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Integrated Annual Report 2020-21 11CORPORATE OVERVIEW200720102015The Company went public following asuccessful IPO, raising H275 Crore. It waslisted on the Bombay Stock Exchange andNational Stock Exchange.The Company launched‘24K’ to cater to theincreasing demand forluxury real estate.The Company crossed themilestone of developing10 Million square feet ofresidential area2020The Company recorded the highest collectionof H1,368 Crore in its three-decade existenceThe Company received OC for Jai Vijay,a milestone in its Mumbai property redevelopment journey. Jai Vijay is theCompany’s flagship project in Mumbai andone of the largest redevelopment projects inthe Vile Parle East micro-market.The Company entered into a H120Crore transaction with a JP MorganIndia subsidiary for its redevelopmentproject Jay-Vijay in Vile Parle, Mumbai2021The Company entered into an agreement with Planet Smart City, a UKbased real estate developer, for the strategic land monetisation of SectorR10 in Life Republic for H172 Crore. This land parcel in Sector R10 willbe developed by KPIT and Planet Smart City around a profit-sharingmodel; the project Universe was launched within nine months of theagreementThe Company’s Mumbai portfolio delivered sales of H180 Crore (H19.8Crore in FY 2019-20). The aggregate contribution from Mumbai andBengaluru projects increased to the targeted value of H300 Crore( 25% of FY 2020-21 sales value of H1,200 Crore).

12 Kolte-Patil Developers LimitedWE COULD HAVE ADDRESSEDTHE MOST EXTENDEDSLOWDOWN IN INDIA’S REALESTATE INDUSTRY WITHCONVENTIONAL RESPONSESWE SELECTED TO ADDRESSTHE CHALLENGE WITH ADIFFERENT WAY OF DOINGBUSINESS INSTEAD

Integrated Annual Report 2020-21 13CORPORATE OVERVIEWTHE LASTSEVENYEARS WERETHE MOSTCHALLENGINGFOR THEREAL ESTATESECTOR ININDIA Land prices plateaued and selectivelydeclinedProperty launches and sales became slowerReal estate realisations encounteredresistanceCustomers stayed away; most felt priceswould declineThere was a premium on having cash on theBalance SheetThe Indian government implemented thelandmark RERADemonetisation affected consumer sentimentTHE LASTSEVEN YEARSWERE ALSOOUR MOSTPRODUCTIVEDUE TO ADIFFERENTWAY OF DOINGBUSINESSWe focused on controlled growthWe invested in our brand around timely andpromised deliveryWe selected to build cash flows over toplineWe digitalised, automated andprofessionalised fasterWe asked contractors ‘How fast can youconstruct?’We focused on the mid-income residentialsegmentWe invested in technology to increase processconsistencyWe grew our business through financialpartners for specific projectsWe allocated proprietary resources to buildour marketing teamWe continued to focus on the growth comingout of Pune, Mumbai and BengaluruWe maximised the use of accruals with noequity dilution

14 Kolte-Patil Developers LimitedTHIS IS HOW WE WERE EMPOWEREDBY DISCIPLINE AND GREW THROUGHTHE MOST EXTENDED DOWNTREND ININDIA’S REAL ESTATE 8FY19FY20FY21Collections (H Crore)Sales (Million sq. ft)Sales value (H Crore)DefinitionCollections are a financial indicator thatmeasure a Company’s ability to collectoutstandings on schedule. The higher thecollections, the stronger the cash flow.DefinitionSales are influenced by the quantum of realestate sold in a financial year, indicatingthe life-cycle of the project (until handover).DefinitionSales indicate the value of real estate soldin a financial year, indicating existing andprospective revenues (until handover to thecustomer).Why we measureCollections provide an index of theCompany’s cash comfort in quantumterms.PerformanceThe Company reported H1128 Crore incollections in FY 2020-21 following a strongcontrol on receivables leading to sustainedliquidityWhy we measureSales provide an index of prospectiverevenues, collections and profit.PerformanceThe Company reported 2.08 Million sq.ft of sales in FY 2020-21. The Companymade only two launches - Evara andUniverse during the year on account ofthe pandemic; it focused on inventoryliquidation instead.*Includes DM collections H62.8 Crore inFY 2018-19, H55.5 Crore in FY 2019-20 and H37.2 Crore in FY 2020-21Why we measureSales by value provide an index ofprospective revenues and profits.PerformanceThe Company reported H1,201 Crore ofsales in FY 2020-21 through the benefitof two launches and sustained inventoryliquidation.

