A. Industry structure and developments
The Real Estate sector is among one of the most globally recognized sectors. It comprises of four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy.
In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. This sector is a major wealth creator for both developers and investors. The consequent increase in business opportunities and migration of the labour force has, in turn, increased the demand for commercial and housing space, especially rental housing. About 250 ancillary industries such as cement, steel, bricks, timber, and building materials are dependent on the real estate industry.
The Year 2022 proved to be a year of a new high for the Indian real estate market. Both new launches and home sales saw a significant improvement last year and is expected to maintain the same momentum in the year 2023 as well. The real estate market in India has been tried and tested, widely thought to be immune to the volatility in the market. Interestingly, the real estate market has stayed true to the expectations of real estate investors despite the number of ups and downs in the last couple of years. Fortunately, positive expectations and a rise in the momentum of growth have demonstrated the markets ability to persist and will continue to do so in 2023 and the upcoming years as well.
The real estate market in India offers something for every type of investor out there. Considering 2023, the general Indian economy shows encouraging indicators, including a rebound from the current stock market fall, a predicted increase in the creation of new employment opportunities, and overall growth. These indicators will ultimately lead to a rise in the demand for housing societies in the country as more and more individuals step into the housing market.
In FY23, Indias residential property market witnessed the value of home sales reaching an all-time high of Rs. 3.47 lakh crore marking a robust 48% year-on-year increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold.
CONCLUSION
Real estate investment in India has never been an easy choice. With sales in various locations increasing significantly, it will make people understand the importance of owning their own real estate assets. With 2022 picking up some real estate trends, it is likely that these trends will continue in 2023 as well, along with any new real estate trends and forecasts that the market might see.
B. Opportunities and Threats
a) Opportunities:
Your management has committed to turn around the Company and make it profitable at an early date by their sincere efforts, business acumen, experience and resources on emerging opportunities in the current scenario of the real estate industry. Demand for quality housing is immense in India and long-term structural drivers of consolidated supply and growing demand with moderate price growth are in place. The current consolidation and long-term drivers both present significant growth opportunities for our Company in the near to medium term.
Your Company is undergoing following two re-development projects during the FY 2022-23:
•Dwarka Co-operative Housing Society Limited, a Society registered under the Maharashtra Co-operative Societies Act, 1960, bearing Registration No. W-S-W / HSG / TC 3875 and having its office at Saraswati Road, Off Linking Road, Santacruz (West) Mumbai - 400054, Maharashtra, India. The Company has entered into a Memorandum of Understanding with Dwarka Co-operative Housing Society Limited on 21st January 2022.
• Ambadevi Co-operative Housing Society Limited, a Co-operative Housing Society registered under the provisions of the Maharashtra Co- operative Societies Act, 1960, bearing Registration Number: BOM/HSG-627 of 1964 and having its office at Saraswati Road, Off Linking Road, Santacruz (West) Mumbai - 400054, Maharashtra, India. The Company has entered into a Memorandum of Understanding with Ambadevi Co-operative Housing Society Limited on 16th February 2022. The redevelopment project of Ambadevi Co-operative Housing Society Limited has been assigned to Arunis Edifice Private Limited, an Associate company.
b) Threats:
1. Fluctuations of interest rates have firm impact on residential real estate markets;
2. Increased bargaining power of suppliers of construction materials;
3. Entrants of new players with better and sound IT knowledge and improved technology;
4. Changing test of clients/consumers.
C. SEGMENT WISE OR PRODUCT-WISE PERFORMANCE
Revenue generated by the Company is from single segment only. Hence segment/product-wise performance is not applicable.
