oberoi realty ltd share price Management discussions


MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMIC REVIEW

Global economy

The baseline forecast is for growth to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3.0% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023. With further financial sector stress, global growth declines to about 2.5% in 2023 with advanced economy growth falling below 1.0%.

Global headline inflation in the baseline is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflations return to target is unlikely before 2025 in most cases.

Indian economy

Indias growth continues to be resilient despite some signs of moderation in growth, although significant challenges remain in the global environment, India was one of the fastest growing economies in the world.

The overall growth remains robust and is estimated to be 6.9% for the full year with real GDP growing 7.7% year on year during the first three quarters of FY 2022-23. There were some signs of moderation in the second half of FY 2022-23. Growth was underpinned by strong investment activity bolstered by the governments capex push and buoyant private consumption, particularly among higher income earners. Inflation remained high, averaging around 6.7% in FY 2022-23 but the current account deficit narrowed in Q3 on the back of strong growth in service exports and easing global commodity prices.

The World Bank has revised its FY 2023-24 GDP forecast to 6.3% from 6.6% (December 2022). Growth is expected to be constrained by slower consumption growth and challenging external conditions. Rising borrowing costs and slower income growth will weigh on private consumption growth and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic related fiscal support measures.

Although headline inflation is elevated, it is projected to decline to an average of 5.2% in FY 2023-24, amid easing global commodity prices and some moderation in domestic demand. The Reserve Bank of India has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate. Indias financial sector also remains strong, buoyed by improvements in asset quality and robust private sector credit growth.

The central government is likely to meet its fiscal deficit target of 5.9% of GDP in FY 2023-24 and combined with consolidation in state government deficits, the general government deficit is also projected to decline. As a result, the debt to GDP ratio is projected to stabilize. On the external front, the current account deficit is projected to narrow to 2.1% of GDP from an estimated 3.0% in FY 2022-23 on the back of robust service exports and a narrowing merchandise trade deficit.

Spillovers from recent developments in financial markets in the US and Europe pose a risk to short-term investment flows to emerging markets, including India.

INDUSTRY REVIEW

The residential real estate market in India had astounding progress in 2022, setting new sales records of 68% year on year, further demonstrating the industrys prominence as one of Indias fastest growing industries. After 2 years of being affected by COVID, Tier 2 and Tier 3 cities have arisen as fresh major real estate trends in 2022, and the real estate market has set unprecedented benchmarks which continued its growth momentum from 2021 amid the global slowdown.

MUMBAI REAL ESTATE

Mumbai, being the largest real estate market in the country is set for a major boom, which will further add to the overall surge. For close to 5 years, Mumbai has resembled a gigantic construction site. A new coastal road, a metro rail and a trans harbour link are among the many ongoing infrastructure projects that are meant to transform Indias commercial capital into a modern and efficient city. As these projects complete over the next few years, new micro markets will open up in and around Mumbai, as commuting would become easier. That will boost real estate development further.

Steady rise in demand for homes boosted realtors confidence and egged them on to launch more projects. In 2022, new launches in the top 7 cities jumped 42% compared to 2021. It was also the highest number of launches in a year since demonetisation.

2022 was a watershed year for the Indian housing sector, with sales breaching the previous peak levels of 2014. In response to this high demand, developers remained focused on completing their previously launched projects.

OPPORTUNITIES AND CHALLENGES Opportunities

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Companys well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.

Challenges

While the management of your Company is confident of creating and exploiting the opportunities, it also finds the following challenges:

• Unanticipated delays in project approvals;

• Availability of accomplished and trained labour force;

• Increased cost of manpower;

• Rising cost of construction lead by increase in commodity prices;

• Growth in auxiliary infrastructure facilities; and

• Over regulated environment.

COMPANY STRENGTHS

Your Company continues to capitalize on the market opportunities

by leveraging its key strengths.

These include:

1. Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in higher premium realizations.

2. Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.

3. Strong cash flows: Has built a business model that ensures continuous cash flows from their investment and development properties ensuring a steady cash flow even during the adverse business cycles.

4. Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

5. Outsourcing: Operates an outsourcing model of appointing globally renowned architects/contractors that allows scalability and emphasizes contemporary design and quality construction - a key factor of success.

6. Transparency: Follows a strong culture of corporate governance and ensures transparency and high levels of business ethics.