Integrated Annual Report 2020-21 15CORPORATE FY21Average selling price (H)Net debt (H Crore)Gearing (x)DefinitionAverage selling price (ASP) is arrived at bydividing the total sales value by the totalarea sold in sq. ft.DefinitionThe quantum of debt after deducting cashand OCD / CCD / OCRPS / Zero CouponNCD on the Company’s books.DefinitionThis ratio measures net debt to net worth(less revaluation reserves).Why we measureIt provides an index of prospectiverevenues, collections and profits.Why we measureThis number provides a true and fairpicture of the Company’s intrinsic liquidity.PerformanceThe Company reported an ASP of H5,785 inFY 2020-21, up 9% YoY through increasedsales contribution from Mumbai projects.PerformanceThe Company’s net debt declined fromH434 Crore in FY 2019-20 to H310 Crore inFY 2020-21, an achievement consideringthat the first half of the year under reviewwas marked by sluggish sectorial offtakeand liquidity crunch; H81 Crore outflowswere required for buyout of the partner’sstake in the Life Republic project.Why we measureThis is one of the defining measures of aCompany’s financial health, indicatingthe ability of the Company to remunerateshareholders after servicing debt providers(the lower the gearing the better).PerformanceThe Company’s gearing decreased from0.35 in FY 2019-20 to 0.24 in FY 2020-21.We recommend that this ratio be read inconjunction with net debt/operating profit(declining, indicating a growing ability toservice debt). The Company adopted IND AS 115 (Completion Contract Method, CCM) effectively from 1 April, 2018 and opted for a modified retrospective method. To facilitate alike-to-like comparison and continuity of information treatment, financials based on the erstwhile applicable Percentage of Completion Method (POCM) of accountingfor revenue recognition is shown.

16 Kolte-Patil Developers LimitedTHIS IS HOW WELEVERAGED A CULTUREOF DISCIPLINE TOIMPROVE OUR FINANCIALPOSITION IN FY 2020-21

Integrated Annual Report 2020-21 17Revenues declined 21.6% YoY toH962 Crore compared to H1226 Crorein FY 2019-20EBITDA declined by 43.8% YoY toH143.9 Crore compared to H256.1Crore in FY 2019-20EBITDA margin was 15% inFY 2020-21 compared with 20.9% inFY 2019-20PAT (post-minority interest)declined by 67% YoY to H45.2 Crorecompared to H137.4 Crore inFY 2019-20suspension of operations in H1 FY2020-21 due to COVID-19 - there wasnegligible construction activity forfirst four months.PAT margin (post-minority interest)was 4.7% in FY 2020-21 comparedwith 11.2% in FY 2019-20Net debt declined by H124 Crore toH310 Crore in FY 2020-21 from H434Crore in FY 2019-20Profitability was impacted by lowerrevenues on account of a temporaryOperational highlightsDespite operating in Pune andMumbai, two cities which have beenmost impacted by the pandemic, H2collections were up 2.7x to H823 Crorecompared with H1, H2 sales valueup 2.4x to H843 Crore and H2 salesvolume up 2x to 1.41 msf.FY 2020-21 sales bookings of 2.08msf, above the guidance of 1.8 msf by15.6%. Strong recovery was reportedin H2FY 2020-21 over H1 FY 2020-21 (byvolume and value). Mumbai portfolioreported a sales value of H180 Croreas against H19.8 Crore in FY 2019-20Achieved the highest sales volumesin six years in Q4 FY 2020-21 of0.85 msf, up 53% QoQ; the highestquarterly sales value of six years wasachieved in Q4 FY 2020-21 at H511Crore, up 54% QoQLaunched Evara at the end of Q3,the first new launch in Mumbai infour years; it sold 54 units till Q4, 75%of the project’s inventory.Achieved highest collections inthe Company’s three-decade historyin Q4 FY 2020-21; this followed Q3FY 2020-21, the best quarter forcollections till Q4 FY 2020-21In FY 2020-21, there has been areduction of H124 Crore in KPDL’s netdebt. This is the second consecutiveyear of net debt reduction at KPDL.Net debt to equity stands at 0.24* ason 31 March, 2021.Given collections growth andlower interest outgo, KPDL deliveredhealthy Operating Cash Flow of H413Crore despite FY 2020-21 being apandemic year.Completed the final tranchepayment of H81 Crore for the buyoutof ICICI Venture’s 50% stake in LifeRepublic (first tranche of H70 Crorewas paid in March 2019 and thesecond tranche of H70 Crore was paidin November 2019). Following thebuy-out, KPDL’s economic interest inLife Republic increased to 95% andthe Company’s economic interest inits entire portfolio grew from 60%to 90%.Undertook strategic landmonetisation of 10.4 acres of SectorR10 of Life Republic for H172 Crore.Residential development potentialis of 1.42 Million sq. ft. of saleablearea to be developed by Kolte-PatilIntegrated Townships Limited(KPIT) and Planet Smart City arounda profit-sharing model. A projectnamed Universe was launched withinnine months of the agreement.Signed three projects with acombined saleable area of 2.2 msfin Pune under capital-light models;projected topline of H1,500 Crore(projected KPDL PBT of H220 Crore)The big numbersleading 3Residential realestate playerin the Puneresidential marketNumber ofdecades ofsectorial presence2920 14 Million sf projectportfolio underexecution,approval and landbankMillion sf unitsdelivered acrossPune, Bengaluruand Mumbai% RoCE* returnsacross the last fiveyears avg*Based on Percentage of Completion Method (POCM). Please refer to page 68 for numbers on Completion Contract Method CCM basis.A /StableOne of the highestcredit ratingamong Indian realestate residentialplayers (byCRISIL)CORPORATE OVERVIEWConsolidated Financial highlights*, FY 2020-21

