Shreeshay Engineers Ltd Management Discussions

The management of Shreeshay Engineers Limited is pleased to present the Management Discussion and Analysis (MD&A) report, which provides an in-depth overview of the Companys performance, operations, and strategic direction for the financial year 2024-25.

As an Expert in the field of real estate construction and engineering solutions, Shreeshay Engineers continues to deliver comprehensive and innovative services that meet the evolving needs of the industry. This report aims to offer stakeholders valuable insights into the Companys business activities, financial performance, market trends, and the broader economic and industry landscape in which we operate.

Our focus remains on operational excellence, growth, and sustainability, and this report highlights the key achievements, challenges, and opportunities faced during the year under review.

INDUSTRY STRUCTURE & DEVELOPMENT:

The real estate sector is one of the most globally recognized and pivotal industries, comprising four primary sub-sectors: housing, retail, hospitality, and commercial. This sectors growth is strongly correlated with broader economic development, as it is directly influenced by increasing demand for office spaces and urban and semi-urban residential accommodations. The real estate industry plays a crucial role in the global economy, ranking third among 14 major sectors for its direct, indirect, and induced effects across various industries.

In India, the real estate sector is a significant employment driver, ranking as the second-largest job generator, only after the agriculture sector. With rapid urbanization and increasing disposable incomes, this sector is poised for sustained growth. Furthermore, the sector is anticipated to attract greater investment from Non-Resident Indians (NRIs), both in the short and long term.

Cities such as Bengaluru, Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun are emerging as the most favored property investment destinations for NRIs, owing to their thriving economies, high- quality infrastructure, and rising demand for residential and commercial properties. Among these, Bengaluru continues to lead as the most preferred investment hub, driven by its robust IT industry and growing real estate market.

By 2040, the real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs.

Indias real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.

In FY23, Indias residential property market witnessed with the value of home sales reaching an alltime high of Rs. 3.47 lakh crore (US$ 42 billion), marking a robust 48% year-on-year increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold.

Indian real estate developers operating in the countrys major urban centers are poised to achieve a significant feat in 2023, with the completion of approximately 558,000 homes.

In 2023, demand for residential properties surged in the top 8 Indian cities, driven by mid-income, premium, and luxury segments despite challenges like high mortgage rates and property prices.

Indias physical retail landscape is poised for a substantial boost, with nearly 41 million sq. ft of retail developments set to be operational between 2024 and 2028 across the top 7 cities, encompassing projects in various stages from construction to planning.

For the first time, gross leasing in Indias top seven markets surpassed the 60 million sq ft mark, reaching an impressive total of 62.98 million sq ft, marking a substantial 26.4% increase compared to the previous year. Notably, the December quarter emerged as the busiest quarter on record, with gross leasing hitting 20.94 million sq ft.

Technology companies held the highest share in leasing activity at 22% during first quarter of 2024.Engineering and manufacturing (E&M) companies accounted for 13%, and banking, financial services and insurance account for 12%. Flexible space operators increase by 48%, showcasing their notable contributions.

According to Savills India, real estate demand for data centers is expected to increase by 15-18 million sq. ft. by 2025.

In 2023, office absorption in the top seven cities stood at 41.97 million Sq. ft. and Gross Leasing Volume is at 62.98 million sq. ft.

Fresh real estate launches across Indias top seven cities grabbed a 41% share in the first quarter of 2023 (January-March), marking an increase from the 26% recorded in the same period four years ago. Out of approximately 1.14 lakh units sold across the top seven cities in the first quarter of 2023, over 41% were fresh launches.

In 2021-22, the commercial space was expected to record increasing investments. For instance, in October 2021, Chintels Group announced to invest Rs. 400 crore (US$ 53.47 million) to build a new commercial project in Gurugram, covering a 9.28 lakh square feet area. The transactions of commercial real estate doubled and reached 1.5 million sq. ft. in Q1 of 2023.

Real Estate Investment Trusts (REITs) in the non-residential segment will open channels for both commercial and infrastructure sector. India is likely to see the listing of at least four REITs on bourses from the second half of this year through the end of next year or early 2025.

