Ladies and gentlemen, good day, and welcome to the Q1 FY23 earnings conference call of Mahindra Lifespace Developers Limited. 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 conference 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. Arvind Subramanian, Managing Director and Chief Executive Officer of Mahindra Lifespace Developers Limited. Thank you, and over to you, sir.
Thank you, Jacob. Good morning, and welcome to all of you to our Q1 FY 2023 earnings call. As you all know, many of our key operating entities from the residential business, like Mahindra Homes and Mahindra Happinest, as well as from our industrial business, which is Mahindra World City Developers, Mahindra World City Jaipur and Mahindra Integrated Parks, none of them are consolidated on a line-by-line basis. Now, it's customary to start with a little bit of a macro view on the economy and the sector, but I'm going to dispense with that because many of you are deeper and more expert on the macro than I am. In fact, I will use some of the Q&A time to ask you some questions for a change on that.
Let me share some of the key highlights of our performance in the first quarter of the year. On the residential business, we achieved sales of INR 602 crore versus INR 145 crore in the same quarter last year, which is over a threefold increase. Sequential quarter-wise also, we have grown by about 80%+. That, as all of you know, is contrary to what the typical trends in this market are. Q4 tends to be strong, Q1 tends to be a bit softer. But we've been able to grow very strong on the back of sustenance sales across our portfolio, as well as two very strong launches in Bengaluru and Gurgaon. Mahindra Eden in Bengaluru was India's first net zero energy project.
It sets us on course to our pledge that by 2030, all new projects that we will launch will be net zero. And Luminare in Gurugram, which all of you are very familiar with, we launched the third tower there, which is the final tower. Again, had a great response to that. In addition to these two, we also launched a new phase at Happinest Kalyan, which has again done quite well. Over the next several months, we expect to launch quite a few new phases as well as new projects. Earlier this month, we've already launched Mahindra Nestalgia in Pimpri, Pune. This was the land parcel that we acquired last year from M&M, and that has received— That is Pune's first biophilia-inspired homes. Again, has received a great response.
250 units launched, more than 50% of that sold within a month. We expect to launch two new phases of existing projects in Mahindra World City, Chennai, in the coming months, and are also looking to launch the larger Pimpri land, which we acquired in April, as well as the Kandivali project in the second half of this year. From a land acquisition perspective, in April, we announced the acquisition of 11.5 acres in Pimpri. This has a total development potential of about 2.1 million sq ft and a gross development value of about INR 1,700 crores. We are seeing a continued strong pipeline in BD. Roughly INR 5,000 crores worth of deals in various stages of the pipeline.
Interesting spaces that have opened up significantly since we last spoke is one society redevelopment, where we are seeing a lot of action in Mumbai. Ever since we've announced our intent to do society redevelopment, we are getting several interesting inquiries, some small, some big, and we are in advanced process in a few of them. As you know, society redevelopment does take some time to fructify. It requires consent of all the members and various processes to be followed. But we are very hopeful that within this year we will make our first forays into society redevelopment. Collections has also been extremely strong.
271 crores of collection during the quarter continues to be an area where our internal cash accruals are extremely strong and are providing us enough cushion to fund future land investments. Completions were very few in this quarter, and that reflects in the revenues that you will see in the PNL. So there was only a little bit, a small phase in Happinest Kalyan that got completed. On the IC and IC business continues to be an area of great momentum. We had ended last year with about INR 297 crores of leasing. We started this year in the first quarter itself with INR 118 crores of industrial leasing.
This is a business, as I have mentioned in the past, where we have strong forward visibility given the long sales cycles, and we are quite confident and hopeful that this year will be a very strong year for the IT and IT business. Let me request Vimal to update you on the financial performance.
Thank you, Arvind. I, I'll move on to the financial performance for the quarter. The consolidated total income is stood at INR 117.3 crores, as against INR 154.2 crores in Q1 FY 2022. The consolidated EBITDA, including other income and share of profit from JVs, stood at INR 53.7 crores, as against a loss of INR 16.8 crores in Q1 FY 2022.
The consolidated PAT, after non-controlling interest, stood at INR 75.4 crores, as against a loss of INR 13.9 crore in Q1 FY21. Company has debt of INR 327 crore at consolidated Ind AS level, while cash in hand and bank balance is INR 202 crores. Our cost of debt is stood at 6.79% on consolidated basis, while standalone cost of debt for MDL is stood at 6.3%. I'll request to if the floor can be open for questions now. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hello, can you hear me?
