Shaival Reality Ltd Management Discussions

A. BUSINESS OVERVIEW:

Shaival Reality Limited (hereinafter referred as ‘SRL) is a reputed Gujarat based company having its presence in the construction industry and transportation sector since many decades. SRL was incorporated as Shaival Reality Private Limited Company under the provisions of the Companies Act, 1956 on April 10, 1996 and is converted into a Public Limited Company w.e.f. February 04, 2015, listed on the SME Emerge Platform of the National Stock Exchange.

BUSINESS HIGHLIGHTS:

Turnover/Total Revenue (Amount in Rs):

During the year 2024-25, the Company has generated total revenue of Rs. 12,005,499.80 on standalone basis and Rs. 14,901,324.04 on consolidated basis as compared to Rs. 42,809,508.32 on standalone basis and Rs. 44,080,017.52 on consolidated basis of the previous year 2023-24.

Employee Benefit Expenses (Amount in Rs):

As per Standalone basis, Employees Benefit Expenses is Rs. 11,022,255.00 during the year as against Rs. 9,35,757.00 during the previous year and as per consolidated accounts, Employees Benefit Expenses is Rs. 1,103,065.00 as against Rs. 9,36,570.00 during the year as against during the previous year.

Finance Cost (Amount in Rs):

As per Standalone and consolidated basis, the finance cost of the Company is Nil in both current and previous year.

Depreciation (Amount in Rs):

As per Standalone basis, depreciation and amortization expenses is Rs. 87,755.00 as against Rs. 3,44,520.00 during the previous year. According to consolidated audit report, depreciation and amortization expense is Rs. 1,23,333.94 as against Rs. 1,522,541.80 during the previous year.

Provision for Tax (Amount in Rs):

The Company has not made any provision towards current tax for the financial year 2024-25. However, it has provided for the deferred tax of Rs. 840,812.00 and Short Provision of Income Tax (Earlier Years) of Rs.4,284,100.67 for the year 2024-25 and Rs. (866,123.00) in the previous year on standalone as well as consolidated basis.

Profit/Loss after Tax (Amount in Rs):

As per Standalone and Consolidated basis, the company has earned a profit of Rs. 1,973,604.67 during the year as against Profit of Rs. 25,166,480.84 during the previous year.

Earnings per Share:

Basic and diluted earnings per share as per standalone and consolidated basis for the current year worked out to Rs. 0.17 as against Rs. 2.17 during the previous year.

FINANCIAL CONDITION (Amount in Rs): - Non Current Liabilities:

The Companys Non Current Liabilities includes other long term liabilities of Rs. 2,50,000.00 as at 31^st March 2025 as against Rs. 2,50,000 Long Term liabilities as at 31^st March 2024 On Standalone basis and The Companys Non Current Liabilities includes long term borrowings Rs. 2,072,115.00 and other long term liabilities of Rs. 2,50,000.00 as at 31^st March 2025 as against Long Term Borrowings of Rs. 713,115.00 and Other long term liabilities of Rs. 2,50,000.00 as at 31^st March 2024 On consolidated basis.

- Current Liabilities:

Companys Current Liabilities includes Other Current Liabilities of Rs. 1,822,242.70 and trade payable Rs. 13,258.00 aggregating to Rs. 1,835,500.70 as at 31^st March 2025 as against Rs. 129,930.00 during the previous year (On Standalone basis).

Companys Current Liabilities includes Trade Payables of Rs. 955,018.27 and Other Current Liabilities of Rs. 1,829,706.40 aggregating to Rs. 2,784,724.67 as at 31^st March 2025 as against Rs. 1,226,565.60 during the previous year (On Consolidated basis).

- Non current Assets:

Non Current assets at the end of the year is Rs. 134,229,526.34 as against Rs. 144,003,806.37 during the previous year on the standalone basis whereas non current assets amounted to Rs. 136,664,772.76 in current year as against Rs. 142,801,699.11 in the previous year on a consolidated basis as the company has liquidated some of its non current investments and fixed assets.

- Current Assets:

During the year, the Company has current assets of Rs. 27,499,694.86 in current year as against Rs. 14,046,238.90 during the previous year on the standalone basis whereas current assets amounted to Rs. 28,085,777.20 in current year as against Rs.17,058,088.71 during the previous year on the consolidated basis.

B. INDUSTRY STRUCTURES, DEVELOPMENT, OPPURTUNITIES & OUTLOOK:

For F.Y.2025-26, growth, while still healthy, may see a moderation to 7%-8% as per various estimates due to high interest rates and lower fiscal impulse would temper demand and the net tax impact would normalize. Also, the uneven economic growth of some trading partners and escalation of geopolitical uncertainties can drag down exports. The World Bank expects India to grow by 6.3% in F.Y. 2025-26 after an estimated growth of 6.7 % in the previous financial year.

REAL ESTATE SECTOR:

In F.Y. 2024-2025, the real estate sector in India witnessed record-breaking growth, driven by strong housing demand, stable interest rates, and resilient economic fundamentals. Real estate investments surged to $6.5 8.9 billion, the highest ever recorded, with land acquisitions accounting for approximately 40% of total investments. A notable trend was the expansion of real estate activity into Tier 2 and Tier 3 cities, supported by growing infrastructure, better connectivity, and urbanization. Investment avenues like direct property purchases, Real Estate Investment Trusts (REITs), and Mortgage-Backed Securities (MBS) gained further traction among both domestic and foreign investors.

