housing q3 2013 earnings call 14 feb’13 call/123716_20130214.pdf · 2013-02-16 · varun gupta,...

Ashiana Housing Q3 2013 Earnings Call 14 Feb’13

Operator Ladies and gentleman, good day and welcome to the Q3 FY 2013 earnings conference call of Ashiana Housing Limited hosted by CRISIL Equity Research. As a reminder, all participants' lines will be in the listen‐only mode and there will be an opportunity for you to ask questions at the end of today's presentation. I would now like to hand the conference over to Mr. Bhaskar Bukrediwala, Associate Director, Equity Research at CRISIL Research. Thank you, and over to you sir.

Bhaskar Bukrediwala, Associate Director, Equity Research Yeah. Thanks, Lavina. Good evening everyone. On behalf of CRISIL Equity Research, I welcome you to the quarter three result con call of Ashiana Housing. It's a pleasure to have with us the senior management of Ashiana Housing represented by Mr. Varun Gupta, Director, Mr. Bhagwan Kumar, Company Secretary and Ms. Reena Nagpal, Investor Relations.

During the course of the call, the management will discuss the factors that drove the operational and the financial performance of the quarter and also provide insights on the overall business scenario and sector. This will be followed by the question‐and‐answer session. I would now like to hand over the call to Mr. Varun. Over to you Mr. Varun.

Varun Gupta, Director Good evening, friends. Thank you for joining us to discuss the third quarter performance of Ashiana Housing. I extend a warm welcome to all of you. This quarter had a mixed response. Bookings were impressive at 6.48 lakh square feet of area, a 64% increase on year‐on‐year basis and 91% increase on quarter‐on‐quarter. This was the highest ever achieved in any quarter till date.

A new project in Neemrana was launched in the quarter which received fabulous response contributing to around 45% of the total area bookings. Though delay in approvals has led to the unlocking of pent‐up demand and also a lot of Also Rangoli Gardens in Jaipur saw increase in bookings as possessions of initial phases have been happening and people have started moving in the project. Occupancy we have seen over years helps increasing the customers' satisfaction manifold. The early target for bookings has also been revised upwards from 16 lakh square feet to 18 lakh square feet, keeping the recent developments in mind.

On construction front an equivalent area of 2.82 lakh square feet was constructed in the quarter. The numbers are weak, primarily due to non availability of buildable inventory as land conversion process in Bhiwadi got delayed. Approvals in Halol and Kolkata have also not been received as of yet. The approvals seem to be moving in the fourth quarter and we expect construction to pick up in the next financial year. The construction targets meanwhile have been suppressed to 12 lakh square feet for the year.

On financials, Ashiana reported sales and other income of INR33.19 crores and a PAT of INR7.24 crores, exhibiting a strong net profit margin of 21.81%. The numbers in absolute terms have improved a bit on quarter‐on‐quarter basis, but still remained lower on year‐on‐year basis.

As discussed on earlier forums, finance is really suppressed for these two years because of changes in accounting policy. The second indicative of financial performance is pre‐tax operating cash flows, which we have been disclosing from the last four quarters now. The third quarter pre‐tax operating cash flows from ongoing projects of the company increased by 67% to INR22.17 crores as compared to INR13.27 crores recorded in the third quarter last year and by 94% from INR11.42 crores in the last quarter Q2 FY '13.

In another event, Ashiana Aangan won the Best Affordable Housing awards in two categories; Best in India and also in Best in NCR by CNBC Awaaz Real Estate Awards 2012. These awards recognitions boost our confidence on the systems and continuous improvements that are regular thrust areas internally and also assures us about our capability of building large‐scale housing projects as we continue to grow.

On this note, I would like to conclude my remarks. We will now be happy to discuss any questions or suggestions that you may have.

Operator Thank you very much sir. Sir, should we open it for questions?

Varun Gupta, Director Yes.

Questions And Answers

Operator Yes, thank you. Participants, we'll begin the question‐and‐answer session. (Operator Instructions). Our first question is from the line of Ishpreet Bindra from Sushil Finance. Please go ahead.

Ishpreet Bindra, Analyst Hi, a very good afternoon. Just wanted to know if you could throw some light on the Neemrana new project that you have launched? Ishpreet, in what respect do you want to know about Neemrana?

Ishpreet Bindra, Analyst We know the saleable area, the kind of realizations that we can see from that project and the kind of cost of construction would be there?

Varun Gupta, Director Realizations will be around 2,400 to 2,500 in between that.

Ishpreet Bindra, Analyst And this would be a one phase project or will it have multiple phases?

