Simplex Realty Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

REPORT

? OVERVIEW OF THE ECONOMY

Indias economy in 2025-26 continues to demonstrate resilience and steady growth, supported by strong domestic demand, government-led infrastructure spending, improving manufacturing activity, and a growing services sector. The country remains one of the fastest-growing major economies globally despite ongoing geopolitical uncertainties, inflationary pressures, and fluctuations in global trade conditions.

Key sectors such as banking, infrastructure, real estate, manufacturing, renewable energy, digital services, and consumer markets are expected to contribute significantly to economic expansion. Government initiatives focused on capital expenditure, ease of doing business, "Make in India," digitalization, and logistics development continue to strengthen the investment climate.

Private consumption remains a major growth driver, aided by rising urbanization, improving employment conditions, and increasing disposable incomes. The real estate sector, particularly in metropolitan regions, has witnessed sustained demand supported by infrastructure development, redevelopment activity, and growing housing requirements.

Inflation is expected to remain relatively moderate, while monetary policy is likely to balance growth support with price stability. The banking sector continues to maintain healthy credit growth and improved asset quality, contributing to overall financial system stability.

Indias long-term economic outlook remains positive, supported by favorable demographics, expanding digital adoption, increasing foreign investments, and continued public infrastructure investments. However, external risks such as global economic slowdown, commodity price volatility, and geopolitical developments may continue to influence overall economic performance during the year.

? INDUSTRY STRUCTURE AND DEVELOPMENTS

The industry structure and developments of Indias real estate sector in FY 2025-2026 reflect a transition toward a more diversified, institutionalized, and technology-driven market. Structurally, the sector is composed of residential, commercial (office and retail), and industrial/ warehousing segments, with residential real estate remaining the dominant component due to strong end-user demand and urbanisation. FY 2025 marked a breakout year with record housing sales and revived commercial activity, while 2026 continues this momentum with steady demand across segments, though at a more moderate pace.

On the development front, the sector is witnessing increased institutional participation through mechanisms such as REITs, private equity, and alternative investment funds, indicating a shift from fragmented ownership to more organized capital structures. Investment inflows have surged significantly, with record equity investments and strong private equity participation in office spaces, data centres, and mixed-use developments. At the same time, infrastructure-led growth—such as new airports, metro expansions, and logistics corridors is reshaping real estate demand patterns and driving growth in peripheral and emerging urban markets.

However, despite strong fundamentals, FY 2026 has also seen a phase of cautious recalibration, as developers and investors adjust strategies amid global economic uncertainties, inflationary pressures, and fluctuating demand conditions. Overall, the Indian real estate industry in FY 2025-2026 is characterized by structural maturity, diversified asset classes, rising institutional investment, and technology adoption, positioning it as a key driver of economic growth while remaining sensitive to macroeconomic risks.

? OPPORTUNITIES

The real estate sector in India for FY 2025-26 presents several strong opportunities, driven by economic growth, urbanisation, and policy support. One of the biggest opportunities lies in the residential segment, where rising incomes, rapid migration to urban centres like Mumbai, Hyderabad, and Pune, and increasing preference for home ownership continue to fuel demand, especially in mid-income and premium housing. Affordable housing also remains a key growth area due to government initiatives such as Pradhan Mantri Awas Yojana, which aim to improve housing accessibility.

The industrial and warehousing segment offers significant potential due to the rapid growth of e- commerce and supply chain modernization. Government initiatives like Make in India and the push for logistics infrastructure are driving demand for logistics parks, warehouses, and data centres.

Infrastructure development is another key opportunity area. Large-scale projects such as metro expansions, highways, and new air ports are creating new real estate hotspots and increasing land value in peripheral regions. These developments encourage both residential and commercial expansion beyond traditional city centres.

The sector is also benefiting from increased institutional investment, including Real Estate Investment Trusts (REITs), private equity, and foreign direct investment, which are bringing greater transparency and stability. Alongside this, the rise of property technology including digital transactions, virtual property tours, and data analytics is improving efficiency and attracting tech-driven investors.

Overall, FY 2025-26 offers a favourable landscape for real estate in India, with opportunities emerging across housing, commercial spaces, logistics, and infrastructure-linked developments, supported by strong demand fundamentals and policy backing.

? THREATS

The real estate sector in India for FY 2025-26 faces several notable threats despite its overall growth momentum. One of the primary risks is rising interest rates and tighter financing conditions, which can reduce housing affordability and slow demand, particularly in price-sensitive segments. Inflationary pressures especially in construction materials like steel and cement—are increasing project costs, squeezing developer margins and potentially delaying project completion.

