FORWARD LOOKING AND CAUTIONARY STATEMENTS
The statements in this report describing the Companys objectives, estimations,
expectations or projections, outlook etc., may constitute forward looking statements
within the meaning of the applicable Rules, Laws and Regulations. Actual results may vary
from such expectations, projections etc., whether express or implied. These statements are
based on certain assumptions and expectations of future events over which the Company has
no direct control.
INDUSTRY STRUCTURE AND DEVELOPMENT
The Indian real estate has come a long way and is today one of the fastest markets in
the world. Real estate in India is being recognized as an infrastructure service that is
driving the economic growth engine of the country. It has a huge multiplier effect on the
economy and therefore, is a big driver of economic growth. It is the second largest
employment-generating sector after agriculture. Real estate sector contributed to 11 % to
Indias GDP by the year 2020. However, the real estate industry, 2016 saw the biggest
changes in decades, especially on the policy front. Some of the biggest game-changing
polices like GST and RERA
Indias real estate sector is projected to reach USD 180 billion by 2020 from USD 126
billion in 2015, according to a joint report by CREDAI and JLL. Investment inflows in the
housing sector since 2014 have been Rs 59,000 crore, about 47 per cent of the total
invested money in real estate, it said. The report also said that the contribution of the
residential segment to the GDP would almost double to 11 per cent by 2020.
The mood at home may not be upbeat so far, but, the charm of Indias real estate has
only doubled among outsiders. According to the Economic Survey 2017-18 that was tabled in
Parliament on January 29 by Finance Minister Arun Jaitley, the sector attracted foreign
direct investment (FDI) worth $257 million in the second half of 2017. While noting that
the foreign investment made in the second half of 2017 is double the FDI real estate
attracted in the entire 2016, the Survey noted that the sector has started showing signs
of improvement.
The outlook of foreign investors towards the sector must have got more positive after
the arrival of the Real Estate (Regulation & Development) Act, 2016. The law would,
the Survey expects, work its magic domestically, too, as things progress.
"With the enactment of Real Estate (Regulation & Development) Act, 2016, it is
anticipated that accountability would lead to higher growth across the real estate value
chain, while compulsory disclosures and registrations would ensure transparency,"
says the Survey.
Revealing data for the governments Housing-for-AII-by-2022 mission, the Survey notes
that the government has sanctioned over 3.1 million houses in urban India under its
Pradhan Mantri Awas Yojana (PMAY). Of these, about 0.4 million houses have been built
while about 1.6 million houses are at various stages of construction. The Survey, however,
points out that aggressively building is not the answer-the rentals and the vacancy rates
must be taken into account while doing so. There is also a need to pay more attention to
contract enforcement, property rights and spatial distribution of housing supply versus
demand, the Survey says.
OPPORTUNITIES
Union Budget 2018 proposes several positive measures for the real estate sector. This
will boost both housing demand and supply significantly in the affordable housing space.
Growing requirements of space from sectors such as education, healthcare and tourism
provide opportunities in the real estate sector with IT parks, retail, hospitality,
special economic zones, financial services, telecom and other new age sectors taking
centre stage will continue providing tremendous room for growth in commercial office
space.
Urban population has been increasing the urbanization and growing household income are
some of the major factors that influence demand for residential real estate and growth in
the retail sector. The RERA Act has brought about major changes thus leading to increase
in transparency in the Real Estate sector. ,
THREATS
Depressed demand, together with increased construction costs - both material and labour
which has been putting pressure on the cost of projects and profit margins.
Any adverse move by the banking sector towards the lending policy on the real estate
loans may increase the cost of borrowing.
The delay in approvals of project and amendments in the various Rules and Regulations
can adversely impact new launches and increase in the cost of the projects. Retrospective
applicability of policy changes may impact profitability.
Lack of supporting infrastructure such as roads, highways, electricity, etc. that can
hamper the growth of real estate as it thrives on availability of good infrastructure.