Hi, morning, Parikshit.
Hi, Arvind. Congratulations on an outstanding performance. So I really don't have many questions. You delivered on all the counts. But just as I analyze the current quarter momentum on pre-sales and the leasing, it seems to be two year ahead of your FY 2025 guidance of INR 2,500 crores pre-sales and INR 500 crores of leasing. So where do we go from here? I mean, are you upgrading your guidance now? Are you preponing it? So how are you, how are you looking at this number now, these two numbers?
Parikshit, I fully expected you to annualize one quarter. Look, it's been a great quarter. We are, we are extremely delighted with the kind of response we got. But, you know, let's not get ahead of ourselves. Let's... As, as I mentioned, a lot of that is two new launches, which we did. So the key focus is to create that balance in the system, where we bring enough new opportunities, continue to drive sustenance sales. That, that entire balance in the system is very important. We are still at early stages of that journey, so need to fill the top of that funnel.
I mean, you have two major launches coming up, so one in Pune and Kandivali, in the second half. So all possibility looks like this is going to be a record year quarterly. So is it like we're still waiting for more clarity on these two launches timelines, then you will increase your guidance? I'm not able to connect the two points.
lesson I've learned in this business is, it never happens till it happens. So yeah, let's, let's wait for it. Fingers crossed, we should have a good year.
Just secondly, on the BD pipeline, so, we have seen record sales. What I hear from brokers that we had to stop sales in Gurgaon and Bangalore, we had opened up these phases. So just wanted to understand, you've been primarily focusing on Pune and Mumbai, MMR. So how do you see these two, since you have presence, local presence in these two geographies, are you going to go deeper in both these geographies as well? So if you can give some sense on the BD pipeline in these two segments out of the INR 5,000 crore, which you have highlighted.
It's Bangalore, certainly, as we had mentioned in the last call as well, that is the third market that we've committed to opening up. I'm sure at some stage we will recommit to NCR as well. It just, we want to do it in a planned and kind of methodical manner. Every new city that we open up, you know, we must make sure that we have the right team on the ground, the right partners in place in terms of distribution, contractors, suppliers, all of that. And, you know, therefore, spreading ourselves into too many cities too quickly, I think is, it's premature for that. So three cities, at least for the next couple of years, and we'll take it from there.
Okay. Just on the BD pipeline, you said that INR 5,000 crore is what looks like. So it has been pretty much there last quarter also, so it means that nothing has got added here. So if you can give some sense, a little more granularity here, if you can give a breakup of MMR, Bengaluru, and Pune here. And the probability-wise, if you can say, are these, like, really high convert, conversion could happen here, like 60%, 70%? Because last time you did mention 50% of this can get converted. So if you're seeing the probability increasing here on the conversion side.
Yeah, so, not fully right to say nothing has changed, because obviously, we've done the INR 1,700 crore of the complete conversion from that earlier 5,000 that I mentioned. So we're, we're back at-- So it's - 1,700 and then back at 5,000 roughly. So in that sense, there have been additions to the pipeline. Look, roughly, I would say, I'm just doing the numbers as we speak. About... Bangalore is still early days, so Bangalore is a smaller component of it. Probably 20% of it is Bangalore, 40/40 between Mumbai and Chennai, Pune. And there's, different nature of transactions.
There's, there's outright, there's JDA, there's, as I mentioned, society redevelopment, as well as some distressed assets that we're looking at. From a stage of pipeline perspective, I'd say a couple of conversations that are probably adding up to about INR 1,000 crore that are in advanced stages. Hopeful to close them towards the end of this quarter or the next quarter.
Okay. And the balance 4,000 are still like high probability conversion type kind of targets, so which may be more towards-
Yes, yes. These are all conversations where commercials have been discussed and various other terms are being discussed before we can get into a term sheet.
Great. Just lastly, finally, this change in the chairman, Mr. Nanda, after a very long stint here, has been driving this business and up to this level. And, so just wanted to know, the new chairman come in, so what's the thought process? So how is he looking at this business? Though he's been part of as an independent director, so what kind of strengths he brings in, given he's been dealing with real estate for a long time on the legal side. So how does it add to the overall strategy, over the next few years?
