Good afternoon, everyone, and a very warm welcome. I would like to thank everyone for joining us today for this conference call. Today we have with us Mr. Amit Kumar Sinha, Managing Director and CEO; Mr. Vimalendra Singh, CBO, Residential; Mr. Vikram Goel, CBO, Industrial; Mr. Sriram Kumar, Chief Financial Officer. Today's meeting will begin with a brief presentation covering the operational and financial highlights, following which we will reply with the questions asked. I would now like to hand over the conference to Mr. Amit Kumar Sinha, Managing Director and CEO of Mahindra Lifespace Developers Limited. Thank you, and over to you, sir.
Thank you, Dev. Hello, everybody. First of all, let me wish all of you happy Dussehra and happy Diwali in advance. A pleasure to speak to you with our results. I will start. Hopefully, you can see the presentation. On the screen you see one of our Chennai project, Lakewoods, which has finished another phase of the development. We have received OC. We have another four towers under construction and development. So that you see two towers are sold out, two are in the process of being in the sales mode. So, a nice project. If you go forward. Yeah. I think, we just got RERA for Mahindra Rivenza. This is the project we have in Mahalunge. Why don't I play this video, and hopefully you can see this from your screen. Just go ahead, please play this.
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This is our project. The experience center is an outstanding project execution for you to get a sense of what the project is all going to be about. If you ever get to be in that part of Pune, please let us know. We love to host you. Coming to the business presentation. Again, this picture is for Mahindra BeaconHill. At the top, this is a 221-m tower, and at the top, we have a very nice club lounge, which hopefully will be the highlight of the project. We are executing on a well-defined strategy. I will not go into details of it too much. You have seen this before. It is almost three years since we put together this. I think, in the next few days, we are going to fine-tune this a little bit more.
I think many of the things that we had planned in terms of ambition, I think we feel that we are well on track. GDV addition of INR 50,000 crore is something that we have already amassed. It is built on six principles, building blocks. Well-engineered portfolio choices, four m arkets being Mumbai, Pune, Bengaluru. Focus on premium mid-premium segments. Exit from affordable. Similarly, very strong, robust BD pipeline. Focus on high quality, superior customer experience. We cannot forget the most important part of value chain is product execution. How do we do first time right, provide on-time delivery? Then how do we leverage standardization in design and specs?
IC continues to be a bellwether for us. You have seen how this business has done well for us and given us the contribution towards the in-year profitability. Then all of this needs to keep in mind financial discipline. These things are known to you. They are also well supported by some of the other building blocks at the bottom. Talent, culture, and using technologies. I think, our goal is to make sure that we have a multi-year track record of executing on all these building blocks and demonstrate a business that is scaling well, because we are ensuring the adherence to these strategy elements.
If you move forward. The key highlights for us is, on the H1 side, Residential, we are roughly INR 1,988 crore, close to INR 2,000 crore, 60% year-on-year growth. A successful launch of Rainforest, which is Bhandup. Some of you have visited and really like the experience center. BeaconHill, we launched, good early successes. Again, the experience center is ready. We should be able to welcome you soon. Citadel Phase 3, we already had early two phases, and the Phase 3 has really taken off, and our sales have done really well. Sustenance sales have contributed 40% of sales this time. We used to have a big part coming from launches, we are actively trying to have a portfolio that gives us good sustaining sales.
We have received RERA for the Mahalunge Phase 1, which is Rivenza, the video that you saw. Lakewoods picture that you saw on the very first slide. We continue to have a strong focus on execution. Our Tier 1 contractors, we signed a large contract with another Tier 1 contractor last quarter for BeaconHill and Rainforest capacity. We have received, in the first half, OCs and a few others are in the pipeline, which will allow us to recognize both revenue and profitability. Good momentum on the BD side, GDV addition of INR 7,100 crore, and the total continues to be at a healthy INR 50,000 crore.