Acute shortage of skilled workforce at all levels.
Non-availability of land within city limits along with rising land and construction
costs, making affordable housing projects unviable.
Low focus on housing for EWS and LIG segment from the developer fraternity owing to
lack of effective policy framework.
The lengthy and complex approval process leads to a high gestation period which
eventually results in project cost escalation by 20-30 percent.
SEGMENT WISE PERFORMANCE
The Company has mainly one reportable business segment. Hence no further disclosure is
required under Accounting Standard (AS) 17 on Segment Reporting.
OUTLOOK
The real estate and construction sectors as a matter of fact have always been an
attractive investment option, and with the additional support of the new rules and
regulations by the government, it has resulted in significant growth in the residential
Real Estate. The government has always had a major influence on the real estate sentiments
of the investors and now with a stable government at centre we are hopeful that the lost
confidence shall be revived.
An initiative taken by the Government for benefiting the people with various changes in
the real estate sector has led to increase in the demand of real estate.
The real estate industry is maturing. Until 2014, it was unregulated, fragmented and
highly inefficient. Though 2016 will bring in regulation, it will remain fragmented and
moderately inefficient. We could see it will become a well-regulated, consolidated and
moderately efficient industry by around 2020. Growth in the Indian economy will definitely
see favourable reflection in the real estate sector, as well.
RISKS AND CONCERNS
The Companys ability to foresee and manage business risks is crucial in achieving
favourable results. While the management of the company is positive about companys long
term outlook, we are subject to few risks and uncertainties as given below
MARKET PRICE FLUCTUATION
The performance of the company may be affected by the sales at a price which are driven
by prevailing market conditions, the nature and location of the projects.
PRICE RISK OF THE INPUTS
The primary building materials like steel and cement are subject to price volatility
due to general economic conditions, competition, production levels, transportation costs
and domestic and import duties and any adverse impact of rise in input cost will have
impact on the profitability of the Company.
DEVELOPMENT RISK
Development depends on several factors which include receipt of required approvals,
weather conditions; labour availability, material shortages etc and any of these factor
may have an adverse impact on execution.
ECONOMIC RISK
Any adverse change in any macroeconomic variables like GDP growth, interest rates,
inflation, changes in tax, trade, fiscal and monetary policies etc. may adversely impact
the Companys business, profitability and financial condition.
HEALTH AND SAFETY RISKS
Real estate Companies constantly face the risk of injury or illness to the Companys or
third parties construction workers.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has proper and adequate system of internal control procedure commensurate
with its size and nature of the business so as to ensure that all assets are safeguarded
from loss, damage or disposition and ensure that all transactions are authorized, recorded
and reported correctly and adequately. All operations parameters are periodically
monitored and strengthened. The Company continuously upgrades these systems in line with
best accounting practices. The internal control system is further supplemented by a
programme of internal audit conducted by an independent Chartered Accountant. The Audit
Committee of the Board of Directors reviews the effectiveness of internal controls and
suggests improvements for strengthening them whenever required.
FINANCIAL PERFORMANCE
The total income of the Company for the current year is Rs. 5,61,68,878/ - as against
Rs. 14,71,72,468/- during the previous year. The Company has suffered loss of Rs.
13,55,263/ -during the current year as against loss of Rs. 37,40,082/ - in the previous
year. The EPS for the current year is nil during the year.
DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT
Employees are the key to achieve the Companys objectives and strategies. The Company
provides to the employees a fair and equitable work environment and support with a view to
develop their capabilities leaving them with the freedom to act and to take
responsibilities for the tasks assigned. The Company strongly believes that its team of
capable and committed manpower, which is its core strength, is the key factor behind its
achievements, success and future growth.
We are continuously working to create and nurture an organization that is highly
motivated, result oriented and adaptable to the changing business environment. The
industrial relations remained cordial during the year.
+91-9892691696
