Sumit Woods Ltd Management Discussions

The following Management Discussion and Analysis ("MD&A") is intended to assist readers in understanding Sumit Woods Limited (the "Company" or "Sumit Group"), its business environment, strategies, performance, and outlook and the risks applicable to Sumit Group. It should be read in conjunction with our consolidated financial statements and accompanying notes (the "financial statements") for the financial year ended March 31,2025.

Outlook

The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7% for 2025 and 2026, factoring the various economic uncertainties

Internal control and their adequacy

The company has an Internal Audit team and an Internal Control System, supported by an external audit firm and a group assurance team, tailored to the size, scale, and complexity of its operations. Both the Internal Audit team and external reviewers bring extensive experience and expertise in internal controls, operating systems, and standard operating procedures. The system is backed by approved, documented policies, guidelines, and procedures that align with industry best practices to monitor business and operational performance, ensuring business integrity and enhancing operational efficiency. The Internal Audit team regularly assesses the adequacy of the internal control systems, compliance with operating procedures, and adherence to policies, conducting an annual audit of Internal Financial Controls. Based on the internal audit report, process owners implement corrective actions within a specified timeline to strengthen controls. Significant audit findings and corresponding corrective actions are presented to the Audit Committee of the Board of Directors on a quarterly basis.

GLOBAL REAL ESTATE MARKET

The global real estate market size accounted for USD 4.12 trillion in 2024 and is predicted to increase from USD 4.34 trillion in 2025 to approximately USD 7.03 trillion by 2034, expanding at a CAGR of 5.5% from 2025 to 2034. Real estate is referred to as the land as well as any permanent, whether natural or man-made, structures or improvements related to the property, such as a house. One type of real property is real estate. It varies from personal property, such as cars, boats, jewellery, furniture, and farm equipment, which is not permanently affixed to the land.

In the real estate market, social factors, such as evolving lifestyle choices, have a big impact. The demand for various types of properties might change as a result of changes in society attitudes and behaviors. A growing interest in flexible workspaces and home offices, for instance, is a result of the expansion of remote work and the digital economy. As a result, there is a higher demand for buildings with designated office space or co-working amenities. Similar to this, shifting interests in leisure and entertainment may increase demand for homes close to parks, recreation areas, and cultural attractions. The real estate market is also impacted by trends in household formation and marriage rates.

The desire for smaller, more inexpensive housing options, including studios or one-bedroom apartments, is rising as a result of postponed weddings and an increase in single-person families. Contrarily, households made up of couples or families tend to prefer bigger homes with more bedrooms and living space. These trends determine the demand for various sorts of residential properties and have an impact on the types and sizes of units that are built by developers. There are several ways that cultural diversity might affect the real estate market.

With a share of 53% in terms of revenue, the rental type led the market in 2024. This is a result of growing property costs in industrialized countries, which has led to an increase in renters and favoured segment development. For instance, a blog written by Mansion Global claims that in 2021, 60% of the residences in Germany will be rented, making it the country of renters.

INDIAN ECONOMY

Indias economic outlook remains positive, demonstrating resilience amidst persistent global economic headwinds. Stabilising inflationary trends have enabled the RBI to reduce the key policy rate in February 2025. Further policy rate adjustments could be anticipated in the subsequent quarters, contingent upon suitable domestic and international economic conditions.

Indias housing market is stronger than ever. Between January and September 2024, over 229,900 units were sold across top seven cities marking a 17 per cent increase from 2023 and a significant 60 per cent jump from 2019. The mid- and high-end segments dominate, with premium housing comprising 16 per cent of demand in 2024, up from just 6 per cent in 2019. This trend is expected to continue with luxury and ultra-luxury segments growing faster than affordable housing.

Integrated townships, offering community-focused living and advanced amenities, are also gaining popularity. Consumers are now seeking tech-enabled homes equipped with advanced offerings, such as Al-driven security, automated lighting and sustainable energy solutions. The concept of multigenerational living is also gaining traction, with families opting for spaces designed to accommodate diverse age groups under one roof. Going ahead, with positive lending rates and increasing consumer demand, the housing market is expected to retain the momentum.

The real estate industry in India is one of the largest and fastest-growing sectors in the country, expected to reach a market size of $1 trillion by 2030. It plays a critical role in employment generation, urban development, and infrastructure growth. In 2025, the sector is witnessing robust activity driven by rising demand for housing, the expansion of commercial real estate, increasing investments by institutional players, and government support through initiatives like PMAY and Smart Cities Mission. This blog covers key trends, emerging opportunities, and challenges shaping the future of Indias real estate industry.

