The real estate sector is one of the most globally recognized sectors. In India afteragriculture real estate market is the second largest employer and is slated to grow at 30per cent over the next decade. The real estate sector comprises of four sub sectors -housing retail hospitality and commercial. The housing sector alone contributes 5-6percent to the country's Gross Domestic Product (GDP) and the construction industry ranksthird among the 14 major sectors in terms of direct indirect and induced effects in allsectors of the economy.
We have witnessed series of radical and transformational reforms - Demonetization RealEstate Regulator Bill (RERA) FDI relaxations. GST. Benami Transactions (Prohibition)Amendment Act. Change in Accounting standards all coming in a row and in quick successionhas compounded real estate problems with o further slowdown in soles for o short period.It is obvious thot year 2017-18 will see Indian real estate sector to be more transparentcredible and attractive with only organized players on the ground. With home ownershipalways being a priority ambition and investment objective for all Indians these reformswill have very positive implications for the home buyers as well as for residential realestate sector.
The transitional slowdown in demand which we witness as an after math of series ofreforms has nothing to do with the huge pent-up demand for housing in India. This lullphase is only temporary and will vanish soon. In the end of 2017 the primary sales marketespecially across larger cities will go up as real estate prices have already bottomed outand stabilized in these cities. Fence sitters who had deferred their decision ejectingfurther fall in prices have already understood the reality and have started showinginterest in case of crediale and established long term players of good brand value.
It is imminent that with the moves by the Government like demonetization and digitaleconomy the un-organizec and the less organized segment of Real estate sector like anyother trade and services with high cash economy will be all together wiped out in duecourse - vacating the place orly to the existing and the new reputed developers who havegood practices. This will naturally create a Demand High' 'Supply Less' situation moreparticularly in mid-market and affordable housing segment - given less number of playerson the ground. Home buyers should realize this aspect and understand that"pricing" is a critical factor in the current market scenario and no player willlose the chance to offer the best possible price in order to secure his business.Therefore the present time is extremely favorable to home buyers to make their move tosecure the best real estate bargains. They should make the hay while sun shines instead ofrepenting later in terms of price and choice.
Buyers are going to have the best time in year 2017-18 and the years to come withsurplus liquidity and lower cost of funds for the banks lending rates by commercial bankshave come down which is good for the sector. Banks may further relax their marginrequirement stipulations for the home loans. Home buyers will find it easy go in forHousing loans. Consequently demand for housing will go up. Going by the present trendgood connectivity existing physical and social infrastructure in the area will bedeterminants for the demand.
Overall accelerated by the presen* measures by the Government Indian Real estatesector will surely witness a healthy growth with growing demand in the end of year 2017with organized reputed credible players on the ground and as said earlier 2017-18 andthe upcoming years would be the best time for the home buyers.
On the financials and progress of the Company
During the year under review the Company on consolidated basis registered a turnover ofRs. 152.06 Crores and reported a profit aftertax of Rs. 5.80 Crores further shareholderswill have reasons to be pleased that in a year when most real estate players in thecountry reported considerably weaker offtake and corresponding numbers the Company hasmade steady growth with sustainable numbers.
To ensure that the Company possess adequate funds to sustain immediate and forecastedbusiness requirements the Company took the measures of substitution of higher cost debtwith lower cost debt and while sustaining to better financing decisions the Company havesignificantly reduced its interest cost in respect of the quantum of debt which willimprove liquidity of the Company with a better and robust balance sheet in terms ofnumbers.
The steady growth and sustainable numbers couped with adequate liquidity represent avalidation of belief in the real estate sector. When real estate market was sluggish andchallenging the management had a totally different view 8i intentions to engage in qualityprojects along with attractive margins and liquidity considering which we readied theplatform to enter in to Affordable housing which could translate into attractive revenuesacross the next two years.
We at CHD are committed to our customers When Customers buy a real estate from us theybuilt a relationship of trust and at CHD their dreams are shaped with our expertise &trust. We are delivering our customer's promises and the same was reciprocated by ourloyal customers as the Company reported an average collection efficiency of about 91percent during the year under review. In the year where it was tougher for the real estateplayers to operate we focused on maximizing the efficiency of factors within our controland the cecisions included making platforms for new launches replacement of higher costdebt with cheap debt operating on asset light model following principles oftransparency sustainability and motivation among employees to increase productivity
Reward to shareholders
The management of the Company is always keen to reward its shareholders and they willbe pleased to know that despite challenging market conditions we remain fully focjsed onmaximizing shareholder value and the Board of Directors of your Company has recommended topay a final dividend forthe year ended 31st March 2017 @ 5% (Rs. 0.10 per equity sharehaving face value of Rs. 2/- each.).
Responding to an increasingly well-informed consumer base and bearing in mind theaspect of globalisation Indian real estate developers have shifted gears and acceptedfresh challenges. The most marked change has been the shift from family owned businessesto that of professionally managed ones. Real estate developers in meeting the growingneed for managing multiple projects across cities are also investing in
centralised processes to source material and organise manpower and hiring qualifiedprofessionals in areas like project management architecture and engineering.
The reforms and new legislations into Indian real estate is encouraging increasedtransparency. Developers in order to attract funding have revamped their accounting andmanagement systems to meet due diligence standards.
Long-term outlook is very positive
Although it's hard to forecast the real estate market that is highly sentiment drivenin India several factors will drive the future trend. Recent demonetization coupled withReal Estate Regulator Bill (RERA) FDI relaxations GST Benami Transactions (Prohibition)Amendment Act Change in Accounting standards became the most talked about news and mostdebatable topics that may drive the short-term trends. While everybody agreed that thesemeasures would help the economy in the long term the short-term consequences were harshfor the residential real estate sector as the overall transaction volumes come :o a halt.Transaction volumes in the residential sector will remain constrained but the currentoversupply in the market will be mitigated in the coming quarters as very limited newprojects are being launched. Yet things are looking positive with end users may startlooking the market again. Having said that 1 am a firm believer of the positive impact ofall these reforms and believe that these are just small hurdles and the overall propertymarkets should come on the edge of recovery shortly.
It is my pleasure to reach you by this message and wish to convey that 2016-17 was theyear where company maintained steady growth. I would like to communicate to ourshareholders that the company selected to invest in proactive initiatives strengthen itsproject pipeline and focused on its business model.
I sincerely thank the members for your support during the year and look forward tomeeting you at the shareholders' meeting.
With warm regards
R. K. Mittal