Prozone Realty Ltd Management Discussions

I. Economic Overview:

Global Economy:

The global economy Is navigating another challenging phase, marked by rising trade barriers, heightened policy uncertainty, and persistent geopolitical tensions. These factors are weighing on growth prospects across both advanced and emerging market economies, compounding the aftershocks of recent crises. For emerging market and developing economies (EMDEs), the scope to narrow per capita income gaps with advanced economies, generate sufficient jobs, and reduce poverty remains limited. Foreign direct investment flows into EMDEs are at less than half their 2008 peak, constraining longer-term development prospects.

We recognise that rising trade barriers and global uncertainty are slowing growth, with world output projected at just 2.3 per cent in 2025.

Global growth Is projected to decelerate sharply to 2.3 per cent in 2025, representing the slowest pace since 2008 outside of global recessions. A modest recovery Is anticipated in 2026, with global output expected to expand by 2.7 per cent, although this remains materially below earlier projections. Among advanced economies, growth Is set to slow to 1.4 per cent in 2025 before improving slightly to 1.7 per cent in 2026, reflecting weak demand, subdued investment, and ongoing policy normalisation. EMDEs are expected to expand by 3.7 per cent in 2025 and 4.1 per cent in 2026, but this momentum Is insufficient to bridge income disparities or significantly reduce poverty levels.

The balance of risks remains tilted to the downside. Escalation in trade restrictions, weaker-than-expected growth in major economies, intensifying conflicts, or climate shocks could further depress outcomes. On the upside, lasting trade agreements among major economies could ease uncertainty and support recovery. Against this backdrop, global cooperation and domestic reforms remain essential. Multilateral policy efforts are reguired to restore stability in trade and address the rising debt and climate vulnerabilities facing EMDEs, while national policymakers must focus on strengthening fiscal resilience, containing inflationary pressures, and fostering private investment to secure longterm growth.

Indian Economic Overview:

Indias economy Is estimated to have expanded by 6.7 per cent in FY2025, supported by strong agricultural production, solid services sector activity, and softer crude oil prices.

While the pace of growth eased compared with the previous year, core fundamentals remained resilient. The slowdown reflected weaker private investment, subdued housing demand, and the lagged effects of tighter monetary policy.

As highlighted by the Asian Development Bank (ADB),

India continued to rank among the fastest-growing major economies, underscoring its role as a key engine of regional and global growth.

Indias economy would have likely grown by 6.7% in FY2025, buoyed by strong agriculture, a resilient services sector, and easing crude oil prices.

As global trade braces for a potential slowdown of around 3%, emerging economies such as India, Canada, and Brazil are positioned to benefit from a significant redirection of export flows away from traditional hubs like the United States and China. India remains relatively insulated from current tariff escalations due to its large domestic market and lower dependence on merchandise exports. This relative immunity also presents a strategic opportunity for India to expand its footprint in global trade, especially as global firms seek alternative supply chain partners. Moreover, Indias export profile - dominated by services - differentiates it from other economies and offers resilience amid shifting trade dynamics. The Indo-US bilateral trade agreement, currently under negotiation, is also expected to bolster Indias export competitiveness and deepen economic engagement with one of its most significant partners.

Indias economy is projected to grow by 6.7% in 2025 and 6.8% in 2026, outpacing Developing Asia (4.9% and 4.7%) and China (4.7% and 4.3%). With inflation easing to 4.3% in 2025 and 4.0% in 2026, India also demonstrates greater macroeconomic resilience compared with the broader region.

In response to emerging headwinds and potential moderation in growth momentum, the Reserve Bank of India (RBI) has revised its GDP growth forecast for 2025-26 downward by 20 basis points, bringing it to 6.5% from its earlier February projection. To cushion the economy and ease financing conditions, the RBI also reduced the repo rate by a further 50 basis points to 5.5%, aiming to lower borrowing costs across sectors such as housing and automobiles. The move signals a clear shift in policy stance - prioritising growth over inflation in a complex global environment.

II. Industry Landscape

Indian Real Estate Sector

The Indian real estate sector sustained Its growth trajectory In FY2024-25, overcoming global uncertainty and domestic affordability challenges. Residential sales across major cities recorded a significant rebound, with overall sales between FY2019 and FY2025 rising nearly 77 per cent, underscoring the confidence of homebuyers. Primary transactions, or sales of under-construction homes, accounted for 57 per cent of total transactions in FY2025, compared to 38 per cent in FY2019, highlighting a clear shift in buyer preference towards new developments.

