Dear Shareholders,
It is a matter of great privilege to present to you the Companys
performance for 2010-11 - a year when the real estate industry was in a
state of flux. We experienced a situation where Indias economic growth
rate was lower than what had been projected, as a sequel to the global
financial performance.
World Economy:
Global growth attained an annualized rate of 4.3 percent in the first
quarter of 2011. The growth is not expected to sustain across the
balance quarters due to unexpected events like earthquakes and tsunamis
which hit the Japanese economy. The supply disruptions effect lowered
the industrial production, consumer sentiment and spending. Higher
commodity prices pushed up the global inflation to 4 percent in the
first quarter of 2011, from 3½ percent in the last quarter of 2010.
This lead to lower growth in the US economy. However, the fundamental
drivers of growth, like overall accommodative macroeconomic conditions,
pent-up demand for consumer durables and investment and strong
potential growth in emerging economies, remain in place.
Growth in advanced economies is projected to average about 2½ percent
during 2011-12. This will represent a modest deceleration from an
average of about 3 percent in 2010. Growth in emerging and developing
economies is expected to be 6½ percent during 2011-12, compared with
about 7½ percent in 2010.
Over all, the world economy is expected to clock a growth rate of 4.2%
this year.
India in 2011-12
High inflation and rising interest rates will weigh heavily on the
overall growth in 2011-12. Elevated crude prices pose a further
downside to overall growth. This may pull down both, investment and
consumption growth.
Agriculture growth, in spite of a normal monsoon, would decline given a
higher base. Therefore, expect GDP growth to moderate from an estimated
8.6 per cent in 2010-11 to settle in a range of 7.7 to 8.0 per cent in
2011-12.
Capital flows are expected to remain robust in 2011-12 led by higher
interest rates and robust economic growth in India vis-à-vis the West.
However, the pace of appreciation is expected to remain uneven and a
bit lower than what was witnessed during 2010-11. Rupee is expected to
strengthen in a range of Rs 43.0-44.0 per dollar by the end of 2012.
According to the 9th Annual European Attractiveness Survey by Ernst &
Young, India will continue to be an attractive investment destination
for global investors and Indian companies will keep up their forays of
global expansion.
Real estate sector in India
According to the Department of Industrial Policy and Promotion (DIPP),
FDI flows into housing and real estate in April-January 2010-11 stood
at US$ 1.05 billion. Housing and real estate sector, including
cineplex, multiplex, integrated townships and commercial complexes
attracted a cumulative foreign direct investment (FDI) worth US$ 9,405
mn. from April 2000 to January 2011.
The real estate sector in India is witnessing increasing recognition as
an infrastructure service which is driving the economic growth engine
of the country. India has the potential to attract investments in the
real estate sector on account of strong economic growth and a
developing and lucrative real estate market. It is the most viable
investment destination in real estate, according to a research report
by PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI).
A report by International rating agency Fitch Ratings, says, that the
high growth in the Indian economy will drive the demand for residential
units, which in turn will drive the real estate sector in the
medium-term. Residential property prices have stabilized and are deemed
attractive for investors. With attractive pricing and innovation in
construction technology and variety of designs, overseas investors are
taking a fresh look at India as a unique market in which they can
invest.
Foreign direct investment (FDI) in the Indian real estate sector is
estimated to increase to US$ 25 billion in the next 10 years, from the
present US$ 4 billion.
Peninsula Land: marching ahead
During the year, PLL accelerated and moved to the next phase of growth.
The company launched premium residential projects in Nasik and Goa.
In the last one year, the company focused on execution and completed
most of the projects in Mumbai. Ashok Gardens, a residential project at
Sewri was completed and handed over to the customers. Another
commercial project, Peninsula Business Park at Lower Parel, is expected
to be completed in the next few months. Work on Peninsula Technopark at
Kurla is progressing as per schedule.
Till date, the company has executed 4.2 mn sq ft of development in the
residential and commercial segments. Another 3 mn sq ft of development
is under execution in Mumbai, Goa and Nasik.
Even as execution remained our priority, the company acquired fresh
land parcels in Mumbai as well as in the West and South of India. PLL
spent about Rs 1200 crores in acquiring land parcels in Mumbai,
Alibaug, Lonavala, Hyderabad and Bangalore in the last 18 months.
With this, the current land bank with the company aggregates to over
500 acres. We will continue to acquire land parcels with a development
horizon of 3-5 years.
Our philosophy to not take undue risks has helped us and today we are
not over-leveraged in any way.
Peninsula Land is in a strong financial position with a surplus of over
Rs 500 crore in cash. This is in addition to one building in Peninsula
Business Park which is complete but not monetized.
Outlook
Peninsula Land is on an accelerated growth path. With a solid
foundation and sound business strategy, the company has embarked on the
second phase of growth. We will continue to focus on timely completion
of our projects which will further strengthen our cash flows. We will
also add to our bank of land parcels and be on the lookout for more
land at the right price.
Last but not the least, let me thank you all for the support you have
rendered that has enabled us to move closer to our goal. I am confident
that this continued support will enable us to scale new heights.
Yours sincerely
Urvi Piramal
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