Welcome to the Q4 and full year FY21 earnings call of Ashiana Housing Limited. Please note that this webinar is being recorded, and the transcript of the webinar will be made available in a week's time from the call. The results and investor presentation have been mailed to you, and it is also available on the stock exchange. In case anyone does not have a copy of the same, please do write to us, and we'll be happy to send it over to you. Before we begin, I would like to remind you that our discussion today might contain forward-looking statements. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially.
You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinion only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. To take us through the results of this quarter and answer your questions, we have today with us Mr. Varun Gupta, Whole Time Director of the company, and Mr. Vikash Dugar , who is the CFO. Mr. Vikash will make his opening remarks, and then we'll move over to the Q&A. During the course of the discussion, and presentation, all investors will be in the listen-only mode, and there will be an opportunity to ask questions once the initial comments conclude. With that said, I'll hand over the call to Mr. Vikash Dugar .
Over to you, sir.
Thank you, Vinay. Good afternoon, everyone. We sincerely hope that you and your near and dear ones are safe and in good health in these difficult times due to the ongoing pandemic. Thank you for joining us to discuss the performance of the year and the fourth quarter of FY 2020 of Ashiana Housing Limited. I extend a warm welcome to all of you. Area Booked recorded in FY 2020 was 14.97 lakh sq ft, as compared to 19.82 lakh sq ft FY 2020. area booked recorded a healthy 8.3 lakh sq ft, as compared to 4.14 lakh sq ft in FY 2020. aided by the launch of Ashiana Aditya Phase 2 in Jamshedpur and Phase 5 of Ashiana Umang, Jaipur. The sales were at 3.57 lakh sq ft in the previous quarter.
We handed over 855,000 sq ft in FY 2020, out of which 293,000 sq ft was delivered in partnerships. This was against a delivery of 876,000 sq ft FY 2020. revenue recognized from completed projects in FY 2020 was INR 188.74 crores, vis-à-vis INR 249.15 crores FY 2020. total comprehensive income FY 2020 was positive at INR 4.08 crores, vis-à-vis negative INR 28.95 crores FY 2020. margins at a TCI level last year were impacted due to mix of projects and one-time exceptional items like impairment of contract selling expenses , INR 17.39 crores, and write-off of INR 5 crores due to discontinuation of our Gujarat operations in Halol.
Margins in the current year are favorably impacted by saving in marketing and selling expenses and overheads. We have become more judicious in incurring marketing expenses and reduced overheads through saving in traveling costs over office overheads and other costs. Area delivered in Q4 FY 2020 was 2.667 lakh sq ft, out of which 1.94 lakh sq ft was delivered in Ashiana Housing, and 0.73 lakh sq ft was delivered in the partnerships. This was against a delivery of 4.06 lakh sq ft in FY 2020. revenue recognized from completed projects was INR 64.90 crores for Q4 FY 2020, versus INR 62.42 crores in Q3 FY 2020. Revenue recognized from completed projects was at INR 80.37 crores in q4 FY 2020.
TCI was negative at 5.13 crores in Q4 FY 2020, vis-à-vis positive 13.26 crores in Q3 FY 2020. Pre-tax operating cash flows was positive at INR 171.65 crores in FY 2020, vis-à-vis positive INR 34.22 crores FY 2020, due to higher collections across projects during the year. Equivalent area constructed was at 11.66 lakh sq ft in FY 2020, vis-à-vis 9.85 lakh sq ft FY 2020. pre-tax operating cash flow was positive at 67.16 crores in Q4 FY 2020, versus positive INR 63.9 crores in the previous quarter.
Equivalent area constructed was at 3.9 lakh sq ft in Q4 FY21 , versus 3.54 lakh sq ft in the previous quarter, and the same was 3.27 lakh sq ft in Q4 FY20. Our construction commitments were in line with the delivery schedule. 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.
Thank you. Anyone with a question, please, raise your hand. Please click on the Raise Hand button, and then we'll queue the question, please. First question is from Harsh Beria-
Please go ahead.
Yeah, so hi, I have a question about your sales in Jamshedpur. Also previously you had said, like, markets like Jamshedpur do not have adequate absorption capacity for new projects. However, if you look at, like, the Aditya project, you had two quarters of sales of 3.5 lakh and, like, 2.7 lakh sq ft in the last two years. On the contrary, in bigger markets like Gurgaon, you have not even seen absorption of 1 lakh sq ft in any quarter. So why is the company not focusing on more projects in smaller cities like Jamshedpur, where you get better margins due to lower costs and probably better value for invested capital?
Hi, Harsh. You see, to generalize across locations basis of one projects, I wouldn't say it's true of the location. Jamshedpur is very specific context with us because we have been present there for a very long period of time and have a great brand name. I think that makes a huge difference. Jamshedpur, the peculiar problems are lesser around selling, but more in access to good title, clear lands, which are very hard to come by in that particular city. So Ashiana Aditya and Seher were launched, I think, after a gap of maybe over two year gap, where we had zero sales because you're not able to get access to a project in the first place.
