Kolte Patil Developers Ltd Management Discussions

Global economy

Overview

Global economic growth weakened from 3.5% in 2022 to approximately 3.1% in 2023, partly offset by stronger growth in Asia. Chinas recovery was slower than expected, while India performed better than anticipated.

The global economy faced challenges as the USA, UK, and Japan entered recessions, and European economies grappled with high energy costs and weakened consumer sentiment due to the Ukraine-Russia conflict and the Red Sea crisis, leading to higher logistics expenses. Monetary policy tightening resulted in higher policy and interest rates for new loans. Growth in advanced economies is expected to slow from 2.6% in 2022 to 1.5% in 2023 and 1.4% in 2024 as policy tightening deepens.

Emerging market and developing economies, mainstay of the global economy, are projected to report a modest growth decline from 4.1% in 2022 to 4.0% in 2023 and 2024. Global inflation is to decline steadily from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024, due to a tighter monetary policy aided by relatively lower international commodity prices.

Core inflation decline is expected to be gradual; inflation is not expected to return to target until 2025 in most cases. The US Federal Reserve approved a much-anticipated interest rate hike that took the benchmark borrowing costs to their highest in more than 22 years.

Global trade in goods was expected to have declined nearly USD 2 expected trillion in 2023; trade in services was expected to have expanded USD 500 billion. The cost of Brent crude oil averaged USD 83 per barrel in 2023, down from USD 101 per barrel in 2022, with crude oil from Russia finding destinations outside the European Union and global crude oil demand falling short of expectations.

Regional growth (%)	2024	2023
World output	3.1	3.5
Advanced economies	1.69	2.5
Emerging and developing economies	4.1	3.8

Performance of major economies, 2023

United States	China	United Kingdom	Japan	Germany
Reported GDP growth of 2.5% in 2023 compared to 1.9% in 2022	GDP growth was 5.2% in 2023 compared to 3% in 2022	GDP grew by 0.4% in 2023 compared to 4.3% in 2022	GDP grew 1.9% in 2023 unchanged from a preliminary 1.9% in 2022	GDP contracted by 0.3% in 2023 compared to 1.8% in 2022

(Source: PWC report, EY report, IMF data, OECD data, Livemint)

Outlook

Asia is expected to continue to account for the bulk of global growth in 2024-25. Inflation is expected to ease gradually as cost pressures moderate; headline inflation in G20 expected to decline. The global economy has shown resilience despite high inflation and tightening, with growth expected to remain around previous levels foris the next two years. (Source: World Bank). monetary

Indian economy

Overview

The Indian economy was estimated to grow 8.2% in FY 2023-24 (the country adding more than 8% in some quarters) against 7.2% inFY 2022-23 mainly on account of the improved performance in the mining and quarrying, manufacturing and certain segments of the services sector. India retained its position as the fifth largest economy.

In the 11 months of FY 2023-24, the CPI inflation averaged 5.4% with rural inflation exceeding urban inflation. Lower production and erratic weather led to a spike in food inflation. In contrast, core inflation averaged at 4.5%, a sharp decline from 6.2% in FY 23. The softening of global commodity prices led to a moderation in core inflation.

The nations foreign exchange reserves touched a milestone of USD 645.6 billion in March 2024. The credit quality of Indian companies remained strong between October 2023 and March 2024 following deleveraged Balance Sheets, sustained domestic demand and government-led capital expenditure. Rating upgrades continued to surpass rating downgrades in H2 FY 2023-24. UPI transactions in India posted a record 56% rise in volume and 43% rise in value in FY 2023-24.

