Trescon Ltd Management Discussions

ECONOMIC OVERVIEW

The Indian economy entered financial year 2025-2026 from a position of comparative strength and closed it there. Real gross domestic product is estimated to have grown by 7.4 per cent during the year, with nominal GDP expanding by approximately 8.0 per cent. Growth was led by services, which grew 9.1 per cent, while manufacturing and construction each recorded 7.0 per cent growth and agriculture grew 3.1 per cent. For a business such as ours, the construction number is the one that matters most: it is a direct read on the volume of physical development activity in the country, and a 7.0 per cent expansion signals a sector operating at healthy capacity rather than one in retreat.

Two features of the years growth composition are particularly relevant to residential real estate. First, private final consumption expenditure is projected to have grown 7.0 per cent and to account for 61.5 per cent of GDP — the highest share since FY 201112. Housing is the single largest discretionary purchase most Indian households ever make, and a consumption-led expansion of this character is the environment in which home-buying decisions get taken rather than deferred. Second, gross fixed capital formation rose 7.8 per cent, reflecting continued momentum in infrastructure creation. In the Mumbai Metropolitan Region, that capital formation is not an abstraction — it is metro lines, road corridors and an operational new airport, each of which reprices the land around it.

INDUSTRY STRUCTURE AND DEVELOPMENTS

• The Mumbai Metropolitan Region

MMR remains the largest and deepest residential market in India, but it participated fully in the volume correction. Sales in the region fell 18 per cent to 1,27,875 units in 2025, from 1,55,335 units in 2024 — a decline sharper than the national average of 14 per cent. Encouragingly, MMR was one of only two major markets to record a reduction in unsold inventory, which eased 1 per cent to 1,79,228 units from 1,80,964 units. Together with Bengaluru, MMR accounted for 48 per cent of national sales and 51 per cent of national launches in the first quarter of 2026, confirming its continuing centrality even in a softer year.

Transaction data for the city of Mumbai points to resilience beneath the headline. Property registrations rose 6 per cent year on year in the first half of calendar 2026 to 80,221 — the highest since 2013 — while stamp duty collections grew 4 per cent to Rs 6,968 crore. The gap between registration growth and revenue growth is instructive: it reflects, in Knight Frank Indias assessment, a shift in transaction mix toward a higher share of mid-market deals, and a demand base that is broadening across buyer segments rather than concentrating in high-value transactions. For a developer positioned in the mid-income and aspirational segments of the extended region, this is a more favorable signal than the aggregate volume decline would suggest.

• Kalyan, Dombivli and the eastern MMR corridor

The Companys development portfolio is concentrated in the Kalyan-Dombivli belt and its immediate extensions; a micromarket being reshaped by committed public infrastructure. Mumbai Metro Line 12, extending the Orange Line from Kalyan APMC to Taloja across 23.57 kilometres and 19 elevated stations at an estimated cost of Rs 5,865 crore, is under civil construction with phased completion targeted towards 2027. The corridor interchanges with Metro Line 5 at Kalyan, with the proposed Line 14 at Hedutane and with Navi Mumbai Metro Line 1 at Amandoot. On commissioning, journey times along the Kalyan-Shil and Dombivli-Taloja axes are expected to compress from over an hour to approximately 25 to 30 minutes.

Metro connectivity has repeatedly proven to be among the strongest drivers of residential demand and price appreciation in MMR, and the Companys land bank at Kalyan (West), Dombivli (East) and along the Shil-Kalyan corridor has been assembled with that thesis in view. The corridors supporting context — the operationalisation of Navi Mumbai International Airport, the Mumbai Trans Harbour Link and the growing employment base in the Taloja and Dombivli MIDC belts — converts what was historically a dormitory catchment into a self-sustaining one.

Land and construction costs in this belt remain a fraction of those in the island city and the western suburbs, which is what makes a genuinely mid-income product commercially viable here and increasingly difficult to build elsewhere in the region.

• Regulatory and policy developments

Ready reckoner rates: The Government of Maharashtra announced on 1 April 2026 that ready reckoner rates for FY 2026-27 would be held at FY 2025-26 levels, with no increase, following a 3.39 per cent increase across Mumbai in the preceding year. Stamp duty continues at 6 per cent for male buyers and 5 per cent for women buyers. The freeze reduces the transaction cost of acquisition for buyers and, for developers, holds the minimum valuation floor steady during a period of softening volumes. Industry expectation is that this represents a deferral rather than a permanent change in policy direction.

Goods and Services Tax rationalisation: The reduction of GST on cement, steel and other key construction inputs to 18 per cent is expected to lower construction cost by approximately 5 per cent, with the benefit passing through progressively as procurement cycles turn.

RERA enforcement: Continued tightening of registration, escrow, disclosure and delivery obligations under the Real Estate (Regulation and Development) Act, 2016 has raised the cost of non-compliance and, in doing so, accelerated the consolidation of market share toward organised and branded developers with demonstrable delivery records.

Institutional capital: Private equity inflows into Indian real estate reached approximately USD 6.7 billion in calendar 2025, a 59 per cent increase year on year, indicating that institutional confidence in the asset class has not tracked the softening in residential volumes.