7. Highly qualified execution team: Employs experienced, capable and highly qualified design and project management teams who oversee and execute all aspects of project development.

KEY DEVELOPMENTS IN FY 2022-23

During the year FY 2022-23, your Company launched Tower G in Sky City project at Borivali (East), Mumbai. Further, your Company has purchased a parcel of land adjoining the existing lands owned by your Company at Pokharan Road 2, Thane.

BUSINESS OVERVIEW

In FY 2022-23 your Company was able to sell nearly 1.67 million sq.ft. RERA carpet area as compared to approximately 1.3 million sq.ft, of RERA carpet area in FY 2021-22.

MANAGEMENT DISCUSSION AND ANALYSIS

OBEROI GARDEN CITY

(GOREGAON EAST)

Oberoi Garden City is the flagship mixed-use development of your Company. It is an integrated development on approximately 83 acres of land in Goregaon (East), in the western suburbs of Mumbai, adjacent to the arterial Western Express Highway and overlooking Aarey Milk Colony. The development is approximately 5 kilometers from the international airport.

ETERNIA ANDENIGMA

(MULUND WEST)

Your Company is developing 2 land parcels (adjacent to each other) of approximately 9 acres each situated at Mulund (West), central suburbs, Mumbai.

The project comprises of 2 premium high storey residential towers namely, Eternia and Enigma. The project site is situated on LBS Marg, overlooking Yeoor Hills and Borivali National Park to the west and Eastern Express Highway to the east. The project is your Companys first development in the eastern suburbs of Mumbai and it offers configurations in various sizes of 3 BHK and 4 BHK. Part Occupancy Certificate was received in December 2022.

SKY CITY

(BORIVALI EAST)

Your Company is developing approximately 25 acre land parcel at Borivali (East) with an estimated total carpet area of about 4.5 million sq.ft.. The project site is situated at Borivali (East), Off Western Express Highway overlooking Borivali National Park to the east. The surrounding infrastructure allows the site to be well connected to the rest of Mumbai.

JVLR

(ANDHERI EAST)

Your Company has developed Prisma, a residential building with an estimated total carpet area of about 0.18 million sq.ft. and is developing Maxima, a residential building with an estimated total carpet area of about 0.18 million sq.ft. which is a part of the ongoing projects within the Oberoi Splendor Complex. Both Prisma and Maxima are conveniently located on the arterial Jogeshwari Vikhroli Link Road in the western suburbs of Mumbai.

THREE SIXTY WEST

(WORLI)

Three Sixty West has been developed by a joint venture entity carrying out development of a mix use project in Worli, located on the arterial Annie Besant Road, consisting of 2 high-rise towers. This development aims to be a global icon for Mumbai.

Your Company has retired as a member and constituent of Oasis Realty, an unincorporated association of persons, on March 3, 2023.

Financial performance overview

Analysis of consolidated financial statements for FY 2022-23 is provided below:

1. Key financial ratio analysis

A comparative table showing synopsis of FY 2022-23 versus FY 2021-22 of Key Financial Ratio is provided below:

Ratio

Calculation

2023

2022

Remarks

Debtors Turnover Net Sales

6.86

21.33

Due to increase in Trade receivables
Average Debtors
Inventory Turnover Sales*

0.56

0.48

Due to increase in Inventories
Inventory/Avg. Inventory
Interest Coverage Ratio EBIT

7.60

6.19

Increase in Interest expenses due to increase in Debt
Interest Expense
Current Ratio Current Assets

3.79

3.13

Due to increase in Inventories
Current Liabilities
Debt Equity Ratio Total Debt

0.32

0.27

Increase in Debt for purchase of flats in
Total Shareholders Equity Three Sixty West
Operating Profit Margin (%) EBITDA

51.53%

45.04%

Due to change in sales mix
Total Revenue
PBT Margin (%) Profit Before Tax

51.80%

49.18%

Due to change in sales mix
Total Revenue
Net Profit Margin (%) Profit After Tax

44.36%

38.04%

In line with increase in PBT Margin
Total Revenue
Return on Net Worth Net Income (PAT)

16.83%

10.58%

In line with increase in PAT Margin
Average Shareholders Equity
Cash and Bank Balances/ Net Worth Cash and Bank Balance including Mutual Funds and Fixed Deposits

