radhe developers india ltd share price Management discussions


MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

Indian Economic Scenario

The Indian economy continued to exhibit a resilient performance despite global uncertainties. The Reserve Bank of India (RBI) expects the Indian economy to be amongst the fastest growing economies in FY 202324 led by improving macroeconomic fundamentals and sustained momentum in domestic economy.

The improving economic indicators along with a major capex push by the Indian Government have led to the RBI marginally improving its real GDP forecast to 6.5% for the Fiscal 2023-24. The RBI in its latest Monetary Policy Committee meeting also decided to pause the rate hikes after a cumulative increase of 250 basis points since May 2022. As per IMF reports, the GDP forecast for India has been revised to 6.3% for FY 2023-24 from 6.6% earlier. The primary reason was attributed to slower consumption growth and challenging external conditions.

Indias foreign exchange reserves were placed at $ 578.4 billion as on March 31, 2023. To cushion rupee depreciation, RBI has been intervening in the forex market via both spot and forward positions.

Indias GDP growth accelerated to 6.1% in the January to March 2023 quarter, lifting the economys uptick in 2022-23 to 7.2% from the 7% estimated earlier.

(Source: Economic Times, IMF, EIU, Business Standard, McKinsey, IBEF)

Industry Structure and Developments

Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies.

The residential segment exhibited a strong performance and sustained momentum during the last fiscal despite several headwinds. The offices segment exhibited resiliency and has started to witness gradual recovery resulting in improvement in occupancy levels across quality assets. This recovery was primarily led by the return to normalcy and back-to-office policies for the majority, however, certain occupiers continue to operate on a flexible and hybrid approach. The retail segment delivered robust growth as a result of increase in consumption and footfalls.

Opportunities

Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13 per cent to countrys GDP. Emergence of nuclear families, rapid urbanization and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanization in the country is pushing the growth of real estate. Indian real estate developers have shifted gears and accepted fresh challenges.

Threats

Indian real estate sector accounts for 13 per cent of the countrys Gross Domestic Product and is one of the biggest and globally recognized sectors. The Indian real estate sector is still dependent on old building techniques and hence they are over-dependent on extensive human labour for construction activities. Whereas, high-quality building materials such as concrete and iron slabs are used in new construction techniques. India is touted to be the most populous country by the year 2050. More than 50 per cent of people are urban centers and Tier 1 cities. To accommodate the population, India would require more new cities and urban centers on a mass scale in order to provide the required resources to the inhabitants. Segment Wise Performance

In line with Ind AS - 108 Operating Segments and basis of the review of operations being done by the Senior Management, the operations of the group fall under the Construction business which is considered to be the only reportable segment by the management.

Outlook

The Indian economy is projected to grow by more than 6.7% in calendar year 2024 as per various institutional estimates, making it one of the fastest-growing economies. Indias growth journey could be the result of a culmination of favorable tailwinds like consistent agricultural performance, flattening of the COVID-19 infection curve, increase in government spending, reforms and an efficient roll-out of the vaccine, among others.

Risks and Concerns

Through land regulations, land readjustment and land pooling policies, the Government should spare large shares of underutilized and vacant land parcels. By this, it will give some relief to the financially aggrieved developers and help the situation of the real estate sector improve. This calls for an urgent change or revision in the Land Acquisition Resettlement and Rehabilitation Act of 2013. There are a lot of impending projects in the Indian real estate market starting from public sector projects to private sector housing colonies. There is a delay happening in the completion of these projects and the reason for this is that the project does not get enough funding or there is a lack of technology to complete these projects on time. Another big challenge in the Indian real estate sector is the protracted approval process because project approvals in India take about days to years because there is no option of a single-window clearance and it often results in time and cost escalations.

Internal Financial Control Systems and Their Adequacy

The Company has a proper and adequate system of internal financial controls, commensurate with its size and business operation. It ensures timely and accurate financial reporting in accordance with applicable accounting standards, safeguarding of assets against unauthorized use or disposition and compliance with all applicable regulatory laws and Company policies.

Internal Auditors of the Company review the internal financial control systems on a regular basis for its effectiveness, and necessary changes and suggestions are duly incorporated into the system. Internal audit reports are also reviewed by the Audit Committee of the Board.

Discussion on Financial Performance with respect to Operational Performance

a) Share Capital: The Companys issued and subscribed share capital consists of Equity Share capital. The paid-up share capital of the Company as at 31st March, 2023, stood at 503598000/- comprising of 503598000 Equity Shares of 1/- each.

b) Non-Current Assets & Non- Current Liabilities: During the year under review, the Non-Current Assets and Non-Current Liabilities stood at 7138.31 Lakhs and 168.24 Lakhs respectively.

c) Current Assets & Current Liabilities: During the year under review, the Current Assets and Current Liabilities stood at 5446.39 Lakhs and 6990.06 Lakhs respectively.

During the year under review, the Company registered total revenue of 1533.44 lakh as compared to 4362.26 lakh for the previous year and Profit before Tax stood at 158.73 lakh for the year under review as compared to 3233.81 lakh for the previous year.

Material Developments Human Resources / Industrial Relations

The timely availability of skilled and technical personnel is one of the key challenges. The Company maintains healthy and motivating work environment through various measures. This has helped the Company to recruit and retain skilled work force which would result in timely completion of the projects. The Company has cordial relation with the employees and contractors of the company. The staff has the depth of experience and skills to handle companys activities. Skilled team of workers and other professionals ensure superior quality standards during every stage of work. The total employee strength as on March 31, 2022 was 19.

Details of significant changes in key Financial Ratios & Return on Net worth

Pursuant to amendment made in schedule V to the Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios and any changes in return on net worth of the Company (on standalone basis) including explanations therefor are given below:

Particulars FY ended 31st March, 2023 (in %) FY ended 31st March, 2022 (in %) Changes Between CY & PY Explanation
Debtors Turnover 2867.92 8720.76 2767.92 Decline because of decrease in Sale volumes.
Inventory Turnover 0.33 1.89 -99.67 Decline in account of decrease in c of goods sold in line with volumes.
Interest Coverage Ratio 50.56 395.17 -49.44 Decline is due to decrease in proce compare to the last FY Year.
Current Ratio 0.79 0.73 -99.21 Not Applicable
Debt Equity Ratio 0.41 0.19 -99.59 The increase is on account of incre in short term debts.
Operating Profit Margin (%) 112.93% 74.35% 12.93% The increase is on account of incre in non-operative expenses.
Net Profit Margin (%) 5.02% 57.90% -94.98% Decline is on account of decrease i sale volumes.
Return on Net worth (%) 29.35% 50.34% -70.65% Decline is on account of decrease i Profit Margin.

Cautionary Statement

The above Management Discussion and Analysis contains certain 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 cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, 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.