I think it's a great addition, not addition in the sense he's been on the board already for five years, but change at the helm. Mr. Nanda has been our founding director and long-standing chairman. In many ways, you know, deeply familiar and entrenched in the business and kind of was one of those entrepreneur founders. He, at this stage of his life, wants to spend more of his time on some of his foundations and the work he does in skilling and senior citizens, and therefore requested to be relieved from the board and he retired from our board.
Mr. Ameet Hariani is, as you mentioned, one of the leading advocates in India, for over 35 years, has built a very strong practice, known to be, particularly in real estate, one of the leading, law firms, Hariani & Co., that, he was, he continues to be the managing partner of. Therefore, brings, deep domain knowledge, understands, the business, and, given that he's already been on the board for five years as an independent director, understands the context of the business, where we are headed, and is completely in sync with what we are trying to achieve.
Okay. That was helpful. I have some more questions. I'll join the queue. Thank you, Arvind, and all the best to you.
Thanks, Parikshit.
Thank you. The next question is from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Yeah, good morning, everyone. First of all, congratulations to the team for an excellent performance and a great start to the year, and hope to see this sort of performance being sustained in the coming quarters as well. So I had some bookkeeping questions on based on what your opening remarks. So firstly, what is our planned spend on land cost and approvals for the entire year, and how much would we have spent in this first quarter?
In the first quarter, we spent roughly about INR 40 crores, and I'm talking about our entire business in without the ICICI.
Sir, your voice is a little.
Sir, your voice is not clear. I could hear static coming.
As in quarter one, we would have spent roughly about INR 240 crores on the, on the real estate side and another INR 30 crores on the IC side to acquire some of the smaller land parcels. So this is a spend now. So as far as visibility is concerned, I request to stay with the guidance which Arvind mentioned in terms of visibility of within land transactions. The nature of those transactions, the kind of transactions which happen, whether it's outright or JDA or any other arrangement or revenue share, that is something which will emerge and based on which our cash outflow will fit. So I'm just very comfortable from a funding of land acquisition perspective, if that is your concern or question. You've seen in the past year as well, operational cash is very strong.
Sorry to interrupt. This is the operator. Sir, there is static noise that is coming. So I'll just, disconnect and reconnect.
Okay.
Dear conference member, we have the line for the management reconnected. Thank you, and over to you, sir.
Thank you. Sorry for the technical glitch. Adhidev, you were asking about funding of land transaction. So-
Yeah. So the number is INR 40 crore or INR 240 crore just before we proceed for this quarter? I couldn't get that.
240.
240. Okay, 240. Okay, thank you. Yeah, sir, please, please go ahead.
So, so very comfortable going forward as well. So as we have said, we've done INR 1,700 crores of GDV accretion in the first quarter, even if we were to do a similar value in the entire rest of the year, it would mean another similar amount of about INR 250 crores. Even the Kavesar land that we purchased, as you are aware, is a staggered payment structure. So the cash, funding will take care of that.
Okay. Sir, so yeah, so to understand correctly, we have spent INR 240 crores and another INR 240 crores, 250 crores for the rest of the year, is the minimum spend, based on the-
I was just giving an example of saying a similar GDV accretion, which-
Okay.
require a similar spend. But again, as, as Vimal said, it depends a lot on whether there's this 5 GDV development transaction, a GDV transaction and outright. I'm taking a worst case scenario, saying everything is outright. Then another INR 200-300 crores is very comfortable.
Okay, so I'll just take it INR 500 crore is the bare minimum sort of spend, which we are doing.
Yes.
Yeah, yeah. Sir, just for this quarter, what would be the GDV of the new launches we have done? There are two launches in Bangalore, Luminare and Tathawade. What is the GDV and how much of the quarter sales have come from these new launches? If you would share that breakup.
Okay. GDV is about INR 1,000 crore between these three. Unless you're taking the similar Eden?
Uh, yes.
About 1,000 crore with the GDV. In terms of percentage of sales, roughly 70% would be Chennai and Luminare.
No, sir, I'm saying out of the INR 600-odd crore for this quarter, how much would be coming from these three new launches? Just,
Yeah, that's what I said, about 70%-75% would be coming. Eden, this new launch in Q1, approximately 75% of the total INR 600 crore is done, which is in Eden, Luminare and Tathawade.
Sir, the line is a little muffled again. That is the only reason I am not clear.
