MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS The Indian real estate sector is one of the most globally recognised sectors. In the country, it is the second largest employer after agriculture. It comprises four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The year 2014-15 has been a mixed one for the real estate sector. The election of stable government at the Centre boosted investor sentiment and confidence. The Government of India along with the governments of the respective states has taken several initiatives to encourage the development in the sector. Some of them are as follows: • The Union Budget 2014-15 has announced a mission to provide a roof for each family under the "housing for all" scheme by 2022. It is targeted to complete 2 crore houses in urban areas and 4 crore houses in rural areas. • The government has notified the regulations for real estate investments trusts or REITs. These trusts will not only provide liquidity to developers but also enable easier exits. Some of the stringent measures proposed in the earlier version of REIT guidelines have been relaxed to make these instruments competitive globally. However, its impact is still to be felt by the industry. • FDI rules governing real estate sector has been rationalized. The government has allowed foreign direct investment of up to 100% under the automatic route in real estate projects. This will be for housing, townships, commercial and industrial construction to boost infrastructure activities in India. The minimum floor area required for Foreign Direct Investment (FDI) in projects has been reduced from 50,000 square metres (sq m) to 20,000 sq m. It has also reduced the minimum capital required from $10 million to $5 million, making more projects eligible for FDI. This will help boost urbanisation, especially in tier-2 and tier-3 cities, which were struggling to develop large projects. It has also done away with the three-year lock-in period for FDI. •The government announced some key reductions in the direct tax structure in the interim budget. The tax benefits for consumers and housing loan borrowers were the main demand from the industry to stimulate the sector. The increase in exemption limit from Rs. 2 lakh to Rs. 2.5 lakh will help household savings. Additionally, the limit on home loan interest has been raised from Rs. 1.5 lakh to Rs. 2 lakh. Increased savings coupled with increased tax benefit will go a long way in motivating home buyers who have been reeling under the brssure of high inflation and high interest rates. • The Union Cabinet on April 8, 2015 gave its approval to the much awaited modifications to Real Estate (Regulation and Development) Bill, 2013 that seeks to regulate the country's property market. • The government plans to develop 100 smart cities over the next 20 years for which an initial allocation of Rs. 7,060 crore was provided for in the 2014-15 Union Budget. All these measures have led to a rise in confidence among investors, developers and end users which are expected to have a positive impact on the future. It will create a better environment for growth of real estate, backed by a strong economy and consumer confidence. OPPORTUNITIES AND THREATS With the series of announcements and forming of stable government at the Centre, the Indian real estate sector seems poised for growth. Rapid urbanisation, fast-growing middle class, economic growth and lowering of interest rates is sure to boost demand in 2015-16. Having said that, "realty" on the ground is not moving with the same pace as the talks. The sector has been demanding a single window clearance to improve ease of doing business, which still remains to be implemented by the Government. Everyone is awaiting the full policy announcement on small cities concept so that this wonderful initiative can be put in place in full. It will not be out of place to mention that until and unless industry status is granted to the real estate sector, this sector will face severe difficulties in raising cheaper funds. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATION PERFORMANCE AND OUTLOOK Your Company is engaged in various projects through its subsidiaries and associates. The consolidated revenue from operations of your Company for the year ended 31st March, 2015 is Rs. 72.95 Crores and Profit after Tax is Rs. 12.27 Crores which was marginally higher than the consolidated revenue and Profit after Tax for the brvious year, that is, Rs. 20.73 Crores and Rs. 7.55 Crores respectively. During the year under review, Emami Realty Limited, its wholly owned subsidiary has entered into two Joint Development Agreements for development of about 8.35 acres and about 6.17 acres at Chennai, Tamil Nadu. The construction schedule of our Project 'Emami City' is on time. RISKS AND CONCERNS Your Company operates in an environment which is effected by various factors some of which are beyond its control. The management periodically reviews the control mechanisms in place, so that risks can be minimized to the optimum. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Our internal control systems are adequate and provide, among other things, reasonable assurance of recording transactions of operations in all material respects and of providing protection against misuse or losses from unauthorized use or disposition. HUMAN RESOURCE AND INDUSTRIAL RELATION Your Company's business is managed by a team of competent and passionate leaders, capable of enhancing your Company's standing in the sector. CAUTIONARY STATEMENT The Management Discussion and Analysis Report may contain certain statements that might be considered forward looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from these exbrssed in the statement as important factors could influence the Company's operations such as Government policies, local, political and economic development, risk inherent to the Company and such other factors. |