Varun Gupta, Director The current 4,25,000 square feet ‐‐ 4,20,000 square feet should be in one phase itself because we have booked most of the area.

Ishpreet Bindra, Analyst Okay.

Varun Gupta, Director And therefore we will start development. We have some additional land behind that that we are looking to acquire and therefore have more phases in the project post that. Cost of construction here should be anywhere between 1,250 to INR1,300 a square feet.

Ishpreet Bindra, Analyst Okay. And this was again old land which has now turned for construction or is it a new land acquisition?

Varun Gupta, Director No, this is a new land acquisition that we had. We bought a converted land parcel.

Ishpreet Bindra, Analyst Okay. And at what price?

Varun Gupta, Director Ishpreet Bindra, Analyst Okay. I also wanted to know the realizations at Treehouse and Marine Plaza?

Varun Gupta, Director Marine Plaza is not available for booking at this moment of time as there has been a stop work order over there. So I don't have any prices to put realization over there because construction stopped about three, four months ago. The last pricing that was around 3,500, INR3,600 a square feet there.


Varun Gupta, Director And in Treehouse Residences, again, it is INR3,500 a square feet.

Ishpreet Bindra, Analyst 35, this is at Bhiwadi right?

Varun Gupta, Director Yeah, it is at Bhiwadi, but it is a little bit of a premium project. We are doing homes of 1 crore and northwards; we have 36 homes. It is a test into the upper‐premium segment.

Ishpreet Bindra, Analyst Right, right. Okay, but the cost of construction would be in the similar range?

Varun Gupta, Director Cost of construction will be in the 1,500 to 1,700 range.

Ishpreet Bindra, Analyst Okay. All right. Since we are actually in the midst of contract completion method and percentage completion method, just wanted to know if you could just broadly give the projects that we could probably take in revenues for FY '13, like Brahmananda, for Aangan, the VI phase, is it that we could see the entire ‐‐?

Varun Gupta, Director Ishpreet Bindra, Analyst Is Vi is possession based, so I suppose the entire amount will come or whatever is booked, it gets completed?

Varun Gupta, Director It might get spread over two quarters because possessions also get spread out a little bit.

Ishpreet Bindra, Analyst Right.

Varun Gupta, Director Okay, should we go tower by tower by tower. So certain hundred gets spread out over two quarters depending on that.

Ishpreet Bindra, Analyst So we can expect 50% in ‐‐?

Varun Gupta, Director We should expect.

Ishpreet Bindra, Analyst Near [ph] 50% next year?

Varun Gupta, Director Yeah, we should.

Ishpreet Bindra, Analyst Okay. And how is it for the other projects, I guess, Brahmananda Phase III?

Varun Gupta, Director Brahmananda Phase III, I am not so sure whether it will happen because either it will happen in March or in April. So there is that 15, 20 day. Brahmananda Phase II was entirely in FY '13?

Varun Gupta, Director Yes, 95% of Brahmananda Phase II has been recognized already as of December.

Ishpreet Bindra, Analyst In FY '13 only right?

Varun Gupta, Director Yeah, in FY '13, yes, correct.

Ishpreet Bindra, Analyst

Okay. And others what we could see is, I suppose, Phase V of Amarbagh?

Varun Gupta, Director Phase V of Amarbagh is again in a similar situation. The Phase V of Amarbagh was recognized this quarter. Phase VI will get spread out to next year.

Ishpreet Bindra, Analyst So, V, we could see in FY '13?

Varun Gupta, Director Yes, we could.

Ishpreet Bindra, Analyst Okay. And obviously VI would be in FY '14. Okay. And Rangoli Gardens, I believe, the first phase entirely has come in FY '13.

Varun Gupta, Director Yeah. The Phase I has come in completely.

Ishpreet Bindra, Analyst Okay. Phase II could be, sorry. Phase II could be part in FY '13 or part in FY '14. I would expect all of Phase II to go to FY '14 again. We are very near to delivery in Phase II of Rangoli Gardens.

Ishpreet Bindra, Analyst Okay. Actually, this is our revenue‐specific questions of FY '13 and '14. You want me to take it offline or is it fine?

Varun Gupta, Director Can you please take it offline? And in next quarter we will give you more.

Ishpreet Bindra, Analyst Yeah, okay with that.

Varun Gupta, Director Next quarter as well we will start disclosures of when do we expect possessions in little bit more precise manner in terms of half year has been stuck, so we will have a little bit more updates on that.

Ishpreet Bindra, Analyst Right. Because I was really going to come to that, if you could share that it would be great.

Varun Gupta, Director

Yeah, we are just yes ‐‐ so we are upping the level of disclosure and next quarter onwards we can have that for you.

