Introduction
Our Company was incorporated on July 12, 2013 as Pushpanjali Realms and Infratech
Limited under the provisions of the Companies Act, 1956 bearing certificate of
incorporation: L70102UR2013PLC000787in Haridwar, Uttarakhand. The Registered office of the
company situated at Nath House DevpuraHaridwar, Uttarakhand, 249401 India. It was listed
on the platform of NSE- SME.
INTRODUCTION
2018-2019 was a year of consolidation for the construction sector in India. Firmly
entrenched on the path to recovery, Pushpanjali Realms and Infratech Limited focused on
reducing its financial leverage and driving the organisational change that aimed to
deliver operational robustness and sustained long-term profitability. Starting from
2019-2020, with the required financial and human resources in place, the Company seems
well poised to witness a good growth in execution of its sizeable order backlog.
The real estate sector is one of the most globally recognized sectors. Real estate
sector 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
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 both the short term and the long term. Bengaluru is expected to be the most
favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai,
Goa, Delhi and Dehradun.
MARKET SIZE
Real estate sector in India is expected to reach a market size of US$ 1 trillion by
2030 from US$ 120 billion in 2017 and contribute 13 per cent of the countrys GDP by 2025.
Retail, hospitality and commercial real estate are also growing significantly, providing
the much-needed infrastructure for Indias growing needs.
Sectors such as IT and ITeS, retail, consulting and e-commerce have registered high
demand for office space in recent times. Commercial office stock in India is expected to
cross 600 million square feet by 2018 end while office space leasing in the top eight
cities is expected to cross 100 million square feet during 2018-20. Gross office
absorption in top Indian cities has increased 26 per cent year-on-year to 36.4 million
square feet between Jan-Sep 2018. Co-working space across top seven cities has increased
sharply in 2018 (up to September), reaching 3.44 million square feet, compared to 1.11
million square feet for the same period in 2017.
INVESTMENTS/DEVELOPMENTS
The Indian real estate sector has witnessed high growth in recent times with the rise
in demand for office as well as residential spaces. Private Equity and Venture Capital
investments in the sector have reached US$ 1.47 billion between Jan-Mar 2019.
Institutional investments in Indias real estate are expected to reach US$ 5.5 billion for
2018, the highest in a decade.
According to data released by Department of Industrial Policy and Promotion (DIPP), the
construction development sector in India has received Foreign Direct Investment (FDI)
equity inflows to the tune of US$ 25.04 billion in the period April 2000-March 2019.
Some of the major investments and developments in this sector are as follows:
• New housing launches across top seven cities in India are expected to increase
32 per cent year- on-year by 2018 end to 193,600 units.
• In September 2018, Embassy Office Parks announced that it would raise around Rs
52 billion (US$ 775.66 million) through Indias first Real Estate Investment Trust (REIT)
listing.
• New housing launches across top seven cities in India increased 50 per cent
quarter-on-quarter in April-June 2018.
• In May 2018, Blackstone Group acquired One Indiabulls in Chennai from Indiabulls
Real Estate for around Rs 900 crore (US$ 136.9 million).
• In February 2018, DLF bought 11.76 acres of land for Rs 15 billion (US$ 231.7
million) for its expansion in Gurugram, Haryana.
GOVERNMENT INITIATIVES
The Government of India along with the governments of the respective states has taken
several initiatives to encourage the development in the sector. The Smart City Project,
where there is a plan to build 100 smart cities, is a prime opportunity for the real
estate companies. Below are some of the other major Government Initiatives:
• Under the PradhanMantriAwasYojana (PMAY) Urban, more than 8.09 million houses
have been sanctioned up to May 2019.
• In February 2018, creation of National Urban Housing Fund was approved with an
outlay of Rs 60,000 crore (US$ 9.27 billion).
