ANNEXURE - D
After the Covid-19, pandemic years from 2020 to 2022, the Word Bank, IMF, Asian
Development
& Ministry of Finance estimates, the Indian economy will grow at around 6.5 per
cent in the current fiscal year April 2023 to March 2024 (7.2% for FY23 as per RBI
reports). The Government is working towards Developed India. Thrust will be given to
Micro, Small and Medium Enterprises (MSME). The Finance Ministry will work with the spirit
of cooperative federalism with a common online platform for all schemes, solutions and
systems for ease of doing business.
The US and European banking crisis, does not see any impact on the Indian financial
sectors. The Indian economy continues to show strong resilience to external shocks like
geo political tensions, Volatile Oil Prices, etc. Indias service exports have continued
to increase, and the current-account deficit is narrowing. However, the growth is expected
to be constrained by slower consumption growth and challenging external conditions. Rising
borrowing costs and slower income growth will weigh on private consumption growth, and
government consumption is projected to grow at a slower pace due to the withdrawal of
pandemic-related fiscal support measures.
The central government is likely to meet its fiscal deficit target of 5.9% of GDP in
FY23-24 and combined with consolidation in state government deficits, the Central
government deficit is also projected to decline. As a result, the debt-to-GDP ratio is
projected to stabilize. On the external front, the current account deficit has narrowed
down to 2.1 percent of GDP in FY22-23 on the back of robust service exports and a
narrowing merchandise trade deficit.
INDUSTRY STRUCTURE AND DEVELOPMENTS: REAL ESTATE SECTOR:
The real estate market in the South has been growing both in Commercial &
Residential sectors. While the Prices have risen between 6-8% the saleable areas also have
raised by 10% comparing the previous Year. Factors like availability of well-planned
infrastructure and presence of strong employment opportunities led by Service Sectors
like, IT, ‘start-ups Education, Health Care and the manufacturing industry have
augmented the attraction of the southern markets. The growing demand for property in the
cities is boosted by factors such as the proximity to major transportation hubs, excellent
healthcare facilities, and a pleasant climate, especially like Bengaluru, as buyers focus
more on affordability and connectivity. There is also significant land available for
development in the region. Bengaluru has upcoming infrastructure projects in the pipeline
that range from the metros linking the entire city with the airport, to interior regions.
Further, Chennai has a strong pipeline of projects supporting road infrastructure to
reduce the traffic on the express highways. The key markets have seen a sharp rise in
retail and commercial growth in recent years.
In conclusion, Bengaluru and Chennai are growing at a fast pace with presence of
zestful professional class and a well-developed corporate ecosystem where both residential
as well as Commercial spaces demand is on the rise.
OPPORTUNITIES AND CHALLENGES: OPPORTUNITIES:
As explained earlier, after the Covid-19 Pandemic hit, the demand for Commercial and
Residential spaces are increasing and your Company diligently safeguarded the inventories
in the form of lands in both Bengaluru and Chennai waiting for the rightful opportunity to
invest, construct commercial properties, expand and optimise the returns to the stake
holders. Our Company has a Zero Debt policy and would like to expand on the internal
accruals and revenue.
CHALLENGES:
As in every Industry, your Company also faces both Macro and Micro challenges; While
the Conflict of Ukraine-Russian war continues for the second year resulting in Volatility
in prices of Crude Oil, minerals and other major Raw Materials, the cost of Construction
materials, including Steel, Cement, sand, Bricks, Electric, Plumbing, HVAC and finishing
materials have raised resulting in increase of construction cost by 15%- 20%. These
challenges need to be overcome by all the real estate companies, including our Company.
SEGMENT – WISE PERFORMANCE:
At present, the Company is engaged only in the business of real estate activities and
there is no other separate reportable segment.
BUSINESS OUTLOOK:
FY2023-24 should be a good business year; though we anticipate downward trends in the
global economy. The real estate sector is going to continue on its journey of long term
growth as we see a continuous rise in GDP, larger disposable incomes, growing
urbanization, etc. The strong growth potential shall lead to high demand in offices and
commercial space in Tier 1 and Tier 2 cities. Post Covid era, the co-working industry, has
successfully adapted to changing work requirements and the demand of floor area is
expected to cross 50 million sq. ft. by the end of the year 2023 which would be a YOY 15%
increase. The increased repo rate of 2.5% in the last one year by RBI, could impact
residential sales to some extent, particularly in the affordable segment. The real estate
market will continue to be driven by various other factors such as supply and demand,
regulatory framework, and overall economic conditions. In the Union Budget 2023–24
the Finance Minister has announced "Green Growth" as one of the priorities of
the budget. Organisations are already working on the concept of green, sustainable living
in India and moving towards sustainability and this move will help to achieve their goals
more efficiently.
To achieve the targeted GDP growth, the need of the hour is investments in the
Commercial Space, Logistics & Warehousing which is gaining significant importance. We
can see spurt of rentals of Commercial spaces in Metros by Worlds top 10 Companies like
Apple, Amazon, etc. Your Company is constantly looking for suitable avenues to identify
and venture in to new projects and business opportunities.
