Macroeconomic Review:
The global economy grew at 3.4% in 2022 compared to a growth of 6.2% in 2021 according
to the World Economic Outlook, released by the International Monetary Fund (IMF) in April
2023. This slowdown was primarily due to rising central bank rates as a result of high
inflation, the impact of the Russia-Ukraine conflict, and sluggish economic activity in
China due to a resurgence of Covid-19 pandemic. IMF forecasts the global growth to decline
to 2.8% in 2023 and then rise again to 3.0% in 2024, dipping below the pre-Covid-19
pandemic historical average of 3.8% (for the period 2000-2019). IMF expects global
inflation to decline in 2023 and 2024, from 8.7% in 2022 to 7.0% in 2023 and 4.9% in 2024.
Global headline inflation peaked during the third quarter of 2022, according to IMF. The
lower inflation estimates for 2023 are partly due to decline in international fuel and
non-fuel commodity prices, as well as the cooling effects of monetary policy tightening.
IMF expects the emerging and developing Asia to grow by 5.3% and 5.1% during 2023 and
2024, respectively.
As per the Economic Survey 2022-23 presented by the Finance Minister in January 2023,
the Indian economy is estimated to have grown at 7.0% in 2022-23 (vs. 8.7% in 2021-22).
This growth was mainly led by private consumption and increased Government focus on
infrastructure development. India is now the fifth-largest economy in the world and was
also the fastest growing major economy in the world during 2022-23. Economic growth in
2023-24 is likely to be in the range of 6.0% to 6.8%, as per the Economic Survey 2022-23.
This is in line with IMF forecasts that peg the growth of Indian economy at 6.1% in
2023-24 and 6.8% in 2024-25, led by resilient domestic demand.
In 2022-23, elevated core inflation led the Reserve Bank of India (RBI) to maintain a
tighter stance on the economy. RBI estimates headline inflation to be at 6.8% in 2022-23.
However, RBI expects inflation to moderate in 2023-24 to 5.3%, but remain well above its
4% target.
The Government of Indias budgeted estimate for capital expenditure outlay in 2022-23
increased by 35.4% from around 5.5 Lakh Crores in 2021-22 to an estimated 7.5 Lakh Crores
for 2022-23. Further, the Union Budget of 2023- 24 has allocated a substantial amount of
approximately 10 Lakh Crores for the countrys infrastructure development. This is likely
to be a key growth driver for the Indian economy amid the current volatile macroeconomic
conditions.
Indias Construction and Infrastructure Sector
In 2019, Government of India adopted a stronger approach towards infrastructure. The
National Infrastructure Pipeline (NIP) was born with a projected investment of around
Rs.111 lakh crore for FY20-25. The NIP currently has 8,964 projects with a total
investment of more than Rs. 108 lakh crore under different stages of implementation.
Regarding sectoral composition, the transport sector constituted more than half of the
projects. The government has assigned infrastructure and investment as one of the seven
priorities of the Union Budget 2023. The capital investment outlay has increased for the
third successive year by 33.4% to Rs. 10 lakh crore equivalent to 3.3% of GDP. Effective
capital expenditure of centre is budgeted at Rs. 13.7 lakh crore equivalent to 4.5% of GDP
which is around Rs. 303.03 lakh crore. Support to State Governments with 50-year interest
free loan has been continued to incentivize infrastructure investment with capital
investment outlay of Rs. 1.3 lakh crores.
To bring in further convergence with comprehensive planning across centre and states,
PM GatiShakti was launched for logistics facilitation through the National Logistics
Policy in September 2022. All of this is expected to tighten the nuts and bolts for the
arduous infrastructure journey that our country has undertaken together by the
participation of centre, state, local governments, and the private sector.
This story has seen many successes. While roads, railways, and waterways have seen
unprecedented expansion in the last eight years, ports and airports have been
substantially upgraded. This has also helped the country move from unimodal to multimodal
transportation, providing a window of opportunity to the private sector to invest and
reinvest in these assets.
With the intent to improve Ease of Doing Business and facilitate overall probusiness
environment, Ministry of Finance has issued a blueprint for Vivad se Vishwas II
(Contractual Disputes) scheme. The scheme intends to setup a conciliation mechanism for
settling the contractual disputes of Government and Central Government undertakings with
private parties. The scheme allows a one-time settlement amount of up to 80% of the
disputed amount, depending on progress and stage of the claim under the dispute resolution
mechanism. This is a welcome move, and once implemented after taking into account inputs
provided by industry, the scheme can give a boost to the sector as a whole.
As per Indias Nationally Determined Contribution (NDC) under the Paris Agreement,
India is committed to achieve 50% installed capacity by non-fossil fuel sources by 2030.
To follow up on its commitment to clean energy, it has issued guidelines to promote pumped
storage projects through concessional finance and rationalisation of environment
clearance. Nuclear power is also seeing a renewed push from the government in line with
its clean energy commitment. India approved 10 indigenously developed nuclear reactors and
is also taking steps for development of Small Modular Reactors (SMR)
In the context of unique challenges, which only a country with a billion people can
face, Indias infrastructure journey has been global in outlook, but domestic in
innovation and implementation.
Opportunities and Threats:
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, well-designed
projects in strategic locations, strong balance sheet, and stable financial performance
even in testing times make it a preferred choice for customers and shareholders. Your
company is ideally placed to further strengthen its development potential by acquiring new
land parcels.
Outlook:
Infrastructure sector is a key driver for the Indian economy. The sector is highly
responsible for propelling Indias overall development and enjoys intense focus from
Government for initiating policies that would ensure timebound creation of world class
infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads,
and urban infrastructure development. In other words, the infrastructure sector acts as a
catalyst for Indias economic growth as it drives the growth of the allied sectors like
townships, housing, built-up infrastructure and construction development projects.
