MANAGEMENT DISCUSSION AND ANALYSIS ECONOMIC REVIEW Global Economy A recurring theme is that the global economy is still struggling to generate increased traction. Particularly worrisome is the chronic underperformance of United States and the continuing slowdown in China, the world's two largest economies, and the multiple headwinds still affecting the global economy. The United States economy is showing some improvement, although concerns remain in most emerging market economies. The Euro area has started to show modest improvement, supported by a boost to demand from lower crude prices and the debrciation of the euro. Worldwide Development in past one year was not as per the brliminary estimations and continues to keep the disappointment phase sustaining like many of brceding years. Growth rates in developing countries and economies in transition have become more divergent during 2014, with a sharp deceleration in a number of large emerging economies. A number of these economies have encountered various country-specific challenges, including structural imbalances and geopolitical tensions. Emerging markets like India faced multiple challenges: capital outflows, intense exchange rate brssures and volatile current account movement. A combination of persistent inflation, fiscal imbalances, external sector vulnerabilities and low investments resulted in sluggish domestic demand growth. Indian Economy Indian economic conditions have improved marginally in last one year. Targeting the slowdown and to bring the economy back on the Growth path, Central Government along with Reserve Bank of India announced several legislative and policy reforms, which resulted in slight improvements on the macro-economic front, with the annual growth rate of India is estimated to have accelerated to 7.4% in 2014-15 as compare to 6.9% in fiscal year 2013-14. It is further expected to grow by around 8 - 8.5% in fiscal year 2015-16. Inflation rates have come down significantly and a major contribution comes from reduction in global oil prices. The Reserve Bank of India has also reduced repo rate by 50 basis points in last quarter of 2014-15, which shall intensify the Indian economy with reduced cost of funding as the interest rates coming down with this movement. Real Estate Industry Review Real estate sector in India have come a long way and develop into one of the fastest growing markets in the World. It is not only successfully attracting the domestic real estate developers, but overseas investors as well. The enlargement of the industry is attributed primarily to a large population base, rising income level and rapid urbanization. The sector comprising of four sub-sectors housing, retail, hospitality and commercial. While the housing contributes to 5-6 percent of the country's gross domestic production (GDP), the other remaining three sub-sectors are also growing at a rapid pace, meeting the increased infrastructure needs. The real estate sector has transformed from being unorganized to a dynamic and organized sector over the past decades. Government policies have been instrumental in providing support after recognizing the need for infrastructure development in order to ensure better standard of living for its citizens. In addition to this, adequate infrastructure forms a brrequisite for a sustaining long-term growth momentum of the economy. Indian real estate sector is one of the most globally recognized sectors. In the country, it is the 2nd largest employer after agriculture and is slate to grow at a massive pace over the next decade. The growth of this sector is well complemented by the growth of the corporate environment and the demand of office space as well as urban and semi urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. It is also expected that this sector will incur more non-resident Indian (NRI) investments in the near future. Furthermore, with the Government of India introducing newer policies helpful to real estate, this sector has garnered sufficient development in recent times. The sector is poised for strong growth over the next 12 months. COMPANY STRENGTHS D B Realty Ltd is the country's leading real estate development company with operations well sbrad out across Mumbai region. The company's business focuses on designing, developing and managing high-end and brmium residential and commercial properties. The company has carved a niche for itself in the luxury and ultra luxury segment by differentiating itself in each micro-market through product positioning, brand partnerships and having different reputed channel partners for each product to attract customers. Moreover, the company intends to keep servicing the segment 'A' customers in each micro-market to meet their growing needs and complementing their earnings. The Company's internal Audit is a multi-disciplinary function which reviews, evaluates and appraises the various systems, procedures/policies of the Company and suggests meaningful and useful improvements. It helps management to accomplish its objectives by bringing a systematic and disciplined approach to improve the effectiveness of risk management towards good corporate governance. The Company has always maintained the International level Standard in Quality and Safety. The Company has been awarded ISO 9001:2008, ISO 14001:2004 and OHSAS 18001 certification. The Company has maintained the International safety standard for all the laborers at project sites. D B Realty's green building initiative, strives to balance environmental responsibility and resource efficiency, with the occupants' health and well-being and community sensitivity. Systems are integrated with the design and are constructed, monitored and controlled to operate at maximum efficiency throughout the building's lifetime. Promoters and senior management focus is on Project Planning and Execution. Activities such as architectural design and construction are outsourced to the best-in-class practices in the Industry for brsent-day design and quality construction. The Project management team comprises of experienced, highly qualified experts who had a proven experience in their functional areas. The team drives the organization through their contribution. The organizational framework has been designed to manage the design, engineering, procurement and execution of concurrent, multi