OUR STRATEGICDIRECTION ANDOUR PERFORMANCE18 Kolte-Patil Developers Limited2

Integrated Annual Report 2020-21 19CORPORATE OVERVIEWTHIS IS WHEREWE ARE Leading real estate brand in Pune 25% sales value from Mumbai andBengaluru Growing property developmentpartnerships Maturing Life Republic; point of take-off Stronger marketing engine Declining debtTHIS IS WHEREWE WISH TO GO Aspiration to emerge among India’sfive leading real estate players Double our sales while maintainingprofitability Grow our Pune presence and leadership Expand market share in Mumbai andBengaluru Deepen cash-light global partnerships Accelerate Life Republic sales Develop benchmark programmes on ESGand customer-centricity

20 Kolte-Patil Developers LimitedCHAIRMAN’S OVERVIEWKOLTE-PATIL’SOBJECTIVE:SELL 5 MILLIONSQ. FT. BY 2024

Integrated Annual Report 2020-21 21In today’s world, the biggest premiumis for stability.When businesses are run, there is nosaying what the next quarter will bring;the business must be invested withfunds and initiatives assuming thatwhat follows from that point onwards ispredictable.Some years ago, we had our momentof truth when we encountered debt onour books and the country’s real estatesector entered its longest downtrend.We had no way of knowing how longthe downtrend would sustain; however,we did know that the predictability ofthe sector had been interrupted andif it could happen once, then it couldhappen again.As an organisation committed toenhance sustainability, we recognisedthe importance of building a businessthat would be anti-fragile. And fromthat moment was redefined the waywe would run our business: with lessdebt, with less land on our books,more structured business developmenttransactions, higher customer advancesand greater speed in completingconstruction faster.In doing so, we were not just makinga nominal transformation in ourpersonality; we were fundamentallyredefining the way we would conductour business.PersonalityIn the past, real estate companiesinvested in land. This land wouldbe progressively developed. Sinceland generally appreciated in value,investment in land was justified ontwo counts – it would provide rawmaterial whenever the Companysought to develop the property; onmost occasions, the arbitrage involvedin holding and developing the landdelivered a superior value than propertydevelopment.When the sectorial slowdown emergedand land prices went into one of themost extended plateaus and declinesseen in living memory, the concept ofholding property as a hedge and valueaddition was discontinued. Kolte-Patilwas one of the first companies in itssector to recognise that the old orderwould no longer work; the Companyprogressively disengaged from theerstwhile practice of building a landbank; the debt that had been taken tobuild land assets was progressivelypared and the Company embarked on ajourney to emerge relatively asset-lightinstead.This asset lightness was markedby priorities: the Company wouldno longer hold finished apartmentinventory in the expectation of anappreciation in realisations; on thecontrary, the Company would see itsrole as an efficient builder committedto the accelerated sale of inventory.Gradually, the focus of the Companytransferred from portfolio value-additionto operational efficiency.If there is one reasonwhy Kolte-Patilhas survived andsucceeded throughthe most challengingsectorial downtrend inmemory, it is this: thespeed and extent withwhich the Companytransformed itspersonality.If there is one reason why KoltePatil has survived and succeededthrough the most challenging sectorialdowntrend in memory, it is this: thespeed and extent with which theCompany transformed its personality.The elements of thispersonalityAt Kolte-Patil, we recognised that aselective transformation in personalitywould do just so much and no more;what we required was a completereinvention.This reinvention warranted us toquestion every single practice