Ladies and gentlemen, good day, and welcome to the Ashiana Housing Limited Q2 FY21 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Diwakar Pingle from Christensen IR. Thank you, and over to you, sir.
Thanks, Rayo. Good evening to everyone who's joined the Q2 FY 2021 earnings call for Ashiana Housing Limited. Results and investor presentations have been made to you, and it is also available on the stock exchange website. In case anyone doesn't have a copy of the same, feel free to write to us, and we'll be happy to send it over to you. To take us through the results of the quarter and answer your questions, we have with us the top management of Ashiana, Mr. Varun Gupta, Whole Time Director of the company, and Mr. Vikash Dugar, who is the CFO. We'll start the call with a brief overview of the company's performance, and then we'll follow it up with a Q&A session. As usual, the standard safety health clause applies. With that said, I'll quickly turn over the call to, Vikash Dugar. Vikash?
Thank you, Diwakar. Good afternoon, everyone. Thank you for joining us to discuss performance of the Q2 of FY 2021 of Ashiana Housing. I extend a warm welcome to all of you. Area book recorded in Q2 FY 2021 was 2.29 lakh sq ft, as compared to 0.81 lakh sq ft in Q1 FY 2021. The booking in the quarter had a significant contribution through launch of phase V of Vrinda Gardens in Jaipur and launch of 1 block open for sale in phase III of Ashiana Nirmay, Bhiwadi. Also, the bookings which were due for cancellation in Ashiana Amantran, Jaipur, have been considered in this quarter post its submission in the system. Area book as well as area constructed has recovered in this quarter as compared to previous quarter.
We handed over 1.10 lakh sq ft in quarter two of FY 2021, out of which only 3,000 sq ft was delivered in partnership. The area delivered in AHL in Q2 FY 2021 was higher at 1.06 lakh sq ft, in comparison to area delivered in Q1 FY 2021 at 0.82 lakh sq ft. The revenue recognized from completed projects in Q2 FY 2021 was INR 36.22 crore versus INR 25.19 crore in Q1 FY 2021. Revenue recognized from completed projects was INR 58.59 crore in Q2 FY 2020. Total comprehensive income, that is TCI, in this quarter, was negative at INR 1.74 crore, which have been negative INR 2.3 crore in Q1 FY 2021.
Margins are under pressure due to lower revenue resulting from lower deliveries. Pre-tax operating cash flows were positive at INR 30.04 crore, increasing significantly from positive INR 10.56 crore in the previous quarter, largely due to improved collections. Equivalent area constructed was at 3.01 lakh sq ft versus 1.1 lakh sq ft in the previous quarter, and was 2.04 lakh sq ft in Q2 FY 2020. The construction activities is expected to improve going forward, and we expect to achieve our targets for the year, which is in line with our construction commitments. 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 very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, please press star and one. The first question is from the line of Avadhoot Joshi from Newberry Capital. Please go ahead.
Hello, sir. I was going through the numbers... Am I audible? No?
Yes, you are. Please go ahead.
So we have good sales there in Bhiwadi as well as in Jaipur. It was good to see the numbers. I would just like to know how was the price trend there? Because I see in the numbers also, there is no decrease in the numbers. I just want to know what was the pricing trend in these areas, especially Bhiwadi?
Pricing continues to remain stable across the buildings.
Okay, sir, that's, that's clear. And second thing, in Lavasa also we have seen good sales trend. Was it because of Maharashtra has given cutting the stamp duty, was it the reason, one of the reasons?
Hard to say. I think Lavasa, I don't think that's driven by the stamp duty again because there wasn't... It's not a similar situation like as other places. We put together a sort of a scheme which made a difference, and
... I would like to comment on Lavasa after one more quarter. Let's see how, you know, sustainably we are able to recover sales in Lavasa.
Okay. I think that Q2 will be better for us because of the Diwali and festivals.
I hope so.
All the best to you. Thank you.
Thank you so much.
Thank you. The next question is from the line of Srivatsan Ramachandran from Spark Capital. Please go ahead.