6.86%

11.48%

Due to decrease in operating cash flow in FY 2022-23
Total Shareholders Equity

*Includes Revenue from Projects and Hospitality

2. Balance sheet analysis

A comparative table showing synopsis of FY 2022-23 versus FY 2021-22 of Balance Sheet is provided below:

(Rs. in Lakh)

Consolidated Balance Sheet

As at March 31, 2023

As at March 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

ASSETS
Non-current assets

6,18,461.72

6,78,149.65

(59,687.93)

(8.80%)

Current assets

12,45,637.78

8,90,907.78

3,54,730.00

39.82%

Total

18,64,099.50

15,69,057.43

2,95,042.07

18.80%

EQUITY AND LIABILITIES
Equity

12,21,011.98

10,41,613.99

1,79,397.99

17.22%

Non-current liabilities

3,14,303.12

2,43,043.69

71,259.43

29.32%

Current liabilities

3,28,784.40

2,84,399.75

44,384.65

15.61%

Total

18,64,099.50

15,69,057.43

2,95,042.07

18.80%

2.1 Non-current assets

(Rs. in Lakh)

Particulars

As at March 31, 2023

As at March 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

Property, plant and equipment

19,468.78

19,733.08

(264.30)

(1.34%)

Capital work in progress

4,03,116.81

3,29,740.10

73,376.71

22.25%

Investment properties

75,203.36

77,993.45

(2,790.09)

(3.58%)

Intangible assets

211.14

237.80

(26.66)

(11.21%)

Intangible assets under development

-

12.83

(12.83)

(100.00%)

Financial assets

46,168.11

1,81,101.79

(1,34,933.68)

(74.51%)

Deferred tax assets (net)

20,837.42

2,726.65

18,110.77

664.21%

Other non-current assets

53,456.10

66,603.95

(13,147.85)

(19.74%)

Total

6,18,461.72

6,78,149.65

(59,687.93)

(8.80%)

2.2 Current assets

(Rs. in Lakh)

Particulars

As at March 31, 2023

As at March 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

Inventories

8,54,309.45

5,03,608.05

3,50,701.40

69.64%

Financial assets
(i) Investments
(a) Investments in mutual fund

28,141.77

88,428.56

(60,286.79)

(68.18%)

(b) Investments-others

223.85

223.85

-

0.00%

(ii) Trade receivables

1,09,830.92

12,457.67

97,373.25

781.63%

(iii) Cash and bank balances

51,291.50

29,314.56

21,976.94

74.97%

(iv) Loans

53,084.12

46,579.91

6,504.21

13.96%

(v) Other financial assets

606.34

330.83

275.51

83.28%

Current tax assets (net)

3,336.56

4,419.40

(1,082.84)

(24.50%)

Other current assets

1,44,813.27

2,05,544.95

(60,731.68)

(29.55%)

Total

12,45,637.78

8,90,907.78

3,54,730.00

39.82%

2.3 Non-current liabilities

(Rs. in Lakh)

Particulars

As at March 31, 2023

As at March 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

Financial liabilities
(i) Borrowings

2,88,063.80

2,16,495.95

71,567.85

33.06%

(ii) Trade payables

6,912.90

3,219.28

3,693.62

114.73%

(iii) Others

14,242.10

16,705.18

(2,463.08)

(14.74%)

Provisions

165.18

173.34

(8.16)

(4.71%)

Deferred tax liabilities (net)

1,546.17

2,474.19

(928.02)

(37.51%)

Other non-current assets

3,372.97

3,975.75

(602.78)

(15.16%)

Total

3,14,303.12

2,43,043.69

71,259.43

29.32%

2.4 Current liabilities

(Rs. in Lakh)

Particulars

As at March 31, 2023

As at March 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

Financial liabilities
(i) Borrowings

1,06,344.79

69,050.58

37,294.21

54.01%

(ii) Trade payables

17,317.92

20,505.86

(3,187.94)

(15.55%)

(iii) Others

58,916.61

21,922.64

36,993.97

168.75%

Other current liabilities
(i) Advance from customers

3,755.09

6,816.66

(3,061.57)

(44.91)

(ii) Others

1,35,591.96

1,60,107.08

(24,515.12)

(15.31%)

Provisions

4,569.68

5,870.61

(1,300.93)

(22.16%)

Current tax liabilities (net)

