Oberoi Realty Ltd Management Discussions.

Economic review Global economy

Global growth this year recorded its weakest pace since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors. Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already under way.

Further pressures came from country-specific weakness in large emerging market economies such as Brazil, India, Mexico and Russia. Worsening macroeconomic stress related to tighter financial conditions (Argentina), geopolitical tensions (Iran) and social unrest (Venezuela, Libya and Yemen) rounded out the difficult picture.

Central banks reacted aggressively to the weaker activity. Over the course of the year, several central banks including the US Federal Reserve, the European Central Bank (ECB) and large emerging market central banks cut interest rates, while the ECB also restarted asset purchases. These policies averted a deeper slowdown. Lower interest rates and supportive financial conditions reinforced still-resilient purchases of non-durable goods and services, encouraging job creation. Tight labor markets and gradually rising wages, in turn, supported consumer confidence and household spending.

The COVID-19 pandemic is inflicting high and rising human costs worldwide and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply, much worse than during the 2008–09 financial crisis. Indian economy

India has emerged as the fastest growing major economy in the world and is expected to be one of the top 3 economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Indias GDP growth rate was 4.20% in 2019-20 as against 6.80% in 2018-19. Indias foreign exchange reserves were US$ 474.66 billion in the week up to April 3, 2020, the highest ever, according to data from the RBI.

Some of the important recent developments in Indian economy are as follows:

Exports from India declined 4.78% year-on-year to US$

314.31 billion in FY 2019-20.

Nikkei India Manufacturing Purchasing Managers Index

(PMI) stood at 51.8 in March 2020, showing expansion in the sector.

Mergers and Acquisitions (M&A) activity in the country has reached US$ 52 billion during January-December 2019.

The gross tax revenue in 2019-20 was 21.63 lakh crore, out of which Direct tax collection contributed 10.27 lakh crore.

Companies in India have raised around US$ 114.1 billion through 768 Initial Public Offers (IPO) in first 9 months of 2019.

Consumer Price Index (CPI) Combined inflation 5.9% in

FY 2019-20

Around 12 million jobs in a year were created in India during 2015-19.

India improved its ranking in the World Banks Doing

Business Report by 14 spots over last year and is ranked 63rd among 190 countries in 2020 edition of the report.

India is expected to have 1,00,000 startups by 2025, which will create employment for 3.25 million people and US$ 500 billion in value, as per Mr. T V Mohan Das Pai, Chairman, Manipal Global Education.

Some of the measures taken by RBI on March 27, 2020 in view of COVID-19 pandemic are as under:

Repo Rate reduced by 75 basis points to 4.40%.

Reverse Repo Rate reduced by 90 basis points to 4.00% and further reduced to 3.75% on April 17, 2020.

CRR reduced by 100 basis points to 3.30% for 1 year.

LTRO window of 1.00 lakh crore to scheduled banks at a concessional rate of 4.00% for the period of 36 months.

Total liquidity injection by RBI in view these steps approx

3.74 lakh crore.

Industry review

The real estate sector is one of the most globally recognized sectors. The real estate sector comprises 4 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 attract more Non-Resident Indian (NRI) investments in both the short term and the long term.

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% 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. Indian real estate is expected to increase by 19.5% CAGR from 2017 to 2028.

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 sq. Ft. By 2020 end while office space leasing in the top 8 cities is expected to cross 100 million sq. Ft. During 2020. Gross office absorption in top Indian cities has increased 26% year-on-year to 36.4 million sq. Ft. Between January-September 2018. Co-working space across top 7 cities has increased sharply in 2018 (up to September), reaching 3.44 million sq. Ft., compared to 1.11 million sq. Ft. For the same period in 2017. New completion of office space is expected to increase 15% to cross 43.6 million sq. Ft. In 2019.

Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. Real estate attracted around 43,780 crore (US$ 6.26 billion) of investment in 2019. The retail segment attracted PE (Private Equity) investment of around US$ 1 billion in 2019. Institutional investment in the sector stood at US$ 712 million during the quarter ended March 2020. Real estate attracted around US$ 14 billion from foreign PE between 2015 and 2019.

During 2019, the gross leasing of office space jumped to 60.6 million sq. Ft. Across 8 major cities, registering a growth of 27% year-on-year.

According to data released by Department of Industrial Policy and Promotion (DIPP), construction is the 4th largest sector in terms of FDI inflows. FDI in the sector (includes construction development and construction activities) stood at US$ 25.12 billion from April 2000 to June 2019.

