Kolte Patil Developers Ltd Management Discussions

Global economy

Overview

The global economic growth was estimated at a slower 3.4% in 2022, compared to 6.3% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

Global FDI inflows declined 12% to nearly USD 1.28 Trn in 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023).

(Source: OECD, WTO data)

The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%)	2022	2021
World output	3.4	6.3
Advanced economies	2.7	5.4
Emerging and developing economies	4.0	6.9

Source: IMF

Performance of major economies

United States	China	United	Japan	Germany
Reported GDP growth of 2.1% in 2022 compared to 5.9% in 2021	GDP growth was 3% in 2022 compared to 8.4% in 2021	Kingdom GDP grew by 4.1% in 2022 compared to 7.6% in 2021	GDP grew 1.1% in 2022 compared to 2.1% in 2021	GDP grew 1.8% in 2022 compared to 2.6% in 2021

Source: PWC report, EY report, IMF data, OECD data

Outlook

The global economy is expected to grow 2.8% in 2023. Concurrently, global inflation is projected to fall marginally to 6.6%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, the European Union, India, Japan, the UK and South Korea are not in a recession. ~70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. The energy shock in Europe did not result in a recession and significant developments, including Chinas progressive departure from its strict zero-covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.3% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.

(Source: IMF).

Indian economy

Overview

Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Demonstrating resilience, Indias economic growth was 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy.

(Source: IMF, World Bank)

Growth of the Indian economy

	FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23
Real GDP growth(%)	3.7	-6.6%	9.1	7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

	Q1 FY 2022-23	Q2 FY 2022-23	Q3 FY 2022-23	Q4 FY 2022-23
Real GDP growth (%)	13.1	6.2	4.5	6.1

(Source: Budget FY24; Economy Projections, RBI projections)

According to the India

Meteorological Department, the FY 2022-23 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest to marginally improve to around 102 MMT in FY 2022-23 from 97.7 MMT in the preceding year. Rice production at 132 MMT was almost at par with the previous year. Pulses acreage grew to 31 Mn hectares from 28 Mn hectares. Due to a renewed focus, oilseed area increased by 7.31% from 102.36 Lakh hectares in FY 2021-22 to 109.84 Lakh hectares in FY 2022-23.

Indias auto industry grew 21% in FY 2022-23; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 Mn units, crossing the previous high of 3.2 Mn units in FY 2018-19. The commercial vehicles segment grew by 34%. Two-wheeler sales fell to a seven-year low; the three-wheeler category grew 84%.

The banking systems total gross non-performing assets (NPAs) fell to 3.9% from ~6% a year ago. A further drop to 3.6% is expected in FY 2023-24.

(Source: RBI data)

As Indias domestic demand remained steady amidst a global slowdown, import growth in FY 2022-23 was estimated at 16.5% to USD 714 Bn as against USD 613 Bn in FY 2021-22. Indias merchandise exports were up 6% to USD 447 Bn. Indias total exports (merchandise and services) grew 14% to a record of USD 770 Bn and is expected to touch USD 900 Bn in FY 2023-24. Indias current account deficit for FY 2022-23, a crucial indicator of the countrys balance of payments position, was USD 67 Bn or 2% of GDP. Indias fiscal deficit was in nominal terms at ~ H17.55 Lakh Crore, which is 6.4% of the countrys GDP for the year ending 31 March, 2023.

Indias headline foreign direct investment (FDI) numbers rose to a record USD 84.8 Bn in FY 2021-22, However, during the FY 2022-23, the country experienced a 16% decrease in foreign direct investment (FDI) inflows, amounting to USD 71 Bn on a gross basis. This decline can be attributed to the unfavourable global economic conditions and stands as the first contraction in FDI in the past ten years.

Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of ~USD 28 Bn in FY 2022-23, primarily influenced by rising inflation and interest rates. Forex reserves at USD 606.47 Bn on 1 April, 2022, decreased to USD 578.44 Bn by 31 March, 2023. The Indian currency also weakened during this period, with the exchange rate weakening from H75.91 to a US dollar to H82.34 by 31 March, 2023, driven by a stronger dollar and an increasing current account deficit. Despite these factors, India continued to attract investable capital.

The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% in March 2023. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined to around 5%, lowest in months.

Indias total industrial output for FY 2022-23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on-year as against a growth of 11.4% in FY 2021-22. In FY 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE 2022-23.

