Omaxe Ltd Management Discussions

Global economy

The global economy is projected to grow at a steady pace in 2024 and 2025, maintaining the growth rate of 3.2% seen in 2023. This stability reflects a balance between slight growth acceleration in advanced economies and a modest slowdown in emerging markets and developing economies. Advanced economies are expected to see growth rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. Conversely, growth in emerging markets and developing economies is projected to slow slightly from 4.3% in 2023 to 4.2% in 2024 and 2025.

Several factors contribute to this growth outlook. These include the persistence of high interest rates aimed at controlling inflation, the gradual withdrawal of fiscal support, and low underlying productivity growth. The global inflation rate is expected to decline from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies likely to achieve their inflation targets sooner than emerging markets. Despite these challenges, the global economy has shown remarkable resilience, supported by favorable supply developments and significant central bank rate hikes. The main risks to the global economic outlook remain geopolitical tensions, persistent core inflation, and potential new price spikes. Conversely, faster-than-expected inflation declines, timely structural reforms, and advancements in artificial intelligence could boost productivity and economic growth.

Recent trends towards deglobalisation

Following nearly a century of globalization, successive global shocks and the movement to confront climate change appear to be turning the tide. The trend started with "Slobalisation" following the 2008 financial crisis may be turning into deglobalisation. Some regions and sectors are deglobalised faster than others.

In response to COVID-19, Russias war with Ukraine and climate change, governments and global companies are seeking security and resilience over the benefits of global value chains. There are strong signals that the era of globalization is coming to an end.

The rise of globalization was never entirely smooth or assured. The reduction of global trade that was bookended by the two world wars was followed by 60 years of increased globalization. This included the hyper-globalization period from 1990 to 2008.

However, the 2008, financial crisis, trade wars, disenfranchised middle classes in developed economies and rising concerns about over-reliance on trade with single partners led to a period of relatively stagnant "Slobalisation".

Today, "Slobalisation" appears to be moving towards deglobalisation. Recent disruptions to global value chains such as the COVID-19 pandemic, the war in Ukraine, growing ideological differences and the green transition have prompted governments and corporations to reconsider external dependencies. They are looking closer to home and to trusted partners for more resilient growth models.

Deglobalisation and the green transit

Energy is a key sector to watch in terms of both globalization and deglobalisation. The common incentive for nations to address climate change has been a major source of globalized cooperation in recent years. Yet the mechanics

of the green transition itself also necessitate a more local focus. The push towards a long-term increase in the share of energy coming from renewables is being driven by the reduction of carbon-intensive transportation infrastructure and carbon pricing mechanisms acting as de facto tariffs. Rising concerns about energy security and fossil fuel pricing volatility have also heightened interest in domestic renewables.

The era of globalization may be coming to an end. What replaces it remains to be seen, but it is clear that global cooperation is necessary to confront shared challenges.

(Source: www.weforum.org)

Indian Economy

The Asian Development Bank (ADB) upgrades Indias gross domestic product (GDP) growth forecast for fiscal year (FY) 2024 ending on 31 March 2025 from 6.7% to 7% and 7.2% in FY2025, driven by robust public and private investment and strong services sector.

The triggers for growth in FY2024 will come from higher capital expenditure on infrastructure development both by central and state governments, rise in private corporate investment, strong service sector performance and improved consumer confidence. Growth momentum will pick up in FY2025 backed by improved goods exports and an increase in manufacturing productivity and agricultural output.

A healthy rise of 17% in central government capital expenditure in FY2024 compared to the previous fiscal year together with transfers to state governments will boost infrastructure investment. A new government initiative to support urban housing for middle-income households is expected to further spur housing growth. Private corporate investment is expected to get a boost with stable interest rates. With inflation moderating to 4.6% in FY 2024 and easing further to 4.5% in FY 2025, monetary policy may become less restrictive, which will facilitate rapid offtake of bank credit. Demand for financial, real estate and professional services will grow while manufacturing will benefit from muted input cost pressures that will boost industry sentiment. Expectations of a normal monsoon will help boost growth of the agriculture sector.