Yeah, yeah. Do you want me to repeat?
No, no.
Ajaydev, do you want me to repeat?
Yeah, yeah. Yeah, the voice was muffled. That is why I was not able to hear.
Yeah.
Yeah, yeah.
Of the INR 600 crore we have sold during Q1, broadly 75% come from new launches.
Okay, okay, around 450.
And Tathawade.
Okay, okay. Okay, okay. For the quarter. Okay, fine. Fine, fine. Yeah, yeah.
The balance from all the ongoing customer sales.
Okay. And the follow-up to that is for the rest of their whatever, launches you have highlighted, right? The Pimpri, the new one we have done, then, Chennai, whatever you're planning, and Kandivali and, Pimpri. So any ballpark, balance, what would be the GDV of the launches we have planned? I know it will be in phases, but for whatever phases we have planned, any indicative, GDV number, the indicative value we are planning to?
So I would say, let me just go through those. I think Pimpri is about INR 1,700 crore. Likely about one third of that is what we will launch, so let's say about 450, 500 crore. Kandivali is about INR 2,300 crore. Again, we will probably launch one fourth of that, so 500 crore there. So added up to about 1,000, I'd say about INR 1,250-INR 1,500 crore.
This is what, something we are reasonably confident of launching? Definitely within this year. I know it, depends on the approvals. I know.
Yeah. We are working quite hard. We, we are on track to launch it in the second half, subject to any external externalities we can't control.
Okay, okay. Okay. Sir, last question is on this construction cost. Now, obviously, last quarter we saw, obviously, because of the global situation, the commodity prices going up, they have cooled down a bit. Now, how are you looking at the construction cost in this quarter? And what sort of price hikes you have taken, and what is the outlook going ahead? That is the last question. I'll come back in the queue again later for more questions.
Good. In a lighter vein, looking at it very, very hard, and my gaze is constantly fixed on construction cost. It is, it continues to be a challenge while, there is, certainly a softening in steel price, et cetera. But, you know, it's not, not to the extent where, we can feel that we are out of the woods yet. So, cost is continues to be a strong area of focus for us. As I've mentioned in the past, we are using three, broad levers to address the cost inflation. One is, design efficiency and value engineering. The second is, procurement and contracting, and the third is pricing. And all these three are being actively pushed.
So in percentage numbers, could you, like, juxtapose what is sort of construction or cost inflation expecting for the year? And we are sticking to our pricing discipline of raising prices by 1-1.5% every quarter. Is that the same template which is being followed, or is there any change to that?
No, it's absolutely the same template. What we've added to that is a bit more dynamism in the pricing, where it's almost become like a yield-based pricing. As sales pick up, as velocity happens, as more inventory gets sold, we move the price up faster, rather than doing just time-bound price increases. And, you know, we've seen that, as Pareekshit commented, in Luminare as well as Mahindra Eden, where even during the launch, we've been able to take price up. So 1%-1.5% is the bare minimum per quarter. We in many projects are able to overachieve that.
Sir, are there any plans to incentivize home buyers with whatever interest rate expected to go up further? Maybe it may take a pause after what has happened, the FOMC meet, but any thoughts on subsidizing costs on the EMI front?
Nothing as of... I mean, to me, that is equivalent to a price discount, so it—this is different structured way of giving a price discount. So, not looking at that actively right now.
Okay. Nothing so far. Okay. Fine, so that was very helpful. I'll come back with more questions. Thank you.
Thank you. The next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Hi, sir. Good morning. Thanks for taking my question, and many congratulations for a great set of performance. My first question is on, you know, you know, I mean, you have partly answered that in the last couple of the questions. But if you can get exact clarity on what sort of launches can come this quarter, even three months, plus minus is, it's okay, but what are the near-term launches that we are looking at?
So in Chennai, we are looking at launching two new phases in the next two to three months. We launched one earlier this month, which was in Aqualily. We're launching the next phase of Lakewoods and the next phase of, or the balance of Happinest MWC, in the next two to three months. We're just sequencing it out so that we don't do all three together. Those will be the imminent launches.
Given how, you know, Kanakapura response has been, are we looking at the second phase this year itself? Because we are almost, like, 75% sold out in that. So, will we be launching that another phase this year, or probably we'll go slow and launch it next year?
