SVP Housing Ltd Management Discussions.

Overview of Indian Economy:

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

Market size

Indias gross domestic product (GDP) (at constant 2011-12 prices) was estimated to be Rs 145.65 lakh crore (US$ 2.06 trillion) for 2019-20, growing 4.2 per cent over the previous year.

India retained its position as the third largest start-up base in the world with over 8,900-9,300 start-ups as 1,300 new start-ups got incorporated in 2019 according to a report by NASSCOM. India also witnessed the addition of 7 unicorns in 2019 (till August 2019), taking the total tally to 24.

Indias labour force is expected to touch 160-170 million by 2020 based on the rate of population growth, increased labour force participation and higher education enrolment among other factors according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves reached Rs 37.31 lakh crore (US$ 493.48 billion) in the week up to May 29, 2020 according to the data from RBI.

Recent Development

With an improvement in the economic scenario, there have been investments across various sectors of the economy. The mergers and acquisition (M&A) activity in India stood at US$ 28 billion in 2019, while private equity (PE) deals reached US$ 48 billion. Some of the important recent developments in Indian economy are as follows:

• Merchandise export and import (in US$ terms) declined by 4.8 per cent and 9.1 per cent, respectively, in 2019-20.

• Nikkei India Manufacturing Purchasing Managers Index (PMI) stood at 30.8 in May 2020, showing contraction in the sector because of coronavirus-related restrictions.

• Gross tax revenue stood at Rs 15.04 lakh crore (US$ 215.28 billion) in 2019-20 - income tax collection contributed Rs 4.80 lakh crore (US$ 68.14 billion) to it..

• In 2019, companies in India raised around US$ 2.5 billion through 17 initial public offers (IPO).

• Indias Foreign Direct Investment (FDI) equity inflow reached US$ 469.99 billion between April 2000 to March 2020, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading, and automobiles.

• Indias Index of Industrial Production (IIP) for 2019-20 stood at 129.2.

• The combined index of eight core industries stood at 137 in March 2020. Its cumulative growth was 0.6 per cent in 2019-20.

• Consumer Price Index (CPI) - Combined inflation was 5.9 per cent in March 2020 as compared to 6.6 per cent in February 2020. The annual consumer price inflation increased to 4.8 per cent in 2019-20 from 3.4 per cent in 2018-19.

• Around 12 million jobs in a year were created in India during 2015-19.

• India improved its ranking in World Banks Doing Business Report by 14 spots over last year and was ranked 63 among 190 countries in the 2020 edition of the report.

• India is expected to have 100,000 start-ups by 2025, which will create employment for 3.25 million people and generate US$ 500 billion in value as per Mr T V Mohan Das Pai, Chairman, Manipal Global Education.

(https://www.ibef.org/economv/indian-economv-overview)

Key highlights of Indian Economy:

* It suggests that two Schemes, Pradhan Mantri Awaas Yojana- Gramin (PMAY-G) and Pradhan Mantri Awaas Yojana- Urban (PMAY-U), seek to achieve the target of housing for all by 2022.

Infrastructure Investment of Rs.102 Lakh Crore in FY 2020-2025.

* The Survey said that Livestock income has become an important secondary source of income for millions of rural families and has assumed an important role in achieving the goal of doubling farmers income.

*The Survey said that despite ongoing developmental efforts, forest and tree cover are increasing considerably..

* India has become Second Largest Emerging Green Bond Market after China

* Other Highlights of Economic Survey 2019-20

• GDP growth pegged at 6-6.5 per cent in fiscal year starting April 1, up from 5 per cent in current fiscal

• Fiscal deficit target for current fiscal may need to be relaxed to revive growth

• Uptick in growth projected in second half of current fiscal based on 10 factors including higher FDI flows, build up of demand pressure, positive GST revenue growth

• Survey asks government to deliver expeditiously on reforms to revive growth

• Ethical wealth creation key to India becoming USD 5 trillion economy by 2025

• Share of formal employment increased from 17.9 per cent in 2011 -12 to 22.8 per cent in 2017-18 reflecting formalisation in the economy

• Theme of Survey is wealth creation, promotion of pro-business policies, strengthening of trust in the economy

• To achieve GDP of USD 5 trillion by 2024-25, India needs to spend about USD 1.4 trillion over these years on infrastructure

• 2.62 crore new jobs created in rural, urban areas between 2011-12 and 2017-18 among regular wage/salaried employees

• 8 per cent increase in regular employment of women in 2017-18 over 2011-12

• Excessive government intervention in markets, especially when the market can do the job of enhancing citizens welfare perfectly well, stifles economic freedom