According to the Economic Times Housing Finance Summit, about three houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. 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.

In India, the real estate sector is the second-highest employment generator, after the agriculture sector.

? Indias real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.

? In 2023, luxury home sales in India priced at Rs. 4 crore (US$ 481,927) and above surged by 75%, doubling their share in total housing sales.

? Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to the countrys GDP.

? Rapid urbanisation bodes well for the sector. The number of Indians living in urban areas is expected to reach 542.7 million by 2025 and 675.5 million by 2035.

? Construction is the third-largest sector in terms of FDI inflow. FDI in the sector (including construction development & activities) stood at US$ 60.53 billion from April 2000-March 2024.

? Government of Indias ‘Housing for All initiative is expected to bring US$ 1.3 trillion investment in the housing sector by 2025.

? Indias Global Real Estate Transparency Index ranking improved by three notches from 39 to 36 since the past eight years from 2014 until 2022 on the back of regulatory reforms, better market data and green initiatives, according to property consultant JLL.

? Boosted by supply from established developers, stable economic conditions, and positive buyer sentiments, first quarter of 2024 saw record residential sales with 74,486 units sold.

? In 2023, demand for residential properties surged in the top 8 Indian cities, driven by mid-income, premium, and luxury segments despite challenges like high mortgage rates and property prices.

? Indias physical retail landscape is poised for a substantial boost, with nearly 41 million sq. ft of retail developments set to be operational between 2024 and 2028 across the top 7 cities, encompassing projects in various stages from construction to planning.

OUTLOOK:

India is one of the fastest-growing major economies globally, with the real estate sector playing a crucial role as the second-largest employment generator and the third-largest contributor in terms of FDI inflow. This sector not only spurs overall economic growth but also significantly contributes to the countrys GDP. The real estate market in India is poised for substantial growth in the coming years, driven by innovation across residential, commercial, and retail segments.

By 2030, the real estate sector in India is projected to reach a market size of US$ 1 trillion, a significant increase from US$ 200 billion in 2021. This growth reflects an estimated compound annual growth rate (CAGR) of 19.5% from 2017 to 2028. By 2025, the market is expected to reach US$ 650 billion, contributing approximately 13% to the nations GDP. Furthermore, a joint report by Knight Frank and the National Real Estate Development Council anticipates the sector to expand to US$ 5.8 trillion by 2047, accounting for 15.5% of Indias GDP, up from its current contribution of 7.3%.

The year 2023 witnessed record sales and new property launches in Indias residential sector, surpassing concerns over the impact of monetary tightening on housing loans. By January 2024, major banks had disbursed approximately Rs. 2.7 lakh crore (US$ 32.45 billion) in credit, reflecting an annual increase of around 37%. In the fiscal year 2023, the government collected approximately US$ 24.1 billion through stamp duty, land revenue, and registration fees.

The increasing share of real estate in Indias GDP is being driven by rising industrial activity, higher income levels, and rapid urbanization. To support this growth, the Indian government has implemented 10 key policies aimed at bolstering the real estate sector:

1. Real Estate Regulatory Act (RERA)

2. Benami Transactions Act

3. Boost to affordable housing construction

4. Interest subsidy for home buyers

5. Reformed arbitration norms

6. Service tax exemptions

7. Exemption from Dividend Distribution Tax (DDT)

8. Introduction of Goods and Services Tax (GST)

9. Demonetization

10. Permanent residency (PR) for foreign investors

These measures, coupled with the sectors continued evolution, are expected to drive sustainable and robust growth in Indias real estate market for years to come.

Opportunities in the Real Estate Sector

• Increasing Investments

1. Surge in Private Investment: The real estate sector is witnessing a significant increase in private investment, driven by enhanced transparency and promising returns. In 2023, private equity investments in Indias real estate market reached US$ 4.2 billion.

2. Small and Medium Real Estate Investment Trusts (SM REITs): The introduction of a new framework for SM REITs has been positively received by the realtors association CREDAI, which believes it will further enhance the flow of funds into the Indian real estate market.