On the IC side, we have cleaned up some of the legacy OBL lands in MWC, and that's why you see a higher number of acreage and a slightly lower crore number because it is outside the boundary land, and I think the realization of those lands is much lower than what's inside our boundary for industrial park. H1 has been slightly lower than our expectation. The reason is some deals are in the pipeline that are about to complete. We should hear about those closures later this month, b ut definitely in this quarter, you'll get a lot more conversion of the pipeline. We are accelerating the land aggregation in Origins Pune.
Financials-wise, I think the overall FY 2027 first half consolidated Residential and IC sales and revenue is INR 2,101 crore, PAT of INR 102 crore, healthy resi collections in H1 FY 2027, and then robust balance sheet with net debt to equity, which is negative. Very healthy cost of debt, 7.55%. Very good balance sheet from that point of view. I think the GDV story continues. As you can see, we have been able to maintain a very strong GDV, even though we are converting GDV into sales. You see the left-hand side as current inventory from the project that have already been launched. Future phases of current phases. Citadel commercial will be a tower that will be launching next financial year. Then a lot of pipeline project that are pre-launch at this stage.
The color blue depicts the new addition that we have done so far in this year, first half of this year. Sai Baba, we have added another society, roughly INR 1,000 crore. Chembur, we already had two societies in our INR 1,700 crore, so another society of INR 500 crore has been added. You saw a greenfield acquisition of K2 in Kandivali, which is INR 5,600 crore. So overall, a strong, healthy portfolio of GDV, and we continuously look at the portfolio and look at how we can convert this portfolio into sales, as well as how do we augment this portfolio from good quality deals which are available in the market. I think I'll just quickly cover this. I think maybe I'll ask Vimalendra, whether you want to touch upon the recent two deals, Chembur 3 and Borivali 3.
Yeah. Thanks, Amit. In Chembur, if you all remember, actually, we announced an acquisition last year. This is the Seema Society and Twinkle Stars Society. This is actually just five minutes from Diamond Garden, which is a major landmark in Chembur. So we had the opportunity to expand this particular cluster, and that's what we did. We got a small society, and we have done the requisite paperwork. Given that there's a proximity to the road, we have been able to get a higher GDV. Though the land parcel itself, as you can see, is very small, but we are able to get a higher FSI given that it's actually on the road. Right? So with that, the cluster becomes roughly INR 2,100 crore, and that gives us reasonable scale and size in that particular market.
Similarly, as Amit mentioned, in Borivali, we have already announced we have this Sai Borivali cluster. We had the opportunity to acquire one more society. We went through the process, and happy to say that we have successfully acquired that. The team is now working towards, say, how soon we can launch that particular project as well. But with that, again, we have roughly INR 2,800 crore of GDV in the Sai Baba Nagar micro market of Borivali, which is a fast-moving market, and doing very well. These two also demonstrate that wherever we are present in society redevelopment space, we are looking to create larger clusters because that allows us to have efficiencies, economies of scale, and we can truly give a superlative product to all our customers. That is the intent going forward.
Kandivali has already spoken, so that is a greenfield project. Again, we are doing this right balance between redevelopment and greenfield, so that we can have a predictability of launches. As you are aware, greenfield is quicker to the market. Redevelopment takes a certain amount of time because of additional steps. But we are mindful of that, and we have done a good job H1. We hope to continue the momentum in H2.
Thanks, Vimalendra. I think if you look at the launches, our first half, roughly INR 1,988 crore reflect sales from the first four on the right-hand side, Rainforest, BeaconHill, Citadel Phase 3, Lakewoods F and G. Mahalunge RERA has just come through, so you will see the impact of Mahalunge in quarter three, quarter four. Then we are at the cusp of getting our approvals and PAAA done for Sai Baba. IOD is already there. Navrat is similarly in the approval process, Navrat 1. WestEra, again, is going through the DA and PAAA process. So hopefully, we will be able to launch all of them that you see there, the three remaining, or at least two of them is something that we really expect to bring to the market in H2 of this year.
I think you have seen this slide. I think building a business requires us to fine-tuning our new launches and sustenance launch plan. FY 2028, as you have seen, K2 will play an important role, so it has been added there. Mulund is another one. We are hoping as we look at FY 2028, a large number needs to be coming from sustenance, which is something that we really are looking forward to. If we launch some of those projects this year, they become sustenance for next year. We are hoping to see a lot more launches coming from sustenance. 2029- 2030 are reflecting the current pipeline. Let us hope that we augment that little bit more as we have a very healthy business development pipeline.
