Shraddha Prime Management Discussions


MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(a) Industry structure and developments

Shraddha Prime Projects Limited (Formerly known as Towa Sokki Limited) is a public limited company domiciled in India and incorporated under the Companies Act, 1956. Equity shares of the company are listed on Bombay Stock Exchange. The Company is engaged in Real Estate Business. The Consolidated operations for the year under review shows a profit of Rs.50,57,770 /-. During the year under review, the sales have been improved as was expected. Your directors are hopeful of achieving a reasonable turnover and resultant net margin in the years to follow.

(b) Opportunities and Threat

The financial year 2022-23 witnessed a mixed economic environment globally, marked by ongoing recovery from the pandemic-induced disruptions. Despite certain challenges, the real estate sector showed resilience with increasing demand for residential and commercial properties, driven by low interest rates, urbanization, and government initiatives.

Opportunities:

1. Urbanization and Population Growth:

Continued urbanization and population growth provide opportunities for SPPL to develop residential and mixed-use properties to cater to the increasing demand for housing and infrastructure.

2. Technology Adoption: Embracing innovative technologies such as smart building systems, virtual reality tours, and online property management platforms can enhance customer experience and operational efficiency, setting SPPL apart in a tech-savvy market.

3. Affordable Housing:

There is a growing need for affordable housing solutions. By focusing on designing and developing cost-effective residential projects, SPPL can tap into a significant market segment while addressing a societal need.

4. Infrastructure Development:

Collaboration with local governments for infrastructure development projects, such as roads, public transport, and utilities, can create synergies and enhance the value proposition of SPPLs projects.

5. Economic Recovery:

As economies rebound from the effects of the global pandemic, renewed consumer confidence and improved financial stability could lead to increased demand for real estate. SPPL can position itself to capture this pent-up demand.

6. Green and Sustainable Initiatives:

Incorporating eco-friendly features and sustainable design practices can attract environmentally conscious buyers and investors. SPPL can benefit from the growing trend towards sustainable real estate development.

Threats:

1. Economic Volatility: The ongoing global economic uncertainty and potential fluctuations in interest rates could impact consumer confidence and purchasing power, affecting the demand for real estate properties. Any adverse economic conditions could lead to a slowdown in the real estate market.

2. Regulatory Changes: Rapidly changing regulatory policies, such as taxation, zoning, or environmental regulations, may impact the cost structure and feasibility of real estate projects. Non-compliance with these regulations could lead to delays, penalties, or even project cancellations.

3. Competition: The real estate industry is highly competitive, with numerous players entering the market. Intense competition could lead to pressure on pricing and profit margins. Differentiating SPPLs projects from competitors offerings will be crucial to maintain market share.

4. Supply Chain Disruptions: Disruptions in the supply chain, such as shortages of construction materials or labour, can lead to delays in project completion and increased costs. These disruptions could impact project timelines and profitability.

5. Environmental Concerns: Increasing awareness of environmental issues may lead to heightened scrutiny of real estate projects ecological impact. Failure to adopt sustainable practices and address environmental concerns could result in reputational damage and project delays.

(c) Segment wise Performance

The Company is engaged in Real Estate Business and in single operating segment.

Residential Real Estate Segment:

In the Residential Real Estate segment, SPPL has continued its strong performance by successfully launching and completing several high-quality residential projects during the fiscal year. The demand for affordable housing remained robust, leading to increased sales and healthy revenue growth. The Companys focus on timely project execution, innovative designs, and customer-centric approach has contributed to positive customer feedback and increased brand loyalty.

(d) Outlook

Looking ahead, SPPL remains optimistic about its growth prospects. The Company aims to capitalize on the sustained demand for residential properties by launching innovative projects that cater to various customer segments. In the Commercial Real Estate segment, SPPL will continue to focus on enhancing property occupancy rates and rental yields. The Infrastructure Development segment is expected to benefit from ongoing government initiatives, and SPPL will explore new opportunities to expand its presence in this sector.

(e) Risks and concerns

SPPL acknowledges the inherent risks associated with the real estate industry, including regulatory changes, market fluctuations, and project execution challenges. The Company maintains a proactive approach to risk management by continuously monitoring market trends, diversifying its portfolio, and adhering to stringent compliance standards. Additionally, SPPLs strong financial position and prudent financial management provide a buffer against potential uncertainties.

(f) Internal control systems and their adequacy

SPPL recognizes the significance of a robust internal control system in maintaining transparency, accountability, and operational efficiency. Our internal control framework is designed to provide reasonable assurance regarding the achievement of organizational objectives. It encompasses the following key elements:

1. Control Environment: SPPL fosters a culture of integrity, ethical behavior, and accountability throughout the organization. The Board of Directors and senior management set the tone by establishing policies and codes of conduct that guide employees actions.

2. Risk Assessment: We regularly identify, assess, and mitigate risks that could impact the achievement of our strategic and operational objectives. Risk assessments help us prioritize our internal control efforts and allocate resources effectively.

3. Control Activities: SPPL has implemented a range of control activities to ensure accurate financial reporting and asset protection. These activities include segregation of duties, authorization and approval procedures, and physical safeguards.

4. Information and Communication: Effective communication is crucial for maintaining internal control. SPPL promotes open communication channels among various departments and levels of management to facilitate the exchange of relevant information.