• Under the PradhanMantriAwasYojana (PMAY) Urban 1,427,486 houses have been
sanctioned in 2017-18. In March 2018, construction of additional 3,21,567 affordable
houses was sanctioned under the scheme.1.Industry Structure,Developments & Overview of
the economy:
ROAD AHEAD
The Securities and Exchange Board of India (SEBI) has given its approval for the Real
Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors
to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25
trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an
increasingly well-informed consumer base and, bearing in mind the aspect of globalisation,
Indian real estate developers have shifted gears and accepted fresh challenges. The most
marked change has been the shift from family owned businesses to that of professionally
managed ones. Real estate developers, in meeting the growing need for managing multiple
projects across cities, are also investing in centralised processes to source material and
organise 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
WHAT CONFEDERATION OF REAL ESTATE DEVELOPERS ASSOCIATION OF INDIA HAS TO SAY ABOUT THE
FUTURE PROSPECTS OF REAL ESTATE SECTOR
Indias economic transition, workforce expansion and urbanisation will boost investment
opportunities in real estate sector in the next decade, leading to significant growth in
housing, office, retail and warehousing space, says a CREDAI and CBRE report.
In its joint report released at a real estate conference held here, property consultant
CBRE said the sector would expand tremendously by 2030, led by new asset classes such as
coworking, coliving, student housing and real estate investment trusts (REITs).
The report estimated that office space stock will touch one billion sqft by 2030, with
flexible workspace accounting for 8-10 per cent of the total stock.
The retail shopping centre stock is estimated to cross 120 million sqft by 2030, while
warehousing stock could touch 500 million sqft by then.
By 2030, residential real estate has the potential to almost double from the current
stock of 1.5 million units in key cities, the report said.
"As the Indian economy transitions and its workforce expands, it will offer vast
development and investment opportunities for the real estate sector," CREDAI-CBRE
report said.
The growth of cities is going to further influence the countrys built environment,
while technology, demographics and environmental issues will become the new value drivers,
it added.
Commenting on the report, CREDAI President SatishMagar said, "India continues to
remain a high- priority market for long term growth potential as is evident from the
increased investment flows in the last few years.
"In the wake of positive policy reforms and emergence of a strong workforce, the
momentum of Indias economic growth is steady and it will only grow stronger in the next
10 years," said Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle
East and Africa, CBRE.
The factors which will further facilitate this growth trajectory are investment,
improved governance, human capital upgrade, improved connectivity, infrastructure
enhancement, strengthened institutions, policy reforms and integrated sustainability of
the entire ecosystem, he added.
1. Industry structure, developments & overview of the economy
India has emerged as the fastest growing major economy in the world and is expected to
be one of the top three economic powers of the world over the next 10-15 years, backed by
its strong democracy and partnerships. Real estate industry is one of the most important
pillars of the Indian economy. Real estate industry contributes between 6-8% to Indias
Gross Domestic Product (GDP) and it stands second after IT industry in terms of employment
generation.
The real estate sector is one of the most globally recognized sectors. Real estate
sector 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
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 both the short term and the long
term. Bengaluru is expected to be the most favoured property investment destination for
NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.
With real estate reaching point of saturation in developed countries and the demand and
prices falling, global real estate players are looking at emerging economies such as India
for tapping opportunities in real estate. Indian real estate will stay attractive due to
its strong economic fundamentals and demographic factors. The steps taken by the Union
Government are in the right direction. The underlying purpose of RERA is to bring
transparency and information to the consumer, timely delivery, and financial discipline in
management of customer advances. RERA coupled with demonetization has made buying and
selling homes transparent and easier. The industry has ultimately become more organized
and better regulated and with the introduction of Goods and Services Tax, it hasremoved
the duplicity of taxes and the cascading effect which has made the tax structure uniform
in the economy. GST has subsumes central excise, service tax, VAT and other local levies
taxes which has ultimately improve the profit margins of developers.
Impact of GST on real estate
GST has brought transparency in the functioning of the real estate sector, the overall
increase in price for new residential properties could be lower than that for new
commercial properties.