Luxury housing above 1 crore also accelerated during this period, supported by higher disposable incomes, lifestyle changes, and targeted launches by developers. At the same time, the office market showed strong recovery, with leasing volumes in FY2025 hitting record levels on the back of demand from GCCs, IT/ITES, e-commerce, and flexible workspace operators. Industrial and warehousing assets continued to expand, driven by logistics, 3PL players, and the governments "Make in India" push.

We saw luxury housing above 1 crore accelerate in FY2025, supported by higher disposable incomes, lifestyle shifts, and targeted launches by developers.

Drivers of Growth

The sectors resilience is anchored by structural reforms such as RERA and GST, urbanisation, and evolving consumer aspirations. Technology integration, sustainability imperatives, and regulatory initiatives are reshaping market dynamics. Urbanisation-led demand in suburban hubs and Tier-2 cities is expanding the scope of housing, while government incentives and hybrid work patterns are supporting larger home purchases. Co-living, rental housing, and wellnesscentric projects are also gaining traction.

From an investor perspective, FY2024-25 saw consistent inflows with 99 real estate transactions valued at USD 6.99 billion, supported by private equity, M&A, and public market fundraising. Private equity alone contributed USD 3.15 billion across 48 deals, reflecting strong institutional appetite for Grade A assets, while IPOs and QIPs together raised close to USD 2.99 billion.

Outlook for FY2025-26 and Beyond

According to Grant Thornton Bharat, the sector is entering FY2025-26 on a resilient footing, with continued momentum expected across residential, commercial, and logistics segments. Residential demand is anticipated to remain firm, particularly in mid-income and premium categories, though affordability pressures will continue in the affordable segment. Developers are likely to pivot towards suburban hubs and Tier-2 cities such as Jaipur, Nagpur, and Bhubaneswar, supported by infrastructure-led growth.

According to the Indian Real Estate 2030 report published jointly by Cushman & Wakefield and Confederation of Indian Industry, the organised Indian real estate market is expected to record significant expansion between 2024 and 2030, led by steady growth across residential, office, retail, and hospitality segments in the top eight cities. Residential built-up supply is projected to rise by 39 per cent over 2024 levels, reaching 6,198 million sq. ft. by 2030, supported by urbanisation and higher investment inflows.

The office market is estimated to touch 1,306 million sq. ft. by 2030, marking a 44 per cent increase over 2024. Organised retail is also poised for growth, with supply expected to reach 140.04 million sq. ft., reflecting the development of grade-A malls, high streets, and international brand expansion. In the hospitality sector, organised hotel rooms across leading cities are forecast to expand by 26 per cent over 2024, reaching 86.09 million sq. ft. by 2030.

Indian Retail Sector:

The Indian retail sector is one of the worlds fastest-growing markets, underpinned by strong domestic consumption, favourable demographics, rapid urbanisation, and accelerating digital adoption. It is also a critical pillar of the economy, contributing more than 10% of Indias GDP and providing direct employment to nearly 8% of the workforce (about 35 million people).

In 2024, the Indian retail industry was valued at approximately US$1.06 trillion and is projected to reach US$1.93 trillion by 2030, translating to a 10% compound annual growth rate (CAGR) over the period. According to the Deloitte-FICCI Report, this expansion reflects not only the resilience of the sector against global headwinds but also its ability to capture shifting consumer preferences and broaden its reach across both metros and smaller towns.

Parallel estimates from IBEF indicate that the total retail market could scale to US$1.6 trillion by 2030, with organised retail alone expected to surpass US$600 billion, underscoring the sectors transition from fragmented markets to more structured, branded formats. Organised retail is already projected to hit US$230 billion by 2030, supported by Grade-A mall development and omnichannel strategies.

E-commerce and Digital Influence

The digital transformation of Indias retail landscape has been rapid. Online platforms are no longer niche but mainstream, influencing 73% of purchase decisions, with consumers relying on YouTube reviews (40%) and peer recommendations (51%) before finalising purchases. Indias e-commerce market, valued at US$125 billion in 2024, is expected to expand to US$550 billion by 2035, reflecting a five-fold jump in just over a decade.