The governments focus on fiscal consolidation, with a targeted deficit of 5.1% of GDP for FY 2024 and 4.5% for FY2025, will enable the government to reduce its gross marketing borrowing by 0.9% of GDP in FY 2024 and create further room for private sector credit. Indias current account deficit will widen moderately to 1.7% of GDP on rising imports for meeting domestic demand. Foreign direct investment will be affected in the near term due to tight global financial conditions but will pick up in FY 2025 with higher industry and infrastructure investment. Goods exports will also be affected by lower growth in advanced economies but pick up in FY2025 as global growth improves.

Unanticipated global shocks such as supply line disruptions to crude oil markets and weather shocks that impact agriculture output are key risks to Indias economic outlook. Economic Performance

Growth increased to 7.6% in fiscal year 2023 (FY 2023 ended 31st March 2024) driven by Manufacturing, construction and services. Agriculture growth dropped sharply due to the impact of erratic rainfall This was compensated by an increase in manufacturing growth to 8.5%. Construction also grew rapidly by 10.7% due to strong housing demand. Services which account for 50% of GDP, grew by7.5%, led by financial, real estate, and professional services. Net indirect taxes also got a boost in FY 2023 due to declining central government subsidy expenditure following high fertilizer subsidies in FY 2023.

Strong investment drove GDP growth in FY 2023 as consumption was muted. Gross capital formation increased by 10.2% in FY 2023 to contribute 3.4% points to GDP growth as public and private sector capital expenditure grew strongly. Consumption remained subdue, however, with growth falling to 3% because of weak rural demand and tepid growth in public consumption under fiscal consolidation, adding 2.1 points to growth. Exports also grew modestly at 1.5% in real terms, while imports grew by 10.9%, driven by greater domestic demand for inputs and capital goods. As a result, net exports declined, deducting 2.3 percentage points from growth.

Global Real estate market

The global real estate market size was valued at USD 3,694.47 billion in 2022. It is estimated to reach USD 7,142.70 billion by 2031, growing at a CAGR of 7.6% during the forecast period (2023-2031). Factors like the increase in public-private partnerships and the rise of the residential construction industry stimulate market growth.

An increase in public-private partnerships (PPP) and the rise of the residential construction industry stimulate market growth. Real estate is an important asset class that includes land, tangible structures, and improvements, such as buildings, houses, and undeveloped land. It provides shelter, facilitates business operations, and generates investment opportunities.

However, real estate ownership and investment involve several factors and hazards, such as market conditions, property location, financing, and property management. Individuals and businesses involved in real estate must conduct extensive research, seek professional advice, and evaluate opportunities thoroughly to make informed decisions. Real estate is a dynamic and diverse industry that plays a crucial role in the economy, housing market, and investment landscape.

Market Dynamics

Global Real Estate Market Drivers

Increase in Public-Private Partnerships (PPP)

A public-private partnership (PPP) is a type of joint venture that may be defined as a collaboration between the government and firms active in the private sector to develop public infrastructure systems. The construction of public infrastructure is the major purpose of the PPP. The emergence of public-private partnerships in a range of nations, such as India and China, will continue to be a driving force behind the expansion of the real estate market because this is the case.

Rise of Residential Construction Industry

The increasing need for residential development is a major factor that is driving the expansion of the business. According to these projections, the sector of the economy devoted to building and maintenance will make up a much bigger percentage of the total economy. It is projected that the real estate market will grow rapidly due to the increase in the number of industries involved in residential development and the rise in the urban population. This is because more people will be living in cities.

Global Real Estate Market Opportunities

Increase in Government Investment In Infrastructure Development

The government is currently devoting many resources to developing various programs, all connected to enhancing the existing physical infrastructure. One of the key elements contributing to the construction of this pattern is the unceasing expansion of the economy, which has been going on for quite some time now. At the same time, the economies of emerging nations such as India and Indonesia, amongst others, have been improving, resulting in large-scale investments from outside the country. Among the developing nations that have benefited from this trend is the United States. This is a factor that, in turn, promotes the need for construction equipment in infrastructure projects that are being done by a wide variety of companies. In other words, the demand for construction equipment is being stimulated by this factor. These projects include things like the construction of highways and the expansion of airports. This would lead to good development possibilities for continuing the markets overall expansion.

India Real Estate Market Analysis

The Real Estate Industry in India Market size is estimated at USD 0.33 trillion in 2024, and is expected to reach USD 1.04 trillion by 2029, growing at a CAGR of 25.60% during the forecast period (2024-2029).