Ishpreet Bindra, Analyst Okay. And what is the kind of measures probably we are taking for the increase in the construction activity, because ‐‐?

Varun Gupta, Director So there are two or three things that has happened in this quarter itself which was disclosed out to the stock exchanges; one was Anantara in Jamshedpur has received clearance and has been launched and constructions pick up there. We have were received the first leg of clearance in Ashiana Town in Bhiwadi.


Varun Gupta, Director In terms of 90A approvals, so there are about two months to go to three months to go to launch Ashiana Town, Bhiwadi. So, once that comes in there is really significant inventory available for that. We are also taken steps in terms of buying converted land in Neemrana that was a thought over there, so that should start kicking in. And we've also done a recent acquisition in Jodhpur that was disclosed, hopefully that would also start kicking in soon. So, overall there has been sort of stuck in terms of projects, in terms of approvals that we have been facing and we have been looking to resolve that. Is that completely resolved? No. Are we on the right track? Yes.

Ishpreet Bindra, Analyst Okay, fine. What else ‐‐ otherwise I will take my other questions offline?

Varun Gupta, Director Thank you, Ishpreet.

Ishpreet Bindra, Analyst Yeah.

Operator Thank you. (Operator Instructions). Our next question from the line of Shreyas Goel from IDBI Capital. Please go ahead.

Shreyas Goel, Analyst Good afternoon, sir.

Varun Gupta, Director Good afternoon.

Shreyas Goel, Analyst My question is regarding what was ‐‐ how many square feet of areas was constructed by Ashiana in the last two years?

Varun Gupta, Director In the last financial years, like 2011‐2012 and 2010‐2011.

Shreyas Goel, Analyst Yes, yes.

Varun Gupta, Director Shreyas Goel, Analyst And in the entire 2013, you are expecting roughly 12?

Varun Gupta, Director Yeah, roughly 12.

Shreyas Goel, Analyst It would be a little maybe faster to ask, maybe the next 2013‐2014 or is it too early to say?

Varun Gupta, Director It is a little early, next call we'll have disclosures, our planning is going to happen in March. We will come back on the exact figures.

Shreyas Goel, Analyst Okay. And your realizations are pretty much based on different projects, could be expected in the range of 2,500 to 3,500 as answered for the previous question?

Varun Gupta, Director Yes, so more than the 2,500 to 3,000 range.

Shreyas Goel, Analyst Okay. And what any force majeures, not force majeures, sorry, any major risks that Ashiana has currently faced or what is the major risk that could be seen as to be adversely affecting any new projects that will be coming up?

Varun Gupta, Director One, regulatory uncertainty is definitely a significant risk. Secondly, overall economic environment hasn't improved, then concerns on job creation and income growth of people will remain, which according to us, are the two single biggest drivers of residential real estate. So, job creation [ph] volumes and growth in annual income in terms of realizations.

Shreyas Goel, Analyst Okay. So but on today, as of today's basis what would you say would be your market outlook towards the target demographics that you are aiming for? Generally, we are optimistic, cautiously optimistic.

Shreyas Goel, Analyst Cautiously optimistic. Okay. That's it from my side sir. Thank you.

Varun Gupta, Director Thank you.

Operator Thank you. Our next question from the line of Mr. Rajat Budhiraja from Banyan Capital. Please go ahead.

Rajat Budhiraja, Analyst Hi, Varun. Congrats for the good set of numbers, great bookings and response from Neemrana.

Varun Gupta, Director Thank you, Rajat.

Rajat Budhiraja, Analyst Yeah. So my first question is related to Neemrana. You are saying you are looking out for a new land parcel and that will soon come up. So I want to get the feel like how big that would be?

Varun Gupta, Director That would be also be around 4 lakh on square feet of saleable area, 3.5 to 4 lakh square feet of saleable area.

Rajat Budhiraja, Analyst And that is also approved land, you don't ‐‐

Varun Gupta, Director No, that is not approved.

Shreyas Goel, Analyst Not approved. There are no more approved land parcels in Neemrana. This is the only one that is available.

Rajat Budhiraja, Analyst Okay. Fine. Now the next question is on Ashiana Town, Bhiwadi. So it would be great if you can throw some color on the project in terms of areas launched in different phases, price realization, and your expectations on demand?

Varun Gupta, Director The Ashiana Town (technical difficulty). Okay. So we will spread it out over 8 to 10 phases.

Rajat Budhiraja, Analyst Okay.