In the past, some of you asked, "Are we going to slow down in our business development effort?" The answer is no. But the land prices have run up quite a lot, so we are very careful with any kind of business development. We want to make sure those are strategic locations, they make sense to our existing strategy, existing and future strategy. Then financially, we are not taking any risk. Given the slight slowdown in the market in terms of velocity, the value makes it up, because the values have gone up, the pricing makes it up. But overall, there is slight slowdown in the velocity side. But post-Iran- U.S. war, I think the costs have also gone up a tiny little bit. That tiny little bit adds up if you look at all the projects across all the years, across all the commodities.
So to ensure that we reflect the market sentiments, we need to make sure that each and every project meets our financial guardrails. That is something that we avoid to dilute, even in many strategic projects. So it has to make strategic sense, and it has to make economic sense. So that is our plan. I think IC&IC business is something that is, as I said, had done well. I think H1 of this year is a little bit muted. But we do have committed deals which we are expecting to close in H2, and a big part ideally should come from quarter three itself. So I think Vikram is right here. He is shaking his head that he will make sure that that happens. But I think we are quite excited about this business, which has done well for us.
Then, this you have seen. I think a good amount of land opportunity, but we are also now taking a 10-year look at our IC business. I think a lot of financial rewards are coming from land parcel that we acquired 20 years back or 10 years back. But I think the time is ripe for us to ensure that we bring to market the bottom two, Origins Ahmedabad, then Origins Pune, where land acquisition is going on. I think a lot of work has happened. Some more work required for Origins from a commercial point of view, and then we have to get ahead with some additional approvals. Origins Pune, I think it will take a year or two for us to get the continuity of land complete. I will hand over to Sriram for this financial highlights.
Thanks a lot. On the financial highlights, just wanted to capture a few points. On the Residential side, we did about INR 1,988 crore of pre-sales in H1 FY 2027, which is a 66% year-on-year growth. On the IC side, while the revenues were a little muted, primarily because of the lower leasing activity, the expectation is it will catch up in H2. On the GDV side, we did about INR 7,100 crore as against INR 5,200 crore last year in the first half. As you would now recollect that we did about INR 18,000 crore last year, and we are working towards it. On the Residential collections side, we did about INR 1,152 crore. Some of the billing milestones and the launches collections are stacked up towards the end of the September. So you would see that collections picking up in Q3 of this year.
On the net debt to equity side, we are at a healthy level at - 0.28%, with a cost of debt at 7.55%, despite all the disruptions on the macro factors impacting the interest rates. Moving on, the segment-wise results. As we can see that the PAT for the first half of the year is about INR 102 crore as against INR 99 crore in the first half last year. Resi and IC were equally represented in this first half, INR 56 crore for Resi PAT and INR 46 for IC business. The couple of points to highlight here is we were able to get some cost savings from our existing projects where we have already received OCs for more than six months, and we were able to realize the cost savings in H1 FY 2027 on the Residential side.
On the IC side, we also had profits from sale of our stake in Ample Parks, which got reflected here. Overall, strong performance financially from both the Residential and the IC side. Moving on the free cash flow side, we were at INR 341 crore of operating cash for H1. Again, given the collections are expected to come up in Q3, you would see that the operating cash flow pick up in H2. As far as the land outflows is concerned, we had spent about INR 332 crore in the first half of the year and with a healthy closing cash balance system-wide at INR 1,036 crore. From a project breakdown perspective, we have an estimated cash flow of roughly about INR 15,280 crore overall.
This includes our existing ongoing projects, future phases of current projects, and also the pipeline projects to be launched. This doesn't include Jaipur and Mulund, which are included in our GDV, but not forming part of the cash flows as we are still working on the business cases for those. Thane is included, and we are expecting INR 15,000 crore of cash flow to happen over the next few years as our existing projects take shape. On the financials consolidated P&L side, we covered it briefly earlier on the segment results. Overall, INR 102 crore of PAT for H1, INR 16 crore of PAT in Q2, and INR 86 crore in Q1.