• Indias real estate market was affected by the COVID-19 pandemic. The residential sector was the worst hit as strict lockdown measures across major cities impacted housing sales as home registrations were suspended and home loan disbursement was slow. However, the sector recovered due to an increase in house sales, new project launches, and increasing demand for new office and commercial spaces, etc.

• The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy.

• In India, the real estate sector is the second-highest employment generator after agriculture. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short and long term. Bengaluru is expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

• According to industry reports, real estate demand for data centers is expected to increase by 15-18 million sq. ft. by 2025. Demand for residential properties has surged due to increased urbanization and rising household income. India is among the top 10 price-appreciating housing markets internationally. (Source: https://www.mordorintelligence.com/industry- reports/real-estate-industry-in-india)

India Real Estate Market Trends

In a dynamic real estate market, staying ahead of the curve is vital for investors looking to make informed decisions. The Indian real estate sector has experienced profound transformations over the past few decades. The rapid advancements in technology have not only impacted developers, civil engineers, and contractors but also lenders, accountants, marketing managers, and, most importantly, home buyers.

Increasing Demand for Affordable Housing

• The high demand for affordable housing dominates the housing market. The current shortage of housing in urban areas is estimated to be 10 million units by the India Brand Equity Foundation. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the countrys urban population.

• The real estate industry has benefited from the push for policy that has resulted in legislation like the Real Estate (Regulation & Development) Act, 2016 (RERA), the introduction of Real Estate Investment Trusts (REITs), and housing initiatives like PMAY (Pradhan-Mantri Awas Yojana) and SWAMIH (Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects).

• In 2023, a target of 45,70,082 houses in West Bengal was allocated by the Ministry of Rural Development. Even though there is a big demand for housing in the country, residential launches have been on a comparatively high level over the past few years. In the financial year 2023- 24, the total number of completed houses in urban areas of India under the Pradhan Mantri Awas Yojana (PMAY), The Prime Ministers Housing Plan reached 1,58,37,128.

• Housing affordability in India was 3.3 in the financial year 2023, as compared to 3.2 in 2022, according to industry experts. As reported by the Reserve Bank of India, in the financial year 2022, banks in India advanced around INR 2 trillion (USD 24.44 billion) in housing loans, almost reaching pre-COVID levels. This reflected renewed homebuyer sentiment, as an increasing number of Indians have been investing in buying residential property, which continues to this day.

Investment value in affordable housing programs: INR billion, November 2023, by cities

Office Real Estate Witnessing Lucrative Growth

• The Indian office real estate market has driven the growth of the commercial real estate sector in the past decades. Once dominated by information technology, office spaces are being increasingly leased by other sectors such as BFSI (banking, financial services, and insurance), engineering, manufacturing, e-commerce, and co-working sectors. The sector has demonstrated consistently low vacancy and high absorption rates.

• Commercial real estate investments have increased as a result of the Real Estate Regulation & Development Act (RERA) and Real Estate Investment Trusts (REITs). REIT owns, manages, and funds income-producing real estate. Office properties have emerged as the most popular sector for investment among high-net-worth individuals (HNI) in India and international PE investors, who together represent the majority of all equity investments in Indian real estate. Investors of all stripes are drawn to this industry by the high rental rates and better profits. Smaller homes and larger families contributed to the countrys increase in flex and co-working spaces.

MODERN-DAY TRENDS:

Transforming the real estate sector

Virtual visits: Utilizing augmented and virtual reality alongside 3D visualization, virtual tours provide immersive experiences, enabling potential buyers to explore properties in a 3D format. This eliminates the need for physical visits, saving time and money for both realtors and clients. Also, it enables real estate professionals to present properties in a more impactful manner.

Improved accessibility: Manual data collection and management can be burdensome for realtors. New-age technologies, including data analytics, on the other hand, consolidate data from multiple sources into integrated platforms, benefiting consumers and real estate agents alike. It also enables real estate specialists to assess property conditions and histories, reducing risks for potential buyers and investors.

Growth in Tier II and Tier III cities: With more and more individuals shifting to tier 2 and tier 3 cities for better career and employment opportunities, the demand for for office spaces and urban and semi-urban housing, as well as for prime sites and top-notch amenities has grown, contributing to a significant shift in the real estate industry. Given their growing appeal and popularity, these bigger cities can be an excellent alternative for real estate investors seeking long term earning potential.

