Zodiac Ventures Ltd Management Discussions.

i) Indian Economy:

Impact of a global slowdown and Non-Banking Financial Companies (NBFC) crisis continued to weigh on the Indian economy. According to IMF estimates, the growth rate of economy declined significantly to 4.2% for fiscal year 2020 on the back of weak manufacturing activity, falling exports and weak consumer demand and private investment. Responding to the persistent slowdown, the Central Bank continued to cut policy rates during the year while the Government announced various measures to arrest the pace of decline. Corporate tax rate was slashed to boost investment. Public sector banks were merged to create healthy large banks and the Government announced capital infusion into PSU banks to boost lending and improve liquidity in the system.

The Covid-19 pandemic and consequent lockdown brought economic activity to a virtual standstill. Amidst the uncertainty, IMF expects the growth rate of Indian economy to plunge to 1.9% in FY21. In response to the ongoing crisis, the government and RBI announces several fiscal and monetary stimulus measures to revive the ailing economy. Though the economy continues to be in the grip of slowdown in the short term, key structural reforms by the government including reduction in policy rates, recapitalization of public sector banks, liquidity support to NBFC sector and governments infrastructure investment plans should help revive the credit cycle and help in kickstarting the economy over the medium to long term.

ii) Industry and Segment Analysis:

Revenue of the Company is generated from providing Architectural and Consultancy Services in Real Estate Sector. For the housing sector, 2019 was a lacklustre year in terms of sales growth and demand. Sentiments remained subdued, sustaining almost solely on end-user activity focused on ready-to-move-in or almost-complete homes. Indian residential sector was caught in the grip of delayed project deliveries, liquidity squeeze for developers, high unsold inventory and a growing proportion of stalled projects. As such, end-users continued to gravitate towards well-established players with a track record of completing and delivering projects on time. The slew of measures announced by the government such as last-mile funding of affordable housing, rationalisation of the GST rates, liquidity support to HFCs and NBFCs were desirable steps to revive the sector.

Indian real estate sector which had already been grappling with subdued demand and liquidity crisis, is now facing severe slowdown challenges owing to the impact of coronavirus pandemic. Amidst the current COVID-19 outbreak, residential sector, which was already reeling under inventory overhang and lack of consumer confidence, is likely to struggle through fiscal 2021 as developers will face challenges in launching new projects and complete the ongoing ones as planned because of construction halts, labour shortage and financing issues. However, the government is expected to step in with required measures to revive the sentiments and invigorate demand to get the growth trajectory back on track. Moreover, in the current challenging environment, leading players are likely to adopt technology to enhance customer experience.

iii) Opportunities and challenges:

While the management of your Company is confident of creating and exploiting the opportunities it is faced with unfavorable changes in the government policies and the regulatory environment can adversely impact the performance of the sector. The Covid-19 pandemic has further made the situation difficult. There are substantial procedural delays with regards to land acquisition, land use, project launches and construction approvals. Retrospective policy changes and regulatory bottlenecks may impact profitability and affect the attractiveness of the sector and companies operating within the sector.

iv) Internal Control Systems

The Company has an adequate Internal Control System commensurate with size and nature of its business to safeguard all assets and to ensure their efficient productivity. The Company has continued to keep focus on processes and controls. The Company has a suitable internal control system for the business processes, operations, financial reporting, compliance with applicable laws and regulations. Wherever deemed necessary, internal control systems are also reassessed and corrective action is taken, if required.

v) Financial operational performance

In spite of a repressed economic development, your Company performed reasonably well.

vi) Impact of COVID-19 on the Company

The outbreak of COVID-19 pandemic has adversely impacted our company also like other entities. The company suspended operations in compliance with lockdown instructions issued by the Central and State governments. However, the company has resumed operations in a phased manner in line with subsequent guidelines of the government. Due to this reason, Management has not been able to carry out impairment testing, as mentioned in the Auditors Report annexed to this Report.

The management is actively monitoring effects of this pandemic on its operations including construction, supplies and workforce and financial condition including liquidity, inventories, receivables, investments and other assets/liabilities. The company has used the principles of prudence in applying judgments, estimates and assumptions in assessing its liquidity position and carrying value of its assets.

vii) Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.