D. OUTLOOK
Real Estate plays a vital role in the economic development of the Country. It is estimated that the overall employment generation in the economy due to additional investment in the housing/construction sector leads to approximately 8 (eight) times employment through backward and forward linkages. The sector is also among the largest receivers of foreign direct investment (FDI), while supporting more than 350 industries in the Country. The residential real estate market in India is predicted to rise positively in 2023, with a capital value increase of more than 6%. The Indian residential market is expected to sustain its growth momentum in 2023 while dealing with global headwinds and higher interest rates. Meanwhile, some concerns exist regarding the supply-demand gap, a flight to quality will ensure that superior-grade commercial assets are given priority Additionally, the luxury housing market is poised to touch new heights in the coming years.
The real estate sector comprises four sub-sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodation.
E. RISKS AND CONCERNS
The objective of risk management systems is to measure and monitor the various risks the Company is subject to and to implement policies and procedures to address these. The Company continues to improve its operating processes and risk management systems that will further enhance its ability to manage these risks.
F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company believes that strong internal control system and processes plays a critical role in the functioning of the Company. Regular internal audits and checks ensure that responsibilities are discharged effectively. Your Company keeps on updating the IT infrastructure both hardware and software. The internal control system is designed to ensure that every aspect of the Companys activity is properly monitored.
G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The total income of the Company for the financial year under review was 369.36 Lakh as compared to 180.40 Lakh in the previous financial year and Net Profit (after tax) was 17.90 Lakh as against 18.08 Lakh in the previous financial year and earning per shares was 0.60 as against 0.60 in the previous financial year.
H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF
PEOPLE EMPLOYED
Employees are the key to achieving the Companys objectives and strategies. Your Company provides the employees a fair and equitable work environment and support from their peers with a view to develop their capabilities leaving them with the freedom to act and to take responsibility for the tasks assigned. Your Company strongly believes that its team of capable and committed manpower, which is its core strength, is the key factor behind its achievements, success, and future growth. Industrial relations remained cordial during the year. Our constant endeavor is to work towards making an organization that is simple, diverse, and agile which will move fast and innovate better. As on 31st March 2023, 4 people were employed in the Company.
I. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY
PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR
Key Financial Ratios |
Standalone | Consolidated | |||
| 2022-23 | 2021-22 | % Change | 2022-23 | 2021-22 | |
Debtors Turnover |
2.67 | - | - | 2.67 | - |
Inventory Turnover |
- | - | - | - | - |
Interest Coverage |
2.31 | 20.58 | 88% | 2.31 | 19.77 |
Current Ratio |
1.47 | 2.18 | 32% | 1.48 | 2.21 |
Debt Equity |
0.57 | 0.29 | 99% | 0.57 | 0.29 |
Operating Profit Margin (%) |
11.24 | 14.14 | 21% | 11.21 | 13.58 |
Net Profit Margin (%) |
5.20 | 11.76 | 56% | 5.00 | 11.14 |
Note: Previous years ratios have been regrouped wherever necessary to conform to current years classification.
a) The Interest Coverage Ratio was 2.31 in the financial year 2022-23 as against 20.58 in the previous financial year on account of the increase in Borrowings made during the financial year.
b) The Current Ratio declined to 1.47 in the financial year 2022-23 as against 2.18 in the previous financial year due to a substantial increase in current liabilities;
c) The Debt Equity Ratio was 0.57 in the financial year 2022-23 as against 0.29 in the previous financial year due to Fresh Borrowings made during the financial year.
d) Operating Profit Margin declined to 11.24% in the financial year 2022-23 as against 14.14% in the previous financial year due to fair valuation loss on investments; and
e) Net Profit Margin declined to 2.9% in the financial year 2022-23 as against 5.20% in the previous financial year due to fair valuation loss on investments.
J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS
FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF
Standalone: Return on Net Worth in the financial year 2022-23 was 2.98% as against 3.10% in the financial year 2021-22. During the financial year under review, return on Net Worth decreased by 4% as compared to immediate previous financial year due to fair valuation loss on investments.
Consolidated: Return on Net Worth in the financial year 2022-23 was 2.87% as against 2.94% in the Financial Year 2021-22. During the financial year under review, return on Net Worth decreased by 2% as compared to immediate previous financial year due to fair valuation loss on investments.
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