Yeah, hi. Thanks for taking my question. Just wanted to get a sense on three slides that you had in the presentation on the future projects. I'm referring to slides 24, 27, 26. How should we read these? These are mutually exclusive project details that you've given, or is there some overlap between the, what are the difference on the future-
They are mutually exclusive projects that we have listed out. Typically, slide 24 are projects where they are typically future phases of existing projects. Except for Ashiana Town Gamma, which is written there, which is again, sort of a future phase and is between, like, Ashiana Town Beta and Milakpur and Gamma were from the same. They form part of one chunk of land that was segregated during the approval process because of roads. But outside of that, the future projects inventory is typically future phases of existing projects.
The land inventory are places where we have land, either through joint venture, joint developments or ownership, where nothing has been launched. We haven't launched any particular phase, typically because approvals have yet not been received. And so these are new projects which are coming up. Completed projects in which we are having inventory are actually finished projects, which is slide 26. So they're mutually exclusive also.
Thanks for the detailed disclosure. On slide number 25, which is the land available for future development, is it safe to assume that most of the land-related costs would be incurred already, or is it something that would be not yet incurred? How should we look at that?
Okay. So, we haven't specified the type of transaction here. Next time we will try to specify that. Therefore, land, I'll just walk you through it. Milakpur Land and Ashiana Umang Extension are fully paid for. They are outright owned by Ashiana, and there is no future payments. Ashiana Malhar and Ashiana Maitri, Nitara and Pune and Kolkata are joint development projects, where Ashiana Malhar and Pune, in this quarter, got fully funded in terms of deposits, stamp duties and everything, and whatever the remaining payments that have to go to the landowners now will go through as a revenue share structure. Similarly, in Ashiana Maitri, Nitara and Kolkata, we have funded part of the land cost already, which is committed now.
The rest of it is structured as a revenue share slash some, but with some guaranteed revenue over a period of time, where the timeline for that start has not started yet. So there is no pending liability as of this moment towards any of these parcels.
Okay. Okay. I, at least for the, presentation, this will be a first project input, but I just wanted to get a sense how do you see the opportunity there? Because we've seen multiple projects. Are there meaningful profitability differences between cities where you run similar projects with very multiple, projects, and what is the roadmap there? Would you want to kind of expand more in Pune, Jamshedpur, Jodhpur, where you're having one or two projects now, maybe 20-24, like what you see in these communities?
The longer-term focus, Mr. Ramachandran, is on, so the NCR region, so Bhiwadi and, and Gurgaon. We have done one project in the Gurgaon area. We're looking for another, continued, to do more in, Jaipur. This will be our first project in, Pune, which one is Ashiana Malhar, outside of Lavasa, and we've been waiting for a bit to get, project kicked off in Pune. And this now, this quarter, we paid off, a significant part of the deposits because those were linked, to zone conversions and statutory hurdle issues. So those have been, to a large extent, now resolved, and remaining, approvals of, building plan and, environmental clearance still remain, but they're smaller hurdles, to go through.
Pune would be the other, and Chennai would be the other places that are focused. So, Jodhpur, Jamshedpur and Kolkata do not remain focus areas. Kolkata, we are having difficulties in even getting the project off the ground right now, so I would not comment on that. Jodhpur and Jamshedpur are going to remain, you know, smaller markets with, you know, one or two projects going on simultaneously. Nothing really more.
Okay. Okay. My last question, we've seen some state government announcements, like the previous question I've alluded in Maharashtra to something like Karnataka for small-ticket houses. I'm sure you're speaking to multiple regulators across states. What's your sense? Do you see a few more states joining the bandwagon and cutting stamp duty or circle rate, the cases want to get different, even the operational multiples?
I hope they do. I don't think there is anything coming in right now. Okay, thank you. Thank you. Thank you!
Thank you. The next question is from the line of Rohit Kothi from Marshmallow Capital. Please go ahead.
Thank you for the opportunity, and it's a really good set of numbers. So, my first question is, do you think this is pent-up demand and or, do you see the momentum continuing into this quarter as well?
Yes, I would see the momentum continuing in this quarter.
Okay, that's actually-
So everything seems to be yes. So the Q2 momentum should continue. Hopefully, it will improve going forward. So things seem to be all right right now.
Okay, that's great to know. And the second question I have is: How does the land pipeline, land deal pipeline look, because I think it's been quite some time since the last land deal, which I believe was in Jaipur, if I'm not wrong.
