Ladies and gentlemen, good day, and welcome to the Q1 FY 2022 earnings conference call of Brigade Enterprises Limited. We have with us on the call the management of Brigade Enterprises 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. If you need assistance during the conference call, please signal the operator by pressing star then zero on your touch-tone phone. Now, this conference is being recorded. I now hand the conference over to Mr. M. R. Jaishankar, Chairman and Managing Director of the company. Thank you, and over to you, sir.
Thank you. Good afternoon, ladies and gentlemen, and thank you again for joining us for this call, earnings results call. We hope all of you and your loved ones are doing well after this second wave of the virus. On behalf of the Brigade Group, I would like to welcome you to this earnings call for the first quarter of financial year 2022. I am joined by our Executive Directors, Ms. Pavitra Shankar and Ms. Nirupa Shankar. Our senior management team is also present on the call. Mr. Atul Goyal, CFO, Mr. Rajendra Joshi, CEO, Residential, Mr. Vineet Verma, CEO, Hospitality, Mr. Subrata Sharma, CEO, Office Living, and Mr. Om Prakash, Company Secretary. The second wave really hit the entire nation hard. It was distressing to witness the grief and despair that followed. We were all affected both directly and indirectly as a business.
The lockdown stalled our plans, but only briefly. Our team was better poised this time around. Now, as COVID-19 continues to rear its ugly head, we believe we are better prepared to face the next wave of this pandemic. In fact, our team is back in the office and raring to go. We are all vaccinated. Despite a muted quarter one this year, the company was able to carry out a very successful QIP of INR 500 crore in June 2021, which was oversubscribed 6x . The funds will predominantly be used for acquiring land for new projects to grow the residential business primarily. Here are the remaining business highlights from the last quarter. Starting with our residential business, our performance was good despite the severity of the second wave. We ended the quarter with 0.76 million sq ft of new bookings with a value of INR 470 crore.
This is a growth of 91% by area and 111% by value compared to the period of quarter one of the last financial year, during which there was a nationwide lockdown. The improved performance this year can be mostly attributed to the favorable macroeconomic dynamics to buy a home, thanks to low interest rates and higher disposable income and improved confidence regarding job stability and salary growth. The positive customer outlook was reflected in the second half of June 2021, which recorded a sharp increase in site visits and bookings once the unlock guidelines came into effect. Our projects across Bengaluru, Chennai, and Hyderabad continue to deliver consistently high results. On the collections front, it was an all-time second highest at INR 531 crore, driven by continued strong sales performance and good construction progress at all project sites.
We would also like you to note the conservative approach followed in terms of reporting our operational numbers. Our pre-sales numbers are always shown net of cancellation of bookings done in current as well as prior periods. We also do not consider bookings towards pre-sale numbers unless a minimum of 5% or 10% of the agreement value has been collected along with all the required documentation. Our average realization is based on RERA agreement value of the customer and do not include any other expenses or transaction costs. On the revenue recognition front, we only report units where the customer has completed the entire registration process and not just taken possession of the unit without registering the property.
Coming to the office segment, we continue to focus on collections of lease rentals and are happy to inform that we have achieved 99% cumulative collections in quarter one of the financial year 2022. On the leasing front, there was increased momentum in terms of leasing inquiries, RFP releases, request for proposal releases, and site inspections, though decisions are still delayed, primarily because average physical occupancy levels are still below 10% across all office parks. Our outlook is positive owing to robust hiring across IT and ITES sectors, which is likely to enhance the increased need for office spaces as companies commence work from office. We are in discussions for approximately 1.5 million sq ft across projects. In addition, we have achieved a strong leasing velocity at the Brigade Center, GIFT City, Ahmedabad.
Our strategically located and well-designed project, Brigade Tech Gardens World Trade Center, Chennai, are attracting prospects because of their superior value proposition. We are focused on transacting the remaining space within the next three to four quarters. Moving to our retail business, the lockdown in the quarter one adversely affected our malls. Nevertheless, our focus was on retailer engagement. We maintained a reasonable approach to renegotiation of leases by offering somewhat similar commercial terms as last year's rent relief during the first lockdown. In the quarter one FY 2022, we billed 40% of the financial year 2020 rent in the similar quarter in comparison to just 20% in the last financial year, FY 2021 of the quarter one.
