parsvnath developers ltd Management discussions

1. MACRO_ECONOMY OVERVIEW

a. Global Economy

The World Banks Global Economic Prospects report of June 2023 projects global economic output to grow at a slower pace from an estimated 3.1% in 2022 to 2.1% in 2023 and 2.4% in 2024. The Advanced Economies are likely to see their estimated 2.6% growth in 2022 fall to 0.7% in 2023 with the Euro Area showing the largest dip from 3.5% to 0.4% during this period. Among the Emerging Marked and Developing Economies (EMDEs), increase in Chinas GDP growth from 3% in 2022 to 5.6% in 2023 will drive the increase in pace of growth for EMDEs from 3.7% in 2022 to 4% growth in 2023. However, most of the other EMDEs are likely to witness a declining trend. The slowdown is being driven by a number of factors, including:

Continued war in Ukraine has disrupted trade and driven up energy and food prices driving inflation in most economies to record levels.

Monetary policy response by the Advanced Economies to rising inflation is expected to weigh down on economic growth.

Most smaller Emerging Market & Developing Economies (EMDE) that are not energy or commodity exporters have borne the brunt of higher food and energy prices, as many of them are already in precarious fiscal position reducing manoeuvrability in monetary and fiscal policy terms.

The report warns that the risks to the global economy are tilted to the downside. Unless the fallout from Ukraine war, supply chain disruptions and rising energy prices are not mitigated, the global growth could go further down. Many economies are expected to go into a recession. If right policy choices are made, it could help to avert recession in many countries and put the world on a path to sustainable growth.

Output Trends for Major Economies

GDP Growth (in %)	2021 (A)	2022 (E)	2023 (P)	2024 (P)
Advanced Economies	5.4	2.6	0.7	1.2
United States	5.9	2.1	1.1	0.8
Euro Zone	5.4	3.5	0.4	1.3
Japan	2.2	1.0	0.8	0.7
Emerging Market & Developing Economies	6.9	3.7	4.0	3.9
China	8.4	3.0	5.6	4.6
Indonesia	3.7	5.3	4.9	4.9
Russia	5.6	-2.1	-0.2	1.2
Brazil	5.0	2.9	1.2	1.4
Saudi Arabia	3.9	8.7	2.2	3.3
South Africa	4.9	2.0	0.3	1.5
World	6.0	3.1	2.1	2.4

( Source: Global Economic Prospects June 2023, World Bank; https://openknowledge.worldbank.org/server/api/core/ bitstreams/6e892b75-2594-4901-a036-46d0dec1e753/content )

b. Indian Economy

The Indian economy grew by 7.2% in the financial year 2022-23 in real terms, down from 9.1% in the previous year. The corresponding GDP growth performance in nominal terms was 16.1% in FY2022-23 vs. 18.4% in FY2021-22. This growth was driven by improved performance of the agriculture sector, which grew by 4.0% vs. 3.5% in previous year, and the services sector, which grew by 9.5% vs. 8.8% in the previous year. The manufacturing sector was the most negatively impacted as it grew only by 1.3% as against 11.1% in FY2021-22. The growth in Construction sector moderated from 14.8% to 10.0%. The growth in the agriculture sector was supported by good monsoon rains and favourable crop prices. The growth in the services sector was supported by strong growth in tourism, transportation, and financial services.

The countrys performance in FY2022-23 on other important macroeconomic parameters was as follows:

The current account deficit (CAD) stood at 2% of GDP in FY2022-23, up from 1.2% in the previous year. This was on account of a surge in commodity prices during the first half of the year.

The inflation rate stood at 6.7% in FY2022-23, up from 5.5% in the previous year. This was due to rising prices of food and fuel.

The governments fiscal deficit stood at 6.4% of GDP in FY2022-23, down from 6.9% in the previous year and on target.

Overall, the Indian economy performed well in the financial year 2022-23. However, there are some risks to the outlook, including rising inflation and the ongoing war in Ukraine. The government will need to take steps to address these risks to ensure sustained economic growth. The Reserve Bank of India expected the countrys economy to rise by 6.5% in real terms during FY2023-24.

2. INDIAN REAL ESTATE SECTOR

The Indian real estate sector is a major driver of the Indian economy. It is expected to continue to grow in the coming years, supported by strong demand and government policies. Major factors driving the sectors growth and demand are population growth, increasing urbanization, rising economy and income levels, Government support for housing and rising investments including from foreign sources. The Construction segment, which includes the Real Estate sector, contributes 8.2% to the Indian economy. The sector comprises of many segments including Residential, Offices, Retail, Industrial & Logistics, Hospitality & Economic Services and Others. The residential segment is the largest segment of the Indian real estate sector, accounting for about 70% of the market. The major cities in India, such as Mumbai, Delhi-NCR, Bengaluru, Chennai, Kolkata, Hyderabad, Pune, and Ahmedabad are the leading markets for real estate. The real estate sector is expected to create about 10 million jobs in the coming years.

The Construction segment was estimated to be US$ 265.18 billion in size in 2023 and grow to US$ 828.75 billion by 2028 (growing at a CAGR of 25.6%) and to cross US$ 1 trillion by 2030. The Private Equity Investments in Indias real estate sector, stood at US$ 5.1 billion in 2022.