andprecept that we had earlier held dear.For instance, the Company wasaccustomed to working with somedebt on the books; the Company nowcommitted to utilising whatever surplusthat it could generate and shrink thesize of its Balance Sheet.The Company was focused on buildingland assets on its books; the Companynow entertained the prospect ofentering alliances with landowners (ormaking an exception as in the caseof Life Republic where the decision toacquire translated into a multi-decadeownership, making it distinct fromshort-term arbitrage or development).The Company had consistently focusedon its traditional Pune market; theCompany now broadbased its risk byextending its business to Bangaloreand by entering a relatively capex-light niche of the vast Mumbai market(extending its revenues from one engineto three).The Company was focused onmoderating its risk through the sharingof ownership interest in properties withattractive development potential; theCompany began to gradually re-acquireits economic interests with the objectiveto consolidate its ownership and sendout a strong message to stakeholders ofits portfolio conviction.The Company focused on thereasonable construction, completionand turnaround of properties around thesectorial standard; it began to invest intechnologies and contractor pedigree toturn properties around faster, pleasantlysurprising customers with quicker andmore secure deliveries (a competitiveadvantage at a time when a numberof real estate players delayed oncommitments).What transpired in the last few yearsis that the Company’s brand began toevolve: from that of an enduring realestate developer in one market (Pune)to one of the most trusted (across Pune,Mumbai and Bangalore).CORPORATE OVERVIEWOverview

22 Kolte-Patil Developers LimitedThere is a greatertraction for ‘smart’homes. People donot only seek to livebetter; they seek tolive ‘smarter’. Thiscommitment wasencapsulated inUniverse, positionedas a ‘cradle of a digitallifestyle’.Competitive positioningThe description of how we transformedover the last number of years has abearing on where we stand in oursector.During the last few years, the risingRERA benchmark has made itincreasingly difficult for real estatecompanies to stay in business. TheBalance Sheets of most real estateplayers have been extensively impaired.Access to debt is restricted; there islow investor confidence to invest networth in the business. This indicatesthat the entry side into the business isrestricted with few players possessingthe resources to grow from this pointonwards.Now turn to the demand side of thebusiness. During the last seven years,real estate prices either stayed flat ordeclined even as incomes increased.Besides, mortgage rates declined toa point where they are probably attheir lowest in years. The governmentstepped in to secure the sector throughprovisions and thereafter sweetenedthe consumer’s proposition through taxincentives. The result is that there hasprobably never been a better time tobuy into a home than in the last coupleof years.Something transpired that transformedthe consumer’s intent to buy intovisible action: the pandemic. Whenthe pandemic broke and the lockdownwas announced in March 2020, therewas a premium in holding on to one’ssavings; the thought of buying into anew property was way down the listof priorities. However, the more peoplespent their time locked into theirresidences and the more office-workingyielded to work-from-home, there wasa growing realisation of the need to livebetter.Those who were living on rent nowsought to buy their own home;customers livi

advanced CRM SAP-based ERP in India's real estate sector. Institutional frameworks Kolte-Patil is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Several of the Company's projects were certified by the Indian Green Building Council (IGBC). Recognition Kolte-Patil is a respected industry player, reflected in various