• Debt waivers disrupt the credit culture, reduces formal credit to same farmers

• Suggests government to systematically examine areas where it needlessly intervenes and undermines markets

• Calls for improving governance in public sector banks, more disclosures to build trust

• Calls for measures to make it easier to start new business, register property, pay taxes, enforce contracts

• Easing of crude prices lowers current account deficit; imports contract more sharply than exports in first half of current fiscal

• Declining inflation from 3.2 per cent in April 2019 to 2.6 per cent in December 2019, reflecting weakening demand pressure in the economy

• GST collections grew by 4.1 per cent for the centre during April-November 2019

Source : https://www.financialexpress.com/budget/economic-survev-2020-highlights-state-of- indian-economv-in-economic-survev-of-india-2019-20/1841049/

OUR INDUSTRY:

Overview of Real Estate Industry

Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

Market Size

By 2040, real estate market will grow to Rs 65,000 crore (US$ 9.30 billion) from Rs 12,000 crore (US$ 1.72 billion) in 2019. Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs. Indian real estate increased by 19.5 per cent CAGR from 2017 to 2028.

Office space has been driven mostly by growth in ITeS/IT, BFSI, consulting and manufacturing sectors. During 2019, the office leasing space reached 60.6 msf across eight major cities, registering a growth of 27per centy-o-y. In 2019, office sector demand with commercial leasing activity reached 69.4 msf. Co-working space across top seven cities increased to reach 12 sq ft by end of 2019.

Warehousing space is expected to reach 247 msf in 2020 and see investment worth Rs 50,000 crore (US$ 7.76 billion) during 2018-20. Grade-A office space absorption is expected to cross 700 msf by 2022, with Delhi-NCR contributing the most to this demand.

Housing sales reached 2.61 lakh units in 2019 across seven major cities.

Source https://www.ibef.org/industry/real-estate-india.aspx

Real Estate as a sector is the second largest employer, after agriculture and constitutes almost 6% of our GDP. In India, urbanization is the biggest growth driver for real estate, which is fueled by growth in business environment in the country and it is estimated that around 10-12 million people getting urbanized annually. Further, the government is backing the sector with several initiatives like a push to develop 100 cities into smart cities, initiatives like "Housing for all by 2022" for a growing population in both urban as well a rural India backed by both financial and regulatory support for the buyers and developers. By 2022, real estate and construction sector in India is expected to generate 75 million jobs & emerge as the largest employer in the country. In a falling interest rate scenario with the GDP of the country growing at the fastest pace among the major economies and an easy business environment which is being pushed by the government to bolster the "Make in India" initiative, the demand for assets across the sector may see gradual revival in the next 1-3 years.

The sector is broadly classified into three segments viz. Residential, Commercial and Retail- Malls. There are 8 major real estate markets in the country, with Mumbai, NCR and Bengaluru being the top cities, followed by Pune, Hyderabad, Chennai, Kolkata and Ahmedabad.

The residential real estate segment is fragmented by nature with dominant regional players and very few developers having a pan-India presence. Commercial real estate and Retail real estate segment has fewer players which hold most of the quality office and retail spaces which ensures transparent transactions and accountability in the business for investors and buyers/leasers alike compared with the residential segment.

The real estate sector is headed for greater transparency, and accountability after the introduction of Real Estate Regulation and Development Act, 2016 (RERA) and various other regulatory and policy initiatives. Sources of funds to the cash-starved sector have recently witnessed innovation with introduction of structured products through CMBS, REITs, PE funding etc.

(Source:http://www.caremtings.com/upload/NewsFiles/SplAnalysis/Real%20estate- %2 0Opportunities%2 Ochallenges %2 0and%2 0outlook.pdf)

Regulatory changes and policy initiatives for the real estate industry

The real estate industry witnessed introduction of regulatory changes and policy initiatives in order to transform it into an organized, transparent, accountable and investor-friendly sector. Lack of long term funds has been the biggest impediment for the sector which could not be fulfilled by banking institutions owing to regulatory restrictions of the Central bank. Some of the regulatory changes and additions between 2014-16 are as follows-

• Real Estate Investment Trusts (REITs): One of the most transformational changes which have been brought in to make the entire sector more transparent and investor centric. Apart from the fact that REIT would let small investors buy into the real estate asset class at a much smaller ticket size, REIT gives large portfolio investors the chance to exit from investments, which makes Indian real estate market favorable for more investments from global investor community. Additionally, Budget 2016-17 exempted dividend distribution tax (DDT) on special purpose vehicles (SPVs). Rules for REITs were relaxed, and the investment cap in under-construction projects was raised from 10% to 20%. Currently, around 229 m.s.ft. of office space can be seen as REIT compliant. (Source: JLL Research)

• Real Estate (Regulation & Development) Act 2016: RERA, was passed by the Parliament in March 2016. States have to implement the bill within one year from the time it was passed. This bill is primarily aimed at bringing in, transparency to the sector and is being touted as a pro-consumer law. One of the biggest industry wide change is registration of properties under development by developers which would mean only organized and professionally managed companies would be able to carry on with the business, thus the sector would see lot of consolidation going forward.