Residential

Annual Residential Segment Performance

Period	FY2021-22	FY2022-23	Growth
Launches (Units)	234,546	337,255	43.8%
Sales (Units)	239,567	313,165	30.7%
Quarters To Sell at the end of year	9.1	7.2	-20.9%

(Source: Knight Frank data for 8 major cities in India; https:// www.knightfrank.co.in/research/india-real-estate-residential-and-office-market-h1-2023-10306.aspx and https://www. knightfrank.co.in/research/india-real-estate-residential-and-office-q1-2022-8926.aspx)

NCR and Mumbai exhibited above average growth in terms of launches in FY2022-23 with 103.6% and 48.3% growth respectively. Similarly, in terms of sales, Ahmedabad topped all the cities with 42.2% rise followed by Mumbai at 38.1%, NCR at 35.7% and Hyderabad at 32.6% YOY increases that were more than sectoral increase in home sales. The sales showed increasing trend of sale of premium properties vis-?-vis affordable housing.

The Residential segment recorded a marked recovery in all aspects including launches, sales, pricing and unsold inventory during FY2022-23, building upon the positive momentum that began in the previous year. In the national residential property market, India saw the value of home sales reach an all-time high of 3.47 lakh crore (US$ 42 billion), marking a solid 48% YOY jump. In volume terms as well, the sales showed a robust growth with a 36% rise to 379,095 units sold. The residential segment will witness a significant feat in 2023 when the real estate developers operating in the countrys major urban centres are expected to complete approximately 558,000 homes.

Office

Annual Office Segment Performance

Period	FY2021-22	FY2022-23	Variance
Net absorptions (million sq. ft.)	40.2	52.1	29.6%
New completions (million sq. ft.)	40.1	42.1	5%

(Source: Knight Frank data for 8 major cities in India; https:// www.knightfrank.co.in/research/india-real-estate-residential-and-office-market-h1-2023-10306.aspx and https://www. knightfrank.co.in/research/india-real-estate-residential-and-office-q1-2022-8926.aspx)

In contrast to the most office markets across the world, the Indian Office Market saw a commendable rise in transactions at 29.6%, as Indian economy performed relatively much better than its global peers. The supply of new office space did not outpace the absorption levels in FY23 as the economic growth was expected to see further slowdown, therefore resulting in a reduction in vacancy rates. However, new supply did rise on a YOY basis at a modest 5%. Once again, the Office segment was dominated by Bengaluru which contributed 27.8% of the total transactions and 34.2% of the total new supply in terms of square feet. However, in terms of YOY growth Bengaluru and southern markets i.e., Hyderabad and Chennai lagged the segment average in terms of transaction. Mumbai, Kolkata and Pune showed the most growth in transaction volumes.

In terms of new completions, only NCR, Hyderabad and Bengaluru showed a YOY increase with rest of the markets seeing a decline.

The Return-To-Office trend with an economy that is doing relatively better have resulted in sustainable demand for quality office spaces. The rentals have seen an across the board rise of low to high single digits in YOY terms. Flexi-working and Other Services verticals are gaining market share of the new transactions from the traditional heavyweights such as IT and BFSI.

Retail Segment

The Indian Retail sector continued its recovery from the COVID-19 pandemic and hence, the absorptions during

FY2022-23 saw an impressive rise on a YOY basis. among the top 5 in the world based on the size. It was expected to grow toUS$ 1.8 trillion by 2030. Retail sector was hit extremely hard due to the pandemic, however, with the consumer demand seeing a rebound and movement restrictions minimised, the sector saw a full-scale recovery. The Retailers Association of India (RAI) reported that the sector achieved 96% of pre-COVID sales in September 2021. The Retail segment in Real Estate also saw a similar uptick in demand and new supply during the year 2021. Bengaluru and Mumbai are the two dominant markets in this segment with a greater than 50% share. Fashion & Apparel and Supermarkets were the key demand drivers.

Annual Retail Segment Performance

Period	2021	2022	Variance	Q1 2022	Q1 2023	Variance
Absorption across Grade A Properties (million sq. ft.)	3.2	4.7	46.9%	0.5	1.5	200%
New Investment Grade Supply (million sq. ft.)	4.1	1.4	-65.9%	0.6	1.1	83.3%

(Source: CBRE Research Reports; https://www.cbre.com/ insights#market-reports)

Outlook

The Indian real estate sector is expected to continue to grow in the coming years, driven by a growing economy and number of other factors such as:

Rising demand from millennials: Increasingly there is a renewed shift from Rent to Buy Homes among this demographic, which forms the largest group.

Increasing urbanization: The Indian economy is urbanizing rapidly, which is creating demand for new homes and commercial space. Government is investing significantly in the development if Tier-II and Tier-III towns, which will increase the opportunities for the sector overall.

The outlook for the different segments of the real estate sector is as follows:

Residential: The residential segment is expected to continue to be the largest segment of the real estate sector, driven by the demand from millennials and increasing urbanization. The premium and luxury segment is likely to grow the fastest in the medium term.

Office: The office segment is expected to grow at a slower pace than the residential segment, but it is still expected to grow. Even with continued use of Hybrid working models, the need for office space is expected to rise. The focus of developers will be on providing office space that meets the needs of occupiers, such as flexibility, accessibility, proximity to public transport, and technology-integration.

