Sikozy Realtors Ltd Management Discussions

1.ECONOMIC OVERVIEW Global Economy:

During FY 2024 25, the global economy continued to face headwinds arising from inflationary pressures, monetary policy tightening, and geopolitical conflicts, particularly the Russia Ukraine crisis and supply chain disruptions. While growth remained uneven across regions, the real estate sector globally showed selective recovery, with demand patterns shifting toward affordable housing and hybrid commercial spaces.

The Indian economy maintained its growth momentum during FY 2024 25, supported by robust infrastructure development, urbanisation, and government policy initiatives in housing and real estate. Affordable housing and mid-segment residential projects remained a key growth driver, while the commercial and retail sectors saw steady but selective demand, influenced by hybrid work models and changing consumer behaviour.

The Indian real estate sector continued to demonstrate resilience in FY 2024 25 despite rising input costs, high interest rates, and a challenging funding environment. Key trends included: Residential Segment: Strong demand persisted in affordable and mid-segment housing, supported by government incentives, favourable demographics, and urban migration. Commercial Segment: Office demand in Tier 1 cities revived, though flexible and hybrid work models kept coworking spaces relevant. Retail and Hospitality: Recovery continued with improved consumer spending and tourism activity. Regulatory Environment: The implementation of RERA, GST, and other compliance measures continued to drive greater transparency, discipline, and investor confidence in the sector. Affordable housing remains a significant opportunity, with government schemes and policy support ensuring sustained demand in the low-income and economically weaker sections of society.

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. 15.12 Lacs for the financial year 2024-25 as against loss of Rs. 13.77 Lacs for the previous financial year 2023-24. 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.

The Company has reported accumulated losses of Rs. 620.89 lakhs (Previous Year Rs.603.74 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

The real estate sector in India continues to face cyclical challenges, including the impact of GST, the NBFC liquidity crisis, the ban on subvention schemes, and ongoing geopolitical uncertainties. However, these measures and reforms have also enhanced transparency, accountability, and fiscal discipline across the sector. In the medium to long term, demand for real estate in India is expected to remain strong, supported by rapid urbanization, demographic trends, and government focus on infrastructure and housing.

In this context, your Company recognizes the need to strengthen its financial foundation to capitalize on emerging opportunities. During FY 2024 25, the Board of Directors approved a Scheme of Reduction of Share Capital, designed to clean up the balance sheet by adjusting accumulated losses of the past against the paid-up share capital. Once implemented, this restructuring will enable the Company to present a stronger financial position, raise fresh resources, and support diversification into new business opportunities.

The management is actively evaluating various options, including starting new lines of business and acquiring land parcels for development, in order to reposition the Company on a growth trajectory. With the support of a leaner balance sheet, efficient capital structure, and a renewed focus on expansion, your Company is confident of improving its operational performance and creating long-term value for shareholders.

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 6 2 0 . 8 9 akhs for the year ended 31st March, 2025 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.

The real estate market continues to be cyclical in nature and is influenced by macroeconomic conditions, government policies, demand-supply dynamics, financing availability, and input costs. The ongoing geopolitical tensions, particularly the Russia Ukraine crisis, coupled with rising costs of construction inputs, have further added to industry uncertainties. For the Company, the key risks remain:

Execution Risk: Real estate and construction projects are exposed to delays in regulatory approvals, availability of manpower, and raw material price fluctuations, which may lead to cost overruns.

Liquidity Risk: The business model involves significant upfront investments, with staggered and long-term inflows. The lack of new projects has affected liquidity in recent years.

Regulatory Risk: The Companys operations are exposed to evolving regulations, including RERA, GST, and other compliance frameworks, which require continuous adaptation and alignment.

Mitigation Strategies:

Capital Restructuring: During FY 2024 25, the Board approved a Scheme of Reduction of Share Capital under Section 66 of the Companies Act, 2013, to clean up the balance sheet and offset accumulated losses. This will enable the Company to strengthen its financial position, improve investor confidence, and raise fresh funds for future projects.

Diversification and New Business Opportunities: The management is evaluating new lines of business and acquisition of land parcels to reduce dependency on a single segment and to create diversified revenue streams.

Cost Management and Efficiency: The Company continues to explore advanced construction methods and efficient project management practices to mitigate cost escalation risks.

Customer-Centric Approach: Emphasis on transparency, timely delivery, and regulatory compliance remains a core focus to strengthen brand credibility and reduce reputational risks. With the above measures, the Company believes it is better positioned to manage risks, restore financial stability, and pursue growth opportunities

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.