Shri Krishna Devcon Ltd Management Discussions

<dhhead-MANAGEMENT DISCUSSION AND ANALYSIS</dhhead-

Part of the Directors Report Economic outlook

Global growth held broadly steady through the year, with the IMF projecting global growth at 3.3 per cent for 2026, supported by easing trade tensions, accommodative financial conditions and continued investment linked to technology, including artificial intelligence. Geopolitical developments, particularly the conflict in the Middle East, however, emerged as a key risk to global economic stability during the year, prompting central banks, including the RBI, to reassess their macroeconomic assumptions. (source:

https://www.deloitte.com/us/en/insights/topics/economy/asia-pacific/india-economic-outlook.html )

On the monetary policy front, the RBI eased rates through the year before holding the repo rate steady at 5.25 per cent from mid-2026 onward, maintaining a neutral policy stance amid heightened global uncertainty even as domestic growth indicators remained resilient. The RBI has since raised its FY 202627 GDP growth forecast to 6.7 per cent, while lowering its inflation estimate, and projects core inflation at 4.3 per cent. Headline inflation rose to 4.4 per cent in June 2026, driven primarily by seasonal food and fuel price pressures rather than broad-based demand-side inflation, with the full-year CPI forecast for FY 2026-27 placed at 5.0 per cent. (source: https://www.finnovate.in/learn/blog/rbi-august-2026-policy-repo-rate-rupee- inflation )

Indias real estate sector, the second-largest employment generator in the country after agriculture, continues on a strong growth trajectory, with the sectors contribution to GDP projected to expand significantly over the coming decades. Housing demand grew 77 per cent between FY19 and FY25, and the total value of housing sales across Indias top cities is expected to exceed Rs. 6.65 lakh crore (US$ 75.25 billion) in FY26. New residential project launches across the top seven cities are projected to rise 6-9 per cent in FY 2025-26, reaching approximately 620-640 million square feet, reflecting sustained developer confidence. (source: https://www.ibef.org/industry/indian-real-estate-industry-analysis-presentation )

above Rs. 3 crore) grew 9 per cent, driven by rising wealth creation; in contrast, the affordable housing segment (tickets below Rs. 1 crore) saw sales decline 21 per cent year-on-year. This shift is corroborated by CBRE, which notes that flight-to-quality trends are set to strengthen, with the high-end segment continuing to expand its share across major cities, driven by rising aspirations for larger homes, improving household incomes, and sustained interest from HNIs and NRIs. (source: https://www.jll.com/en- in/insights/market-dynamics/india-residential & https://news.griinstitute.org/en/real-estate/anchoring-the-future-indian-real- estate-outlook-h2-2026-report )

Opportunities

Growing demand in Tier-2 cities — Indore, as one of Indias fastest-growing Tier-2 cities, continues to benefit from rising urbanisation, a growing IT/startup ecosystem along corridors such as the Super Corridor, and a large student and professional population, all of which sustain structural demand for residential and commercial real estate.

Infrastructure-led growth — Continued execution of the Indore Metro and improved road connectivity is expected to open up new growth corridors and unlock value in previously peripheral locations, providing the Company opportunities for land acquisition and project development in emerging micromarkets.

Government support for affordable and mid-income housing — Initiatives such as SWAMIH Fund-2 and continued PMAY-U allocations provide financing support and demand-side incentives that can benefit the Companys affordable and mid-income housing projects.

Premiumization trend — Rising household incomes and a growing preference for larger, better-planned homes present an opportunity for the Company to diversify into premium and mid-to-high-value segments, which have shown stronger growth relative to the affordable segment during the year.

Favorable monetary environment — The cumulative reduction in RBI policy rates through 2025-26, together with a stable interest rate environment, supports homebuyer affordability and financing costs, aiding sales velocity and project financing.

Regulatory transparency — A mature RERA framework in Madhya Pradesh enhances buyer confidence in RERA-registered developers with strong delivery track records, which can work to the advantage of established players such as the Company.