Indias high growth imperative in 2023 and beyond will significantly be driven by major
strides in key sectors with infrastructure development being a critical force aiding the
progress. In order to meet Indias aim of reaching a USD 5 Tn economy by 2025,
infrastructure development is the need of the hour. The governments focus on building
infrastructure of the future has been evident given the slew of initiatives launched
recently. The USD 1.3 Tn national master plan for infrastructure, Gati Shakti and Smart
Cities has been a forerunner to bring about systemic and effective reforms in the sector,
and has already shown a significant headway.
The government has launched the National Infrastructure Pipeline (NIP) combined with
other initiatives such as ‘Make in India and the production-linked incentives (PLI)
scheme to augment the growth of infrastructure sector. Historically, more than 80% of the
countrys infrastructure spending has gone toward funding for transportation, electricity,
and water & irrigation. Investments in building and upgrading physical infrastructure,
especially in synergy with the ease of doing business initiatives, remain pivotal to
increase efficiency and costs. Few of the recent government initiatives and investments in
the infrastructure sector are as follows:
? Capital investment outlay for infrastructure is being increased by 33% to Rs.10 lakh
crore (USD 122 Bn), which would be 3.3% of GDP and almost three times the outlay in
2019-20.
? Infrastructure Finance Secretariat is being established to enhance opportunities for
private investment in infrastructure that will assist all stakeholders for more private
investment in infrastructure, including railways, roads, urban infrastructure, and power.
? 100 critical transport infrastructure projects, for last and first mile connectivity
for ports, coal, steel, fertilizer, and food grains sectors have been identified and will
be taken up on priority with investment of Rs. 75,000 crore (USD 9 Bn), including Rs.
15,000 crore (USD 1.8 bn) from private sources.
? An Urban Infrastructure Development Fund (UIDF) will be established through use of
priority sector lending shortfall, which will be managed by the National Housing Bank, and
will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3
cities.
Real estate:
The real estate market in India has shown resilience and stability despite the impact
of the COVID-19 pandemic. Home prices have stabilized with a rebound in housing sales and
a decline in unsold inventories. The increase in rent price ratios in major metros has
also shown promising growth potential in the rental market. REITs have experienced
positive returns, and there is renewed interest from foreign funds in private equity real
estate investments in India. Overall, the future performance of the real estate market in
India looks promising despite global uncertainties. Indias real estate sector has seen a
three-fold increase in foreign institutional inflows, amounting to USD 26.6 Bn between
2017 and 2022. Foreign investments accounted for 81% of total investments in real estate
during the period, driven by investor-friendly FDI policies, increased transparency in
deals, and higher investment limits. Institutional investments remained strong in Q1 2023,
with a 37% YoY increase to USD 1.7 Bn, led by the office sector.
Real estate sector in India is expected to reach USD 1 Tn in market size by 2030, up
from USD 250 billion in 2022 and contribute 13% to the countrys GDP by 2025. Indian real
estate is expected to attract a substantial amount of FDI in the next two years with USD 8
billion capital infusion by FY22. The Private Equity Investments in Indias real estate
sector, stood at USD 3.4 Bn in 2022.
Indian residential real estate market is witnessing a surge in new launches as the
appetite for home ownership remains strong. It is expected that this sector will incur
more nonresident 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. The residential housing is
expected to get further boost by central governments schemes on affordable housing under
Pradhan Mantri Awas Yojana (PMAY). Some of the major investments and developments in this
sector are as follows:
? In the Union Budget 2023-24, the Finance Ministry has announced a commitment of Rs.
79,000 crore (USD 9.6 Bn) for PM Awas Yojana, which represents a 66% increase compared to
the last year.
? In order to revive around 1,600 stalled housing projects across top cities in the
country, the Union Cabinet has approved the setting up of Rs. 25,000 crore (USD 3.6Bn)
alternative investment fund (AIF).
Risks and Concerns:
The industry is affected by the factors like increased cement & steel cost, power
cost; increase in labour cost and transportation cost due to petrol/diesel price increase
etc. could contribute to inflation. The Company considers good corporate governance as a
pre-requisite for meeting the needs and aspiration of its shareholders. The main risk to
the Company which may arise is mainly due to Government policies and decisions,
Fluctuations in prices of Raw materials, Exchange rate fluctuations, Industry demand etc.
Internal Control Systems and their adequacy:
The Company has an adequate system of internal controls to ensure accuracy of
accounting records, compliance with the applicable laws & regulations. In a developing
and dynamic economy such as India, regulatory environment keeps on progressing to keep
pace with the global dynamics in the fields of environment, taxation, competition,
governance, etc. Non-compliance of applicable regulations may lead to imposition of
penalties, suspension of operations, among others apart from reputational damage. This may
also hinder the pace of innovation, upgradation, transformation within the organisation.
To mitigate the same, the Company keeps a strict vigil and regularly tracks the regulatory
environment and takes necessary actions. Wherever required, it amends/ upgrades its
operational practices and incurs capex to ensure compliance.
Financial Performance with respect to Operational Performance:
Total Income showed a decrease of earnings from Rs. 103,35,000 to Rs. 50,38,000/-.
Human Resources:
As on 31st March, 2023, the Company had One (1) employee, viz.: Mrs. Pinal Parekh,
Company Secretary.
Cautionary Statement: The statements in this management discussion and analysis
describing the outlook may be “forward looking statement” within the meaning of
applicable laws and regulations. Actual result might differ substantially or materially
from those expected due to the developments that could affect the Companys operations.
The factors like significant change in political and economic environment, tax laws,
litigation, technology, fluctuations in material cost etc. may deviate the outlook and
result.
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