We are keeping our options open, so we will get our RERA and be ready to launch later this year. But I want to play it by ear, depending on how we are seeing the cost inflation as well. Because, you know, locking in a price and then being faced with cost inflation is not something I would like to do. So selling it closer to when we actually need that sale to happen and the cash flow to happen would be a smarter strategy. So we'll wait and watch and, as I said, we will keep ourselves ready to launch the second phase. Whether we launch it or not will depend a bit on the outlook on the cost side.
Okay. And both Dahisar and Kandivali should be this year or first quarter next year? Is that a timeline we should look at?
Kandivali, certainly, second half of this year is what we are targeting. Dahisar might take a little bit longer. We are working through some approval-related issues there, so it may slip into first quarter of next year.
Got it. So our beginning of the year guidance, I mean, a target of having 2.5-3 million sq ft launched this year, we have already done 1 million sq ft, so still looks reasonably visible, right?
Certainly. Certainly.
Okay. Okay. And another question on the IC and IC segment. So we had, you know, Jaipur fully contributing this quarter. What's the visibility on, you know, Ahmedabad and Pune? When will that contribute to our IC and IC segment?
Yeah. So we have actually this quarter, hoping to have some strong conversions in this quarter or next quarter in Chennai. So there's a good pipeline that's built up there. Ahmedabad is still a little bit further away, as I had mentioned in the last few calls. We want the right anchor customer there. So while we do have several inquiries for smaller plots, et cetera, it's very important to start with the right anchor, because that sets the tone and complexion of the park. So we are still looking for that breakthrough. And Pune is, you know, I would say 24 months away from a launch perspective. We are in land aggregation stage, and then we get into master planning and approval, so I'd say 24 months.
Got it. And lastly, on realizations in Bangalore, would have been higher given, you know, how the project offering is overall, plus, I mean, right now we are generating INR 7,000 on a sellable. What's the, you know, pricing strategy there in Bangalore project?
We've given the strong response we've seen in the first phase, we certainly seem to take price up, and we've already taken it up during the launch, as I mentioned. The velocity was very strong, so we had good volumes at the entry-level price that we launched at, but quickly took it up after that, and are continuing to see sales at the higher price as well. So we will use the rest of the inventory in the first phase to test out the price elasticity in the market, which will also give us guidance for the second phase launch pricing and timing.
Okay. If you can elaborate where we started and where we are right now?
I think we started at roughly 6,900-something, just under 7,000. We are currently selling at about 7,300-7,400, somewhere between that.
Okay, got it. Thanks. That's very helpful. That's it from my side, and all the best for your future performance. Thanks.
Thank you, Pritesh.
Thank you. The next question is from the line of Prem Khurana from Anand Rathi. Please go ahead.
Yeah, thank you for taking my questions, and congratulations on very good set of numbers this quarter. So I think, I mean, if you could share your thoughts on the recently proposed bill, DESH, I mean, which would come to replace SEZ. How do you see it impacting our ICE and ICE vertical, especially Jaipur SEZ? Because, I mean, as far as I understand, the DTA part won't see any material change, I mean, essentially, I mean, because you don't get any tax benefits. But how about the SEZ part? Would you be required to kind of—I mean, if you are required to kind of go for DESH, would you be required to kind of get it denotified, or it'll get automatically denotified and come under the new bill? Any initial thoughts? I understand it's still early days, but any thoughts would be helpful.
Hi, Prem. I'm glad you picked up DESH. I think it can be a significant upside for us in Jaipur, given we have a large SEZ there, and SEZ demand has been muted over the last few years as some of those benefits have sunsetted. So I think DESH offers a wonderful window of opportunities to revitalize the SEZ area. The rules are still not clear. The draft bill was out for review, but the rules were still being framed when we last checked. So unclear whether existing SEZs automatically migrate to DESH or whether it needs to be reregistered or denotified in some form.
But broadly, what it allows us to do is, you know, have industries operating in the SEZ who also serve the domestic market, and that gives you the best of both worlds. You get, for your export, business, you get the export-oriented benefits, and for the domestic business, you have... So it consolidates the operations. It's much more cost efficient for the client. So we actually think if that intent is fully delivered through the actual fine print of the act and the rules, the SEZ could become even more prime than the DTA.
