Mahindra Lifespace Developers Ltd Management Discussions

5Completed developments includes only projects/phases where construction is complete and occupancy certificate has been received. Includes commercial development inside residential complexes.

bought four land parcels — one each in Mumbai and Pune, and two in Bengaluru — which should cumulatively contribute about Rs.4,400 crore in terms of Gross Development Value of the projects. Further, the first phase of the Pune project was launched in March 2024, within six months of the acquisition of land, highlighting the Companys focus on achieving fast turnaround times for its projects.

The Integrated Cities and Industrial Clusters business also reflected strong performance in FY 2023-24 (See Chart C). Land leased by the business stood at 119 acres in FY 2023-24, whereas the total lease premium generated was Rs.370 crore in FY 2023-24.

Table 1 provides a snapshot of the Companys project portfolio across different markets. As of 31^st March 2024, Mahindra Lifespaces and its subsidiaries have completed projects covering 21.14 million square feet (msft)⁵ in the residential segment, including 1.26 msft completed during the year.

# Estimated saleable area

* MMR includes Mumbai, Boisar, Palghar, Thane, Kalyan and Alibaug ** NCR includes Delhi, Gurugram and Faridabad ^ Includes residential and commercial developments inside MWC Chennai and Jaipur

Table 2 provides project-wise status of sales and construction in ongoing projects and information on forthcoming projects.

# All values and percentage are inclusive of Joint Developers share wherever applicable. * Status (%) Sales is based on total launched area.

@ Status (%) Construction is for ongoing phases and is based on total estimated project cost (including land and construction related costs). Construction costs are based on management estimates.

^ Projects implemented by subsidiaries and JV companies. $ Area for forthcoming projects are estimates and are subject to change based on approvals.

The Companys presence in this segment spans three operational projects — two Mahindra World Cities (MWCs) at Chennai and Jaipur and its industrial cluster project called Origins, Chennai. These projects have a combined gross area of about 4,800 acres and a leasable potential of about 3,300 acres. In FY 2023-24, it leased 119 acres of land, taking the total land leased in these three projects to 2,364 acres. As on 31^st March 2024, the projects had over 200 companies from over 22 countries, making these truly global developments. Combined direct employment provided by these projects stood at around 79,000 persons at the end of the year.

Development work is currently in progress in its second Origins project in Ahmedabad. The Companys offerings in the business will be bolstered further with its third industrial cluster project being planned in Maharashtra.

MWC Chennai is the Companys first integrated city project with gross area of 1,524 acres and a leasable potential of 1,145 acres across its Special Economic Zone (SEZ), Domestic Tariff Area (DTA) and Residential & Social Zone (R&S). MWC Chennai has leased 100% of its existing land inventory in the SEZ and DTA but continues to offer lease options in the Residential & Social Zone. At the end of FY 2023-24, the total number of industrial customers in MWC Chennai was 45 in the SEZ and 25 in the DTA. Of these, 64 companies are currently operational and the remaining 6 are expected to start operations soon. In January 2024, it signed an MoU with the Tamil Nadu government during TN Government Investor Meet to facilitate and support investment in MWC Chennai.

During the year, two residential plotted developments — Lakefront Estates and Green Estates — were launched in MWC Chennai. Construction is also in progress in the two ongoing projects — Happinest MWCC and Lakewoods. Project-wise details have already been provided in the section on residential developments.

MWC Chennai has a healthy occupancy in its completed residential projects. It has all key infrastructure and amenities for its residents such as retail and commercial centre, health, education and hospitality. As a mature project, the focus is on community building and other initiatives that enhances the liveability quotient of the city and promote it as a destination of choice.

As a part of the Mahindra Group, MWC Chennai has been at the forefront of adopting sustainable and environmentally friendly practices. It is Indias first integrated city to have achieved ‘Zero Waste to Landfill certification.

MWC Jaipur is the Companys largest integrated city project with gross area of 2,946 acres and a leasable potential of 1,917 acres across its SEZ, DTA and the Residential & Social Zone. In FY 2023-24, it leased around 76 acres — taking the cumulative net leased area to 1,106 acres. MWC Jaipur ended the year with 138 customers — 63 in the SEZ, 74 in the DTA and 1 in Social Zone. Of these, 81 companies are operational and another 27 are expected to start operations in FY 2024-25.