Retail: The retail segment is expected to grow at a slower pace than the residential and office segments. Retailers are looking to diversify their location mix and focus on mini retail micro-markets.

Other segments: The industrial and logistics segment is expected to grow at a faster pace than the other segments. The governments PLI scheme is expected to create demand for industrial and logistics space. Similarly, the Data Centre space is likely to boom due to data localisation rules and increasing demand for storage and SAAS services.

Overall, the outlook for the Indian real estate sector is positive. However, there are some risks to the outlook, such as rising inflation that may result in further rate hikes and political uncertainty.

Trends by CBRE for the year 2023 over 2022

Segment	Demand	Supply
Office	Slow pace of growth due to lower expected growth in office-based employment. Activity will be higher towards the second half of 2023	Steady supply of 51 – 53 million sq. ft. of space is expected
Retail	Leasing in new malls to drive up absorption	Supply will significantly improve as it lagged in 2022 due to fewer completions.
		Many projects launched in the last 1.5 – 2 years will become operational in 2023
Residential	Lagged impact of tighter monitory policy may affect demand from the second half of 2023. But overall, the growth momentum is expected to continue.	New Launches will continue to remain robust.

(Source: CBRE India Market Outlook 2023 https://mktgdocs.cbre.com/2299/c03d8834-e77b-4316-9de6-55a2ec622a2b-1954864249/ 2023_20India_20Market_20Outloo.pdf )

3. COMPANY OVERVIEW

The Parsvnath Group is a marquee real estate brand with a pan-India presence in 37 cities across 13 states. It has been in operation since its establishment in 1990. In its more than four-decade existence, the Company has established an enviable track record in diverse segments of the sector such as Integrated Townships, Residential, Commercial, Retail, DMRC Station Development, Hotel, IT Park, SEZ and Third-Party Contracting projects. It was the first company in the sector to integrate and implement quality standards such as ISO 9001, 14001 and OHSAS 18001.

The residential housing projects developed by the Company offer the customers best amenities in addition to quality construction of multiple con_guration units in high-rise apartment blocks, row houses and group housing. It also offers residential plots on sale. The projects that have made a name for the Company in this segment are Parsvnath Edens – Greater Noida, Parsvnath Exotica – Gurugram, Parsvnath Green Ville – Gurugram, Parsvnath La Tropicana – Delhi, Parsvnath Planet – Lucknow and others.

In the Integrated Township projects, Parsvnath Group offering includes apartments, villas, group housing, plots, schools, hospitals, retail and commercial units. It has part completed 14 township developments across major cities foremost among them being Ujjain, Dharuhera, Panipat, etc. Among the leading institutions and corporates that operate from the Companys commercial projects are Axis Bank, Canara Bank, State Bank of India, PNB, NIELIT, WHO, Smart Chip (Adhaar Center), Qatar Visa Center, SMC, etc. Similarly, the main highlights among the Retail brands with presence in the Companys properties include PVR, Metro Cash & Carry, LOTS whole sales, Haldirams, KFC, Food forum- Food court, Caf? Co_ee Day, Burger King, Dominos, Pizza Hut, NEXA, Adidas, Skechers, Puma, Benetton, etc. Delhi Metro Rail Corporation Limited (DMRC)s award of integrated property development rights at MRTS stations and commercial development of incremental land pockets available with it has been the most important project wins for the Company.

The ‘Concession agreements are on a Build-operate-transfer (BOT) basis with terms of 30 years. Till date, Parsvnath Group has completed construction of 8 (Eight) DMRC projects.

The overall developed area of 75.74 million sq. ft. in 80 projects has been delivered by the Company till March 31, 2023. The number of ongoing projects is 27 with a potential development area totalling to 19.89 million sq. ft.

a. Segment Highlights of Completed Projects Residential Segment

The Residential developments completed by the Company are based in 32 projects with a total area of 14.80 million sq. ft. These developments are concentrated in major cities such as Delhi, Gurugram, Greater Noida, Sonepat, Rohtak, Karnal, Indore, and many more.

Integrated Townships

The Companys Integrated Township portfolio comprises of the projects in cities such as Karnal, Rohtak, Indore, Jaipur, Panipat, Sonepat with commercially exploited and completed area of 55.53 million sq. ft. in 14 townships till March 31, 2023.

Commercial Segment

With a total leasable/ saleable area of 2.51 million sq. ft. spread over 20 completed projects in the prominent cities till March 31, 2023, the Company has established a significant presence in the Commercial segment. This segment had gained prominence in the Companys portfolio due to its focus on reliable income streams and steady demand patterns. 8 DMRC projects with a total developed area of 1.06 million sq. ft.

Other segments

The Company has also ventured in other segments such as Hospitality and Contracting. Total area developed by the Company in other segments including contractual projects is 1.84 million sq. ft.

b. Segment-wise Under-construction Projects

Among the ongoing Residential and Integrated Township projects of the Company, the major ones are Parsvnath La Tropicana – Delhi, Parsvnath Paramount – Delhi, Parsvnath Exotica Extension (Part) – Gurugram, Parsvnath Palacia – Greater Noida, Parsvnath Castle – Rajpura, Parsvnath Villas – Saharanpur, and Parsvnath City township projects in Karnal, Rohtak and Indore. In Other Segments a 3 Star hotel property situated at Shirdi is still under development.