Sure. And is there any pushback from clients who are looking to kind of lease some space in SEZ, on SEZ side, but then they're waiting for some more clarity on DESH to kind of decide whether they want to go ahead with the transaction now or wait for the bill to come through and then decide. DTA, I understand, I mean, doesn't make any difference, but on SEZ side, because it's been little slow, the SEZ area.
Yeah, so there is a pickup in inquiries. It's still too early to call it, as I'd mentioned, the sales cycles tend to be long. So, so, you know, customers are starting to show interest in the SEZ. I'm sure it's on the back of their own calculations of whether the DESH Bill will come through and in what form it will come through. I'm sure they're doing their, crystal ball gazing and based on that, engaging in these conversations. But, you know, the expectation was that the bill will be introduced in the monsoon session.
Yeah.
Don't know whether we are on track for that yet, but hopeful if that happens, then we will have clarity very soon.
Sure. On our Jaipur SEZ, even with Chennai, what I've observed is, I mean, the gap between the number of customers onboarded and operational has been widening. I think initially we used to have strict timelines. So let's say if I were to take space, I mean, you used to give one, one and a half year to be able to kind of start operating. But for some reason, I mean, some of these tenants have been with us for a very long period of time, but then operations have not commenced as yet. I mean, as things, I mean, if I were to look at Q1 number for Jaipur, especially, we have 120-odd customers and only 69 are in operation, and there's 50-odd customers which are yet to kind of commission.
So does it mean that we will try extending more time to kind of commission operations? Or, how would you explain this, the gap, the widening gap between the operational number and the numbers, I mean, in terms of total customers that we have?
So one big factor to that is the strong sales we've done last year. You know, these would be customers who've been added in the last year and would be in construction phase for setting up their operations. But, you know, it's something that I will need to break down in terms of how many of the aging of this gap between 121 and 69. It's a good point you make. I look at how these
How many?
25-30. Yeah, almost 30 are in construction phase is what Vimal reminds me.
Oh, okay. Okay, sure. And just one last from my side. So when I look at Kalyan phase 2, the second Kalyan that we've launched, and then compare the response, I mean, with the initial Kalyan, the Kalyan 1 that we, when we launched, I mean, we've seen significant success with the Kalyan 1. But for some reason, I think Kalyan 2 has been little slow in terms of sales velocity. So is it because, I mean, the competition has gone up in that area? Or is it because, I mean, we now already have some supply and there's secondary market which is active and which is why we would have seen some slow response to Kalyan 2?
Yeah, so candidly, Kalyan 2 has underperformed our expectation. We have gone into a very detailed postmortem of that launch and what worked and what didn't. The good news is, the product is very strong, and the feedback on the product is extremely strong. We tactically got a few things wrong in terms of our launch preparation, timing, the tactics of the launch, et cetera. And as I said, we were gearing up for a much stronger launch performance. We underperformed on that. But we know what we got wrong, and we will bring it back into market post-monsoon and catch up.
Sure. And just one last from my side, I mean, on Goregaon, so we used to have this biotech SEZ approval for this. So, I think, I mean, before you launch this, I mean, on, I mean, as a residential project or a mixed-use development, you would be required to kind of get that de-notification. Has the process started or is it still, kind of waiting for, some, some, triggers to kind of go and approach the Board of Approval to kind of get, that de-notified?
The process is actually very advanced already. That's what we've been working on over the past year, and there's been significant movement on that, and it's in the last stages, is what I would say.
Sure, sir. Thank you. That's it from my side. All the very best for future.
Thanks.
Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital Advisors. Please go ahead.
Yeah, hi. Thanks for the opportunity, and congratulations on very strong numbers. So first question, I think on the launches, you said 75% got sold in this quarter, and that sounds quite high. So if you can just go a little more in detail as to whether that was by design or we ended up selling more because the demand was so, so good. Just wanted to get some more color on that. And is that sort of the rhythm you want to be on going forward?
So, Rajesh, just to clarify, I think, the point being made was 75% of our sales in the quarter, out of the INR 600 crore, roughly 75% was contributed by the new launches, and primarily-
Right.
Eden and Luminare and Tathawade. Tathawade is a smaller value in the overall scheme of things. But yes, in fact, in Eden, we have sold more than 75% of the inventory. And it is by design. You know, we would like at every launch to sell, maximize the sales, given our focus on cash flow and IRR, much more than on accounting profit. It does very well for us if we sell strongly at launch.