Rise in flexible offices: Ever since the hybrid working model has gained traction, modern-day businesses have been propelled to look for flexible working spaces, resulting in the opening of new opportunities in the real estate segment. Moreover, with the present-day business world being largely dominated by a new generation of entrepreneurs, co-working culture is gaining extensive popularity and is expected to continue growing, offering fresh prospects for the real estate sector.

(source: The Economic Times1

Foreign Direct Investment in Real Estate Sector

Foreign Direct Investment (FDI) has been a vital catalyst for Indias economic growth, particularly in the commercial real estate sector. As global companies continue to expand their footprints, the Indian real estate market stands out as a prime beneficiary of this influx of international capital.

Updated landscape of FDI in Indian commercial real estate (2023-24)

India has emerged as a lucrative destination for foreign investors, thanks to its robust economic policies and substantial market potential. Recent data from the Reserve Bank of India indicates that the first quarter of 2023 witnessed a 20% increase in FDI inflows compared to the same period in the previous year. This uptick is attributed to enhancements in Indias economic stability and improved investor sentiments following global economic recoveries.

Opportunities arising from foreign company expansion

The expansion of foreign companies in India provides a substantial opportunity for the growth of commercial real estate. As these companies establish or expand their operations, there is an increased demand for office spaces, warehouses, and retail locations. The technology and e-commerce sectors, in particular, have shown exponential demand. Additionally, with the e-commerce boom continuing, there is a projected need for an additional 30 million square feet of warehousing space in India by the end of 2024, according to a report by JLL India.

Moreover, the rise of India as a start-up hub has also attracted foreign investors looking to tap into new ventures. The symbiotic relationship between start-ups and commercial real estate is evident as these new businesses require operational spaces, contributing further to the demand in this sector.

In addition to IT parks, the retail sector has witnessed significant growth, driven by FDI. International retail brands expanding in India have led to the development of numerous shopping malls and retail parks. These establishments not only serve the urban populations but also create jobs, thus contributing to the local economies.

Data and statistics supporting FDIs impact

Looking forward, the objectives for leveraging FDI in commercial real estate involve not only attracting more investment but also ensuring sustainable development. The focus is increasingly shifting towards green buildings and sustainable practices in the construction and maintenance of commercial spaces. The target for new commercial projects certified as green buildings is set to increase by 40% by the end of 2024, aligning with Indias sustainability goals. Additionally, there is a strategic initiative to integrate more advanced digital infrastructure into commercial properties, with the government and private sector investing in smart building technologies that promote energy efficiency and reduce operational costs.

The synergy between Foreign Direct Investment (FDI) and Indias commercial real estate sector is a potent driver of economic progress. As international firms increase their presence, they inject not only capital but also innovation, fuelling growth across various regions. This influx is supported by Indias appealing economic policies and commitment to creating an inviting investment environment.

As global economic landscapes evolve, the bond between FDI and commercial real estate in India is poised to strengthen, driving substantial economic contributions and ushering in a new era of opportunities. This ongoing development ensures Indias place as a top destination for foreign investment into the foreseeable future.

(Source: www.etinsights.et-edge.com)

Outlook

This year, the housing market in India has remained resilient even in the period of uncertainty before the general elections. The current government has taken several measures to increase housing demand, infrastructure development, and economic reforms. A general confidence that this government will continue to remain in power has provided considerable protection from the typical pre-election downturn.

After the election, the Indian housing sector has every reason to remain upbeat. The market will definitely rise if the party in power can maintain policy and safeguard economic stability. There are also industry expectations that the GST applicable on building supplies may be moderated with upcoming regulations. This would prove to be a big shot in the arm for both developers and their customers, as will help keep property price rises in check.

Apart from that, there are expectations that the availability of financing for the housing sector may improve, and that affordable housing once again becomes a priority sector for the government. All this will certainly contribute to steadily improving housing market dynamics.

Implications for investors

The stability in the governance will deliver very attractive opportunities for both buyers and investors of residential real estate. Once the government announces more measures to boost the market and stabilize the economy further, real estate will rise and yield very significant returns due to price appreciation and increased demand. Such measures will dovetail very well with the growing trend of digitization and transparency in real estate transactions.