It will reduce the cost of buying houses for buyers as in the previous tax regime, they
had to pay Service Tax and VAT on purchase of residential unit when booked prior to their
completion, developers had to pay excise duty, custom duty, CST, Entry tax which is
non-creditable tax cost, on their professional side, which is included in the price of
units. With the uniform tax rate, developers will have input credits on GST paid for
services and goods purchased by them which will reduce the cost for them and can be passed
on to the buyers.
Now coming to the point of Value added tax (VAT), after the implementation of GST, the
tax structure is under the simplification process. After GST implementation, the
government has not included the stamp duties under it. All under-construction properties
will invite a GST of 5 per cent with no input tax credit. However, GST will not be
applicable to ready-to-move-in properties. In this category, the actual GST rate is 18 per
cent. But one-third of this 18 per cent is deemed as the value of land or undivided share
of land supplied to the buyer of the property. Hence, GST rate lowers down to 5 per cent
on under-construction flats, properties or commercial properties with the full input tax
credit.
In spite of all the uncertainty around the GST, the reformation of the complex tax
structure stands to bring increased transparency to the real estate sector and boost
foreign investments.
The economy is still in a transitory stage when it comes to RERA and GST and there are
many developments that will happen over time as the new regulations get further
streamlined. Industry veterans hold a positive stance towards these changes and expect to
see tremendous long term benefits out of them.
2. Opportunities:
The year 2019 will be both challenging and opportunistic and the ones likely to succeed
are those who embrace the changing market dynamics. Apart from elections, credit growth
and improvements in infrastructure will set the tone for economic growth in the future.
With geo-political events such as Brexit, trade war between China and the USA, and
rising global interest rates etc., global capital is looking at safe havens for
investment. Indias commercial real estate could be seen as a prime beneficiary of this
shifting access. Over the past few years, we have seen tremendous opportunities presenting
themselves to global and domestic investors with clearly visible growth at the horizon.
The last few years have seen many new trends taking shape in the Indian real estate
markets, from consistent growth in the office market, to emergence of sunrise segments.
In 2018, developers largely focused on clearing existing inventory and adjusting to the
new policy requirements. The increased transparency and accountability has created a more
efficient environment which has found favor with both domestic and institutional
investors. The stringent measures enforced by Real Estate Regulatory Authority (RERA) has
erased out non serious players and only credible developers with proven track record are
driving the market, both organically and via consolidation. This is expected to continue
in 2019 as well and we will see established names further capitalize on their brand to
strike joint development deals with smaller players.
The implementation of title insurance that will lead to renewed confidence among buyers
and will definitely impact the real estate market favourably. Digitisation of land records
will further aid in improving transparency in the land records maintenance, updating
settlement records and reducing the scope of land disputes, thereby enhancing the real
estate market.
Affordable and mid-income housing took center stage in 2018 will continue to drive
residential housing both in metro and Tier 2 cities. There been an uptick of almost 15-20
percent with preference for ready to move in units owing to RERA and GST benefits. The
massive push for improvement in infrastructure by the Government of India (GOI), including
significant capital expenditure for roads, railways, development of smaller airports and
expansion of schools and hospitals at the outskirts will benefit this segment further.
This will provide better connectivity and have a multiplier effect thereby allowing
developers to explore new projects in the peripheral areas of the cities.
The Company believes that there are lots of opportunities and demand in Indian Real
Estate Sector. Some of them are as under:
> Real Estate Investment Trusts (REITs): The Securities and Exchange Board of India
(Real Estate Investment Trusts) Regulations, 2014 facilitate tapping of cash low in the
Indian economy, and help smaller investors access income-generating real estate assets.
> Smart cities: Government proposal to develop smart cities, to offer sustainable
development and employment to a wider section, regardless of skill, education, or income
level.
> Relaxation in rules for foreign direct investment in the sector. Some of these
relaxed rules include reducing minimum built-up area and capital requirement for the
projects receiving FDI.
