Ratnabhumi Developers Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW OF INDIAN ECONOMY

India has consistently demonstrated robust economic growth, emerging as one of the fastest-growing major economies globally. India is now the worlds fourth-largest economy and is projected to become the third largest by 2030 with a GDP of US$ 7.3 trillion. This transformation stems from a decade of focused governance, structural reforms, and strengthened global positioning. Backed by strong domestic demand, favourable demographics, and sustained policy reforms, India continues to enhance its global footprint in trade, investment, and innovation. Over the past decade, Indias GDP at current prices has surged from US$ 1.23 trillion in FY15 to an estimated US$ 3.82 trillion in FY25, tripling in just ten years. In FY25, Indias nominal GDP grew by 9.9% and real GDP by 6.5%, with quarterly GDP growth in Q4 FY25 at 7.4%, and a projected real GDP growth range of 6.4% to 6.7% expected in FY26, indicating sustained economic momentum. This trajectory is underpinned by macroeconomic stability, a resilient external sector, narrowing fiscal deficit, easing inflation, and high consumption expenditure. Additionally, improving employment prospects and the governments focus on long-term structural reforms are expected to play a key role in sustaining growth.

Moreover, export performance has experienced remarkable growth over the past decade, reflecting the increasing credibility and demand for Indian products in the global marketplace. Indias total exports ha ve shown remarkable growth over the past decade, rising from US$ 468 billion in FY14 to US$ 825 billion in FY25, marking a substantial increase of approximately 76%. Additionally, Indias share of world merchandise exports also improved, rising from 1.66% to 1.81%, advancing the country from 20th to 17th position globally. The demographic transition, marked by a lower infant mortality rate and a consistent growth in literacy rates, further enhances Indias advantageous position. With improved income distribution, heightened employment rates, and globally competitive social amenity provisions, there is potential for Indias per capita GDP to expand in the next 25 years, mirroring the growth seen in the preceding 75 years.

In the Union Budget 2025-26, the government proposed to increase allocation for capital expenditure to Rs. 11.21 lakh crore (US$ 129.0 billion), up 10.1% from revised budget estimate of Rs. 10.18 lakh crore (US$ 117.2 billion) in FY25.

Over the years, the Indian government has introduced many initiatives to strengthen the nations economy. The Indian government has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financial stability but also for the overall growth of the economy. Over recent decades, Indias rapid economic growth has led to a substantial increase in its demand for exports. Besides this, several of the governments flagship programmes, including Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation, is aimed at creating immense opportunities in India.

OUTLOOK

Indias economy grew by 6.5% in FY25. With a 7.4% growth rate in Q4 FY25, with RBI projecting a growth rate of 6.5% in FY26 as well. Indias comparatively strong position in the external sector reflects the countrys positive outlook for economic growth and rising employment rates. In 2024, India rose to 15th place globally in FDI rankings and retained its position as South Asias top recipient.

The Union Budget 2025-26, themed "Sabka Vikas," focuses on balanced growth across regions. It prioritizes agriculture, MSMEs, investment, and exports as key growth engines. Initiatives include the Prime Minister Dhan-Dhaanya Krishi Yojana for agriculture, support for first-time entrepreneurs, and a push for domestic manufacturing through customs duty rationalization. The budget also emphasises education, healthcare, and infrastructure development, with plans for 50,000 Atal Tinkering Labs and new medical colleges.

In the near future, Indias banking and financial sector is expected to thrive. Despite foreign investors booking profits in the capital market, the outlook remains largely positive for the country. As global conditions stabilise, foreign investors are expected to re-enter the market and capture the upcoming growth wave. The collective efforts invested over the past several years have laid a robust foundation, providing a sturdy platform upon which the framework of a middle-income economy can be built.

(Source: IBEF, CNBC, Economic Times)

1. INDUSTRY STRUCTURE AND DEVELOPMENT

The real estate sector is one of the most globally recognized sectors. It comprises four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

The Government launched 10 key policies for the real estate sector:

• Real Estate Regulatory Act (RERA)

• Benami Transactions Act

• Boost to affordable housing construction

• Interest subsidy to home buyers

• Change in arbitration norms

• Service tax exemption

• Dividend Distribution Tax (DDT) exemption

• Goods and Services Tax (GST)

• Demonetisation

• PR for foreign investors.

Market Size

Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs. The Indian real estate market is projected to experience a substantial increase, potentially reaching a value of US$ 5-7 trillion by the year 2047, with the possibility of surpassing US$ 10 trillion.