Various measures like RERA and GST have created a level playing field in the real estate industry which will benefit well-organized real estate developers with established compliance processes and disciplined financial management. In addition, as real estate developers with weaker processes and systems exit the industry due to the higher cost of doing business, there will be strategic acquisition opportunities in the industry.

Mumbai real estate

Sales in Mumbai rose 22% in 2019 even though a persistent credit crunch & economic slowdown curtailed recovery in Indias housing sales across top 7 cities. New home sales rose 21% across 7 of Indias biggest cities led by affordable flats, highlighting pent up demand in the segment.

Other highlights of Mumbai Real Estate are as follows:

Mumbai Metropolitan Region and Pune saw highest growth in residential sales in current year, while sales declined in Bengaluru, Hyderabad and Kolkata.

Affordable housing continued its growth momentum in

2019 with overall new supply rising by 22% in 2019.

Unsold housing inventory declined by 4%.

Average residential property prices across the top cities increased by 1% in 2019 except Kolkata and National Capital Region, where prices remained stagnant.

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.


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;

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 connect 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 2019-20

During the year FY 2019-20, your Company launched a new project Maxima at JVLR, Mumbai and achieved 100% occupancy in Commerz II, office space as on March 31, 2020.

Business overview

Despite the subdued performance of overall sector, your Company was able to sell nearly 4,01,914 sq. Ft. RERA carpet area in FY 2019-20 as compared to approximately 5,13,285 sq. Ft. Of RERA carpet area in FY 2018-19.

A brief description of the update across each project is given below:

1. Oberoi Garden City (Goregaon)

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 8 kilometers from Mumbais domestic airport and approximately 5 kilometers from the international airport.

Oberoi mall Commerz i (office space)
Revenues Occupancy Revenues Occupancy
16,050.06 lakh 96.25% 3,175.88 lakh 57.65%
( 15,079.93 lakh in FY 2018-19) (96.93% in FY 2018-19) ( 4,163.36 lakh in FY 2018-19) (77.83% in FY 2018-19)
Commerz ii (office space) The westin mumbai garden city (hospitality)
Revenues Occupancy Revenues Occupancy
12,353.81 lakh 98.17% 13,148.51 lakh 74.93%
( 8,343.71 lakh in FY 2018-19) (66.23% in FY 2018-19) ( 13,705.24 lakh in FY 2018-19) (82.44% in FY 2018-19)
Exquisite (residential) Esquire (residential)
Cumulative units sold Total sales value Cumulative units sold Total sales value
784 units 2,39,967.90 lakh, 100% 717 units 2,82,086.04 lakh, of which
Of which has been recognized 2,80,494.05 lakh has been
As revenue till FY 2019-20 Recognized as revenue till FY 2019-20

2. 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. The pricing sets the target audience to include Upper Middle class and nris.

Eternia (residential) Enigma (residential)
Cumulative units sold Total sales value Cumulative units sold Total sales value
414 units 97,322.03 lakh, of which 172 units 68,058.13 lakh, of which
60,251.34 lakh has been 40,171.76 lakh has been
Recognized as revenue till Recognized as revenue till
FY 2019-20 FY 2019-20

3. Sky City (Borivali east)

Your Company is developing approximately 25 acre land parcel at Borivali East with an estimated total carpet area of about 3.4 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.

Sky city (residential)
Cumulative units sold Total sales value
1,248 units 2,99,552.19 lakh, of which 2,03,662.18 lakh has
Been recognized as revenue till FY 2019-20

4. JVLR (andheri east)

Your Company has developed Prisma, a residential building with an estimated total carpet area of about 1,78,395 sq. Ft., which is a part of the ongoing projects within the Oberoi Splendor Complex. Maxima is a new residential project launched this year with an estimated total carpet area of about 2,38,623 sq. Ft. Is also 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 and overlooking Aarey Milk Colony.

Prisma (residential) Maxima (residential)
Cumulative units sold Total sales value Cumulative units sold Total sales value
88 units 46,460.94 lakh, 100% of 10 units 3,660.32 lakh, of which
Which has been recognized as 880.36 lakh has been recognized
Revenue till FY 2019-20 As revenue till FY 2019-20

5. Three sixty West (Worli)

Three Sixty West is being 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; The Ritz-Carlton, Mumbai and a residential tower, by the name Three Sixty West, to be managed by The Ritz-Carlton. This development aims to be a global icon for Mumbai will mark the entry of The Ritz-Carlton into Indias financial capital. Strategically located in Worli, less than a kilometer from the prominent Bandra-Worli sea link, the development has been designed to be a luxury landmark adorning the Arabian Sea.