So in Jamshedpur, we are constantly looking for a parcel, but again, that's not true of Jamshedpur, that's true of Ashiana and Jamshedpur with our brand name that exists. So I think more than anything else, for us to get sales, we have to establish our brand presence in whichever micro market we participate in. And as earlier, we continue to be bullish on Jaipur, Jamshedpur. We are looking... I think things are improving in Bhiwadi as well. Outside of Gurgaon, where we are again sort of Sohna in Gurgaon and now Bhiwadi, which is more core NCR market, generally the play of the company in the larger cities will continue to focus more on Senior Living, like in Chennai, like the new transaction we have done in Pune.
We have one regular housing project we are planning in Pune, but outside of that, we're gonna be more focused on Senior Living in the larger cities.
So, is the Wazirpur project also going to be a Senior Living project?
So, so the Wazirpur is in Gurgaon. I said Gurgaon we will do regular housing. Again, we believe we have now gotten to a stage based on the Sohna project, where our brand name is starting making a difference, and, we'll do regular housing there.
Okay. One data keeping question, how many units were booked in this year? Like last year it was 1,505. What were the number of flats that were sold this year?
Vikash, would you have that number in you? Just give us a moment. That would be 1,131 units.
Okay. So the average realizations, like, per flat has really increased from, like, INR 44 lakhs last year to INR 47 lakhs. Is this, like, does this number have some kind of predictive power, or is it just a reflection on the markets where you are selling?
It is more a reflection of the markets where we are selling, but we have seen typically, now what we are getting a sense of now in the company is that, A, sales prices on a per sq ft basis should go up, and there is a tendency to, for the unit sizes to increase as well on an average basis. I think both of those are also coming together. Very, very small early signs of it, but we see that happening in the future as and that's what we think it is.
Is this, like, if you sell, like, bigger flats, is this better on a gross margin basis? Does it have any differentiation on that aspect?
Not really, Harsh, so much. It's very similar on the gross margin basis. A slightly bigger flats are slightly cheaper to construct, so there will be slight impact on the per square foot, on the gross margin, but very, very minimal.
The kind of gross margins you're still making is about INR 1,000-1,200 per sq ft for your upcoming, like, and ongoing projects. Is that the right number to go with?
We should look at, we should look at... So ongoing projects and upcoming projects, around INR 1,000 a sq ft. We will release what the margin we made on the delivered units like we do every year. That will come out, you can take a view from that. But INR 1,000 a sq ft of gross margins seems very reasonable.
One last question is, are there going to be new project launches in FY 2022, or is it going to be like the previous things, like extension of ongoing projects?
We are working on four project launches. Either they will happen at the end of this financial year or the beginning of the next financial year. We are very touch and go. COVID had some impact on our ability to get approvals over the last three months. So we are working on four projects to be launched within the last quarter of this financial year or the first quarter of next financial year. But other than that, there are a slew of phases of existing projects planned to be launched this year.
What are the markets in which these new launches will take place?
The new launches are planned in Pune, Gurgaon, Bhiwadi, and Jaipur.
And I guess the Pune would be a Senior Living-
The planned project in Pune is a regular Comfort Homes project. The Senior Living project is, we just signed up. It will definitely go to the next financial year for launch.
Oh, that's it. That's all my side. Thank you.
Thank you. Before we take on the next participant, we'd like each participant to limit their question to two per participant. Also, before asking a question, I request you to mention your institution name, please. So we have the next question with Raghav Singh. Please go ahead, sir.
Can you hear me?
We can.
Okay. So my question is related with the project completion date. Let's say we have Jaipur Daksh or Jamshedpur Aditya, where we had large booking FY 2020. they are expected to complete by FY 2024 and/or early FY 2025. So does that mean all the projects, all the flats will be delivered and 100% revenue will be recognized within this timeframe? Or you start handing over after your project is complete, that therefore the revenue will be recognized maybe next three to four months. How does that actually happens?
So, Raghav, at the time of completion, once the project is completed, we typically would be recognizing revenues in that quarter itself, because we start issuing intimation of possession letters right away. But it does take, you know, it's not at any given point of time. Issuing of intimation of possession letters does take, I would say 30-60 days across various projects to do. Secondly, the thing I wanted to say, the expected completion time that we have mentioned in our project summary in the presentation, those are the dates that we have given to RERA. We would expect to substantially complete the project substantially earlier than this. I think I mentioned it last time, but we forgot to issue it. We will issue that.
We will put two columns, Vikashji, if we can do this quickly, expected completion time as per RERA and when do we actually expect to complete it. I would probably think we have a 12-month, in general, a 12-month buffer in these timelines that are provided in the chart.
Okay, understood. So that means the revenue recognition will happen after actual completion date, not before, right?
Mm-hmm. So it would happen after actual completion.
Cool, cool. My second question is related with the run rate of booking that we are making. So we rebounded sharply from somewhere 9 lakh sq ft to 19 and now to 14. So, do you expect that we are going to increase it, or you see some kind of stagnation going forward in future?
No, I think, Raghav, it will increase, but we need to be the first. So earlier, the challenge was sales, and we sort of resolved that and got to 19 and 14. Now, the biggest challenge in front of the company is actually launching new projects and creating more inventory that is saleable. We are at it. As I said, we have four new projects planned for launches, and we are working on two, three more to sign up and get those launches going. So as and when those launches keep coming, this annual run rate should start increasing.