Indias real estate sector is more than just bricks and mortar—its a powerful engine for economic growth. As one of the most dynamic industries, it contributes significantly to the countrys GDP and employment landscape. The year 2025 marks a new phase of transformation, led by technology, sustainability, and rapid urbanization.

Indias real estate sector has exhibited remarkable resilience in recent years. According to the India Brand Equity Foundation (IBEF), the sector attracted ^35,300 crore in private equity investments in 2024, a 32% year-on-year increase. The residential property market saw record-breaking sales, with home sales reaching ^3.47 lakh crore in FY23, a 48% increase from the previous year. The market is projected to reach a valuation of US$1 trillion by 2030, contributing 13% to Indias GDP by 2025.

The demand for residential properties remains strong, particularly in the mid-income, premium, and luxury segments. According to industry experts, 350,612 residential units were sold across eight major markets in 2024, a 6.54% year-on-year increase. Units priced above ^10 million accounted for 46% of sales, driven by high-net-worth individuals (HNIs) and non-resident Indians (NRIs).

The Reserve Bank of India (RBI) has recently cut rates, reducing home loan interest rates to 8.10-8.75% as of March 2025. Policies like the Real Estate (Regulation and Development) Act (RERA) and the Pradhan Mantri Awas Yojana (PMAY) have boosted transparency and affordable housing. However, compliance costs under RERA have increased developer expenses, often passed on to buyers.

MUMBAI REAL ESTATE MARKET

Overtime, Mumbais population has been steadily going up, and its expected to keep rising. Because of this, more and more people will need places to live in the city. That means there will be a bigger demand for residential apartments in Mumbai. Developers are already getting busy working on new projects to make sure there are enough homes for everyone who wants to live here.

In the second quarter of the financial year 2024-2025, the residential market in Mumbai witnessed significant growth. The city has set new records in the real estate sector and has established itself as one of the most resilient markets in the country. In Q2 of FY24-25, the real estate market in Mumbai has thrived. The highest sales volume in the city reached 24,222 units, setting a new market record. Not only has the city maintained its consistent growth trend, but it has also shown a 9% increase year-over-year in Q3 of 2024 and a 13%

increase year-to-date. Factors like high demand, premium property launches, and a growing preference for larger homes have helped the city dominate the real estate market in India. The growth in Mumbais property market has also been favoured due to the economic climate in India, rising disposable income and an urgency amongst investors to purchase property when prices are stable.

In Q2 of FY24-25, homebuyers in Mumbai actively sought out and purchased properties across different ticket sizes. Around 10,000+ units, priced under Rs 5 million, were sold in the quarter, making up almost 42% of sales. Similarly, buyers who fall within the Rs 5 million and 10 million segment drove a 10% year-on-year growth that contributed around 24% to the citys total real estate sales. In the premium segment, buyers upped sales by 16% year- on-year and increased transactions from 7000+ units in Q3 2023 to 8153 units in Q3 2024.

The Mumbai Metropolitan Region (MMR) led Indias housing inventory with around 1.9 lakh units. It marked a 1% increase from the previous quarter. The MMR also witnessed the launch of approximately 44,120 new units, showcasing a 31% rise from Q1 2024 and a 2% year- on-year rise with more than 64% of fresh supply in the less than 80 lakh segments. Prices for units also grew by 4% year-on-year, and the MMR areas residential market is likely to perform well during the rest of FY 2024-25, thanks to economic conditions and the completion of key infrastructure projects.

To keep up with rising demands, around 29,000+ new units were launched in the MMR during Q3 of 2024. The rating agency ICRA announced that it anticipates a year-on-year growth of 8-9% in the area sold in MMR during FY 2024-25. The growth is expected to be built on a foundation of end-user demand and affordable prices.

As Mumbai transforms, with key infrastructure projects enhancing connectivity and boosting the local economy, the real estate landscape looks promising. From the Mumbai Trans Harbour Link, Coastal Road, and Metro Aqua Line 3 to the Navi Mumbai International Airport, Versova Bandra Sea Link, and the Mumbai-Ahmedabad Bullet Train, Mumbai is on the highway to improving residents quality of life.

STATE OF COMPANYS FINANCIAL AFFAIRS CONSOLIDATED FINANCIALS

During the year under review, your Companys consolidated total revenue stood at Rs.14,403.04 lakhs as compared to Rs. 18,247.18 lakhs for the previous year, representing a decrease of 21.07%; Profit before tax stood at Rs. 1,529.82 lakhs for the year under review as compared to Profit before tax Rs. 1,284.68 lakhs for the previous year, representing an increase of 19.08%; and the total comprehensive income stood at Rs. 1,108.84 lakhs as compared to Rs. 1,027.85 lakhs for the previous year, representing an increase of 7.88%.