Three sixty west (residential)
Cumulative units sold Total sales value
64 units 2,47,435.95 lakh, of which 58,502.59 lakh has
Been recognized as revenue till FY 2019-20

Financial performance overview

Analysis of consolidated Ind As financial statements for FY 2019-20 is provided below:

1. Key Financial Ratio analysis

A comparative table showing synopsis of FY 2019-20 versus FY 2018-19 of Key Financial Ratio is provided below:

Ratio Calculation 2020 2019 Remarks
Debtors Turnover Net Sales Average Debtors 19.92 17.78 Better control on Debtors
Inventory Turnover Sales/COGS Inventory/Average Inventory 0.38 0.52 Lower ratio due To Land Acquisition
Interest Coverage Ratio EBIT Interest Expense 6.33 7.33 Comfortable coverage ratio
Current Ratio Current Assets Current Liabilities 2.87 3.03 Indicates better Liquidity Position
Debt Equity Ratio Total Debt Total Shareholders Equity 0.18 0.20 Comfortable debt ratio
Operating Profit Margin (%) EBITDA* 47.96% 46.37% Higher EBITDA is Due To
Total Revenue Change in sales mix
PBT Margin (%) Profit Before Tax 42.38% 44.25% Lower PBT margin Is due To
Total Revenue Change in sales mix
Net Profit Margin (%) Profit After Tax 30.15% 30.70% Lower PAT margin is due To
Total Revenue Change in sales mix
Return on Net Worth Net Income (PAT) 8.28% 11.57% Due to decline in PAT
Average Shareholders Equity
Cash and Bank Balances/Net Worth Cash & Bank Balance 3.32% 9.56% Due to decline In Cash
Including Mutual Fund and And Bank balance As It was
Fixed Deposits Utilized for operations
Total Shareholders Equity

*Includes Non Operating Income

2. Balance sheet analysis

A comparative table showing synopsis of FY 2019-20 versus FY 2018-19 of Balance Sheet is provided below:

Consolidated Balance sheet As at March 31, As at March 31, Increase/ % increase/
2020 2019 (decrease) (decrease)
Non-current assets 4,37,542.96 4,13,798.79 23,744.17 5.74%
Current assets 6,84,596.09 6,98,571.71 (13,975.62) (2.00%)
Total 11,22,139.05 11,12,370.50 9,768.55 0.88%
Equity and liabilities
Equity 8,62,948.44 8,02,917.05 60,031.39 7.48%
Non-current liabilities 20,889.21 78,817.10 (57,927.89) (73.50%)
Current liabilities 2,38,301.40 2,30,636.35 7,665.05 3.32%
Total 11,22,139.05 11,12,370.50 9,768.55 0.88%

2.1 Non-Current Assets

Particulars As at March 31, As at March 31, Increase/ % increase/
2020 2019 (decrease) (decrease)
Property, plant and equipments 20,548.70 19,522.10 1,026.60 5.26%
Capital work in progress 30,493.90 12,512.52 17,981.38 143.71%
Investment properties 83,914.12 86,472.37 (2,558.25) (2.96%)
Intangible assets 185.83 164.64 21.19 12.87%
Intangible assets under development 52.46 93.36 (40.90) (43.81%)
Financial assets 2,29,818.04 2,60,399.35 (30,581.31) (11.74%)
Deferred tax assets (net) 9,316.63 12,994.53 (3,677.90) (28.30%)
Other non-current assets 63,213.28 21,639.92 41,573.36 192.11%
Total 4,37,542.96 4,13,798.79 23,744.17 5.74%