MWC Jaipur has institutionalised a customer engagement platform called ‘Coalesce to discuss operational matters and collaborate on new initiatives. Multiple customer engagement events were organised during the year to enable community building.

MWC Jaipur is committed to sustainable development. It is Asias first and worlds largest project to reach C40 Climate Positive Development Program (CPDP) Stage 2. It regularly carries out several initiatives that contribute to the sustainability and enhances well-being of the communities in which it operates.

Origins Chennai is the Companys first industrial cluster project, which is being developed through its step-down subsidiary Mahindra Industrial Park Chennai Limited (MIPCL), a JV with Sumitomo Corporation. Launched in April 2019, this project in North Chennai currently has a gross area of 307 acre with a leasable potential of 229 acres. Origins Chennai is also Tamil Nadus first IGBC Platinum Certified industrial park, reflecting the strong focus on principles of sustainability employed in its design and development. During the year, 30 acres of land was leased, taking the cumulative land leased under the project to 157 acres. The enquiry pipeline remained strong and the Company is planning the second stage of the project for which land acquisition is in progress.

Origins Ahmedabad is the Companys second industrial cluster project, which is located near Ahmedabad, Gujarat. The project has gross area of around 340 acres and a leasable potential of 255 acres. It is being developed through its subsidiary, Mahindra Industrial Park Private Limited (MIPPL), in strategic partnership with International Finance Corporation.

MLDLs activities in this area encompass three broad themes: (a) product design, (b) marketing and brand building efforts, and (c) driving sales.

The product design process begins with assessment of needs and preferences of target customers as well as current trends. Over the years, sustainability has been at the core of MLDLs approach towards developments — where it continues to set industry benchmarks (See Box 1). Use of technology in product design is another area where Mahindra Lifespaces has taken a lead. In FY 2023-24, the Company started use of Building Information Modelling tools to enhance utility of common areas as well as optimising construction and maintenance costs.

Mahindra Lifespaces has been at the forefront of environment-friendly and sustainable developments in the Indian real estate sector. It has maintained a 100% Green portfolio of residential projects since 2014 and is committed to Net Zero (Energy, Water & Waste) Developments by 2030. 2023-24 saw significant movement towards this goal as well as efforts to promote sustainable practices in the real estate industry.

• In Feb 2024, MLDL launched Mahindra Vistas, Indias first net zero energy (NZE) and net zero waste (NZW) residential project, in Kandivali, Mumbai. Its energy demand will be met from renewable sources including both on-site renewable energy generation as well as purchase of green energy. Apart from being NZE and NZW project, it will have water conservation measures that will save 53% of water requirement from external sources. This was followed-up with the launch of its second NZE and NZW project Mahindra Zen, Bengaluru, in March 2024. After the launch of Indias first NZE project Mahindra Eden in 2022-23, these projects mark major milestones in Mahindra Lifespaces sustainability journey as it works towards its goal of Net Zero developments by 2030.

• Mahindra Lifespaces contributes to Mahindra-TERI Centre of Excellence (https://mahindratericoe. com), its joint research facility with The Energy and Resources Institute (TERI) to create innovative energy efficient solutions for the Indian construction industry. In 2023-24, about 100 building materials were tested for their thermal properties and added to the online database for the benefit of the construction community. During the year, it also launched an abridged manual for Sky Modelling for Gurugram, India — as a part of its initiative to understand local sky conditions for more energy efficient and sustainable building designs.

• Mahindra Lifespaces came together with WRI India, Alliance for an Energy Efficient Economy and EcoCollab to put together a Decarbonisation Business Charter in 2022 to promote transformative changes and adoption of low-carbon practices in the construction and building industry in India. This charter is a call to action to put the sector on a net-zero pathway and demonstrate that climate action and profit go hand in hand.

• MLDL launched a Carbon Calculator to inform and shape individual commitment in the battle against climate change. Through a user-friendly interactive process that takes 5 minutes, the Carbon Calculator allows people to assess their carbon footprint based on factors like food, transport and power consumption, so as to drive positive change towards a greener and more sustainable future.

