MANAGEMENT AND DISCUSSION ANALYSIS REPORT

OVERVIEW:

A key driver of the economy, Infrastructure is highly responsible for propelling India's overall development. The industry enjoys intense focus from the top officials of the Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. This sector includes power, bridges, dams, roads and urban infrastructure development.

The Indian real estate sector being one of the most globally recognized sectors, has transformed from being unorganized to a dynamic and organized sector over the past decade.

GLOBAL ECONOMY:

Global growth in 2014 was lower than initially expected, continuing a pattern of disappointing outturns over the past several years. At the same time, demand for oil has weakened due to the slowdown in China and the persistent sluggishness of the Eurozone and Japan. Several major forces are driving the global outlook such as soft commodity prices; persistently low interest rates but increasingly divergent monetary policies across major economies; and weak world trade. In particular, the sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies like India. However, it will dampen growth prospects for oil-exporting countries, with significant regional repercussions.

The international market, more particularly, the Middle East, appears to be challenging due to the fall in international oil prices which may force some rethinking on the growth plans of a few countries but generally ongoing projects are expected to continue as per budget allocation.

INDIAN ECONOMY:

REAL ESTATE SECTOR:

Between 2005-08, the real estate sector grew by about 30% annually before slowing down significantly due to a 2008 global financial crisis. It grew by about 8% between 2009-11 and 6.5% in 2012-13. The Indian real estate market is estimated to be approximately USD 78.5 Billion in 2013 and is expected to grow to approximately USD 140 Billion by 2017. According to FICCI-EY Real Estate Report 2013, India's real estate requires about USD 42 Billion (excluding housing for economically weaker sections) in investments by 2015. Residential real estate alone will require an investment of USD 29 Billion.

INFRASTRUCTURE SECTOR:

India remains rich with potential. With a stable government in place coupled with improving business sentiments and a rapidly emerging environment that is conducive for policy making, the future looks promising especially for the Infrastructure and Construction sector.

10% of India's GDP is based on construction activity. This sector is the 2nd largest employer and contributor to economic activity, after agriculture sector and accounts for second highest inflow of FDI after the services sector and employs more than 35 Million people.

The year 2015-16 is expected to be challenging though encouraging due to a recovery of the Indian economy on account of reform measures being initiated by GOI. Positive announcements on Infrastructure and Defence Sectors in the Union Budget should also revive infrastructure projects.

According to DIPP- Department of Industrial Policy and Promotion, the construction development sector in India has received FDI equity inflows to the tune of US$ 23,874.1 Million in the period April 2000- September 2014. The Construction sector ranks third among the 14 major sectors in terms of Direct, indirect and induced effects in all sectors of the economy.

It is estimated that infrastructure investment (as measured by Gross Fixed Capital Formation) is expected to surge to 12.1% of GDP by FY20 from 7.0% of GDP in FY11. Rising demand for infrastructure facilities, given the rapid growth in urbanisation, bulging of the middle class and an increasing working-age population, would engender substantial increase in infrastructure investments during the current decade.

GOVERNMENT INITIATIVES:

REAL ESTATE SECTOR:

Under the Sardar Patel Urban Housing Mission, 30 million houses will be built by 2022, mostly for the economically weaker sections and low-income groups, through public-private-partnership (PPP), interest subsidy and increased flow of resources to housing sector', according to Mr M Venkaiah Naidu, Union Minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs, Government of India.

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 Government of Maharashtra has announced a series of measures to bring transparency and increase the ease of doing business in the real estate sector.

• The Government of India has relaxed the norms to allow foreign direct investment (FDI) in the construction development sector. This move should boost affordable housing projects and smart cities across the country.

• 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 cash-strapped developers and create a new investment avenue for institutions and high net worth individuals, and eventually ordinary investors.

• The Telangana Real Estate Developers' Association (Treda) plans to host the Fifth Treda Property Show 2014 at Hitex Centre, Hyderabad. The show will be open to a mix of the populace, including prospective property purchasers, investors, architects and others.

• The State Government of Kerala has decided to make the process of securing permits from local bodies for construction of houses smoother, as it plans to make the process online with the launch of software called 'Sanketham'. This will ensure a more standardised procedure, more transparency, and less corruption and bribery.

INFRASTRUCTURE:

The Government of India is in the process of launching a new urban development mission. This will help develop 500 cities, which include cities with a population of more than 100,000 and some cities of religious and tourist importance. These cities will be supported and encouraged to harness private capital and expertise through PPPs, to holster their infrastructure and services in the next 10 years.

The Government of India in the Union Budget 2014-15, has announceda project to develop 'One Hundred Smart Cities' as satellite towns of larger cities by modernizing the existing mid-sized cities in the country. INR 70.6 Billion has been allocated in the current fiscal year for the same. The following are the few announcements made in the budget in relation to smart cities:

• To encourage development of 'Smart Cities', which will also provide habitation for the neo-middle class, requirement of the built-up area and capital conditions for FDI is being reduced from 50,000 sq. mts. to 20,000 sq. mts., from USD 10 Million to USD 5 Million respectively. To further encourage this, projects which commit at least 30% of the total project cost for low cost affordable housing will be exempted from minimum built-up area and capitalisation requirements.

