Shricon Industries Ltd Management Discussions

Indian economic overview

Indian real estate 2024 trends are characterized by innovation, sustainability and affordability. As
developers, it is pivotal to seize emerging opportunities and adapt to changing consumer preferences and
technological advancements.

Opportunities & Threats

Real estate means that the investment of capital and resources to improve the land, buildings, roads, utility
system, fixtures, and structures. Some of the main 4 types of real estate are land, commercial, industrial,
and residential.

When we say the real estate business, then it has to perform various functions like; brokerage, management,
marketing, development, sales, professional services, and lending. It provides many career and job
opportunities in the following categories; sale agent, real estate attorney, analyst, appraiser, home and
building inspector, commercial broker, loan underwriter, and mortgage specialist.

The SWOT analysis of the real estate business would help us to see things from different angles like
strengths, weaknesses, opportunities, and threats that this industry has to face.

Here it follows;

Strengths of Real Estate Business

Some of the core strengths of real estate business are as follows;

Value Multiplies Overtime

The investment in the real estate property is one such asset, where the value of your investment increases
with time. If a new housing society, main road, or a railway line is connected with your property, then its
value multiplies much time more.

Less Risky Investment

Unlike investment in the bonds and shares; where you lose almost all of your money if the stock doesnt go
up in the market. On the other hand, investment in real estate property is one of the safest investments. Its
value doesnt fall from the sky and you would lose everything.

Even its value does fall, and then you can use your property for other purposes like rents, crops, buildings,
etc. In that case, you wont go bankrupt just like it happens with the investment of bonds and shares.

Authority over the Use of Land

Once you have ownership of your property, then you can do whatever you want to do with your land.
Whether you want to cultivate some crops or fields, drill down the land for the oil and gas, or establish
some building for the rent or other purposes. You would have complete authority over tire use of the land.
No other asset would provide you such autonomy over its use.

Inflation Hedge

An inflation hedge is an economic term and it means when the currency of a country shuts getting devaluing
either because of the macro-economic factors or inflation. Then you invest your capital to protect inflation

and investors interests. Assets like real estate property, gold, or silver fall in the category of good inflation
hedge that would not only save the country from inflation but also the investor as well.

Used as Collateral

When you apply for a loan from the financial institution, then the bank would require real estate property
to issue you the loan. Even the land isnt providing much value in the open market, but you can still use it
as a security to buy a loan from the bank or any other private business owner.

Traded in the Open Market

Just like a stock market for bonds and shares, banking industry, or the livestock market for the animals. But
you wont see a specific market for the real estate business. Some brokers and agents work in this industry,
and their target market is almost everyone.

It doesnt matter whatever your background or field is, you could invest or buy the real estate property. As
long as you have enough capital and something valuable to trade with, then you arc the target market.

Weaknesses of Real Estate Business

Some of the internal weaknesses of real estate business are as follows;

Difficult to Transfer Ownership

When it comes to transferring the ownership of a real estate property, then it involves so many people and
other institutions. Sometimes it takes years to transfer the ownership from one generation to next. The more
family members and relatives are involved, the longer it would take because you would have to bring
everyone on the same page.

Not Liquid Asset

The cash is a liquid asset that you can buy anything from anyone anywhere. The real estate property¹ isnt a
liquid asset; it means that you have to sell it to make it liquid in order to make purchases that you like.

Sometimes, when it comes to liquefying your real estate asset, the market doesnt provide you the rate that
you want. You have to sell your asset at a lower rate in case of an emergency.

Huge Capital Required

When it comes to owning a real estate property, then it is not easy. It requires huge capital and something
very valuable to buy the land. Sometimes people work their entire lives and they cant build one house of
their dreams.

Limited Supply

The supply of land in a country or a region is limited; you cant stretch it out for more people. If the land
becomes less for you in a country, then you can move out to other countries. The laws and regulations of
other countries dont allow you to own a property easily. You have overcome many hurdles to own land if
youre an ordinary person.

Opportunities for Real Estate Business

Some of the external opportunities that the real estate business could use to its advantage are as follows;
Global Demand

If it wasnt for the land, then no country in the world would have invaded other countries. The fertile
beautiful landscape is in great demand across the world because you can use it for production and tourism
as well.

Rapidly Growing

The way technology and the mechanical industry is inventing new tools and machinery, the growth and
productivity of the fertile land are increasing rapidly. People didnt much care for the land in the past, but
now it means profit. Therefore, everyone is in the race of getting a piece of it.

New Areas have Great Potential

The construction machinery and material have made all kinds of architects and real estate designs possible.
However, modern buildings have a great scope of attracting new investors and businesses into your country.

Threats to Real Estate Business

Some of the external threats that are out of the control of real estate business are as follows;

Economic Recession

When the economy of the country is in recession, then people start spending less. When people spend less,
then it affects badly the overall sale of businesses. As a result, no one would be willing to spend in the real
estate property because of the uncertain environments. Economic recession is out of the control of anyone,
it takes a lot of time for a country to get out of it.