Okay. In fact we are thinking of splitting it into two or three projects as well in terms of they will be self sufficient in terms of services, having separate STP, separate clubs, separate, so there is ‐‐ we might split Ashiana Town over different projects and then have phases in those projects itself. Exact timing is (technical difficulty). Expected launch price over there would be similar on the lines of Neemrana, so about 2,400 to INR3,500 a square feet.


Varun Gupta, Director Okay. And you know expectation is to do the project in a time frame of about seven to eight years completely.

Rajat Budhiraja, Analyst Okay. And it would be realistic if you can give some idea about the location, how far is it from your previous project?

Varun Gupta, Director Location of town is about (technical difficulty).

Rajat Budhiraja, Analyst And regarding your previous project, there are many projects which are coming by. So how do you see the demand coming, basically this is again five to six kilometers away from that place, so many projects are coming in that area. I am just ‐There was one more project that is already developed and pretty much occupied right opposite our project called Trehan Hill View Gardens.


Varun Gupta, Director Okay. That I believe has a north of 1,000 families already living in there.

Rajat Budhiraja, Analyst And what is the price for that?

Varun Gupta, Director Trehan Hill View Garden, I am not completely aware exactly what price would be ‐‐ anywhere in the 2,000 to 2,500 range.

Rajat Budhiraja, Analyst Okay. All right.

Varun Gupta, Director Our view is that our brand over there commands a premium in terms of volumes and pricing as well in Bhiwadi because we have the best track record of delivery. So we think we can get a premium there.

Rajat Budhiraja, Analyst Okay. Fine. My next question is related to Gulmohar Gardens, the same thing basically. So you are going to launch and how many phases, realization and demand?

Varun Gupta, Director Gulmohar Gardens will be about 11.5 lakh square feet having spread across maybe again four to five phases with five to six year developmental timeline. It will be a slower project as compared to others because it's a little further located, a little further off. Pricing will be around INR2,000 ‐‐ 1,900, INR2,000 square feet for apartments and about 3,000 to INR3,500 per square foot for villas. And it's a 90A approved project. Now, the layout plan for that has been submitted, we are expecting sanctions anytime soon. So, we are at the last leg of approvals to launch that project out.

Rajat Budhiraja, Analyst Varun Gupta, Director Tremendous, we have sold more than 100 odd units as well. In Jamshedpur, we've had a situation and Anantara is ‐‐Jamshedpur has had issues in terms of land because of couple of issues, one was the issue that is paying money for that.

Rajat Budhiraja, Analyst Hello?

Operator Participants please stay connected. Do not disconnect your lines. Thank you. Participants', we're trying to reconnect the management. Please stay connected. Thank you.

Rajat Budhiraja, Analyst Hello?

Operator Participants we have the management reconnected. Mr. Rajat, you may go ahead with your question.

Rajat Budhiraja, Analyst Thanks a lot. So, coming back to the Anantara, Jamshedpur, you are saying, you are getting tremendous response. So, in terms of percentage booking, out of your total area launch if you can give some numbers. Hello?

Varun Gupta, Director Yeah, the voice quality is not good. Could you ask once again Rajat?

Rajat Budhiraja, Analyst Yeah, basically I'm asking in terms of percentage bookings, out of your total area launch, if you can give me a number.

Varun Gupta, Director So, we have ‐‐ I think we are close to 75% (technical difficulty) in the Ist phase of Anantara.

Rajat Budhiraja, Analyst Okay. And how big is this Phase I? Participants we'll reconnect the management. Participants we are trying to connect the management. Please stay connected. Sir, you are reconnected. You may go ahead.

Varun Gupta, Director Rajat?

Rajat Budhiraja, Analyst Yes, Varun. So you are saying 75% of Phase I has already been booked?

Varun Gupta, Director Yes. Probably, little bit more. We're getting the exact figures out.

Rajat Budhiraja, Analyst Okay. And how big is this Phase I?

Varun Gupta, Director Phase I is 180 odd units. We'll get the exact figures, I don't have the exact figures here, but it should be around 2.2, 2.3 lakh square feet odd.

Rajat Budhiraja, Analyst Okay. And then you must be like thinking of launching new Phase, because it's 75% already booked?

Varun Gupta, Director We will soon, whenever that happens, we will keep putting that together. The Anantara, as I said, is having ‐‐ there are land issues in Jamshedpur and we were ‐‐ we got a land that is converted and there is a significant dip in supplies because of the land issue. So we are getting a benefit of that.

Rajat Budhiraja, Analyst Okay. And what is the realization for the Phase I?

Varun Gupta, Director About 2,700.

Rajat Budhiraja, Analyst Varun Gupta, Director Yeah.