Of course, that is subject to getting the cost versus price equation right, which is where I said, you know, we would like to keep, we would like to build that capability, and we've demonstrated that in these two launches, where even during the launch, we are able to take price up, and, and still maintain the velocity.
Yeah, no, that's terrific. That's wonderful. My second question is on the land prices. You know, as you talked about your pipeline and wherever you are looking for outright, what are you seeing on the land prices? Are they starting to stabilize or they're still moving northwards?
Land prices are moving northwards. There is a lot more, since everybody is talking up the demand cycle being strong in residential real estate. Landowners also read the same newspapers and kind of have heightened expectations for land valuation. But you know, it doesn't worry me too much, because at the end of the day, land is anywhere between 10%-20% of the top line. So even if it inflates another two to three percentage points, from a margin perspective, and there are many ways to recoup that, from cost of construction, from pricing, time. So yes, there is more, there is a hardening of land values, but I'm not unduly worried about it.
Great. And, I know you talked about the planned launches this year, but I missed it. What is the total value of the planned launches this year for the rest of the three quarters?
It's about INR 1,200 crores of GDV put together across all these.
Okay. Okay. So theoretically, we could be getting around 70-35% of that sales volume this year?
Yeah, those are two different answers to different questions. You're not supposed to interpolate the two.
Okay. All right. All the best. Thanks.
Thanks.
Thank you. The next question is from the line of Himanshu Upadhyay from O3 Capital. Please go ahead.
Yeah, hi. Congratulations. Am I audible?
Yes.
Yeah, great set of results. After a long time, it's a positive surprise. Really appreciate the numbers which have come up, okay. My first question is on the Jaipur SEZ, okay, or the leased area which is happening. We see pretty... means, let's say a few years back, the traction was more generally on the Chennai side, and Jaipur was, slower, okay? Now we have seen a significant improvement on the Jaipur site, but Chennai is slightly lower, okay. So what leads to a faster absorption in a particular market?
And will it be also in, let's say, the newer launches, which will be, let's say, in Ahmedabad or Pune, and new things which will happen? That once the area becomes popular or favorable, the traction on leasing will be much faster, and then it will slowly taper down, or just because the one vendor is there in a large OEM is there, so a lot of vendor comes up, and hence, the traction happens. Can you elaborate on the velocity and what is leading to such a good traction on Jaipur right now?
Yeah. So many factors go into that. I think first and foremost is the team on the ground. So I give a lot of credit to Rajaram and his team, Anuj, who leads the business development in Jaipur. You know, they've really put their foot on the pedal and delivered a strong trajectory of leasing in Jaipur. But yes, there is external factors as well. You know, state policy, how attractive is the state for investment? What kind of industries are they courting? And is there a momentum in that industry? So, for example, right now we are seeing a lot of inquiries in renewables and EV, electronics, those kinds of spaces.
So, there is a combination of our execution plus partnering with the state government and riding off their the momentum that the state is seeing. There is certainly a kind of spiraling effect, and it's not just about principal OEM versus supply chain, as is the case in, you know, for example, we have JCB as a large client in, in the World City, Jaipur, and many of their vendors over time have also set up facilities there. That is one kind of model of spiraling. But even without a principal supplier relationship, you do find that, you know, an initial momentum of leads and conversions leads to a lot more interest. You know, there is, how you call it, a herd mentality or a gravitation to these clusters, which is very perceptible in their life cycle.
Okay, and one thing. In the Mahindra World City, Chennai, we have 60 acres of land outside the boundary, okay, MWC boundary. And we have stated that we want to do that outright sales, okay? Is it or that is also a lease, what we'll give? Because on the slide 29, it is planned as land sale. And others, what I understand, in World City projects or in the commercial space, we generally lease land. Why would there be a difference, or I am going wrong somewhere?
Yeah. So because this is outside the boundary and tend to be scattered lands. There are a few contiguous land parcels, but many of them are small, scattered lands outside the boundary of the main SEZ and DTA area. We do go for a sale model because we are, you know, the whole point of -- we are not providing services there, so then doing leasehold makes no sense. So there is no long-term value creation there.
Okay, okay. Thank you. And one more thing. In case of Jaipur, we see, commercial activity has reached a scale, okay, and, but still the residential and social has not started picking up, okay? Or what would be the stage when, the residential and social starts picking up in a, Jaipur type of, Mahindra World City project? Can you, can you elaborate on this?