STANDALONE FINANCIALS

During the year under review, the total revenue stood at Rs. 9,911.32 lakhs as compared to Rs. 6,657.71 lakhs for the previous year representing an increase of 48.87%; Profit before

tax stood at Rs. 1,703.97 lakhs for the year under review as compared to Profit before tax Rs. 498.58 lakhs for the previous year, representing an increase of 241.76%; and the total comprehensive income stood Rs. 1,340.16 lakhs for the year under review as compared to Rs. 499.75 lakhs the previous year, representing an increase of 168.17%.

Opportunities

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, and well-designed projects in strategic locations for customers and shareholders. Your Company is ideally placed to further strengthen its development potential by acquiring new land parcels.

Challenges

While the management of your Company is confident of creating and utilizing the opportunities, it also finds the following challenges:

Unanticipated delays in project approvals; Policy alterations; Increased cost of manpower and Technology; Rising cost of construction, Marketing activities; Growth in auxiliary infrastructure facilities; and over regulated environment; Steep increase in interest rates in general and mortgage rates in particular.

COMPANY STRENGTHS

Our Company has been in the real estate business for nearly four decades. Your Company continues to capitalize on the market opportunities by leveraging its key strengths. These include:

Brand Reputation: Enjoys higher recall and influences the buying decision of the customer given our hold on market being more than three decades. Strong customer satisfaction further results in higher premium realizations.

Execution: Possesses a successful track record of quality execution of projects within a reasonable time frame since commencement of any project with contemporary and modern architecture which fulfils the requirement of micro market and potential buyers.

Strong cash flows: Has built a business model that ensures continuous cash flows from their investment and development properties ensuring a steady cash flow even during the adverse business cycles as 90% of our inventory is sold/alloted before the completion of projects.

Significant leveraging opportunity: Follows conservative debt practice coupled with enough cash balance which provides a significant leveraging opportunity for further expansions.

Buuaara a uavsiopare NSE LISTED COMPANY

Outsourcing: Operates an outsourcing model of appointing renowned engineers/architects / contractors & professionals that allows scalability and emphasizes contemporary design and quality construction - a key factor of success.

Transparency: As your companys motto states "Creating Value, Building Trusts" which reflects our strong culture of corporate governance and ensures transparency and high levels of business ethics.

Highly qualified execution team: Employs experienced, capable and highly qualified design and project management teams who oversee and execute all aspects of project development.

Strong Financing: Your Company has had good relations with various NBFCs and Bankers for funding projects in the near past and the company is able to maintain the same status given the current industry scenario.

Focus Points on future growth:

Focus is on middle, upper middle-class group and aspirational class in alignment with the governments aspect to provide housing for all;

Focusing more on project acquisition through joint ventures and development management model with view to achieve asset light model;

Focusing on timely completion of project by adopting new technologies in the field of constructions; and

Your company focuses on various opportunities in Mumbai and Goa in the field of Redevelopment and development which will ensure robust growth in revenue and profitability of the company.

Market price fluctuation

The performance of your Company may be affected by the sales and rental realisations of its projects. These prices are driven by prevailing market conditions, the nature and location of the projects, and other factors such as brand and reputation and the design of the projects.

Your Company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenarios.

Sales volume

The volume of bookings depends on the ability to design projects that will meet customer preferences, getting various approvals in time, general market factors, project launch and customer trust in entering into sale agreements well in advance of receiving possession of the projects. Your Company sells its projects in phases from the time it launches the project, based on the type and scale of the project and depending on market conditions.

Land/ Development rights - costs and availability

The cost of land, forms a substantial part of the project cost, particularly in Mumbai. It includes amounts paid for freehold rights, leasehold rights, fungible FSI, construction cost of area given to landlords in consideration for development rights, registration and stamp duty. Your Company acquires land / land development rights from the government and private parties. It ensures that the consideration paid for the land is as per the prevailing market conditions, reasonable and market timed. Your Company also enters into MOUs and makes advances for the land / land development rights prior to entering into definitive agreements. The ensuing negotiations may result in either a transaction for the acquisition of the land/ land development rights or the Company getting a refund of the moneys advanced. The Company also join JVS for project developments.

Financing costs

The acquisition of land and development rights needs substantial capital outflow. Inadequate funding resources and high interest costs may impact regular business and operations. Your Company has always tried to build sufficient reserves resulting out of operating cash flows to take advantage of any land acquisition or development opportunity.

CAUTIONARY STATEMENT

This Management Discussion and Analysis contain forward looking statements that reflects your Companys current views with respect to future events and financial performance. The actual results may differ materially from those anticipated in the forward looking statements as a result of many factors.

NSE LISTED COMPANY