Nimbus Projects Ltd Management Discussions.

GLOBAL ECONOMY

Global economies are facing a synchronized slowdown, resulting from a variety of factors affecting the world. The Global growth is projected at 4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 6 percentage points lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling the significant progress made in reducing extreme poverty in the world since the 1990s.

INDIAN ECONOMY

Indias GDP growth in FY 19-20 has slowed down to an 11 year low of 4.2%. The Indian economy decelerated sharply in the fourth quarter at 3.1%, lowest in almost 17 years, after growing at 4.1% in Q3 FY20. The countrys fiscal de cit worsened to 4.59% of GDP, much beyond the targeted 3.8% of GDP and expected to worsen further with the dip in tax collection and revenue shortage due to the subsequent effects of lockdown on the economy. The core sector contracted by a record 38% in April as the lockdown hit all eight infrastructure sectors.

The COVID-19 pandemic has thrown up big challenges for Indias real estate industry. The nationwide lockdown and the consequent suspension of economic activity has led to slump in sales, halt in construction at ongoing projects and considerable postponement of new project launches. With threat of job losses keeping the consumer sentiment down, people are deferring their big-ticket purchases like homes. Given the current negative sentiment, it will take some time for the demand to revive in the residential real estate. The lockdown and the ensuing Work-From- Home (WFH) concept has the potential to negatively impact commercial real estate demand in the coming years. The social distancing concept will also reduce the demand for shared co-working spaces.

In face of such challenges, one emerging positive is the falling interest rates. The RBI has reduced Repo Rates from 6% in April, 2019 to 4% at present and that has been a cascading effect on the home loan interest rates. E ectively the reduced EMIs have made home mortgages more a ordable.

IMPACT OF COVID-19 GOBALLY Vs. INDIAN ECONOMY IN REAL ESTATE SECTOR

The impact of the novel Corona virus on Indian real estate has been unprecedented to an extent that it has brought construction activities to a halt and significantly eroded the market of its potential buyer-base. With property transactions dipping to near-zero during the nation-wide lockdown, the sector is looking at challenging times ahead. The interdependence of supply chains, migration of labourers, cost overruns, and liquidity constraints are some of the looming challenges. The COVID-19 crisis and its impact on Indian real estate is such that it is being considered as big hit for the realty sector in the last ve years, the first two being demonetization and the implementation of the Real Estate (Regulation and Development) Act, 2016.

COVID-19 has infected more than 20.3 million people worldwide and has claimed over 7.42 lakh lives across the globe. With the World Health Organisation (WHO) declaring it a global health emergency and pandemic on March 11, 2020, the sentiments of businesses worldwide have been severely impacted and are mostly negative in their outlooks. The outbreak has created a great deal of uncertainty regarding trade and imports, not only in China but worldwide.

Some reports indicate that 300,000 workers have already been laid o by developers across India due to the ongoing slowdown. The potential impact of COVID-19 on the Indian economy the real estate industry will witness an estimated job loss of around 30%. Undoubtedly, the economy cannot a ord additional job losses of this magnitude.

While the adverse effects of the pandemic are already being felt across the world, varying opinions are emerging on COVID-19s impact on the real estate sector, a health emergency that force-launched the biggest ever work from-home experiment globally, putting a question mark on the relevance of workspaces in a post-Corona virus world.

India, where the economic growth is already set to slow down to a record 11-year-low, a prolonged lockdown which started from March 25, 2020 and was eventually extended till June 7, 2020, amid a dramatic rise in the number of infections worsened the situation in Asias third-largest economy. As on August 20, over 28 lakh Corona virus infections were reported in India. While the Chinese economy has been reeling under the impact of the Corona virus since December 2019, the situation started to get worrisome in India only in March 2020. The lockdown, which virtually brought to a standstill most economic activity in the country, has hurt all sectors, including real estate. The adverse impact of the Corona virus is visible on housing sales in the last quarter of the last fiscal because March is usually one of the biggest months for sales,"

MEASURES TAKEN BY THE GOVERNMENT THAT MAY PROVIDE RELIEF TO THE INDIAN REAL ESTATE SECTOR

Before the COVID-19 outbreak, the Indian economy was one of the fastest-growing economies of the world (According to the International Monetary Fund). However, due to the breakout, the economy is on the back foot, and so is the real estate sector, which was dealing with many other issues since the past few years. To handhold the real estate and construction sector, the Central Government has rolled out certain measures:

? Announcing relief measures for aggrieved real estate developers, the Central Government has increased the threshold for initiating default proceedings under the Insolvency and Bankruptcy Code (IBC) 2016, from Rs 1 lakh to Rs 1 crore. This will help keep a check on unscrupulous and frequent insolvency proceedings against developers, especially during tough economic times.

