S & T Corporation Ltd Management Discussions

INDIAN ECONOMY

Indias economy continues to grow at a steady and confident pace, standing out as the fastest growing major economy in the world. Gross Domestic Product (GDP) is a measure of size and health of the economy. It is the total value of all the goods and services produced within a country. In 2024-25, real GDP growth was estimated at 6.5 per cent. The Reserve Bank of India expects the same rate to continue in 2025-26. This performance comes at a time when the global economy faces uncertainty, making Indias steady momentum all the more significant.

Supported by strong domestic demand, easing inflation, robust capital markets and rising exports, the broader economic picture is one of resilience and balance. Key indicators such as record foreign exchange reserves, a manageable current account deficit, and increasing foreign investment reflect growing global trust in Indias long-term prospects. Together, these trends show an economy that is not only expanding but doing so with strength across sectors.

Source - ( https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154840&ModuleId=3 )

While the short-term outlook seems to be challenging given the rising interest rates, external supply shocks and geopolitical tension, we do believe the government is doing the right things to ensure a sustainable growth path for the country. The union budget presented this year was very supportive of the long-term growth of the real estate sector in India through its focus on urban infrastructure and the digital economy.

REAL ESTATE SECTOR

Construction industry always has a long-term vision and mission in setting the goals and working towards achieving its goals. A burgeoning housing economy and the Central Governments massive infrastructure push are driving Indias construction boom. As per reports, the country is set to become the third-largest construction market globally following China and the US. Estimates show that the industry is set to reach $1.4 trillion by 2025. The Union Budget 2024-25 has also set the trend to achieve this goal with its key measures for infrastructure development and housing sector.

Infrastructure development is the foundation for a countrys economic prosperity and is critical for improving the quality of life of its citizens. India has witnessed a surge in infrastructure development, with strategic government investments and active private sector participation propelling the expansion of critical sectors. Programs like the Gati Shakti plan and National Infrastructure Pipeline are crucial in accelerating development, enhancing connectivity, and fostering urbanization. The roads & highways sector has gained momentum after a consolidated approach in highway construction under the Bharatmala Pariyojana programme that envisages the development of economic corridors, interstate corridors, and feeder routes.

Source - ( https:/ / constructiontimes.co.in/mission-2025-indian-construction-industry )

RESIDENTIAL REAL ESTATE MARKET

The real estate market in India is set for remarkable growth over the next couple of years. As we step into 2025-26, experts and investors alike are keeping a close eye on trends, statistics, and projections. With the countrys rapid urbanization, rising income levels, and government initiatives, the Indian real estate market is expected to expand steadily, offering lucrative opportunities across residential, commercial, and industrial sectors.

The next few years will be pivotal for the real estate market in India. With strong fundamentals, supportive government policies, and increasing demand across sectors, the market is primed for significant expansion.

For investors, developers, and homebuyers, the Indian real estate market offers an exciting landscape full of opportunities. Whether youre planning to invest in residential, commercial, or industrial properties, keeping an eye on market trends and expert forecasts will help you make informed decisions.

As we move through 2025 and beyond, one thing is certain: the real estate market in India is evolving fast, and those who stay ahead of the curve stand to gain the most.

OPPORTUNITIES

The Indian real estate sector is anticipated to witness a significant surge in sales, with a projected growth of 8-10% in the fiscal year 2024-25, according to a report by India Ratings and Research (Ind-Ra). This forecast comes amidst the backdrop of various factors such as government initiatives, improving consumer sentiment, and economic recovery.

The report suggests that the residential segment is likely to be the primary driver of this growth, buoyed by increased demand for housing. Additionally, the commercial real estate sector is expected to witness a gradual recovery, supported by the revival of business activities and investments.

Furthermore, the affordability of housing, aided by low-interest rates and government incentives, is expected to bolster demand in the real estate market. The report highlights the role of regulatory reforms and policy support in fostering a conducive environment for the sectors growth.

However, challenges such as rising construction costs and supply chain disruptions could pose hurdles to the sectors expansion. Therefore, developers are urged to adopt innovative strategies and efficient project management practices to navigate these challenges effectively. Overall, the outlook for Indias real estate market appears optimistic, with sustained growth expected in the coming fiscal year. This projected expansion underscores the resilience and potential of the sector to contribute to the countrys economic development.

Source - ( https:/ / www.constructionworld.in/latest-construction-news/real-estate-

news/ indias-real-estate-sales-forecasted-to-surge-by-8-10-in-fy25/54374 )

THREATS AND CHALLENGES

Regulatory Hurdles - Real estate sector is a highly regulated sector and any unfavorable changes in government policies and the regulatory environment can adversely impact the performance of the sector. There are substantial procedural delays with regards to land acquisition, land use, project launches and construction approvals.

Monetary Tightening and Funding Issues - There has been a contrasting trend in real estate lending over the past few years wherein reputed, low leveraged developers continued to enjoy easy access to liquidity as the lenders remained selective and weaker developers struggled with limited sources of capital. Real estate sector performance is closely linked to economic recovery and its monetary policies.

Shortage of Labour and Technology - Being the second largest employer in the country, the construction sector is heavily dependent on manual labour. During the pandemic, the sector was badly hit due to labor availability issues which affected the project completion timelines. Hence, there is a need for development of technologically less labour intensive alternative methods of construction.

INTERNAL CONTROL & ADEQUACY:

Adequate internal control systems commensurate with the nature of the Companys business, size and complexity of its operations are in place and have been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations. Internal control systems are designed to ensure that all assets and resources are acquired economically, used efficiently and adequately protected.

For details of Ratios and changes therein refer Notes to the Financial Statements forming part of this report. Office No.227, Avior Corporate Park, Nirmal Galaxy LBS Road,

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