Industry Structure and Developments:
According to the World Economic Situation and Prospects (WESP) 2019,
the global economy was growing at a steady pace of around 3% in calendar years 2019. While
the major countries of the world are grappling with low growth, Indian economy has marched
ahead with overall growth in the range of 6 to 6.5% over last 2 years.
Despite growing global vulnerabilities, better demand conditions,
settled GST implementation, expansion from growing investments in infrastructure,
continuing positive effects of reform policies and improved credit off take especially in
the service sector the offtake of real estate industry has been steep in Hyderabad and has
galloped ahead of other major cities in India.
Indian and Hyderabad Real Estate Sector:
The Indian real estate sector has witnessed a steady growth over the
last two years and with the implementation of RERA Regulations, the trust factor has found
its footing in the industry. The Indian Government focus on Home for all and Sate
Government scheme for Double Bedroom Flats has given a large impetus to the market in and
around Hyderabad.
New residential projects received a decent response from the buyers and
they majorly remained confined to the western corridor of areas such as Nanakramguda,
Kokapet, Narsingi and Kondapur. These ruled the roost in terms of buyer enquires, new
launches and residential sales.
The region accounted for the largest share in new launches, growing by
over 250% with mid and high-income budget segments witnessing the launch of number of
projects in this period. Healthy demand from the potential buyers helped in lifting the
sales that had initially witnessed a dip amid the resurgence of COVID 19 cases in April
2022.
Opportunities:
The Real Estate Regulatory Act (RERA) was aimed at ensuring
accountability and infusing transparency and uniformity in practices prevalent in the real
estate sector, and has been very widely adopted by Governments and Corporates alike, which
is bringing more credibility to the sector.
On the other hand, incentives for affordable housing coupled with lower
GST rate has increased demand for underconstruction segment, a trend which is expected to
continue in 2023-24 as well. In terms of city, Hyderabad (West Hyderabad — Madhapur,
Gachibowli, areas adjoining ORR) along with other cities like Bangalore, Chennai, Mumbai
are expected to drive demand in present and next year as more Work From Home options will
leave spendable/ investible income in hands of working class.
The Companys effort to get into Technology products trading as
conceived in year 2019 did not take off and had to be abandoned as the partner company was
unable to generate the expected business and has been eluding clear business plans and has
not been able to bring expected Order book to the Company. The arrangement had to be
called off in April 2020 amidst the pandemic to safeguard the larger stakeholders
interests.
Outlook:
The Company believes that demand conditions in the real estate sector
are exhibiting clear signs of improvement after the pandemic and the Management is
positive that the Company will be able to strike some small or medium sized housing
projects in near future and be able to take advantage of potential revival in economic
growth and its resultant positive effects on the real estate sector over the medium term.
The Company shall continue to strive to acquire new projects to increase sales and
profitability. However, the Company has not carried on any business activity during the
Financial year under review.
Risks and Concerns:
The Company works in an environment which is affected by various
factors, some of which are controllable while some are outside the control of the Company.
Owing to the nature of the industry in, it is exposed to a variety of risk factors. These
risks include waning support for multilateral approaches; the escalation of trade policy
disputes; financial instabilities linked to elevated levels of debt; and rising climate
risk, as the world experiences and increasing number of extreme weather events. The
Company has developed a robust risk management framework consisting of identification,
assessment, mitigation, monitoring of risks; which, in turn reduces the volatility due to
unfavorable internal and external events and facilitates risk. The Management identifies
the following risks:
Economic risk: The pandemic has given a hard lesson to one and all
in terms of complete shut down of all economic activity and such unexpected development in
any of the macroeconomic variables that may adversely impact the Companys
profitability or viability are a major threat. Real estate is a cyclical industry and is
affected by the changes in variables like interest rate, GDP Growth, purchasing power,
inflation, Government policies, GST rates, among others.
Execution Risk: The Real Estate and construction projects are
subject to various execution risks like regulatory hurdles, delay in receipt of approvals,
availability of labour and raw material, etc. Any such delay may result in cost overruns
and impact the Companys operations unfavorably.
Liquidity Risk: The primodal approach of Bankers and financial
institutions towards mid sized Real estate companies has not undergone any suitable change
and has slowed disbursals to the real estate sector, banks becoming more cautious,
developers are finding it a challenge to raise funds for the projects and are being forced
to other financial routes, which in turn is increasing their cost of capital, inadequate
funding resources may have an impact on the liquidity position of the Company. Also there
is a large mismatch between the supply and actual demand in terms of unit and ticket size.
Rising Input Cost: The real estate industry is a capital and work
focused sector, accordingly, an ascent in the cost of work makes issues in the development
of the project in focus. Besides, uncalled for routine with regards to specific segments
of merchants and concrete industry by raising the cost, makes issues in the completion of
the project a highly unprofitable gamble.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has a proper and adequate system of internal controls to
ensure that all assets are safeguarded and protected against loss from unauthorized use or
disposition and all transactions are authorized, recorded and reported correctly. The
systems are updated and monitored on a continuous basis. The Companys internal
control systems are further supplemented by Internal Audit conducted by competent finance
executives and periodic review by Management. The Company has clearly laid down policies,
guidelines and procedures which form part of its internal control system.
The Audit Committee of the Company consists of Independent Directors
who possess expert knowledge and vast experience. They periodically review accounting
records and various Accounts/statements prepared by the accounting department. They advise
the senior management of the Company for any precautionary steps to be taken, as required
from time to time. During the year under review, four meetings of Audit Committee were
held to review, inter alia, the internal audit/controls along with management comments and
initiated follow-up actions thereon.
SHARE CAPITAL
The Paid-up Share Capital of your Company as on 31stMarch 2023, is Rs.
25,06,56,300/- divided into 2,50,65,630 Equity Shares of Rs. 10/- each with Voting Rights.
SECURED LOANS
The Company has no secured loans at the end of the Financial year
2022-23.
FIXED ASSETS
The Fixed Asset (Gross Block) as on 31stMarch 2023 amounts to Rs.
36,60,705/-.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Manpower is biggest strength in any Sector. The Company has maintained
cordial relations with its employees across all levels of the organization during the
period under review Human resource continues to be core strength and always endeavors to
work towards having satisfied workforce.. The key HR objective is to ensure that our
employees are aware of the role they are expected to play in the organization to be able
to drive organizational momentum. Going ahead, the Company will continue to invest in its
people to strengthen its delivery model.
As on 31st March, 2023, the manpower strength of the Company was 5
members which comprises professionals from diverse backgrounds like engineering, finance,
taxation, secretarial, legal, management, business, supervisors, skilled and semi-skilled
workers.
Disclaimer:
The above Management Discussion and Analysis containscertain forward
looking statements within the meaning of applicable security laws and regulations. These
pertain to the Companys future business prospects and business profitability, which
are subject to a number of risks and uncertainties and the actual results could materially
differ from those in such forward looking statements. The risks and uncertainties relating
to these statements include, but are not limited to, risks and uncertainties, regarding
fluctuations in earnings, our ability to manage growth, competition, economic growth in
India, ability to attract and retain highly skilled professionals, time and costover runs
on contracts, government policies and actions with respect to investments, fiscal
deficits, regulation, etc. The shareholders and readers are cautioned that in the case of
data and information external to the Company, no representation is made on its accuracy or
comprehensiveness though the same are based on sources thought to be reliable. The Company
does not undertake to make any announcement in case any of these forward-looking
statements become materially incorrect in future or update any forward looking statements
made from time to time on behalf of the Company.
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