COHDOS

• INR 80 Billion has been allocated for the National Housing Bank with a view to expand and continue to support rural housing in the country.

• India and the US have signed a memorandum of understanding (MoU) in order to establish Infrastructure Collaboration Platform. The document showcases the relationship between both the Governments which intend to facilitate US industry participation in Indian infrastructure projects to improve the bilateral commercial relationship and benefit both the Participants' economies.

FOREIGN DIRECT INVESTMENTS:

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).

100% FDI is allowed under the automatic route. 'Industrial Park' is a project in which quality Infrastructure in the form of plots of developed land or built-up space or a combination with common facilities is developed and made available to all the allottee units for the purposes of industrial activity. But FDI is not allowed in the real estate business or construction of a farmhouse.

Though Foreign investors have bought tenanted office space worth over US$ 2 billion in India in 2014, a four-fold rise compared to the brvious year, in order to increase their rent-yielding commercial assets in Asia's third largest economy. 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 2 December 2014, RBI said in a notification on its website.

OPPORTUNITIES & STRENGTHS:

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.

THREATS & CONCERNS:

While the management of your Company is confident of creating and exploiting the opportunities, it also finds the following challenges:

1. Availability of accomplished and trained labour force

2. Increased cost of manpower

3. Rising cost of construction

4. Growth in auxiliary infrastructure facilities

5. Over-regulated environment

6. Economic slowdown may impact the growth of Real Estate Sector.

7. Rising interest rates and credit squeeze for realty sector may create financial bottlenecks in the long run.

ROAD AHEAD:

India's growing population requires a robust infrastructure. The government, through a series of initiatives, is working on policies to attract significant investor interest. Indian aviation market is expected to become the third largest across the globe by 2020, according to industry estimates. The sector is projected to handle 336 million domestic and 85 million international passengers with projected investment to the tune of US$ 120 billion. Indian Aviation Industry that currently accounts for 1.5 per cent of the gross domestic product (GDP), has been instrumental in the overall economic development of the country. Given the huge gap between potential and current air travel penetration in India, the prospects and possibilities of growth of Indian aviation market are enormous.

Real estate developers, in meeting the growing need for managing multiple projects across cities, are investing in centralized processes to source material and organize manpower and hiring qualified professionals in areas like project management, architecture and engineering. The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.

CAUTIONARY STATEMENT:

The view and forward-looking statements contained in this report are based on reasonable assumptions and subject to certain risks and uncertainties that could cause actual results to differ from those reflected in such statements. The Management's Discussion and Analysis describing the Company's objectives, projections, estimates, and expectations may be forward looking statements within the meaning of applicable securities laws or regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations including, among other, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, change in the Government regulations, tax laws and other statutes and incidental factors. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto.

PERSONNEL:

Presently the Company enjoys cordial relations with employees and believes that human resources are invaluable asset. The Board wishes to place on record its apbrciation to all employees for their efforts and co-operation for the performance and growth of business during the year. Company acknowledges the good work shown by its employees by enhancing their salaries up by 10-20%.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

There were no fresh loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review.

THE DETAILS OF THE EXISTING GUARANTEES ARE GIVEN BELOW:

a) The Company has given the Corporate Guarantee to Vijaya Bank, Bank of India and Union Bank of India in respect of Term Loan availed by M/s. Country Club Hospitality & Holidays Limited.

The details of the Property given as Collateral securities are as follows.

Company's Immovable property situated at No.20/1-524, Sy No: 20/1, Geddanahalli, Attibele Hobli, Anekal Taluk, Bangalore District Pin-562107.

b) The Company has given the Corporate Guarantee to Karvy Financial Services in respect of Term Loan availed by M/s. Country Club Hospitality & Holidays Limited.

The details of the Property given as Collateral securities are as follows.

Company's Immovable Property Situated at Sy No:101/3,102/3,103/1,103/2 & 103/17, Kumbalgodu, Kengeri Hobli beside Mc.dowell Unit near Mysore Road under BBMP, Bangalore.

ACKNOWLEDGEMENTS:

Your Directors thank the Company's customers, vendors, investors, business associates, bankers and other agencies for their support to the Company.

We wish to place on record our apbrciation for the untiring efforts and contributions made by the employees at all levels to ensure that the Company continues to grow and excel.

Finally your Directors record their deep sense of gratitude to all the shareholders for the abundant confidence reposed in the Board of Directors.

For and on behalf of the Board

For COUNTRY CONDO'S LIMITED

Y. RAJEEV REEDY CHAIRMAN & MANAGING DIRECTOR DIN:00115430

D. KRISHNA KUMAR RAJU VICE-CHAIRMAN & CEO DIN: 00115553

PLACE: HYDERABAD

DATE : 13-08-2015