Cool. Thanks, Varun. I don't have any further question. Just from the Jamshedpur, I can tell you, you have a very good brand equity build-up over there. So if you launch any project, it will sell like hotcakes. This is a ground feedback, on the ground feedback I'm giving you.
Thank you, Raghav. Much appreciated.
Thank you. We have the next question from Rohit Potti . Please go ahead, sir.
Thank you for the opportunity. And congrats on an excellent performance. My question is on the commodity prices. So I think historically, we've had this break-up that around 15%-20% of our total sales value would be the land cost, and then around 40-50% would be the, I believe, the construction cost. So just curious to know what is the commodity price, how much does that contribute to, let's say, % of the total sales value that you are seeing today? And do you see that compressing our margins?
Material cost, I would say 30% of our sales value, total, material construction cost. Vikashji, would you have any different thoughts on that number or-
So it is approximately 60%-65% of the construction cost. So it will be in the region of that 30%-35% of the sales price. You're right.
So about 30-35% of sale value, so that is what is happening. At this moment of time, I, again, our view is that sale prices in real estate are going to increase. There is overall the conditions for that are ripe.... and in our opinion, again, we don't know the future. In our opinion, the increase in apartment sale prices will be more than the increase in input costs.
Thank you. That was helpful. So the average realization inching up, is it a function of the product mix that larger cities and Senior Living we are selling more?
Sure. I, I would say over the last year, predominantly it was a mixed thing, very slight price increases, that were happening. But, like this, this financial year, we have already increased, prices across the board. And I would say now, increase in prices might be visible going forward, in, in actual realized prices.
So what is the price increase that you've taken this financial year? And last question, you've done a couple of large land transactions which is heartening to see. Do you, do you intend to continue, or do you intend to focus on launches this year?
So, sale price is up right now. I think it would have gone up by a 1.5 percentage points on average across the board. I have a view that annual price increases of between 5% and 10% annually is something we should see for the next few years. We have a lot of catching up to do. But I was just thinking about it. In the 14 years I've been at work at real estate, prices overall of those 14 years have been below CPI inflation in the country. So I would think overall that there is a little bit of catching up to do. So that's one. Second, we are focusing on launching new projects for the next 3 years.
In that, launching the projects that we have taken up and taking up new projects at the same time will continue. So we continue to be scouting for more transactions and working at launching the transactions that we have already done.
Thank you. That's it from me.
Thank you. We have the next question from V.P. Rajesh. Please go ahead.
Thanks, Vinay . So Varun, what is the guidance for this year's launches?
Hi, VP. I think we should look to launch about 1.5 million sq ft of projects this year.
Okay. And, is it, can we expect an acceleration in the following year from that? Because, last year was bad because of COVID. This year, again, we have lost couple of months. So what would be the thought process for fiscal year 2023?
We should accelerate the next financial year in terms of launches for sure. I'm hoping that we should start hitting about 2.5-3 million sq ft of launches a year, hopefully.
Okay. My second question is regarding Noida. I think you had mentioned that you were in discussions with some parties to acquire something. So any update on that?
It'll take some time now. We are in discussions of commercials, and all have been agreed, but Noida has its own peculiar regulatory issues. So we are still doing diligence of the regulatory risks before we announce anything or take it to a really advanced stages. So I think maybe another 2-3 months for us to evaluate the regulatory issues in that. Thank you.
Okay. And lastly, on the time gap between the time you, you know, acquire the land and launch, what's your current delta, and how are you looking to reduce that?
At least 12 months, I don't think we are able to reduce it, frankly. Given the regulation, maintaining 12 months is actually... I would be happy if we are able to maintain 12 months.
All right. Thanks. I'll get back in with you.
Thank you.
Thank you. Anyone with a question, please press on the Raise Hand button. So we have the next question from Himanshu Upadhyay. Please go ahead.
Hello, am I audible?
Yes, you are.
Yes, Himanshu.
Yeah, hi. Congrats, and especially on the two land deals what we have done. Very heartening to do, to see that things happening. You said that you want to continue to look for newer opportunities in the market. Can you give some light on what is happening on the ground? So are the prices, land prices remaining there, or you see the launch opportunity is very strong? How are you seeing the things, if you can-
Land prices have inched up, Himanshu, over the last 12 months, I would say, particularly the last 6 months of the last financial year, land prices have gone up. So, we continue to focus on more JDs, therefore, where the impact of this is lesser. We also are evaluating a little bit more outskirts and places where the impact on land prices have been lesser. And still looking and trying to find value opportunities in the current market.
The markets where we would be focusing would be, means, Pune, Gurgaon only, or?
...For new transactions right now, the focus of the company would be Jaipur, Jamshedpur, and Chennai.
Okay, okay. See, we have been in the Chennai market for quite some period, okay? But we have not got any other opportunity. Are there any other particular issues in that market also, or you think it is just we have not-
No, just we were—this project size was good in itself, and we were also trying to create scale, brand, some pricing before we start scouting. We've now been scouting, actively scouting for about 18 odd months, but of that 12 months, substantially in COVID. Hopefully we should be able to close a couple of transactions.
