VSD Confin Ltd Management Discussions

1. GLOBAL ECONOMIC SCENARIO:

After a year marked by global uncertainties and volatilities, the global economy achieved greater stability in 2023. While uncertainty stemming from adverse geopolitical developments remained elevated, global economic growth was surprisingly robust. As per the World Economic Outlook (WEO), April 2024 of the International Monetary Fund (IMF), the global economy grew at 3.1% in CY23 according to International Monetary Fund (IMF) exceeding its expectation of 2.8% for the year. The global economy registered a growth of 3.2 per cent in 2023, though marginally lower than in 2022 and average for 2011-19 but higher compared to the projection of 2.8 per cent as per the April

2023 WEO. Inflationary pressures have been significantly higher on account of the persistence of core inflation. Global trade moderated due to rising geopolitical tensions, cross-border restrictions and slower growth in advanced economies (AEs). The muted trade growth occurred despite the easing of supply chain pressures. Further, geopolitical developments and monetary policy changes across countries resulted in increased caution among investors, culminating in moderation in foreign direct investment (FDI) flows.

Almost all major economies have surpassed the pre-Covid-19 pandemic (hereinafter as pandemic) real gross domestic product (GDP) levels in 2023. However, growth has been diverse across countries, raising prospects of increasing divergences. Some economies, including India and China, have attained GDP levels 20 per cent higher in

2024 compared to 2019 levels.

Despite strong global economic growth, as per the WEO data, the global volume of exports of goods and services registered a modest growth of 0.5 per cent in 2023 compared to 2022. Concerns regarding geopolitical conflicts, high borrowing costs and global economic fracturing were also reflected in weakening FDI flows. Global FDI flows declined in 2023 compared to 2022.

According to the latest projections by the IMF, the global economy is slated to grow at 3.2 percent in 2024 and holding steady, even for 2025. The IMF also expects the global headline inflation to decline to 5.9 percent in 2024 and sequentially to 4.5 percent by the end of 2025, leading to a soft landing.

2. INDIAN ECONOMY:

While global economy managed to fend off hard lending, India stood out with GDP growth significantly surpassing expectations while retaining the tag of fastest growing major economy. Indias economy carried forward the momentum it built in FY23 into FY24 despite a gamut of global and external challenges. The focus on maintaining macroeconomic stability ensured that these challenges had minimal impact on Indias economy.

RBI estimates Indias GDP growth rate for FY25 at 7.2% following a stellar performance in FY24. World Bank revised its CY24. As per the Economic Survey 2023-2024, Indias real GDP grew by 8.2% in FY24, posting growth of over 7% for a third consecutive year, driven by stable consumption demand and steadily improving investment demand. Gross value added (GVA) at 2011-12 prices grew by 7.2% in FY24, with growth remaining broad-based. Net taxes at constant (2011-12) prices grew by 19.1% in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalisation of subsidy expenditure. This led to the difference between GDP and GVA growth in FY24. Private final consumption expenditure (PFCE) grew by 4.0% in real terms in FY24. Growth in gross tax revenue (GTR) was estimated to be 13.4% in FY24, translating into tax revenue buoyancy of 1.4. The growth was led by a 15.8% growth in direct taxes and a 10.6% increase in indirect taxes over FY23. Broadly, 55% of GTR accrued from direct taxes and the remaining 45% from indirect taxes.

The survey further stated that for the first time in 13 years, S&P Global Ratings upgraded Indias sovereign credit rating outlook from stable to positive in May 2024 on the back of robust economic growth, sound economic fundamentals and improved composition of government spending. The increase in indirect taxes in FY24 was mainly driven by a 12.7% growth in GST collection. In FY24 total government expenditure (as per the provisional actuals) declined to 15.0% of GDP from 17.7% in FY21. From the gender perspective, the female labour force participation rate has been rising for six years, i.e., from 23.3% in 2017-18 to 37% in 2022-23, driven mainly by the rising participation of rural women.

Revenue receipts of the union government consisting of tax revenue (net to centre) and non-tax revenue (NTR) increased YoY by 14.5% in FY24 (PA), with robust growth in both tax and non-tax revenues. The fiscal deficit of the government is expected to drop to 4.5% of GDP or lower by FY26.

