supreme holdings & hospitality ltd share price Management discussions


A. Industry Structure and Development:

2022 has been the year of resilience for the Indian real estate industry. Despite the consistent global headwinds, rising domestic inflation, and rate hikes by RBI, the real estate market continued to sustain positively. With several emerging trends, the industry successfully thrived. And the momentum will be higher following this year too. The Q1 saw positive sales in top markets, and the number of new launches is still increasing. Properties in MMR and Pune have seen price appreciation despite steady sales growth. The housing demand remains undeterred despite increasing prices.

Homebuyer preferences have evolved to a larger extent. Millennials are majorly contributing to the upscaled housing demand. Modern homebuyers are perceiving property as a vital asset investment rather than just a shelter. Green and smart societies are overpowering in the market. Larger homes, big projects with expansive spaces, sustainability compliances, working spaces, amenities, etc., have become popular characteristics of the residential market in India. The demand for spacious and luxury homes have substantially increased. People are willing to pay more to get an upgraded lifestyle in the best location.

Moreover, several other factors have been favourable to the growth of real estate. The Union Budget assisted in bolstering the housing demand. The central and state governments proactive initiatives to stimulate infrastructural development drive housing sales. Homebuyers have become insightful regarding the importance of robust infrastructure in the price appreciation of property. The announcement of the Urban Infrastructure Development Fund with an investment of 10,000 crore in the Union Budget was a pivotal push for infrastructure projects in the country. This year, RBI kept the repo rate unchanged, providing relief to investors. Industry experts are assuming the rates to be the same throughout the year. Moreover, the increased income cap in the PMAY scheme will support homebuyers, thereby accelerating the housing demand.

B. Companys Performance:

The revenue from real estate activity is recognised in accordance with the "Guidance Note on Accounting for Real Estate Transactions (for entities to whom Ind AS is applicable)" issued by the Institute of Chartered Accountants of India (ICAI), and accordingly the income from operations during the year 2022-23 has been reported at Rs. 73,11,17,520/- as compared to Rs. 76,39,62,511/- in the previous year. The total Income for the year 2022-23 was at Rs. 76,13,46,774/- as compared to Rs. 77,84,01,388/- in the previous year.

During the year under review, the cost of sales and other operational expenses were at Rs. 54,30,71,515/- as against Rs. 55,35,07,905/- in the previous year. The employees cost during the year 2022-23 was at Rs. 2,43,33,966/- as compared to Rs. 2,47,19,350/- in the previous year. The Finance cost for the year 2022-23 was at Rs. 50,667/- as against Rs. 22,54,462/- in the previous year. The Depreciation and amortization expenses and other expenses were at Rs. 40,55,144/- as compared to Rs. 40,63,763/- in the previous year.

The Profit for the year 2022-23 before taxation was at Rs. 14,22,63,095/- as against Rs. 15,40,89,281/- in the previous year. After providing for taxation, including deferred tax, the Company has reported Profit of Rs. 11,88,24,082/- during the year 2022-23 as against Rs. 12,83,69,866/- in the previous year.

C. Segment-wise Performance:

As Company had only one reportable segment during the year, disclosure under Ind-AS 108 on segment reporting is not applicable to the Company.

D. Outlook for the Company:

The real estate sector has been strongly contributing to the GDP. The company has been successful in conducting quality construction and delivering exclusive products. The real estate industry is now an important component driving the growth of the Indian economy. As per news reports, it is estimated that Indian real estate is linked with 50% of the GDP growth. The housing demand has been robust since last year. Our sales have increased owing to the demand for spacious, premium apartments. Comparatively, we are offering larger carpet areas than others in the vicinity.

The Company is driven by ambitious aspirations to expand its footprint in the real estate sector. It eagerly seeks opportunities to acquire new land parcels in the promising Panvel region for future mega township developments. Moreover, the Company is actively exploring collaborative joint ventures in the dynamic Pune market, aiming to forge strategic partnerships that fuel its growth. The broad-based recovery in the real estate market serves as an encouraging sign for the Companys future endeavours.

E. Opportunities, Threats, Risk and Concerns:

The real estate sector has experienced several risks and coped with them. The resilient trait of the sector paved the way for the revival of real estate since the end of 2021. Some risks lead to unexpected opportunities. Pandemic tenure has transformed the dynamics of real estate. Developers embraced new technologies and focused on including modern features and amenities. This led to a substantial revival of the industry amidst unfavourable conditions.

Here are some of the key risks faced by the Company

Unforeseen Risk:

Unforeseen risks such as natural disasters and accidents can hamper the business on a short-term or long-term basis. Such issues are difficult to tackle and take time. Efficient risk management and resilience are essential to mitigate these risks for the proper sustenance of business. Despite such hurdles, our robust business model remains firm towards enhancing business sustainability.

Contractual Risk:

Contractual risks can disrupt the operations of the business. Hence, accurate analysis of delays, disruptions, and proper allocation of responsibilities before entering into a contract helps in the mitigation of risks. Right contractual provisions should be incorporated in case of unforeseeable risks to prevent business losses.

Manpower Risk:

With increasing competition, attracting and retaining skilled personnel is essential. An aggressive approach from new players in the industry may result in the poaching of experienced staff.

Human Resource Management Risk:

Employee-Centric Approach: The Companys workforce is the major asset that assists in attaining higher endeavours in business. Their determination and devotion to the company is highly appreciated and recognized. The Company strives towards enhancing skill development and making the organisation a better place to work. We aim to foster the professional growth of our employees.

Consumer-Centric Approach: The Real Estate (Regulation and Development) Act (RERA) is at the forefront of promoting consumer interests. It focuses on addressing consumer complaints and ensuring timely redressal of grievances, creating a transparent and accountable environment for homebuyers.

F. Internal Control Systems and their Adequacy:

The Company has adequate internal control system running throughout the organisation. Internal processes of the Company commensurate with our nature of business. The Company has appointed internal auditor who audits the adequacy and effectiveness of the internal control system as laid down by the management and suggests improvements as required.

The audit committee periodically reviews the audit plans, internal audit reports and adequacy of internal controls.

G. Discussion on financial performance with respect to operational performance:

The Company delivered good performance for the year under review, the revenue of the company was Rs. 73,11,17,520/- as against revenue of Rs. 76,39,62,511/- during the FY 2021-22.

H. Material developments in Human Resources/ Industrial Relations front including number of employees:

Industrial relations with employees remained cordial during the year. Your Company recognizes that its committed and talented workforce is the key factor in driving sustainable performance and growth. As one of the most critical assets of the Company, its people are responsible for its competitive advantage. Your Company is committed to recruiting and retaining the most relevant and best industry talent. The total number of permanent employees working as on 31st March, 2023 was 19.

I. Comparative analysis of Financial ratios and significant Changes therein as on 31st March, 2023.