> Economic activity is gradually picking up.
> Office rents to start appreciating.
> Increase in Floor Area Ratio by the Department of Town & Country planning,
Haryana.
> More international retailers to venture into India, which would result in high
demands.
> 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 for each
product to attract customers.
> Home loans will become cheaper.
> Goods and Service Tax will increasingly formalize the economy and the industry
> Reduction in holding period: The holding period for capital gains on sale of
immovable property—land and building—to qualify as long term capital gains
(LTCG) is proposed to be reduced to 2 years from 3 years in the Union Budget 2017. These
steps are expected to reduce the capital gains tax burden on property sellers and thereby
make movement of immovable capital easier. Investors who were holding on to properties
will benefit from this reduction in tenure.
Real estate is one of the major contributors to Indias GDP, and the market saw several
progressive policy reforms in the last couple of years. While its true that most of these
reforms were taken back in 2017, the impacts were seen largely in 2018.
The three major reforms - the introduction of GST, the launch of RERA and the grant of
infrastructure status to affordable housing properties - have had a massive and positive
impact on the industry. The governments vision of "Housing for All by 2022,"
and the grant of infrastructure status to compact, affordable residential homes saw an
increase in the demand for low-cost homes.
The government aims to achieve its target of Housing for All by 2022, through the
PradhanMantriAwasYojana (PMAY). It has sanctioned over 81 lakh houses under the PMAY-Urban
scheme and an additional 1.95 crore houses have been proposed to be provided under the
PMAY- Rural. "The government has been consistent, with its efforts towards boosting
affordable housing, in the form of granting infrastructure status to this segment in the
previous budget and also by providing exemption of Rs 1.5 lakhs in income tax, on home
loans under affordable housing in this budget.
Government initiatives around ‘Smart City, Atal Mission for Rejuvenation and
Urban Transformation (AMRUT), etc. for development of urban infrastructure are also likely
to favour increase in demand for both residential and commercial properties. Co- working
or Community Working spaces have mushroomed across metros and Tier-ll cities, providing
flexible working options at affordable rents. With some of the operators running at 100%
occupancy levels, the supply of such spaces is very limited at the moment, against a
significantly higher demand on account of cost efficiency, flexibility and proximity
benefits.
REITs and 100% FDI in complete projects are likely to attract international
institutional investors, who are in pursuit of Grade-A income yielding leased commercial
assets. While large funds like Blackstone pioneered this trend, many others such as Canada
Pension Plan Investment Board (CPPIB), Maple Tree, Tishman Speyer and Morgan Stanley have
followed suit.
3. Threats. Risk and concerns:
a) External factor.
While the internal consumption story remains intact, notwithstanding the temporary blip
due to demonetization, the Indian Economy is vulnerable to market risk from adverse
developments in the global scenario. These downside risks to the positive global economic
growth such as trade protectionism, structural issues, commodity stocks,etc. could impact
market statement and income growth, hurting real estate as well.
Real estate is an interest sensitive sector; hence any increase in rates affected by
the reserve Bank will impact the performance of the sector.Even though this is unlikely
because of the low CPI and tepid industry growth, any reversal in monetary policy
direction is going to dent sectors prospectus. This will not affect the customers demand,
but also impact cost of funds for the industry.
Regulatory overhaul and botched implementation related to RERA, GST, etc. Have the
potential to cause temporary setbacks for the economy and sectoral performance in the
short term to medium term.
Increase labour cost and non- availability, especially of skilled manpower, on account
of MGNREGA are a threat to industrys growth since could lead to delayed and unprofitable
project executions.
b) Internal factor.
Some of the internal factors are as under:
• Unanticipated delays in project approvals.
• Un-stability in the government policies.
• Environmental issues.
• Rising cost of construction such as steel, cement, power etc.
• Rise in competition.
• Increase in Input costs.
• Lower liquidity likely to impact demand, construction progress and secondary
market transactions.
• Increase in Interest costs and foreign currency rates.