So yes. So, as of March, we were in lots of active conversations. We had three term sheets there... Four term sheets, sorry, four term sheets as on the date of lockdown, thinking of taking those through. And then, post-lockdown, we also became a little conservative just to hold on to see how things are. Now, with sales momentum continuing forward right now and our expectations that it continue to like this, we are now looking to take some of those land transactions through on those term sheets that we had executed. So, you know, as the diligence and actual closures happen, we have few transactions in the pipe, and we actively look for more.
One thing that happened in this quarter as well, as I read earlier, Ashiana Malhar in Pune, which was signed up earlier, but we were not able to take through because of some statutory hurdles. And that has gotten cleared, and our, you know, documentation concluded finally, firmly, registered and deposits done with that project, looking forward. So we are looking on those, on that line actively right now, and more confident that those things.
So that's very nice to hear. And so, just to follow up, does it mean that you expect to hopefully sign a few deals this financial year, or do you think it can spill over to the next?
I'm hoping that we should be able to do about three transactions this financial year, is what my hope. It might spill over to April, May, but we are looking to close out three transactions in this financial year.
Okay, great. And on Pune, I mean, it's very nice to know that the progress has been good. So, are you looking at launch this financial year, or is it,
No.
Uh-
Launch will be in the next financial year. The, again, the approval process will take, that kind of, time, before. But, we were having a lot of uncertainty in mind. I think we have a lot more certainty in that now things should come through in the next financial year.
Okay. Okay, so that was helpful. So we have three broad segments that we operate in, the mid-income, the kid-centric and the senior. So any particular segment that has that you are more confident about today than, let's say, pre-COVID or something? Because, for example, I was reading your brother, I believe, Ankur's interview or discussion on senior living, and he seemed really excited about the space, and he indicated that we get around one-third of our inquiries. I mean, the inquiry in senior has gone up really high, and we're looking to add a lot more projects in that going forward. So a little more color on that would be helpful.
Yeah. So senior living is something that we think will drive a larger part of the profitability of the organization going forward. So the shares and profits and projects and things should increase going forward. We are actively looking for transactions. I think it's less to do with COVID, more to do with the fact that it's a less competitive space with differentiation and therefore less susceptible to cycles being driven by, you know, more competition coming in and excess supply coming in and those. And with that sort of realization, I think strategically we made a view that we want to get in there. And slowly and slowly, I think we we've also been able to get a market going for it.
I think a lot of time was spent in creating a market for it, if that's the right way to put it, in educating people, getting people to come in and then get references and all that. So I think overall, we're enjoying good volumes and pricing, both in Chennai and in our project in Ashiana Shubham, Ashiana Shubham in Chennai. Therefore, we would continue to look for more projects in senior living.
In terms of total houses constructed, would I be right in thinking that you are among the top three in the country right now in senior living?
In senior living, yes, I would say so. It's not the top, definitely in the top three. I would say that, yeah, probably the top, developer in terms of number of houses constructed in senior living.
Perfect. And the actual last question from my end is on Ashiana Anmol. Your thoughts here, because I think the momentum is not taking up still. Is the connectivity issue still a big issue there?
... No, it's. It wasn't really a connectivity issue that way. It is a little further away, but there is a connectivity opportunity that's coming on board, going forward. We're building, basically, elevated corridor, if I think about 18 kilometers or 14 or some. I might, I mean, you know, government there's an elevated, highway, like a highway is getting elevated, from Gurugram to, from center of Gurugram to our project. And, that's going to make a difference. So that is still under construction, but the speed on that is rapid. That said, that will take about 6-12 months. But we're working on ways to find momentum in Ashiana Anmol, going forward.
I'm, I'm hoping that, you know, in this financial year itself, we will start seeing some, improvement. We have seen, improvement in October and November already, very positive. And if that momentum that is there, it continues and builds up, I think that more will start doing better, in this financial year itself.
Perfect. Thank you. I'll get back into the queue.
Thank you.
Thank you. The next question is from Rohan Advani, from Multi-Act. Please go ahead.
Yeah, thanks for the opportunity. My first question was on, you know, you said that the cancellations have been accounted for in this quarter. So what are the gross cancellations there? Because I think we are negative 35,000 sq ft in Amantran, but that might be a net number. So if you could just give the gross cancellations, that was one. Secondly, you know, if you could talk about your launch pipeline for H2 and maybe for FY 2022. Like FY 2020, we almost did 2 million sq ft.