Okay, and, one last question. We said that we are, raising prices or blended it, or across the project, it is 1.5% up, okay? Are we seeing the customer sentiment being also strong? Because one of the things last cycle, what we saw was, market had, just a thought that prices will increase, a lot of inquiries will keep on coming at the thing, because the fear is the prices will increase very soon. Have we reached that stage where, if, some news is out that the prices are going to move up, the inquiry levels suddenly start shooting or customer level interest increases? Are we seeing that level of enthusiasm, or you think it is just the plain raw material price rise is there, hence we need to raise the prices?
No, I think overall prices are ready for an upswing overall within the industry itself across the board. That said, so for us also, the price increase is coming in June itself. It's not been there throughout the quarter. And there has been a COVID impact, but now over the last, let's say, two weeks when the markets have really opened up, things seem to be coming back to normal. It's not as if that there is any fear that, and slowness in visits and inquiries. Visits and inquiries are up. And to me, sale prices are going to go up for two, three clear reasons.
One, as I said, if you take a 14-year CPI and you take house prices in the markets we are in, in most places, our house prices would be trending below inflation for those 14 years. Second, interest rates are at the lowest ever in the country that any that I know of. And third, that same period, salary growth has been there over the last, let's say, 5-6 years. Sale price, interest rates have come down, house prices have been flat, and salaries have increased, barring, you know, the impact of COVID. And fourth, supply side dynamics are very, very favorable on the real estate side. We have had very few launches over the last 3-4 years. Lot of developers have exited the business. Capital for developers remain a constraint.
It all provides a, to me, a long-term bull market in real estate for the next 5, 6 years. That's, that's the view I have. Again, as I said, I generally don't like to make predictions and forecasts. If anybody attending the call over a period of time would like to know, particularly rosy forecasts. But for us, it seems my view is that it's this is a longer range price increase that we would see here.
Okay, okay. One last question. In, for FY 15 to 18, what we saw was the area constructed was generally ahead of area booked, okay? In last three years, the area bookings have been ahead of equivalent area constructed. From here on, do we think that, both can move in tandem, means, or at least, area constructed has to start improving in FY 22 and onwards, which, which has been generally-
In 2022, we would see a significant jump up in area constructed more than a 50% rise. They should start moving in tandem, more or less, going forward.
Okay. And, one last thing. So what we also saw there were the sales or area booking bottomed in FY 2017-18, okay? When we did 6, 6.9 and 7 lakh sq ft, what we were selling.
Mm-hmm.
After that, we have been continuously moving up. So do we see that the PNL would also start improving from FY 22 onwards? Because the low area booking or the low-
Uh-
area getting constructed is now behind, and now the improvement should start seeing on the P&L side also.
I would expect that the movement on the PNL side would start improving financially at 2023 onward.
Okay, okay.
Not 20, one full year, because that's when our deliveries will start kicking in.
Okay, okay. Yeah, thank you. I'll join back in the queue. Yeah.
Thank you. We have the next question from Anish Jobalia. Please go ahead.
Yeah, hi, Varun, and hi, Vikash, thank you for the opportunity. This is Anish from Planet Capital. So I just want to understand from the Bhiwadi market, like in your initial comments, you did mention that you know, we are seeing expectation of new launches. So if you could comment on the Bhiwadi market, given that you know, we have quite a bit of land over there, as well as forthcoming projects. So I mean, how to think in terms of scale and numbers, like if you are doing today ex, like how are we expecting that to ramp up going forward?
Yes. So in Bhiwadi, I think one thing, Anish, which is happening largely is we are shifting strategically towards more and more Senior Living. Okay? So, our one large project there, which is Ashiana Town Gamma, we will rename the project now. We have shifted that to Senior Living, going forward. It will reduce some sellable area, but overall, our understanding has become in Bhiwadi, that Senior Living is becoming getting great traction, good pricing, the right kind of customer base who can really afford to pay increased prices if you give them a good product. So what they're really asking for is: Give me a better product, give me better services, we are willing to pay more for it, as compared to paying someone who's price conscious.
So strategically we are shifting more and more focus towards Senior Living in Bhiwadi. So I think more than the volume play in Bhiwadi, I think it's going to be a margin play. And that's what we should look to do going forward.
Oh, okay. So thanks for the clarification. And, secondly, you mentioned that, you know, the kind of gross profit per sq ft that you're booking is around INR 1000 going forward, if my interpretation is correct. So now, given that, you know, you just mentioned about your comments on sales per sq ft increasing, and that too faster than the inflation in our, you know, commodities over construction costs, would you not kind of, let's say, with the cycle pick up over the next 5-6 years, kind of, expect that gross profit per ton, sorry, per sq ft, to keep inching up? Like, because in the past you're always doing INR 1100, INR 1200, but now you are talking of INR 1000s. So just wanted to get your sense of, why we are expecting this kind of numbers.
Are we being, more conservative, et cetera?
So, Anish, we've been doing now, we have come down to about INR 1,000/sq ft, which has not been reflected in the PNL so much now. Some of those projects will get delivered. And so the, some of the deliveries which are happening now, which are planned in the year 2023, there I think the margins will be a little constrained and will be closer to this. But new launches, the projects which will be launched now, and which we will sell, going forward, or new phases that we are going to launch, we do see an improvement in gross margins. And I would expect, more than INR 1,000 a sq ft to come in, and hopefully, increase further as we increase sales mixes.