Gross tax collection of goods and services (GST) for FY 2022-23 was H18.10 Lakh Crore, with an average of H1.51 Lakh a month and up 22% from FY 2021-22. For FY 2022-23, the government collected H16.61 Lakh Crore in net direct taxes, according to data from the Finance Ministry. This amount was 17.6% more than what was collected in the previous fiscal.

Per capita income almost doubled in nine years to H1,72,000 during the year under review, a rise of 15.8% over the previous year. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3% in FY 2022-23.

Outlook

The economy shows strength, marked by an increase in rural growth during the last quarter and an appreciable decline in consumer price index inflation to around 5% in April 2023. India is expected to grow around 6-6.5% (as per various sources) in FY 2023-24, catalyzed in no small measure by the governments 35% capital expenditure. The growth is expected to be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation are expected to trend down and private sector investments are poised to revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead, moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in FY 2022-23 was 10,993 Km; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year.

The global landscape favours India

Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias and America and Europe are experiencing highest inflation in years.

Indias production-linked incentive appears to catalyze the downstream sectors. Inflation is moderating. India is at the cusp of making significant investments in various sectors and emerge as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates.

Broad-based credit growth, improving capacity utilisation, governments thrust on capital spending and infrastructure should bolster investment activity. According to economic surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions and slowing external demand.

(Source: IMF data, RBI data, Union budget 2023-24 data, CRISIL report, Ministry of Trade & Commerce, NSO data)

Union Budget FY 2023-24 provisions

The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to H10 Lakh Crore, equivalent to 3.3% of GDP and almost three times the 2019-20 outlay, through various projects like PM Gati Shakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of H5.94 Lakh Crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly H20,000 Crore was made for the PM Gati-Shakti National Master Plan to catalyze the infrastructure sector. An outlay of H1.97 Lakh Crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY 2023-24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services.

Indian real estate sector review

The Indian real estate industry is the third-largest contributor to the economy and expected to contribute 13% of Indias GDP by 2025. The Indian housing market persisted with its bullish trend throughout FY 2022-23. Despite encountering a higher benchmark interest rate by the RBI to tame inflation, the market remained resilient and displayed buoyancy. Robust housing sales numbers were achieved by the top eight cities in India, with ~3.13 Lakh units sold in FY 2022-23 compared to 2.39 Lakh units in FY 2021-22, marking a growth of ~31%.

The Indian real estate market grew to USD 256.8 Bn in 2022. The market anticipates sustained growth to USD 780.6 Bn by 2028. Compound Annual Growth Rate (CAGR) of 9.2% is expected between 2023 and 2028, attributed to residential and commercial segment growth on account of urbanisation, increasing disposable incomes, higher demand for contemporary office spaces, e-commerce-led warehousing demand and digitalization-induced data storage facilities.

On the supply side, there was a surge in new launches in the Indian residential real estate market as the demand for home ownership strengthened. There was a 44% increase in new unit launches across the top eight cities, rising from ~2.35 Lakh units in FY 2021-22 to 3.37 Lakh units in FY 2022-23, indicating a positive trend in the Indian real estate market.

City-wise launches and sales performance

	Launches (Units)			Sales (Units)
City	FY 2021-22	FY 2022-23	Change	FY 2021-22	FY 2022-23	Change
Mumbai	62,456	92,611	48%	60,785	83,921	38%
NCR	31,839	64,836	104%	43,361	58,833	36%
Hyderabad	36,643	44,577	22%	24,402	32,353	33%
Bengaluru	33,246	45,387	37%	41,474	53,090	28%
Pune	31,667	40,960	29%	33,870	43,473	28%
Ahmedabad	15,628	21,201	36%	9,971	14,182	42%
Chennai	13,523	15,648	16%	11,276	14,522	29%
Kolkata	9,544	12,035	26%	14,428	12,791	-11%
Total	2,34,547	3,37,254	44%	2,39,567	3,13,165	31%

Source: Knight Frank Report

In the last quarter of FY 2022-23, in line with trend observed during the year, homes with ticket size between H50 Lakh–H1 Crore dominated the markets with a share in sales of 38% (Q4 FY 2021-22 – 35%). The premium segment priced at H1 Crore and above contributed 29% to sales (Q4 FY 2021-22 – 25%) and the share of H50 Lakh and below ticket size reduced to 32% (Q4 FY 2021-22 – 41%).