RBIs decision to hold repo rates to keep housing boom on course

RBIs Monetary Policy Committee (MPC) meeting on April 5, 2024 decided to keep the repo rate steady at 6.5% for the seventh consecutive time. As per our expectations, the housing demand should remain buoyant and the home loan EMIs will remain unchanged for now as the Reserve Bank of India (RBI) has decided to hold the repo rate.

Housing sales across the top 7 cities have been phenomenal in the last few quarters, even though prices are rising steadily. The decision to maintain status quo will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence.

Business and operations

Omaxe has a successful track record of delivering more than 135 million square feet of their own real estate developments and from construction contracting services as on March 31, 2024.

During FY 2024, Omaxe has completed successfully 3.87 million square feet of handover of real estate properties to its customers during the current financial year. This makes the Total delivery of real estate projects of 135.87 million square feet upto 31st March 2024. This includes their own real estate developments and construction contracting services. These deliveries encompassed projects located in various cities such as Delhi (Omaxe Chowk), Chandigarh, Lucknow, Prayagraj, Faridabad, Ludhiana, etc.

The groups net worth as at end of FY 2024 stood at Rs. 480.41 crore.

Financial performance

Particulars	FY23	FY24
Total income from operations	798.01	1634.88
EBITDA	-278.60	-322.70
Profit before tax	-456.77	-507.30
Profit after tax	-351.08	-405.91

Total Income from Operations: The total income of the Company during current FY 2023-24 on a consolidated basis was at Rs. 1634.88 Crores which is 105% higher than the last year total income of Rs. 798.01.

EBIDTA: Though there is a marginal increase in EBIDTA loss by Rs. 44.10 Crore however the EBIDTA loss % has come down from earlier 35% to 20% of total income during the current Financial Year.

Profit before tax (PBT) : The loss for current financial year 2023-24 was Rs. 507.30 Crore against loss of Rs. 456.77 Crore of last year. Though there in a marginal increase of Rs. 50.53 Crore during the current financial year however as a percentage of total income the same has come down from 57% to 31%.

Cash From Operation: There is a notable increase in the cash from operations during the current financial year. The company has generated cash from operations of Rs. 986.77 Crore during the current financial year against Rs. 469.00 Crore during the last year.

Further, the company has repaid interest and loan of Rs. 924.14 Crore resulting into lower financial liabilities in the books at the year end.

Key Changes in Financial Ratios

The reasons that have impacted and led to a significant movement in financial ratios have been stated below for the information of the shareholders.

Parameter	FY23	FY24	Change	Explanation
Debtor Turnover (Times)	2.01	4.35	116%	Ratio improve due to increase in revenue
Inventory Turnover (Times)	0.09	0.17	89%	Improvement in the ratio shows better operation efficiency
Interest Coverage Ratio (Times)	-1.3	-1.4	8%
Current Ratio (Times)	1.07	1.02	-5%
Debt Equity Ratio (Times)	1.64	3.12	90%	Due to increase in losses
EBITDA margin (%)	-35%	-20%	15%	Due to increase in Margin
Net Profit Margin (%)	-44%	-25%	19%	Due to increase in Margin
Return on Net Worth (%)	-39%	-84%	-45%	Due to increase in losses

Projects and Plans

Omaxe is now expanding its footprint to several new cities across Madhya Pradesh, Punjab, and Uttar Pradesh. In Madhya Pradesh, Omaxe plans to launch projects in Indore, Ujjain, and Ratlam. In Punjab, the focus will be on Amritsar, Bhatinda, and Chandigarh, while in Uttar Pradesh, new projects are planned for Lucknow, Gorakhpur, Allahabad, and Vrindavan.

In Uttar Pradesh, where Omaxe is already active in Lucknow, the company plans to further its presence with a total investment of approximately Rs. 2,500 Crore over the next four years. This investment will span residential, commercial, and retail segments. A major project in Gorakhpur will feature a township spread across roughly 100 acres, with an MoU already signed for the development of 57 acres. This project, including plots and villas, is expected to launch in this financial year. Additionally, new projects are planned for Omaxes existing townships in Allahabad and Vrindavan.