Okay. All the very best going forward. Thank you.
Thank you, Anish.
Thank you. We have the next question from Ankit Kanodia. Please go ahead.
Hello. So, historically, we have maintained that land is like a raw material for us, and we do not like to invest in land beyond a point, right? But when, currently, when we are seeing, as in our assessment says that 3-5 years or maybe 6 years, as you mentioned, of bull market in real estate, are we going to... What is our assessment here? So, would we like to change our stance and build up inventory, maybe even leverage our book a little bit more aggressively now and build up the inventory when we see the prices rising in the next 4-5 years, or we'll continue to be just-
So Ankit, we will treat land as a raw material and we will not look to land bank. Our view on land will be that we are acquiring the land for a project to be launched and not to land bank.
I'm not talking about having a land bank without having the project, but, it may happen that, if we get a land right now, say, in, the region in which we are already there, and we have the projects, so if we can be a little aggressive in acquiring land today, we might get, a better, margin going forward, right?
Sure, but it will be with the intent of launching the, as soon as possible.
Right.
We will not intend to buy a land that we will launch three years hence. We'll intend to buy a land or acquire a land, either in a JV or through outright purchases, where we intend to launch as of today. Or, you know, get approvals and launch as soon as we can. And that intent will not change, and within that, we are hunting for value transactions.
Okay. Thank you.
Thank you. Anyone with a question, please press on the Raise Hand button. We have the next question from Raghav Singh. Please go ahead.
Hi, Vishal. I'm sorry, I'm back with two more questions, actually. So basically, the way I see Ashiana, our company, is that we are kind of kings in tier two cities. Especially I can talk of Jamshedpur, where I have more experience. The way Ashiana is seen, and there are the number of competition we have in these cities, is actually driving our next project success. And somewhere, I think it's reflective in the way you say that in Bhiwadi, senior citizen projects are picking up, because we had been selling senior citizen projects over there. So probably these kind of projects being picked up by the market is probably because of the brand building or the kind of work we have done in the past. Same thing, if replicated, is easier for us to sell.
Now, my question is angle of, we have a strong hold in tier two cities, but we are still venturing out to the bigger market, let's say Pune or Gurgaon and Noida, where there are the bigger players or the- all the players are there, right? So the competition is definitely high. So do you think breaking more into a bigger city is a more, strategically a better way, rather than, expanding ourselves where we have done lot of ground work and we can easily sell projects? That's my first question.
Raghav, I don't think it's an either/or question. Right now, we need to maximize sales in places where we are already present. So that's to us, Jaipur, Jodhpur, Bhiwadi, where our brand name is already strong. Jodhpur, where we have a very strong presence and brand resonance. And in that, we continue to look for lands and projects. These are also markets where it's harder to find projects given their nature, but we continue to do that. And at the same time, we need to find newer opportunities to grow the business.
In that, we are looking for pockets where markets are bigger, but we think we can have a competitive edge, whether it's in Gurgaon, where we can take a rub-off of our brand, in Bhiwadi and in, now in Sohna, and look at that. Or it's in Pune, in Chennai, in Senior Living. Or it's in Pune, in markets where we believe that the kind of work we do and customer centricity we bring is not as available within that micro market pocket. And we believe that we can compete in those places with our strengths. That's the sort of thought we have. It's not an either/or choice that you continue to expand in current markets and or just look at newer markets. We have to do both.
Otherwise we'll not be able to grow at the pace we want to grow.
Okay, fair enough. So, my next question is related with the pace of growth of Indian economic cluster in major cities. So, in my own assessment, I think a lot of growth came from, was IT-led, where the IT sector employed a lot of people and they bought a lot of flats. The other one, where we were present in tier two, was largely PSUs, which are getting money after pay commission hike and all these things. Now, as people are saying that probably next cluster of growth can be from chemical segment, not necessarily so much in IT segment. So there are certain economic zones or cities which may potentially see many people having good salaries because that overall sector is blossoming.
And that again, will be tier two, because most of the manufacturing plants are not in the tier one cities. So do you think you... I think you attempted that in a way by going into Halol, right? A few years back. But do you think that is a viable strategy as a, as another branch out, apart from, making move in the bigger cities?
Those are, those are hard things to comment on, Raghav. Halol as a strategy failed. Jodhpur is also, as a city, has not done the required bit in our tier two cities. So some of these, we are not economists, we can't have a play on that. The way, the way to do is, you know, you place a few bets, and some of them work very well, and you ramp them up. So we had placed a similar bet in Jodhpur and similar in Jaipur. It's hard, easy to say, you know, oh, Jaipur is a much larger city in the first place, but you would have also said Jodhpur had lot less competition. Jaipur worked, Jodhpur did not. We ended up doing a lot more projects and scaling up Jaipur. We are doing this with Senior Living.