3. Foreign Direct Investment (FDI): FDI in the real estate sector, including construction development, amounted to US$ 60.53 billion from April 2000 to March 2024. Additionally, foreign investors contribute approximately US$ 4 billion annually to Indian real estate, with a 20% year-on-year increase in foreign inflows in 2023.

• Robust Demand

1. Urbanization and Infrastructure Development: The ongoing migration to urban areas is driving increased demand for residential and commercial properties, particularly in emerging economies where urbanization is a key growth factor.

2. Smart Cities and Infrastructure Projects: Governments are heavily investing in infrastructure projects such as transportation networks, smart cities, and urban renewal programs, creating significant opportunities for real estate development.

• Technological Advancements:

1. PropTech Innovations: Technology is revolutionizing the real estate sector with the rise of smart homes, digital property management tools, and online marketplaces, providing opportunities for enhanced value and efficiency in the market.

2. Sustainable Building Practices: There is growing demand for green and sustainable buildings, driven by consumer preferences and regulatory requirements, offering opportunities for developers focused on eco-friendly construction.

• Expanding Middle Class and Rising Incomes:

1. Increased Housing Demand: Rising incomes, especially in emerging markets, are fueling demand for housing, particularly in the residential sector.

2. Luxury and Premium Properties: As wealth increases among certain population segments, there is a growing demand for luxury and premium real estate, presenting lucrative opportunities in high-end residential and commercial markets.

• Foreign Investment and Globalization:

1. Attractive Returns in Emerging Markets: Emerging markets, with their high growth potential, continue to attract foreign investors seeking higher returns compared to developed markets.

2. Cross-Border Investments: The globalization of real estate allows investors to diversify their portfolios across regions, reducing risk and opening new growth avenues.

3. Rising Demand for Data Centers: According to Savills India, the demand for real estate for data centers is expected to increase by 15-18 million sq. ft. by 2025.

4. Surge in Luxury Home Sales: In 2023, luxury home sales in India surged by 75%, doubling their share in total housing sales.

5. Growth in Organized Retail Real Estate: Organized retail real estate stock is projected to increase by 28%, reaching 82 million sq. ft. by 2023.

• Attractive Opportunities

1. Projected Market Growth: The real estate sector is expected to grow at a 9.2% compound annual growth rate (CAGR) from 2023 to 2028, driven by urbanization, rental market expansion, and property price appreciation in 2024.

2. International Real Estate Development: Rising international real estate development is set to provide significant growth opportunities for the Indian market. For instance, an MoU between Jammu & Kashmir and the Government of Dubai, signed in October 2021 for the development of real estate projects, is expected to boost growth in the union territory.

3. Fundraising Through REITs and Infrastructure: Indian firms were expected to raise more than Rs. 3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, compared to the US$ 29 billion raised to date.

4. Private Investment by Blackstone: Blackstone, a major investor in Indian real estate with investments worth Rs. 3.8 lakh crore (US$ 50 billion), plans to invest an additional Rs. 1.7 lakh crore (US$ 22 billion) by 2030.

• Policy Support

1. FDI Policy: The Indian government has allowed 100% FDI for township and settlement development projects, providing a significant boost to the sector.

2. Housing for All Scheme: Under this initiative, 20 million houses were targeted to be built by 2022, with a reduced GST rate of 5% to encourage affordable housing.

3. 2024-25 Interim Budget: The interim budget announced by Finance Minister Ms. Nirmala Sitharaman included a significant boost for Indias affordable housing sector, with the addition of 2 crore more houses under the flagship scheme Pradhan Mantri Awas Yojana - Urban (PMAY- U).

These opportunities, coupled with robust demand and supportive government policies, position the real estate sector for sustained growth and development in the coming years.

Threats in the Real Estate Sector

• Economic Uncertainty and Market Volatility:

1. Recession and Economic Slowdown: Economic downturns can lead to reduced demand for real estate, lower property values, and higher vacancy rates, negatively impacting returns.