Rajat Budhiraja, Analyst The current run rate of booking per quarter we are actually seeing that is 0.24 lakh square feet?

Varun Gupta, Director Yeah.

Rajat Budhiraja, Analyst Can you please throw some light on the demand and how will this figure move going forward?

Varun Gupta, Director The Utsav, Jaipur was very slow. In the beginning, Rajat, we had run rates per quarter more in the 5,000, 7,000, 8,000 square feet, maybe 10,000 odd square feet. It has gone up to about 20, 25,000 square feet per quarter, and I think that run rate now will be maintained at about 20, 25,000 square feet over the next four odd quarters and then it will happen.

The good part about Utsav, Jaipur has been the occupancy levels have been very good. We have more than 100 families already living in Utsav, Jaipur. So the sales that are happening are turning into occupancy and therefore it should augur whenever we plan to do another Utsav in Jaipur. We haven't decided on that yet, but the good part is the occupancy levels are very good.

Rajat Budhiraja, Analyst Okay. And have you already completed the bookings of any of your Phase in Utsav, Jaipur?

Varun Gupta, Director Not completely, they all have some units left.

Rajat Budhiraja, Analyst Okay, fine. And Varun, I was thinking like you are saying that they have got a good response from Jamshedpur, Neemrana is completely booked. And then you are looking for new parcels and you have pending projects. So, your EAC should improve in next financial year, which is FY '14 from '12, and I want to get the feel that how much of EAC you can manage with the current resources or rephrasing the question that where do you want to see this figure, EAC figure going in next two years?

Varun Gupta, Director Rajat Budhiraja, Analyst How much?

Varun Gupta, Director 20 lakh square feet.

Rajat Budhiraja, Analyst 20 lakh square feet by FY '14 or FY '15?

Varun Gupta, Director We are planning that out as that was asked. We will know exactly in March how they are looking. See, the concern is not more on the resources, the concern is when will the inventory come along to give enough (Foreign Language) to the construction team to actually go ahead and build.

Okay. We are planning that out in first week of March, it is significantly dependent on the timelines of A Town's start of construction, because A Town in itself can contribute about anywhere between 4 to 5 lakh square feet annually, if not more after it picks up pace. So, therefore it will be hard for us to comment right now exactly, but 2 million square feet going ‐‐ annually it's a 2

million square feet is the first task that we have in our mind, somehow to get that.

Rajat Budhiraja, Analyst Okay. Fine. And the next question related to realization, it has gone down in the current quarter. So is it really because of Neemrana or any other factors there?

Varun Gupta, Director Basically mainly because of Neemrana, it was closer at the 2,400, 2,500 levels and they contributed about 45% of bookings in the quarter. It had a significant impact, realizations have been going up every quarter in every project.

Rajat Budhiraja, Analyst Okay. And in terms of run rate for the quarter which is around 6.4, right now it is 6.48, do you think like you will be able to maintain it going forward?

Varun Gupta, Director It's again hard to comment, Rajat, again the 2 million square feet is the figure right now in mind, which will translate into 5 lakh square feet every quarter. We will come back with a view, I think, 6. ‐‐ the last quarter was a little bit skewed because of the number of bookings in Neemrana that happened and this quarter again will be skewed higher because of the kind of response that Anantara has gotten and the remaining bookings in Neemrana, which will get reflected in this quarter.

Rajat Budhiraja, Analyst Okay. Last thing I just wanted to confirm that you are saying 2 million square feet. This is EAC or bookings.

Varun Gupta, Director Well, both, we might be a year behind, year forward, but the idea is to you can't do either or, we have to do both. There is no point in going ahead and selling all the square footage and not have the capabilities to deliver it, and there is no point in delivering it without about selling it. So, at the end of the day, 2 million square feet annually is basically a figure that we are looking and hopefully with a lag of a year. Construction lagging sales by two to four quarters is a good situation then we are actually selling first in building, which is a good sign of de‐risking.

Rajat Budhiraja, Analyst Okay. Thanks a lot for taking my questions. I will come back in case if I had further questions.

Varun Gupta, Director Thank you, Rajat.

Operator Thank you. (Operator Instructions). Our next question from the line of Mr. Sachin Kasera from Lucky Investment Managers. Please go ahead.

Sachin Kasera, Analyst Yeah, good afternoon, sir and congrats for a good set of numbers for the quarter. Regarding the prices you mentioned that most of the projects have seen price increases. If I see the last two quarter, the realizations are closer in the range of 2,600 to 2,700 a square feet compared to approximately 2,100 [ph] a year back. So how much of this 500, INR600 increase could be because of the change in projects, and how much could be contributed to the price increase?