We are looking at newer markets. We've gone to Pune and Gurgaon, are very, very different clusters and very, very different economic activities. Idea would be to place some of these bets, see which does well, and try and scale them up in a location where we do well and start doing more projects and get as much for, you know, for our brand name. We have no ability to predict where jobs will get created. We will only get to know that we are there once the jobs are created. So that, that's the way it's going to be for us.
Thanks, Varun. I believe in bigger markets, if we are venturing in, probably the model which has worked wonderfully well for us, where our own guys are selling and our own guys are doing the maintenance, do you think we have to probably go to the distributors to break more into these markets, or we are going to follow the same?
Yes. For non-Senior Living projects, we have to go to distributors in these markets, but maintenance will be carried out by our own guys. And even the sales process, we will carry through in our team. The distributors will be more to bring in the customers to the project. But, showcasing of the project, briefing of the project, talking about the brand, we will try and control that a lot more by ourselves.
All right. Thanks, Varun. That's all from my side.
Thank you.
Thank you, Raghav.
We have the next question from, Harsh Beria. Please go ahead.
... Hi, thanks for the follow-up. Can you give like a broad split between investor and end user demand for your current selling projects?
I hope so. I wouldn't have that data. Vikashji, would you want to take that up? Would you have some,
I do not have the latest data because some bit of change in this ten years. I don't have it right now.
50/50 has to be, I would approximate, but changes project to project. Would be hard to give you any hard code information.
Is there some kind of investor demand that's coming back that you see in the market, or is it still mostly led by end users?
Yeah, the demand over the last two, three years for long-term investors continues. People who are investing to rent or keep, there is investment demand. And it's been there for the last two, three years. The demand of the guys who are investing to trade out at possession is not come back.
That number has significantly diminished over the years, but then the long-term investors, some bit of demand is of course there.
Okay. The next question that I had was on... so I have seen a lot of Ashiana banners in Ranchi, and I think there's some kind of brand equity there. Do you guys have plans in the Ranchi market?
We are exploring a couple of transactions, but it's not something like we have plans to enter it. It's more like on the softly, we are just understanding the market a little bit. Eastern India is just a difficult place to operate and do a lot of projects in there. As I said, it's selling is easier, supply side is more difficult.
Okay, and do you have any updates on the Kolkata land? Is that still stuck? Is there anything there?
The Kolkata project is still stuck.
Okay. I have one suggestion for Ashiana, and that is, like, your investor section; this can be substantially improved, the investor section of the website.
Okay. Can I request you to write in specific improvements we could do? We would be happy to take those up, if you can write in specific things you could do, as you might have seen as well.
Yeah, I'll definitely do that. And also, you only have, like, the snapshot results until FY 2019. It needs some kind of a revamp for sure. I'll write in more specific recommendations.
This is with respect to the website, right?
Yeah, this is with respect to the website, Ashiana Housing website.
If you can, if you can write to us, we would highly appreciate.
Will do. Thanks. That's all from my side.
Thank you. We have the next question from Rohit Simpi. Please go ahead.
Yeah, hi, Varun and Vikash. Uh, congrats on good numbers. So just two questions. So one is, so considering we have seen large jump in the, the, you know, OCF performance in Q3 and Q4, and also you mentioned that the construction co-commitments would increase in FY 2022. You see this even more broadly FY 2020 OCF as being sustainable, or do you think that there are extraordinaries which are pulling that up in this year?
Vikashji, it's over to you.
Yeah. So cash flow from operations numbers were healthy due to higher collections in FY 2020. We hope that the healthy situation of cash flows should continue in FY 2022. That again is a leading indicator in line with the improvement in optics. So we expect the cash flows to continue to be healthy in current year as well.
Yeah, but, Rohit, I would just say that the numbers in FY 21, in terms of INR 170-odd crore are just, anomalous.
Yeah, yeah, so, but, but-
At this moment of time, if we are able to sustain INR 100 crore of OCF for a couple of years, we'll be happy with that, because construction commitments will jump up.
Correct.
Okay, so to understand that better, this year, FY21 would have seen lower construction relative to your earlier estimate, and hence the OCF is higher, right?
Not to our... yes, it, it showed a little bit lesser than our estimate. We also saw, collections a little earlier and stronger than we expected as well. So both of those things have come in.
Mm-hmm.
This year again, construction commitments are lined up, and I don't think we are going to waver from that. On the sales side, we are also a little worried, you know, how things will behave because one thing that happens whenever a COVID wave hits, even if sentiment is high, ours is a business which is very difficult to transact, and it's not an urgent purchase. So if the sales slow down significantly for 2-3 months, it can be easily deferred. So I think that that's also something that might be also a little bit varied. But after that, you know, OCF about INR 150-160 crores a year is something we hope to sustain year-on-year after that.
But right now, this financial year, 2023, if we see north of INR 100 crore, is what we had forecast, and we would be happy with that. That's what we had also forecasted a year ago for the next two years. This year just became.
Yeah, right.
- significantly better than what we expected.
Okay, thanks. And last question is on the momentum that we are seeing in the completed inventory sales. So notably there, a project like Anmol in last two quarters has done really well versus, let's say, the you know, the Diwali you know, non-Senior Living projects have been you know, broadly in a similar range. I mean, what's the color you are seeing on the ground and the the reason for this difference that you're noting here? Is it type of customers? Is it something else?
