SSPDL Ltd Management Discussions

1. Economic Overview

Global economic growth remained subdued in calendar year 2024, with the International Monetary Fund (IMF) outlining a modest expansion of 3.3%, consistent with the previous year. This stagnation was attributed to persistent challenges such as elevated inflation, high interest rates, and ongoing geopolitical tensions. These factors continued to dampen consumer sentiment and investment activities across various regions.

In an era marked by escalating global trade tensions and persistent geopolitical uncertainties, India has emerged as the fastest growing economy amongst the top 5 economies of the world, which is attributed to rising domestic consumption on account of higher disposable incomes, urban development & privatisation, infrastructural support to manufacturing, government policy impetus, and foreign investment across sectors.

India stands at a pivotal juncture, showcasing remarkable resilience and dynamism as it continues to navigate the complexities of a postpandemic world. The economy is slated to grow at a CAGR of 6.5% over the next five years, driven by domestic consumption, policy led incentivisation, and major investments in infrastructure.

Indias economy continues to demonstrate resilience amid a complex global backdrop marked by persistent trade disruptions and geopolitical uncertainty. Policymakers have maintained a tone of diplomatic composure while prioritising macroeconomic stability, and this has ensured continued investor confidence

2. Indian Real Estate Industry Overview

The real estate sector contributes nearly 7% to Indias GDP and is expected to reach $1 trillion in market size by 2030, accounting for approximately 15% of the GDP. The sector is witnessing rapid growth across segments·from affordable and mid-market housing to luxury developments, commercial real estate, and warehousing.

Consumers displayed an increased willingness to purchase high value homes, catalyzing a substantial shift in market dynamics. The 1 crore-plus housing segment continues to outperform, driven by strong demand in select micro-markets. Developers are increasingly tailoring new launches to align with evolving lifestyle preferences and patterns of urban expansion.

The factors, such as strong economic growth, rising incomes, a growing population, urbanization, shifting demographics, aspirational Lifestyle, etc., are going to result in rapid growth in real estate in all segments like residential, commercial and retail, and newer segments such as warehousing, logistics, industrial parks, data centers, etc.,

3. OPPORTUNITIES, THREATS / RISKS AND CONCERNS:

Opportunities

We believe that long term structural potential for the sector to grow is immense. The Indian real estate industry has strong structural growth drivers, which will keep the longer-term demand trends robust even as the industry undergoes sectoral cyclicality. These are as under:

• Rapid urbanization is boosting the urban population

• Nuclearization of families

• Improving education levels

• Rising household incomes

As the bank rate starts moving down modestly in line with inflation, demand will further get a boost as consumers will want to benefit from a low home loan rate scenario.

The offices segment is exhibiting a gradual recovery, resulting in an improvement in occupancy levels mainly due to the back-to-office policies, although certain occupiers continue to operate on a flexible and hybrid approach.

Threats/Risks/Concerns:

Real estate being a cyclical industry and projects have a long gestation period, gets impacted more by the changes in macroeconomic variables like global and countrys economy, changes in the market dynamics, availability of capital, interest rate, GDP Growth, employment, purchasing power, inflation, availability of skilled labour, etc., and the same directly impacts the project sales and profitability of the Company.

Execution delay may result in cost overruns, and it can cost dearly in the form of higher than expected input costs and higher than anticipated interest burden. Further, such delays also negatively impact the Companys reputation and returns.

Also, intrinsic challenges that hinder growth of the sector and performance of your Company, factors such as high borrowing costs, lack of funding, liquidity issues, and slow (and uneven) development of urban infrastructure.

As the growth of your Companys portfolio is linked to the overall economic growth, the primary risk to the business is adverse changes to the economy.

4. SEGMENT WISE PERFORMANCE:

The Company is engaged in the construction and development of Commercial, residential properties in metropolitan and Tier II cities.

The projects undertaken by the Company on its own and through other partners are under various stages of execution, and the details of the status of these projects are mentioned in the Directors Report.

5. OUTLOOK

The real estate sector is likely to continue its journey of long-term growth as we see a continuous rise in GDP per capita, larger disposable incomes, and growing urbanization.

Your company is currently executing housing projects in Hyderabad and Chennai. Considering the past experiences, your Company primarily focusing on the development of property, mid-size houses, etc., and has reduced the construction contract works. However, on finding better opportunities, it will take up and execute the construction contracts.

Based on the opportunities available in the real estate sector, the management, being optimistic about the growth in the sector, will undertake projects that suit market requirements.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has a reasonably sound system of controls in the operational areas. Internal controls are in line with the size of the operations and organizational requirements. Which are adequate to protect the Companys resources. The Audit Committee reviews the adequacy of internal financial control and risk management systems from time to time.

The Company focuses on quality control in its operations and projects. Adhering to quality norms and standards will help minimizing risks and improve the efficiency of operations.

7. DISCUSSION ON FINANCIAL PERFORMANCE (CONSOLIDATED) WITH RESPECT TO OPERATIONAL PERFORMANCE:

Total Revenue: During the year under review is Rs. 639.16 lakhs, against Rs. 2658.05 lakhs in 2023-24.

Total Expenses: During the year under review is Rs. 833.22 lakhs, as against Rs. 2941.79 lakhs for 2023-24.

Profit/(Loss) Before Tax: During the year under review is Rs. (194.06) lakhs, as against Rs. (283.75) lakhs in 2023-24.

Profit/(Loss) After Tax: During the year under review is Rs. (194.06) lakhs, as against Rs. (283.75) lakhs in 2023-24.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT:

The Company continues to maintain cordial relations with its employees, vendors and other agencies. The Company strives to provide a congenial atmosphere to the employees to enable them to offer their best in terms of performance. As of 31st March, 2025, your company has 19 employees on its payroll.

9. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND CHANGE IN RETURN ON NET WORTH:

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year ("FY")) in Key Financial Ratios, with explanations therefor are given below along with details of any change in Return on Net worth (based on the standalone financial statements of the Company):

Return on Net Worth: During the year under review, net worth is reduced due to an increase in net loss.

CAUTIONARY STATEMENT:

Statements in the Management Discussions and Analysis, the Directors Report, describing the Companys objectives, projections, estimates, and expectations are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors/developments that could affect the companys operations include a downward trend in the real estate sector, including political and economic conditions of the country, in which the Company operates, and the changes in the Government regulations, tax laws, corporate and other laws, interest and other costs, and other incidental factors.