DMRC Projects

As on March 31, 2023, Parsvnath Group had completed

Under Construction Projects (As on March 31, 2023)

No. Segment	No. of Projects	Area (Million Sq. Ft.)
A Residential (Group Housings) Projects	21	10.47
B Commercial /IT Park Projects	2	1.18
C IntegratedTownships Projects	3	8.19
D Hotel	1	0.05
_ GRAND TOTAL (A+B+C+D)	27	19.89

c. SWOT

Strengths	Weakness
Reputed name with nearly four decades of legacy in the real estate sector	Delays in past projects due to reasons beyond the Companys control
Recognised for quality of its projects	Long-term horizon of projects means a longer payback period and cash flow uncertainty
Diversified product and regional portfolio
Valuable land bank in future growth markets, primarily in the Northern parts of the country
Highly motivated and capable workforce ably led by excellent leadership
Opportunities	Threats
Renewed interest of financial institutions for funding of Real Estate projects with more institutional investments options available from foreign investors, REITs, Alternative Investment Funds (AIF) and other sources.	Input cost inflation remains a serious concern due to ongoing inflationary pressures arising from breakdown of international supply chains and rising local demand for steel, cement, and energy.
Urbanization leading to doubling of shortage in urban housing by 2030.	Jump in interest rates that have driven up the cost of capital.
Return-To-Office trend and revival in Retail segment driving increase in occupancy rates for Commercial properties..

4. COMPANY PERFORMANCE & OUTLOOK

a. Financial Performance

The consolidated operating revenue booked by the company during FY 2022-23 decreased by 51.02% from _ 898.93 crores to _ 440.33 crores. With the increase in Other Income by _ 19.53 Crores, the total income of the Company was lower by 47.84%. The Loss Before Exceptional Item & Taxes for the reported financial year was _ 527.88 crores, an increase of 7.8% over the previous year. The company has recognised as Exceptional Items of _ 124.38 Crores in the financials. In addition to the Net Exceptional Loss, the companys Profit After Tax for the period was further impacted by recognition of Deferred Tax Asset of _ 143.57 crores against unabsorbed depreciation and business losses carried forward till financial year 2019-20 and by share of associates loss at _ 2.06 crores. The loss at Profit After Tax rose from _ (493.86) crore in FY2021-22 to _ (801.28) crore, a jump of 62.22%.

b. Significant Changes in Key Financial Ratios

In compliance with the requirements of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, the significant changes (i.e., 25% or more during the financial year 2022-23, as compared to financial year 2021-22) in the key financial ratios, as mentioned in these regulations are given herein below:

Ratios	As at 31-03-2023	As at 31-03-2022	% Change in ratio	Reasons for more than 25% change
Current ratio (in times)	0.86	0.97	(10.91)	-
Debt-equity ratio (in times)	1.94	1.37	41.56	Total equity reduced due to losses during the year
Debt service coverage ratio (in times)	(0.43)	0.05	(1008.22)	Decreased mainly on account of increase in Cost of goods sold recognised for certain projects on completion of performance obligation as compared to sales
Return on equity ratio (%)	(83.08)	(21.00)	(295.58)	Decreased due to increase in losses
Inventory turnover ratio (in times)	0.17	0.29	(42.43)	On account of decrease in revenue which lead to decrease in Cost of goods sold
Trade receivable turnover ratio (in times)	1.03	2.53	(59.17)	Decreased mainly on account of decrease in revenue recognised during the year as compared to previous year
Trade payable turnover ratio(in times)	0.57	1.22	(53.79)	Decreased mainly on account of decrease in Cost of goods sold recognised for certain projects on completion of performance obligation
Net capital turnover ratio (in times)	0.61	(6.18)	90.09	Increased mainly on account of decrease in revenue recognised during the year as compared to previous year
Net profit ratio (in %)	(157.61)	(28.08)	(461.17)	Decreased due to increase in net loss as compared to revenue recognised during the year
Return on capital employed (%)	LIGN=RIGHT>(6.16)	0.60	(1120.56)	Decreased mainly on account of increase in Cost of goods sold recognised for certain projects on completion of performance obligation as compared to sales
Return on investment (%)*
i. Fixed income investments	4.89	4.23	15.56	-

*does not include return on investment in subsidiaries, associates, joint ventures and partnership firms which are stated at cost as per Ind AS 27 ‘Separate Financial Statements and unquoted equity investments being measured at fair value through other comprehensive income (‘FVTOCI).

c. Operational Highlights

During the financial year, the Company was successful in booking sale of 1.138 million sq. ft. area at a valuation of _ 24,202.87 lakhs. The break-up of the total booking between the segments was as follows:

Residential group housing: 1,66,814 sq. ft.

Commercial property: 1,934 sq. ft.

Integrated townships: 9,69,145 sq. ft.

As on March 31, 2023, the Company has completed total area 7,57,44,857 sq. ft. as on March 31, 2023 distribution across segments was:

Residential group housing: 1,48,01,763 sq. ft.