? The Government has urged the State governments to utilise the Rs 31,000 crore fund for the welfare of construction workers, so as to minimise the adverse impact of the nation-wide lockdown on the same.

? The release of a relief package to the tune of Rs 1.71 lakh crore will benefit migrant construction labourers.

? The massive reduction in repo rate (75 bps), Reverse Repo rate and CRR by the Reserve Bank of India (RBI) will lower the cost of borrowing for the real estate sector and will help projects which were delayed due to fund crunch.

? The deferment of home loan Equated Monthly Installments (EMIs) will help borrowers and the business community utilise funds for priority activities.

? The deferment of dates for key lings such as ITR, composition scheme, and Aadhar-Pan linkage will ease the compliance burden.

? Various State governments (Delhi, Maharashtra, Gujarat, and Uttar Pradesh etc.) are offering compensation to migrant workers for loss of employment and are arranging for food and temporary shelters for the same. The Delhi government has also offered to pay rent on behalf of migrant citizens so that they stay put at their place of residence.

? A recent judgement of the Supreme Court of India to categorise construction workers and labourers as consumers will also help in this regard. It will ensure that no statutory benefits are denied to this section of people.

 ? Looking at the rising infection cases, the Government of India has banked on technology for dealing with the same and are working to spread awareness via a mobile phone application called Aarogya Setu. The application uses the location, mobile number and Bluetooth signals to check if the user of the app has interacted with someone who has tested positive for COVID-19.

? To ease the potential cash crunch situation in the economy, RBI has announced a slew of measures. It has decreased the Reverse Repo rate by 25 basis points from 4 percent to 3.75 percent. This step will aid banks in terms of liquidity, which could then be disbursed as credit.

? RBI has also provided a direct funding facility to the tune of Rs 1 lakh crore. Out of this, Rs 50,000 crore will be earmarked for the National Housing Bank (NHB), Small Industries Development Bank (SIDBI) and National Bank for Rural and Agricultural Development (NABARD). The second tranche of Rs 50,000 crore will be provided through the Long Term Repo Operation (LTRO). This is one of the largest direct liquidity infusions by the Central Bank in recent times.

? RBI has allowed the facility of deferment of Date of Commencement of Commercial Operations (DCCO) to the Non-banking Financial Companies (NBFCs). This facility was hitherto available only to banking institutions. The move is expected to help real estate developers who have taken credit from NBFCs.

? RBI has also provided that the three-month moratorium period provided on all kinds of loans, will not be counted for the purpose of calculating Non-Performing Assets (NPAs).

? In a major relief to corporate real estate borrowers, the Central Government has decided to suspend Section 7, 9 and 10 of the Insolvency and Bankruptcy Code (IBC).

? In the second round of relief measures, the Central Government intends to roll out a package of Rs 20 lakh crore, including the revival measures taken by RBI.

? The Central Government has urged State governments to invoke the Force Majeure clause of RERA so that the registration and completion schedule of the real estate projects can be extended by at least six months. Currently, over 20 states in the country have done the same.

? Providing incentives to cash-starved Non-Banking Financial Companies (NBFC) and Housing Finance Companies (HFC), the Indian Government has provided a special liquidity facility to the tune of Rs 30,000 crore. This will pump up the much-needed cash flow in the real estate market, which is one of the foremost borrowers for NBFCs. The re financing window for HFCs will work to rekindle the interest of homebuyers in the housing segment.

? The construction contractors engaged with government infrastructure companies have been given an extension of up to six months to complete ongoing projects.

? Change in the de nition of Micro, Small and Medium Enterprises (MSME) will help in reviving tanked business sentiment. This will help in demand creation and shall have a positive domino effect on the residential segment.

? In addition to this, the Government has also extended the CLSS component of the Pradhan Mantri Awas Yojana (PMAY) till March 2021. This shall benefit both homebuyers in the middle-income segment and real estate developers.

SECTOR WISE ANALYSIS: REAL ESTATE MARKET

The Indian residential sector has been grappling with subdued demand for the past few years and the recent developments including COVID-19 have made things even more di cult for the sector. While certain measures such as the consecutive rate cuts by the RBI, the reduction of GST rates to 1% for a ordable housing and 5% for others and the setting up of an Alternative Investment Fund (AIF) have helped home-buyer sentiments, theyve had little impact on the sales for the sector.

