MANAGEMENT DISCUSSION & ANALYSIS REPORT Economic and Industry Review The overall economic situation in the country is looking better and the basic parameters of the Indian economy are improving. According to the Indian Finance Ministry, the annual growth rate of the Indian economy is projected to have increased to 7.4% in Fiscal Year 2014-15 as compared with 6.9% in the Fiscal Year 2013-14. The Central Government along with the central bank announced various legislative and policy reforms, aimed at stemming the slowdown and leading the economy back on the growth path. The Economy is further expected to grow by around 8-8.5% in fiscal year 2015-16. Indian inflation has moderated sharply as global oil and commodity prices have slumped since last year. Further, with inflation being at a record low, the Reserve Bank of India has reduced repo rate and further reduction is also expected. This will result in the reduction in interest rates, which will further boost the overall Indian economy. Focus on urbanization, smart city program and improvement in infrastructure along with implementation of policy reforms in the area of taxes and approval related will encourage private sector investment and ultimately result in higher GDP growth. The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces. The government has taken several initiatives to encourage the development in the sector. The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). This move will enable easier access to funds for developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors. Financial Review The total income of the Company for the year ended 31st March, 2015 is Rs.2120.80 lakhs against Rs.2001.46 lakhs during the brvious financial year an increase of 5.96%. The Company posted a net profit of Rs. 15.37 lacs for the year ended 31st March, 2015 against a loss of Rs. 447.29 lakhs during the brvious financial year. Business Performance The Company is engaged in construction and development of residential complex in National Capital Region (NCR). The status of current projects undertaken by the Company is furnished hereunder: Exbrss Park View: The Company is developing a Group Housing Project - "Exbrss Park View" at Plot No. GH-10B, Sector CHI-V, Greater Noida, Uttar Pradesh. The Project consists of 332 units comprising of 2BHK and 3BHK flats. The project has been completed and handing over of possession of Rats is under progress. As on 31st March, 2015, the company has booked 303 flats of which possession of 132 flats has been given. IITL-Nimbus The Hyde Park: The Company is developing a Group Housing Project - "IITL-Nimbus The Hyde Park" at Plot no. GH-03, Sector 78, Noida, Uttar Pradesh in partnership with IITL Projects Limited and Supertech Limited. The Company has 45% stake in the said partnership. The Project consists of 2044 units comprising of 1BHK to 4BHK flats. As on 31st March, 2015 the Company has booked 1296 flats. IITL-Nimbus The Exbrss Park View-II: The Company is developing a Group Housing Project - "IITL-Nimbus The Exbrss Park View II" at Plot no. GH-03, Sector CHI-V, Greater Noida, Uttar Pradesh in partnership with IITL Projects Limited and Assotech Limited. The Company has 47.5% stake in the said partnership. The Project consists of 1668 units comprising of 2BHK to 4BHK flats. As on 31st March, 2015 the Company has booked 663 flats. IITL-Nimbus The Palm Village: The Company is developing a Group Housing Project - "IITL-Nimbus The Palm Village" at Plot no. GH-03, Sector 22A, Greater Noida, Uttar Pradesh in partnership with IITL Projects Limited and Assotech Limited. The Company has 47.5% stake in the said partnership. As on 31st March, 2015 the Company has booked 215 flats. IITL-Nimbus , The Golden Palms : The Company holds 50% stake in Capital Infraprojects Private Limited which is developing a group housing project -"The Golden Palms" at Plot No. GH-01/E, Sector 168, Noida, Uttar Pradesh. The project consists of 1408 residential units comprising of Studio Apartments and 2 BHK to 4BHK Rats and 49 Commercial units. As on 31st March, 2015 Capital Infraprojects Private Limited has booked 823 flats and 22 Commercial units. The Company has increased its share from 90% to 98% in partnership firm "Indogreen International" which is running "The Golden Palms Hotel and Spa". Opportunities and challenges Opportunities As India awaits policy reforms to pick up speed, your Company firmly believes that the demand for Real Estate in a country like India should remain strong in the medium to long term. Your Company's well-accepted brand, contemporary architecture, well-designed projects in strategic locations, strong balance sheet, and stable financial performance even in testing times make it a brferred choice for customers and shareholders. Focus on urbanization, smart city program and improvement in infrastructure along with implementation of policy reforms to iron out the regulatory issues will encourage private sector investment, creating opportunities for real GDP growth to move to higher levels. Challenges Over regulated environment resulting in unanticipated delays in project approvals, high materials and manpower cost coupled with non-availability of trained labour force adding to rising cost of construction and Sluggish growth in auxiliary infrastructure facilities are the major challenges before the Company. Risks and Concerns Market price fluctuation The performance of your Company may be affected by the sales and rental realizations of its projects. These prices are driven by brvailing market conditions, the nature and location of the projects, and other factors such as brand and reputation and the design of