Second, focus continued to be on digital content to generate pull for the brand and improve the quality of leads. The Companys campaigns for new project launches generated tremendous reach and visibility among prospective buyers, resulting in considerable increase in organic leads. Superlative sales performance in the Companys newly launched projects is a testament to the Companys success in this area. In an industry-first initiative, Mahindra Lifespaces showcased Indias first home-buying experience on Metaverse for its project Citadel (Phase 2) — where potential buyers could walk-through and have an immersive experience of the project. The launch event also included a drone show where 600 drones lit-up the sky eventually forming a scannable QR Code with link to the project.

Third, the Company continues to benefit from a strong channel partner network. This network is supported by ‘HappiEdge mobile App that contains project marketing material as well as tools for lead management and transaction processing. This App was upgraded during the year to provide real-time brokerage calculation and digital invoicing capabilities. While majority of the sales are generated through its channel partner network, the Company has also invested in digital assets for direct sales as well as building corporate partnerships and referral network. Contribution of these alternative channels to sales grew in FY 2023-24.

Customer centricity is at the core of MLDLs approach towards all activities and processes related to the entire home buying journey — right from booking to post-handover support. Some of the key initiatives and achievements during the year include:

• M-Life Customer App: Mahindra Lifespaces relaunched its single-stop platform for customers with a comprehensive feature list that includes regular construction updates, making online payments, raising service requests, access important documents like allotment letter, agreement and payment receipts. 44% of the Companys active customer base has already downloaded the App in the first month of its launch.

• Tech-enabled Initiatives: Initiatives for better customer experience include a range of cutting-edge technologies like artificial intelligence (AI), data analytics and robotic process automation. The impact of these initiatives is reflected in the fact that 92% of service requests are closed within defined turnaround times.

• Customer Engagement: Mahindra Lifespaces has curated exclusive events that allow the customers to experience their flats during construction. It has also entered into multiple alliances for value added services to augment the living experience by nurturing community engagement. During the year, it organised five such customer engagement events across different locations.

MLDLs customers have appreciated these efforts. The consistent improvement in the customer net promoter scores is a testimony to its success in building a customer centric organisation.

Mahindra Lifespaces unwavering commitment to high-quality and timely project execution stands as a cornerstone of its strategic and operational priorities. These are guided by the principles of total quality management (See Box 2) and a ‘First Time Right approach. Adherence to robust processes and standard operating procedures (SOPs) in line with these principles have resulted in a culture of continuous improvement in the organisation.

• The Company has adopted the principles of Total Quality Management (TQM) under the banner of ‘The Mahindra Way (TMW) — the Mahindra Groups integrated approach to promote excellence in all spheres of its operations. Both residential and IC&IC businesses are at Stage 4 in the Service category of this assessment in 2023-24.

• The organisation is ‘Integrated Management System certified since 2013 complying to standards of ISO 9001 - Quality Management System; ISO 45001- Occupational Health and Safety Management System; and ISO 14001 - Environmental Management System.

• The Company has an established ‘Quality Policy The primary focus is on delivering high-quality products and services while consistently exceeding customer expectations, all within stipulated timelines. Central to our quality management approach is the Plan-Do-Check-Act (PDCA) methodology, which has played a pivotal role in enhancing the quality of our products. It also fosters a culture of continuous improvements through Kaizens projects — 59 of which were implemented in 2023-24.

The Company took several measures in FY 2023-24 to further improve project execution and related processes:

• MLDL introduced Mahindra Certified Finishing Engineers Programme — an intensive 4-month training to enhance the capabilities of our engineers in finishing work. By providing advanced knowledge and skills, the idea is to nurture the ‘First Time Right and ‘zero-snag culture and ensure consistent and standardised delivery across all our projects.

• T o upgrade the effectiveness of training, the Company developed in-house Hand-skill Training Videos that provide comprehensive guidance on various construction activities, facilitating better skill development and consistency in execution. It also designed Visual Work Procedures, which are meticulously designed documents with photographs that provide step-by-step guidance for activities, covering all their critical aspects.

• A second edition of the Engineers Handbook with three volumes (Shell & Core, MEP Works, and Finishing Works) was launched during the year. This manual covers technical know-how on every activity done on project sites from conceptualisation to handover and enables greater standardisation as well as effective troubleshooting.