Construction activities displayed increased momentum and registered a growth of 9.9% in FY24 due to the infrastructure buildout and buoyant commercial and residential real estate demand. In 2023, residential real estate sales in India were at their highest since 2013, witnessing a 33% YoY growth, with a total sale of 4.1 lakh units in the

top eight cities. New supply witnessed an all-time high, with 5.2 lakh units launched in 2023, as against 4.3 lakh units in 2022. The momentum continued in Q1 of 2024, witnessing record-breaking sales of 1.2 lakh units, clocking a robust 41% YoY growth.

3. INDUSTRY REVIEW:

Indian real estate has seen diverging trends as compared to global peers. Higher interest rates dented housing sales, layoffs and weak consumer sentiment impacted office and retail space leasing in advanced economies. India on the other hand witnessed surge in housing demand, accompanied by recovery in office leasing despite global slowdown in IT/ITes spending. Retail real estate continues to perform well driven by upbeat consumer spending.

The real estate sector shows promise with a projected 9.2% CAGR from 2023 to 2028. 2024 is expected to drive growth with urbanization, rental market expansion, and property price appreciation. Driven by increasing transparency and returns, theres a surge in private investment in the sector. The new framework for Small and Medium Real Estate Investment Trusts (SM REITs) has been praised by the realtors association CREDAI, stating that it will enhance the flow of funds into the Indian real estate market. In 2023, luxury home sales in India surged by 75%, doubling their share in total housing sales.

Construction costs typically account for 25% to 45% of the sales price, depending on the location and positioning of the project, with labour cost (which has seen steady and low inflation in the recent past) making up over one-third of that amount. This effectively means that the price of commodities has a lower intensity on the profitability of new projects. Short commodity cycles and long gestation period for construction provides comfort to developers to increase price in calibrated manner without impacting margin.

4. OPPORTUNITIES AND CHALLENGES:

Opportunities

The real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021. By 2025, it will contribute 13% to the countrys GDP. The emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. Rapid urbanisation in the country is pushing the growth of real estate. Indias real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.

The Smart Cities Mission presents a major opportunity for real estate developers by targeting the development of 100 smart cities in India, stimulating the growth of commercial centers in their vicinity. Demand for industrial and logistics space hit a record in 2023, totaling 38.8 million square feet across 8 cities.

India is in early stage of structural upcycle for housing demand. Dynamics of industry will largely blunt the cyclical forces and will elongate the cycle. India housing is expected to be both the participant as well as the driver of GDP growth over the course of the decade, with contribution to GDP rising from 7% currently to mid-teens, as seen in developed and mid-income economies. The demand will be supported by several long-term factors and key among them are:-

• Rising household incomes.

• Rapid urbanization boosting urban population.

• Nuclearization of families.

• Improving education levels leading to rising number of STEM graduates.

Supply & demand consolidation:

Consolidation of supply and demand in the industry, led by policy reforms, demonetization and IL&FS crisis among other factors in the previous decade, accelerated post-Covid. Having suffered economically in the past, consumers are increasingly preferring to buy from only handful of branded tier-1 developers. Similarly, lenders prefer to lend only to handful of branded developers. Devoid of customer advances and formal credit, a large number of unbranded developers have vacated the space leading to market share gains for branded developers. As per Anarock Research, more than 50% of incremental supply is now coming from branded developers.

Affordable and Mid-income segment:

The share of affordable and mid-income segments in the total housing sales has come down in the recent past due to rise in mortgage rates. While the consumer can afford the monthly payments towards the mortgage due to income growth, lower loan eligibility means a higher equity contribution on the part of the consumer There are near term actions which are likely to support the demand in this segment. Key among them are:

• Likely government incentives for entry level homebuyers.

• Likely cut in interest rate in second half of FY25.

Threats and challenges:

While we remain well placed to capture the opportunities, few challenges may have an impact on the industry in the near term. We always keep a watchful eye for any of challenges which, if they fructify, can impact the upward trajectory of the industry. Our strong management team in consultation with the board takes mitigating actions in light of such challenges. Some of these challenges in the near term could be:

• Increase in high inflation.