Commercial/ retail property: 25,06,375 sq. ft.

Integrated township : 5,55,27,935 sq. ft.

DMRC Projects : 10,64,407 Sq. ft.

Contractual: 18,44,378 Sq. ft.

d. Segment Highlights

Bookings by Segment during FY 2022-23
No. Segment	# of Projects	Booking Value ( Lakhs)	Area in (sq. ft.)
A Residential (Group Housings) Projects	10	11,503.34	1,66,814
B Commercial /IT Park Projects	2	120.33	1,934
C Integrated Townships Projects	9	12579.19	9,69,145
_ GRAND TOTAL (A+B+C)	21	24,202.87	11,37,893

Area completed by Segment as on March 31, 2023

No. Segment	# of Projects	Area in (sq. ft.)
A Residential (Group Housings) Projects	32	11,48,01,763
B Commercial / retail property	20	25,06,375
C Integrated Townships Projects	14	5,55,27,935
D DMRC Projects	8	10,64,407
E Contractual	6	18,44,378
GRAND TOTAL (A+B+C)	80	7,57,44,858

e. Business Strategy & Outlook

The industry growth presents a never before opportunity for the Company to effect a turnaround in its performance by focusing on the following strategies in addition to leveraging its nearly four decade strong foundation in the sector.

Continued focus on ensuring liquidity by sourcing capital from alternative sources

Slowdown and pandemic in previous years had constrained the Companys ability to fund its projects resulting in delays. With the market scenario seeing an improvement, the Companys focus will be to rationalize its debt, capital cost and source funding from alternative sources.

Ensuring On-Time Delivery Of Projects

Operational efficiency is of crucial importance for the Company in light of its financial situation and hence, it would focus on completing its under construction projects and their delivery to the customers within time to avoid cost overruns and delayed cash inflows.

Approach Potential Partners For Strategic Alliances Since the previous year, the Company has made significant efforts to build alliances and partnerships with other players to strategically share risks, source capital and leverage expertise. Its alliance with Unity Group, named ‘Unity Parsvnath LLP for the construction and development of the project situated at Netaji Subhash Place, Delhi, is one such example. It is also looking for alliance with new marketing partners to improve its reach and marketing effectiveness on all channels, especially social media.

f. SUBSIDIARIES AND ASSOCIATE COMPANIES i. Subsidiaries Companies Parsvnath Infra Limited (PIL)

Parsvnath Developers Limited holds 94.87% equity in PIL. PIL was allotted land by Andhra Pradesh Industrial Infrastructure Corporation Ltd. for setting up a Biotechnology SEZ at village Karkapatla, District Medak, Andhra Pradesh for which the sale deed was executed in 2010. However, there were some discrepancies in the survey numbers of the allotted land which were subsequently recti_ed. As a result, the commencement of the project was delayed. PIL received a notice dated May 26, 2018 from Telangana State Industrial Infrastructure CorporationLtd (TSIIC) for cancellation of allotment of land due to delay in execution of the project. PIL has made suitable representation followed by several reminders and a final decision of TSIIC in this regard is awaited. PIL has also initiated legal action against the cancellation of allotment of land before the Telangana High Court which is pending adjudication. An amicable resolution is also being tried simultaneously.

PIL intends setting up a Private Integrated IT/ Hi-tech Park at Kochi, Kerala, for which declaration of the land area as Industrial Area by the Government of Kerala is awaited.

Parsvnath MIDC Pharma SEZ Private Limited (PMPSPL)

PMPSPL, a subsidiary of PIL, was incorporated to implement a pharmaceutical SEZ project in Maharashtra. However, the project was found to be unviable and therefore surrendered during 2014-15. Options are now being explored for taking up suitable business in PMPSPL.

Parsvnath Landmark Developers Private Limited (PLDPL)

Construction of a premium residential project "La Tropicana" at Civil Lines, Delhi, is in progress. The project is being constructed in four phases. Possession for fit out for Phase 1 is completed and the families have started residing there and the club is also operational. Possession for fit out for Phase II has majorly been completed. The construction work of Phase III is in progress. PLDPL has yet to start the construction of Phase IV.

Parsvnath Hotels Limited (PHL)

PHL is in the process of constructing a three-star hotel project at Shirdi, a well-known religious place in Maharashtra. The project has been delayed due to some unavoidable circumstances. Revalidation of approval earlier received from the Ministry of Tourism, Government of India, is under process.

Parsvnath Estate Developers Private Limited (PEDPL)

PEDPL, a wholly owned subsidiary of the Company, has constructed the "Parsvnath Capital Tower", a modern state of- the-art office-cum-commercial complex of international standards, located adjacent to Connaught Place on Bhai Veer Singh Marg, New Delhi on land allotted on BoT basis from DMRC. The complex has two parts - Part A has been completed and is leased out to leading organisations like the World Health Organisation (WHO), State Bank of India, ICICI Lombard General Insurance Company, Aditya Birla Group, Karmayogi Bharat, Agriculture Insurance Company of India Limited, LOr?al, etc. Part B has been completed in May 2021 and is in the process of being leased out.