So when can we get back to 2 million sq ft of sales? Will it be 2022 or will it take more time beyond that? And just lastly, Pune land, I got what you're saying, and Kolkata land, you said that you are finding it difficult to get it, you know, started. So, I mean, what's the outlook on that? Thank you.
So three things. First was on cancellations in Ashiana Amantran. I don't have exact numbers of gross cancellations there, but I think, and this is not a three-month figure, but a six-month figure between April and September, I think we had a cancellation of about 80,000-85,000 sq ft. And most of these cancellations, because we canceled about 55 units, that average unit size are very large, so I don't have the exact. These were pertaining to bookings, because Ashiana Amantran was launched a week before lockdown came in, and we got about 124-125 bookings, out of which about 55 canceled.
And cancellations which had happened in the Q1 itself, a large part of that recognition happened in the Q2, because some of the paperwork and documentation for cancellation processes didn't get done in time. But that's what's there. During the quarter, during the six months, and we expect Amantran to be doing well going forward.
Okay. So you said 80,000 sq ft, right?
Yeah, about 80-85 thousand. We can, we can-
Okay.
We'll see if we can give out an exact number, gross cancellation number, out in a couple of days' time, to see if we can get that out. We can get, get that.
Yeah, it'll be done.
Actually, if you exclude that, we are already at 300,000 sq ft, right? Because this is sort of a non-recurring number, right? All the cancellations that were to happen have happened. Yeah, and so also the point was the cancellations effectively happened in April-May quarter. Because I, you know, as I removed the April-May, Ashiana Amantran number, if it had been posted in April, or more itself average, we would have been at 300,000 sq ft this quarter. You're absolutely correct.
So when we track bookings, not from a software perspective, I think we had about 220-odd bookings, net of cancellations in the July to September quarter, about 215. An average unit typically for us is about 1,300, 1,350 sq ft is typical. That's where the numbers would be. So yes, I would say that we're closer to 300,000 sq ft.
Uh, okay.
Second, your question was on—
On the launch pipeline and 2 million sq ft, when can we expect?
On the launch pipeline, so we have launches planned of the four that we had in terms of projects. Ashiana Umang extension, which will now typically become Ashiana Umang phase five, because it's part of Ashiana Umang project itself. And basically, we had added a land to the project about five years ago. That's gonna get launched. We have approvals in place for that except for RERA, and we should be launching that within this financial year itself. And Ashiana Malhar in Pune, I expect to launch next year. The Kolkata project, it's difficult to get color, yeah. It's we are having a tough time with approvals over there, and I can't give color as to...
Because it's a little bit of a race that we are having difficulty in managing them. But, I would expect that we should start hitting close to 2 million sq ft next year. We are on term sheet stages of projects also that we can launch next year. We have stages of existing projects which we could launch next year. So, in my opinion, we want to get back to 2 million sq ft again next year, as well, and have that momentum. And, basically, with if bookings remain good this financial year and cash flow keeps coming in the way they've been coming in, right now, then we are overall on a good wicket. Because we can, you know, move cash from existing projects to fund new projects and get the pipeline going, and that's it.
Got it. Thanks, Varun, and all the best.
Thank you.
Thank you. The next question is from the line of Anuj Sharma from M3 Investment. Please go ahead.
Yeah, thank you for this opportunity. My question is on the land bank. Yeah. Hello, am I well audible?
Yes, sir, you're audible. Please go ahead.
So one is, you know, the deals or the term sheets were signed in March, and we had been conservative since then. What's keeping us from not closing them now, given that, our confidence and business would have improved? And, you know, if you don't close it, why would the seller be willing to sell you at the same price? He would want to charge you a bit more, given the reason for more clarity.
No, no. So, so we are now in the process of closure. Of the four, we have decided to drop one sale of them. Three, we are going to continue. We are in the process of closure. All three are now waiting. We had put them on hold, so certain conditions precedent that the landowner had to perform, they were going slow on those. They've been put into throttle again over the last three months, and we are waiting for landowners to perform their part of obligations, and then we'll put those transactions through. So they're, they're basically subject to landowners being able to perform their own.