For the full year last year, we did about INR 298 crore of PAT. On the balance sheet side, no material movement. A couple of things to highlight. Our cash position remains robust. Our borrowings, we have been steady at the INR 600 crore level, which includes the ICDs from M&M. Also on the inventory side, these changes reflects the new projects that were sort of brought in during the quarter and during the first half of the year. Overall, the balance sheet reflects a healthy position with a net worth of around INR 3,600 crore.
That is it, I think. Thank you, Sriram. I think it is very helpful. I just want to highlight two very small thing that you saw INR 300- odd crore of cash outflow for land acquisitions. The K2 transaction closure happened last week, which was another INR 400 crore.
Right.
So that happened in Q3 technically, but that is something we have already spent in this year. So it is closer to—
INR 700 crore.
INR 750- odd crore, rather than just INR 300 crore. Given our desire to scale the business, that will continue to be a primary focus for us. Second is a subtle point. I think we have been very conservative in terms of delaying recognizing the savings on the project for which we received OC six months ago. I think that we cannot change the economics of those projects which were previous financial year, but it reflects the strength of our operations where we have been very consistent in terms of recognizing revenue and PAT, which is conservative.
Then we have additional PAT coming because we released the savings that were there, but we waited six months out after the OC was received. So that may show as a different line item, but it is actually operating income from business Residential. Those are two small things I think I just want to underscore, Sriram, as you—
Yeah.
—as you highlighted.
Thanks.
Yeah. Good. Today we should open up for questions, right?
The first few questions are from Parikshit.
Yeah.
Few questions are for Residential and few are for industrial. I will start with the Residential first. What are the business development plans for the rest of the year after INR 7,100 crore of GDV for this H1? What is likely launch of GDV for Q3 FY 2027 with robust H1 FY 2027 pre-sales? Do you think it is possible to achieve higher end for the financial year 2027?
So let me take the BD question, and Vimal, you can take the sales question. Those are the two questions. I think, Parikshit, you've been watching our journey from a close range, and we've learned quite a lot from your perspective. Thank you for this question. I think from a BD perspective I think we want to maintain the momentum. I think our key objective has been to achieve a INR 10,000 crore pre-sales target, which we think we are well on the way. But there'll be some high growth years, some moderate growth years. And I think this year I'm hoping it'll be a higher growth year for us. We were INR 3,400 crore last year, FY 2026, I'm hoping will be a healthy growth year this year. Healthier growth year.
I think— and we don't want a situation where we are starting to deplete heavily from our GDV. So we'll continue to add more to the GDV, but we are absolutely careful given the market there is and the land prices. They're a little bit out of sync as of now. The land prices expectation are still high. But the market economics may be slightly lower, from a sentiment point of view, from a cost point of view. So we are doing very careful assessment of the pipeline. Over cost, under price as we look at our business development pipeline to make sure that those deals will work. And if those deals work with those strong hurdles we'll take those deals.
We don't have a challenge of number of deals. It's a question of picking the best deals, deploying our capital to those best deals, and making sure that we are able to launch them at the earliest. So, I think in last time we spoke, I had given a number of anything between INR 10,000 crore- INR 20,000 crore is something that we will do. We have done INR 7,100 crore in the first half. So I think we'll definitely be falling in that range, ideally on the higher side rather than the lower side. So that's a quick response to your BD question. I think the second question was on sales. How do you convert BD into sales?
Yes, thank you, Amit. Hi, Parikshit. So on sales, as was covered in the presentation earlier, we have got the RERA for Mahalunge, which is our Pune project. And the market activity has started, so we are looking to launch somewhere in the first half of December. So that is one conversion. There are three more projects we are hoping to get the approvals. Two are redevelopment and one is greenfield. The redevelopment ones are, one is in Borivali, the other one is in Santacruz. We are at this as we speak, we are going through the PAAA process. And hopefully we should be able to bring that to the market in H2. There's one greenfield project in Bengaluru where also the approval process is going on. That also we should be able to launch in H2.