COVID-19 has severely hit residential real estate business and the sector has come to a standstill in the short term. While the sector was coming out of the woods after the liquidity crisis initiated by the IL&FS asco and subsequent fallouts of various financial institutions, the pandemic outbreak could further impact residential sector.

The near-term outlook on sales remains bleak and depends completely on how the pandemic impacts the economy in the second half of the year 2020. With the COVID-19 crisis, ensuing income uncertainty and poor consumer sentiments, demand would be further severely hit in 2020.

The residential real estate market stands precariously poised with a funding crisis only having gotten worse in the first half of 2020. The six-month moratorium on term loans till August 31, 2020 has reduced immediate pressure on servicing their debt burden but cash flows are under pressure like never before.

The six-month extension on RERA completion dates for all registered projects scheduled for completion after March 25, is another measure to help developers cope with this highly stressed environment. However, this temporary lease on life might not be significant enough if homebuyer sentiment and sales do not revive, the report said.

The officespace market felt the full force of the COVID-19 pandemic in 2019-2020 with the lockdown crippling the economy and threatening to completely change the face of the Indian workplace. It is expected that officedemand and supply came to a near standstill during in first two quarters of the current financial year 2020-21. The same sentiment shall prevail upon in the rental real estate market across India. Some market experts predict that rents have dropped the sharpest in NCR at 8.8 percent YoY.

AN OPPORTUNITY

If we look from the Indian business perspective, the COVID-19 outbreak might be an opportunity for Indian businesses to increase production capacity and give a thrust to the "Make in India" campaign. The Indian Government is also encouraging companies in various sectors to make the campaign successful.

AN OPPORTUNITY IN THE INDIAN COMMERCIAL REAL ESTATE MARKET

China is facing a backlash due to controversies behind the alleged origin of the novel Corona virus and the countrys initial handling of the same. With many large Corporates retreating from the said country, India presents a ready made ground for commercial and manufacturing infrastructure development. It is also accompanied by a proposed overhaul of the Foreign Direct Investment (FDI) policy to enable easier entry of foreign players. According to a recent report by JLL, the following factors make India an apt alternative of China from a commercial infrastructure perspective:

? The industrial real estate market of India has attracted FDI of over USD 10 billion since 2017, backed by professi onally managed groups.

? India boasts of a ready-to-shift industrial infrastructure to the tune of approximately 22 million sq ft. The same is in the ready-to-be-occupied state, within six-to-eight weeks of initiation, across the major manufacturing clusters.

? India has an ample amount of pre-constructed/ready infrastructure of standard specifications with a minimum height of 13-meters, and floor strength of 6 ton per sq mt.

? Since renting factories in India with lease tenure of 9 years and above can significantly reduce expenditure on land and buildings, the investment and re-location towards India shall result in higher capital expenditure savings for foreign companies.

? The saving in capital expenditure can be utilized for servicing a significant part of operational expenditures.

FINANCIAL REVIEW

(a) STANDALONE RESULTS OF OPERATIONS

During the financial year under review, your Companys standalone revenue from operations is Rs. 950.75 Lakh as compared to revenue of Rs. 465.40 Lakh in last year, an increase of 104.29 %. The standalone profit after tax of your

Company is Rs. 1594.15 Lakh compared to loss of Rs. 1552.57 Lakh in last year, registering an increase in Pro t of 202.68 % over the last year. All the above said increase in profit after tax is due to change in Fair Value of Preference Share Liabilities and Investment in Equity & Preference Shares of Group Companies.

(b) CONSOLIDATED RESULTS OF OPERATIONS

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. 950.75 Lakh as compared to revenue of Rs. 465.40 Lakh in last year, a increase of 104.29 %. The consolidated profit after tax of your Company is Rs. 2218.97 Lakh compared to loss of Rs. 2177.72 Lakh in last year, registering an increase of 201.89% 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 2020 For the year ended 31st March 2019 For the year ended 31st March 2020 For the year ended 31st March 2019
Debtors Turnover Ratio 18.68 5.54 18.68 5.45
Inventory Turnover Ratio 0.15 0.03 0.15 0.03
Interest Coverage Ratio 1.63 -0.80 1.87 -1.53
Current Ratio 5.69 2.98 5.69 2.98
Debt Equity Ratio 0.61 0.93 0.61 0.93
Operating Pro t Margin (%) 0.74 -0.77 0.84 -1.47
Net Pro t Margin (%) 0.27 -1.74 0.38 -2.44

The improvement in the ratios, in financial year 2019-20, is due to change in valuation of financial liability & investment.