Another key threat comes from global economic uncertainties, including geopolitical tensions and volatile capital flows, which may impact foreign investment in Indian real estate. The ongoing war crisis, particularly in the Middle East, is severely impacting global supply chains and driving up the cost of raw materials. This escalation poses a significant threat to global economic growth and inflation. The Middle East conflict is primarily impacting Indian real estate through increased construction costs, higher inflation risks, and cautious buyer sentiment.

This is particularly relevant for commercial assets in major hubs like Bengaluru and Mumbai, where international funding plays a significant role. Additionally, currency fluctuations can further discourage foreign investors and increase the cost of imported materials.

The sector also faces, such as affordability constraints in urban markets and the possibility of demand saturation in premium housing segments. At the same time, the commercial office segment faces uncertainty due to evolving work patterns, including hybrid and remote work models, which may reduce long-term demand for office space.

Regulatory and compliance challenges remain another concern. Although reforms like RERA have improved transparency, approval delays, land acquisition issues, and policy changes can still disrupt project timelines and increase costs. Environmental risks, such as climate change impacts, flooding, and unpredictable monsoons, also pose a growing threat to real estate development, particularly in coastal and densely populated urban areas.

Overall, FY 2025-26 presents a mix of structural and cyclical threats for the Indian real estate sector, requiring developers and investors to adopt cautious strategies and focus on financial discipline, demand alignment, and risk management.

? ON GOING PROJECT

* The Project "Simplex KhushAangan" has been completed and handed over to the society for its day-to-day maintenance.

* The project Casas-Na-Colina consists of 4 villas at Nachinola, Goa, spreading across 1,325 sq. mtrs. of land. The Viilas are completed and ready for sale.

* The Company has duly entered into Development Agreement with ‘Bandra Anand Vihar Co-operative Housing Society Limited situated at Bandra, Mumbai for redevelopment of the Residential Building. The Company has entered into a Supplementary Agreement for Development and Assignment with Simplex Modern Homes Pvt. Ltd. and the Society to unlock the full potential development of the plot. As part of this agreement, the Company has officially transferred the project to Simplex Modern Homes Private Limited

* The Company is evaluating redevelopment opportunities across Mumbai and its surrounding regions.

? OUTLOOK

The outlook for Indias real estate sector in FY 2025-26 remains positive but moderately cautious, reflecting a balance between strong domestic fundamentals and emerging global risks. The sector is expected to continue its growth trajectory, supported by rising urbanisation, infrastructure development, and sustained demand across residential, commercial, and industrial segments. Demand for housing, especially premium and mid-income remains strong, with property prices projected to gradually increase due to robust end-user demand and rising incomes. At the same time, affordability is likely to stabilise as income growth begins to offset price increases, supporting continued homeownership demand.

In the commercial segment, office leasing, retail expansion, and co-working spaces are expected to grow steadily, driven by corporate expansion and evolving workplace models, while industrial and warehousing real estate will see strong momentum due to e-commerce, logistics, and manufacturing growth. Increased institutional participation, including REITs and private equity, along with policy support and infrastructure investments, is further strengthening the sectors long-term outlook. Overall, the industry is moving toward greater formalisation, transparency, and diversification.

However, the outlook is not without caution. In 2026, the sector has entered a "measured or recalibration phase", as developers and investors respond to global economic uncertainties, inflationary pressures, and shifting demand patterns. Growth is becoming more selective and value-driven, with premium housing and well- connected urban corridors outperforming other segments, while some markets face rising inventory and slower sales.

Overall, FY 2025-26 can be described as a phase of "steady expansion with cautious optimism" where the Indian real estate sector continues to grow, driven by strong fundamentals, but with increasing emphasis on financial discipline, location-specific demand, and resilience to global economic headwinds.

? RISKS AND CONCERNS

The risks and concerns for the Indian real estate sector in FY 2025-26 stem from a mix of macroeconomic pressures, structural challenges, and evolving market dynamics.

A key concern is interest rate sensitivity and financing constraints. Any increase or sustained high level of borrowing costs can directly affect housing demand by reducing affordability, especially for first-time buyers. This is particularly relevant in major markets like Mumbai and Bengaluru, where property prices are already elevated. Developers also face tighter liquidity conditions, which can slow down project execution.