2.2 Current Assets

Particulars As at March 31, As at March 31, Increase/ % increase/
2020 2019 (decrease) (decrease)
Inventories 5,31,727.54 4,16,547.45 1,15,180.09 27.65%
Financial assets
(i) Investments
(a) Investments in mutual fund 14,229.50 33,702.84 (19,473.34) (57.78%)
(b) Investments - others 180.80 180.74 0.06 0.03%
(ii) Cash and bank balances 10,833.59 42,530.82 (31,697.23) (74.53%)
(iii) Trade receivables 11,524.74 10,940.35 584.39 5.34%
(iv) Loans 30,994.22 26,620.69 4,373.53 16.43%
(v) Other financial assets 190.29 315.17 (124.88) (39.62%)
Current tax assets (net) 1,527.11 1,238.73 288.38 23.28%
Other current assets 83,388.30 1,66,494.92 (83,106.62) (49.92%)
Total 6,84,596.09 6,98,571.71 (13,975.62) (2.00%)

2.3 Non-Current Liabilities

Particulars As at March 31, As at March 31, Increase/ % increase/
2020 2019 (decrease) (decrease)
Financial liabilities
(i) Borrowings - 58,851.45 (58,851.45) (100.00%)
(ii) Trade payables 2,466.45 2,390.04 76.41 3.20%
(iii) Others 12,259.80 11,684.99 574.81 4.92%
Provisions 210.84 196.77 14.07 7.15%
Deferred tax liabilities (net) 2,839.89 2,599.73 240.16 9.24%
Other non-current liabilities 3,112.23 3,094.12 18.11 0.59%
Total 20,889.21 78,817.10 (57,927.89) (73.50%)

2.4 Current Liabilities

Particulars As at March 31, As at March 31, Increase/ % increase/
2020 2019 (decrease) (decrease)
Financial liabilities
(i) Borrowings 1,14,392.89 24,755.88 89,637.01 362.08%
(ii) Trade payables 6,122.74 20,839.93 (14,717.19) (70.62%)
(iii) Others 60,681.80 1,01,727.69 (41,045.89) (40.35%)
Other current liabilities
(i) Advance from customers 2,958.86 2,638.56 320.30 12.14%
(ii) Others 50,587.07 79,480.76 (28,893.69) (36.35%)
Provisions 221.53 82.93 138.60 167.13%
Current tax liabilities (net) 3,336.51 1,110.60 2,225.91 200.42%
Total 2,38,301.40 2,30,636.35 7,665.05 3.32%

3. Profit and Loss analysis

A comparative table showing synopsis of FY 2019-20 versus FY 2018-19 of Statement of Profit and Loss is provided below:

Consolidated Profit and Loss

FOR the year ended march 31,

Increase/ % increase/
2020 2019 (decrease) (decrease)
Revenue from operations 2,23,763.29 2,58,249.93 (34,486.64) (13.35%)
Other income 4,835.22 7,884.68 (3,049.46) (38.68%)
Total Revenue 2,28,598.51 2,66,134.61 (37,536.10) (14.10%)
Expenses 1,18,966.12 1,42,721.78 (23,755.66) (16.64%)
Depreciation and amortisation 4,486.79 4,403.81 82.98 1.88%
Interest and finance charges 8,847.25 1,936.19 6,911.06 356.94%
Profit before share of profit of joint 96,298.35 1,17,072.83 (20,774.48) (17.74%)
Ventures (net) and exceptional items
Share of Profit/(Loss) of joint venture (net) 590.88 689.60 (98.72) (14.32%)
Profit Before Tax 96,889.23 1,17,762.43 (20,873.20) (17.72%)
Profit after Tax 68,933.02 81,693.35 (12,760.33) (15.62%)
Basic and diluted EPS (in ) 18.96 22.80 (3.84) (16.84%)

3.1. Revenue from Operations

2020 2019 (decrease) (decrease)
Revenue from projects 1,68,141.18 2,06,911.28 (38,770.10) (18.74%)
Revenue from hospitality 13,062.50 13,513.51 (451.01) (3.34%)
Other operating revenue 807.04 893.44 (86.40) (9.67%)
Rental and other related revenues 36,722.53 32,337.30 4,385.23 13.56%
Project management revenues 5,030.04 4,594.40 435.64 9.48%
Total 2,23,763.29 2,58,249.93 (34,486.64) (13.35%)



FOR the year ended march 31,

Increase/ % increase/
2020 2019 (decrease) (decrease)
Operating costs 1,03,567.89 1,24,716.53 (21,148.64) (16.96%)
Employee benefits expense 6,424.25 7,335.43 (911.18) (12.42%)
Other expenses 8,973.98 10,669.82 (1,695.84) (15.89%)
Total 1,18,966.12 1,42,721.78 (23,755.66) (16.64%)