• Regulatory Pressure: Like in 2018, developers will have to confront the effect
of RERA by concentrating on finishing the on-going projects. As the supply of
ready-to-move-in properties will expand, builders will confront the challenge of finishing
the task on a specified due date.
• Rising Input Cost: The real estate industry is both capital and labour
intensive. Labour availability, unstable price fluctuations in concrete industry and other
dependent industry impacts the real estate industry significantly.
• GST Rate: 2019 has seen more clarity on GST in the real estate industry. There
is no GST for completed properties for which completion certificate has been issued,
However, Goods and Services Tax (GST) is applicable on sale of under-construction property
or ready to move in flats where completion certificate is not issued at the time of sale.
• Home Loan Interest Limit: In the budget for 2019-2020 it was stated that actual
principal repaid subject to a maximum of Rs. 1,50,000 (Rs. 2 lakh for senior citizens) can
be claimed as investment eligible for tax deduction under section 80C and the additional
deduction of Rs. 1.5 lakhs for interest on home loan availed for purchase of Affordable
houses of up to Rs. 40 lakh till March 2020,this will make the purchase of home very
attractive to individuals.
In the long term, the demonetization along with implementation of Real Estate
Regulation Act and single-window.
Clearance system will be positive for the sector leading to higher transparency and
investors confidence Investment in equity and equity related securities involve a degree
of risk and investors should not invest any funds in this Issue unless they can afford to
take the risk of losing their investment. Investors are advised to read the Risk Factors
carefully before taking an investment decision in this Issue. For taking an investment
decision, investors must rely on their own examination of our Company and the Issue
including the risks involved. The Equity Shares offered in the Issue have not been
recommended or approved by the Securities and Exchange Board of India ("SEBI")
nor does SEBI guarantee the accuracy or adequacy of this Prospectus.
4. Financial Performance:
Despite high volatility and uncertainty, the companys diversified offerings helped it
in boosting the sale sin these regions and overall as well. Built-up area accounted for
larger per cent of overall sales as compared to plots. The commercial spaces also
contributed to substantial sales.
The Financial Statements of the company have been prepared in accordance with the
Companies Act, 2013 and any other applicable laws for the time being in force and Indian
GAAP and restated in accordance with the SEBI ICDR Regulations, including the schedules,
annexure and notes thereto and the reports thereon, included in "Financial
Statements"Indian GAAP differs in certain material respects from U.S. GAAP and IFRS.
We have not attempted to quantify the impact of IFRS or U.S.
Our results of operations and financial conditions are affected by numerous factors
including the following:
• Fluctuation in price of Raw Material.
• Companys results of operations and financial performance.
• Performance of Companys competitors.
• Changes, if any, in the regulations / regulatory framework / economic policies
in India and / or in foreigncountries, which affect national & international finance.
• Significant developments in Indias environmental regulations.
4- Total Revenue from operations: The total revenue of the company during Financial
year 2019 stood at Rs.13,67,82,475/- as compared to Rs.29,67,95,103/- in Financial year
2018.
4- EBIDTA: For Financial year 2019 EBIDTA stood at (Rs. 4,16,74,035/-) vis-a-vis Rs.
7,65,23,836/- in Financial year 2018.
4- Profit before tax: Profit before tax for Financial year 2019 stood at
(Rs.4,86,20,300/- )as compared to Rs.7,07,15,089/- in Financial year 2018.
4- Profit after tax: Profit after tax for financial year 2019 stood at (Rs.
3,80,83,589)as compared toRs. 4,87,40,609 in Financial year 2018.
4- Net worth: The companys Net worth as on March 31st, 2019 stood at Rs.28,81,94,344.
Note: Figures in brackets represents loss incurred by the company during the F.Y
20182019.