Another major risk is rising construction costs, driven by inflation in raw materials such as steel, cement, and labour. This puts pressure on developer margins and often leads to higher property prices, which can dampen demand. Alongside this, affordability challenges remain significant in urban centres like Delhi and Pune, where price appreciation has outpaced income growth in some segments.

The sector is also exposed to global economic and geopolitical uncertainties, including volatile oil prices, currency fluctuations, and capital flow instability. These factors can reduce foreign investment inflows and affect commercial real estate, particularly office and retail spaces that depend on multinational tenants and investors.

From a structural standpoint, regulatory and approval delays continue to pose challenges despite reforms. Issues related to land acquisition, project clearances, and compliance can lead to cost overruns and project delays. Additionally, the sector still faces inventory overhang in certain micro-markets, especially in mid-income housing, which can slow new launches and affect cash flows.

Changing work patterns present another concern. The rise of hybrid and remote work models has created uncertainty in long-term demand for office spaces, especially in key IT hubs. Environmental and climate-related risks are also becoming more prominent, including flooding, heat stress, and unpredictable monsoons, which can impact project viability and insurance costs—particularly in coastal and densely populated regions.

Overall, FY 2025-26 presents a scenario where the Indian real estate sector remains fundamentally strong but must navigate financial pressures, demand imbalances, regulatory hurdles, and external shocks, requiring cautious planning and adaptive strategies from developers and investors.

? INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has proper and adequate system of internal control procedure commensurate with its size and nature of the business so as to ensure that all assets are safeguarded from loss, damage or disposition and ensure that all transactions are authorized, recorded and reported correctly and adequately. All operations parameters are periodically monitored and strengthened.

The Company continuously upgrades these systems in line with best accounting practices. The internal control system is further supplemented by a programme of internal audit conducted by an independent firm of Chartered Accountants. The Audit Committee of the Board of Directors reviews the effectiveness of internal controls and suggests improvements for strengthening them whenever required.

? FINANCIAL AND OPERATING PERFORMANCE

The total income of the Company for the current year is 1,577.18 Lakhs as against 1,259.97 Lakhs during the previous year. The Company has made a net loss of 360.64 Lakhs during the current year as against the net profit of 131.64 Lakhs in the previous year. The EPS for the current year is (12.06) as against 4.40 in the previous year after the exceptional item.

? KEY FINANCIAL RATIOS

The Key Financial Ratios for the financial year 31st March 2026 are as under:

Particulars	2025-2026	2024-2025
Inventory Turnover	0.32	0.09
Interest Coverage Ratio	(0.66)	2.21
Current Ratio	50.48	5.29
Debt Equity Ratio	NA	0.17
EBIDTA Margin (%)	(0.26)	24.29
Net Profit Margin (%)	(22.87)	10.45
Return on Net worth	(3.03)	1.10

During the financial year 2025-26, the profit after tax reduced primarily due to the reversal of Deferred Tax Assets arising from the lapse of brought-forward losses during the year. Increase in

Inventory ratio due to increase in sale and decrease in inventory. Interest coverage ratio reduced on account of decrease in PAT. Increase in current ratio due to decrease in current liability on account of repayment of Inter corporate deposit in current year. Debt was repaid in current year. EBIDTA Margin, Net Profit Margin Return on Net worth ratio decreased due to decrease in PAT.

? HUMAN RESOURCES

Employees play a pivotal role in the achievement of the Companys vision and strategic objectives. We are committed to cultivating a fair, inclusive, and enabling work environment that promotes individual development, accountability, and collaboration. By empowering our workforce with greater autonomy and responsibility, we strive to unlock their full potential and foster leadership at all levels of the organization.

The Company firmly believes that its skilled and dedicated employees are its most valuable asset and the primary drivers of its sustained success and growth. We remain focused on building a dynamic, performance-oriented organization that is agile and well-equipped to respond to an evolving business environment.

Throughout the year, industrial relations remained cordial and stable, reflecting our continued emphasis on transparency, mutual respect, and a positive workplace culture.

? CAUTIONARY STATEMENT

This "Management Discussion and Analysis" report contains certain forward-looking statements relating to the Companys objectives, expectations, estimates, projections, and outlook. These statements are based on various assumptions and expectations of future events, which are beyond the control of the Company.

Actual performance and results may differ materially from those expressed or implied in such statements due to risks, uncertainties, and other external factors. The Company does not undertake any obligation to update or revise these forward looking statements, whether as a result of new information, future developments, or otherwise, unless required by applicable laws and regulations.