SVP Housing Ltd Management Discussions.

Overview of Indian Economy:

India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Indias GDP is estimated to have increased 6.6 per cent in 2017-18 and is expected to grow 7.3 per cent in 2018-19.

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

Key highlights of the Indian Economy:

• Economic growth expected at 6.5 per cent in 2016-17.

• IMF expects India to grow at 7.2 per cent in 2017 and 7.7 per cent in 2018.

• CPI inflation has come down to 3.4 per cent in December 2016 from 6.0 per cent in July 2016.

• Current Account deficit declined from about 1 per cent of Gross Domestic Product (GDP) last year to 0.3 per cent of GDP in the first half of 2016-17.

• Foreign exchange reserves have reached US$ 361 billion as on January 20, 2017.

• Government has recommended 3 per cent (of GDP) fiscal deficit target for the next three years Fiscal deficit for 2017-18 is targeted at 3.2 per cent.

• Revenue deficit of 2.3 per cent (of GDP) in Budget Estimates (BE) 2016-17 stands reduced to 2.1 per cent in the Revised Estimates (RE). The Revenue deficit for next year is pegged at 1.9 per cent.

(Source: https://www.ibef.org/economy/union-budget-2017-18)

OUR INDUSTRY: Overview of Real Estate Industry

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.careratings.com/upload/NewsFiles/SplAnalysis/Real%20estate-%20Opportunities%20challenges%20and%20outlook.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.

• 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