• An Inspection Test Plan covering 64 materials for civil works and 42 materials for MEP works was implemented during the year. As a part of this, each material undergoes thorough checks of physical and chemical parameters in accordance with code requirements, ensuring compliance with the highest quality standards.

• MLDL also introduced Dynamic Quality Audit — a rating system is based on CONQUAS, Singapore, which is globally recognized and accepted as a benchmarking tool for quality in the construction industry. This will further aid in rigorous monitoring and ensuring delivery of defect-free products through adoption of best practices.

Mahindra Lifespaces has an ‘inclusive safety culture which involves perceiving risks and rectifying them systematically. Its projects have reached a maturity level in use of personal protective equipment, housekeeping, adherence to systems and aims to eliminate unsafe acts by proactive reporting of incidents. In FY 2023-24, there was significant increase in capturing of proactive observations, near-miss cases as well as training hours on occupational health and safety (OHS). These efforts have paved the way for a good safety culture in the organisation. Initiatives like ‘Safety Observation Tour and ‘Quarterly Safety Campaign launched in FY 2022-23 were institutionalised during the year with recognition of achievements in OHS. The Company also institutionalised a pan-India rating system for its projects based on reporting of safety-related risks and incidents. Box 3 provides further details.

• Key Initiatives: Safety Observation Tour involves project leadership and dedicates time to addressing daily site safety concerns and their resolutions.

Quarterly Safety Campaigns were institutionalised in areas such as Fire Prevention & Life Safety, Workplace Electrical Safety, Workplace Equipment Safety and Happier workforce is Healthier Workplace. Programmes have been implemented to enhance the safety culture by recognising projects that prioritise safety as well as outstanding achievers in OHS by providing leadership and demonstrating a proactive approach.

• Process Improvements: Aligning employee KRAs with Occupational Health and Safety; incorporation of OHS Budget in the project planning stage; comprehensive inspection of critical equipment every six months to ensure that these comply with OEM requirements; and, setting up of common infrastructure to facilitate basic medical help is always provided.

• Achievements: Won 12 awards in OHS from different facilitators in 2023-24.

Mahindra Lifespaces aspires to grow its sales to Rs.10,000 crore by 2028. The Company has put in place a strategy for growth of its key businesses, including availability of land and capital to drive this growth. The Company has a strong balance sheet and has access to debt for its growth at extremely competitive rates. As on 31^st March 2023, debt at IND-AS consolidated level stood at Rs. 873 crore and the average cost of debt during 2023-24 was 8.6%. Consolidated cash balances stood atRs.107 crore at the end of the year.

The Company also has access to capital through partnerships spanning all its business segments. It has a track record of successful partnerships with: (i) Actis and HDFC Capital for residential developments and (ii) Sumitomo Corporation, Japan, and International Finance Corporation (IFC) for IC&IC projects. It also has a Joint Venture (JV) with Actis for developing Built-to-Suit (BTS) facilities in the industrial and warehousing space in India.

In the residential business, the Company made four land acquisitions during the year which should amount to a combined gross development value of around Rs.4,400 crore:

1. Malad West, Mumbai: Selected as the preferred partner to redevelop a residential society in Malad West in April 2023. This is one of the prominent residential and commercial localities in the western Mumbai and the project will offer a revenue potential of around

Rs. 950 crore.

2. Wagholi, Pune: Acquired land parcel of 5.38 acres in October 2023 for a residential project with a development potential of over 1.5 million square feet (msft) and a Gross Development Value of Rs.1,400 crore, primarily comprising mid-premium residential apartments. The first phase of the project, comprising 0.86 msft was launched in March 2024, within six months of the acquisition of land.

3. Whitefield, Bengaluru: Acquired land parcel of 9.4 acres in March 2024 for a residential project with a development potential of 1.2 million square feet and a gross development value of Rs.1,800 crore, primarily comprising mid-premium residential apartments.

4. Whitefield, Bengaluru: Acquired a second land parcel of about 2.0 acres of land in March 2024 for a residential project with a development potential of 0.2 million square feet of saleable area and a gross development value of Rs. 250 crore, primarily comprising mid-premium residential apartments.

Mahindra Lifespaces has a healthy pipeline of land deals and will continue to evaluate further opportunities in the residential business. As noted earlier, it also sees considerable opportunities for redevelopment projects and acquisition of stressed assets. The Company has dedicated teams in place to evaluate opportunities in this respect.