Despite an increase in inventory, the Quarters to Sell (QTS) metric declined from ~10.2 to 7.2 in H2 2022. This reduction indicates strong sales traction and a healthier market. A lower QTS level signifies improved market conditions and enhanced sales efficiency.

Foreign institutional inflows into the real estate space trebled between 2017 and 2022, attracting H26.6 Bn over a five-year period. Institutional investors are actively investing in Tier II and III cities. In FY 2022-23, private equity (PE) investments in Indias real estate sector reached USD 4.2 Bn.

(Source: livemint.com, Anarock report, Knight-frank report, IMAC group)

Key demographics

Pune

The residential real estate market in Pune witnessed steady growth. In FY 2022-23, annual sales volume recorded at 43,373 units, marking a growth of~28% YoY. Punes residential market expanded with growing employment opportunities across sectors like engineering, automotive, education, IT and healthcare. Further, a_ordability makes Pune a preferred destination for home buyers. While volumes were robust, prices increased; average Pune residential prices grew 7% year-on-year (YoY) in H2 2022. Despite the robust demand and higher residential prices, according to the Knight Frank A_ordability Index, Pune remained the second most affordable housing market in India. This implied that on an average, a household in Pune needed to spend 25% income to pay a housing loan instalment. While a significant section of homebuyers is represented by the migrant workforce, mainly salaried employees opting for housing mortgage, demand continues to be robust despite consecutive mortgage rate hikes affecting purchasing power. As a result of strong demand, the quarters-to-sell indicator declined from 6.3 quarters in 2021 to 4.6 quarters in 2022. The age of unsold inventory reduced from 12.7 in 2021 to 11.7 quarters in 2022, owing to strong absorption of new and old projects.

On the supply side, Punes real estate market recorded a growth of 29% in new launches, with a supply of 40,960 units in FY 2022-23 compared to 31,667 units in

FY 2021-22. A well-developed transport system and improved connectivity with other parts of the city helped Pune secure the second spot in the Ease of Living Index amongst Indian cities. The upcoming second phase of the ‘Maha Metro Project is expected to enhance the citys transport system. The city boasts of good infrastructure even in remote areas, which contributed to increased demand across existing and emerging micro-markets. H2 2022 saw increased contribution in launches in the Central, Western and Northern zones. There was a visible increase in the participation of large real estate players especially in East and North-East Pune. As the return-to-office trend picks momentum, employment hubs like Hinjewadi and Baner in the Western zone are expected to register higher sales.

The share of residential sales with a ticket size of H50 Lakh to H1 Crore saw a significant increase from 40% in H1 2021 to 45% in H2 2022, while the share of residential sales with a ticket size of less than H50 Lakh registered a decline from 52% in H2 2021 to 46% in H2 2022. Properties with a ticket size of more than H1 Crore also saw an increase in share from 8% in H1 2022 to 9% in H2 2022. This shift in share can be attributed to a rise in property prices. Over the past several years, multiple infrastructure projects have come up in the city that have supported intra-city, regional and international connectivity. Under the Bus Rapid Transit System (BRTS) corridor, four routes namely, Aundh-Ravet, Sangamwadi-Vishrantwadi, Nashik Phata-Wakad and Yerwada-Wagholi, are already functional. Further, the BRTS corridor, the metro rail and the ring road, are likely to enhance connectivity. Under the Smart City Mission, social and infrastructure projects have been proposed to improve the liveability quotient. The hyperloop project is expected to reduce the travel time between Mumbai and Pune to 25 minutes. These efforts could support the residential demand momentum over the near term to medium term.

(Source: fiancialexpress.com, Knight-Frank report, Cushman & Wakefield report)

Mumbai

Resilient consumer demand supported by rising income continues to drive residential sales in Mumbai. FY 2022-23 sales at 83,921 units improved significantly by 38% from 60,785 units in FY 2021-22. Despite headwinds like consecutive repo rate hikes that impacted the purchasing power of home buyers, along with challenges such as the implementation of the metro cess, which effectively raised the stamp duty by 1%, the Mumbai residential market achieved record sales, the highest increase in 10 years since 2013. The city ranks 7^th in the Asia-Pacific region as a preferred destination for cross-border property investment. Mumbais rank improved from 92^nd to 37^th on the global list of luxury property price movements. The office market also showed signs of recovery as it recorded a significant 69% YoY increase in transactions in 2022.