And, and I would discover sometimes they don't happen, you know, and or sometimes they take longer than what happens. I think the Pune project, as I said, it took about, them about 21 months to perform on something that we thought would take 12 months. We don't have those kind of obligations for these projects, but there are obligations which can take, you know, six months instead of three and run into some difficulties as well. But, that's what we are waiting for to conclude on the call.
All right. Okay. So, so again, you know, if you're finding this challenging from the part of the landowner or the seller for them to comply, are you also looking at other opportunities? And, you know, what's your sense in terms of land prices and where are they closer to your expectations or they're still far away? How do you, how do you think about it? And also, your thoughts on accumulating land for the next 2-3 years, maybe if prices are good, and then maybe build them over the long term rather than do the JIT approach, which we have been doing for a long time.
So we don't take calls on whether land prices are very interesting from a land price perspective. We look for more: does at that price and the product we are able to do, does that leave value on the table for us? And we find that right now available. We are preferring joint ventures over acquisitions or outright acquisitions in general, except for one, where we are looking at outright acquisition. But mostly, at this point in time, we are preferring to do joint ventures. And in joint ventures, we are getting terms on offer. Some places are reasonable, some places are not so reasonable, and we are looking for transaction. So on the first point, we are actively looking for more, more parcels outside of those three, and we continue to look.
Unfortunately, COVID also stopped a little bit of travel for us, which is a little bit critical to do these things. I think, that part is also we are slowly and slowly getting more comfortable and starting with... And we've been quoting our land; otherwise, we will look for more and more transactions going forward right now, and we're looking to close a few.
Okay. And one more on this. You know, in your understanding or expectation, do you think that land opportunities will remain for some more time, or think, you think this might not remain and, the prices might possibly come back to where they were? Just your thought on land prices and-
My opinion, land opportunities will remain for a decent period of time, primarily because the concerns on the balance sheets of real estate developers continue to remain. You know, overall, in terms of buyers in the market continue to remain lesser because of the sheer stress that the balance sheets of most developers have had. And I don't know if that stress is... As of now, that there hasn't been any relief from that stress. My gut feel says that the stress continues to be there. So therefore, in my opinion, land prices should remain weaker than for a little bit of time. But again, it will depend market to market, depending on the quality of the balance sheet of the real estate developers in that particular market.
Okay. And sorry, one hygiene point. Of those three land deals you are pursuing, what will be the average size of these?
In terms of?
Whatever you can quantify, whether amount or the-
They are ranging between 8 lakh-20 lakh sq ft of salable area.
All right. Each?
Each 8-20. That's what we're particularly looking. And depending on being outright or joint venture, you know, capital requirements can vary significantly.
All right. Thank you so much.
Thank you.
Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead.
Yeah, thanks for the opportunity. So one question on the cost side, are you starting to see inflation creeping into the cement price, steel prices, et cetera?
Not yet, V.P. Our overall purchase pricing would be very similar to pre-COVID levels. Maybe 1.5% lower on average, depending on the item. Some items are more expensive, but some items are still cheaper. We haven't seen any inflation creep in, as compared to pre-COVID levels of price.
Okay. And, I saw that we had very good sales in Ashiana Prime this quarter. So what changed, or is it just pent-up demand there?
It's just, demand coming back, I think, rather. Or we're just getting more and more of the market because supply continues to, consolidate further.
All right. All right. Thank you. That's all.
Thank you.
Thank you. The next question is from the line of Harsh Beria, Individual Investor. Please go ahead.
Hi. I have a question about your Noida project. As you had earlier announced that you are looking for a senior citizen and a housing project in Noida. Is that included, in, like, the three or four term sheets that you signed in March?
We have signed the term sheet in Noida. Yes, and we are actively looking for that. It wasn't signed in March, but yes, we are. We have a term sheet signed on Noida Senior Living. But, you know, it's, it's a very preliminary term sheet, like, there is nothing really to take from that. It's, it's still a long way before we come to any sense of a deal conclusion in Noida. It's a quite a. Probably the most complex land market that I've seen till now. Very, very complicated. So, we are, again, we are evaluating very early. Like Noida is a senior living market, we want to do senior living development there, from, a sale perspective, but, from a land cost, risk, and perspective, Noida is a real challenging market to create overall.
Okay. I have another question about, like, the long-term plans of the company. So let's say five, six years down the line, what is the kind of bookings that you kind of envisage? And what are the kind of markets that you want to expand in, and what are the kind of projects that you want to be in?