... So Ashiana Anmol, particularly the one in Sohna, was a very serious sales and marketing effort there. We got a strategic partner in Anarock, which would have made a huge difference in learning about the new market and executing a lot of sales strategies. And there were other things which were very serious interventions by the management team to change a lot of the sales and marketing functions within that micro market in the way we operate. So that's what happened in Anmol is what I would say largely. And other places, we are slowly and slowly reducing completed stock. I'm hoping that we'll not add much. In Vrinda Gardens, I think, inventory of another maybe four quarters will get added when it gets completed.
We have to complete that faster than we wanted to, due to some regulatory issues. But, that said, after that, we don't... I don't think we'll add a lot more completed inventory. So that is also helping in overall result.
But to that extent, you are not seeing, say, the, you know, we saw a lot of excitement in completed inventory in certain cities getting, you know, sold quickly, right? And, maybe I'm still thinking from a Mumbai, Bangalore perspective. Are you seeing that in your, markets and particularly Bhiwadi, because that's where you've got the large completed inventory?
Yeah, I don't see tremendous excitement or sudden change in excitement over it.
There isn't any kind of lopsided-
Okay.
demand, I would say. Generally, we sell around 25 to 25%, ballpark is the kind of sales you get from out of the total sales, 25% approximately is attributable to completed inventory.
Correct. Okay, thank you so much. All the best.
We have the next question from the line of Ankur Jain. Please go ahead. Ankur Jain, please go ahead.
Hi, Varun. Hello?
Hi, Ankur, you are not audible. You need to be a little louder, please.
Hi, Varun, can you hear me now?
But faintly. We can hear you. You can continue like this. I think he'll be able to address.
Okay, I'll try to speak louder. So it's not a question on the operations of the company, but it is, it's a dilemma I am facing, and maybe you can help us resolve it. So me and my wife, we visited the flat, one of your projects in Bhiwadi, and my wife really liked the flat. So she said that we should buy one for our old age. And my view is that the company is good and the stock is cheap, so we should buy the stock for our old age. So this is the dilemma that we have. Can you please provide some inputs?
I would say buy both. I wouldn't be able to say one way or the other, Ankur. Thank you for your trust. I would suggest to buy both if you are looking to do either of those two. But in my opinion, in these questions, I generally listen to my wife on a lighter note, more than anybody else. She is the right opinion maker on that front.
Well, thank you for the input. I'll, I'll try to keep that in mind.
Thank you, Ankur.
Thank you. We have the next question from V.P. Rajesh. Please go ahead.
Hi, so I was just looking at the presentation. So from the current projects, you have around 13 lakhs of inventory, or not inventory, but sellable area of 13 lakhs. Then in one of your slides, you mentioned around 54 lakhs of projects that you have planned, right? If I put that together, that's about 67 lakhs or so.
Right.
But the catch is that around 25 is coming from Bhiwadi, which is... I would categorize it as a slow-moving market, or correct me if I'm wrong in that assumption. So the question is that if I back out that 25 out of 67, I'm left with 42. So what is the time period over which you think this will get sold? So two questions, really. If my assumption on Bhiwadi is correct, and then if you ex Bhiwadi, uh-
Yes.
What is the timeline in which it will get sold?
Just one input over there, that in case of Bhiwadi also, we need to segregate between Senior Living and comfort homes. Because, you know, the focus and the kind of run rate in sales is different. There is a lot better traction in Senior Living. So we need to demarcate the two and then look at the numbers.
No, that's a fair point, Vikash. And if you can just guide me, like, you know, ex-Bhiwadi, what is the time period, and then for Bhiwadi, you know, what is the time period?
That depends. Yeah, even there are some other, Neemrana is also slow.
Correct.
Gurgaon is also slow.
Right.
Chennai is relatively quick. Lavasa is also a little slow in this thing. Jaipur is very quick. Yeah, it's, it's hard to say how things will move one way or the other. There is a larger portion in Bhiwadi than you're suggesting. I would also, VG, the thing is, now we've taken a 2 million sq ft project in Gurgaon. We've taken, we have 2 million now in Pune that we'll also bring to the table. My, my view overall, as a company, is that we want to get to about 2.5-3 million sq ft in the short term right now, in, let's say, three years. And that's the churn we will have. It's hard to say overall when will the entire portfolio churn, depending on where we are.
But overall, seems okay, like, as Vikash you pointed, even in Bhiwadi, one of the things that we have taken, the largest chunk of the square footage that you see, which is in Gamma there, 18.45, we have moved that to Senior Living, and it's going to come down from 18.45, maybe closer to 13 or 14. Because we might do some villas, and we might make the project more upscale, where we think by reducing square footage and making the project nicer,
Mm-hmm.
we more than be able to make it up in the pricing that we'll be able to achieve, and given the land cost that's there. So, there, and then, you know, my expectations is that Senior Living should start hitting about 200,000 sq ft a year in Bhiwadi. We did about 115,000, I think, last year, in Ashiana Nirmay, if I'm correct.
That's right.
Uh, uh, right-
I think 40-50 sales at run rate, per quarter, in Bhiwadi Senior Living.