Growth of the Indian economy

	FY 2020-21	FY 2021-22	FY 2022-23	FY 2023-24
Real GDP growth (%)	-6.6%	8.7	7.2	8.2

E: Estimated

Growth of the Indian economy quarter by quarter, FY 2023-24

	Q1FY24	Q2FY24	Q3FY24	Q4FY24E
Real GDP growth (%)	7.8	7.6	8.4	8E

(Source: Budget FY 2023-24; Economy Projections, RBI projections, Deccan Herald)

Indias monsoon for 2023 hit a e-year low. August was the fiv driest month in a century. From June to September, the country received only 94% of its long-term average rainfall. Despite this reality, wheat production was expected to touch a record 114 million tons in the FY 2023-24 crop year on account of higher coverage. Rice production was expected to decline to reach 106 million metric tons (MMT) compared with 132 million metric tons in the previous year. Total kharif pulses production for FY 2023-24 was estimated at 71.18 lakh metric tons, lower than the previous year due to climatic conditions.

As per the first advance estimates of national income released by the National Statistical Office

(NSO), the manufacturing sector output was estimated to grow 6.5% in FY 2023-24 compared to 1.3% in FY 2022-23. The Indian mining sector growth was estimated at 8.1% in FY 2023-24 compared to 4.1% in FY 2022-23. Financial services, real estate and professional services were estimated to record a growth of 8.9% in FY 2023-24 compared to 7.1% in FY 2022-23.

Real GDP or GDP at constant prices in FY 2023-24 was estimated at H171.79 lakh crore as against the provisional GDP estimate of FY 2022-23 of H160.06 lakh crore (released on 31 May 2023). Growth in real GDP during FY 2023-24 was estimated at 8.2% compared to 7.2% in FY 2022-23. Nominal GDP or GDP at current prices in FY 2023-24 was estimated at H296.58 lakh crore against the provisional FY 2022-23 GDP estimate of H272.41 lakh crore. The gross non-performing asset ratio for scheduled commercial banks was 3.2% as of September 2023. By March 2024, the gross NPA ratio of Indian scheduled commercial banks stood at 2.8%. Indias per capita disposable income was expected to be H2.14 lakh in FY 2023-24, an 8% increase in FY 2023-24. Indias gross national disposable income, which includes net primary income and global transfers, is expected to expand 8.9% in FY 2023-24 (after 14.5% in FY 2022-23). Indias gross savings were largely maintained around the earlier level of around 30%.

Indias exports of goods and services were expected to touch USD 900 billion in FY 2023-24, compared to USD 770 billion in the previous year, despite global headwinds. Merchandise exports were expected to expand between USD 495 billion and USD 500 billion, while services exports were expected to touch USD 400 billion during the year. Indias net direct tax collection increased to H19.58 lakh crore in the March 2024. The gross collection was 24.58% higher than the gross collection for the corresponding period of the previous year. Gross GST collection of H20.2 lakh crore represented an 11.7% increase; average monthly collection was H1,68,000 crore, surpassing the previous years average of H1,50,000 crore. The agriculture sector was expected to see a growth of 1.8% in FY 2023-24, lower than the 4% expansion recorded in FY 2022-23. Trade, hotel, transport, communication and services related to broadcasting segment are estimated to grow at 6.3% in FY 2023-24, a contraction from 14% in FY 2022-23. The Indian automobile segment was expected to close FY 2023-24 with a growth of 6-9%, despite global supply chain disruptions and rising ownership costs.

The construction sector contributes 9% to Indias GDP and ranks as the second-largest employer in the country. It is estimated that the industry could reach USD 1.4 trillion by 2025. It comprises two primary segments: real estate, encompassing residential, office, retail, hotel, leisure projects and urban development, covering sub-sectors such as water supply, sanitation, urban transport, schools and healthcare facilities.

In the FY 2024-25 budget announcement, approximately USD 134 billion was allocated for infrastructure development, amounting to 3.4% of the GDP, up slightly from around USD 133 billion in FY 2023-24. (Source: Panels and Furniture Asia)

India reached a pivotal phase in its S-curve, characterized by acceleration in urbanization, industrialization, household incomes and energy consumption.