Moreover, Gen Z is emerging as a powerful consumption cohort, expected to drive 43% of total consumption in 2025, with a direct spending power of US$250 billion. Tier II and Tier III cities are leading this shift, accounting for more than 60% of total e-commerce transactions, demonstrating how retail expansion is spreading beyond large metros into aspirational urban clusters.

Quick Commerce and Consumer Experience

India is also a global leader in quick commerce, with services already operating in 80+ cities and expanding at a 70-80% CAGR. This rapid adoption underscores consumer preference for immediacy and convenience. In parallel, experience- driven consumption is reshaping retail, with over 70% of consumers preferring active entertainment formats such as bowling and play zones over traditional passive experiences, and nearly 90% willing to spend up to 4,000 per month on such activities.

Employment and Investment Outlook

By 2030, the retail sector is expected to generate 25 million new jobs, further cementing its role as an engine of inclusive economic growth. Investment appetite remains robust, with US$4.8 billion in FDI flowing into retail trading between April 2000 and December 2024. At the same time, the capital markets are witnessing expansion in direct-to-consumer (D2C) brands and retail-driven IPO activity.

Indias retail sector is undergoing a profound transformation, balancing scale with sophistication. Supported by regulatory reforms, omnichannel adoption, expanding infrastructure, and evolving consumer aspirations, it is positioned to nearly double in size by 2030. As noted by Deloitte-FICCI and IBEF, the convergence of youthful demographics, rising digital penetration, and sustained investment makes Indian retail one of the most dynamic and promising markets globally.

Residential Real Estate in India

Indias residential real estate market maintained strong momentum through 2024 despite macroeconomic uncertainties and electoral dynamics. Housing sales across the top seven cities reached approximately 4.59 lakh units, up 76% over 2019, though marginally lower by 4% compared to 2023. Housing sales across Indias top seven cities surged 76% over 2019 levels, reaching 4.59 lakh units.

New launches reached 4.12 lakh units in 2024, down by 7% vs. 2023 but up by a strong 74% over 2019, reflecting sustained developer confidence. Mumbai Metropolitan Region (MMR), Hyderabad, Pune, and Bengaluru collectively contributed around 79% of total new launches.

Buyer sentiment remained resilient, despite tightening borrowing costs and higher property prices, with end-users driving demand. Inventory overhang remained under control at 14 months, reflecting improved market efficiency and healthy absorption.

Across the top seven cities, Bengaluru led new launches with 71,000 units (up 30% year-on-year), while MMR posted the highest average capital value growth at 21%, reaching INR 16,600 per sq ft. Sales in Pune, Hyderabad, and NCR also remained strong, contributing significantly to overall numbers.

The luxury and ultra-luxury segments (homes priced above 1.5 crore) gained further traction. In Bengaluru, their share in new launches accounted for 34% up from 23% in 2023. Overall, luxury housing saw a sharp surge, particularly in Delhi-NCR, Mumbai, and Hyderabad, which accounted for over 90% of luxury sales.

Delhi-NCR, Mumbai, and Hyderabad accounted for over 90% of Indias luxury housing sales.

Indias residential real estate sector is poised for continued growth, driven by robust end-user demand, strong economic fundamentals, and supportive home loan interest rates. Tier II cities such as Ahmedabad, Indore, Jaipur, and Coimbatore are emerging as key growth engines, aided by improved infrastructure, rising incomes, and government initiatives like the Smart Cities Mission.

Affordability challenges remain critical, requiring sustained policy support for affordable housing initiatives. Trends such as greater adoption of PropTech, ESG-compliant developments, and the growth of co-living and shared spaces will further shape the sector, setting the stage for balanced and resilient growth.

III. Business Overview

Company Overview

Prozone Realty Ltd, incorporated in 2007 and formerly known as Prozone Intu Properties Ltd, is a leading developer, owner, and operator of shopping malls, commercial spaces, and residential projects across India. Following its rebranding in May 2023, the Company sharpened its vision to focus on superior-grade shopping centres, large-scale residential complexes, and integrated mixed-use developments that cater to Indias dynamic urban growth landscape.

A significant milestone in FY2025 was the consolidation of promoter holding, with the Chaturvedi family and Apax Trust together now holding a majority stake. This has brought enhanced stability, alignment, and clarity of vision, placing the Company on a stronger footing for future growth.