Residential Real Estate continued to dominate, with unprecedented sales across major cities and a surge in new project launches. Despite increased supply, inventory levels remained stable or declined, especially in Tier-1 markets, reflecting strong absorption.

The commercial office space segment rebounded, with leasing demand rising by 7 8% year-on-year, aided by improved workplace strategies and higher demand from IT/ITES and GCCs.

Retail real estate made a full comeback, surpassing pre-pandemic consumption levels, driven by revived footfalls and new retail formats.

Industrial and warehousing emerged as a fast-growing segment, receiving ~39% of institutional inflows, thanks to e-commerce and logistics sector growth.

Budget 2025 takeaways

The Union Budget 2025 was supportive of the sectors long-term development, with a strong emphasis on urban infrastructure, affordable housing, and sustainability. The budget created a favorable environment for real estate growth through targeted capital expenditure and inclusive policy measures.

Inclusive Development

The Pradhan Mantri Awas Yojana (PMAY) progressed significantly toward its goal of 3 crore rural houses, with a commitment to build 2 crore more houses over the next five years.

The total allocation to PMAY stood at Rs. 80,671 crore, with Rs. 54,500 crore specifically earmarked for the rural component.

The PM-SVANidhi scheme continued supporting 78 lakh street vendors by facilitating access to credit and formal housing support.

These efforts align with the governments ‘Viksit Bharat by 2047 vision for comprehensive and inclusive urban-rural development.

Urban Housing and Middle-Class Support

The budget announced a new housing scheme for urban middle-class families living in rented homes, chawls, slums, or unauthorized colonies, helping them buy or build their own homes with affordable financing support.

The rooftop solarization scheme was launched for 1 crore urban households, offering up to 300 units of free electricity per month, promoting green energy adoption and reduced energy bills.

C. SEGMENTWISE FINANCIAL & OPERATIONAL PERFORMANCE:

SRL operates mainly in two segments of revenue Construction & Renting. The details on financial performance of the same forms the part of the Financial Statements and is been time to time disclosed to the Stock Exchange.

D. SWOT ANALYSIS:

The Company is nowhere ignorant about the risks and threats encounter in these highly competitive and volatile sectors and even cant deny the speculation rose due to the frequent changes in the legal, economic and fiscal policies by the Government among the consumers, investors and stakeholders.

a) RISK AND CHALLENGES ARE: - In Construction Segment:

Regulatory Hurdles- The real estate industry is subject to extensive regulation, and any negative adjustments in governmental policies or the regulatory framework can negatively influence the sectors performance. Significant delays in procedures related to acquiring land, determining land use, initiating projects, and obtaining construction approvals are common. Changes in policy applied retrospectively, along with regulatory obstacles, could affect profitability and diminish the appeal of both the sector and the companies active within it.

Monetary Tightening and Funding Issues- The budding economic revival, coupled with potential increases in interest rates, may pose challenges for the real estate sector shortly.

Higher housing loan costs and an escalation in financing costs for developers, who are already contending with margin pressures due to the rising prices of commodities, could have implications.

Shortage of Manpower & Technology- As the countrys second-largest employment provider, the real estate sector relies significantly on manual labor. The pandemic severely impacted this sector due to labor shortages, disrupting project completion schedules. Consequently, theres a pressing need for the adoption of alternative construction methods that are less dependent on manual labor and more on technology.

Climate Change-Due to physical climate change the infrastructure gets damaged at construction sites, disruptions to logistics routes, and decreased workforce efficiency due to heat waves.

On the other hand, transitional risks emerge from the transition towards a low-carbon economy, manifesting across four key categories: reputational, market, technology, and policy.

- In Rent Segment:

-Vacation of properties by the current tenants with intent to have owned estate. -Economic Downturn due to changes in fiscal policies -Massive Competition mainly regarding the supply of space/properties. -Inaccurate Scrutiny of the roots of the tenants, etc.

B) STRENGTH:

SRL is very much optimistic about its growth, expansion and strong hold in years to come. The basic strength which drives the organizational potential are:

1. Experienced board members & active team

2. Collaborative relationship with the stakeholders & investors

3. Curiosity, Innovation and inclination towards technological advancement

4. Calculative Risk taking approach.

5. Customer centricity

E. HUMAN RESOURCES MANGEMENT:

Management is successfully indulge in building experienced team and nurtures them to be leaders. The HR Department is specifically monitored by our Senior Management with an aim to build trust, integrity, teamwork, innovation, performance and partnership. Various Departments are headed by Professional Qualified Personal, helping our business to remain competitive, achieve greater success and newer milestone.

F. RISKS AND CONCERNS:

Your company is mainly focusing on manpower and the intelligence. Apart from the risk on account of governmental policies and regulatory changes, business of the company are exposed to certain operating business risks, which is mitigated by regular monitoring and corrective actions. The company has taken necessary measures to safe guard its assets and interest etc.

G. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

As per the provision of Section 138 of the Companies Act, 2013, the Company has devised a proper system to check the internal controls and functioning of the activities and recommend ways of improvement. Internal Audit is carried out on timely and the report is placed in the Audit Committee Meeting and Board meeting for consideration and directions. The internal financial controls with reference to financial statements as designed and implemented by the Company. During the year under review, no material or serious observation is received from the Internal auditor of the Company for inefficiency and inadequacy of such controls.

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, 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 realized. 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.