Message from the Chairperson
It is a matter of privilege to present to you Peninsula Land's performance for 2013-14.Countries across the globe witnessed a bit of a slowdown in their economic growth in thefirst half of 2013-14 but showed improvement in the second half. Despite the volatileeconomic condition your Company performed reasonably well and our projects have beenreceived well by all stakeholders.
Global economic growth remained subdued during the year at 3%as against 3.2% theprevious year. According to International Monetary Fund (IMF) the global economicrecovery is predicted to pick up pace this year but likely to remain weak and uneven. Therecovery in global growth is likely to witness new risks. The conflicts in Iraq LibyaPalestine and Ukraine add significant geopolitical risk to this outlook. Large disruptionsin gas supplies to Eastern Europe or oil supplies in Libya and Iraq could put upwardpressure on gas and oil prices and further dampen global economic growth says the IMFreport.
India's economic growth slowed to 4.6% in 201314. It fell short of the estimated4.9% predicted at the beginning of the year.
The Reserve Bank of India has said that the Indian economic growth is poised for atake-off in 2014-15 amid signs of fiscal consolidation and projected improvement ininvestments. It has forecast that India's GDP is likely to grow about 5.5% in 2014-15after two consecutive years of sub 5% growth.
The investment demand in India is likely to pick up gradually in 2014-15 as theCabinet Committee on Investments (CCI) is expected to clear more projects. Fast trackingof projects is expected to provide the much required fillip to the construction activityin India and generate fresh employment. The land acquisition process has become easierpost implementation of the new land acquisition act and likely to benefit the real estatesector.
The Real Estate Sector:
The sector had its share of upheavals as the performance of the sector is linked to theglobal and domestic economic scenario. During the year the demand for real estateremained subdued compounded by a cautious approach by investors and home buyers.
The Indian real estate sector continues to be a favourable destination for investorsacross the globe. The surge in the urban population will continue to put pressure oncreating more housing stock. According to ASSOCHAM there is a shortage of almost 27million dwelling units today.
The real estate sector has been a major contributor to India's economic growth andaccounts for 6.3% of the nation's GDP. It is also a source of revenue for the CentralState and Local governments and provides employment to more than 50 million people. Thesector also supports ancillary industries such as building material and cement.
On the negative side the real estate sector is burdened with high costs: constructioncost has increased by 40% in the last two years. On its part the government took a fewpositive steps during the year which will provide the much-desired fillip to the sector.
The government's move to introduce Real Estate Investment Trusts (REITs) is aprogressive step. REITs are a great instrument to tap cash flow into the Indian economyand help smaller investors' access income-generating real estate assets. It will help bothdevelopers and investors by creating liquidity in the market.
The announcement by the government during the Budget to raise the taxable limit oninterest payable on home loan from Rs. 1.5 lakhs to Rs. 2 lakh is likely to make homebuying more attractive.
Your Company has performed well during the year and the projects have receivedencouraging response.
During the year your Company launched new projects in Mumbai and Pune. The ground workfor launching the first project in Bengaluru has been completed and it is likely to belaunched soon. This is in line with our business strategy to expand our operations in westand south India.
In Mumbai work is in progress on two projects: Bishopgate at Breach Candy and CelestiaSpaces (phase I) at Sewree. These projects have generated keen interest from investors.
Construction work is progressing as scheduled at Ashok Beleza at Goa Ashok Astoria atNasik Ashok Nirvan at Lonavala and Ashok Meadows at Pune. All these residential projectshave evinced interest from the investors and we have sold a substantial share of thecompleted portions of these projects.
We will continue with our focus on Mumbai Pune and Bengaluru as these are growingmarkets.
Your Company will concentrate on timely execution of projects. Currently PeninsulaLand has 6 projects under execution with a salable area of 2.3 mn sq ft. With another 16mn sq.ft. of development in the pipeline your Company will continue to generate healthyrevenues going forward.
While on one hand Peninsula Land concentrated on creating value for all shareholderson the other your Company focused on strengthening itself internally. During the year weintroduced the cluster concept to focus on timely execution and handover of projects toour customers.
Each cluster has an individual head supported by a design and execution team. Eachcluster handles one or more projects depending on the size and location of the projects.This will ensure timely execution of projects that in turn will help arrest costover-runs.
All these initiatives along with our strong governance practices will furtherstrengthen Peninsula Land.
Peninsula Land has always followed a risk-averse policy backed by a prudent investmentstrategy. Over the years your Company has strengthened internal systems created a strongpipeline of projects and focused on timely completion of projects.
Going forward I am confident that Peninsula Land will continue to deliver goodperformances. Last but not the least I would like to thank all of you for the support andconfidence you have reposed in us.