The reinforced promoter commitment provides greater confidence to stakeholders, ensuring continuity in strategy and execution.

Prozones business model is anchored in two complementary approaches:

? A "Build & Sell" model covering nearly 75% of land parcels for residential and commercial projects.

? A "Build & Lease" model applied to retail assets, which form around 25% of the portfolio and generate stable, recurring income.

The Companys portfolio includes marquee assets such as Aurangabad Mall, Coimbatore Mall, and Aurangabad Prozone Trade Centre (PTC), alongside major residential projects in Nagpur and Coimbatore. It continues to attract prominent domestic and international retailers, with anchor tenants including H&M, Marks & Spencer, Reliance Trends, Smart Bazaar, Shoppers Stop, Croma, Pantaloon, and Zudio, strengthening its positioning as a curator of high-quality shopping destinations.

With its established presence in Tier II and Tier III cities and a renewed strategic focus on Tier I markets, Prozone is expanding into Indias most dynamic corridors. A notable step in this direction is its SRA redevelopment joint venture in Mumbai, which underlines its commitment to tapping into high-potential opportunities in the Mumbai Metropolitan Region (MMR).

The Company also maintains a robust land bank of 15.32 million sq. ft. of fully paid-up land, of which 2.10 million sq. ft. has already been developed and 13.23 million sq. ft. is at various stages of development. This strong asset base, combined with low leverage, rising mall footfalls, resilient residential demand, and enhanced promoter alignment, positions Prozone Realty on a sound footing to drive sustainable value creation in the years ahead.

Our Business Model:

Business Strategy for Malls:

Prozone Realty has built its business model on a balanced strategy that combines the stability of recurring income from retail assets with the scalability of residential and commercial development. A cornerstone of this approach is the creation of a large-format "Anchor Asset" retail centre, typically accounting for about one-third of a land parcel, developed under a "Build & Long-Term Lease" model. This ensures the creation of debt-free, annuity-generating assets that provide predictable cash flows. The remaining two-thirds of the land parcel are allocated to residential and commercial projects under a "Build & Sell" model, which generates liquidity to support retail development and strengthen the balance sheet.

This integrated approach not only reduces execution risks but also aligns with the Companys vision of creating thriving mixed-use destinations. In FY2025, Prozones retail portfolio demonstrated its resilience, with footfalls crossing 20.8 million visitors across its operational malls and retailer sales reaching 7.66 billion, supported by robust leasing performance at both Coimbatore and Aurangabad. Coimbatore Mall closed the year at 96% occupancy, while Aurangabad Mall stabilised at 86% occupancy, reaffirming the strength of our retail- focused business model.

Business Strategy for Residential Projects:

Our residential strategy is guided by careful preparation and a customer-first approach. Every project is preceded by the development of essential infrastructure and completion of approvals, which strengthens buyer confidence and supports strong sales momentum. FY2025 marked steady progress across our portfolio.

? Nagpur Residential: Over 200 units were handed over during the year, reflecting strong execution capability.

? Coimbatore Residential: Phase 1 maintained healthy traction, with 291 units sold cumulatively, while construction of additional towers is progressing as planned.

? Indore Residential: Phase 1 plots were fully sold, and sales started for Phase 2, with demand continuing to remain encouraging.

These results highlight the success of our strategy, which combines disciplined groundwork with effective project positioning in high-demand catchments.

Looking forward, we are sharpening our customer engagement by investing in technology integration and building a dedicated CRM team to deliver a superior buyer experience. Cost-effective promotional strategies and digital channels will further amplify project visibility and sales efficiency.

New Growth Focus: Mumbai Metropolitan Region

While Tier II and Tier III cities continue to be the backbone of our business, we are entering a new chapter of growth by strategically focusing on Tier I markets, particularly Mumbai. With limited land availability, redevelopment and mixed-use opportunities are emerging as the most attractive avenues for expansion in the city. In FY2025, we took a decisive step with a joint venture for an SRA redevelopment project in Mumbai, setting the stage for deeper participation in the regions transformation.

We view the Mumbai Metropolitan Region (MMR) as a critical growth frontier - a market where our proven retail expertise and experience in large-scale residential development can be leveraged to create high-quality, integrated destinations. This approach not only diversifies our portfolio but also positions us at the centre of Indias most dynamic real estate market.