India emerged as the fifth largest economy with a GDP of USD 3.6 trillion.

Indias Nifty 50 index grew 30% in FY 2023-24 and Indias stock market emerged as the worlds fourth largest with a market capitalization of USD 4 trillion. Foreign investment in Indian government bonds jumped in the last three months of 2023. India was ranked 63 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Indias unemployment declined to a low of 3.2% in 2023 from 6.1% in 2018. The emphasis is on the changing consumer spending trends in India, emphasizing the middle-class ascent. In addition to erratic post-pandemic growth in consumer spending, there has been a change in consumer behaviour, with the demand for upscale and luxury goods and services expanding more quickly than that of necessities. This trend will probably become even more pronounced as we anticipate an increase in the number of middle-class to upper-class households with growing disposable income, which will fuel an increase in total private consumer spending. The rapid growth of the middle-income class has led to rising purchasing power and even created demand for premium luxury products and services.

However, the problem of growing household debt and declining savings may make long-term growth sustainable more difficult.

Preventing household debt from surpassing unmanageable levels is crucial in order to reduce the likelihood of a debt overhang, uphold economic stability, and shield households from financial vulnerability.

According to Engels law, as income grows, consumers tend to allocate a larger proportion of their budget to luxury goods, leading to a more pronounced increase in demand for these items compared with necessities such as food. At the same time, goods with low income elasticity, such as food and groceries, will see a stagnating demand with rising income. (Source: https://www2.deloitte.com/us/ en/insights/economy/asia-pacific/india-economic-outlook.html)

Outlook

India withstood global headwinds in 2023 and is likely to remain the worlds fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. The Indian economy is anticipated to surpass USD 4 trillion in FY 2024-25. The Asian Development Bank (ADB) upgraded India?s gross domestic product (GDP) growth forecast for FY 2024-25 (FY 2024-25) to 7% from 6.7% earlier, citing better prospects. The triggers for FY 2024-25 growth will come from higher capital expenditure on infrastructure development both by central and state governments, rise in private corporate investment, strong service sector performance, and improved consumer confidence.

With inflation moderating to a projected 4.6% in FY 2024-25, monetary policy could become less restrictive and catalyse bank credit.

Union Budget FY 2024-25

The Interim Union Budget FY 2024-25 retained its focus on capital expenditure spending, comprising investments in infrastructure, solar energy, tourism, medical ecosystem and technology. In FY 2024-25, the top 13 ministries in terms of allocations accounted for 54% of the estimated total expenditure. Of these, the Ministry of Defence reported the highest allocation at H6,21,541 crore, accounting for 13% of the total budgeted expenditure of the central government. Other ministries with high allocation included Road transport and highways (5.8%), Railways (5.4%) and Consumer Affairs, food and public distribution (4.5%).

In FY 2023-24, the Ministry of Road Transport and Highways constructed 12,349 km of national highways, slightly below the targeted 13,814 km. This would mark the second-highest annual construction of national highways in India, exceeding the 10,855 km constructed in FY 2018-19 but falling short of the record of 13,327 km achieved in FY 2020-21. The capital expenditure outlay for the upcoming year sees an 11.1% increase to H11.11 lakh crore, accounting for 3.4% of GDP. The projected fiscal deficit for FY 2024 25 stands at 5.1% of GDP. Foreign Direct Investment (FDI) inflow FY 2014-23 totalled USD 596 billion, reflecting a significant uptick compared to the previous decade. To foster innovation and research, a corpus of H1 lakh crore will be established, providing long-term financing with low or nil interest rates. This initiative aims to strengthen private sector involvement in key sectors, particularly in deep-tech and defense technologies. The government is prioritizing the eastern regions development, with initiatives like PM Awas Yojana (Grameen) and rooftop solarization, aiming to provide housing and electricity to millions of households. Schemes like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana have already made significant impacts, benefiting farmers and generating employment opportunities. Overall, the budget emphasizes empowering the youth through technological advancements and fostering an environment conducive to sustainable growth and innovation.

