Shelter Infra Projects Ltd Management Discussions

RECENT INDUSTRIAL SCENARIO

The real estate sector is one of the most globally recognized sectors. 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.

The real estate market in India has seen significant private equity investment in the first half of FY23. Real estate sector in India is expected to contribute 13% to the countrys GDP by 2025. Indian real estate is expected to increase by 19.5% CAGR from 2017 to 2028. Currently worth $200 billion, the sector is projected to reach $1 trillion and employ nearly 70 million people by 2030. The industry continues to grow and adapt to big tech, with steady post-pandemic demand and confidence in the commercial real estate sector, signaling an upsurge in economic activity, especially in sectors like residential, offices, warehousing, data centers, etc. By 2040, real estate market will grow to 65,000 crore from 12,000 crore in 2019. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

Indias real estate sector saw over 1,700 acres of land deals in the top 7 cities in 1 year. According to the Economic Times Housing Finance Summit, about 3 houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 populations. The current shortage of housing in urban areas is estimated to be 10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the countrys urban population.

GLOBAL ECONOMY

The world economy faces numerous headwinds and the economic outlook is exceptionally uncertain. High inflation is set to remain, central banks are continuing their tightening cycles, and governments are stretching their budgets further to insulate against unprecedented energy prices. Real estate pricing adjusted considerably in some markets in 2022 and this repricing is likely to continue into early 2023. There is still a significant amount of capital sitting on the sidelines and, as with any period of adjustment, investment opportunities will arise. The volatility of debt costs will ease, the current phase of price discovery will pass, and more certainty will enter the market as underwriting becomes clearer and the appetite for risk returns. The period of repricing is likely to see some winners and losers, but forced sellers are expected to be limited.

In the U.S., expiring leases will help boost tenant demand for offices, while relatively low vacancy rates across much of Europe will partially mitigate slowing leasing activity. High-growth sectors, such as Life Sciences and Data Centers, are likely to emerge from the temporary pause to strong demand, while the Living sector is expected to remain relatively resilient throughout the downturn and beyond. Real estate occupiers should prioritize contract negotiations. The better the industry can match negotiations and outcomes with reasonable if imperfect inflation expectations, the more efficient the outcomes for the commercial real estate industry overall.

INDIAN REAL ESTATE SECTOR

The Indian real estate sector is pretty much mirroring the resilience shown by the Indian economy despite global headwinds. Real estate is expected to contribute a larger share of Indias GDP and expand its market size in the coming years. Growth levellers are even, and momentum is only likely to ramp up in magnitude. While the global real estate industry has seen a slump and sales plummet, the Indian real estate sector serves as a fitting example of tiding over tumultuous times and show signs of growth consistency in the years to come as well. India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

The Indian real estate industry is an ever-evolving market. While the pandemic did significantly impact the sector; the sector resiliently walked on the path to recovery. In India, the real estate sector is the second- highest employment generator, after the agriculture sector. Emergence of nuclear families, rapid urbanization and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanization in the country is pushing the growth of real estate.

Indias remarkable economic transformation has positioned the nation to become the worlds fifth-largest economy. Amidst various contributing sectors, the real estate industry has emerged as a critical player, demonstrating its crucial role in fueling Indias growth and development. By 2040, the Indian real estate market is projected to grow from its current level of Rs 12,000 crore to Rs 65,000 crore. The Indian real estate sector is expected to be worth $1 trillion by 2030, up from $200 billion in 2021, and to contribute 13% of the countrys GDP by 2025. In the wake of technological advancements, it is expected that India will have a 40% market share in the real estate industry in the next 2-3 years. Retail, hospitality, and commercial real estate are also increasing quickly, providing India with the infrastructure it needs to meet its burgeoning needs.

FUTURE OUTLOOK OF OUR COMPANY

In order to promote affordable housing, the Government has made several efforts to create enabling environment and eco-system. Towards such an end, the Government has granted infrastructure status to affordable housing which will enable these projects to avail the associated benefits such as lower borrowing rates, tax concessions and increased flow of foreign and private capital.