Project Portfolio Composition

SPV	Residential	Commercial	Retail
Aurangabad Ownership - 34.71%		Phase 1 of Prozone Trade centre(PTC) office space project delivered.	Retail: Leasing stands at 86%, working towards further increasing occupancy.
			Key Brands: H&M, M&S, Smart Bazaar, Shoppers Stop, Croma, Max, Pantaloon, Zudio, Reliance Trends, Reliance Digital, Mr DIY, Lifestyle, and Inox Multiplex.
			The mall saw annual footfall of 11.67 mn and annual Retailer sales of 4210.8 mn.
Coimbatore Ownership - 61.50%	Phase 1 of 540 luxury units launched - 291 units booked. Development Status: Construction of Initial Infrastructure completed. Residential Tower construction is in progress.		Leasing Status: Leasing stands at 96%, working towards further increasing Occupancy
			Key Brands: H&M, M&S, Lifestyles, Spar, Reliance Trends, Reliance Digital, Pantaloons, Westside, Hamleys, Max, Unlimited, Croma, Zudio, Fun Unlimited & Inox Multiplex.
			The mall saw annual footfall of 9.19 mn and annual Retailer sales of 3447.7 mn.
Mumbai	Phase 1 Launch 463 units - 449 units booked. Phase 2 Launch 552 units - 357
	units booked. Planning & approvals are in process for balance phases to consume sale FSI.
	Development Status update: Rehab 1-2 and Composite 7 completed with OC; Rehab 3A/3C RCC done with finishing WIP; 3B at plinth; Rehab 4C at terrace slab·while Sale 1A has RCC done (finishing WIP) and Sale 2A is at plinth/7th-slab WIP.
Nagpur Ownership - 61.50%	Residential Project Phase1 - 4 towers of 14 floors comprising 336 apartments completed. Units - 264 sold for sales value of 1,750 Mn.	The retail design has been finalised, and project approvals are being processed.
	Development Status: Part OC obtained for units up to 11 floors.
	Have received development permissions for Prozone Palms Elante in Nagpur (Plotted Development).
Indore Ownership - 60.00%	Phase 1 of Plotted development of 74 plots sold & delivered.
	Approvals obtained & sales started for phase 1B having 75 plots

IV. Financial Review

Financial Highlights

Particulars	FY25	FY24
Revenue from Real Estate Projects	583.4	725.3
Lease Rental & Related Income	1203.8	1,119.9
Total Income from Operations	1787.3	1,845.1
Other Income	124.9	176.5
Total Income (Including Other Income)	1912.2	2021.6
EBITDA w/o Other Income	451.3	547.6
EBITDA	576.2	724.1
EBITDA w/o Other Income Margin	25.20%	29.70%
EBITDA Margin	32.20%	39.20%
Depreciation	229.9	237.9
Interest	376.8	422.6
Profit Before Tax	-22.5	67.9
Profit After Tax	-543.6*	28.5
PAT After Minority Interest	-379.2	45.3

*The enacted Finance Act, 2024 has revised the tax rate on Long-Term Capital Gain (LTCG) from 20% to 12.5% without indexation benefit in relation to transfer of a long-term capital asset. The Company has remeasured its deferred taxes and the impact of the same has been accounted for in the Statement of Profit and Loss during the current year.

Financial Analysis

Revenue Performance in FY2025, Prozone Realty reported Total Income (Including other Income) of 1,912,2 million, compared to 2,021,6 million In FY2024, reflecting a marginal decline of 5,4%, This was primarily due to lower contributions from real estate projects, where revenue stood at 583,4 million in FY2025 versus 725,3 million in FY2024, On the other hand, Lease Rental and Related income increased to 1,203,8 million in FY2025, up from 1,119,9 million in FY2024, highlighting the strength and resilience of the annuity-driven retail portfolio,

Profitability

Operating profitability remained robust, though moderated compared to the previous year, EBITDA stood at 576,2 million in FY2025, compared to 724,1 million in FY2024, EBITDA margin declined from 39,2% in FY2024 to 32,2% in FY2025, largely due to lower real estate project revenues and a higher share of costs relative to income, Excluding other income, EBITDA margin was 25,2% in FY2025, compared with 29,7% in FY2024, demonstrating a contraction of 450 basis points,