With these four projects, I think, the guidance that Amit has actually given earlier to the market, we should be able to reach that guidance numbers, right. We had close to INR 2,000 crore in H1. We are hoping that with these launches plus the sustenance, the inventory which is available with us, we should be having a good H2. That is how the team is gearing up. That is how we are thinking. I hope that answers your question. I think we are on a good wicket. We are playing very carefully in terms of, as Amit said, the new acquisitions.
We are also working in a very disciplined way to ensure that we actually maximize sustenance sales b ecause what is happening is, as the market stabilizes, steadies further, what is going to be very important is that how well you are able to execute on sustenance, because that is a low decibel kind of an activity. It requires a lot of discipline of execution. It requires a right allocation of sales expenses as well. We are in H1 at 41% in terms of sustenance sales as a percentage of overall sales. We want to continue to work on that space. Of course, we expect to get good highs from the launches as well. I hope that answers your question, Parikshit.
There is one more question on Residential from Parikshit. Any update in approval status of Thane likely launch?
Yes, so we are looking to bring Thane to the market, in the next fiscal year. I will not be able to comment on which quarter, but let me tell you that the work is going on full swing with respect to the design and certain preliminary approvals which are needed. So we are in good space as we speak. We will get back to you with more details as and when we make the progress.
Okay. Next question is on industrial from Parikshit. Industrial parks, can you update us status on Chennai, Ahmedabad, Jaipur, and Pune? SEZ de-notification in Jaipur, Pune, and likely launches.
I think they are all in different stages. I think Pune, as I explained, is still aggregation and contiguity is our priority. We will start applying for approvals when the aggregation is at a critical mass where there is all the access contiguity as well as land parcel contiguity. Ahmedabad, I think there is no issue with land aggregation. We are trying to secure some special power and water approvals, which are on top approval that we already received. Given Gujarat is a different market. They have also announced a data center policy. We believe that our location could be appealing to some of those clients. So that is going on. With respect to Jaipur, I think the progress on SEZ de-notification, we are working with the state government. The efforts are already underway.
We expect to get some clearance from the state government soon so that we can go through center for the final approval. So that is where we are. In terms of OC 1 Origins Chennai with Sumitomo. OC 1 has all the approvals. OC 2A has all the approval. OC 2B, we are again finishing some amount of aggregation before we apply for the launch. We expect that whole process to take 9- 12 months after all the aggregation have been done. So that is the quick status of our industrial assets.
The next question is from Trisha Bhatia, from Anand Rathi. H1 Residential pre-sales are already at INR 1888 crore. How should we think about the H2 run rate, particularly with Mahalunge, Sai Baba, Navrat, and WestEra, which are expected to get launched in the next half year? Could you give us update on the launch readiness of Sai Baba, Navrat, and WestEra?
Yeah. I think I will give the first part, and then Vimalendra, you can jump in with that. I think the first part is, we have given a guidance for this financial year of INR 4,500 crore- INR 5,000 crore, somewhere between that. Pick a midpoint, maybe INR 4,750 crore is something that we will target. Of the remaining four which are not captured, Rivenza, which is Mahalunge, the approval has come, RERA, and it is in the EOI and launch phase. The other three are in the pipeline. I will let Vimalendra comment on expected timeline. Maybe at a Q3, Q4 level, you can share.
Yeah. Sai Baba, WestEra and Navrat, you asked specifically when we will bring WestEra and Sai Baba are both redevelopment projects. As I mentioned earlier, we are going through the PAAA process. You have to go through these mandatory processes. Sai Baba is a fairly large project for us, where the number of tenants are very high. It is basically six societies. We are working through it.
We hope to be able to get the requisite approvals also by the end of Q3 or latest by mid of Q4. We are definitely targeting for launching as early as possible. Similarly, for WestEra, I think we are targeting end of this coming quarter. Q3 end is when we should be able to get a significant amount of approvals. Navrat is greenfield, so we are going through the approval process there as well. There may be a certain amount of bunching of all these projects when we launch.
Next question is, can you help us understand the traction in new launches like Rainforest, Mahindra BeaconHill, Citadel?