Yeah. We've had our plans for the social and residential zone, kind of in our top drawer for the last couple of years. We have been evaluating the market periodically to see what's the right time to launch that, and are currently in the process of doing the same. It's kind of striking the right timing between how much employment is there, and therefore, and the profile of that employment. And would they buy residential apartments? Would they like to live in that same location with mid-market or value housing? So that, that's what we constantly monitor, as well as developments in the neighboring areas. How good is the quality of housing there? Therefore, if, you know, the whole promise of the integrated city has to create value over and above what is available in the neighborhood.
Okay, and one last question from my side. See, historically, in few years, the JD was becoming much more popular, and again, we were also interested in that model. And again, society redevelopment, okay? But today, the raw material and inflation is in a flux, or I would say it is on the higher trend, okay? And the certainty on the price rise, how sustainable, it's not so sure. So what - how do we assess the land share or revenue share, or we would like to go for the outright purchase of land? Some thoughts of yours, and what risk mitigation efforts can be done once a land is, or let's say a JD is done or a society redevelopment is, area share is being made, and then the inflation goes up, okay?
Yeah, so those are constant calculations and scenarios that we keep creating and playing with. So you're absolutely right. It's very hard to be deterministic in an uncertain cost environment, cost as well as price environment. So we do our classical sensitivities and scenarios to understand what elbow room we have. We have compensating mechanisms. Like I mentioned, we are seeing a hardening of land prices, but we feel that we have enough elbow room on pricing and cost of construction to mitigate that. So, you know, those are the typical levers we employ. From a type of transaction perspective, JDA versus outright, we don't have any bias or preference to either. We do what's right for that particular location and that particular transaction.
In some cases, the landowner is very clear that he only wants a joint development, for his own, reasons of income and tax and various other things. In other cases, they are very clear they want, outright. So it, it's often not a clear choice about, you know, for a particular transaction, you don't have both choices on the table. More often than not, it is one or the other.
Okay. Okay. Thank you for my time, and best of luck for future quarterly numbers. I hope the momentum continues.
I hope so, too. Thank you.
Thank you. The next question is from the line of Shaleen Seth from Seers Fund Management Limited. Please go ahead.
Hello. I think congratulations on these numbers. We are really happy to see this thoughtful aggression on the residential side. I have one small question. Most of my questions are already answered, so this is one small question on the Origins Chennai part. I see it's been missing our sales for the past one whole year, financial 2022 and the first quarter, 2023. So any strategic reason as to why are we not aggressive on the IC side in Chennai? Because going forward, we have close to 300 acres in this data when Origins two also comes in.
Shalin, great question, and your observation is absolutely right. I mean, I'll only answer with, watch this space. As I mentioned, the pipeline is building up nicely in Chennai. We, we should be able to show some significant change in trajectory there in the next two quarters.
Okay, that sounds nice. Secondly, on the Eden side, the project, the whole idea seems extremely good. And going forward, are we aggressive on this side? Do we plan to launch more of Eden around that area, in Bangalore, maybe MMR, Pune, et cetera?
Yes. So if you're referring to net zero as a concept-
Correct.
As I mentioned, we are committed by 2030, that all our projects will be net zero. Every new project we do will be net zero. This is a full, 20 years ahead of the Paris Agreement and 10 years ahead of what the group has committed. So we are aggressively moving down that path. Eden was our first such project. But, you know, pieces of that have been done in earlier projects. Obviously, Eden is a culmination of work that has been done across various projects before that. That was net zero energy. We still need to crack net zero water and net zero waste to make it entirely net zero, and you will see future projects will have an increasing tilt towards that.
That sounds good. Thank you very much. That's fine.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Arvind Subramanian for closing comments.
Thank you, Jay. So thank you to all of you for participating in the call. As we discussed, we've had a very, very strong quarter. It sets us up extremely well for the year. Always when your first quarter is good, you know, you walk forward with a lot of confidence. On the residential side, we are seeing a good pipeline of both land acquisition as well as launches of the land that has already been acquired. And on the industrial side, we do expect this to be an extremely strong year, and matching or bettering the performance of the previous year. So fingers crossed with your good wishes and blessings, looking forward to continued strong performance. Thank you very much.
Thank you. On behalf of Mahindra Lifespace Developers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.