4. Cash Flow analysis

A comparative table showing synopsis of FY 2019-20 versus FY 2018-19 of Cash Flow is provided below:

Consolidated Cash Flow FOR the year ended march 31,
2020 2019
Opening cash & cash equivalents 43,149.85 9,276.07
Net cash inflow/(outflow) from operating activities (28,198.20) 14,556.16
Net cash inflow/(outflow) from investing activities 35,842.38 (64,577.15)
Net cash inflow/(outflow) from financing activities (30,948.56) 83,894.77
Closing cash & cash equivalents 19,845.47 43,149.85
Closing cash & cash equivalents including fixed deposits having remaining 10,833.59 42,530.82
Maturity of less than 12 months
Closing cash & cash equivalents including fixed deposits having remaining maturity 3,603.56 507.87
Of more than 12 months classified under non-current financial assets

Human resources

Collaborative work culture and automation

With a vision to collaborate, connect, express and contribute, your Company has an agile corporate office structure, where the focus is towards adopting the best practices and being more environmentally conscious and going almost paperless. Efforts have been taken to leverage technology to the maximum to achieve the vision. Your Company encourages an open working culture and the office is designed to further aid inter-department coordination and collaboration. Automation Your Company is one of the early adopters of technology and a firm believer in digital transformation in the real estate sector. Keeping the same in mind, an agile cloud-based HR solution

– Success Factors has been introduced to minimize manual interventions in functioning of processes. In addition, usage of Microsoft Teams is being extensively encouraged for official communications and meetings.

Performance Management system

Your Company aims to build talent within the organization and keeping the same in mind performance of individuals are evaluated for higher roles and responsibilities. Succession Planning exercise for each critical role was undertaken wherein potential resources within the organization were identified and are trained to take up new roles in near future.

Learning & development

With the expansion of the project sites at various locations, online trainings are organized for larger benefits. Quiz competitions on occasions like World Quality Day and National Safety Day are conducted to appreciate employees and keep them engaged. Various technical and skill development programs have been conducted during the year. Your Company also encourages and appreciates employees within the organization who deliver training on their topic of expertise during the ‘Knowledge sharing forums held periodically.


Your Company encourages its employees not only in gathering within the organization but also ensuring employees have good options for building camaraderie after office hours too. Health and Wellness have always been a focus point with Yoga session, wellness talk on diet etc. Being organized at regular intervals. Your Company also values and encourages CSR participation amongst employees. Employees participate in the “Run to Give” initiative organized by The Westin Mumbai Garden City in support of an NGO, Rising Star Outreach, who has dedicated itself to improving the lives of people affected by leprosy, through social and medical rehabilitation. Also, employees contribute as per their will as a sign of gratitude for their all-time assistance at workplace to the internal support staff. The contribution is equally matched by the organization and distributed amongst the support team during Diwali. Some of the other events enjoyed and celebrated with pomp during the year are Independence and Christmas Day.

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 and 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.

Pandemic risk

The outbreak of a novel strain of coronavirus (i.e. COVID-19) across the world has since spread to almost entire India. The number of reported cases of COVID-19 in India, as well as the number of reported deaths because of COVID-19, significantly increased post April 2020. The COVID-19 outbreak could become more severe and result in a more widespread health crisis and/or result in a global recession because of disruptions of economic activity. Several governments revised GDP growth forecasts for 2020 downward in response to the economic slowdown caused by the spread of COVID-19, and it is possible that the outbreak of COVID-19 may cause a prolonged global economic crisis or recession. Any of these factors may have a material adverse effect on your Companys financial condition and results of operations.


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 moneys 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.


India Ratings and Research (Ind-Ra) has maintained a negative outlook on the overall real estate sector for 2020-21 (April-March). The stimulus packages provided by the government for the sector does not provide much hope given the limited financial flexibility of and reduced credit availability to companies.

The ratings agency has maintained a Stable Outlook for players in grade-I residential real estate, commercial office and retail property development and operations and a Negative Outlook for non-Grade-I players for the financial year.

As per India Ratings analysis, the market share of the top 10 listed players gradually doubled to 13% in 2019-20 from 7% and 6% in 2017-18 and 2016-17, respectively. It expects this trend to continue for 2020-21 as well.

Focus on Mumbai and beyond

We shall continue to explore development opportunities in and around Mumbai and also 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, we shall further strengthen our relationship with our 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

The 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 forward looking statements as a result of many factors.