Common questions, which are. In terms of the new launches that we have done, we have seen actually very good traction. I am very happy to inform you, one is the velocity, the other is APR, which is a price realization. Across all these projects, I think we have commanded a price premium in the market, while actually not compromising on the velocity. In terms of Rainforest, when we launched, we had done close to INR 600 crore, and now it is in the sustenance phase, which is also very healthy. Similarly, in terms of Citadel 3 is actually a phase launch. It is not a new project. We had already done two earlier phases there. This was the third phase, and again, the product has been received very well at a price which is slightly higher than the micro market.
BeaconHill, again, our re-entry into the South Mumbai market, as we had said earlier in the past. We have done well. In terms of specific numbers, we will be close to INR 300 crore. But again, as I said earlier, we are at a price point which is significantly healthier than the micro market, and we want to continue it that way, given that it is a single tower with limited inventory. We really want to make that address in that particular micro market, and we are seeing good traction. Now in the sustenance phase also, we are getting a lot of inquiries. All the projects have done well, both in launches and in sustenance.
The next question is, the current INR 15,300 crore net cash flow assumption on INR 50,000 crore GDV also include land cost we are spending on the outright projects like K2 and others?
I will take this. This is INR 15,300 crore is the cash flows from our existing projects from hereon. Whatever CapEx is already incurred, it is not taken into account. It is after that.
It is already taken.
Yeah.
It is already—
It is already spent. INR 15,300 crore is the cash flow from hereon, which we will expect over the years from our projects.
Let me just put it, I think Sriram, maybe just want to clarify. From INR 15,300 crore, there is no other spend towards land.
Yes.
The land spend has already been taken into account.
For outright.
This is a net cash flow that we will get. So collections minus construction spend, minus some of the other spend to support that from an overhead perspective. That is what.
Yeah.
The next question is, on redevelopment projects, why Sai Baba Phase 1 and Phase 2 launches are in FY 2027 and FY 2028? Why is the Chembur project getting launched in FY 2029 while we acquired it in FY 2027? Next question is, normally what is the timeline to launch society redevelopment projects after signing the deals?
Okay, I will take that, Amit. Let me share a happy news in terms of Chembur. We have actually concluded the development agreement, and we have registered it. While we had shown FY 2029 earlier, we are working very hard to actually prepone that project. But we will actually let you know the exact time once we are significantly ahead in the approval process, n ut definitely working to see if we can expedite that.
I think just to clarify, Vimalendra, this reflects Seema and Twinkle Star. That is INR 1,700 crore.
Yes.
It does not reflect the latest acquisition of INR 500 crore, right? So the good news is, for Seema and Twinkle Star, the DA has been signed, right?
Executed.
Executed. What that means is the next critical step is for us to do the detailed design as well as all the PAAA process with the residents, and that process will take a few months. It is a mid-size society. It is not too big, it is not too small. So just the time taken. We typically take anywhere from 6- 12 months. And I think we are working hard to accelerate from 2029- 2028, and that is the challenge Vimalendra and his team has taken up. How do we move some of the 2029 society redevelopment to 2028 in our efforts?
Okay. The next question is, there is a reversal of INR 25 crore in the revenues. It is for which projects, and it is booked in other income?
Yeah, I'll take this. As Amit explained, this is the cost savings that—
Reversal of cost is what—
—cost.
Okay. Yeah.
This is the cost savings we realized from our existing projects. There was not one particular project. We had a few projects like Tathawade, Nestalgia, Eden, Luminare, and Vicino, where the OCs have been received for more than six months, and we were able to recognize the cost savings from that project. We waited for six months before we took them.
Yeah. As I explained, we have been very conservative because we waited, OC, all kinds of settlement with all kind of contractors, all payments made, and this is after all that and six months. I think maybe ultra-conservative, but I think it is a good way to ensure that we show the savings only when all costs are actually taken into account. That is what we have done so far.
Can you please put some light on the launch of the Santa Cruz West project?