2,288.35

126.32

2,162.03

1,711.55%

Total

3,28,784.40

2,84,399.75

44,384.65

15.61%

3. Profit and loss analysis

A comparative table showing synopsis of FY 2022-23 versus FY 2021-22 of statement of Profit and Loss is provided below:

(Rs. in Lakh)

Consolidated Profit and Loss

FOR THE YEAR ENDED MARCH 31,

INCREASE/(DECREASE)

% INCREASE/(DECREASE)

2023

2022

Revenue from operations

4,19,258.18

2,69,397.04

1,49,861.14

55.63%

Other income

10,062.18

5,845.09

4,217.09

72.15%

Total revenue

4,29,320.36

2,75,242.13

1,54,078.23

55.98%

Expenses

2,08,092.24

1,51,263.42

56,828.82

37.57%

Depreciation and amortisation expense

3,975.12

3,978.29

(3.17)

(0.08%)

Interest and finance charges

16,905.49

8,602.94

8,302.55

96.51%

Profit before share of profit of joint ventures (net)

2,00,347.51

1,11,397.48

88,950.03

79.85%

Share of Profit of joint venture (net)

22,040.57

23,960.23

(1,919.66)

(8.01%)

Profit before tax

2,22,388.08

1,35,357.71

87,030.37

64.30%

Profit after tax

1,90,454.71

1,04,709.83

85,744.88

81.89%

Basic and diluted EPS (?)

52.38

28.80

23.58

81.88%

 

3.1. Revenue from operations

(Rs. in Lakh)

Particulars

FOR THE YEAR ENDED MARCH 31,

INCREASE/(DECREASE)

% INCREASE/(DECREASE)

2023

2022

Revenue from projects

3,61,243.40

2,24,701.38

1,36,542.02

60.77%

Revenue from hospitality

15,601.70

7,108.95

8,492.75

119.47%

Other operating revenue

1,879.67

1,492.57

387.10

25.94%

Rental and other related revenues

35,883.40

32,532.00

3,351.40

10.30%

Property and management revenue

4,650.01

3,562.14

1,087.87

30.54%

Total

4,19,258.18

2,69,397.04

1,49,861.14

55.63%

3.2. Expenses

(Rs. in Lakh)

Particulars

FOR THE YEAR ENDED 2023

MARCH 31, 2022

INCREASE/ (DECREASE)

% INCREASE/ (DECREASE)

Operating costs

1,86,686.78

1,34,531.86

51,154.92

38.77%

Employee benefits expense

7,779.47

6,836.93

942.54

13.79%

Other expenses

13,625.99

9,894.63

3,731.36

37.71%

Total

2,08,092.24

1,51,263.42

56,828.82

37.57%

4. Cash flow analysis

A comparative table of FY 2022-23 versus FY 2021-22 of Cash Flow is provided below:

(Rs. in Lakh)

Consolidated Cash Flow

FOR THE YEAR ENDED ON MARCH 31,

2023

2022

Opening cash and cash equivalents

1,00,811.14

18,712.84

Net cash inflow/(outflow) from operating activities

(2,38,304.21)

1,06,872.72

Net cash inflow/(outflow) from investing activities

1,13,565.96

(1,38,995.58)

Net cash inflow from financing activities

70,883.54

1,14,221.16

Closing cash and cash equivalents

46,956.43

1,00,811.14

Closing cash and cash equivalents including fixed deposits with banks, having remaining maturity of less than 12 months

51,291.50

29,314.56

Closing cash and cash equivalents including fixed deposits with banks, having remaining maturity of more than 12 months classified under non-current financial assets

4,269.02

1,814.15

HUMAN RESOURCES

Leadership Development Program

Your Company had initiated the Leadership Development Program for senior leaders in partnership with People Business Consulting. The vision of this one of a kind management program is to build an ecosystem of Great Leaders and create real competitive advantage through them.

As part of this program, a cohort of select Senior Leaders were identified to undergo a structured 3 month intervention entailing curated workshops and simulations, byte size learning, application of learnings at workplace and reflections. The learning journey was focused on the R-OPTI model?. This program allowed the organization to gauge the effectiveness of Senior Leaders and plan their development journey and interventions accordingly.

Succession & Career Development Planning

Your Company considers critical talent as their major competitive advantage. Therefore, we have a robust

Succession Planning & Talent Review process in place which helps us in identifying and developing high potential employees. As part of Succession Planning, your Company identifies Critical Roles within the organization and a pool of Successors and High Potential employees basis talent assessment exercise. Through the assessment, your Company evaluates role readiness, potential versus performance and risk assessment of key internal talent. This ensures that the organization has an internal capability and bench strength to meet current and future business requirements.