the projects. Your company follows a prudent business model and tries to ensure steady cash flow even during adverse pricing scenario. Sales volume The volume of bookings depends on the ability to design projects that will meet customer brferences, getting various approvals in time, general market factors, project launch and customer trust in entering into sale agreements well in advance of receiving possession of the projects. Your company perceives selling the projects as a continuous process to ensure regular cash flows. Execution Execution depends on several factors which include labour availability, raw material prices, receipt of approvals and regulatory clearances, access to utilities such as electricity and water, weather conditions and the absence of contingencies such as litigation. Your Company manages the adversities with cautious approach, meticulous planning and by engaging established and reputed contractors. Rental realizations The rental realizations on the space leased depends upon the project location, design, brvailing economic conditions and competition. As far as the office space rentals are concerned, the same depends on demand and supply, general economic conditions, business confidence and competition. Financing costs Timely execution of projects requires regular flow of finances. Inadequate funding resources and high interest costs may impact regular business and operations. Your Company tries to build sufficient reserves brferably out of operating cash flows. Outlook According to the National Housing Bank (NHB) Residex Index, residential property prices show an upward trend in the second half of Fiscal 2014-15. First half had seen property prices dip, as the weak rupee and high inflation had a negative impact on spending. There is a backlog of unsold property coupled with delays in approvals, project clearances, low government spending in this sector and a huge delay in finishing projects. Needless to mention, Fiscal Year 2015-16 will largely be about recovery. Interest rate cuts by Reserve Bank of India (RBI), increase in GDP, introduction of REITs, improved market sentiment and more efforts by the government to reduce project loopholes and bottlenecks will go a long way in clearing the way for positive trends in FY 2015-16. The Planning Commission estimated that by 2030, about 600 million people will live in cities. Affordable housing therefore is a huge demand and the industry has a large gap to meet, with shortage seen among the low income groups. The residential real estate space in India is divided into affordable housing, mid-level priced houses and the luxury segment. The onus on low cost housing is expected to put brssure on the luxury segment, but this is not significant. Fiscal Year 2015-16 will focus more on recovery and clearing inventory, construction deadlines and backlogs. Real Estate Investment Trusts (REITs) and commercial real estate will make significant impact. REITs will have a huge impact in Fiscal Year 2015-16. It is an internationally tried and tested strategy, especially in the USA, Taiwan, South Korea, Singapore and Australia. REIT is a trust that buys, sells, develops and manages income-generating real estate property such as malls, commercial office spaces and more, with the main intention of attracting investors who can manage an interesting array of properties. Corporate investors benefit from tax exemptions. It largely impacts small investors and encourages proper investment channels in large real estate accounts, and is a better alternative to investing in stock, due to its higher returns and a diversified portfolio of investments. There is an adequate internal control system commensurate with the size of the Company and the nature of its business. A firm of Chartered Accountants have been appointed as internal auditors. All audit observations are discussed with the Management and necessary follow up action is taken for the improvement in the process. The audit Committee reviews the internal audit reports at regular interval. Our Vision Our vision revolves around our motto "ENDLESS EFFORTS.........TO MAKE LIFE BETTER." We strive to: • Design and construct the most magnificent ladmarks and edifices; • Contribute tangibly to regional and national development by way of key infrastructure projects; • Protect and brserve the environment we live in. Our Mission • To build a better world; • To set standards and improve our environment; • To offer a wide portfolio of international quality; • To offer products that cater to different markets and segments; • To evolve contemporary benchmarks in construction and marketing practices. Our Growth Drivers • Excellent track record; • Diversified Business Model with clear focus; • Highly professional and proficient team of Engineers at site; • Strong project execution capabilities; • Long term relationship with vendors for streamlined raw material supply. Human Resources Company has a dynamic team of highly qualified professionals and proficient employees and engineers. As at 31st March, 2015 the Company had six employees on its payroll. Adequacy of Internal Financial Controls with reference to the Financial Statements The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. Even through this non-production period the Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business. Cautionary Statement The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Company's future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in case of data and information external to the Company, no rebrsentation is made on its accuracy or combrhensiveness though the same are based on sources thought to be reliable. |