MANAGEMENT DISCUSSION & ANALYSIS REPORT

Industry Structure & Developments:

India is cherished as one of the fast-growing economies, driven by many factors including multinational entrebrneurialism, buoyant local stock markets, robust economy-changing demographics and the overall emergence of India on the global stage with Make in India initiative. With great demand for housing for India's huge population and for commercial and industrial brmises for its booming economy; the initiative for large-scale real estate projects few are on the cards and rest implemented across the whole country. This transforms the real estate business into one of the most lucrative sectors in the country. By and large, the success or failure of these uses is dependent on many interrelated factors such as economic conditions, 1 demographics, transportation, management expertise, government regulations and tax policy, climate, and topography which when placed at the right algorithm show the state of economy.

TELANGANA SCENERIO

After a full five year sluggishness, the business community feels Hyderabad which shall act as the joint capital for ten years from separation is a promising opportunity and encouraging factor for the city's real estate market with new initiatives on Government policies for development and attracting large scale investments. With the advent of IT Companies with mega investment and large work force, the real estate sector is slated to take the positive turn shortly.

According to Mr. C Shekhar Reddy, President of Confederation of Real Estate Developers" Associations of India (CREDAI), 'The real estate sector is poised for a meteoric growth as the state government is actively promoting 'Brand Hyderabad' and is also looking at transforming the city into a 'Global Smart City*. Based on the brsent rock bottom prices brvailing in the city, our expectation is that prices will increase by 40-50% in the next six to eight months," /

Analysis reveals that the buyers shall undoubtedly brpare themselves to buy properties and invest in real estate- Hyderabad as the prices are at rock bottom and increase in population growth in the Country. This means that the Hyderabad will double in size, pushing up the demand for housing enormously. Hyderabad is going to be an incubation hub for entrebrneurs and will have a Pharma City. Sports City; Cinema City; Manufacturing City; among others, which will spur rapid growth in the housing sector.

Hence, not only the real estate players but also all other stakeholders believe that 2015-16 shall be the year of recovery for real estate in Telangana

Opportunities and Threats:

The state Government initiative to revive the real estate market in the state is a boost. The Finance minister of the state explained that although the sector did not receive any particular budget allocation or benefits, the assignment of large funds to metro, infrastructure, security, flyovers, drinking water and roads and buildings is expected to have a positive impact on it.

According to the Mr. R. Chalapathi. Chief Convener. National Real Estate Development Council (NAREDCO), Hyderabad city is promising as the political uncertainty has come to rest, the real estate market in the city will grow? at a relatively faster pace and give tough competition to Bangalore. Chennai and Pune $

Opportunities:

The management of the Company opines that there has been a steady, albeit incremental growth in the project sites. Having said this, owing the growth prospects in the market, the management further believes that "If not euphoric, the mood is definitely optimistic, unlike earlier years, enquires are now converting into sales but certainly the conversion rate has to go up in the coming days". To substantiate, the management detailed about the survey that was conducted in Hyderabad which states that a major buying trend that can be seen in the real estate industry, include high proportion of end-users looking for mid-segment properties, buyers giving importance to infrastructure, brsence of public transport and security before deciding the locality. Nearly 64 per cent of prospective buyers who participated in the survey in Hyderabad have exbrssed an increase in confidence in real estate.

Undoubtedly, the projects which are on hand in the Company are of similar mid-segment properties which have relatively fair silver line, potential to reap the investment made.

i. Make in India- An initiative taken by the Modi Government envisages the potential opportunity in investing in Construction Industry7, a welcoming for Foreign and National investment.

ii. Banks report that interestingly, the non resident Indian living abroad are show ing a renewed interest in the Indian Housing market.

iii. State Government Focus on improving the real estate market and allocation of funds in budget on power, infrastructure, agriculture, irrigation and industrial development, which will ultimately help the real market investments.

iv. Governments motto to improve the business friendly reputation of the state, especially Hyderabad, which in turns helps the real estate industry.

v. Announcement of a string of urban and rural development projects by the government which is boon to the sector

Threats:

i. Financial vicious circle:

Poor financial assistance at the right time, delay in sanction loans/ bridge loans subsequently no capacity to service the investment/ loan etc inevitable acts as a vicious circle which continues al through the project execution, thus disturbing the financial stability and future funds raising initiatives.

ii. Poor cash flow:

A very critical element to maintain a positive cash flow for the Company is related to having a clear understanding of how each particular client pays and the fund flow management remains a challenge.

iii. Poor capitalization—

Operating money is critical to achieve success. It so happens while project planning, financing and Loan disbursement that the Company underestimate the capital needed to pursue the most profitable projects, and have the cash necessary to fund those projects until draws can be obtained.

iv. Little or no flexibility:

Being flexible provides strategic advantages, and flexibility can be gained by continually review ing the plan versus reality. When the Company* financial Statements become weak, the management opines to resort back to the traditional approach thus contracting the flexibility. which may act as a hindrance in success of the project.

v. Execution difficulties:

Clear understanding the capabilities of the company and setting strategic objectives that are realistic will allow the company to advance and achieve sustainable growth in the future. Developing a good strategic plan with a vision, mission, strategic objectives and an action plan to implement it will provide an important guide or map for growth and help avert mismanaged growth.