Competition with other Assets

Real estate is not only a solid asset in the market. There are other assets as well that are even more valuable
than real estate. Like gold, silver, oil and gas, wheat, and etc. The most important advantage of such assets
is that they arc moveable, and you can liquefy it in a market where theyre in great demand. Growth in the
other asset means that people wont take real estate assets seriously.

Price Falls due to Less Demand

The market of the real estate business is very uncertain. When more people are interested in the property,
then its value increases. When people stop showing interest, then its value falls from the sky. For instance,
if you need cash instantly and the real estate market is down, therefore, you have to sell it at a very price in
such circumstances.

Conclusion: SWOT Analysis of Real Estate Business

After studying the swot analysis, we have concluded that the real estate business is a great profitable
industry. But it depends on many other external factors. Therefore, it is very important to be familiar with
all other variable factors before making any purchase decision.

Company Overview

Shricon Industries Limited was incorporated as Bharwaney Builders and Leasing Limited on February 24,
1984 under the Companies Act, 1956 as Public Limited Company in the State of Rajasthan. The name of
Company was changed to Shricon Industries Limited on January 31, 1995. The company is engaged in tire
business of civil work. The Company has leveraged its rich family legacy and business experience to service
the real estate needs of mid and lower-income segment of the society.

Risk management

Economic risk: Slowdown in the global or national economy due to the second and third wave of the
pandemic could decelerate the Companys growth.

Mitigation: The pandemic has forced people to stay in their homes during lockdown, leading to the demand
for larger homes. The company is optimistic of being able to leverage this reality and increase the carpet
area sold, a growth opportunity.

Competition risk: Growing competition could cannibalise the Companys market share.

Accessibility risk: Projects beyond centralized locations could hinder sales as customers prefer centralized
location.

Cost risk: Significant variations in land acquisition cost, approvals cost and raw material prices might lead
to considerable losses.

Mitigation: The company has a systematic approach to acquire large land tracts at reasonable rates.

Mitigation: The company has a planned approach to strategies its operations and project development plans
through exploring economically beneficial Joint Ventures to fund its projects and mitigate the cash How
mismatches.

Financial performance

Shricon Industries followed the accrual basis of accounting under the historical cost convention. Its
accounts were prepared on the basis of Ind AS as per Section 133 of the Companies Act, 2013, read with
Rule 7 of the Companies (Accounts) Rules 2014.

Balance Sheet

Sr. No. Particulars	31/03/2024	31/03/2023
		Amount Rs. In lakhs
1 Borrowings	0.86	101.81
2 Non-current assets	377.54	444.55
3 Other Non-current liabilities	0	0

Profit & Loss statement

Sr. Particulars No	31/03/2024	31/03/2023	Increase / (Decrease) as compared to previous year
1 Total Revenues	154.58	170.24	-15.66
2 Expenses	67.50	49.27	18.23
3 EBITDA	69.09	51.52	17.57
4 Finance Cost	4.38	29.69	25.31
5 Depreciation and amortisation	1.59	2.25	-0.66
6 Profit (Loss) after tax	87.06	120.95	-33.89

Working capital management

Sr. No. Particulars	31/03/2024	31/03/2023
		Amount Rs. In lakhs
1 Current assets	59.63	4.36
2 Current ratio	17.33	3.38
3 Inventories	2.10	0
4 Current liabilities	3.44	1.29
5 Cash and bank balances	54.00	1.68

KEY Ratios:

Particulars	Numerator	Denominator	31.03.2024	31.03.2023	Variance %	Reason for variance of above 25%
Current Ratio (no. of times)	Current Assets	Current Liabilities	17.33	3.38	413%	Current Assets increased in Current year as compared to previous year.
Debt Equity ratio (no. of times)	Total Debt	Shareholders Equity	0.01	0.30	-97%	Ratio change due to profit in last 2 year.
Debt service ( Interest coverage )ratio (no. of times)	Earnings before Interest and Tax	Interest Charges	NA	NA	NA	Company has no term loan, therefore not applicable.
Return on Equity Ratio (%)	Net Profits after taxes	Average Shareholders Equity	0.20	0.35	-43%	Net Income in current Year high as compared to previous reporting Year.
Inventory turnover ratio (no. of times)	Cost of goods sold (or) sales	Average Inventory	NA	NA	NA	NA
Trade Receivables turnover ratio (no. of times)	Net Credit Sales	Average trade receivables	106.66	1.26	8365%	Turnover of Company very high as compared to previous year reporting Year.
Trade payables turnover ratio (no. of times)	Net Credit Purchases	Average trade payables	NA	NA	NA	NA
Net Capital Turnover Ratio	Net Sales	Working Capital	1.02	0.06	1603%	Turnover of Company high as compared to previous reporting Year.
Net profit ratio (%)	Net Profits after taxes	Net Sales	0.56	0.71	-21%	NA
Return on Capital employed (%)	Earnings before interest and taxes	Capital Employed	0.21	0.34	-38%	Profit arise in current Year low as compared to previous year, So tills ratio is low as compared to previous year
Return on Investment	Income on investment	Investment made by company	NA	NA	NA	NA

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
realised by tire 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 developments.