Relstruct Buildcon Ltd Management Discussions.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Industry review In India, real estate is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. The real estate sector comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations.

The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. Indias real estate market is expected to reach US$ 180 billion by 2020 from US$ 93.8 billion in 2014. The housing sector alone contributes 5-6 per cent to the countrys Gross Domestic Product (GDP). Emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial and retail.

Real estate is currently the fourth-largest sector in the country in terms of Foreign Direct Investment (FDI) inflows. The Government of India has been supportive to the real estate sector.

Below are some of the other major Government Initiatives:

• The Government has raised FDI limits for townships and settlement development projects to 100 per cent.

• 100% FDI is also permitted in real estate projects within the Special Economic Zone (SEZ).

• In Union Budget 2015-16, the government allocated US$ 3.72 billion for housing and urban development.

• Further, Finance Bill 2016 has exempted REITs from Dividend Distribution Tax (DDT).

• The Ministry of Housing and Urban Poverty Alleviation (HUPA) has commissioned a study by Indian Institute of Technology, Kanpur on testing of new construction technologies, with the objective of promoting newhousing technologies in the country.

• In August 2015, the Union Cabinet approved 100 Smart City Projects in India. Indias Honble Prime Minister MrNarendraModi approved the launch of Housing for All by 2022. Under the Sardar Patel Urban Housing Mission, 30 million houses will be built in India by 2022, mostly for the economically weaker sections and low-income groups, through public- private-partnership (PPP) and interest subsidy.

• The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern real estate investment trusts (REITs).

• Both LokSabha and RajyaSabha have passed The Real Estate (Regulation and Development) Act 2016, the Bill which seeks to protect the interest of the home buyers by enhancing transparency.

Government Policy and Incentives to Home Buyers- Highlights

• Pradhan Mantri Awas Yojana ( PMAY ) Scheme for first time Home buyer government benefits upto Rs. 2.67 lacs

• Promote Home Loan and reduce Interest rates.

• Allow Builders to pass on benefits under GST and to reduce burden on buyers

• 100 % tax benefits on profits - With a view to incentivise affordable housing sector as a part of larger objective of ‘Housing for All, it has amended the Income-tax Act so as to provide for hundred per cent deduction of the profits of an assessee developing and building affordable housing projects if the housing project is approved by the competent authority before the 31stMarch, 2019 subject to certain conditions.

Mumbai Real Estate

Mumbai real estate market has shown signs of improvement and increase in off-take of inventory. Further, customers have shown a clear preference to the developers with good track record of timely delivery, quality product and with sound financial stability. Good developers have seen regular demand throughout FY2016-17.

Opportunities and challenges Opportunities

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term.

Your Companys well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your company is ideally placed to further strengthen its development potential by acquiring new land parcels.

Challenges

While the management of your Company is confident of creating and exploiting the opportunities, it also finds the following challenges:

• Unanticipated delays in project approvals and litigation from land owners and Rehab tenants

• Availability of accomplished and skilled &trained labour force

• Increased cost of manpower and sourcing

• Rising cost of construction due to inflation, taxes and logistic charges

• Growth in auxiliary infrastructure facilities

• Over regulated environment - RERA and GST

Company strengths

Your Company continues to capitalize on the market opportunities by leveraging its key strengths. These include:

1. Brand Reputation: Enjoys higher recall and influences the buying decision of the customer. Strong customer connects further results in quicker conversions and higher realizations.

2. Execution: Possesses a successful track record of quality execution of projects with contemporary architecture.

3. Strong cash flows: Has built a business model that ensures continuous cash flows from its investment and development properties ensuring a steady cash flow even during the adverse business cycles.

4. Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

5. Outsourcing: Operates an outsourcing model of appointing globally renowned architects / contractors that allows scalability and emphasizes contemporary

6. Cordial relations with our customers and contractors - Our Management policy is to build strong relationships with customers, past satisfy customers of group firm and contractors. With this policy, allows us to repetitive order with our customers as well as efficient and timely execution of projects.

FORWARD-LOOKING STATEMENT:

The report contains forward-looking statements, identified by words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘believes, ‘intends, ‘projects, ‘estimates and so on. All statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.

OPPORTUNITIES, THREATS, RISKS AND CONCERN:

OUR BUSINESS STRATEGIES/ FUTURE PLANS

Focus on Township residential complexes including Affordable Housing Projects

As compared to other players in the Industry, we dont believe in launching multiple projects at one time. We focus on construction of quality projects one at a time. We believe in constructing Township / Affordable Housing Projects in order to derive multiple benefits. Further, construction of large scale residential complexes, allow us to benefit from economies of scale and is one of the contributing factors to the greater credibility that we enjoy with sellers of land as well as buyers of properties. Thus, we are able to ride the wave of a particular project. We believe that the expansion project of "Green Park" will enable us to achieve premium prices for the remaining phases that are under construction, thereby improving our margins going forward. Our management has plans to provide facility of club house and recreation facility to resident of Boisar project. This may consider as additional benefits.

