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in such amounts and at such times as Our Company may need, Our Company may not be able to purchase
additional land or develop additional projects, which would adversely affect our results of operations.
19.
We are dependent on the performance of and the conditions affecting the real estate market in Mumbai
as most of our operations are concentrated in and around Mumbai.
Most of our current real estate development projects are located in and around the city of Mumbai. In the
event of a regional slowdown in construction activity in Mumbai or the surrounding areas, or any
developments that make projects in and around Mumbai less economically beneficial, we may experience
more pronounced effects on our financial condition and results of operations. There can be no assurance
that the demand for our properties in and around Mumbai will grow, or will not decrease, in the future.
Consequently, our business, financial condition and results of operations have been and will continue to be
largely dependent on the performance of and the prevailing conditions affecting, the real estate market in
and around Mumbai. The real estate market in and around Mumbai may be affected by various factors
beyond our control, including prevailing local economic, political and social conditions, changes in supply
and demand for properties comparable to those we develop, natural calamities and changes in applicable
governmental schemes. If property prices in Mumbai fall, our business, financial condition and results of
operations could be adversely affected. Any adverse development affecting the Real Estate Sector will
adversely affect the operations of Our Company.
20.
Limited supply of land, increasing competition and applicable regulations are likely to result in land
price escalation and a further shortage of developable land.
We are in the business of real estate development. Due to increased demand for land for development of
residential and commercial properties, we are experiencing increasing competition in acquiring land in
various geographies where we operate or propose to operate. In addition, the unavailability or shortage of
suitable parcels of land for development leads to an escalation in land prices. Any such escalation in the
price of developable land could materially and adversely affect our business, prospects, financial condition
and results of operations. Additionally, the availability of land, its use and development, is subject to
regulations by various local authorities.
21.
We recognize our revenue based on “Percentage Completion Method” of accounting on the basis of our
management‘s estimates of the project cost.
We recognize the revenue generated from our projects on the "Percentage Completion Method" of
accounting in accordance with Indian GAAP. Revenue from the sale of incomplete properties is recognized
on the basis of the percentage of completion method by reference to the physical proportion of the work
completed, as certified by the Company’s technical personnel, in relation to a contract or a group of
contracts within a project. Revenue will only be recognized under the percentage of completion method
once the work in relation to a particular contract or group of contracts has progressed to the extent of 20%
of the total work involved. This revenue recognition policy is applicable to developments that we intend to
sell and for which we have entered into a sale agreement prior to completion of construction; it is not
applicable to developments that we intend to lease. The effect of changes to projected costs is recognized in
the financial statements of the period in which such changes are determined. Therefore, our revenue
recognition is based on the number of projects that qualify for such revenue recognition that are under
execution during a period. This may lead to significant fluctuations in our revenues in accounting periods.
Amounts received from customers not recognized under the method described above, are accounted for as
advances from customers as part of the current liabilities.
22.
The business and future results of operations of Our Company may be adversely affected if we incur any
time or cost overruns.
Our Company’s business plans are subject to various risks including time and cost overruns and delays in
obtaining regulatory approvals. The length of time required to complete a project usually ranges from 24 to
48 months, within which there can be changes in the economic environment, local real estate market,
prospective customer’s perception, price escalation, etc. If the changes take place during the duration of the
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project, then our projections regarding the costs, revenues, return on the project, profitability as well as our
operations will be adversely affected.
There could also be unexpected delays and cost overrun in relation to our projected / future projects and
thus, no assurance can be given to complete them on scheduled time and within the expected budget.
23.
Increase in the cost of raw material will adversely affect Our Company’s operations.
Our Company’s business is affected by the availability, cost and quality of the raw materials it needs to
construct and develop its properties. The principal raw materials include steel, cement and timber. The
prices and supply of these and other raw materials depend on factors not under our control, including
general economic conditions, competition, production levels, transportation costs and import duties. If, for
any reason, the primary suppliers of raw materials should curtail or discontinue their delivery of such
materials to Our Company in the quantities it needs and at prices that are competitive, Our Company’s
ability to meet the material requirements for the projects could be impaired, construction schedules could be
disrupted and Our Company’s business could suffer.
24.
We compete in our business with a number of real estate developers.
We operate our business in an intensely competitive and highly fragmented industry with low entry barriers.
We face significant competition in our business from a large number of Indian real estate development
companies, who also operate in the same regional markets as us. The extent of the competition we face in a
potential property market depends on a number of factors, such as the size and type of property
development, contract value and potential margins, the complexity and location of the property
development, the reputations of the customer and us and the risks relating to revenue generation. Given the
fragmented nature of the real estate development industry, we often do not have adequate information about
the property developments, our competitors are developing and accordingly, we run the risk of
underestimating supply in the market.
25.
Our Company may enter into MoUs, Agreements to sell and similar agreements with third parties to
acquire land or land development rights, which entails certain risks.
Our Company may enter into and proposes to enter into in future MoUs, agreements to sell and similar
agreements with third parties to acquire title or land development rights with respect to certain land. Since
we do not acquire ownership or land development rights with respect to such land upon the execution of
such MoUs, a formal transfer of title or land development rights with respect to such land is completed after
we have conducted satisfactory due diligence and/or requisite governmental consents and approvals have
been obtained and/or we have paid all of the consideration for such land. As a result, Our Company is
subject to the risk that pending such consents and approvals sellers may transfer the land to other purchasers
or that Our Company may never acquire registration of title or land development rights with respect to such
land. Our Company may also be required to make partial payments to third parties to acquire certain land or
land development rights which Our Company may be unable to recover under certain circumstances. Our
Company’s inability to acquire such land or land development rights, or if Our Company fails to recover the
partial payment made by it with respect to such land, may adversely affect Our Company’s business,
financial condition and results of operation.
26.
Changes in interest rate will have a significant impact on Our Company and also on the demand for
residential real estate projects.
Our Company may opt to avail long term or short term debt, if required in order to meet its financial
requirements in future. Interest rates in our economy are sensitive to factors which are usually beyond the
control of Our Company. Thus, any change in the interest rates will impact our cost of borrowing and
profitability.
Customers may borrow funds to acquire the property. Thus, one of the factors on which the markets for
residential and commercial developments are dependent is the affordability of such properties which in turn
is dependent on the availability of credit to the prospective customers. Increase in interest rate will affect
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