Considering the above future possibilities and policies Your Company is looking to develop projects for senior citizens and scheme for affordable housing at Barasat, West Bengal.

However, as advised by our marketing consultant that the real estate in West Bengal is yet to take momentum overcoming the set such due to Covid 19. Your Company have decided to postpone the ongoing projects as well as the aforesaid project for the time being.

STRATEGY

Company is glad to announce to its Shareholders that the good number of pieces of land which are suitable for the aforesaid purpose have been identified by the co and are in process of finalization of tie-ups ensuring the access of the those parcels of land for implementation of housing projects with affordable price.

The Company has also decided for introduction of Special Purpose Vehicle (SPV) to implant such independent projects as subsidiary of the company, as the case may be.

OPPORTUNITIES AND THREATS

Viewed against the disruption, confusion and uncertainty of the past year, it would be easy to become despondent about the future of infrastructure around the world. Yet we see great opportunity and promise emerging. There is much to be excited about. Governments continue to demonstrate a strong desire and ambition to invest in infrastructure, both as a path to economic growth and as a way to hold back the rising tide of populism. New technologies and rapid innovation are creating new approaches, models and tools for infrastructure development and helping to bring down costs. The quest to identify new pricing and funding models offers the potential to unblock pipelines and unleash a new era of rapid development. And new perspectives on key issues such as sustainability, governance and investment are driving greater sophistication in many markets. A new dawn may be rising.

We hope that this years report inspires infrastructure participants to think progressively about the opportunities we face today and cautiously about the risks of tomorrow. We believe there is huge potential for great good to be unlocked. But, if we do not respond with vision and purpose, we may also be sowing the seeds of discord and division for future generations. The choice is ours.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a satisfactory system of internal control corresponding with its size and the nature of its operations. These have been designed to provide reasonable assurance & accuracy with regard to recording & reporting and providing reliable financial and operational, information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.

The Company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. The Audit Committee reviews Audit Reports submitted by the Internal Auditors. Suggestions for improvement are considered and the Audit Committee follows up the implementation of the corrective steps. The Committee also meets the Companys Statutory Auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the Company and keeps the Board of Directors informed of its major observations from time to time.

FINANCIAL PERFORMANCE

During the Financial Year under review, total revenue revenue decreased from Rs. 241.85 Lakhs to Rs. 145.71 Lakhs. The Company has incurred loss of Rs. 40.43 Lakhs for the Financial Year 2022-23 compared to the loss of Rs. 56.80 Lakhs incurred during the Financial Year 2021-2022 due to sustaining business in the most economical and budget friendly manner.

Shelter Infra Projects Limited is confident that apart from the infrastructure job, real estate business particularly the residential projects will be a regular source for the company of cash inflow and profit. The company has also decided to hire different professional agencies having sufficient expertise in their respective field for making and marketing those real estate projects as proposed.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

The Industrial Relations scenario continued to be cordial. The Company regards its employees as a great asset and accords high priority to training and development of employees.

NUMBER OF EMPLOYEES AS ON MARCH 31, 2023 WAS 11.

The information required pursuant to Section 197 of the Companies Act, 2013 ("the Act") read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company; need not to be disclosed as it is not applicable in respect of our company.

RISKS AND CONCERNS.

The company is involved in the construction of infrastructure projects. The company may face significant competition and margin pressures from its competitors depending on size, nature and complexity of the project and on the geographical region in which the project is to be executed. The failure to bid competitively may adversely affect its operations. Bidding high will mean it does not win contracts and bidding too low will mean incurring a loss, or operating at very thin margins.

HUMAN RESOURCES

Human Resources continued to be one of the biggest assets of the Company. The management has been paying special attention to various aspects like training, welfare and safety and thereby further strengthening the human resources. Relations with the employees remained cordial throughout the year.

CAUTIONARY STATEMENT

Statements in the Management Discussions and Analysis Report in regard to projections, estimates and expectation have been made in good faith. Many unforeseen factors may come into play and affect the actual results, which could be different from what the Directors envisage in terms of future performance and outlook. Market data and product information contained in this Report have been based on information gathered from various published and unpublished reports, and their accuracy, reliability and completeness cannot be assured.