Yeah. So if we start hitting about 200,000 sq ft in Bhiwadi Senior Living, then that's a 7-year churn. So it's difficult to say how sort of exactly how long this portfolio will take to churn in, but I have a view that we can start hitting 2.5-3 million sq ft a year once we're able to get the Gurgaon and the Pune projects live and kicking in.
Most of them will get launched in Q1, right? I mean, sorry, not Q1, in fiscal year 2022.
So in the Pune project and the Gurgaon project, we are looking at in fiscal year 2022 or Q1 of fiscal year 2023. The new Senior Living project in Pune, which we've just signed up, maybe three months after that, maybe Q2 of fiscal year 2023. But again, those are early to say. Approvals can always be funny in our business, and you don't know where it gets stuck. Like in, in the Pune Ashiana Malhar project, all but one approval is in. And we need environmental clearance, all the other approvals, the fire NOCs and the NA and the building permit, all of that have gotten in. So but one doesn't know where one might get stuck. But we are looking to launch those as well and get them off the ground.
You have paid the seller completely in Pune, or is it a JDA?
Pune, it's a revenue share joint venture.
Okay. Okay.
Predominantly revenue share, part area share joint venture.
Right. Okay, and my second question was for Vikash. You know, I was just trying to calculate our operating overheads. So for this year, like, you know, if you can just give some guidance, what is the operating cost below gross profit on a run rate basis?
You mean, selling, you mean finance cost, depreciation and other expenses, right?
Yeah. Well, I'm looking at below gross profit, your selling cost and corporate overheads or any other, you know, basically before EBITDA. So between gross profit and EBITDA, what are the costs you have on a run rate basis for this year? And maybe Q4 is a probably a better number.
As far as the marketing cost is concerned, again, you know, there are two components to it. One is that it is in line with,
Right.
It is in line with the sales that we do. So that, again, will be proportionate to the kind of deliveries that we do and book revenues, which are, which are lower, vis-à-vis-
Mm-hmm
- Q1 2021. And then there is a fixed cost element-
Mm-hmm.
which anyway we are judiciously spending. And the current year, some bit of it, will also increase because of the new launches in Gurgaon and Pune, but that will not exactly feature in the P&L this year. So overall, there should be a reduction selling cost because of the variable component to it. And as far as finance cost is concerned, it is directionally reducing because we are repaying the debt. And other costs more or less will remain in line. And as far as other office overheads are concerned, we did some kind of cost reduction this year, and some impact of COVID was also there, like we negotiated certain costs, office rentals and all.
We think 60%-70% of that-
Mm-hmm.
- will be sustainable. So we see the other overheads to be more or less in line and in control. They continue to be in control. So-
So-
That's the kind of,
Just to add to Vikash ji's thing, I would say, operating costs outside, excluding depreciation, amortization, finance and selling cost, that is, that we spoke of, outside of that, our annual run rate now should be somewhere between INR 45-50 crores in the financial year 2022.
Okay. Okay. So INR 40 crore-INR 50 crore plus your selling cost is the
Yeah.
- number that gets one to EBITDA.
Yeah.
Yeah.
45-50, yeah, plus our selling cost, and then finance cost and depreciation amortization for total cost.
Sure. Sure. Okay. All right. Thank you.
The next question from Harsh Beria. Please go ahead.
I have a comment on your 20-year, like the NCD issued to IFC. Is this a percent fixed interest or is there some variable interest component for this NCD?
... These are all variable return debentures. They are project-linked variable return debentures, whereby so therefore, they are unsecured, long-term, long tenured, without any fixed repayment or interest specified interest payments. The interest vary as per project performance.
So this is kind of a quasi-equity, kind of a bond. Is that interpretation correct?
Yes, it would be. It is quasi-equity in structure, if that's the way to put it. But, yeah, it is what we-- It's project performance linked capital.
It doesn't have a fixed obligation like the conventional NCDs are there. The obligation is in line with the returns made on the cash flows generated in the project.
Yeah, so they're, they're project-linked. So they're not equity in nature, that is not permanent capital that's coming to the company. Uh, they, they will have to be... Even the capital will have to be returned back, not just returns, and but they're linked to project performance.
Thank you. We have the last question from Raghav Singh. Please go ahead. Raghav Singh, you are not audible.
Okay. Can you hear me now?
Yes.
So it's actually not a question, just a suggestion or feedback on the investor presentation. Slide 70, where we have this ongoing project summary, giving the sellable area in lakh sq ft versus the expected completion time. I will request if you can just add the potential value in terms of INR as well. So for investor point of view, it becomes very easy to visualize how much money is falling after which quarter, right? Otherwise, I have to manually calculate. Just a feedback, if you can.
Okay. All right, Raghav, we will see what we can do. Point taken. We won't commit anything. We'll understand okay.
Thank you.
Thank you. So that was the last question. We'll now hand over to the management for closing comments. So over to you, Paras.
We would like to thank all of you for being on this webinar and being so patient with all our questions and answers. If we were unable to take any questions, please feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the webinar. A lot of material we have spoken about is posted on our website, and you can also email your queries for any further clarification. Thank you once again for taking the time to join us on this webinar.
Thank you. Thanks, everyone.