• Goods and Services Tax: The GST is the single-biggest tax reform to be ever introduced in India. GST aims at eliminating the difference in indirect taxes applicable across various states, hence bringing in ease of doing business and simplified taxation procedure for businesses. The tax regime would be introduced in the year 2017, with most states having accepted the law after debate and discussion. The sector stands to benefit from the fact that GST would provide more clarity on tax-credits for RE transactions and allowance of input credit would reduce the price of properties. GST rate for the real estate sector is expected to be announced in the next year. The government has given option to real estate companies to charge 5% GST for normal Houses or 1% GST for affordable house with no ITC instead of earlier 12% GST for residential complex. It will boost the real estate as the new GST rates will make cheaper the residential properties for home buyers.

• Infrastructure status to affordable housing: The affordable housing segment has been accorded infrastructure status which would ensure more funding from the banking system as well as Pension funds being eligible to invest long term into affordable housing segment which in turn would reduce the cost of construction. For classification of affordable housing, instead of "built-up" area of 30/60 sqm, the new classification is "carpet-area" of 30/60 sqm. The 30 sqm limit applies only in case of municipal limits of 4 metropolitan cities while for the rest of the country including the peripheral areas of metros, limit of 60 sqm will apply. The government has also extended the time of completion of such projects from 3 years to 5 years.

• Benami Transactions Act 2016: This bill will curb black money flow into real estate and will render holding of property under fictitious names a punishable offence. This bill aims at bringing transparency and accountability in the sector as a whole especially with regard to funding.

• Policy initiatives: Pradhan Mantri Awas Yojana and National Urban Housing Policy 2015 set up to meet the gap of housing through increased private sector participation and policy initiatives to support housing for all across by 2022.

Total housing shortage envisaged to be addressed through the new mission is 20 million by 2022.

Smart Cities mission for revival and creation of 100 cities into smart cities, Atal mission for rejuvenation and urban transformation, heritage city development and augmentation yojana (HRIDAY) are some other policy initiatives, which if implemented in line with the projected plan of implementation would be huge growth drivers for housing segment of real estate

OUR BUSINESS

SVP Housing Limited (formerly known as Mahabir Metallex Limited) was incorporated on January 10, 2003. Till 2016, our Company was mainly engaged in the business of trading and distribution of steel products like TMT Bars, Rolled Products, Billets, Colour Coated Sheets, Steel strips/ Cold Rolled Strips, Round Angle Channels& Bars, Ingots and Steel Pipes and Tubes. However, in the year 2016, the promoters of the company received an open offer from a renowned real estate company ‘SVP Builders (India) Limited pursuant to acceptance of which the Company has entered into real estate business in the last year.

Post the said execution, the Company has secured housing project having FSI area of 20.50 lakh sq ft. at wave city NH-24, Ghaziabad. Presently, the company is in the process of getting building plan approvals and other registration and is expected start the said project in December 2017.

Set forth below are the key highlights of our Ghaziabad Project-

i. Location

• The project is located at a very prime location of wave city in Ghaziabad, Uttar Pradesh. The project land is on 24 mtrs wide road and is well connected with two national highways viz. NH-24 and NH-58.

• There are 10 malls, reputed schools Like New Era Public School, DPS - Indirapuram Public School, Hospitals like - Columbia Asia., Engineering AKG Engineering College and other colleges, near to the project.

• Proposed Metro Station, just a stones throw away

ii. Amenities and facilities

• Provisions for modern facilities & amenities.

• Sufficient parking space for allottee/prospective buyers.

• 24 hours uninterrupted power supply

• Sufficient water arrangement

iii. Type of housing

• The location of the proposed project is most suitable for a group housing complex

iv. Area details

• The total Floor Area Ratio (‘FAR) of the housing project is 20.50 lakh sq. ft.

v. Construction details

• The Company has planned to construct more than 2000 flats which will be of affordable size