5. Monitoring Activities: Our internal control system undergoes continuous monitoring and periodic evaluation to assess its effectiveness. This includes management reviews, internal audits, and feedback mechanisms to identify control deficiencies and implement necessary improvements.

Adequacy of Internal Control System: SPPL is committed to maintaining an internal control system that adapts to the changing business environment and emerging risks. In the FY 2022-23, we have taken several initiatives to enhance the adequacy of our internal controls:

1. Technology Integration: We have invested in advanced software and systems to streamline financial processes and reduce manual intervention. Automation has improved accuracy and reduced the risk of human errors.

2. Training and Development: SPPL recognizes the importance of a well-informed workforce. We have conducted training programs to educate employees about their roles in the internal control process and how to identify and report control deficiencies.

3. Enhanced Risk Management: Our risk assessment processes have been refined to encompass a broader spectrum of risks, including those arising from technological advancements, regulatory changes, and market fluctuations.

4. Strengthened Oversight: The Board of Directors has increased its oversight role in internal control matters. Regular meetings are held to review the effectiveness of our internal control framework and address any gaps.

5. Whistleblower Mechanism: SPPL has established a confidential whistleblower mechanism to encourage employees to report any instances of unethical behavior, fraud, or control weaknesses without fear of retaliation.

(g) Discussion on financial performance with respect to operational performance

During the fiscal year 2022-23, SPPL achieved significant milestones despite a challenging economic environment.

The companys financial performance demonstrated resilience and growth across various key indicators.

1. Revenue Generation: SPPLs total revenue for the year increased marginally compared to the previous fiscal year, driven by a combination of factors such as successful project completions, increased demand for real estate properties, and effective sales and marketing strategies.

2. Profitability: The companys operating profit on consolidated basis margin remained healthy, reflecting effective cost management and operational efficiency. SPPLs net profit also witnessed a notable improvement, showcasing the companys ability to generate returns for its stakeholders.

3. Debt Management: SPPL continued its prudent debt management approach, but looking into the ongoing projects there was increase in overall debt levels. Company aims to reduce the debt position in years to come, which will strengthened the companys financial position and reduced its exposure to financial risks, enabling it to allocate resources strategically and pursue growth opportunities.

Operational Performance Analysis:

SPPLs operational performance during the fiscal year 2022-23 further enhanced its position as a reliable and innovative player in the real estate industry.

1. Project Development: The Company has successfully launched several projects in the year under review. These projects contributed significantly to revenue generation and customer satisfaction.

2. Customer Engagement: SPPL continued its customer-centric approach by focusing on personalized service, transparent communication, and addressing customer feedback. This approach resulted in a high level of customer satisfaction and enhanced brand loyalty.

3. Market Penetration: The Company strategically expanded its presence in key markets, capitalizing on emerging trends and opportunities. SPPLs market research and analysis enabled it to identify underserved segments, driving demand and sales growth.

4. Sustainability Initiatives: SPPL remains dedicated to sustainable practices and environmental responsibility. The implementation of energy-efficient technologies and green building standards not only aligns with our corporate values but also positions us as a responsible and forward-thinking organization.

Outlook and Future Prospects:

Looking ahead, SPPL remains committed to its growth trajectory while staying responsive to market dynamics and evolving customer preferences. The company aims to achieve the following in the coming years:

1. Diversified Portfolio: SPPL plans to expand its portfolio by venturing into new segments and geographies, mitigating risks associated with market volatility and enhancing long-term stability.

2. Technology Adoption: The company will continue to leverage technology to enhance operational efficiency, improve customer experience, and streamline project management processes.

3. Customer-Centric Approach: SPPL will maintain its focus on delivering value to customers through innovative solutions, personalized experiences, and unwavering commitment to quality.

4. Sustainability and Innovation: The company will invest in sustainable practices and innovative construction techniques, aligning with global trends and regulatory requirements.

(h) Material developments in Human Resources / Industrial Relations front including number of people employed

1. Human Resources Initiatives:

In the fiscal year 2022-23, SPPL remained committed to fostering a culture of employee engagement, development, and empowerment. Our HR initiatives focused on enhancing the overall employee experience and promoting a collaborative work environment.

a. Training and Development: SPPL continued to invest in the professional growth of its employees through comprehensive training programs. These programs were designed to upgrade skills, enhance knowledge, and cultivate leadership qualities.

b. Diversity and Inclusion: We acknowledge the importance of a diverse and inclusive workforce. SPPL took steps to ensure equal opportunities for all employees, fostering an environment where diverse perspectives are valued and respected.

c. Employee Wellness: The well-being of our employees remained a top priority. Initiatives such as wellness programs, mental health support, and flexible work arrangements were introduced to promote a healthy work-life balance.

2. Industrial Relations and Employee Engagement:

SPPL recognizes the significance of maintaining positive industrial relations and promoting employee engagement. We are committed to providing a conducive work environment that facilitates open communication and collaboration.

a. Communication Channels: Regular interactions were held with employees at all levels to address concerns, gather feedback, and provide updates on company developments. These interactions contributed to a transparent and harmonious work atmosphere.

b. Grievance Redressal Mechanism: SPPL continued to operate an effective grievance redressal mechanism that enables employees to voice their concerns and seek resolution in a fair and timely manner.

3. Employee Strength:

As of the end of FY 2022-23, SPPLs workforce comprised a total of two employees only but has other consultants who are dedicated for the projects. Our team consists of professionals from diverse backgrounds and skill sets, contributing to the companys growth and success.