Sikozy Realtors Ltd Management Discussions

1. ECONOMIC OVERVIEW Global Economy

During FY 2025-26, the global economy continued to navigate an environment characterised by geopolitical uncertainties, evolving monetary policies, persistent inflationary pressures and disruptions in global trade and supply chains. Economic growth remained uneven across regions, with varying levels of recovery in major economies. Against this backdrop, the global real estate sector witnessed a gradual and selective recovery, supported by improving demand in certain markets, while affordability, financing conditions and changing occupier preferences continued to influence the sector.

The Indian economy continued to demonstrate resilience and sustained growth during FY 2025-26, supported by domestic consumption, infrastructure development, urbanisation and continued policy initiatives. The real estate sector remained an important contributor to economic activity, with residential demand supported by urban migration, rising household incomes and increasing demand for quality housing. The commercial and retail segments also witnessed steady activity, supported by economic growth, improving consumer sentiment and evolving business and consumption patterns.

The Indian real estate sector continued to remain resilient during FY 2025-26 despite challenges arising from elevated construction and input costs, financing conditions and broader economic uncertainties. The sector continued to benefit from urbanisation, infrastructure development, changing consumer preferences and policy support. Key trends during the year included:

Residential Segment: Demand for residential properties remained healthy, particularly in the affordable and mid-segment categories. Urbanisation, demographic growth, improving household incomes and continued policy support contributed to sustained demand for housing.

Commercial Segment: The commercial real estate segment continued to witness steady demand, particularly in major urban centres. Office space demand showed improvement, while flexible workspaces and co-working facilities continued to remain relevant in response to evolving workplace requirements.

Retail and Hospitality: The retail and hospitality segments continued to recover and expand, supported by increased consumer spending, urbanisation, domestic tourism and improving business activity.

Regulatory Environment: The continued implementation and enforcement of regulatory frameworks, including the Real Estate (Regulation and Development) Act, 2016 (RERA), the Goods and Services Tax (GST) regime and other applicable compliance requirements, contributed towards greater transparency, accountability and discipline in the real estate sector and supported stakeholder and investor confidence.

Affordable Housing: Affordable housing continued to represent a significant opportunity for the real estate sector. Government initiatives, policy support and the underlying demand from economically weaker sections and low-income households continued to provide a favourable environment for growth in this segment.

The Indian real estate sector continued to demonstrate resilience in FY 2025-26 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 co-working 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.

During the financial year, the Company posted a loss of Rs. 36.43 Lacs for the financial year 2025-26 as against loss of Rs. 17.15 Lacs for the previous financial year 2024-25. The loss was on account of the inability of the Company to undertake any new projects during the financial year post the completion of the project at Karjat.

The Company has reported accumulated losses of Rs. 657.33 Lacs (Previous Year Rs. 620.89 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 and infusing fresh capital, to strengthen the financial position and future operations of the Company

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 urbanisation, demographic trends and the Governments continued focus on infrastructure and housing.

In this context, your Company recognises the need to strengthen its financial foundation to capitalise 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 against the paid-up share capital. The Scheme was subsequently approved by the shareholders at the Extra-Ordinary General Meeting held on August 8, 2025.

Subsequent to the close of the financial year, the Honble National Company Law Tribunal ("NCLT"), Mumbai Bench-I, vide its order dated June 18, 2026, sanctioned the Scheme of Reduction of Equity Share Capital of the Company under Section 66 of the Companies Act, 2013. Pursuant to the said order, the paid-up equity share capital of the Company is to be reduced from ?445.83 lakhs to ?44.58 lakhs by cancellation and extinguishment of 4,01,24,700 equity shares of ?1/- each, with an amount of ?401.25 lakhs being adjusted against the accumulated losses of the Company. The NCLT Order and the approved Form of Minutes were subsequently registered with the Registrar of Companies on July 2, 2026.

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 its shareholders.

The Statutory Auditor, in the previous financial year, had commented on "Material Uncertainty Related to Going Concern" status of the Company owing to the financial losses incurred and substantial erosion of the net worth of the Company. During the financial year ended March 31, 2026, the Company reported a net loss of ?36.43 lakhs, as against a net loss of ?17.15 lakhs in the previous financial year, and accumulated losses of ?657.33 lakhs, as against ?620.89 lakhs in the previous year.

The Management acknowledges that the aforesaid financial conditions may cast a doubt on the ability of the Company to continue as a going concern. However, the Management is of the view that the going concern basis of accounting remains appropriate, considering that the current assets of the Company are more than its total outside liabilities. Further, the Management is actively evaluating various options, including starting a new line of business, acquiring land parcels for development and exploring avenues for infusion of fresh capital, with a view to improving the financial and operational position of the Company.

Further, the sanction and subsequent registration of the Scheme of Reduction of Share Capital is expected to facilitate rationalisation of the capital structure and adjustment of accumulated losses. The Management remains focused on implementing the sanctioned Scheme and pursuing viable business opportunities and is confident that the measures being undertaken will enable the Company to strengthen its financial position, improve its operational performance and continue its operations on a going concern basis.

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.

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 Companyhas 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.

1 Companys Philosophy on Corporate Governance: Corporate Governance broadly refers to a set of rules and practices designed to govern the behavior of corporate enterprises. The Companys philosophy on Corporate Governance envisages accountability, responsibility and transparency in the conduct of the Companys business and its affairs vis-?-vis its employees, shareholders, bankers, lenders, government, suppliers, dealers etc. and accordingly lay great emphasis on regulatory compliances. The Company firmly believes that Corporate Governance is a powerful tool to sub serve the long-term growth of the Company and continues to give high priority to the principles and practices of good Corporate Governance and has accordingly benchmarked its practices with the existing guidelines of corporate governance as laid down in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.