BUSINESS OVERVIEW

The Company is engaged in construction of residential ats through Special Purpose Vehicles (SPVs) and these SPVs have been allotted plots of land on long term lease, under Builders Residential Scheme (BRS) of the New Okhala Industrial Development Authority (NOIDA), Greater Noida Industrial Development Authority (GNIDA) and Yamuna Expressway Authority (YEA). The total lease hold area allotted to the Company along with SPVs is around 2,65,000 sq. meters and the projects are under various stages of construction.

PROJECTS DEVELOPED BY THE COMPANY

(a) 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, 2020 the Company has executed 300 Sub-Lease deeds in favour of the respective allottees. This Project consists of 332 ats in totality, out of which the Company has sold out 318 ats as on 31st March, 2020.

(b) 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. 2092 ats in total. 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. The possession of ats & commercial shops is in full swing. Till March 2020, 2026 ats were sold by the firm and 1972 allottees have taken the physical possession of their ats. As on 31st March Company has executed 1496 Sub-Lease Deed in favour of the allottees.

The firm has also handed over the Maintenance of Common areas & Facilities to the Resident Welfare Association duly constituted under the Provisions of the Societies Registration Act, 1860.

(c) 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, owers, 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. 1403 ats of varying sizes including Studio Apartments. 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 ats & commercial shops is in full swing. Till March 2020, 1271 ats were sold by the firm and 1035 allottees have taken the physical possession of their ats. As on 31st March 2020 Company has executed 558 Sub-Lease Deed in favour of the allottees.

(d) EXPRESS PARK VIEW II

This Project is jointly developed by the Company with IITL Projects Limited. Firm has constructed total no. of 10 towers in the project "THE EXPRESS PARK VIEW" out of which 7 towers (I, J, K, L, L1, M & M1) has been completed and Completion Certificate has been duly received from Competent Authority. For the remaining three towers i.e. I1, J & K1, Firm has already applied for Completion Certificate. The project comprises of total no. of 1320 ats out of which 830 ats has been sold out till March, 2020. And 434 allottees have taken possession of ats till March 30, 2020.

Firm has recently launched the Commercial Area in the project in the name of "The Park Street" It consists of 39 Commercial Shops. The Commercial area is separately registered as independent project under Real Estate (Regulation & Development ) Act, 2016. The registration no. of the project is UPRERAPRG180127. The date of Completion of the Project is 30 September 2021.

(e) THE GOLDEN PALM VILLAGE

This plot of land near F1 racing track was allotted and scheduled to be developed by the Company jointly with IITL Projects Ltd for Residential ats 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 nal disposal. The firm is evaluating options for development.

SWOT ANALYSIS

v STRENGTHS

? Low cost well educated and skilled labour force is now widely available across the country.

? Su cient availability of raw material and natural resources in the country is supportive for industry.

? Risk of investment is lower as compared to equity.

? Implementation of RERA as a single regulator

? Increasing the threshold limit under the Insolvency and Bankrupcy code (IBC) 2016, from Rs. 1Lacs to Rs.1 Crores for initiating the default proceedings.

v WEAKNESS

? Non availability of Skilled Labour

? Weak Brands

? Poor customer Retention

? High Public cost and constrains on Public Borrowings

? Lack of Public awareness about government reforms and initiatives.

v OPPORTUNITIES

? Reduction in Repo rate, Reverse Repo rate and CRR by RBI will lower the cost of Borrowings and will help projects which are delayed due to fund crunches.

? Deferment of Moritorium Period by RBI

? Invocation of Force Majeure clause of RERA , which helps in extension of Registration and completion

Schedule of the Project by atleast Six months.

? Extension of CLSS component of the Pradhan Mantri Awas Yojana (PMAY) till March 2021.

v THREATS

? Delay in construction due to shortage of funds

? Supply is more than demand for the projects.

? Less FDI in Sector

? Lack of investors con dence 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 activities.

OUR VISION

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

We strive to:

? Design and construct the most magni cent landmarks and edi ces;

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

? Protect and preserve the environment we live in.

v 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.

v Our Growth Drivers

? Excellent track record;

? Diversi ed Business Model with clear focus;

? Highly professional and pro cient team of Engineers at site;

? Strong project execution capabilities;

? Long term relationship with vendors for streamlined raw material supply.

HUMAN RESOURCES

The Company has a dynamic team of highly qualified professionals and pro cient employees and as on 31 March 2020, the Company has 7 (Seven) employees on its payroll.

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 veri es 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 pro tability, 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: 28 August, 2020 Bipin Agarwal
Place: New Delhi Chairman & Managing Director
DIN: 00001276