Our project Stanza, Chembur, Mumbai shall have approximately 77,376.15 sq. mtrs. salable area comprises of 8 towers of 16 floors. Residential complex having 8 buildings with ultra modern facility, club house, recreation facility and garden shall provide value addition to flat owners and improve their standard of living.

Develop the Management & Execution Team

Continue to build-up a professional organization we believe in transparency, flow of information, and commitment to the work among our work force and with our valuable customers, suppliers, investors, government authorities, banks, financial institutions etc. We have employed experiences persons for taking care of our ongoing projects. For taking care of accounts and finance related matters we have employed finance professionals. We also consult with outside agencies on a case to case basis on technical and financial aspects of our business. Hence, the philosophy of professionalism is foundation stone of our business strategy and we wish to make it more sound and strong in times to come.

Regular Investment in Infra and Real Estate

Capture the high growth opportunities in the Indian real estate sector. We believe that the increasing levels of investment in infrastructure by Governments and private industries will be major factor for growth in our business in the foreseeable future. We intend to take advantage of the growing opportunities in infrastructure development by strengthening our expertise in development of land and property, construction business and identifying new prospects for growth.

Quality Project and Timely Execution

To focus on Quality Projects and on timely project schedule delivery. Our one of the significant business strategy is to undertake quality projects and timely project execution thereby maximizing customer satisfaction.

Expand the Business in new location

We believe that it is important to identify additional land and development rights in strategic locations at a competitive cost; we currently intend to focus on developing our Forthcoming Projects in a timely and efficient manner. We intend to continue to focus on performance and project execution in order to maximize client satisfaction. We will continue to leverage advanced technologies, designs and project management tools to increase productivity and maximize asset utilization in capital-intensive construction activities.

Widen the type of project

We are currently focused on the development of residential, commercial, office use, retail and mixed use projects including government projects i.e MHADA, SRA projects. We also undertake infrastructure projects. Apart from that we also indulge in trading of real estate units. We intend to maintain a spread of the different types of projects we are involved in as this provides us with a strategy for growth as well as mitigating the risk of focusing on only a certain types of projects and ensures stability of our revenue stream.

Development of projects through joint development Model

We utilize an outsourcing model that allows scalability and emphasizes quality construction. Our Management is well assisted by experienced project managers who oversees the functions of contractors. We also have strong and long-standing relationships with various contractors. The joint venture model enables us to focus on the core area of operations.

OUR GROWTH STRATEGY

We intend to pursue the following strategies in order to consolidate our position and grow further: Focus on Performance and Project Execution

We believe that it is important to identify additional land and development rights in strategic locations at a competitive cost, we currently intend to focus on developing our Forthcoming Projects in a timely and efficient manner. We intend to continue to focus on performance and project execution in order to maximize client satisfaction. We will continue to leverage advanced technologies, designs and project management tools to increase productivity and maximize asset utilization in capital-intensive construction activities.

Continue our Focus on a Diversified Business Model

We are currently focused on the development of residential, commercial, office use, retail and mixed use projects. We also undertake infrastructure projects. Apart from that we also indulge in trading of real estate units. We intend to maintain a spread of the different types of projects we are involved in as this provides us with a strategy for growth as well as mitigating the risk of focusing on only a certain types of projects and ensures stability of our revenue stream.

Penetration in to Mumbai Metropolitan Region

The real estate industry in India is predominantly regional due to difficulties with respect to large scale land acquisition in unfamiliar locations, inadequate infrastructure to market projects in new locations, the complex legal framework and the large number of approvals which must be obtained from different authorities at various stages of construction under local laws, and the long gestation period of projects. We also believe that due to our base at Mumbai and experience of our management about markets in and around Mumbai, we will be able to penetrate our operations in and around Mumbai.

Opportunities& Threats

• Continuous private sector housing boom will create more construction opportunities

• Public sector projects through Public Private Partnerships will bring further opportunities

• Developing supply chain through involvement in large projects is likely to enhance the chances in

• construction

• State governments and bodies like the Confederation of Real Estate Developers Associations of India

• (CREDAI) are hoping to crack down on unlawful and potentially dangerous construction practices with new requirements and increased transparency

Threats

• Industry is prone to changes in government policies

• No entry barriers in our industry which puts us to the threat of competition from new entrants

• Fluctuations in the material prices

• Long term market instability and uncertainty

OUTLOOK:

For FY 2017-18, our company will primarily focus on key areas for business development:

• Affordable Housing and Low cost Home at Green park, Boisar. Construction of Phase 2 for housing project.

• Housing project for residential and commercial at Billimora, Gujarat

• Housing project in Chembur, Mumbai at Stanza.