In Madhya Pradesh, Omaxes investment will likely be around Rs. 750 crore over four years. The company is planning its fourth township in Indore, spanning approximately 300 acres. A 73-acre township is also in the works for Ujjain, with both projects expected to launch this fiscal year. Omaxe is also conceiving a 35-acre land parcel in Ratlam to develop plotted and mid-segment residential projects.

In Punjab, Omaxe plans to invest around Rs. 750 crore over the next four years. A new township spanning 250 acres is planned for Amritsar, primarily focusing on plot development. The company is also looking to acquire mixed- use land in Amritsar and plans to launch a 100-acre township in Ludhiana next fiscal year. In Chandigarh, a 15-acre shop- cum-offices project is on the horizon, and in Bhatinda, Omaxe is exploring the possibility of developing over 40 acres.

Key Strategies

Omaxes has been following a consistent and long terms strategy for achieving its objectives. We have been monitoring and fine tuning these strategies as per our requirements and in line with the market trends. The key strategies adopted by the Company are outlined below.

Strategic Land Acquisitions: Strategic land acquisitions play a pivotal role in the success of a real estate company, and Omaxe has demonstrated its expertise in this domain. By leveraging its forward-thinking approach, the Company has consistently identified and procured land parcels in emerging growth locations ahead of the competition. Omaxes visionary outlook led it to recognize the potential in Tier-II and Tier-III cities, as well as unfancied micro-markets within larger cities, positioning itself advantageously. This early entry into promising areas has bestowed the Company with a cost advantage, allowing it to offer competitive prices or command a premium based on superior locations. To ensure optimal capital allocation, Omaxe follows a prudent "stoploss" principle by divesting non-strategic land parcels that would otherwise strain its financials.

Emphasis on Tier-II and Tier-III Cities

With the Tier-II and Tier-III cities growing faster economically than the Tier-I cities, the aspirations and demand for quality went up in these centres. Omaxe has been at the forefront of tapping this trend with its pedigree and brand. Furthermore, by combining its strategic land holdings with its brand value, offering the quality and aspirations associated with Tier-I cities in smaller urban centres, it has tasted success in the Tier-II and Tier-III markets. This strategic approach enhances Omaxes ability to command premium pricing for its projects.

Diversified Product Mix

Recognizing the evolving needs of customers and the dynamic nature of the real estate market, Omaxe has implemented a strategic approach of maintaining a diversified product mix. This strategy not only allows the Company to cater to varied customer segments but also provides a broader platform for generating sustained growth. Moreover, by having a diverse range of offerings, Omaxe can effectively navigate through potential demand slumps in specific segments by redirecting focus to others that are experiencing higher demand. Omaxe continually studies and analyses the changing customer requirements, enabling it to adapt its product mix.

Focus on Customers and Quality Delivery

Omaxe has an unwavering commitment to customer satisfaction and delivering superior quality. These have been the foundation of its success and brand value. Omaxe ensures that all stakeholders within its ecosystem share this customercentric approach. Omaxe not only adheres to the customerfriendly provisions of RERA but also proactively implements practices that prioritize customer needs even before they are mandated. By upholding the highest standards of construction quality, meeting committed delivery timelines, and complying with industry regulations, Omaxe has gained the trust and loyalty of its customers. Omaxes dedication to customer satisfaction extends beyond the sale itself, as it has established a robust grievance redressal mechanism to promptly address any concerns that may arise post-sale. By upholding its principles of Customer First, Commitments Fulfilled, and Superior Quality Always, Omaxe ensures a superlative purchase experience, long-term customer satisfaction, and sustainable growth in the real estate sector

Opportunities

The new year brings strong growth opportunities for developers, driven by end-users spread across segments. In 2023, the industry witnessed a spike in sales of luxury and ultra-luxury homes and plotted developments, pushing overall sales in the top markets to over 2.3 lakh units. In 2024, this figure is forecasted to increase to 3 lakh units. Commercial real estate, too, is poised for a significant rebound, with particular emphasis on office spaces.

Due to its excellent returns, stability, and diversification benefits, commercial real estate has drawn the attention of investors looking for a lucrative outlet that can withstand economic swings. In this context, office spaces, commercial stores, and flex space properties have been in high demand.

Exceptional office spaces

The rise of startups and businesses in Tier-I, Tier-II, and Tier-III cities has led to a rise in the development of and demand for exceptional office spaces.