site projects keeping a focus on delivery of developments of International standards. BUSINESS OVERVIEW The Company remains committed to timely completion and delivery of projects with quality state-of-art construction. The progress on our key business parameters continues at a reasonable pace. The Company continues to consolidate its steps in the right direction for growth while it will take couple of quarters to gain momentum considering the current market situation. The project wise development status is as below: DB Woods DB Woods is a lush property located away from the urban chaos of the city next to the only green belt of Mumbai. Sbrad over an area of 2.38 acres in the suburb of Goregaon, this property offers panoramic views of the scenic hills and picturesque plans that surround the area. DB Woods connects its residents to the heart of Mumbai through the exbrssway and is an address that redefines the concept of suburban luxury living. The project has been successfully completed well within the stipulated timeframe and a total 630 units have been constructed. DB Ozone DB Ozone sprawling over 17 acres is located in Dahisar adjoining the Western Exbrss Highway, amidst the scenic and tranquil hills of the National Park. The civil structure of Total units in project: 3,661 Cumulative units sold: 3,326 Total Sales Value: Rs 9,427.18 mn, of which Rs 7,356.12 mn has been realized. DB Crown DB Crown is located in the upscale neighborhood of Prabhadevi, South Mumbai. It has luxury of ampleness of space and an endless view of the sea. It offers to its residents state of the art amenities and the added luxury of access to a multitude of prominent shopping areas in the vicinity. Total units in project: 741 Cumulative units sold: 272 Total Sales Value: Rs 13,597.28 mn. There is no revenue recognition from this project as the project is yet to reach the requisite threshold limit. Orchid Heights Orchid Heights is a spectacular residential tower located at Mahalaxmi in Mumbai offering its elite residents the luxury of size and space along with an unmatched view of the Arabian Sea as well as the Golf Course. Sbrad over 4 acres of prime real estate, the Orchid Heights offers quick access to any part of the city. The Worli sea-link, financial districts of Nariman Point and the Mumbai Airport are all a few minutes drive away from it. Total units in project: 391 Cumulative units sold: 166 Total Sales Value: Rs 10,728.07 mn. There is no revenue recognition from this project as the project is yet to reach the requisite threshold limit. DB Skypark DB Skypark is luxury residential project located at Sahar, Andheri opposite to Mumbai International Airport. The project is being developed on ~1.5 acres of land with 6 wings. The project site is at very strategic location near by Andheri MIDC, ITC Grand Maratha and Hilton International and is well connected by way of Metro, road network and railways. Total units in project: 284 Cumulative units sold: 22 INTERNAL CONTROL SYSTEMS D B Realty has a team of professionals including Chartered Accountants, Company Secretaries, Lawyers and MBAs, to ensure systems in place as per applicable laws and regulations. The internal audit of the company is conducted by Deloitte Haskins & Sells. The Audit Committee and the Board of Directors review the internal audit reports. The statutory audit of the company is conducted by Haribhakti & Co. LLP. A dedicated team of professionals ensure ISO compliances are adhered to by employees, contractors, suppliers, vendors, and any other person connected to the project operations. DB Realty Ltd implements a culture of continuous improvement, sponsored by top management and supported by technology excellence and innovation. The company has also focussed on upgrading the IT infrastructure both in terms of hardware and software. The Company has an efficient system of internal controls for achieving the following business objectives of the Company: • Efficiency of operations by implementation of SAP application in business processes • Protection of resources • Accuracy and promptness of financial reporting • Compliance with the laid down policies and procedures • Compliance with various laws and regulations OUTLOOK GOING FORWARD The year 2016 would be a combination of beneficial turns in terms of interest rates cycles, and various steps being taken by new government to boost economy in the country. The year would be introduction of the New Development Plan for Mumbai and the proposed Real Estate Bill. This will have a positive impact on the customer and investor sentiment leading to far enhanced demand atmosphere. Economists expect India's GDP growth in the range of 7.0%-7.5% for FY 2016. Your company will continue to focus to deliver high quality projects along with launch of new project in FY 2016. Cautionary Statement: The financial statements have been brpared in compliance with the requirements of the Companies Act, 2013 and the Generally Accepted Accounting Principles (GAAP) in India. Readers are advised that this discussion may contain "Forward-Looking Statements" by D B Realty Ltd (DBR) that are not historical in nature. These forward-looking statements, which may include statements relating to future results of operations, financial conditions, business prospects and projects etc, are based on the current assumptions, estimates, expectations about the business, industry and markets in which your Company operates. These statements do not guarantee any future performance and are subject to known and unknown risks, uncertainties and other factors, many of which are beyond DBR's control and difficult to brdict, that could cause actual results, performance or achievements to differ materially from those in the forward-looking statements. Such statements are not and should not be construed as a rebrsentation of future performance or achievements of DBR nor be regarded as a projection of future performance of DBR. It should be noted that the actual performance or achievements of DBR may vary significantly from such statements and the Company takes no responsibility for any consequences of decisions made which are based on such statements and also holds no obligation to update these in the future. This report should be read in conjunction with the financial statements included herein and the notes thereto. |