It is an immense pleasure to present to you the Annual Report of Anant Raj Limited for the year ended March 31, 2018. While the market environment continued to pose challenges, we are glad to share that your Company has shown the resilience to manage such hurdles and stand tall and firm.
Fiscal 2018 will be remembered in the Indian economic context as a year when critical structural initiatives were undertaken to build strength across macroeconomic parameters. Foremost among them was the historic rollout of the Goods and Services Tax (GST). The implementation of the biggest tax system change since Independence was, however, not without glitches and its temporary disruptive nature slowed down Gross Domestic Product (GDP) growth. The introduction of the Insolvency and Bankruptcy Code (IBC) to facilitate recovery of stressed assets and enforcement of the Real Estate Regulation and Development Act (RERA), which seeks to protect homebuyers by mandating that developers deliver projects on time and with quality were the other major initiatives of the year.
These structural changes provide a solid foundation for sustainable economic growth and have also been welcomed by leading international institutions. India made a 30-point jump to join the top 100 countries in the World Bank’s “Ease of Doing Business” Index, and the country’s sovereign credit rating was upgraded by Moody’s Investors Service for the first time since 2004.
Despite the real estate sector still facing significant headwinds with new regulations yet to stabilise, demand sentiments not gaining sufficient traction and substantial unsold inventory, we reported a satisfactory performance for FY 2017-18. Our total income increased by 7.02% to reach Rs. 529.32 Crores. The EBITDA at Rs. 158.47 Crores & PAT at Rs. 65.98 Crores, due to sluggishness in the market recorded a decline of 5.89% and 13.18% respectively.
While FY 2017-18 was a tough year for the industry, the recent legislations usher the promise of bringing about a paradigm change in the way the Indian real estate sector functions. Most important among them is RERA, which seeks to increase transparency and accountability to make the residential segment more attractive to consumers and investors. RERA is also expected to consolidate the industry with the disintegration of fly-by-night operators. GST implementation is likely to lead to cost savings for developers, while infrastructure status given to the affordable housing sector should enable the segment to gain considerable traction.
While the residential segment is slowly emerging from the downturn with the improved regulatory environment, the commercial segment continues to show robust activity. Slow supply of quality real estate has lowered vacancy levels, thus firming up rentals. Today, India is one of the world’s largest and fastest-growing economies. With India’s economic growth outlook continuing to be bright, demand for office and commercial space is expected to remain high. As per recent reports, absorption of commercial real estate across the country is set to rise by over 10% to 33.5 million sq. ft. in 2018.
We are convinced that increased buyers’ confidence in the regulated environment will bring about an impressive turnaround in the real estate sector. Preference for an established brand with a proven track record of delivery is also resulting in customers gravitating towards bigger players. At Anant Raj, we are prepared to translate these unfolding opportunities into strong growth. Our integrated township Anant Raj Estate is progressing as per schedule and should drive increased sales. Fully paid-up low-cost land parcels at core locations in Delhi-National Capital Region (NCR) along with our detailed knowledge of this market also provides us compelling prospects for undertaking new and the right projects.
Additionally, our low-cost land parcels also place us at a vantage point to seize opportunities in low-cost housing. An overwhelming majority of housing demand is in the EWS (Economically Weaker Sections) and LIG (Low Income Group) categories, with demand for units less than Rs. 10 Lakhs. However, most developers are still staying away from the low-cost segment due to difficulty in procuring low-cost land and maintaining margins. We have already shown our execution prowess in low-cost housing with the successful completion of project AASHRAY in Rajasthan. Backed by these internal competencies as well as the deployment of new technologies, we are charged to address this demand-supply gap, not just in NCR but across pan-India.
We also remain confident about increasing the rental yields from our ready for fit-out commercial property in NCR, of which, currently, only 30% is leased out. As per leading real estate report, in the first half of 2018, NCR accounted for the second highest share of absorption of office space in India; this along with sustained demand for commercial real estate provides considerable upside potential for our rental income. We are also exploring the prospects of developing our strategically located Hotel plots in partnership with leading international brands. With the Floor Area Ratio (FAR) of these plots going up to 1.5, we now have the potential to build 7,000 rooms. The proposed foray will further contribute to our revenue and boost long-term growth and business expansion.
In conclusion, our unique market! knowledge, deep experience and operating efficiencies have enabled us to stand tall despite difficult times. Our vast land bank further differentiates us from our peers in the industry. The game-changing new regulations herald buoyant and durable growth prospects for the real estate sector, and we are fully prepared to capitalise on the same. Our balance sheet is strong and, last but not the least, we have the people to take advantage of this upcoming opportunity.
As always, we would like to take this opportunity to thank our customers for their business, our employees for their commitment; partners for their support and our shareholders and investors for their continued confidence. We continue to seek the support of all our valued stakeholders as we seek to unlock the full potential of our business.