2. Interest Rate Fluctuations: Rising interest rates can increase the cost of borrowing, making it more expensive for both developers and buyers to finance real estate projects, potentially slowing down market activity.

• Regulatory Risks:

1. Stringent Government Regulations: New regulations aimed at curbing property speculation, increasing taxes, or enforcing stricter environmental standards can add costs and complexity to real estate projects.

2. Changes in Zoning Laws: Sudden changes in zoning laws or land use regulations can disrupt planned developments and affect property values.

• Environmental and Climate Risks:

1. Natural Disasters: Properties in areas prone to natural disasters like floods, hurricanes, and earthquakes face significant risks, including damage, higher insurance costs, and potential devaluation.

2. Climate Change Impact: Rising sea levels, extreme weather events, and shifting climate patterns pose long-term risks to real estate, particularly in coastal and low- lying areas.

• Market Saturation and Oversupply:

1. Overbuilding: In some regions, particularly in urban centers, there is a risk of oversupply in both residential and commercial real estate markets. This can lead to lower occupancy rates, reduced rental yields, and declining property values.

2. Declining Demand in Certain Segments: For example, the rise of remote work has decreased demand for traditional office spaces, while changes in retail behavior, such as the growth of e-commerce, have impacted the demand for physical retail spaces.

• Technological Disruption:

1. Rapid Technological Changes: While technology offers opportunities, it also poses threats. For instance, the rapid pace of technological change can render existing buildings obsolete, especially if they lack the infrastructure to support modern amenities like high-speed internet or smart home features.

2. Cybersecurity Risks: As real estate transactions and property management increasingly move online, the sector faces growing risks from cyberattacks and data breaches, which can lead to financial losses and reputational damage.

• Social and Demographic Shifts:

1. Aging Population: In some regions, an aging population can lead to declining demand for certain types of real estate, such as family homes, while increasing demand for senior living facilities.

2. Changing Consumer Preferences: Shifts in lifestyle preferences, such as the increasing desire for flexible living arrangements or the preference for rental over ownership, can impact traditional real estate markets.

3. Recession and Economic Slowdown: Economic downturns can lead to reduced demand for real estate, lower property values, and higher vacancy rates, negatively impacting returns.

4. Interest Rate Fluctuations: Rising interest rates can increase the cost of borrowing, making it more expensive for both developers and buyers to finance real estate projects, potentially slowing down market activity.

• Regulatory Risks:

1. Stringent Government Regulations: New regulations aimed at curbing property speculation, increasing taxes, or enforcing stricter environmental standards can add costs and complexity to real estate projects.

2. Changes in Zoning Laws: Sudden changes in zoning laws or land use regulations can disrupt planned developments and affect property values.

• Environmental and Climate Risks:

1. Natural Disasters: Properties in areas prone to natural disasters like floods, hurricanes, and earthquakes face significant risks, including damage, higher insurance costs, and potential devaluation.

2. Climate Change Impact: Rising sea levels, extreme weather events, and shifting climate patterns pose long-term risks to real estate, particularly in coastal and low- lying areas.

• Market Saturation and Oversupply:

1. Overbuilding: In some regions, particularly in urban centers, there is a risk of oversupply in both residential and commercial real estate markets. This can lead to lower occupancy rates, reduced rental yields, and declining property values.

2. Declining Demand in Certain Segments: For example, the rise of remote work has decreased demand for traditional office spaces, while changes in retail behaviour, such as the growth of e-commerce, have impacted the demand for physical retail spaces.

• Technological Disruption

1. Rapid Technological Changes: While technology offers opportunities, it also poses threats. For instance, the rapid pace of technological change can render existing buildings obsolete, especially if they lack the infrastructure to support modern amenities like high-speed internet or smart home features.

2. Cybersecurity Risks: As real estate transactions and property management increasingly move online, the sector faces growing risks from cyberattacks and data breaches, which can lead to financial losses and reputational damage.

• Social and Demographic Shifts:

1. Aging Population: In some regions, an aging population can lead to declining demand for certain types of real estate, such as family homes, while increasing demand for senior living facilities.

