The immediate past has undoubtedly been a challenging period for thecountry's economy and the real estate sector in particular has been constrained by avariety of factors such as sluggish demand liquidity constraints regulatory pressuresand customer activism. Your Company has been able to tide over the lean period adoptingtried-and tested strategies while stabilizing a shaky situation. The resilience ofIndia's real estate market prices should not be taken as a sign of all is well in India'sreal estate economy though. Most big real estate companies are laden in debt today.
The sector witnessed substantial slowdown and part recovery in demandbecause of the global economic downturn and various government regulations such asdemonetization which led to a decline in affordability and tight liquidity. The retreatof various real estate investors accompanied by slowdown in the capital markets hasresulted in oversupply and falling prices. Also the advent of demonetization has broughtin a sobering effect to the market as well as SRS with the organizations bank accountbecoming NPA.
The Delhi-NCR market which was already facing demand slowdown and hugedelays in project completion saw maximum fall in sales during October-December at 53 percent.
With 2016 being the year of landmark decisions for the Indian realestate industry the sector saw concerted efforts by the Government to bring intransparency as well as boost consumer sentiment in the sector especially in theresidential market. The outlook for the year 2017 is positive with an expectancy of steadygrowth stability and revival in the resilient market. The real estate industrycontributes about 7.8% to India's GDP and is the second-largest employment generator afterthe IT industry and is slated to grow at 30 per cent over the next decade. The I ndianreal estate market is expected to touch US$ 180 billion by 2020. The housing sector alonecontributes 5-6 per cent to the country's Gross Domestic Product (GDP). Real Estate as amatter of fact has always been an attractive investment option and with the additionalsupport of the new rules and regulations by the government it has resulted in significantgrowth in the residential and commercial Real Estate. The growth of this sector is wellcomplemented by the growth of the corporate environment and the demand for office space aswell as urban and semi-urban accommodations.
Putting together my thoughts for this message has coincided with a verypositive development - the implementation of goods and services tax (GST) and RERA. Thisis expected to benefit the real estate industry and I do feel the enactment of this lawwill single-handedly solve many of the challenges faced by the real estate sector and helpin pulling the sector out of its long slumber.
GST is the most revolutionary tax-related reform to be seen in India inseveral decades having a reflective effect on India's economic prospects and futurescenario of the market. In spite of the tax structure has being announced there is stilla lot of
speculation about which tax rate will be applicable to the real estateand construction industry. Yet this is set to have a positive impact on our's endeavorsas business will improve due to enhanced liquidity leading to enriched profitabilitycollection will garner a timely facade sales will increase and our NPA of banks will bestandard.
As a move to revolutionize the real estate scenario Prime Minister hasannounced that 2 Crore affordable houses will be completed up to 2022 to provide home forpoor and middle class. The budget announcement on allowing 100 per cent deduction forprofits to housing projects building homes up to 30 sq.metres in 4 metro cities and 60sq.metres in other cities is likely to spur supply of affordable homes demand for whichmakes for almost 90 per cent of the demand for homes in India. Govt. classified theAffordable housing projects which is certain to improve the profitability of the Companydue to low income-tax on affordable projects alongside being an easy way to get fundsfrom financial institutions or banks. We ally to that through plans to build affordablehousing for new owners to capitulate on.
Keeping in mind the factors like rising income level of people peopleof all age group interested in Real Estate as an investment predicted growth in themanufacturing and the service sectors affordable housing taking pace etc. we at SRSbelieve that the year of 2017 will revive the lost confidence and have a positive impacton the business environment of Real Estate. With the lowering down of the rentals and theincreased foreign investments in India we are already witnessing a hike in interest incommercial spaces in 2017.
The current economic environment is extremely challenging; competitiveintensity remains high and is likely to increase.
I would like to sincerely thank all my colleagues on the Board fortheir wise counsel and assistance and express my appreciation for the efficient and loyalservices rendered by the Company's employees at all levels. I must also express mygratitude to our many business partners - our contractors suppliers business associatesbankers financial institutions for their continued support. And most importantly I thankyou - our shareholders personally and on behalf of the Board for your continued supportand for your confidence in the management of your Company.