Arihant Superstructures Ltd

We have a time-validated business model and a favourable external environment is likely to enable us to reach 3X of our current size over the next 3_years.

ASHOK CHHAJER

Chairman & Managing Director Arihant Superstructures Limited

I?d like to begin by expressing my sincere gratitude to all of you for continuing to place your trust in Arihant Superstructures Limited, and enabling us in our pursuit of excellence. Your faith in us allowed us to report another year of commendable performance, and we look forward to building on this foundation in the years_ahead.

2021-22 was another challenging year for all of us. We witnessed geopolitical unrest in several regions of the world,whiletheresurgenceoftheCOVID -19endangered business activity. All these factors taken together resulted in unprecedented volatility in commodity prices and high inflationary pressure. Overcoming this challenging environment, we recorded our highest ever homes sales, revenue and profitability in 2021-22, demonstrating the strength of our business model and strategy, and the dedication of our hardworking team.

We started the financial year amidst the havoc created by the second wave of COVID-19. Despite challenges, our sites and offices operated without any major glitch. The scaling up of human resources, technology and our systems and processes in the previous year ensured we were able to beat our sales guidance as reflected in a 91% Y-o-Y growth in pre-sales, while taking calibrated price hikes and improving our margins. This was a major achievement requiring enormous effort in the face of the macro-and microeconomic challenges.

2021-22 in review

We continued to focus on building on our internal capabilities and sharpening our strategies. As a result, when the tide tuned in our favour, we were able to execute our projects faster, sell better and deliver on our commitments backed by the favourable industry upcycle. We recorded pre-sales of 1,628 units admeasuring ~1.4 million sq. ft. worth 764.0 crore in 2021-22, an increase of 91%, 59% and 74% respectively from the previous year. We grew our topline and bottom-line by 22% and 163% in 2021-22, to stand at 332.5 crore and 41.4 crore, respectively. Against all odds of high inflationary pressures, we expanded our EBITDA margins by 300 bps and PAT margins by 666 bps, a clear sign that the new age customers are willing to more than bear incremental costs for a brand they trusts and product they aspire.

Since post-covid, we have demonstrated financial jurisprudence by reducing debt and maintaining our preferred borrower status.

We invested in strategically important land purchases in newer micro-markets such as Kalyan, which will expand our reach and further strengthen our land bank. During the year we launched more than 1,600 units out of which we were able to sell nearly 35% within the same financial year. Operationally, by the end of 2021-22, we had ongoing projects with 5,000 units admeasuring 4.7 million sq. ft. saleable area under construction. These results are an outcome of an unwavering focus to build Scalability in all aspects of our business – Financial, Acquisition, Operational, Brand, People and Markets. With this objective, we have and we shall continue to work towards building scalability by pushing boundaries. We have upgraded our internal systems and processes and adopted newer technologies for better management and quicker project execution, achieve economies of scale and maximize efficiency to create a competitive advantage. It also allows us to further align with our Scalability pillars and guarantees growth underpinning our ability to produce high quality, sustainable homes into the future.

Building Scalability

The long-term housing market fundamentals continued to be favourable in 2021-22. With a strong demand for affordable houses across all our regions, interest rates remaining low by historical standards, inflationary pressures subsiding and the financial markets continuing to be supportive, the industry upcycle is here to stay for the next few years. Whilst the supply of labour is likely to be challenging, we believe, companies like us who have a strong track record in the contractor and vendor community will be able to deliver projects faster than the rest of the industry. We believe that Navi Mumbai and peripheral regions of MMR will garner disproportionate share of growth in the housing industry in western India with its fast growing infrastructure, connectivity, employment opportunities and a_ordability. Being the market leaders in Navi Mumbai with fast increasing presence in the other parts of the MMR, we see a humongous opportunity in front of us which we are poised to capitalize. The first mover advantage gives us an edge to grow faster and scale higher. We have the people, resources and expertise to achieve this.

In the current financial year, we got approvals for 7 new projects/ phases translating into ~2.6 million sq. ft. saleable area providing us ammunition to scale up the business rapidly. We plan to launch more than 2,700 units in 2022-23 with over 2 million sq. ft. saleable area to ensure we meet the guidance of 45-50% growth on all metrics. We remain aggressive to scale up our portfolio to 20 million sq. ft. in the near future and scale up further to 40 million sq. ft. over medium term by a judicious mix of outright and asset-light acquisitions. To put everything in perspective, we have a time-validated business model and a favourable external environment is likely to enable us to reach 3X of our current size over the next 3 years.

Proven success of business strategy

On the strategy front, we are quite clear and have centred our focus around six strategic priorities:

i. Continue to focus on the affordable and mid-income housing segment mirroring target population matrix ii. Efficient and judicious utilizations of funds for growth and leverage our track record and brand to increase our portfolio in the asset light model iii. Achieve scalability by focusing on technological up-gradation to further improve project management, operational effectiveness and customer centricity iv. Consolidate and grow our position as a prominent and preferred real estate developer in MMR and Jodhpur micro markets v. Continue to focus on sustainable development covering environmental parameters vi. Capitalise on emerging opportunities in rapidly evolving regulatory regimes and industry trends The benefit of our business model and strategic priorities is demonstrated by ASL?s impressive performance during 2021-22.

Towards a better tomorrow

Since post-covid, we have demonstrated financial jurisprudence by reducing debt and maintaining our preferred borrower status. Raising funds for business growth has increased faith in our business strategy and enhanced our brand. Performance in this sector should be judged by the age spent in the industry. Even during the most challenging times, we successfully kept our operations running smoothly when many developers ran into trouble. This has proven our continuous stability providing us a platform to grow from.

Our Scalability strategy will continue to evolve as we gain knowledge and fully embed it not just across functions and operations but also organizational culture that can become our identity going forward. Over time, though, we fundamentally believe that our responsible approach is the right one to ensure the long-term future success of ASL and to contribute to strong, ongoing financial returns. Backed by a strong balance sheet, we are confident to retain our strong operational focus, nurture our people, give highest priority to health, safety, and quality, and have a laser sharp focus on customer service - all integral to our culture and at the forefront of our business. Notwithstanding the challenges faced in the recent years, we are looking forward to a successful 2022-23. As we move into our next phase of growth, we will continue to work towards scaling newer heights by continuing to build on our internal capabilities.

I am very proud of what we have achieved in this year, and would like to take this opportunity to thank every single one of our associates for their tireless contribution, excellent teamwork and inherent spirit of not giving up. With such a dedicated and focused team, I am confident that ASL will continue to grow and adapt to any situation and environment. I would also like to thank our business partners, shareholders, and other stakeholders for their ongoing engagement and support. With a proven resilient track record and a comprehensive strategic plan in place, Arihant Superstructures Limited is well-positioned to generate long-term value, achieve sustainable scalability and grow our business multifold in the years ahead.

Stay Safe. Stay Healthy.