Housing sales across the top seven Indian cities saw a slight dip of 4% in 2024, with around 4.59 lakh units sold compared to 4.76 lakh in 2023, as per ANAROCK data. In the first quarter of CY25 (January-March), Indias residential real estate market experienced a notable slowdown, with total housing sales across the top seven cities declining by 28% year-on-year to approximately 93,280 units, down from over 1.30 lakh units in CY2024.

In FY23, Indias residential property market witnessed with the value of home sales reaching an all-time high of Rs. 3.47 lakh crore (US$ 42 billion), marking a robust 48% YoY increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold. Indian real estate developers operating in the countrys major urban centers are poised to achieve a significant feat in 2023, with the completion of approximately 558,000 homes.

According to the Economic Times Housing Finance Summit, about three houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be ~10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the countrys urban population.

Government Initiatives

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. Below are some of the other major Government initiatives:

• The Union Budget 2025-26 allocated Rs. 1 lakh crore (US$ 11.66 billion) to the Urban Challenge Fund, aiming to transform cities into growth hubs through redevelopment and infrastructure projects.

• Government launches Rs. 15,000 crore (US$ 1.75 billion) funds to revive stalled affordable and midincome housing projects in Swamih Fund II

• In the Union Budget 2024-25, under PM Awas Yojana Urban 2.0, housing needs for one crore urban poor and middle-class families will be met with a Rs. 10 lakh crore (US$ 120.16 billion) investment, including Rs. 2.2 lakh crore (US$ 26.44 billion) in central assistance over the next 5 years.

• In the 2024-25 Interim Budget, Union Minister of Finance, Ms. Nirmala Sitharaman announced a boost for Indias affordable housing sector by adding two crores more houses to the flagship scheme PMAY- U.

Road Ahead

The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which will allow all kind of investors to invest in the Indian real estate market. It would create an opportunity worth Rs. 1.25 trillion (US$ 19.65 billion) in the Indian market in the coming years. Responding to an increasingly well-informed consumer base and bearing in mind the aspect of globalization, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family-owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralized processes to source material and organize manpower and hiring qualified professionals in areas like project management, architecture and engineering.

The residential sector was expected to grow significantly, with the central government aiming to build 20 million affordable houses in urban areas across the country by 2060, under the ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Union Ministry of Housing and Urban Affairs. Expected growth in the number of housing units in urban areas will increase the demand for commercial and retail office space.

2. OPPORTUNITIES AND THREATS

Opportunities:

1. Rapid Urbanization & Population Growth: Increasing demand for housing, commercial, and retail spaces in urban and semi-urban areas.

2. Government Initiatives & Policy Support: Programs like Housing for All, Smart Cities Mission, Pradhan Mantri Awas Yojana (PMAY), RERA reforms, and infrastructure spending boost the sector.

3. Rising Demand for Affordable & Mid-Segment Housing: Growing middle-class population with higher disposable incomes creates a strong market for budget-friendly housing.

4. Infrastructure Development: Expansion of metro networks, highways, and airports enhances land value and creates new real estate hubs.

5. Growth in Commercial & Industrial Spaces: Rising demand for Grade-A office spaces, logistics parks, data centers, and warehousing driven by IT, e-commerce, and manufacturing.

6. Digital Transformation: Adoption of PropTech (virtual tours, AI-based property management, smart buildings) is creating efficiency and better customer experience.

7. Sustainability and Green Buildings: Increasing awareness of energy efficiency, eco-friendly projects, and smart homes is driving demand for sustainable developments.

8. Foreign Investment & REITs: Liberalized FDI norms and growing popularity of REITs attract institutional investors and strengthen capital inflows.

Threats:

1. Economic Slowdown & Inflation: High inflation and slower GDP growth reduce home-buying capacity and investment appetite.

2. Interest Rate Volatility: Rising borrowing costs impact home loan affordability and real estate financing.

3. Regulatory and Policy Challenges: Complex approval processes, changes in tax structures, and strict compliance norms can delay projects.

4. Land Acquisition & Legal Issues: High land costs, disputes, and lengthy approval processes remain a major bottleneck.

5. Cost Escalation in Construction Materials: Volatility in steel, cement, and raw material prices impacts project viability and profitability.

6. Unsold Inventory & Market Saturation: Oversupply in certain markets leads to price stagnation and liquidity challenges.

7. Global Uncertainty: Geopolitical tensions, currency fluctuations, and global economic slowdown may affect foreign investments.

8. Environmental Concerns & Climate Risks: Increasing focus on ESG compliance, environmental clearances, and vulnerability to floods/heatwaves pose risks to projects.