We don't have a six-year view. We have a three-year view. Three-year view, right now, as I reiterated, reiterating from earlier, Bhiwadi, Gurugram, Jaipur, Pune, and Chennai is where we look at core. We look at senior living in NCR and Chennai as an important driver of that. So in Bhiwadi, also, our mix, I think now will start moving more and more towards senior living as a component of Bhiwadi sales. And Chennai, we are now we have been looking for one more senior living project, which we continue to look for, and finding avenues to do that. So I think from a three-year perspective, senior living in Bhiwadi and Chennai, and hopefully we do something in Noida and Pune as well, will be an important driver.
We are looking for one more project in, Gurgaon, as I said. That probably will be a kid-centric home, development. And continuing with more, comfort homes, mid-income developments in, in Jaipur. I think that's the sort of strategy we will have in, from a perspective of a 3-4-year perspective right now. And right now, basic thinking is in the short term, get back to profitability, and in the 3-4-year term, get to, you know, mid-teen return on equity levels. I think that's, that's sort of the financial goal right now for the company.
I have one last question about land realizations. Have you guys studied, like, what is the long-term growth and realizations of flats sold in India over, let's say, a 20-year cycle? Like, what's the CAGR growth in realizations? Currently we have been stuck at around INR 9,000, 2,300 from the last five years.
I don't have a full CAGR number. Let's say about 13, 14 years that I've been around, it's roughly doubled, a little bit more doubled. So I think, basically, been at about CPI, would be, is my guess, 6, 7, 8%. Anywhere between 6%-8% is where we've looked at, CAGR, CAGR on pricing over the last 13 years. And I did roughly a rough math of taking, you know, 2, 3 of my projects and what they were selling at in 2008, and what they are selling at now. So that's, that's, that's pretty much it.
Okay, that's all from my side. Thank you.
Thank you.
Thank you. The next question is from Amey Kulkarni from Candor Investing. Please go ahead.
Yeah. Hi, congrats on a good set of numbers. I think the future is more promising than what the last six months have been. I had one question. We launched two projects in Jaipur last year, right? In Q3 and Q4, which sold amazingly well, Daksh and Amantran. But somehow I observed from your slide number 12 that Vrinda Gardens seems to not be selling much, and it is also located in Jaipur, somewhere near our existing projects. So is there some slow-moving inventory in these, in this project, or what is it? Could you shed some more light?
Yes. So Vrinda Gardens has been generally, but overall, been a slower project for us to sell of all our projects in Jaipur and the region. But we don't know exactly what's been the challenge. Over the last couple of quarters, one thing was that we did not have a lot of stock available for sale in Vrinda, and when we were launching Daksh and Amantran, we were also holding Vrinda's launch. We didn't want to flood the market with all sorts of projects. We launched a phase in Vrinda in this quarter. It hasn't gone extremely well, but for a phased launch, I don't think it was awfully well. We got 72 books sold in this quarter. So, it has been a little bit more challenging than the other projects in Jaipur.
So, I mean, is there a difference in price? Is there a difference in the sale price or... Because I have, you know, I've just seen-
The unit sizes there are typically very similar to the sizes in Aman. Pricing is 6%-7% higher than Aman, not very different, closer to the city. But something you-- we just don't know about, you know, and, and some decisions we get also off a little bit, something we don't realize. But that said, we have over 400 families residing in the project. We are getting sales. It's not that it's not selling at all. Q4 and Q1 were aberrations because lack of product to sell in Q4 and, in Q1, we were preparing for the launch in Q2. So that aberration is a separate one, but I don't see this as a very significant challenge, like how we struggled in a few projects in Bhiwadi. That pain I don't emphasize for Vrinda Gardens.
Fair enough. Yeah. Thank you.
Thank you.
Thank you. Before we take the next question, a reminder to participants that you may press star and 1 to join the question queue. The next question is from the line of Srivatsan Ramachandran from Spark Capital. Please go ahead.
Yeah, hi, just a quick question. If you look at the CapEx vis-à-vis the area equivalent constructed, that seems to be averaging about INR 3,500 last year, where it would come up substantially. Is there a large land component of it?
Can you repeat the question again, sir, please?