2. Changing Consumer Preferences: Shifts in lifestyle preferences, such as the increasing desire for flexible living arrangements or the preference for rental over ownership, can impact traditional real estate markets.

COMPETITION:

The real estate consultancy industry in which we operate is both highly competitive and fragmented, with competition arising from a diverse range of small and large players. Organized companies within the sector strive to differentiate themselves by delivering high-quality, time-sensitive, and value- added services. We face numerous competitors offering similar services, making it crucial to stand out in this competitive landscape.

We believe that the key factors driving competition in the real estate consultancy sector include pricing, quality, timely project delivery, and reliability. Our competitive edge lies in positioning ourselves as a knowledge-driven firm with deep industry expertise. We are committed to completing projects on time and delivering exceptional quality, which allows us to meet and exceed current market expectations. This approach ensures that we provide our clients with efficient, high-standard services that align with their needs and goals.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Company is engaged in the business of real estate construction and engineering focused solutions, accordingly this is the only single reportable segment.

Discussion on financial performance with respect to operational performance.

The Financial Results of the Company for the year ended on 31^st March, 2025 are as follows:

(Amount in Lakhs)

Particulars	Year ended March 31, 2025	Year ended March 31, 2024
Total Income	150.13	1,829.70
Total Expense	130.09	1,683.71
Profit before extraordinary items and tax	20.04	145.99
Extraordinary items	-	-
Profit before tax	20.04	145.99
Tax Expense	6.49	36.74
Net Profit After Tax	13.54	109.25
Earnings Per Equity Share	0.10	0.48

REVIEW OF OPERATIONS:

The Company is engaged in the business of providing real estate construction and engineering focused solutions. The total income of the Company during the year under review was Rs. 150.13 (Amount in Lakhs) as compared to Rs. 1829.70 (Amount in Lakhs) during the previous year. During the year under review the Company has earned net profit of Rs 13.54 (Amount in Lakhs) as compared to profit of Rs. 109.25 (Amount in Lakhs) during previous year.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Your Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to M/s. N B Parekh and Co. Chartered Accountants, Mumbai (FRN: 115408W), a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

HUMAN RESOURCES:

Your Company has team of qualified and dedicated personnel who have contributed to the consolidation of the operations of your Company. Your Companys industrial relations continued to be harmonious during the year under review. Your Company has succeeded in attracting and retaining key professional and intends to continue to seek fresh talents to further enhance and grow our business.

KEY FINANCIAL RATIOS:

(Disclosure of the following ratio changed 25% or more as compared to the previous year)

Sr. No. Ratio Analysis	Ratio		Difference	Reasons for Differences, if Difference is More than 25%.
	31-Mar-25	31-Mar-24
1 Current Ratio	1.38	2.14	-35.52%	Due to Decrease In Current Liabilities and increase in current assets, Which Effects Ratio Negatively..
2 Debt Equity Ratio	NA	NA	NA	-
Debt Service 3 Coverage Ratio	NA	NA	NA	-
Return on Equity 4 Ratio	0.01	0.05	-87.64%	Due to decreased in PAT of the company, Which Effects Ratio Negatively.
Inventory 5 Turnover Ratio	NA	NA		-
Trade Receivables 6 turnover ratio	0.15	0.87	-82.36%	Decreased in sales, which affect ratio negatively.
Trade payables 7 turnover ratio	0.13	0.86	-85.22%	Due to company has paid its trade payable and decreased purchase, which effect Ratio Negatively.
Net capital 8 turnover ratio	0.37	0.78	-63.14%	Due to companys business decreased during the year, which effect ratio negatively.
9 Net profit ratio	0.11	0.06	-89.48%	due to decreased in PAT of the company, Which Effects Ratio negatively.

CAUTIONERY STATEMENT:

Statements in this report describing the Companys objective, expectations or predictions may be optimistic statements within the meaning of applicable securities laws and regulations. The actual result may differ materially from those expressed in the statements. Important factors that could influence the companys operations include economic conditions affecting demand / supply price condition in the domestic markets in which the company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.