solve the problems of the entire built environment.

Opportunities

- Increase in per capita income of Indians

- Constant growth of GDP

- Housing for all by 2022 mission of central government

- Involvement of private players in the sector

- Requirement of 38 million of workforce by the year 2030

- One crore rural houses to be built by the year 2019

- Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed.

- Indira Awaas Yojana will be extended to 600 districts

- Indexation of capital gains shifted from 01-04-1981 to 01-04-2001.

Challenges

- Delay in construction due to shortage of fund

- Supply is more than demand for the projects

- Less FDI in the sector

- Lack of investors confidence in the sector due to delay in construction for the last few years

- Slow job creation in the economy as the sector is dependent on labour-intensive activities Our Vision

Our vision revolves around our motto "ENDLESS EFFORTS. TO MAKE LIFE BETTER."

We strive to:

• Design and construct the most magnificent landmarks and edifices;

• Contribute tangibly to regional and national development by way of key infrastructure projects;

• Protect and preserve the environment we live in.

Our Mission

• To build a better world;

• To set standards and improve our environment;

• To offer a wide portfolio of international quality;

• To offer products that cater to different markets and segments;

• To evolve contemporary benchmarks in construction and marketing practices.

Our Growth Drivers

• Excellent track record;

• Diversified Business Model with clear focus;

• Highly professional and proficient team of Engineers at site;

• Strong project execution capabilities;

• Long term relationship with vendors and customers,

Human Resources

Employees are our vital and most valuable assets. We have created a favorable work environment that encourages innovation and meritocracy. It is important for us that organization culture and organization strategy are well aligned. Over a period we have developed a strong culture of transparency through constant employee communication and have developed strong performance management practices wherein best in class reward and recognition systems are deployed. We have also set up a scalable recruitment and human resources management process which enables us to attract and retain high caliber employees. Our employee partnership ethos reflects the Companys longstanding business principles and drives the Companys overall performance with the prime focus to identify, assess, groom and build leadership potential for future

The Company has a dynamic team of highly qualified professionals and proficient employees and as on 31st March 2019, the Company has seven employees on its payroll. During the year under review there was no significant development in human resources and on industrial relation front. The

Adequacy of Internal Financial Controls with reference to the Financial Statements

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditors of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

Cautionary Statement

The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable.

For and on behalf of Board of Directors
Nimbus Projects Limited
Date: 12th August, 2019
Place: New Delhi Bipin Agarwal
Chairman & Managing Director
DIN: 00001276