The WestEra project in Santa Cruz. It is a great location, firstly. As I mentioned earlier also to other questions, we have received the IOD. At this point, we are going through the PAAA process. After that, typically in a redevelopment project, what happens is after PAAA, they will have to vacate, then demolition, and then the CC. So we are working hard to see if we can actually bring it to the market in next two to three months. So that is the current status.
Next question is for Industrial. The question is, though we have sold 38.9 ac versus 35.6 ac in HY last year, but sales revenue are down 50% in the same period from INR 219 crore- INR 113 crore. Whether the realization per acre has been dropped?
Yeah, so I will take this. Yes, the area sold is 38.9 ac versus 35.6 ac. But what we sold in the first half this year is OBL lands. These OBL lands are outside boundary lands, and their realization tends to be lower compared to our regular industrial lands that we sell in Mahindra World City, Chennai. You would see that primarily because the OBL lands were sold in this first half, the realization appears to be lower, but it is actually not the case. Also these—
How much is OBL land?
34 ac. Roughly out of the 35.6 ac, 34 ac was OBL land, where the realization was lower. In fact, actually kudos to the team for actually cleaning up the land and sort of bringing it to the market. This has been in the works for quite some time, and the team were able to basically bring it onto the market and execute a transaction during the first half.
The next question is, can you tell us the synergies between the Mahindra Holidays and Lifespace as they are coming under the same umbrella? Can Lifespace build the properties needed for Holidays?
I am still in the process of moving to Mahindra Holidays. There are some synergies, some opportunities, but we will have to look at them very carefully. I like to highlight three areas. The first is the functional synergy. Functional meaning how do we actually benefit from scale on both sides? If you are doing projects together, can we have purchase synergies? Can we have contractor synergy? Can we have other kinds of approval synergies that are across both sides? I think that will show improvement in cost, improvement in time, hopefully improvement in customer experience.
The second is from a business point of view. I think there are two or three areas where it could be relevant for us. It could be, let us say, senior living, which we are starting to look at in a serious way, as you can anticipate Mahindra Lifespace would be very good from a development point of view, but the senior living requires a good amount of services aspect. Mahindra Holidays would be quite relevant. So we are trying to build a team, a business in which both of them can coexist. That is a great example of synergies on the business side.
Another example is serviced villas, where I think if you go to a little bit outside the urban locations where Mahindra Lifespace is playing and we are able to secure a location that is good for second home villas, but also good from a resort point of view. So we have to find those locations. Our desire is to create a community where there will be a resort, and there will be serviced villas surrounding those, which can very well be managed by the resort service team. That is very important because when you buy a second home or a villa, service villa, one of the challenges, who is going to take care of it if you are not going to be using, like as a first home.
Now the maintenance, caretaker, all that is something that requires careful service levels. That is where I think Mahindra Holidays would actually be very relevant. Third and final part, which we are looking at is, from a branded residences point of view. As you know, the high end of the market continues to be healthy. Branded residence means you will be able to develop very high-quality residences, but those residences demand high-quality services, hospitality kind of services, which is where Mahindra Hospitality is also quite strong.
Mahindra Holidays has also launched the Mahindra Signature Resorts, which is highest level of service for non-members, for regular guests, and I think that kind of service level can be brought only in branded residence. So Mahindra Lifespace, while we are evaluating this at this stage, and given our sister company, Pininfarina, there might be opportunities for leverage more of the group, not just holidays. These are three examples. It does not specifically include construction from Mahindra Holidays because their resorts, their assets are located in very different locations than the urban centers of Mumbai, Pune, Bengaluru, where we are focused. They may be looking at maybe Jaipur, where we have decent amount of land.
There could be small synergies there, but our synergies will not be built on going to far-flung areas and helping construct those resorts at this time. That is my quick summary, and it will develop as I spend more time in the business. We have a lot of strong capabilities on the Mahindra Lifespace side, especially project execution, procurement, which is my first point on functional synergies. That is something we really think will help improve, not only Mahindra Holidays, but also I am sure we will learn many things along the way at Mahindra Lifespace.
The next question is, you previously mentioned that sales velocity is slowing down. Can you expand on this comment and talk about the demand across our micro markets?