The Affordable housing project will continue to be a dominant part of overall revenues for FY2018, however, company expects to see a significant breakthrough in FY 2019 as a result of phase 2 of Green park project.

SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE:

The Company is engaged primarily operating in single segment i.eReal Estate and Construction Business.

HIGHLIGHTS AND KEY EVENTS:

The year FY2016-2017, remarkably went very well for our company. Your company went through series of developments and took several new initiatives for ongoing projects and plans for hyper growth in coming years.

Green Park Project

Our ongoing project named "Green Park" is a Town Ship-Residential & Commercial Project is being developed over land parcels situated at Boisar, Plot No. 3, 4 and 8, Survey number 21/1 & 21/2 at Village Kurgaon, TalukaPalghar, Maharashtra. Our company has purchased the free hold NonAgricultural land having Plot numbers 3, 4 and 8 comprising of 14,604.50 sqmtrs. in total. Within these three plots, Our Company had laid out a plan for constructing and developing a) 9 buildings having 330 flats and 36 commercial shops; and b) Recreation and Cultural Area.

Further, the project includes construction and operation of various other value added services around the complex such as Club House and Amenities - Gas-Supply Services, etc. The project shall cover the installation of Solar Panel on the roof of each building for common supply electricity including the supply of internal lights. Our Company also, plans to install a Water Recycling Plant for recycling the used water before its drainage and rain water harvesting for common use.

Stanza Project

Our project named "Stanza" is a SRA Redevelopment project is being developed over land parcel situated at Chembur, on plot number 12, 14, 34 to 42, 48, 82, 83 and 779, Village Borla, Chembur, Mumbai, Maharashtra. Our company has entered the Development Agreement with the Existing members residing there. The process is initiated for plan approval and formalities for Development and Construction of Residential Project. The land area under development is approx 14,544.39 sq. mtrs. and Construction area is approx 77,376.15 sq. mtrs. after necessary permission. The proposed plan is to construct 8 building of 16 floors each. Management has planned to implement the project in Phase manner. Phase 1 of Stanza consist of Building 1 of Ground+16 floors of Saleable having 64 flats and building of Rehab. Approx Area of construction is 10832.64 sq. mtrs.

Maiden Public Issue:

As all of you are aware, that your company went in for a Public Issue during March 2017 and got successfully listed on BSE SME Plate form. This was a proud moment & special milestone for the entire team and all the stake holders. This initiative and success will help us further enhance our goodwill, credibility and strengthen our acceptance amongst all the major partners of RBLs growth Journey. The trade community, clients, employees and bankers will perceive RBL as a major serious player in Real Estate sector.

The funds raised during the Public Issue will help your company to improve for ongoing real estate project, the turnover and profitability in coming years. The board is extremely thankful to all the employees, investors, customers, and all other stake holders including suppliers, customers, governments, bankers and various departments. We believe this listing status should also help us abstracting more talent by offering ESOPs and adding organized players as a business partners. Overall trust factor and dependability perception by all stake holders in RBL has increased to new heights helping RBL lay a solid foundation for a very successful Journey ahead.

INTERNAL CONTROL SYSTEM AND ADEQUECY:

The Company has adequate Internal control systems commensurate with its size and operations to ensure orderly and efficient conduct of business while safeguarding the assets, quality, safety, procurements, finance and accounts and reducing and detecting error.

FINANCIAL PERFORMANCE AND REVIEW:

The year Fy2016-2017 was more of a consolidation and base building year for your company. The shift of focus more on to long-term growth drivers and development of Affordable and low cost housing. Your company is focusing on scaling down margin and low ticket size real estate project to put more resources & energy into larger opportunities in township and SRA projects.

This has resulted in a more moderate and stable financial performance. The Demonetization had major negative impact on the second half of the financial year 2017, impacting revenues & profitability.

During the year under review, the Total Revenue stood at Rs. 72.02 Lakh as compared to Rs. 25.55 Lakh for the previous year representing an increase of 182 %; profit before tax stood at Rs 19.81 Lakh for the year under review as compared to Rs. 5.31 Lakh for the previous year representing an increase of 273 % and profit after tax stood at Rs. 14.66 Lakh as compared to Rs. 0.78 Lakh for the previous year representing an increase of 1779 %.

HUMAN RESOURCE:

Smooth Industrial Relations and effective Human Resource Management are the key factors contributing towards success in the industry. As our company is part of the Real Estate industry the importance of efficient and motivated human resources helps in achieving complete customer satisfaction. The employee strength of the Company, as on 31st March, 2017 was 12.

CAUTIONARY NOTE:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations and others may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied. Several factors that could significantly impact the Companys operations include economic conditions affecting demand, supply and price conditions in the domestic and overseas markets, changes in the Government regulations, tax laws and other statutes, climatic conditions and such incidental factors over which the Company does not have any direct control.