In the industrial business, its focus is on accelerating the leasing activity and increasing deal sizes across its existing projects and at the same time unlock value from existing land bank. It is also working on expansion of Origins Chennai and establishing a new industrial cluster project in Pune, Maharashtra. Both these projects are in the land aggregation and planning stage.

Mahindra Lifespaces approach towards use of technology has been to improve efficiencies, provide a competitive advantage and enable scale. Accordingly, it has deployed appropriate IT infrastructure and solutions across all its key business, administrative functions as well as project sites.

MLDLs IT applications includes SAP ERP for its core and peripheral business functions, which is fully integrated with SFDC — the Companys integrated sales, servicing and communications platform. It also includes primary and disaster recovery data centres, audio-visual communication tools and access to specialised industry specific software for project management. During the year, it successfully implemented role redesign project to improve end-user experience as well as achieve risk mitigation and compliance goals.

Its efforts to institutionalise use of digital and technology-based solutions in key activities such as sales, project management and customer servicing has already been discussed in the respective sections of this report. Following the onboarding of the IC&IC Business on the SFDC platform in the previous year, all key functions such as sales, CRM and now utilise the system for all customer related transactions. In the area of analytics and dashboarding, business-critical dashboards and insights were developed for various functions — Sales, CE, Marketing and Finance — which have resulted in considerable increase in efficiencies.

Going forward, the Company has prepared a 3-year plan to implement best-in-class IT systems and stay ahead of the curve in the Indian real estate industry.

Mahindra Lifespaces recognises that success is directly linked to the quality of talent. People are heart and soul of the organisation, and their skills, knowledge, and commitment contribute significantly to its growth. The Companys commitment to nurturing talent and creating a positive work environment has helped in achieving its organisational goals.

In talent acquisition, its rigorous recruitment practices continued to attract candidates who are qualified and at the same time aligned with its values and culture. Focus was not just on skills and experience necessary to drive the company forward, but also on ensuring talent development and promoting diversity and inclusivity, resulting in a more vibrant and dynamic workforce. In FY 2023-24, a second batch of 14 women civil engineers were hired as Graduate Engineer Trainees in line with its special focus is on gender diversity. The percentage of women working as full-time associates stood at 24% at the end of the year, compared to 22% a year ago.

Learning and development (L&D) has always been a top priority at Mahindra Lifespaces. This covers programs aimed at enhancing skills, fostering innovation, and promoting personal and professional growth. These are delivered through a blend of in-house training, external workshops and the Companys online learning platform called M-Academy. An important initiatives in FY 2023-24 was promoting learning from peers through "Learning Fridays – Knowledge sharing by M-Life Unstoppable Stars". Other notable efforts include launch of Mahindra School of Finishing for the projects team and Theatre Workshop on Inclusion.

Employee engagement continues to be a key focus area and was driven by the mantra of "Work Hard, Play Harder" during the year. The Company regularly undertakes initiatives to promote a positive work environment and transparent communication to strengthen the bond between employees and the organisation. These include building effective communication channels, promoting employee well-being and attractive employee recognition programmes. In FY 2023-24, it launched ‘M-Life Premier League to promote fitness and fun at work.

As on 31^st March 2024, Mahindra Lifespaces together with its subsidiaries had 697 associates on its rolls.

As a part of its CSR activities, Mahindra Lifespace and its subsidiaries contribute to local communities by focusing on the following areas: girl child education, women empowerment and environment. Besides working with partners, the Company also encourage volunteering by employee for CSR activities. Volunteering work amounting to over 2,400 person-hours was recorded during the year. Some of the key initiatives carried out in FY 2023-24 are given below.

• Girl Child Education: As a part of ‘Nanhi Kali, Mahindra Groups flagship programme for girl child education, it sponsored education of 61 girls in FY 2023-24. Through ‘Enabling Education for Girls in Schools of Rajasthan implemented by Mahindra World City, Jaipur, it provided support to girls to overcome challenges that impede them from attending school regularly. Over 800 girls benefited from this programme in FY 2023-24.