Varun Gupta, Director Sachin, I think 50‐50 maybe ‐‐ I don't know the exact figure.

Sachin Kasera, Analyst Yeah.

Varun Gupta, Director Sachin Kasera, Analyst Okay.

Varun Gupta, Director That's even ‐‐ sometimes even more it's gone up to nearly now it is touching 2,900, 3,000 levels, wherein the project was launched at about 1,800 levels.

Sachin Kasera, Analyst We still have about a 1 million ‐‐ close to 1 million square feet pending in Rangoli, so?

Varun Gupta, Director A little million less about 800,000 ‐‐ about 800,000 to 900,000 square feet we have there.

Sachin Kasera, Analyst Yeah, so you think you have further scope on Rangoli or are you seem to have reached the optimum pricing there?

Varun Gupta, Director We don't know. We have increased prices again in January once. You can see [ph] that bookings continued to be doing well. The resale market in Rangoli is quite healthy, occupancy is quite healthy. So that gives us a lot of confidence in how things are going. We are having Phase II deliveries in next three to four months with clubhouse and everything coming depending on the occupancy levels that we reach in Phase II and Phase I towards that, we'll get a better sense of how things are moving.

Sachin Kasera, Analyst And you've seen the market absorbing the price increase in Rangoli and having not much impact on the volumes?

Varun Gupta, Director Yes, the price increases in Rangoli has been observed. I think Rangoli might have been also under priced as to when it started and there has been a certain infrastructural changes that Rangoli is benefited for and we've also delivered very well in terms of Rangoli, in terms of our speed of development and quality of development that we've done there,

which has benefited a lot in getting the right price increases.

Sachin Kasera, Analyst Varun Gupta, Director Yeah, we didn't have unit booked in.

Sachin Kasera, Analyst

Because you remember at the time of September call you had mentioned that the initial response was very good and you're looking to maybe sell out it pretty fast. So what exactly is clarified [ph]?

Varun Gupta, Director I don't know exactly what happened, but I think we ‐‐ the response that we got from our ‐‐ the feed back we got from the sales team and the actual bookings that later on translated, there was a gap in it. But that said, the project is kind of small in terms of overall square footage. We have sold about 30, 33% in the market.

Sachin Kasera, Analyst Yeah.

Varun Gupta, Director We expect the sample flat to be ready in the next three to four months and ones that happens maybe bookings will pickup post that because the kind of quality of development that we plan to do here is not something that Bhiwadi has seen before in terms of specs and materials and sizes and stuff like that.

Sachin Kasera, Analyst Sure.

Varun Gupta, Director So that will help.

Sachin Kasera, Analyst Yeah. Secondly, coming to the guidance for FY '13, considering the response which you are getting at Aangan and Rangoli and now even the new launch that you have done, (inaudible) sold out 75% already. What do you think here because this quarter you would have 6.4 and you have one more project additional this quarter. Do you think you could probably do closer to 19, 19.5 because you are already on the mid of Feb right, so?

Varun Gupta, Director Yeah, 19 looks a possibility.

Sachin Kasera, Analyst Okay. On the future projects there is not much progress we are seeing in Kolkata, Mylapore and Halol. Can you give some update what is exactly happening there?

Varun Gupta, Director Okay. In Halol, there was ‐‐ the approvals had got in stuck at the last leg and with ‐‐ and then elections came in the process and everything changed. So again the approvals are with the land owners. We are not responsible for it, but the information that we get from him is that he had restart the approval process once again and it has reached the last leg of approvals again. Okay. So hopefully ‐‐ he is hopeful that in the next 30 to 45 days he will get the first leg of area approvals and then we will have building plan approvals to put together and from there on we can move ahead. Okay.

Sachin Kasera, Analyst Kolkata and Mylapore?

Varun Gupta, Director In Kolkata, there are no updates as of yet, again the accountability and approvals are with the land owners. They have a 300‐acre township that they are getting for approvals, okay. They given the current scenario in West Bengal, they have been quite unable to tell us as to when it will happen, okay. So we are waiting on Calcutta as well, there is very limited guidance we can give in Calcutta now.

Sachin Kasera, Analyst And Mylapore?

Varun Gupta, Director Mylapore will ‐‐ at least for another year we should not see a project launch there.

Sachin Kasera, Analyst Because I believe we had acquired land quite a while back, is it right so?

Varun Gupta, Director Yeah, it's been very ‐‐ there are land acquisition proceedings going on by the government over there.

Sachin Kasera, Analyst Because I believe now that the 90A guidelines are clear at both ‐Mylapore has separate issues involved in it that the government wants to acquire the land to do a scheme over there.