A significant proportion of the properties transacted in H2 2022 remained in the less-than-H50 Lakh ticket size although their share has decreased from 51% in H2 2021 to 48% in H2 2022. For the H50 Lakh to H1 Crore ticket size, the market expanded, recording a 32% share in H2 2022 from 23% in H2 2021. For the above H1 Crore ticket size, the share of sales declined from 26% to 20% in H2 2022. Residential prices increased by 7% YoY in H2 2022. On the supply side, developers launched a record 92,611 units in FY 2022-23, an approximate 48% YoY growth. Remaining conscious of the consumer sentiment and a_ordability, most launches were in the suburban markets like the Western suburbs, Thane, peripheral central suburbs and central suburbs. The unsold inventory rose by 4% YoY in 2022 on account of massive supply addition. However, as a result of strong sales volumes, the quarters-to-sell indicator reduced from 12 quarters in 2021 to 9 quarters in 2022.

Over 18 months, four landmark infrastructure projects worth USD 10 Bn+ are expected to be executed. On completion, these projects - Mumbai Trans Harbor Link, Coastal Road, Mumbai Metro Line-3 and Navi Mumbai Airport which are in the last phase of completion – could provide a long overdue infra upgrade to Indias largest property market. The combination of Trans Harbor link and the new airport opening in 2024 could improve connectivity to the extended Eastern suburbs (Navi Mumbai, Panvel, Kalyan / Dombivli area).

Another ~USD 60 Bn worth of large infrastructure projects are planned for completion over 3-7 years, with improving connectivity within Mumbai. Upgraded infrastructure is expected to attract fresh economic activity.

(Source: Economic times, CBRE India, Knight Frank report, Je_eries report)

Bengaluru

Bengaluru ranks second in the APAC watch list for 2023, fuelled by the growth of its IT and related industries. The citys expansion in India is driven by a favourable climate, cosmopolitan culture and excellent connectivity, contributing to an increasing demand for residential and commercial spaces. With the existence of IT clusters, smart infrastructure and robust domestic and international connections, strong development is expected. Residential sales in Bengaluru improved almost 28% in FY 2022-23, with 53,090 units sold in the city.

In H2 2022, Bengalurus average residential unit price rose 7% YoY. ft due to strong demand and increased construction costs. Despite the increase, high-priced units above H1 Crore remained popular on account of the growth in the IT sector, start-ups and unicorns that have boosted the earnings and thereby the buying potential. Bengalurus per capita income of H5,41,638 is significantly higher

than the national average. Share of residential units above H1 Crore increased from 14% in 2018 to 28% in 2022.

On the supply front, residential launches in Bengaluru grew by 37% YoY to 45,387 units in FY 2022-23. During H2 2022, South Bengaluru reported 46% of the total launches on the back of end user demand in micro-markets. Attibele, Sarjapur, and Kanakpura Road attracted key launches across affordable, mid and luxury segments. The health of the information technology sector, which leads to job creation and salary growth, remained a key determinant of residential demand and developer confidence in Bengaluru. Owing to strong demand, the volume of unsold inventory decreased to 57,398 units in H2 2022, the lowest in a decade. Owing to the development of metro lines on Bannerghatta Road, Hosur Road, Outer Ring Road connecting key employment clusters in Outer Ring Road (ORR), Secondary Business District (SBD) and Peripheral Business District (PBD) South, developers have a strong preference to launch their projects in South Bengaluru. On the overall, Bengaluru displayed strong performance across the residential and commercial segments.

Driving factors

The driving factors for the construction and building material sector in India are:

Aspiring millennials

Millennials in India are a crucial market segment with easy access to home loans and are currently in their prime purchasing years. In 2020, they contributed to over 50% of home sales and their influence helped the Indian real estate market exceed 54% in 2022.

Urbanization and population growth

India is the most populous country with around 1.42 Bn citizens. Indias population growth and rapid urbanization have led to an increased demand for real estate. From 17% in 1951, the urban population had risen to 35% in 2022 and is projected at 38% by 2025, widening the real estate market.

Rising disposable incomes

The soaring demand for quality housing, fuelled by an expanding middle class and increasing disposable incomes, led to a substantial surge in real estate demand. The number of a_uent Indian families doubled, with the percentage rising from 14% in 2005 to 31% in 2021. Projections anticipate a further rise to 63% by 2047.

Appreciating asset class

Property prices in India have been on the rise since 2020. A 6% annual appreciation in property prices is predicted in FY 2023-24, making it attractive to own a home in India.