No, I was asking, if you look at the operating expenditure, total operating expenditure for the year of FY 2020 or FY 2019, and divide it by the equivalent sq ft constructed, and do the same math for H1 of this year, that you see a steep drop in OpEx per sq ft of constructed area. Is there a large land component as a part of the operating expenditure that typically accounts for?
Operating expenditure will typically have land also in purchase. So if you look at from an annual perspective, we report annually something called project expenses. And taking that project expenses and dividing it by the land area, by the equivalent area constructed, of the company, including the partnership firm, would probably be the right thing to do instead of taking the overall operating expenditure. The operating expenditure is actually more linked to sales. You know, project expenses on equivalent area constructed comes in, and then it goes to inventory. So if you really want to map out construction costs, it's best to take project expenses and divide that by the area constructed, and only Ashiana Housing Limited.
Okay, all good. Thank you.
Thank you.
Thank you. Participants who wish to ask questions, may press Star and One. The next question is from Rohit Shimpi, from SBI Funds Management. Please go ahead.
Yeah. Hi, hi, everyone. You know, Varun, you mentioned in an earlier question that Ashiana Town performance is also better, just a return of demand. So how are you seeing Bhiwadi as a market now for the 2,000 projects? I mean, are you getting any tailwinds of, like, work from home, et cetera, people wanting to buy larger homes there as a satellite market? Or any trends that you can share also in terms of buyer preferences on buying and renting, et cetera?
Yes. So we have, we've called a lot of buyers right now, over the last few weeks, probably speaking to about 3 buyers a week on average at the executive level, and coming out, so would've called about, you know, probably 65, 70 buyers in total. Haven't come out at a very specific trend why people are buying. Okay, we were also looking. I don't think it's just work from, it's work from home or anything like that. I think just people are making a decision which they had delayed for 2, 3 months, now are getting back to making decisions. They're feeling comfortable in their earnings and income, and they're going ahead and buying. I think that's, that's the only thing that we've got a sense of.
I think one thing that is helping, and that will probably drive larger sizes more than work from home, to me, is the fall in interest rates. The reduced interest rates increase the affordability of any buyer, right? And then everybody wants... To me, everybody wants a larger home, right? It's a natural instinct to want a home, a larger home that you can afford, than, you know, than you otherwise would have, and a larger home than that in a better location. So people make that trade-off, and when earning lower interest rates, to me, would typically get people to buy larger homes. Till Q1 prices increase and sort of cover that out, but till then, I would say that trend would probably hold for that.
Okay, thank you. Any trend of customers, like, is there an age difference? Is the customer getting younger who's buying in the last three months or anything like that, or it's pretty much the same?
Again, pretty much the same. We have not been able to extrapolate any trend. The only thing I could say is that one thing that has happened, though, at least in the visits, the proportion of end-user buyers as compared to buy-to-let or buy-to-rent-out investors that we have, the proportion has shifted more towards end users in the last few to four months.
Okay. Thanks for that. Maybe just a last one again from me, in terms of, say, are you seeing larger consolidation in the smaller markets where we are dominant? Or are you seeing it pretty much in line with the, let's say, top four or five markets of the country?
Well, we are seeing, even in top four, five markets, I would say consolidation in NCR and Bangalore might be very different. It's hard to generalize on it. It's more driven with the quantum of leverage and the quality of the balance sheet. In whichever city there is more leverage and, you know, more pain, and therefore more consolidation. Okay. Smaller cities also have a particular problem of, in general, also have not had so much supply as compared to other cities, is that the access to capital is much more limited. The way India's financial system funds, I think it funds Bombay first, then it funds the rest of the larger cities, and then the smaller cities really come in last in terms of access.
And then that has also, I think, prevented the kind of excess supply that is there. Like, I think Rewari got a lot more excess supply than, let's say, a Jaipur, because it was a Delhi developer which went in and developed Rewari, and therefore they had more access to capital, both informal, institutional, and that. I think that's the underlying driver of consolidation, of course.
Okay. Thanks so much, Vikash-ji and the whole team. Happy Diwali!
You, too.
Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.
Vikash, would you like to take up closing comments, please?
Yeah. We'd like to thank all of you for being in this call and being so patient with all the questions and answers. If you are unable to take any questions, feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the call. 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 call. Wishing all of you a very happy, healthy, and safe Diwali. Thank you.
Thank you very much. On behalf of Ashiana Housing, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.