RISKS AND CONCERNS:
The Company is exposed to a number of risks such as economic, regulatory, taxation and
environmental risks as well as sectoral investment outlook. Some risks that may arise in
the normal course of business and could impact their ability to address future
developments, comprise credit risk, liquidity risk, counterparty risk, regulatory risk,
commodity inflation risk and market risk. The Companys strategy on focusing real estate
activity for various geographical segments is exposed to economic and fluctuating market
conditions. The Company continues to implement robust risk management policies that
set-out the tolerance for risk management and the requisite mitigation plans.
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 several 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, fluctuations in earnings, 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, regulations etc. In accordance with
the Regulations on Corporate Governance as 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 on any forward-looking statements made from time
to time on behalf of the Company
ECONOMIC RISKS:
An economic slowdown and uncertainty in the economic system like the natural risks
associated with the construction sector are beyond the control of a company so also the
risks that have to do with the economy. A sluggish economy or even recession in a specific
industry such as IT/ITES can lead to a decrease in sales or market rates for residential
projects. In extreme cases of an economic downturn, a company may also run the risk of
customer insolvency though the registration of property happens only on the receipt of all
the dues from a customer. These factors could decrease the revenue generation from some or
all companys businesses, adversely effecting its business and future growth. Further,
uncertainties in the national or global economic scenario, a changing demographic profile
of the country and inflation also have a bearing on the functioning of a company operating
in the real estate sector. In India, a real estate companys business is dependent on the
easy availability of finance. An economic slowdown can result in fund shortages as lenders
may want to act safe.
POLITICAL RISKS:
Changes in government policy, social and civil unrest, and political developments in or
effecting India could affect the Companys business interests. Specific laws and policies
effecting real estate, foreign investments and other matters effecting investments in the
companys securities could also change.
LIQUIDITY RISKS &CREDIT RISKS:
LIQUIDITY RISKS: The real estate industry has its own challenges and dynamics. The
time required to liquidate a real estate property can vary depending on the size, volume,
demand, quality and location of the project.
CREDIT RISKS: In most of the cases properties are on a joint venture/sale basis.
Credit risks arise when its JV partners or the buyers do not discharge their obligations
and, in such circumstances, it may be required to make additional investments in a joint
venture or become liable for the other partys obligations
POLICY AND REGULATORY RISKS:
REGULATORY RISKS: Local, state, and central regulatory bodies control the real
estate sector through laws and regulations governing the acquisition, construction and
development of land including zoning, permitted land use, fire safety standards, height of
buildings and access to water and other utilities. Our business is subject to all these
laws and regulations. Any delay in obtaining an approval under these laws and regulations
will expose the business to higher risks. LEGAL RISKS: In some legal proceedings
relating to the land, in relation to taxation matters, any adverse decision may have a
significant effect on the companys business, prospects, and financials
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has a comprehensive Internal Financial Control System commensurate with the
size, scale and complexity of its operations. Your Company lays greater importance on
internal control systems across the organization. The Company has adequate system of
internal control which helps the management to review the effectiveness of financial and
operating control as well as to ensure that all the assets are safeguarded and more
productive. The system encompasses the major processes to ensure reliability of financial
reporting, compliance with policies, procedures, laws, and regulations, safeguarding of
assets and economical and efficient use of resources. We have a qualified and independent
Audit Committee from the Board and quarterly meetings are attended by the Internal
Auditors & Statutory Auditors. The Audit Committee reviews the adequacy and efficiency
of internal controls and recommends any improvements or corrections. These internal
controls ensure efficiency in operations, compliance with the policies of the Company.
DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:
Employees are at the heart of your Company and a major resource for the future. Its
their inexorable commitment that helps your Company to create spaces that enhance quality
of life. Keeping the spirits high at workplace needs a sound mental and physical fitness
and deep-rooted culture which promotes work life balance. Your Companys focus is to
continue building organizational capability and capacity, leverage and nurture key talent,
encourage meritocracy and enhance people utilization aligned with the business strategy.
As on March 31, 2023 your Company had 15 employees.
DETAILS OF KEY FINANCIAL RATIONS:
| Particulars |
FY 2022-23 |
FY 2021-22 |
% of Variance |
| a) Current Ratio |
59.41 |
42.51 |
40% |
| b) Debt - Equity Ratio |
0.11 |
0.14 |
-18% |
| c) Return on equity Ratio |
0.03 |
0.07 |
-65% |
| d) Net Capital Turnover Ratio |
0.03 |
0.02 |
42% |
| e) Net Profit Ratio |
0.22 |
0.90 |
-75% |
| f) Return on Capital Employed |
0.01 |
0.02 |
-64% |
| g) Return on Investment |
0.00 |
0.01 |
-65% |
DISCLOSURE OF ACCOUNTING TREATMENT:
In the preparation of the financial statements for the year ended 31st March, 2023, the
applicable Indian Accounting Standards ("Ind AS") have been followed. Pursuant
to the notification dated February 16, 2015 issued by Ministry of Corporate Affairs, the
Company has adopted the Indian Accounting Standards ("Ind AS") notified under
the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017.
| Place: Chennai |
By Order Of The Board |
| Date: 22.05.2023 |
For S V GLOBAL MILL LIMITED |
|
Sd/- |
|
E. SHANMUGAM |
|
Chairman |
|
DIN: 00041968 |
+91-9892691696