Threats

Rising input and construction costs — Elevated costs of construction materials, labour and other inputs, partly driven by global geopolitical developments and supply-chain disruptions, could pressure project margins if not adequately passed on to customers.

Cyclical moderation in demand — National residential sales volumes softened during parts of FY 202526, with buyers turning more cautious amid elevated property prices; a similar moderation in local demand could affect sales velocity.

Competitive intensity — Increasing competition from both established and new developers in Indore, particularly along high-growth corridors, could exert pressure on pricing and margins.

Global geopolitical uncertainty — Ongoing geopolitical tensions, including the Middle East conflict, pose risks to energy prices, input costs, and broader macroeconomic stability, which could indirectly affect the real estate sector.

Risks and Concerns

Regulatory and compliance risk — The real estate sector remains subject to evolving regulatory requirements under RERA, environmental clearances, land use approvals, and local municipal/development authority regulations. Delays or changes in regulatory approvals could affect project timelines and costs.

Project execution and delivery risk — Delays in construction due to labour shortages, contractor performance issues, or extreme weather conditions could affect project completion timelines, with consequent risk to cash flows and customer relationships.

Liquidity and financing risk — The Companys business is capital-intensive, and dependent on the availability of construction finance and customer advances/collections. Any tightening of credit conditions or delays in customer payments could strain project cash flows.

Interest rate risk — While rates have remained stable through the year, any future increase in interest rates could adversely affect both the Companys borrowing costs and homebuyer affordability, impacting demand.

Title and land acquisition risk — Real estate development inherently carries risks relating to clear and marketable land title, litigation, and delays in land acquisition, which could affect project launch timelines.

Inventory and unsold stock risk — Any prolonged demand slowdown, particularly in the affordable housing segment (which saw a decline in sales during the year), could result in accumulation of unsold inventory and pressure on the Companys working capital.

Cybersecurity and data risk — Increasing digitisation of sales, marketing and customer relationship processes exposes the Company to risks of data breaches and cybersecurity threats.

Regulatory changes in taxation — Changes in GST rates, stamp duty, or other applicable taxes could affect overall project costs and end-customer affordability.

Segment wise performance

The Company has evaluated its Operating segments in accordance with Ind AS 108 and has concluded that it is engaged in a single operating segment viz. real estate business.

Internal financial control systems and their adequacy

The Company has a comprehensive Internal Financial Control system commensurate with the size, scale and complexity of its operations. Your Company lays great importance on internal control systems across the organization. The Company has adequate system of internal control which helps the management to review the effectiveness of financial and operating control as well as to ensure that all the assets are safeguarded and more productive. The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources. We have a qualified and independent Audit Committee which comprises of our Board of Directors. The Audit Committee reviews the adequacy and efficiency of internal controls and recommends any improvements or corrections. These internal controls ensure efficiency in operations, compliance with internal policies of the

Company, applicable laws and regulations, protection of resources and the accurate reporting of financial transactions.

Disclosure of accounting treatment

In the preparation of the financial statements for the year ended March 31, 2026, the applicable Indian Accounting Standards (Ind AS) have been followed. Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2017.

Human resource development

The Company comprises a small team of professionals & managers, who are result oriented, committed and loyal. The number of permanent employees on the rolls of company as on 31.03.2026 was 12. The Company is in real estate sector and for the development of projects we engage the services of consultants, contractors and sub-contractors who work on our projects, employ a significant Labour force which includes skilled, unskilled and semi-skilled workers. We like to thank all our employees for their dedication, and their families for their unfailing support. Your hard work has carried the company through its difficult time. We would also like to thank our customers for their ongoing trust, as well as our contractors, sub-contractors for their tremendous support.

Key financial ratios

Cautionary statement

Certain statements contained in this Managements Discussion and Analysis and Directors Report may be "forward-looking statements". These include statements about Managements expectations, beliefs, intentions or strategies for the future. All forward-looking statements reflect Managements current views with respect to future events, and are subject to numerous risks, uncertainties and assumptions that have been made. Actual results could differ materially from those expressed or implied, depending upon global and Indian demand-supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.