Outlook and Future Plans:

The Company has currently few- semi-finished projects which are to yield the returns in the following financial years.

During the year, the Company has made few sale proceeds from the projects and started a new project in Jaihind Nagar, Shaikpet, the site plan of the project is filed for approval before the Authorities.

Risks and Concerns:

In the normal course of business, the Company is exposed to certain financial risks, principally interest rate risk, liquidity risk and credit risk, risks associated with the economy, regulations, competition, etc. The Risk Management framework of the Company ensures in risk mitigation areas and functions of the

Company, and has in place, the procedures to inform the Board Members about the risk assessment and minimization process. These processes are periodically reviewed to ensure that the management of the Company controls risks through a defined framework.

The following are the risks and concerns for the industry and the Company:

i. Completion risk

This is the risk that the project may not be completed on time, or at all. due to various reasons such as cost overruns, site .development, force majeure etc.

ii. Price risk %

This is the risk that thejprice of the project's output might be volatile due to supply-demand factors. If new capacities are coming up or if there is likelihood of fall in demand of the project output, the price risk is high.

iii. Resource risk

This risk includes the non-availability of raw materials for the project operation. It also includes the risk that the raw material prices might move adversely

iv. Technology risk

This is die risk that the technology used in the project is not sufficiently proven.

v. Political risk

This risk relates to matters such as increased taxes and royalties, revocations or changes to the concession, exchange controls on proceeds, forced government participation in shares and refusal of import licenses for essential equipment.

vi. Financial risk

This is the risk that the project that the project might not reach financial closure. The interest rate fluctuate may also be a factor.

vii. Insolvency risk

This is the risk of insolvency of contractors, project sponsors, suppliers, and purchasers of project output, insurers or a syndicate bank.

At brsent, the disturbing concern to the Company is that it has received advances from the customers for booking the flats in the semi-fmished project. But due to the sluggish overall market conditions, few clients are hesitant to make the further payments for their bookings. This is causing the potential discrepancies in resources management. However, a case is filed and pending before the Hon'ble Debts Recovery tribunal against the company for recovery- of debts. Company has also made its submission and the decision is pending before the Tribunal

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has an advanced and improved internal control system that is innovative and effective to detect the error in the system. The Company is carrying out internal audits at regular intervals of time so as to ensure that there are no irregularities and operational inefficiencies at all levels. These periodical checks and audits are carried out at different levels of organization under the supervision of Audit Committee. The report on the Audit is submitted to the Board of Directors after being approved by the Audit Committee. The Board shall review the policies adopted and procedures followed and shall approve the same on finding them appropriate to the requirement

SHARE CAPITAL

The Share Capital of your Company is Rs. 14,61.56.300 divided into 1,26.15.630 Equity shares of Rs/10/- each with voting rights and 2.00.000 Cumulative Redeemable brference shares of Rs.100/-each. During the Financial Year 2014-15. the Company has not issued and allotted any equity shares out of the unissued share capital.

SECURED LOANS

Secured loans of the Company stood at Rs. 5,91.52.376/- (including short and long term) as on 31.03.2015. FIXED ASSETS

Fixed Assets (Gross Block) amounting to Rs. 96,249/- was sold during the year and the balance of Fixed Asset (Gross Block) as on 31.03.2015 amounts to Rs. 41,38,874/- . An accumulated debrciation of Rs.35.40,421/- was charged to the balance Fixed Assets (Gross Block) thereby arriving at a Net Block of Rs.5,98,453/-.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has adequate man power and personnel to cam- out the business without any troubles. The company is making maximum utilization of the available resources. As per current situation the company's objective is not hiring/recruit any candidates, but it will be focused on improving the current staff. The human and industrial relations have remained peaceful and composed during the year and die company is currently working on providing much comfortable working environment to the existing personnel and new talents to motivate retain and attract the highly contributing talents.

The Company also has good relations with other companies in the similar stream of business and it shall be useful in understanding the market behavior and phenomenon in depth and to stay updated with competitors both in growth and adoption of new technologies for cost effective operation.

CAUTIONARY STATEMENT

Statements made in the Management Discussion and Analysis report which describes the Objectives, projections, estimates, approximations, brdictions etc.. may be considered to be forward looking statements and are stated as per the applicable laws and regulations. Actual results may defer from those exbrssed or speculated and are determined by many factors both domestic and global demand - supply conditions, processes, raw material availability, tax laws, government policies and other statutory obligations and implications which may affect the actual results which may be different from what the Directors envisaged in terms of future performance and outlook.