3. SEGMENT-WISE/PRODUCT-WISE PERFORMANCE:

The company operates in single segment that is "Real Estate". The Company has delivered a satisfactory financial and operating performance for 2024-25. The total revenue from operations is Rs. 21419.71 lakhs on standalone basis as compared to Rs. 50.97 lakhs in 2023-24. The Profit before interest and taxes stands Rs. 2190.24 lakhs for the FY 2024-25 as against Rs. 1578.78 lakhs in 2023-24 on standalone basis.

4. OUTLOOK FOR FY 2025-26

• Emphasis on increasing dealers network to achieve higher penetration;

• Emphasis on gaining market share from the local unorganised players;

• Expand portfolio with mid and high range residential and corporate schemes;

• Engage with various engineers, designers and architects to promote business.

• Focus on premium and luxury projects in growth zones.

• Leverage digital solutions (PropTech, VR tours, e-closings) and green certifications to stand out.

• Enter emerging markets—Tier II/III cities and suburban smart townships—with tailored offerings.

• Explore asset-light partnerships, REIT structures, or JV models for capital efficiency.

• Monitor financing trends and ensure cost controls amid inflation and interest rate shifts.

5. RISK AND CONCERN

The Companys ability to foresee and manage business risks is crucial in achieving favourable results. Risk management at Ratnabhumi Developers Limited is an integral part of the business, focusing to mitigate the adverse impact of risks on business objectives. The Company has laid down a well-defined risk management procedure covering the risk identification, risk exposure, potential impact and risk mitigation process. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY

The Company has an adequate internal control system adopted for operating procedures, policies and process guidelines. The guidelines are well-documented with clearly defined authority limits corresponding with the level of responsibility for each functional area. Further, the Company has budgetary control system to monitor expenditure against approved budgets on an ongoing basis. The Companys robust internal audit programme which works to conduct a risk-based audit not only tests the adherence to laid down policies and procedures but also suggests improvements in the current processes and systems.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial performance on standalone basis of the company during the FY 2024-25 as compared to FY 2023-2024 is as under:

			(Rs. In Lakhs)
Particulars	2024-2025	2023-2024	% of Increase /Decrease
Gross Revenue from operations	21419.71	50.97	41924.15
Profit Before Tax	701.23	23.37	1329.92
Profit after Tax	570.82	31.02	1059.05

Operational Performance

The Company continued to focus on improving operational efficiency leading to better returns for the shareholders. Further, the company has significantly enhanced its operational performance by establishing prudent risk management framework.

8. MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONSHIP FRONT, INCLUDING NUMBER OF PEPOLE EMPLOYED

Human resource practices and policies at Ratnabhumi Developers Limited ensure that all employees, wherever they work, whatever their role is, are always treated equally, fairly and respectfully. We maintain consistent and transparent diversity policies.

Our human resource team believes in personnel management, which involves planning, organising, directing and controlling of the recruitment and resource management, training & development, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and social goals.

People power is one of the pillars of success of company and hence any creative suggestion by the employees are always welcomed by the Management. As on 31^st March, 2025 the Company employs 30 employees. Going ahead, the Company aims to retain and develop the existing employees and align their goals with the common business vision and mission.

9. THE DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the financial year, the details of significant change in the key financial ratios as compared to the previous year along with the detailed explanation is summarized below on standalone basis:

Sr. No.	Key Financial Ratios	F. Y. 2024-25	F. Y. 2023-24	Changes in %	Reasons for change
1.	Debtors Turnover Ratio	NA	NA	NA
2.	Inventory Turnover Ratio	0.89	0.00	103520%	Increase in Turnover in FY 2024-2025.
3.	Interest Coverage Ratio (in times)	0.094	0.191	-51%	Repaymnet of Borrowings.
4.	Current Ratio	4.07	2.62	55%	Reduction in Current Liabilities in FY 2024-2025
5.	Debt Equity Ratio (in times)	2.86	5.41	-47%	Payment of non-current borrowings in FY 2024-2025.
6.	Operating Profit Margin (in %)	10.07%	3098.39%	3088.32%	Due to increase in turnover during the current year.
7.	Net Profit Margin (in %)	2.66%	60.87%	-96%	Due to increase in turnover during the current year.

10. The Return on Capital Employed during the FY 2024-2025 is 13.88% as compared to 7.13 % in FY 2024-25. The increment of 95% in the return on Net Worth is mainly due to increase in earnings before interest and taxes in FY 2024-2025.

11. CAUTIONARY STATEMENT

Statement made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of application securities laws and regulations. The actual result may differ from those expectations depending upon the economic conditions, changes in Government regulation and amendments in tax laws and other internal and external factors.