Chairman & MD’s Letter

Dear Shareholders,
Greetings !

We may be in the same storm, but we all are not in the same boat. This perhaps is the defining statement that best describes the scenario since a global pandemic ravaged the world. It is a storm that refuses to ebb, forcing the world to create or invent ways of living, working and socialising within the persistent turmoil.

Nations, communities, and organisations are trying to discover the best ways of coping and eventually surviving. Every disruption creates opportunities for some, and this one is no different. Countries, where the pandemic started and peaked early, are now on course to economic revival. In such nations, factories have reopened, and businesses are starting to buzz. Some industries have benefited from the dramatic shift in consumer priorities. Many essential services as well as e-commerce and OTT players have seen supernormal demand – our specialty packaging films business, which is a critical supplier to food products and other fast-moving consumer goods being a case in point.

For most others, it will be the adaptable and the nimble who will be able to recover the earliest and grow faster. That has been the guiding philosophy for us at MaxVIL as we navigate our way through the current uncertainty. Till the lockdown started, our core business of commercial real estate, operated through our fully-owned subsidiary Max Estates, was showing both progress and promise. Our flagship office building Max Towers had strong leasing momentum, with reputed global and Indian firms signing up to be occupiers at lease rents which were at 25% premium to the micro-market. We were grateful for this vindication that the Indian commercial estate market is ready to progress to the next stage of evolution with companies willing to pay for workplaces which have high build quality and aesthetics, are sustainable and environment-friendly, being managed impeccably through high technology integration, and provide a rich mix of recreation, amenities and community building activities. We love the simple term we have coined to describe such future-ready workplaces - #WorkWell.

Towards the end of FY20, our second office building, Max House, Phase 1, in South Delhi’s thriving business district of Okhla, was in the final stage of construction. Developed with the same mindset of WorkWell, it had a busy pipeline of prospective occupiers. We were equally enthused with the land acquisition of our third office complex, a 7 mln sq ft project on Noida Expressway, which has emerged as the epicentre of Noida’s service sector and residential growth. Convinced by our vision for commercial real estate and our operational capabilities, New York Life, our erstwhile Life Insurance Joint Venture partner and currently, the largest minority investor in MaxVIL, signed on as a 49% partner for the project.

The current economic turmoil has brought in uncertainty amongst corporates, both about their growth prospects as well as their office space requirements. We expect it to adversely impact office space demand for the first two quarters of FY 21. This will, however, be balanced by a decrease in fresh supply due to strained financials of developers in Delhi-NCR, our region of play. Resultantly, rentals, especially for Grade A+ developer owned and managed offices, should remain stable. Demand in the immediate future will be driven by occupiers shifting to competitively priced business districts, those consolidating multiple offices locations or some who aim to try the hub and spoke office model for reducing single location risk and to lower office commute time for their employees.

The current scenario is leading to well-run, large organisations emerging stronger. Such companies’ preference for hygienic, well maintained Grade A workplaces will put us in a position of strength as office space demand revives. We have introduced a ‘Zero Capex’ solution for clients where we will take care of the design, build as well as up-front capital expenditure of the fit-outs to cater to the current cash conservation mindset and to enable the hassle-free transition of the occupiers to their new office space. Additionally, we have shifted to technology-enabled evaluation and sales journey in tune with the changing buying behaviour. Enquiries have restarted for Max Towers and for Max House, which will be completed by August 2020.

An important enabler of our real estate differentiation is a subsidiary named Max Asset Services (MAS). It is responsible for flawless facility management of our existing and future office complexes, driving property technology integration, running community-building program for all occupiers and offering managed office spaces to those occupiers who want to outsource all workspace creation and administration responsibilities. MAS is executing our current product offering innovations such as ‘Zero Capex solution’ for customised furnished offices, for which we expect high customer preference in the near term. MAS has implemented a Five-S (Stay at Home, Staggering, Screening, Social Distancing and Sanitation) layer of protection at Max Towers to ensure health & safety of the occupants as they get back to the office.

We see many growth opportunities emerging in FY 21 and thereon due to the current disruption. We are keeping our powder dry and our financial partners engaged to capitalise on attractive real estate opportunities as they materialise. Our intent over the next three to five years is to create an asset-light capital model backed by pedigreed platform investors and gain scale as a developer and operator of differentiated office spaces.

Our other business, specialty packaging films, operated as a 51:49 strategic venture with leading Japanese conglomerate, Toppan, served as a perfect foil during the prolonged lockdown with increased demand for packaged food and other essential products. FY 20 was the year of revival with the supply overhang decreasing, while FY 21 promises to be one of superior revenue growth as well as contribution margin expansion. We expect the demand-supply situation to remain favourable in the near future and will continue our focus on increasing the mix of innovative, value-added and recyclable specialty films.

Our investment arm Max I. pivoted last year to become a real-tech startup accelerator. It is currently mentoring 5 startups in this space and may selectively invest small sums in those which continue to show promise. It still retains both its past investments, one of which in e-commerce space continues to grow well, while the other in the restaurant space has currently been impacted by the lockdown.

Adversity is often a good teacher. The current one is equipping the team to hunker down, strengthen their resolve, manage costs, and innovate operation models and service offerings. We are heartened to witness how all employees have collectively rallied to the cause and created stronger bonds even when they are interacting remotely. This to us is the best indicator that we are well on way to build a resilient and worthy organisation which we and our shareholders should be proud of.

With all good wishes and gratitude for your support and confidence.

Analjit Singh

Founder & Chairman

Sahil Vachani

Managing Director & CEO


Annual Report 2019 - 2020