• Escalation of geo-political tensions leading to another round of supply chain disruption.

• Significant slowdown in India.

• Souring of job sentiment.

• Significant increase in home prices effected by developers which in turn starts to impact affordability. Company Strengths:

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

• Possesses a successful track record of quality execution of projects with contemporary architecture.

• Follows a strong culture of corporate governance and ensures transparency and high levels of business ethics.

• Strength of Innovation in product as well as sales and marketing strategies.

• Possess exceptional management capabilities with the advantage of decentralized organization structure.

5. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

During the FY 2023-2024 the Company had re-commenced its operations in the segment of trading of goods relating to real estate segment. The Company is taking all efforts to generate business and is also looking out for different avenues to grow the business.

6. RISKS AND CONCERNS:

The Company is exposed to multiple risks such as economic, regulatory, taxation and environmental as well as sectoral investment outlook. Some risks that may arise in the normal course of business and could impact their ability to address future developments, comprise credit risk, liquidity risk, counterparty risk, regulatory risk, commodity inflation risk and market risk. The Companys strategy of focusing on key products and geographical segments is exposed to economic and market conditions.

The Company continues to implement robust risk management policies that cater for risks and requisite mitigation plans.

7. OUTLOOK:

In 2024, we anticipate an opportunity for the Indian economy to become a world leader. The real estate sector is likely to continue on its journey of long term growth as we see a continuous rise in GDP per capita, larger disposable incomes, growing urbanization and most of all a larger focus of the world on us as the next big economy. An increase in earning potential, a need for a better standard of living and the growing base of aspirational consumers and their lifestyle changes have led to substantial growth in the sector. With suited economic growth, the premium housing segment will also witness higher demand in the years to come.

8. INTERNAL CONTROL SYSTEMS:

The Company has a robust internal financial control system commensurate with the size, scale and complexity of its operations. It has put in place adequate controls, procedures and policies for ensuring orderly and efficient conduct of its business including adherence to policies, safeguarding its assets, reasonable framework aimed at prevention and detection of frauds and errors, accuracy and completeness of accounting records. Appropriate frameworks have been designed to have internal controls over financial reporting, which ensures the integrity of financial statements of the Company and reduces possibility of malpractice.

9. HUMAN RESOURCES:

The Company firmly believes that human resources is an important instrument to provide proper communication of the Companys growth story to its stake holders and plays vital role in the overall prospects of the Company. The Company takes possible steps for the welfare of its manpower. Your Company aims to attract, develop, motivate and retain diverse talent, which is critical for its competitive differentiation and continued success. The employee relationship was cordial throughout the year. Your Company as on 31^st March, 2024, had 1 permanent employees on its rolls.

10. DISCUSSION ON FINANCIAL PERFORMANCE:

During the year under review, the Company has incurred a Net Loss of Rs. 16.15 Lakhs as compared to Net Loss of Rs. 11.67 Lakhs in the previous year. Your Directors are continuously looking for avenues for future growth of the Company.

11. KEY FINANCIAL RATIOS:

Particulars	31.03.2025	31.03.2025	Reasons for Change of 25% or more
Current Ratio	366.68	385.28	NA
Debt Equity Ratio	0.10	0.15	Decrease in liability payable
Return on Equity Ratio	-0.011	-0.008	Increase in loss incurred
Inventory Turnover Ratio	NA	NA	NA
Trade Receivables Turnover Ratio	NA	7.74	No sales during the year (Average Trade Receivables Ration as per Sales during the previous year)
Net Capital Turnover Ratio	NA	0.22	No sales during the year (As per sales during previous year)
Net Profit Margin	NA	-0.04	No sales during the year (As per sales during previous year)
Return on Capital Employed	-0.014	-0.009	Increase in Loss incurred
Return on Investment	-0.013	-0.010	Increase in Loss incurred

 

	BY ORDER OF THE BOARD OF DIRECTORS FOR VSD CONFIN LIMITED
	Sd/-	Sd/-
	ASHUTOSH SHARMA	ANSHUMAN GARG
Date : 05.09.2025	(DIN: 08198684)	(DIN: 02403491)
Place : Lucknow	MANAGING DIRECTOR	DIRECTOR