Depreciation expenses remained broadly stable at 229,9 million in FY2025 compared with 237,9 million in FY2024, while interest costs reduced to 376,8 million from 422,6 million, reflecting prudent financial management and deleveraging efforts,

Net Profitability

At the pre-tax level, the Company recorded a marginal loss of 22,5 million in FY2025, compared to a profit before tax of 67,9 million in FY2024, However, net profitability was materially impacted by the changes introduced in the Finance Act, 2024, which revised the tax rate on Long-Term Capital Gains (LTCG) from 20% to 12,5% without indexation benefit, This resulted in the remeasurement of deferred taxes and a one-time impact on the profit and loss statement, Consequently, the Company reported a net loss after tax of 543,6 million in FY2025, compared to a profit of 28,5 million in FY2024, After minority interest, the loss stood at 379,2 million,

Despite the one-off impact of tax remeasurement on profitability, the Companys underlying fundamentals remain sound, The steady growth in lease rental income underscores the strength of the retail portfolio, while declining finance costs highlight disciplined balance sheet management,

With a fully paid-up land bank, stable promoter holding, and a growing annuity income base, Prozone Realty remains well-positioned to sustain long-term growth, The one-time tax-related impact does not detract from the operational resilience demonstrated in FY2025, Key Ratios

Particulars	FY25	FY24	Remarks
Current Ratio (x)	1,96	1,91
Debt-Equity Ratio (x)	0,9	0,83
Debt Service Coverage Ratio (x)	1,23	1,78	The decrease in debt service coverage ratio is due to a decrease in earnings before interest, depreciation, and tax in the current year as compared to the previous year,
Return on Equity (%)	-6,97%	0,34%	Decrease in Return on equity ratio is due to reduction in current year net profit on account of reversal of deferred tax asset on withdrawal of indexation benefit on Long Term Capital Gain,
Inventory Turnover (x)	0,45	0,43
Trade Receivables Turnover Ratio (x)	13,99	13,97
Trade Payables Turnover Ratio (x)	3,05	3,24
Net Capital Turnover Ratio (%)	67,81%	66,70%
Net Profit Ratio (%)	-30,42%	1,55%	Decrease in net profit ratio is due to reduction in current year net profit on account of reversal of deferred tax asset on withdrawal of indexation benefit on Long Term Capital Gain,
Return on Capital Employed (%)	4,82%	5,79%
Return on Investment (%)	2,07%	4,97%	Decrease in return on investment ratio is due to reduction in other income compared to previous year,

V. Internal Controls & Compliance

Prozone maintains a robust internal control framework that is well aligned with the scale and complexity of its operations. The framework is supported by a comprehensive internal audit programme, which is periodically evaluated by management to ensure its continued effectiveness. Documented policies and guidelines further strengthen these controls, safeguarding the integrity of financial records and information used in the preparation of financial statements.

The Company remains committed to adopting best-in-class accounting practices while continuously enhancing its internal control mechanisms. Independent audit processes provide oversight across all operational areas, ensuring that governance standards are consistently upheld. The Audit Committee of the Board plays a pivotal role in reviewing internal audit findings and recommendations, reinforcing Prozones commitment to transparency, accountability, and strong corporate governance.

VI. Risks and Concerns

Operating in a dynamic and highly regulated sector, Prozone Realty recognises the importance of identifying, monitoring, and mitigating risks that may affect its performance and longterm growth. The Company has established a structured risk management framework that enables proactive responses to emerging challenges, while ensuring business continuity and stakeholder confidence.

Economic Risks

The global economic environment in FY2025 continues to be marked by volatility, shaped by geopolitical tensions, supply chain disruptions, energy concerns, and fluctuating inflation. While Indias economy remains resilient, its integration with the global market exposes it to these headwinds, which could affect disposable incomes, consumer spending, and demand for housing. Prozone mitigates this risk through robust financial management, a diversified portfolio, and operational flexibility. The Company is also actively exploring new revenue streams and geographic diversification to reduce dependency on any single economic driver.

Business Risks

Operating in Indias fast-growing urban centres, the Companys success is closely linked to retail consumption and urbanisation trends. Any slowdown in urban migration or weaker retail spending could affect absorption rates of residential and commercial offerings. To address this, Prozone focuses on high-demand catchments, develops large-scale mixed-use projects, and adopts a phased approach that allows flexibility in execution. Continuous monitoring of urbanisation patterns ensures projects remain aligned with demand.