• Women Empowerment and Skill Development: MWC Jaipurs ‘Hunar programme provides skill development and vocational training to the youth and women, as well as formation of self-help groups (SHGs). About 275 rural women benefited from the programme in FY 2023-24, taking the total beneficiaries under the project to 2,457 rural youth and 2,186 women, since the inception of this programme. Besides, 20 SHGs have also been formed till date. Financial assistance was also provided to 25 Hunar beneficiaries during the year to promote entrepreneurial activities.

• Environment & Sustainability: Around 3,000 trees were planted under the Mahindra Groups tree plantation initiative called ‘Mahindra Hariyali. In another initiative, over 15,000 saplings of native trees were planted by Mahindra Water Utilities Limited in Tirupur. As a part of the ‘Green Army programme which involves sensitising school-going children on healthy and sustainable living, 8917 children across 97 schools were reached during the year. Under its ‘Green Guardians initiative, 75 LED streetlights and 5 high mast lights were successfully installed in 35 locations thereby impacting the lives of 35,000 people.

• Health and Social Security: This included donation of 5 e-rickshaws, medical equipment and assistance for primary health care units in 2 villages, development of open gym and a digital library for local communities. It also provided safe drinking water to 200+ school children. In another important initiative, it worked to ensure sustainable water security for rural communities through rainwater harvesting by improving awareness as well as development of 5 rooftop water harvesting structures and 5 farm ponds.

Table 3 gives the abridged profit and loss statement of Mahindra Lifespaces.

Total income of the standalone entity stood at Rs.123.4 crore in FY 2023-24, compared to Rs.628.1 crore in FY 2022-23. This decrease in operating revenues is primarily due to a reduction in the number of completed projects. The project and other operating costs followed a similar trajectory, declining to Rs.25.2 crore in FY 2023-24, down from Rs.415.2 crore in FY 2022-23. In contrast, employee and other costs, which are largely fixed in nature, remained stable at Rs.171.7 crore in FY 2023-24. Even as total expenses came down by 64% from Rs.601.9 crore in FY 2022-23 to Rs.216.4 crore in FY 2023-24, the Company reported losses during the year. Operating loss (PBDIT) for the year stood at Rs.73.5 crore, whereas net loss after taxes (PAT) stood at Rs.38.8 crore.

The decline in operating revenues in the standalone books of the Company also affected the consolidated performance. Consolidated total income stood at Rs.279.1 crore in FY 2023-24, compared to Rs.659.6 crore in FY 2022-23. Operating loss at the consolidated level stood at Rs.104.1 crore in FY 2023-24, compared to a loss of Rs.57.2 crore in FY 2022-23. However, after accounting for the share of profits from JVs and associates amounting to Rs.179.5 crore in FY 2023-24, the Company reported profits at the consolidated level. Profit before taxes (PBT) improved considerably to Rs.54.3 crore in FY 2023-24, up from Rs.37.9 crore in FY 2022-23. Consolidated PAT stood at Rs.98.3 crore in FY 2023-24.

Table 4 presents key financial ratios for MLDL as a standalone entity.

^ Ratios where change is significant (over 25% compared to previous year)

As noted above, there was a significant decline in standalone operating revenues of MLDL, which came down from Rs.628.1 crore in FY 2022-23 to Rs.123.4 crore in FY 2023-24. This led to the decline in Debtor and Inventory Turnover ratios. The decline revenues also resulted in losses, which affected the Interest Coverage Ratio, the two profitability margin ratios as well as Return on Net Worth.

The increase is Debt Equity Ratio during the year was due to increase in utilisation of working capital facility. The Companys ability to generate cash and service its debt obligation continues to be robust and the liquidity situation remained comfortable during the year. Surplus funds available from time to time have been invested in creditworthy investments, including deposits with banks.

The Company has adequate internal control systems, commensurate with the size and nature of its business. Well documented policies, guidelines and procedures to monitor business and operational performance are supported by IT systems, all of which are aimed at ensuring business integrity and promoting operational efficiency.

An independent internal audit and assurance firm appointed by the Company conducts periodic audits to ensure adequacy of internal control systems, adherence to management policies and compliance with laws and regulations. The scope of work of this firm includes internal controls on accounting, efficiency and economy of operations. The internal auditors also report on the implementation of their recommendations.