Career Development Program

Your Company has a Career Development Program (CDP) that lets its people take charge of their growth and empowers them to take complete ownership of their career journey. It enables them to choose their career paths aligned with their interests, abilities and competencies. The key aspects of CDP include creation of development plan where an employee can add the goals, development plan and craft career journey. It outlines the competencies and behaviors required for a position, enabling it to create, development objectives critically to succeed in current or aspired positions.

Mentor-Mentee Program

As an organisation, your Company believes in supporting and enhancing leadership and professional development of the workforce. With an aim to build a strong talent pipeline within the organisation, your Company has launched the "Mentor-Mentee Program". The program is designed to formalize relationship between the Mentors (senior management) and the Mentees (team members) that will help further their career. This intervention will also ensure strong cross team network within the organization which will focus on a Mentor-Mentee engagement to provide an enhanced career development for the mentees.

Performance Management

As part of the Annual Performance Management System, your Company follows a structured process entailing Annual Goal Setting exercise that provides clarity to all employees about their targets and alignment to the organizations goals. The process is followed by a formal Mid-Year Review and the Annual Review. Your Company also encourages continuous check-ins which help create an environment of trust, strengthen relationships, build communication and provide remedial coaching to the employees thereby assisting them to realize their full potential.

Learning & Development

Your Company believes that capability building and empowering employees is a key step in aligning our people to achieve our vision. Our blended learning approach entails our Learning Management System (LMS) and Classroom Trainings which help in the development of Technical, Behavioural as well as Leadership skills.

Your Company continues to leverage the LMS platform and has clocked over 6,500 hours of learning, which includes a count of over 5,000 e-learnings. This milestone was achieved through our SMEs who regularly conduct technical and function specific training for skill upgradation, soft skills training based on concepts from best sellers like Fish! Philosophy and Who Moved My Cheese. Your Company also has various classroom interventions to strengthen the capability of all employees and ensure that they always stay ahead of the curve. As a part of the organization, every employee has completed the mandatory learning modules which include Health & Safety, Code of Conduct, Insider Training, POSH, Diversity & Inclusion.

In a continuous effort to build a human centric organization, your Company believes that the People Managers form an integral part of building the organization culture. With this objective an Appreciative Leadership Workshop was exclusively organized for the People Managers which equipped them to seek a deeper understanding of appreciation as a critical component of great leadership and strengthen their influence as a leader.

Rooted in Values

As an organization, values are a critical part of the company culture. To ensure continuous alignment with the values, your Company has launched a value reinforcement drive which includes a series of Value Workshops twice a week and other interventions for all employees across locations. These workshops are the guiding force that support alignment in all our regular activities. Furthermore, your Companys Employee Recognition Program acts as an engagement tool that encourages and recognizes company values in action. It is a platform to showcase and reinforce values like innovation, effective problem solving, achieving process and operational efficiency, going above and beyond the call of duty to achieve organizational objectives.

Women Leadership Development Intervention

A balanced and inclusive workplace engages people, generates positivity, fosters innovation and helps attract talent by developing a reputation of a great place to work. With an aim to broaden and strengthen the Women Leadership pipeline, your Company launched Women Leadership Development Program titled Flying Lessons for a select Hi-Potential cohort in partnership with Interweave Consulting Pvt Ltd.

This program is specially curated for women in senior managerial roles across cross-functional teams to help them prepare for future leadership roles and craft their career development strategies. The learning journey is well planned and organized across span of 4 months with intensive classroom training sessions, nudge calls, self-reflection and pre-post assignments.

Using a unique and holistic approach, this intervention will empower ascending women and offer variety of interactive and immersive learning opportunities to strengthen their leadership acumen.

Mental Wellness

Your Company has an Employee Assistance Program (EAP) to ensure that the employees are healthy both mentally and emotionally. Whether it is a slight feeling of worry or a more serious problem, employees can reach out to the EAP counsellor over call, text and email. It is a confidential counselling program that help employees cope with stress, mental illness and other issues. The Employee Assistance Program (EAP) is available 24/7 to all employees and their family members.