Policy Risks

The real estate sector is inherently sensitive to policy changes relating to interest rates, tax regimes, subsidies, and housing schemes. Shifts in government policy can directly influence borrowing costs, consumer sentiment, and profitability. Prozone manages this by maintaining agile operations, closely tracking regulatory developments, and engaging with industry bodies. Portfolio diversification and proactive adjustments in pricing, marketing, and timelines further safeguard against sudden policy changes.

Brand Risks

As a developer of retail and residential destinations, Prozones brand reputation is central to its success. Negative publicity, adverse events, or heightened competition could impact trust and positioning. The Company addresses this through rigorous quality control, proactive communication, customer engagement, and partnerships with established retail brands. Regular monitoring of customer sentiment and swift responses to potential issues support brand resilience and long-term loyalty.

Internal Control Risks

Given the scale and complexity of operations, strong governance and robust internal controls are essential to prevent inaccuracies, fraud, or compliance lapses. Prozone has implemented a comprehensive internal control framework supported by independent internal audits, continuous monitoring, and adherence to best-in-class accounting standards. The Audit Committee of the Board plays an active role in reviewing audit findings and ensuring corrective action, thereby reinforcing transparency and accountability.

Environmental Risks

Growing environmental concerns, stricter regulations, and shifting consumer preferences towards sustainable development pose new challenges for the sector. These could impact project timelines, costs, and marketability. Prozone has integrated sustainability into its business model by adopting green building standards, investing in energy-efficient technologies, and implementing waste reduction and water conservation practices. The Company also actively explores opportunities to develop eco-friendly projects that align with regulatory requirements and consumer expectations.

Technological Risks

The real estate industry is being reshaped by rapid technological advancements, from PropTech platforms and virtual transactions to smart building systems. Failure to adapt could result in competitive disadvantage. Prozone continues to invest in digital marketing, smart infrastructure, and customer engagement tools. Partnerships with technology providers and regular staff training ensure that the Company remains agile and well-positioned to leverage new opportunities in a technology-driven environment.

VII. Human Resources

Prozone firmly believes that its people are its greatest strength and remains committed to fostering a positive, supportive, and growth-oriented work environment. The Company values the skills, potential, and achievements of its workforce, providing them with opportunities for professional advancement, meaningful engagement, and new challenges. As of March 2025, Prozone employed a dedicated team of over 89 professionals. While the overall organisational structure has remained steady, strategic adjustments have been made at the operational level to better align talent with business priorities. These changes are aimed at enhancing efficiency, leveraging technical expertise, and ensuring resources are optimally deployed to meet project reguirements. The senior leadership and project management teams continue to deliver outcomes that support the Companys mission, demonstrating strong alignment between individual contributions and collective objectives.

Employee Engagement and Welfare

Prozone actively undertakes initiatives to strengthen employee engagement and promote holistic well-being. Regular training sessions, events, and team gatherings are organised to enhance skill sets and cultivate a workplace culture defined by camaraderie and collaboration. During the pandemic, the Company reinforced its commitment to employee welfare by arranging vaccination drives for employees and their families, while also introducing flexible work-hour arrangements to accommodate changing needs.

Beyond immediate measures, Prozone continues to prioritise employee health and wellness through tailored programmes that address both individual well-being and collective corporate health. These initiatives reinforce a culture of teamwork, resilience, and unity, empowering employees to adapt, perform, and excel even in challenging circumstances. By nurturing its human capital, Prozone ensures that its workforce remains motivated and aligned with the Companys long-term vision.

VIII. Cautionary Statement

This document contains statements about anticipated future events, financial performance, and operational results of Prozone Realty Limited that may be considered forwardlooking in nature. These statements are based on certain assumptions and are subject to risks and uncertainties, which could cause actual outcomes to differ materially from those expressed or implied.

Readers are advised not to place undue reliance on forwardlooking statements, as several factors beyond the Companys control may lead to variations between assumptions and actual results. The information presented here should therefore be read in conjunction with the assumptions, Qualifications, and risk factors detailed in the Managements Discussion and Analysis (MD&A) section of this Annual Report.