sikozy realtors ltd share price Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDIAN ECONOMY

Indias growth continues to be resilient despite some signs of moderation in growth, although significant challenges remain in the global environment, India was one of the fastest growing economies in the world. The overall growth remains robust and is estimated to be 6.9% for the full year with real GDP growing 7.7% year on year during the first three quarters of FY 2022-23. There were some signs of moderation in the second half of FY 2022-23. Growth was underpinned by strong investment activity bolstered by the governments capex push and buoyant private consumption, particularly among higher income earners. Inflation remained high, averaging around 6.7% in FY 2022-23 but the current account deficit narrowed in Q3 on the back of strong growth in service exports and easing global commodity prices.

Although headline inflation is elevated, it is projected to decline to an average of 5.2% in FY 2023-24, amid easing global commodity prices and some moderation in domestic demand. The Reserve Bank of India has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate. Indias financial sector also remains strong, buoyed by improvements in asset quality and robust private sector credit growth.

Spillovers from recent developments in financial markets in the US and Europe pose a risk to short-term investment flows to emerging markets including India

The residential real estate market in India had astounding progress in 2022, setting new sales records of 68% year on year, further demonstrating the industrys prominence as one of Indias fastest growing industries. After 2 years of being affected by COVID, Tier 2 and Tier 3 cities have arisen as fresh major real estate trends in 2022, and the real estate markethas set unprecedented benchmarks which continued its growth momentum from 2021 amid the global slowdown.

Affordable housing continues to remain a significant opportunity for players and key focus area of government, major short supply of housing lies in the economically weak and low-income segments. The governments constant push for affordable housing has shifted the focus from high-end and luxury segments to the affordable segment.

2022 was a watershed year for the Indian housing sector, with sales breaching the previous peak levels of 2014. In response to this high demand, developers remained focused on completing their previously launched projects.

PERFORMANCE HIGHLIGHTS:

• The Company did not report any turnover during the financial year, as there was no new projects started by the Company

• During the financial year, company posted a loss of Rs. 9.88 Lacs for the financial year 2022-23 as against loss of Rs. 15.95 Lacs for the previous financial year 2021-22. Loss was on account of inability of the Company to undertake any new projects during the financial year post the completion of existing project at Karjat and therefore there was no operational income recorded during the financial year .Further, the during the previous financial year your Company has written off amount of Rs.223.80 Lacs towards Investment in Shares at fair value and Rs61.28 Lacs towards Debtors and the sum of same is appearing under the head loss under exceptional items which is reason for loss during the previous financial year.

• The Company has reported accumulated losses of Rs. 589.86 lakhs [Previous Year Rs.579.48 Lacs] which has resulted in substantial erosion of net worth of the Company. The management is evaluating various options including starting a new line of business

FUTURE PROSPECTS/OUTLOOK:

A cyclical downturn combined with impact of demonetization, GST and the implementation of the Real Estate [Regulation and Development] Act, 2016 has created uncertainty in the sector. Further owing to GST, IBC &NBFC crisis and the subvention scheme ban it has been tough for the sector to align itself with these new regulations, the measures have been instrumental to bring transparency, accountability and fiscal discipline over the last few years.

As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Companys well accepted brand, contemporary architecture, well designed projects in strategic locations, strong balance sheet and stable financial performance even in testing times make it a preferred choice for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.

The auditor in the previous financial year had commented on Material Uncertainty Related to Going Concern status of the Company owing to net loss of Rs 301.03 lakhs for the year ended 31st March, 2022 which had resulted in substantial erosion of net worth of the Company. There were circumstances which may cast a doubt on the ability of the company to continue as a going concern. However, Management is of the view that its current assets are more than its total outside liabilities and management is evaluating various options including starting a new line of business .

THREATS RISKS AND CONCERNS

The real estate market is inherently a cyclical market and is affected by macroeconomics conditions, changes in applicable government schemes, changes in supply and demand for projects, shortage in manpower, availability of consumer financing and illiquidity. The present Russia-Ukraine crisis along with rising cost of inputs in the real estate sector has made the situation worse.

RISK MANAGEMENT

Execution Risk: The Real Estate and construction projects are subject to various execution risks like regulatory hurdles, delay in receipt of approvals, availability of labour and raw material, etc. Any such delay may result in cost overruns and impact the Companys operations unfavorably.

Liquidity Risk: The Real estate business has significant initial outflow with staggered and long-term inflows. Delays in project cycle; inadequate funding resources may have an impact on the liquidity position of the Company.

Regulatory Environment:

Our operations are exposed to uncertain political, legal and economic environment, government instability and complex legal systems and laws and regulations in India and abroad. Our ability to manage, evolve and improve our operational, financial and internal controls across the organization and to integrate our widespread operations and derive benefits from our operations is key to our growth strategy and results of operations.

HUMAN RESOURCES

Manpower is biggest strength in any Sector. The Company maintains its focus on its human resources as it believes that a motivated and empowered workforce is the key to sustained competitive advantage. The Company has maintained excellent relations with its employees across all levels of the organization during the period under review. All efforts were made to ensure a high employee satisfaction. Adequate measures were undertaken to enhance the skill sets of the employees.