Parsvnath Promoters and Developers Private Limited (PPDPL)

PPDPL was identified as the SPV to implement a residential project at Delhi awarded by Rail Land Development Authority (RLDA) to the Company. However, since RLDA subsequently wanted the project to be implemented by a newly incorporated company, a new company Parsvnath Rail Land Project Pvt. Ltd (PRLPPL) was incorporated and the project was transferred to PRLPPL. While a major part of the consideration for the assignment/ transfer of the project has been received from PRLPPL, receipt of the remaining part will depend on the outcome of the arbitration proceedings initiated by PRLPPL and the Company against RLDA.

Parsvnath Rail Land Project Private Limited (PRLPPL)

PRLPPL was incorporated for implementing the residential project near Rani Jhansi Road, Delhi, on land leased by Rail Land Development Authority (RLDA). Your Company had tied up with Red Fort Capital Group, international private equity investors, for investment in the project. However, because of various factors including inability to achieve financial closure due to delay in approval of building plans, PRLPPL had surrendered the project and sought refund of the amounts deposited towards land premium. Since the RLDA disputed the claims of PRLPPL and the Company for refund, the matter was referred to arbitration and the Honble Arbitral Tribunal passed an Award dated November 25, 2017, directing RLDA to refund an amount of Rs. 1034,53,77,913/- (Rupees One Thousand Thirty Four Crores Fifty Three Lakhs Seventy Seven Thousand Nine Hundred Thirteen only) along with interest @ 4% per annum from July 15, 2015 till the date of payment. After exhausting all legal recourses, RLDA deposited the required amount in the Registry of the Delhi High Court in July 2019 which was a major relief for PRLPPL. The amount received was used for part redemption of non-convertible debentures and redemption of optionally convertible debentures issued by PRLPPL, part payment of the amount payable to PPDPL for assignment of the project and discharging certain other liabilities. In another arbitration proceedings relating to RLDAs liability for payment of interest to the Company on instalments received in advance as RLDA had wrongfully revoked its consent for the Special Purpose Vehicle proposed to implement the project, the arbitration was decided against PRLPPL and PRLPPL has appealed to the Honble Delhi High Court and the Courts decision is awaited. Besides the above, two more arbitration proceedings have been initiated against RLDA regarding certain other claims. In one of the arbitration proceedings, an arbitral award of Rs.146.19 cr. has been awarded in favour of the organization. Another arbitral award has also been pronounced, in one of the arbitration proceedings, wherein a sum of Rs.3.30 cr has been awarded in our favour.

Parsvnath Hessa Developers Private Limited (PHDPL)

PHDPL, a wholly owned subsidiary of the Company, is developing a part of the premium luxury residential project "Parsvnath Exotica" at Gurgaon, Haryana. Possession of fiats of all the towers, have been given to the customers except the EWS Tower where the construction is in progress.

Parsvnath Buildwell Private Limited (PBPL)

PBPL, a wholly owned subsidiary of the Company, is implementing a premium residential project "Parsvnath Exotica - Ghaziabad" in Ghaziabad District, Uttar Pradesh, spread over an area of approx. 12.55 hectares. Construction has been delayed due to delay in receipt of approval of revised building plans from the Ghaziabad Development Authority, which are now partially approved. In terms of the Order passed by the Honble Supreme Court in a related matter, arbitration proceedings were initiated against the land owners. An arbitral award was passed in the matter which has erroneously considered a non-determinable contract to be a determinable contract. PBPL is in the process of challenging the Award by filing objections under Section 34 of the Arbitration and Conciliation Act, 1996.

Parsvnath Realcon Private Limited (PRPL)

PRPL is developing a luxury residential project at Subhash Nagar in West Delhi on land acquired from DMRC. Construction was delayed due to delay in receipt of approval for revised building plans by South Delhi Municipal Corporation which was mainly by certain acts of commission/ omission by DMRC. The Company had initiated arbitration proceedings against DMRC. Following the conclusion of the arbitration, the matter is now reserved for orders. Construction is in full swing to complete the project.

Parsvnath HB Projects Private Limited (PHBPL)

PHBPL, a subsidiary of Company and a joint venture with HB Estate Developers Ltd., is a SPV for developing a Hotel-cum-Multiplex-cum Shopping Mall Project viz., Parsvnath Mall Matrix at Mohali in Punjab. Pursuant to certain disputes with the Punjab Small Industries Export Corporation (PSIEC) from whom the plot of land was acquired, the allotment of the plot was cancelled by PSIEC vide their letter dated May 21, 2015. The Company filed an Arbitration Petition against Cancellation of Allotment. PSIEC initiated proceedings under Public Premises (Eviction of Unauthorized Occupants) Act. Orders were passed by the Authority on July 20, 2017 directing the Company to handover the possession of the site. PSIEC has taken symbolic possession of the land around early October, 2019. The arbitration proceedings are going on against PSIEC.

Parsvnath Film City Limited (PFCL)

PFCL was set up to implement a Multimedia-cum-Film City Project near Chandigarh on the land to be provided by Chandigarh Administration. PFCL had deposited Rs. 4,775.00 lakhs with ‘Chandigarh Administration (CA) for acquiring development rights in respect of a plot of land. Since CA could not handover the possession of the said land to PFCL, it invoked the arbitration clause for seeking refund of the allotment money paid along with compensation, cost incurred and interest thereon.

