MANAGEMENT DISCUSSION & ANALYSIS REPORT

INDIAN ECONOMY

The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). The country classified as Newly industrialized country, one of the G-20 major economies, a member of BRICS and a developing economy with around 7% average growth rate since last two decades. Indian Economy became world's fastest growing major economy from last quarter of 2014 replacing China.

Growth in the gross domestic product is expected to accelerate to 7.8% in FY2015 on improved performance in both industry and services as policy addresses structural bottlenecks and external demand improves. Growth is expected to edge up further to 8.2% in FY2016, helped by a supportive monetary policy in 2015, as inflation continues to trend lower and by a pickup in capital expenditure.

INDIA'S INFRASTRUCTURE SECTOR

The Indian real estate sector is one of the most globally recognized sectors. In the country, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. 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 Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces.

India is witnessing significant interest from international investors in the infrastructure space. The Indian Government is taking every possible initiative to boost the infrastructure sector. The Reserve Bank of India (RBI) has notified 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector. The new limit is effective from 2nd  December 2014, RBI said in a notification on its website. Foreign direct investment (FDI) received in construction development sector from April 2000 to January 2015 stood at US$ 24,028.19 million, according to the Department of Industrial Policy and Promotion (DIPP).

OPPORTUNITIES

The Indian real estate market size is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country's gross domestic product (GDP). Also, in the period FY08-20, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.

Along with metros smaller towns and cities are also expanding. As cities are expanding towards suburbs and new villages are now getting closer to cities. Thus, the existing infrastructure needs an overhaul. This would mean more development and more construction. There will be more jobs and growth opportunities in the country. Even data supports such a growth.

CHALLENGES

Despite plenty of opportunities and sector being important to growth of the country, it is plagued with challenges plenty. Some of them highlighted as below:

• Lack of clear land titles

• Non-availability of low cost of working capital

• Delay in approvals before a project launch

• Approval and procedural difficulties

• Shortage of skilled manpower

• Rising input cost

STRENGTHS

The major strength of the Indian real estate industry is raising population. It creates domestic demand and scarcity of housing. As per industry estimates, India requires 18.78 million housing. Of this huge shortage more than 90 per cent of the housing is required by those who belong to either the economically weaker sections (EWS) or lower income groups (LIG). The huge domestic demand will continue to drive demand and keep pushing developers/builders and the industry to build more mid-income and affordable housing. The foreign direct investors are interested to invest in real estate industry such as, constructions and infrastructure. Thus, there is a requirement for more skilled professionals, more manpower and labour to build. In addition to this, an infrastructure is also required to support the upcoming housing and real estate developments. This would need more investments and external support. Due to this essential demand and opportunities, India's built environment and especially real estate continues to be a search for area for investments.

RISK AND CONCERNS

In the course of its business, your company is exposed to a wide variety of risks like non availability of, or exorbitant increase in the cost of land, cement, steel, labour force, short terms and long term funds etc being inherent to industry. Demand for real estate industry is sensitive to interest rate fluctuations. Interest rate has been rising in the recent past owing to Reserve Bank of India credit tightening policy. This could adversely affect Company's business plan considering that residential segment constitutes significant portion of company's business. Real estate business in India being highly regulated by Governments at various level, several regulatory approvals, permits, licenses etc. are required to be obtained from the Government/Authorities from time to time for projects. Any delay in obtaining such approvals can affect the timely execution of projects.

INTERNAL CONTROLS

The Company has in place adequate internal control system covering all its operations in order to provide reasonable assurance with regard to information and maintenance of proper accounting records, the economy and efficiency of operations, safeguarding of assets against unauthorised use or losses, and the reliability of financial and operational information. The Internal Control mechanism comprises a well-defined organization structure, br-determined authority levels and clearly defined policy guidelines for appropriate delegation of authority.

Internal control is an integral part of the company's corporate governance. Management ensures that the Company business operations are conducted appropriately, ethically and in accordance with legislation and other regulations.

Company's Board of Directors, operative management, other personnel and internal audit take part. The objective of internal control is to give reasonable assurance about the effectiveness and appropriateness of operations, about the financial information, about the reliability of reporting, and of compliance with legislation and other regulations.

HUMAN RESOURCE

Your Company firmly believes that "People" and "People driven Strategies" are the pivotal force behind success of its growth. The HR philosophy follows shared vision and is communicated to the employees through various group interactions with the Top Management. In order to ensure that its HR philosophy is translated into demonstrated action, the Company has sound, pro-active and progressive HR strategy and practices.

Your Company expects to continue to identify prudent land acquisition opportunities even as it intends to focus on the timely completion of its projects, despite of number of risks. Your company will be facing them with full zeal and gist and will be able to overcome and withstand the risks enumerated envisaging future outlook.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic market in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.