INTEREST RATES AND LIQUIDITY

Monetary conditions eased materially over the preceding eighteen months and then stabilised. Following a cumulative reduction of 125 basis points in the policy repo rate, the Reserve Bank of India held the rate at 5.25 per cent through the review period, including at its August 2026 meeting. Prevailing floating home loan rates for prime retail borrowers settled in the region of 8.0 to 9.0 per cent. For the Companys customer a first-time or second-time buyer in the Rs 40 lakh to Rs 1.2 crore ticket band across Kalyan, Dombivli and Ambernath this combination of a lower and, crucially, a stable rate is more valuable than the rate cut alone. Equated monthly instalments are affordable and, equally important, predictable, which shortens the interval between a site visit and a booking.

Input cost inflation, which had compressed developer margins for much of the preceding cycle, eased on the back of policy action. The rationalisation of Goods and Services Tax rates on key construction materials including the reduction on cement and steel to 18 per cent — is estimated by industry to reduce all-in construction cost by approximately 5 per cent. The benefit accrues progressively as older inventory is worked through and fresh procurement is made at revised rates; the Company began to see it in the second half of the year under review.

OPPORTUNITIES AND THREATS

• Opportunities

Infrastructure-led rerating of the eastern MMR corridor. Metro Line 12, the Navi Mumbai International Airport and the Mumbai Trans Harbour Link together compress travel time and expand the effective employment catchment of Kalyan, Dombivli and Ambernath. The Companys land holdings sit within the influence zone of these assets and were acquired substantially in advance of their commissioning.

A supply vacuum in the mid-income segment. With 62 per cent of national sales now occurring above Rs 1 crore and developer launches concentrated in premium formats, the Rs 40 lakh to Rs 1.2 crore band is comparatively under-supplied relative to the size of its buyer base. The Companys cost structure in the eastern corridor allows it to serve this band at an acceptable margin.

Consolidation toward organised developers. Stricter RERA enforcement and buyer preference for demonstrable delivery records are transferring market share from unorganised local builders to branded developers. Trivenis forty-year record and 3,500-plus delivered families position the Company on the receiving side of that transfer within its micro-market.

A benign cost and rate environment. A stable 5.25 per cent repo rate, home loan rates in the 8 to 9 per cent band, a frozen ready reckoner for FY 2026-27 and a GST-driven reduction of approximately 5 per cent in construction cost are, in combination, the most supportive affordability backdrop the sector has seen in several years.

Monetisation of completed and residual inventory. Reducing finished unsold stock releases working capital at high incremental margin and improves the return on capital employed without further land deployment.

• Threats

Inventory overhang and the loss of pricing power. National unsold inventory has crossed 6 lakh units and launches are now outpacing sales. Should this persist, price growth will compress further and discounting pressure will extend into the mid-income segment.

Volume contraction in MMR. Regional sales fell 18 per cent in 2025, ahead of the national decline. A continuation would lengthen absorption timelines and increase the carrying cost of work-in-progress.

Scale disadvantage. The Company is a small capitalization developer competing in a market where large listed and institutionally funded developers enjoy materially lower costs of capital, deeper land banks and larger marketing budgets.

Concentration risk. The Companys portfolio is concentrated in a single micro-market and a single asset class. A localised shock an infrastructure delay, a change in development control regulations, or a sharp local supply surge — would affect the whole portfolio simultaneously.

Approval and execution risk. Delays in statutory approvals, environmental clearances or occupation certificates directly defer revenue recognition and extend the period over which project finance is carried.

Input cost and labour availability. Notwithstanding the GST relief, cement, steel and finishing material prices remain cyclical, and skilled labour availability in MMR is periodically constrained.

Interest rate reversal. The affordability improvement of the last eighteen months rests on the rate cycle. A reversal would transmit quickly to equated monthly instalments in the Companys price band, where buyer sensitivity to EMI is highest.

STANDALONE FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE • Statement of Profit and Loss

• Balance Sheet (Rs in lakh)

• Cash Flow (Rs in lakh)

• Return on Net Worth (Rs in lakh)

COMPANY STRENGTHS

Your Company continues to capitalize on the market opportunities by leveraging its key strengths. These include:

• 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.

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

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

• Transparency: Follows a 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.

HUMAN RESOURCES

Employees are at the heart of your Company and the biggest differentiators. Its their inexorable commitment that helps your Company to create spaces that enhance quality of life. Keeping the spirits high at workplace needs a sound mental and physical fitness and deep-rooted culture which promotes work life balance.

HEALTH AND SAFETY

Your Company is always committed to the health and safety of its employees. Your Company provides a clean, hygienic and conducive work environment to all employees and doubled these efforts during the pandemic. While your Company has eased the covid restriction at work, your Company is still very cautious and follows social distancing norms, encourage virtual meetings and have place sanitizers at various locations. All employees and their family members are covered under the Companys group medical insurance policy to support hospitalization needs. Special medical leave and flexibility in working hours are provided on case-to-case basis.

INTERNAL CONTROL SYSTEMS

Your company has in place an adequate system of internal controls commensurate with its size & nature of operations, along with well-defined organisation structure & documented policy guidelines & procedures, predefined delegation of authority covering all corporate functions and all operating units. These internal controls are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the adequacy of protecting your companys assets from unauthorized use or losses, the reliability of financial controls and compliance with applicable laws and regulations.

The Company has also focused on upgrading the IT infrastructure - both in terms of hardware and software. In addition to the existing ERP platform, the Company is presently reviewing the process documentation to ensure effectiveness of the controls in all the critical functional areas of the Company.

CAUTIONARY STATEMENT

This report contains statements that may be forward looking including, but without limitation, statements relating to the implementation of strategic initiatives and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forwardlooking statements to reflect future/likely events or circumstances.