Sachin Kasera, Analyst Okay.

Varun Gupta, Director So that proceedings has been going on, we have been fighting in the courts; again don't know when that will get sorted.

Sachin Kasera, Analyst Basically stuck in some litigation with the government right now on the land.

Varun Gupta, Director Yeah it's stuck in litigation with the government.

Sachin Kasera, Analyst Okay. So on this Kolkata and Halol, is there a scenario possible that in case we don't see further progress, we may actually look to cancel those projects. What is the update there because I think it's been ‐‐?

Varun Gupta, Director Right now we're not looking to do either. Halol, we're seeing progress. On Halol, we should go ahead and look at doing that. Calcutta also we're quite hopeful that things will get sorted there. It will not go anywhere, so and the amount of capital that we have actually

deployed into Kolkata is not that significant that we've to look at doing things to exit or do things, we can patiently, wait it is new locations, we are very clear that we do not pay too much money till approvals are in. Okay. So therefore we have a strong holding capacity.

Sachin Kasera, Analyst This 150 ‐‐ approximately 150 acres for this five, six projects, which are the future projects, how much of the overall cumulative for all the six projects, what is the total amount that has to be paid either for land or to the JV partner till the time we get all the clearances?

Varun Gupta, Director What has been showed as future projects, except for as of today now, as of except for Utsav, Calcutta, all lands are fully funded except for a immaterial amount in Ashiana Navrang, Halol, which is a deposit. Rest payments in Halol or Anantara, they are all revenue share structures or they are structured in a manner that the payments will be done as and when the project starts and goes, moves ahead.

Sachin Kasera, Analyst And what is the update on Lavasa because there we still have around 3, almost 3.5 or 4 lakhs of unsold inventory and if you see the quarterly update, we're not seeing too much of volume happening.

Varun Gupta, Director Utsav, Lavasa has been slow in terms of bookings, but it is January, we saw decent pick up and we have started handing over the villas in the 1st Phase of Utsav, Lavas. I think that will help in terms of getting bookings. Even HCC's or Lavasa Corporation amount of work that they have done in the last quarter is significantly higher than the quarter before that and that is also creating a lot of confidence and we expect sales to pick up slowly.

Sachin Kasera, Analyst Okay. Okay, okay sir. Thank you very much and wish you all the best.

Varun Gupta, Director Thank you, Sachin.

Operator Thank you. Our next question from the line of Mr. Manish Jain from Axis Holdings. Please go ahead.

Manish Jain, Analyst Yeah, Varun. Just want the feedback from the current cash status that you have in the company.

Varun Gupta, Director Manish, we have about 110 crores of cash including the cash sitting in the partnership firms.

Manish Jain, Analyst So this is net cash, right. Net of any debt that you might have taken.


No, debt would be around 14, 15 crores. Thanks.

Operator Manish, do you have any further questions?

Manish Jain, Analyst No.

Operator Thank you. (Operator Instructions). Our next question from the line of Mr. Saurabh Shankar from an Individual Investor. Please go ahead.

Saurabh Shankar, Analyst Hi, Varun.

Varun Gupta, Director Hi, Saurabh.

Saurabh Shankar, Analyst Hi. I just wanted to understand if you can share with us, what is the amount of advances from customers you have at the end of, let's say, nine months. I mean is it possible to share that?

Varun Gupta, Director The balance sheets have been disclosed, Saurabh, with the financials and they have it.

Saurabh Shankar, Analyst Okay, okay.

Varun Gupta, Director The net of revenues is recognized, but the advance on customers as of 31st December, was 84.32 crores.

Saurabh Shankar, Analyst Okay. And ‐On a cumulative basis.

Saurabh Shankar, Analyst Okay. Thanks. And for my understanding perspective, say, if a house is sold for, let's say, INR100, then what percentage advance do we take usually get upfront and what is funded by the bank or the promoter?


Most funding of ‐‐ most of our customers go for bank funding.

Saurabh Shankar, Analyst Right.

Varun Gupta, Director Okay, so they get mortgages and home loans done.

Saurabh Shankar, Analyst Right, right.

Varun Gupta, Director But that said about 50% of our customers either by themselves or through the bank fund the entire money upfront. We have down payment scheme that 50% of the customers pay in DP.

Saurabh Shankar, Analyst Okay, understood. Because my question was from the perspective that usually banks have this construction‐linked scheme, so as and when that [ph] is completed ‐‐?

Varun Gupta, Director Yes, banks generally do have construction‐linked schemes, but if you have made good relations with them and you have a track record.