The Arbitral Panel vide its order dated March 10, 2012, decided the matter in favour of PFCL and awarded refund of Rs. 4,919.00 lakhs towards the earnest money paid and other expenses incurred by PFCL along with interest. Subsequently, the CA filed a petition before the Additional District Judge at Chandigarh for setting aside the award. The said petition was dismissed by the Honble District Judge vide his order dated May 07, 2015.

PFCL filed an Execution Petition before the Additional District Judge (ADJ), Chandigarh for the execution of the Arbitral Award. In the meantime, CA filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 before the Punjab and Haryana High Court against the orders of the ADJ, Chandigarh. The Honble High Court allowed the appeal filed by CA and set aside the arbitral award vide its orders dated March 17, 2016. The Company filed a Special Leave Petition (SLP) before the Honble Supreme Court of India and notice has been issued to CA. CA has also filed an SLP in this matter before the Honble Supreme Court and both the matters have been tagged together.

As the Arbitral Awards has been passed in favour of the Company which has already been upheld by Additional District Judge in Section 34 proceedings, the Company has good case before the Honble Supreme Court of India and there is likelihood that the Company will succeed before the Honble Supreme Court of India.

Farhad Realtors Private Limited (FRPL)

FRPL is a wholly owned subsidiary of the Company. It is looking for development of the suitable projects.

PDL Assets Limited (PAL)

PAL is a SPV used for developing the Azadpur Project at Delhi in terms of the concession agreement executed with Delhi Metro Rail Corporation Limited ("DMRC"). DMRC has withdrawn the Project. Consequent upon denial of amicable resolution by DMRC, PAL has served on DMRC, a Notice of invocation of Arbitration in terms of the Concession Agreement.

Parsvnath Realty Ventures Limited (PRVL)

PRVL is a SPV for developing the Akshardham Project at Delhi in terms of the concession agreement executed with DMRC. While part of the project has been developed by the Company, the SPV will be developing/ completing the balance part subject to requisite approvals from DMRC and the Lenders. Accordingly, an amendment agreement to the Concession Agreement dated July 7, 2020 has been executed between DMRC, PRVL and the Company in terms of which all the rights held by the Company has been assigned to PRVL.

Jarul Promoters & Developers Private Limited (JPDPL)

JPDPL is a SPV being used for developing the Seelampur Project at Delhi in terms of the concession agreement executed with Delhi Metro Rail Corporation Limited ("DMRC"). While part of the project has been developed by the Company, the SPV will be developing/ completing the balance part subject to requisite approvals from DMRC and the Lenders.

Suksma Buildtech Private Limited (SBPL)

SBPL is a SPV being used for developing the Inderlok Project at Delhi in terms of the concession agreement executed with Delhi Metro Rail Corporation Limited ("DMRC"). While part of the project has been developed by the Company, the SPV will be developing/ completing the balance part subject to requisite approvals from DMRC and the Lenders.

Snigdha Buildwell Private Limited (SBPL)

Snigdha Buildwell Private Limited is a wholly owned subsidiary of Parsvnath Developers Limited. SBPL is engaged in development of various projects through its subsidiaries.

Evergreen Realtors Private Limited (ERPL)

Evergreen Realtors Private Limited is the step-down subsidiary of Parsvnath Developers Limited and subsidiary of Snigdha Buildwell Private Limited. ERPL is in looking for development of the suitable projects.

Generous Buildwell Private Limited (GBPL)

Generous Buildwell Private Limited is the step-down subsidiary of Parsvnath Developers Limited and subsidiary of Snigdha Buildwell private Limited. GBPL is looking for development of the suitable projects.

Vardaan Buildtech Private Limited (Vardaan)

Vardaan owned a plot of land at Sonepat for building a commercial complex. During the year under review, the said plot of land has been transferred through business transfer agreement. The Company is looking for other suitable projects.

ii. Associate Companies

Amazon India Limited (AIL)

AIL in collaboration with the Company has successfully developed a group housing project viz., "Parsvnath Green Ville at Sohna whereat possession of all fiats have already been handed over. The Company is looking for implementing other suitable projects.

Homelife Real Estate Private Limited (Home Life)

Home Life has developed a part of a residential colony in Rajpura (Punjab) and balance part is currently under development.

5. HUMAN RESOURCES

The companys people are the most important factor that helps it differentiate vis-?-vis its peers. Hence, the company has put in place sound HR practices to attract, retain, and develop the best talent. These practices include:

Recruitment and selection of competent and professional talent

Performance management to track and evaluate employee performance

Training and development to help employees develop their skills and knowledge

Compensation and benefits to attract and retain top talent

Employee relations to create a positive and productive work environment

Work-life balance to promote employee productivity and well-being

Employee engagement to create a positive work environment

The company is committed to investing in its people to ensure its success.

As on March 31, 2023, the Company has total 271 numbers of employees including contractual employees and Executive Directors.

6. RISK MANAGEMENT & MITIGATION

Risks are inherent to any business with the nature and quantum varying based on the industry and specific business context of each company. The Company continuously identifies, assesses, mitigates, and monitors risks to reduce negative fallout from realisation of such risks. It has a codi_ed comprehensive risk management framework approved by the Board in place for this. The section outlines critical risks that the Company is exposed to and relevant mitigation measures.

a. Demand risk

The risk that the actual demand for Companys projects will not be as per expectations can arise from various factors including but not limited to macro-economic scenario, interest rates, consumer sentiments in specific markets, regulatory changes.