5. Internal Control System
Pushpanjali Realms and Infratech Limited has well-equipped adequate systems and
internal controls to properly monitor all business transactions, records and reporting for
different projects under execution. This process also ensure compliances with all
applicable rules and regulations at corporate and projects levels. The system also keeps a
close eye to ensure that unauthorized use of assets is checked. The Internal Control
teams, comprising of professionally trained internal audit team, comprising of
professionally trained internal audit team, inform the management of only regulatory
changes and also monitors the response from various new launches. The internal audits
carried out by the companys auditors.
Further, it has an adequate system of internal control to ensure that all resources of
the Company are used efficiently and effectively, all assets are safeguarded and protected
against loss from unauthorized use or disposition and the transactions are authorised,
recorded and reported correctly, financial and other data are reliable for preparing
financial information and other data and for maintaining accountability of assets. The
internal control is supplemented by extensive programme of internal audits, review by
management, documented policies, guidelines and procedures.
6. Material Developments in Human Resources
Pushpanjali Realms and Infratech Limited has proud of its vibrant pool of young and
energetic people working as one impeccable team Pushpanjali Realms and Infratech Limited.
It is of the view that a satisfied employee is the greatest strength of any company, as
they are the store for organization capabilities and medium of delivering superlative
customer experiences. Transparency in working, open communication and enabling work
environment are the key intrinsic values of the companys work culture. Investment in
enhancing capabilities of the work place challenges and incentive schemes for achievers go
a long way in keeping our employees motivated to perform their best Focus and commitment
towards these human resources principles have helped Pushpanjali Realms and Infratech
Limited deliver excellent performance year-after-year.
7. Outlook
The company has several on-going projects in Tier-II and Tier-II cities and many more
in the pipeline. The projects have the potential to change the landscape of the cities.
Our portfolio consists of both the small and large sized projects, offering complete
solution to our customers from ready to move in to under construction projects. We remain
confident about our existing projects.
We shall be speeding up construction of our existing projects and continue to focus on
timely delivery, which remains our greatest strengths. Our cash position remains
comfortable and so does our debt. Hence, it provides us cushion to undertake new launches
at the appropriate times. Our net margins are likely to be positively impacted by the tax
incentives declared by government for Affordable Housing segments.
We believe that governments focus on Smart City, Housing for All by 2022, AMRUT,
accompanied by ever -increasing urbanization, will continue to provide ample scope of
growth for the Company. RERA implementation , infrastructure tag for affordable Housing
segment and other reforms are expected to turn the tide for the sector , and with our
reputation as one of the most trusted and respected company in the real estate sector , we
are well-placed to benefit from likely uptick in the sector. We also remain committed
towards enhancing the value of our stakeholders.
Statements in this report on Management Discussions and Analysis describing the
Companys objectives, estimates and expectations may be forward looking statements based
on certain assumptions and expectations of future events. Actual results might differ
substantially or materially from those expressed or implied. The Company assumes no
responsibility nor is under any obligation to publicly amend, modify or revise any forward
looking statements on the basis of any subsequent developments, information or events.
This report should be read in conjunction with the financial statements included herein
and the notes thereto.
8. Cautionary Statement
Statements in this Management Discussion and Analysis Report describing the Companys
objectives, projections, estimates and expectations may be ‘forward looking
statements within the meaning of applicable laws and regulations. Actual results might
differ substantially or materially from those expressed or implied. Important developments
that could affect the Companys operations include a downtrend in the infrastructure and
the construction sector, significant changes in political and economic environment in
India, exchange rate fluctuations, tax laws, litigation, labour relations and interest
costs.
For and on behalf of the Board of Directors Pushpanjali Realms And Infratech Limited
| Sd/- |
- Sd/ |
| Deepak Kumar |
Rajpal Walia |
| (Managing DirectorAnd CEO) |
(Whole time Director) |
| DIN:01616201 |
DIN: 06829234 |
| R/O: Nath House,Devpura, |
R/O: 48/B Racecourse |
| Haridwar 249201 |
Dehradun-248001 |
| Uttarakhand, India |
Uttarakhand, India |
+91-9892691696