Growing foreign investments

With 100% FDI approval under the automatic route in completed projects, foreign capital inflows into the Indian real estate market surged three-fold to USD 26.6 Bn during 2017-2022, compared to the previous five years. For the same period, foreign investments accounted for 81% of the total investments in this sector.

(Source: Colliers research report)

Preference for green buildings

Green buildings are gaining popularity among the wealthy segment of the Indian population because of the countrys growing per capita income and are seen as a potential solution to Indias rising pollution levels and poor air quality index. Although exorbitant cost appears to be a barrier, the long-term advantages of reduced energy expenditure, improved life quality and government incentives could strengthen demand.

Policy support

Capital investment outlay

The Union Budget 2023-24 proposed a 37.4% increase in capital investment spending to H10 Lakh Crore, benefiting EPC firms in road, water, and urban development. It also includes H3,113 Crore for regional air connectivity, leading to the creation of 50 more airports, helipads, water aerodromes and advanced landing fields, resulting in more real estate opportunities.

Green growth

The Budget 2023-24 focuses on achieving Indias international commitments at the COP26 conference and emphasizes the creation of sustainable cities. The government plans to improve urban planning, infrastructure, transportation, and quality of life in various cities and towns, ultimately increasing the real estate value in those areas.

Affordable housing push

Affordable housing faced challenges due to rising input prices and the impact of the pandemic on buyers from the unorganized sector. The increased financing for the PM Awas Yojana by 66% to over H79,000 Crore will significantly benefit the sector.

This demonstrates the governments commitment to the success of the Housing for All project.

Urban Infrastructure Development Fund

The establishment of the Urban Infrastructure Development Fund (UIDF) with an investment of H10,000 Crore per annum is a proactive step towards advancement. It will increase commercial and residential areas, boost private sector investment, and contribute to the growth of the infrastructure and investment in tier 2 and tier 3 cities.

Industry SWOT analysis

Strengths	Weaknesses	Opportunities	Threats
• High demand	• High cost of capital	• Growing urbanization	• Economic slowdown
• Economic growth	• Lack of transparency	• Affordable housing Infrastructure development	• Policy changes
• Foreign investment	• High land acquisition costs	• Technology adoption	• Fluctuating interest rates
• Favorable government policies	• Challenging regulatory framework	• Green buildings	• Stiff Competition
• Skilled workforce	• Limited financing options		• Regulatory risks

Company overview

Kolte-Patil Developers Ltd (KPDL), founded in 1991, is a major Pune-based residential real estate developer. With its Kolte-Patil and 24K brands, the Company has a diverse project portfolio covering affordable, mid-income and luxury segments expanding its presence in Bengaluru and Mumbai. The Company established its presence in three growing Indian markets (Pune, Mumbai and Bengaluru). The Company has developed and constructed over 58 projects including residential complexes, integrated townships, commercial complexes and IT Parks covering a saleable area of >26 Mn sq. ft. across Pune, Mumbai and Bengaluru. KPDL has ~36 Mn sq. ft. in the project portfolio under execution, approval, land bank, and DMA.

It plans to launch ~7.39 Mn sq. ft across projects in FY 2023-24. The Company is renowned for its high-quality standards, unique designs, and transparency. The Companys long-term bank debt has been rated ‘A+ / Stable by Crisil, one of Indias highest ratings for publicly listed residential real estate players.

Profit & Loss account snapshot – Consolidated

P&L Snapshot (H Crore)	FY 2022-23	FY 2021-22	Change in %
Revenue from Operations	1,488.4	1117.5	33.2%
EBITDA	189.3	186.2	1.7%
EBITDA Margin (%)	12.7%	16.7%	-
Profit before tax (PBT)	169.6	144.8	17.2%

 

P&L Snapshot (H Crore)	FY 2022-23	FY 2021-22	Change in %
PBT Margin %	11.4%	13.0%	-
Net profit/loss after tax (pre-MI)	111.8	84.8	31.8%
PAT Margin % (pre-MI)	7.5%	7.6%	-
Net Profit (post-MI)	102.5	79.4	29.0%
PAT Margin % (post-MI)	6.9%	7.1%	-

Key financial ratios on a consolidated basis

Ratio	FY 2022-23	FY 2021-22	Remark
Trade Receivables Turnover Ratio	40.71	31.64	Increase in revenue in the last year compared to the previous year resulted in an increase in the ratio.
Current Ratio	1.29	1.24
Inventory Turnover ratio	0.38	0.27	Improvement in inventory management efficiency
Interest Coverage Ratio	4.65	3.72	Increase in Interest Coverage Ratio was on account of a reduction in finance costs and increase in recognized revenue
Net Debt-Equity Ratio	0.11	0.14	Net Debt-Equity Ratio improved in FY 2022-23 due to a reduction in net debt by 19 Crore
Operating Profit Margin (OPM)	12.7%	16.7%
Net Profit Margin (NPM)	6.9%	7.1%
Return on Net Worth (RoNW)	10.2%	8.6%	RoNW increased showing an encouraging increase in the Companys profitability relative to its net worth.