Reports of the internal auditors are regularly reviewed at the Audit Committee meetings. The Audit Committee of the Board also reviews the adequacy and effectiveness of the internal control systems and suggests improvements, as required.

Mahindra Lifespaces has appropriate risk management systems in place for identification and assessment of risks, measures to mitigate them, and mechanisms for their proper and timely monitoring and reporting.

The Company has a Risk Management Committee consisting of four members — one Non-Executive Director, one Independent Director, the MD & CEO and the Chief Financial Officer — to review the risk management plan and oversee the complete process. The role of the Committee inter alia, includes, formulation, overseeing and implementation of risk management policy, business continuity plan, and to ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company. The Board also regularly reviews risks.

Global growth is expected to remain stable in 2024, in part due to the anticipated easing of monetary measures, given the success in combating inflation so far. But there are risks of new commodity price spikes from geopolitical situation in the Middle East and Red Sea disruptions that could prolong tight monetary conditions. Although India has done better, this situation coupled with slower recovery in external demand can impact growth. An extended high interest rate cycle can especially impact the real estate sector in India and hence, the Company.

Mahindra Lifespaces is cognizant of these risks and is taking steps to mitigate them. Regarding inflation, it has taken a multi-pronged approach: (i) value engineering and design efficiency to bring down costs (ii) long-term and forward contracts, and (iii) upward revision of prices to reflect market realities. It has a strong balance sheet and the ability to raise capital at a very attractive cost, which enhances its ability to stay competitive. Besides, its presence in both residential and industrial segments, coupled with prudent financial management, has been a significant source of strength in dealing with a difficult market environment.

Key operational risks include: (i) inability to sell the project as per plan, (ii) inability to complete and deliver projects according to the schedule leading to additional cost of construction and maintenance, (iii) erosion of brand value, (iv) difficulties in the appointment and retention of quality contractors and manpower, (v) inability to attract and retain talent, (vi) poor customer satisfaction, (vii) fraud and unethical practices, (viii) failure to comply with laws and regulations leading to fines, penalties, and lengthy litigations.

Mahindra Lifespaces addresses these risks through a well-structured framework which identifies desired controls and assigns ownership to monitor and mitigate the risks. It has invested significant resources in transparent customer friendly processes and an enabling IT infrastructure, which are expected to effectively mitigate some of these risks.

The Companys corporate governance policies ensure transparency in operations, timely disclosures and adherence to regulatory compliances. It also has a Code of Conduct for all its associates. It believes that its employee-friendly policies and processes enhance engagement and welfare, effectively mitigating risks associated with attracting and retaining talent.

The real estate industry is often affected by changes in government policies and regulations. There are considerable procedural delays with respect to approvals related to acquisition and use of land. Unfavourable changes in the government policies and the regulatory environment may adversely impact the performance of the Company.

The Company attempts to mitigate these risks through its approach towards acquisition of land based on thorough due diligence and its transparent processes in developing the projects. Besides, its focus on environment friendly and sustainable practices helps in mitigating risks associated with environmental regulations.

FY 2023-24 was yet another good year for the Indian economy. Not only did India reflect remarkable stability of its banking and financial systems amidst strong global headwinds, its growth accelerated from 7% in FY 2022-23 to 7.6% FY 2023-24. It continues to be a global bright spot. According to the RBI, GDP growth is expected to remain strong at 7.0% in FY 2024-25, despite downside risks emanating from geopolitical shocks in Middle East, risk of fresh inflation spikes due to Red Sea disruptions and poor external sector demand if the global recovery remains weak.

Indias real estate sector is currently on an up-cycle, with strong demand and offtake in the residential segment despite firm interest rates. The industry has been able to pass on increase in costs through suitable price hikes. The industrial segment is also seeing robust demand coming from both domestic and international businesses.

Mahindra Lifespace reported strong operating numbers in FY 2023-24. The residential business, with eight launches (including new phases of existing projects), grew at 28.5% to deliver a record sales of Rs.2,328 crore in FY 2023-24, whereas the industrial business generated an impressive lease premium of Rs.370 crore. Buoyed by this high growth performance, which also underscores its success in building a high-performance organisation capable of delivering scale, Mahindra Lifespaces has set a target to grow its sales to Rs.10,000 crore by 2028.