Saurabh Shankar, Analyst Right.

Varun Gupta, Director Saurabh Shankar, Analyst Okay, understand. Thanks, that's it from my end. Thanks a lot.

Varun Gupta, Director Thank you, sir.

Operator Thank you. (Operator Instructions). Our next question from the line Mr. Sachin Kasera from Lucky Investment Managers. Please go ahead.

Sachin Kasera, Analyst Yes, sir. In case of bookings where the customer pays entire amount upfront, you still recognize the revenues or you do it on the ‐‐ so is the revenue recognized on the day the entire payment is received or it is linked to the project being completed?


Sachin, the revenue recognition standard doesn't defer on when the customer has paid money or not. If he has paid up front, will sit in advances and current liabilities.

Sachin Kasera, Analyst Okay, okay. Secondly, if I see your future projects and you mentioned that Calcutta and Mylapore are unlikely to see much progress. You think we have going by the pipeline doesn't look like that see we still again have, as of now, enough inventory that we should be able to do good growth over FY'13 in terms of area booked?

Varun Gupta, Director In terms of inventory for FY '13, FY '14, area booked growth will be challenging in terms of doing good growth because here inventory that was, let's say, created got exhausted significantly in terms like Neemrana got booked very quickly and Anantara got booked very quickly as contrary to our expectations, we didn't expect them to be sold that fast.

But as I said Ashiana Town in itself will create significant inventory for us in terms of 4 million odd square feet. And also Gulmohar Gardens, as we said, is looking to be launched, we have close the transaction in Jodhpur as well. Anantara will have inventory left for next year. So we are looking to do well next year as well.

So, Gulmohar Gardens should be launched. Overall the approvals, as I said, approvals, the issue of approvals remain a concern, but not as big of a concern as this, let's say, there about six to nine months ago in terms of us getting projects through them. Thank you. (Operator Instructions). Our next question is from the line of Mr. Ravi Purohit from Securities Investment Private limited. Please go ahead.

Ravi Purohit, Analyst Hi Varun, congratulations on a good set of numbers for the quarter.

Varun Gupta, Director Thank you, Ravi.

Ravi Purohit, Analyst Can you just throw some light on this (technical difficulty) in Jodhpur?

Operator Ravi, please stay connected, we will reconnect the management. Participants, we're trying to reconnect the management, please stay connected. Participants, we have the management reconnected. Mr. Ravi, you may go ahead with your question.

Ravi Purohit, Analyst Hi, Varun.

Varun Gupta, Director Hi, Ravi.

Ravi Purohit, Analyst I don't know whether I missed the early part of the call. Did you give any further information on the Jodhpur project because I think I missed it, or if you can give any ‐‐?

Varun Gupta, Director No, we haven't given updates yet on Jodhpur.

Ravi Purohit, Analyst Okay.

Varun Gupta, Director Ravi Purohit, Analyst Yeah, the new one, correct. So, can you just share some details as to what kind of project are you looking at, is this a similar project or a much larger size project or ‐‐?

Varun Gupta, Director No, it is only 5 to 5.5 lakh square feet.


Varun Gupta, Director G+4 apartments.


Varun Gupta, Director It's on Pal's and Maria Road in Jodhpur.

Ravi Purohit, Analyst Pal's and Maria Road. Okay. So this is a little ahead of where we had our earlier project. That was also on the Pal Road, right.

Varun Gupta, Director No. Our project was earlier was on Pali Road.

Ravi Purohit, Analyst Pali Road. Okay, okay. I think the notice with the BSE you had mentioned that we are still expecting some approvals for the agriculture land, is it?

Varun Gupta, Director Yes, we have done a development agreement; the landowners are to get the 90A approvals. Okay.


And we are working on that.

Ravi Purohit, Analyst Okay, okay. That's it. Thanks a lot. Thanks a lot Varun.

Varun Gupta, Director Thank you Ravi.

Ravi Purohit, Analyst Yeah thanks.

Operator Thank you. Participants that was the last question. I would now like to hand the conference over to Mr. Bhaskar Bukrediwala for closing comments.

Bhaskar Bukrediwala, Associate Director, Equity Research Thanks. Thanks everybody for attending the conference call. On behalf of CRISIL Equity Research, I thank the management of Ashiana Housing for the conference call. Thanks once again and a very good evening to all of you. Thank you.

Operator Thank you, sir. Participants, on behalf of CRISIL Equity Research that concludes this conference call. Thank you for joining us. You may now disconnect your lines. Thank you.

housing q3 2013 earnings call 14 feb’13 call/123716_20130214.pdf · 2013-02-16 · varun gupta,...

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