Yeah. Let me just give some points and Vimalendra, you can jump in. I think this business is the highest spend category. It gets a lot driven by the overall sentiment. Sentiments related to war, jobs are critical. Financial markets, very critical. I think some of them have been subdued for the last few months. The AI impact on jobs, the war impact on sentiments, and the slow financial markets because the FIIs have moved out. The rupee issue tends to be a major one. I think these have affected the sentiment. So we see slight slowdown in the walk-ins. Now it takes more efforts to convert. That is what we are seeing. But we are actually being cautious about this time of the market. As you know, our brand attracts a lot of customers. It helps to create a pull from the customers.
We are able to demonstrate a high-quality value proposition to our customer. That is reflected in the overall pre-sales for H1 so far. We are also making sure that we are disciplined about pricing. To artificially inflate velocity, we will have to give higher discounts or make payment terms or pricing more attractive. That is something we are loath to it. I think we have a strong product value proposition, great locations, and we think that we should price the product appropriately, not chase velocity at this time of the market cycle. I think that is helping us in Mumbai, Pune, Bengaluru.
While the inventory overhang has gone up somewhat, we feel that we are able to find the right customers who are ready to pay for the products and services that we offer, and that's why you've seen a strong H1 for us, which is healthy growth over the previous financial year. We'll maintain this balanced perspective on velocity and price and discount, and continue to demonstrate our value to the customers. Vimalendra, do you want to add anything?
Thanks, Amit. I think you've covered it. Just a couple of points. I just want to give a color to this particular question. One is, while the sales velocity or, say, the absolute numbers are moderating, what is happening is the corporate developers or the branded developers are actually still continuing to gain the market share. What is happening is, this growth, say, in the prominent places coming at the expense of Tier 2, Tier 3 developers. I think that phenomena which started quite some time back is expected to accelerate.
As the market consolidates. That's number one. Number two, as Amit said, there's no point in artificially chasing velocity, right? Because at the end of the day, every business has to be run very well profitably. What we are doing and what we are focusing on is how do we get more walk-ins to our sites, which is actually talking about saying that, "Hey, our products are good, great. The locations are amazing. They are close to any transport corridor." If you see a lot of our projects either are very close to metro stations or highways or the local train stations, right?
So we are working on this and the expectation is that we will continue to see good traction as the overall market continues to moderate. From that perspective, not really worried about the general slowdown because if we are able to execute well on the sales and the product and when we do a good BD generation, we'll be in good place.
There is one last question. It is for IC business. The question is, expected cash flow potential over the next five years for IC business.
If you look at the numbers, I think there was a slide which represented over the next 10 years, I think the total potential of business is about INR 1,500 crore. That has a PAT of about INR 150 crore- INR 200 crore in total, which is coming each year. My sense is, if you look at about five years from here, we are talking about total number of about INR 750 crore to about INR 800 crore, which might come in as the numbers which we have. The momentum is very good and this continues to look good in both in Chennai and Jaipur, the demand will continue to be healthy.
Yeah, this is all about the questions.
Great. With your permission, I think I will take the opportunity to wrap up. I think we are three years into our multi-year growth journey. As you have seen, there are many parts of the business that have done well. I think GDV has been very solid. IC business has done really well for us. The Residential pre-sales, as you can see, is now really starting to demonstrate a high growth trajectory. The financial discipline that we have exercised in our business development continues to be there. Reversing cost is just an example of how we are able to execute well and deliver the cost that we have planned for in some of the projects.
As more and more OCs come, we will be able to demonstrate the execution acumen in our operations. As you know, this business is all about making sure that you find the right location, right land parcel, sell well. Land to launch should be strong. Then execute really in efficient manner, to convert sales into profitability. I think we feel good about where we are.
I think lot of work for us to do, but we are hoping that this year we are able to get to a point where we are seen as challenger to some of the other established players. Hopefully that will start opportunities for us to even do even more in the focus set of markets. Thanks for all your support. We are here for any follow-up question that you might have. Among this group, you got us well covered. Please let us know and really happy to follow for any clarification, any question that you might have.
Thank you everyone for joining this call. We are ending this call now.
Thank you.
Thank you.