(Source: Times News Network, Economic Times, Business Standard, Times of India)

Indian real estate sector overview

The real estate industrys market size in India is estimated at USD 0.33 trillion in 2024 and it is anticipated to reach USD 1.04 trillion by 2029, with a compound annual growth rate (CAGR) of 25.60% during the forecast period 2024-2029. The trajectory, moving from USD 180 billion in 2020 to a projected market size of USD 1 trillion by 2030, is likely to be catalysed by government initiatives, technology integration, sustainability measures and increased investments.

The overall home sales across price categories in the top 8 cities rose 7% in FY 2023-24, as compared to FY 2022-23. A total of 3,36,316 units were sold last year. Sustained momentum in demand also led developers to launch over 3,56,702 new housing units in FY 2023-24, a 6% YoY increase. The Mumbai, Pune and Hyderabad continued to show maximum traction. The sales of luxury homes in India, priced at H4 crore and above, jumped 75% in 2023, doubling the share of these homes in total housing sales. The luxury segment accounts for approximately 5% of the overall residential unit sales. The resurgence in Indias luxury residential real estate has driven strong growth, with about 45% of the total luxury stock added in the last five years alone.

(Source: HDFC Securities institutional research)

In the residential segment, there has been a notable resurgence in home ownership interest since the post-Covid first wave, continuing a trend over the past decade. One significant reform that institutionalized the industry and boosted buyer confidence

Over the past 12 years, the residential segment has grown significantly, expanding 4.7 times to now constitute 49% of the USD 251 billion under-construction real estate market (up from USD 49 billion). This growth underscores its rising importance, with the housing sector in top cities showing robust sales velocity over the last two years.

The industry is increasingly focusing on larger, branded developers. Leading real estate firms are capitalizing on market consolidation, with consumers increasingly favouring established brands. As smaller, unbranded competitors exit the market, larger players are expanding their market share and sales bookings. Additionally, smaller players are aligning with larger developers through Joint Development Agreements (JDA) and Development Management (DM) structures, further bolstering the market presence of listed players through strategic partnerships.

RERA. (Source: BNK Securities Sector update)

City-wise launches and sales performance

Launches (units)

City	FY 2023-24	FY 2022-23	Change
Mumbai	92,579	92,611	-
NCR	63,056	64,836	-3%
Hyderabad	47,139	44,577	6%
Bengaluru	52,188	45,387	15%
Pune	44,190	40,960	8%
Ahmedabad	22,307	21,201	5%
Chennai	16,670	15,648	7%
Kolkata	18,573	12,035	54%
Total	356,702	3,37,254	6%

Sales (units)

City	FY 2023-24	FY 2022-23	Change
Mumbai	90,314	83,921	8%
NCR	60,137	58,833	2%
Hyderabad	34,130	32,353	5%
Bengaluru	53,789	53,090	1%
Pune	50,730	43,473	17%
Ahmedabad	16,561	14,182	17%
Chennai	15,220	14,522	5%
Kolkata	15,435	12,791	21%
Total	336,316	3,13,165	7%

The real estate sector in India attracted over USD 5.8 billion in institutional investments across 53 deals in 2023, a 14% increase compared to 2022. The government, through the Interim Budget, increased an allocation to infrastructure, especially in Tier 2 and 3 cities. Infrastructure will be the key focus for interconnectivity across larger and smaller towns. This is likely to have a positive impact on housing and commercial development in these areas. The governments massive spending on infrastructure is one of the main drivers of recent economic growth we saw in India.