With an aim to leverage the benefit of EAP, PlugH - the EAP partner regularly conducts sensitizing and mental wellbeing sessions facilitated by professional counsellors covering certain real life issues and topics like parenting, time management, work life balance, stress management and others.

Employee Resource Groups

Your Company fosters a diverse and inclusive environment aligned with organizational values. Hence, voluntary and Employee led Resource Groups have been created for recreational activities and meal facilities. These groups entail people from cross functional teams who work together towards a common goal representing their fellow colleagues.

Fun at Work Committee

The Fun at Work Committee focuses on innovative initiatives to engage the workforce as enjoying work and ensuring camaraderie is a key element of employee happiness. Celebrations around festivals and cultural activities break the monotony at work and help people to have a more positive mind set, higher levels of wellbeing and better mental health.

Canteen Committee

This Committee ensures that physical and mental well being is supported with healthy eating habits. The team prioritizes healthy yet delicious meal options along with hygiene, portion control and timely breaks at our cafeterias across locations. The cafeteria vendors are thoroughly examined and then jointly finalized followed by regular reviews to ensure consistency over a period of time.

RISKS AND CONCERNS

Market price fluctuation

The performance of your Company may be affected by the sales and rental realizations of its projects. These prices are driven by prevailing market conditions, the nature and location of the projects and other factors such as brand, reputation and the design of the projects. Your Company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenario.

Sales volume

The volume of bookings depends on the ability to design projects that will meet customer preferences, getting various approvals in time, general market factors, project launch and customer trust in entering into sale agreements well in advance of receiving possession of the projects. Your Company sells its projects in phases from the time it launches the project, based on the type and scale of the project and depending on market conditions.

Execution

Execution depends on several factors which include labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities such as electricity and water, weather conditions and the absence of contingencies such as litigation. Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and reputed contractors. As your Company imports various materials, at times execution is also dependent upon timely shipment and clearance of the material.

Rental realizations

The rental realizations on the space leased depends upon the project location, design, tenant mix (this is relevant in the case of shopping malls), prevailing economic conditions and competition. Your Company has set up its retail property in prime location and maintains a fresh ambience resulting in crowd pull and attracting first time kind of retailers. As far as the office space rentals are concerned, the same depends on demand and supply, general economic conditions, business confidence and competition.

Land/Development rights - costs and availability

The cost of land forms a substantial part of the project cost, particularly in Mumbai. It includes amounts paid for freehold rights, leasehold rights, fungible FSI, construction cost of area given to landlords in consideration for development rights, registration and stamp duty. Your Company acquires land/land development rights from the government and private parties. It ensures that the consideration paid for the land is as per the prevailing market conditions, reasonable and market timed. Your Company also enters into MOUs and makes advances for the land/land development rights prior to entering into definitive agreements. The ensuing negotiations may result in either a transaction for the acquisition of the land/land development rights or the Company getting a refund of the monies advanced.

Financing costs

The acquisition of land and development rights needs substantial capital outflow. Inadequate funding resources and high interest costs may impact regular business and operations. Your Company has always tried to build sufficient reserves resulting out of operating cash flows to take advantage of any land acquisition or development opportunity.

OUTLOOK

In 2023, we anticipate further downward trends in the global economy. This however, should be an opportunity for the Indian economy to become a world leader. The real estate sector is likely to continue on its journey of long term growth as we see a continuous rise in GDP per capita, larger disposable incomes, growing urbanization and most of all a larger focus of the world on us as the next big economy.

An increase in earning potential, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial growth in the sector. With suited economic growth, the premium housing segment will also witness higher demand in the years to come.

Focus on Mumbai and beyond

Your Company shall continue to explore development opportunities in and around Mumbai and explore hubs in the nearby regions on a case by case basis.

Strengthen relationships with key service providers and develop multiple vendors

In order to continue delivering landmark offerings to our customer, your Company shall further strengthen its relationship with key service providers, i.e. architects, designer and contractors. Your Company is also working on strategy to develop more and more vendors who can deliver product and services in line with Companys philosophy and product offerings.

Internal Control Systems

Your Company has also focused on upgrading the IT infrastructure - both in terms of hardware and software. In addition to the existing ERP platform, the Company is presently reviewing the process documentation to ensure effectiveness of the controls in all the critical functional areas of the Company.

CAUTIONARY STATEMENT

This management discussion and analysis contain forward looking statements that reflects your Companys current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forwardlooking statements as a result of many factors.