Consolidated Debt profile

(H Crore)

Profile	31 March, 2023	31 March, 2022
Net Worth	1046	959
Gross Debt	542	522
Less: OCD / CCD / OCRPS / Zero Coupon NCD	73	100
Debt	468	421
Less: Cash & Cash Equivalents & Current Investments	356	290
Net Debt	112	131
Net Debt to Equity	0.11	0.14

Risk management

Market risk	Mitigation: KPDL has diversified its portfolio by investing in different types of properties across various cities such as Pune, Mumbai, and Bengaluru. This helps the Company to reduce the impact of economic risks on any one property or location.
Real estate companies are exposed to market risk, which refers to the risk of fluctuations in real estate prices and demand. A downturn in the market can lead to reduced property valuations, decreased demand for real estate and lower profits.
Interest rate risk	Mitigation: KPDL manages liquidity risk by keeping enough cash reserves, diversifying its funding sources, and periodically analysing its cash flow and liquidity status. During a high rate cycle, buyers were offered attractive discounts to increase demand. A low net-debt-to-equity ratio further insulates from this risk.
Interest rate risk refers to the risk of change in interest rates that can impact the cost of borrowing and the value of real estate investments. Higher interest rates can increase borrowing costs and reduce demand for real estate.
Raw material risk	Mitigation: The Companys supply chain is established. With suppliers, the business established standard pricing for the supply of essential raw materials over a predetermined time.
Substantial fluctuations in raw material pricing may impact the cost of construction. Increasing prices can be partially absorbed through higher realizations. There could also be an impact on profitability in the event the price hike is not fully absorbed by the market through higher realizations.
Liquidity risk	Mitigation: Liquidity is bolstered by a robust sales pipeline as well as collections from existing and planned projects. Financial flexibility is supported by significant refinancing capabilities; the KPDL group has an unsold inventory/ under-approval projects/land bank of around 36 Mn sq. ft. Additionally, as of 31 March, 2023, undrawn bank lines stood at H215 Crore, with cash & cash equivalents and current investments totaling H356 Crore.
Liquidity risk is a significant concern for real estate companies as it can impact their ability to meet short-term obligations and complete projects on time. Liquidity risk can lead to higher financing costs, damage to reputation, forced asset sales and reduced investment opportunities.
Political and regulatory risk	Mitigation: KPDL manages political and regulatory risk by staying informed about the changes in laws and regulations, maintaining relationships with local authorities and conducting a thorough due diligence on properties before acquisition.
KPDL is also subjected to political and regulatory risk, which can arise from changes in government policies, zoning laws and environmental regulations. These risks can impact real estate values and development opportunities.
Competition risk	Mitigation: KPDL conducts thorough market research to differentiate its offerings effectively. Prioritizing customer satisfaction and embracing innovation to enhance the overall experience and build customer loyalty. Additionally, forging strategic partnerships and maintaining financial prudence provide stability and support sustainable growth to the Company.
The Company is subject to potential threats posed by other businesses operating in the same market, offering similar products or services.

Internal control systems and adequacy

The Companys internal control and risk management system aligns with the principles and criteria specified in the corporate governance code. It is an integral part of the overall organizational structure involving coordination among different individuals to fulfill their responsibilities. The Board of Directors provides guidance, supervises strategy to the executive directors and management, and oversees monitoring and support committees. PWC serves as the Internal Auditor for the Company.

Human Resources

The Company places great value on its dedicated and motivated employees, considering them its most valuable asset. Competitive compensations, a healthy work environment, and a planned reward and recognition program contribute to acknowledging employee performances. The Company aims to foster a workplace where every individual can unleash their true potential. Encouraging voluntary projects beyond the scope of work helps nurture creative thinking and personal growth. As of 31 March, 2023, the Company had 1,028 employees, with a retention rate of over 92.7%.

Cautionary Statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.