(Source: IBEF, Mordor Intelligence, IMARC, Economic Times, Financial Times, Business Standard, Hindustan Times, Confederation of Real Estate Developers Association of India)

Key demographics

In 2023, residential units priced between H50 lakh and H1 crore were the most sought-after, comprising 34% of all housing transactions. Similarly, the share of properties priced between H25 lakh and H50 lakh stood at 31% of the market share, a close second to the H50 lakh and H1 crore category. The higher value segment, comprising properties priced at H1 crore and above, experienced growth in market share. This segments share increased from 9% in 2022 to 12% in 2023, indicating a rising buyer preference for properties in this price range.

(Source: Money Control, Pune.news, Hindustan Times, Times Property)

The West accounted for 41% of the total share of sales volumes in the Pune real estate market, while the North and East contributed 24% and 22%, respectively.

Due to Punes development into a thriving hub for information technology and the governments emphasis on infrastructure development, top developers are actively seeking opportunities in this market. The percentage of new project launches across zones has significantly changed in 2HCY23, with the Western Zone accounting for 40% of all launches. As the trend of going back to work from home grows, areas like Hinjewadi and Baner in the West Zone that are close to major workplaces are expected to see increased sales momentum, drawing in homebuyers who want to be close to their places of employment. In 2023, Punes real estate market demonstrated consistent growth, achieving its highest residential sales figures in the past eleven years. Total sales in the Pune residential sector increased by 13% YoY, reaching 49,266 units. The most popular category among residential purchases was properties priced between H50 lakh and H1 Cr, accounting for 34% of all housing transactions by the years end. Properties in the H25 lakh to H50 lakh price range also saw high demand, making up 31% of the sales, just slightly behind the leading category. Additionally, apartments sized between 500 to 800 square feet held a significant 40% of the market share by the end of 2023. (Source: BNK Securities Sector update)

Mumbai

In 2024, Mumbai is expected to witness its highest number of property registrations occurring in 12 years. The previous peak was fuelled by a surge in optimism and a spill over of pent-up demand as the effects of the pandemic gradually diminished. However, the recent increase can be attributed to rising income levels and a favourable perception towards home ownership. In 2024, an increase is anticipated in the share of apartments measuring 500 sq. ft. and below, rising to 48%, as opposed to the 35% recorded in the previous year. Conversely, the share of apartments ranging from 500 sq. ft. to 1000 sq. ft. witnessed a decline, decreasing to 43% from 48% reported during the same period last year. Of the total properties registered, Central and Western suburbs together constituted over 75% as these locations are a hotbed for new launches offering a wide range of modern amenities and good connectivity. 86% of Western suburb consumers and 85% of Central suburb consumers opt to purchase within their micro market. In the fiscal year FY 2023-24,

Mumbai saw a slight decrease in launches with 92,579 units compared to 92,611 units in the fiscal year FY 2022-23 and in the fiscal year FY 2023-24, Mumbai experienced an increase in sales, reaching 90,314 units, up from 83,921 units in the FY 2022-23. (Source: Hindustan Times, Mint)

Mumbais residential real estate market remains Indias largest, constituting approximately 30% of both new launches and sales. In CY23, it achieved its highest sales volume in the past eleven years, driven by increased home ownership aspirations, availability of ready-to-move-in properties, a growing preference for larger homes, and concerns about escalating prices limiting future purchase opportunities in this major real estate market. (Source: BNK Securities Sector update)

Bengaluru

The residential market in Bengaluru, which is projected to grow by 5% annually, is the second-best out of the 24 markets. In 2023, there was a rise in residential prices across the top cities of India in the range of 4-16% y-o-y. Bengaluru saw a maximum increase of 16%. The sale of residential units in Bengaluru surged, with the overall sales value reaching H38,517 crore for the first nine months of 2023, a 42% increase compared to the same period in 2022. This indicates a rise in real estate prices in the city. Residential rental yields in North Bengaluru are poised to witness a 5-10 % growth in 2024 depending on the location, property, builder type and other specifications. The region has the potential to experience a 30-40% rental appreciation over the years. The demand for luxury homes has also seen an uptick, while the demand for affordable housing remains low. North Bengaluru is a region that encompasses areas such as Yelahanka, Hebbal, Jakkur and Thanisandra Main Road among others, and has seen a significant uptick in real estate activity in recent times. The year area has undergone significant development in recent years, with the construction of new flyovers, underpasses and metro stations amongst others. More so, the various IT parks—both operational and upcoming—along with the international airport have further driven demand, both from a rental and buying perspective. (Source: Asset monk, Hindustan Times, Times of India, Times Property) Bengaluru has a diverse array of non-IT industries such as life sciences, aerospace and defence, education, and consulting firms, contributing to balanced income growth and sustained real estate demand in the city.