Risk mitigation

Better demand forecasting using historical data, knowledge of local factors at micro-market level to do a bottom-up forecast and considering other factors to predict future demand help the Company to plan their production and inventory levels more accurately.

Diversification of business portfolio in terms of segments, geography, and con_gurations reduces the impact of demand shock in a specific market. Avoiding highly volatile market segments also helps in reducing the risk.

Use of pricing strategies such as discounts or promotions to manage demand is also an important mitigation measure.

Risk sharing by collaborating with other developers through JVs or other types of business structures can distribute the risk of demand uncertainty.

b. Infiation risk

Increase in prices for factors of productions can affect financial viability of the Companys projects and in turn its overall financial performance.

Risk mitigation

Use of more efficient construction techniques to optimize consumption of raw materials. Minimizing project delays for tighter control on and more predictability of input costs.

Limiting outsourcing of project execution only to exceptional cases.

Long-term rate contracts for cost predictability, wherever feasible.

c. Execution risk

Any delay in completing the projects on a timely basis would expose the Company to deferment of revenue realization and hence cash inflow, higher operational and capital costs, customer dissatisfaction leading to long term impact on Companys credibility and brand, and many such negative outcomes.

Risk mitigation

Project-based organization structures, planning and control systems, contingency plans and timely allocation of necessary resources allow the Company to ensure no delays due to internal reasons.

Regularly train in-house talent in project management skills to ensure availability of best-in-class execution talent.

Partner with other developers, outsource execution or engage external expertise to manage risk from external factors delaying project execution.

d. Capital risk

The Companys business is capital intensive and with highly varying cash flows. Hence, making adequate funds available for project execution is critical to ensure speedy execution of its projects. Any deferral of funds could not only lead to impact on project delivery, but it may also lead to increased cost of borrowings, negative financial viability or diversion of funds from other projects.

Risk mitigation

Improve regularity of the cash flow and overall liquidity by pursuing revenue from leasing, BOT projects or 3^rd party fee-based contracts.

Monetize non-core and non-viable assets.

Thorough research and financial evaluation of projects during capital allocation.

Reduce cost of capital by choosing long-term debt / capital over shot-term financing.

e. Compliance Risks

The Real Estate industry is highly regulated, and any non-compliance may result in fines, interest payouts, lawsuits, imprisonment, suspension of license to operate, sales embargo or loss of reputation for the Company.

Risk mitigation

A no-compromise approach to regulatory compliance in the organization.

Project and corporate level compliance management cross-functional teams.

Strengthening of internal controls and incentives for preventing unscrupulous behaviour by staff.

f. Human resources risk

Non-availability of workforce for construction projects in adequate numbers and with the right skills may impact project execution timelines and quality.

Risk mitigation

Monitor and improve performance of the human resource department in resourcing through policy, people, and process interventions.

Develop strong relationships with quality and regulations conscious labour contractors.

Create a healthy work environment on project sites and at offices to encourage retention and high levels of performance.

Robust training and organizational development programs to sustain or enhance capabilities.

7. INTERNAL CONTROLS AND SYSTEMS

The company has established robust internal control systems to prevent fraud and errors, ensure compliance with laws and regulations, accurately record all data and transactions, and support decision-making. The internal control systems include:

Policies and procedures

Quality standards and checks

Management structures and authority matrix

T I systems

Internal and statutory audits

Review and corrective mechanisms

The company regularly reviews and updates its internal control systems to ensure that they are effective. Some of the principles that the company has incorporated in its internal control systems are as follows:

Segregation of duties: Similar to the maker and checker concept in payments, the company focuses on separation of responsibilities to ensure oversight and redundancies in any process. This means that different people are responsible for different tasks within a process, so that no one person has too much control or the process is not overly dependent on a single person.

Need-based access: Whether it is access to physical space or information, access is controlled for individuals based on their role or the need for access to fulfil their responsibilities. Physical access is controlled through locked doors, security cameras, and safes, and information access is controlled with things like password protection, data encryption, firewalls, etc.

These measures help protect companys physical, information and IP assets from theft, damage or leaks.

Back-up, Redundancy and Reconciliation: Accuracy is maintained by reconciling two sets of records to make sure that they match. Back-up of data and redundancy of systems and facilities to ensure no downtime in the event of any unforeseen mishaps or disasters.

8. FORWARD LOOKING STATEMENT

Statements made in the Management Discussion and Analysis Report describing the Companys objective, projections, estimates, expectations may be forward looking statements within the meaning of applicable laws and regulations, based on beliefs of the management of your Company. Such statements reflect the Companys current views with respect to the future events and are subject to risks and uncertainties. Many factors could cause the actual result to be materially different from those projected in this report, including among others, changes in the general economic and business conditions affecting demand/supply and price conditions in the segment in which the Company operates, changes in business strategy, changes in interest rates, inflation, defiation, foreign exchange rates, competition in the industry, changes in Governmental regulations, tax laws and other Statutes & other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.