Most tenants and buyers are businesses operating in quickly expanding industries like consulting, e-commerce, business process management, and information technology. Additionally, domestic and international companies are showing interest in Indian commercial real estate as a means of expanding their operations due to the countrys remarkable locations, excellent amenities, and affordable purchasing and leasing costs.

Commercial shops at prime locations

A CBRE report states that leasing deals for retail spaces have risen by almost 130% year over year.

This proves that the commercial real estate market is flourishing for several reasons, including prime locations and well-designed and constructed stores.

Since these areas see a lot of footfall, there is a high likelihood of customer traffic and greater visibility for retail businesses. These properties also frequently increase in value over time, which makes them potentially profitable long-term investments.

Residential

The residential real estate market has been mounting a recovery in 2024 and has tremendously added to Indias growth story. The Union Budget has been critical in shaping the industrys direction. The growth in demand for affordable housing is helped by expanding the Affordable Housing Program, increasing the PMAY allocation, and raising the income tax deduction limit for home loan interest. This has given a much-needed boost to the sector as a whole.

Corporate Social Responsibility (CSR)

Omaxe Ltd. ("the Company") recognizes that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organizations. The Company endeavors to make CSR a key business process for sustainable development. The Company is responsible to continuously enhance shareholders wealth; it is also committed to its other stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society and to practice its corporate values through its commitment to grow in a socially and environmentally responsible way, while meeting the interests of its stakeholders. The company is vigilant in its enforcement towards corporate principles and is committed towards sustainable development and inclusive growth. The Company constantly strives to ensure strong corporate culture which emphasizes on integrating CSR values with business objective. It also pursues initiatives related to quality management, environment preservation and social awareness.

Threats, Risks, and Concerns

As with any good story, there are challenges. Hurdles include, the high cost of land, congested and unplanned infrastructure, and complex rules and regulations. Yet, the sectors resilience to innovate in confronting these challenges is proven. Infrastructure issues result in inflated costs, project delays, and overall low productivity. It is through overcoming them that the industry can emerge stronger, more future oriented and aligned to the peoples needs.

The Company is also exposed to a number of risks such as economic, regulatory, taxation and environmental risks as well as sectoral investment outlook. There are some other risks which are very common in the real estate industry, these risk include credit risk, liquidity risk, regulatory risk, commodity inflation risk and market risk. In recent past we have also experienced some unforeseeable such as those emanating from the COVID-19 pandemic. To mitigate these risks, the Company has put in place adequate and robust risk management policies.

Internal Control Systems

The Company has established adequate internal control systems that are appropriate for its business nature, size, and operational complexity. These systems have been functioning effectively. The Directors have implemented policies and procedures to ensure the orderly and efficient conduct of business, adherence to company policies, safeguarding of assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information. In addition, the Company has engaged professional Internal Audit firm to test and evaluate all internal control systems and recommend corrective and remedial measures. The Audit Committee has deliberated with management members, reviewed the laid-down systems, and consulted with the internal audit team and statutory auditors to gauge their opinions on internal financial control systems. The Committee is satisfied with the adequacy and effectiveness of these systems and keeps the Board of Directors informed. However, the Company acknowledges that any internal control framework has inherent limitations. Therefore, periodic audits and reviews are conducted to ensure that the systems are regularly updated.

Human Resources

Our employees are our most valuable assets. The Company remains dedicated to key drivers of employee engagement, career growth, learning opportunities, fair performance evaluations, rewards, and employee well-being by continually enhancing its HR processes to ensure scalability, agility, and a consistent employee experience. Additionally, the Company organizes workshops to enhance employees skill sets and encourage their overall engagement. Individual goals are assigned to employees, aligned with the companys objectives, serving as a strong motivator and improving overall business efficiency. Furthermore, our open-door policy allows employees to voice concerns and share opinions or suggestions, leading to high engagement levels and a lower employee turnover rate.

As of 31st March 2024, the Omaxe group had 1361 full-time employees contributing to its success.

Forward Looking Statements

Statements in the Management Discussion & Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectations of future event; actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting domestic demand supply conditions, finish goods prices, changes in Government Regulations and Tax regime etc. The Company assumes no responsibility to publicly amend, modify or revise any forward- looking statements on the basis of subsequent developments, information or events.