South Bengaluru: End-user consumers dominate the micro market, benefiting from proximity to major employment hubs like Electronic City and Outer Ring Road (ORR). While historically mid-segment dominated, this area has seen a notable rise in luxury developments.

East Bengaluru: Leads in new product launches and serves as a premier IT hub with areas like Whitefield and ITPL housing Grade-A tech parks. Investment-driven demand complements end-user preferences here, prompting developers to introduce high-end luxury projects priced above H50 million.

North Bengaluru: This is one of the citys fastest-growing clusters, buoyed by rapid infrastructural development and robust sales.

Significant commercial real estate developments like Aerospace Park and Devanahalli Business Park have spurred developer interest. This area has seen the launch of luxurious residential villas and plotted developments, attracting High Net Worth Individuals (HNI) and Ultra High Net Worth Individuals (UHNI), resulting in swift sales post-launch. (Source: BNK Securities Sector update)

Growth driving factors

Rising millennials: The millennials, who make up 36% of the nations population, have had a significant influence on the economy. This new generation, which has a spending capacity of approximately US USD 330 billion, made up around 54% of homebuyers in 2023.

Technological integration: The integration of technology is revolutionising the residential landscape, enhancing convenience, security, and comfort. Smart homes equipped with IoT devices, home automation systems, and AI-powered assistants are becoming the new standard, offering residents a seamless living experience while setting new benchmarks for futuristic living.

The projected revenue in the smart home market in India is expected to reach USD 6.5 billion in 2024.

Tier 2 emerges as a strong player:

Tier 2 cities have garnered attention as growing real estate hubs. These cities are witnessing a notable surge in investment activity, driving significant changes in their property landscapes. Bolstered by a thriving housing market, Tier 2 cities are experiencing rapid infrastructure expansion, presenting an array of residential and commercial prospects. In addition to this, the governments push for smart cities is also helping the real-estate market growth. The Government has allowed FDI of up to 100% for townships and settlements development projects.

Real asset as a hedge:

Real estate continues to remain an attractive investment option with 61% of HNIs and UHNIs looking to buy real estate in FY 2023-24. High-rise apartments with 34%, closely followed by farmhouses and holiday homes with 30% are among the most preferred by affluent investors. Rent-yielding commercial real estate is also in demand as 23% of the HNI respondents would like to invest in it. An overwhelming 75% of the High-Net-worth Individuals (HNIs) and Ultra High-Net-worth Individuals (UHNIs) believe real estate will do well over the next two to three years, and a similar 74% consider real estate to be an important asset to hedge against inflation.

Rising disposable incomes: Indias per capita disposable income was anticipated to reach H2.14 lakh in FY 2023-24. Per capita disposable income grew 8% in FY 2023-24 and 13.3% in the previous year. The rising disposable incomes of individuals are acting as a catalysed to the growing needs for the real estate sector in India

Urbanization and population growth: 50% of Indias population will reside in urban areas in 2050 compared to 31% in 2011. This increased urban population will lead to an increase in the real estate sector. (Source: Economic Times, Financial Express, Indian Express, Seedwill) Green buildings: Indias rising per capita income has made green buildings popular among the countrys affluent people, who view them as a remedy for the nations declining air quality index and rising pollution levels.

The long-term benefits of lower energy costs, higher living quality, and government incentives could increase demand even though the high cost appears to be a barrier.

Government policies

Smart City: As for Urban Rejuvenation and Smart Cities Mission, there was a 21% dip in allocation. Around Rs. 13,200 crore was allocated as per revised estimates in 2023-2024 and Rs. 10,400 crore was allocated for FY 2024-25.

Metro projects: For metro projects there was a 9% increase in allocation as Rs. 19508 crore was set aside in 2023-2024 as per revised estimates and Rs. 21336 crore was been allocated for 2024-2025.

Greater retail engagement in REIT: REITs and InvITs have made a significant contribution to the growth of the real estate and infrastructure sectors. The SEZ rule amendment was a progressive policy reform to help REITs and other commercial real estate companies unlock vacant spaces in the IT/ITeS Parks, while adding to employment creation and boosting economic activity.

Capital expenditure outlay: The capital expenditure for the financial year 2024-25 was raised by 11% to Rs. 11.11 lakh crore, or 3.4% of GDP. Capital expenditure, or capex, was used to set up long-term physical or fixed assets. The government proposed to increase capital expenditure outlay by 33% to Rs. 10 lakh crore in FY 2023-24, which was estimated to be 3.3% of the GDP.

(Source: Hindustan Times)

Industry SWOT analysis

Strengths

Skilled workforce

Strong need

Growth in the economy

International investment

Favourable government policies

Weaknesses

Challenging regulatory framework

Deficiency in transparency

Excessive land acquisition costs

Scarce financing options

Capital intensive

Opportunities

Development of the Infrastructure

Technology adoption

Urban growth

Affordable housing

Green buildings

Threats

Regulatory threats

Economic downturn

Changing interest rates

Policy changes

Intense Competition

Company overview

Incorporated in 1991, Kolte-Patil Developers Ltd (KPDL), is a leading Pune-based residential real estate developer. The Company has two brands: Kolte-Patil and 24K, it has a diverse project portfolio including affordable, mid-income and luxury segments with its presence in Pune, Mumbai and Bengaluru.

The Company constructed and developed over 64 projects including integrated townships, residential complexes, commercial complexes and IT Parks covering a saleable area of >28 million sq. ft. across Pune, Mumbai and Bengaluru. KPDL has ~34.65 million sq. ft. in the project portfolio under execution, land bank and approval.

It plans to launch ~8.95 million sq. ft across projects in FY 2024-25. Kolte-Patil Developers Ltd is known for its quality standards, transparency and unique designs.

The Companys long-term bank debt has been rated ‘A+ Positive by Crisil, one of Indias prominent ratings for publicly listed residential real estate players.

Profit and loss account snapshot Standalone ( H crore)

Particulars	FY 2023-24	FY 2022-23	Change in %
Revenue from operations	579.14	902.73	35.84
EBITDA	-59.80	73.14	-
EBITDA margin (%)	-10.33%	8.10%	-
Profit before tax (PBT)	-102.24	52.91	-
PBT margin %	-17.62%	5.87%	-
Net profit/loss aftertax -	71.26	40.37	-
PAT margin %	-12.26%	4.43%	-

Key financial

Particulars	FY 2023-24	FY 2022-23	Reason for variance	% change
Current ratio	1.02	1.15		(11.8%)
Debt- Equity Ratio	1.46	0.58	Variance is on account of increase in debt in current year as compared to previous year	150.0%
Debt Service Coverage ratio	0.13	0.30	Variance is on account of decrease in earnings for debt service in current year as compared to previous year	(56.5%)
Return on Equity ratio	(0.09)	0.05		-
Inventory Turnover ratio	0.27	0.47	Variance is on account of increase in average inventory during the year	(43.6%)
Trade Receivable Turnover Ratio	31.77	46.87	Variance is on account of decrease in revenue in current year compared to previous year	(32.2%)
Trade Payable Turnover Ratio	3.97	3.99		(0.5%)
Net Capital Turnover Ratio	12.87	3.85	Variance is on account of decrease in revenue and working capital in current year compared to previous year	234.1%
Net Profit ratio	(0.11)	0.05		-
Return on Capital Employed	(0.02)	0.07		-
Return on Investment	0.13	0.13		0.8%

Risk management

Market risk	Mitigation:
The companies involved in the real estate sector are subject to market risk, which refers to the changes in real estate demand and prices. A slowdown in the market can lead to lower valuations of the property, lower profits and decreased demand for real estate.	The Company diversified its portfolio by investing different types of properties across cities like Pune, Mumbai and Bengaluru. This safeguards the Company by reducing the impact of economic risks on any one location or any one property.
Interest rate risk	Mitigation:
It refers to the risk of volatility in interest rates that can hamper the value of real estate investments and the cost of borrowing. Higher interest rates can reduce demand for real estate and increase borrowing costs.	Kolte-Patil Developers Ltd looks after the liquidity risk by keeping the required amount of cash reserves, periodically analysing its cash flows and liquidity status diversifying its funding sources. A low net-debt-to-equity ratio safeguards from this risk.
Raw material risk	Mitigation:
Changes in the price of raw material may hamper the cost of construction. Higher realizations can partially absorb the price increase. The profitability can also be impacted in the event the price increase is not completely absorbed through the market through higher realizations.	Kolte-Patil Developers Ltds supply chain is well established. With a robust network of suppliers, the business has applied the standard supply pricing of essential raw materials over a pre-specified time.
Liquidity risk	Mitigation:
Liquidity risk is a concern for real estate Companies as it can hamper their performance to meet their short-term obligations and complete projects on time. Liquidity risk can cause reputation damage, higher financing costs, lowering of investment opportunities.	Liquidity is maintained by strong sales as well as collections from planned projects and existing ones. The financial volatility is handled by significant refinancing capabilities. The Company had an unsold inventory/ under- approval projects/land bank of around 34.65 million sq. ft. Additionally, as of 31 March 2024, undrawn bank lines stood at 304.89 crore, with cash and cash equivalents and current investments totalling H503 crore.
Political and regulatory risk	Mitigation:
The Company also faces political and regulatory risks, which can arise from fluctuations in, zoning laws, government policies and environmental regulations. These can hamper real estate values and development opportunities of the Company.	Kolte-Patil Developers Ltd manages regulatory and political risk by staying well aware of the fluctuations in the laws and regulations, establishing and maintaining relationships with the local authorities and conducting due diligence on properties before acquisition.
Competition risk	Mitigation:
The Company faces potential threats caused by other businesses operating in the same market, offering homogenous products or services.	Kolte-Patil Developers Ltd conducts market research to make its offerings appear different. The Company provides importance to customer satisfaction and embraces innovation to enhance the overall experience and build customer loyalty. The Company is also involved in maintaining financial prudence providing stability, forging strategic partnerships and supporting sustainable growth.

Internal control systems and adequacy

Kolte-Patil Developers Ltds risk management system and internal control align with the principles and criteria mentioned in the corporate governance code. It is an integral and important part of the whole organizational structure involving coordination among various individuals to fulfil their responsibilities.

The Board of Directors gives guidance, supervises strategy to the executive directors and management, and overviews monitoring and support committees of the Company. PWC is the Internal Auditor of the KPDL.

Human resources

The Company places great importance on its motivated and dedicated employees. The Company considers them as its most valuable asset. The Company provides a healthy work environment competitive compensation and a planned recognition and reward program to enhance employees performance. The Company aims for a workplace where every individual can unleash their true potential. The Company also provides encouraging voluntary projects beyond the scope of work that help to nurture the creative thinking and personal growth of its employees. As on 31 March 2024, the Company had a strength of 1,071 employees and a retention rate of over 93.4%.

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.