After the malls reopened in July 2021, we saw a sales consumption recovery that was over 90% of 2020 pre-COVID levels in comparison to just 20% sales recovery from last year malls reopening in June 2020. This was primarily because of the improved customer confidence owing to the vaccination drives in Bengaluru. We are expecting the retail business to normalize by the beginning of quarter three of 2022. Particularly, if there are no more restrictions imposed due to any possible third wave, which we hope it will not happen. Almost 1.80 lakh sq ft is freshly leased and under fit-out. That is 14% of the gross total leasable area across all our malls. These retailers are scheduled to open in phases by end of quarter three in this financial year 2022. Finally, to our hospitality business.
In quarter one, we witnessed an abrupt halt to the positive momentum built in the previous quarters and recoveries made post the first wave. The collective average occupancy achieved by our portfolio of eight hotels was 23%, compared to 43% in the quarter four of financial year 2021. Nevertheless, it was still 5% higher as compared to the first lockdown in quarter one of financial year 2021. ARR, that is average rents in the hotels, continued to remain stressed in quarter one, having reached close to 60% of pre-COVID levels in quarter four of financial year 2021. We saw a 14% gross operating loss in the quarter compared to a 22% gross operating profit in last quarter. The pent-up travel demand and revenge tourism thereafter has enabled hotels to see occupancies bounce back to over 42% in July 2021.
The hotels continue to strictly monitor operating costs and other overheads to ensure that we protect our bottom line as far as possible without compromising on the quality of our services. In fact, out of the eight hotels, seven hotels have had operating cash profit in the month of July. We are hopeful the momentum that we have witnessed in this beginning of Q2 across our businesses continues irrespective of the challenges that come our way. Having said that, we sincerely hope the government's plan to vaccinate the entire adult population before the end of 2021 succeeds. Thank you for your patience. Now, Mr. Atul Goyal, our CFO, will present the financial results in detail. After that, there can be question and answers. Thank you.
Thank you. Good afternoon, everybody. On behalf of our company, we would like to welcome you to the earnings call for Brigade Enterprises for 2023. While we had witnessed a recovery in Q4 FY 2021 in our businesses, the economy was again hit by a second wave of COVID in Q1 FY 2022, which slowed down the recovery pace. The momentum has picked up again after lifting lockdown restrictions, we expect a recovery in the coming months. On the company side, this quarter has been better than the same quarter ending last financial year, where we faced first lockdown due to COVID in terms of business performance, the experience has helped us to manage second wave better. Let me give you some key highlights of our performance in the last quarter. We successfully raised QIP of INR 500 crore, which was oversubscribed by 6.25 x.
I'm also happy to announce that our rating has been upgraded to ICRA A+, further strengthening the confidence of stakeholders of the company. We have recorded 83% growth in real estate sales of 0.76 million sq ft during this quarter vis-à-vis 0.42 million sq ft during the same quarter last financial year. For Q1 FY 2022, the sales registered at INR 480 crore, recording a growth of 92% over the same quarter last financial year. As on June 30th, 2021, Brigade has approx. 18.11 million sq ft of ongoing project, and we propose to launch 1.91 million sq ft in the ensuing quarters. On the leasing side, we achieved 99% rental collections with gradual increase in re-occupancy in the operational portfolio. We achieved new leasing of 1 lakh sq ft during the quarter, and we have an active pipeline of around 1.5 million sq ft.
On the retail side, though impact by lockdown during the second wave was severe, footfalls have been improved considerably and mall occupancy has been around 85%, expecting faster recovery. While we have a significant uptick in the hospitality performance in Q4 FY 2021, the second wave and renewed restrictions impacted the hospitality business occupancy. Occupancy stood at 23% in Q1 FY 2022 vis-à-vis 11% during the same quarter last financial year. It has witnessed a gradual recovery in July 2021, the long-term recovery is dependent on corporate and international travel amid COVID cases. On a consolidated level, there was increase in cash flow from operating activities by 89% from same quarter last financial year. We have surplus liquidity and undrawn credit lines of INR 300 crore from banks.
Our average cost of debt has been coming down consistently over last few quarters and was at 8.14% as on June 2021, versus 9.56% as on June 2020, a 142 bps reduction that would result in an annualized saving of around INR 60 crore per annum. Coming to consolidated financial performance. The consolidated revenues for Q1 FY 2022 stood at INR 391 crore versus INR 214 crore for the same quarter last financial year, an increase by 83%. The consolidated including other income for Q1 FY 2020 stood at INR 120 crore as against INR 58 crore in Q1 FY 2021. EBITDA margin including other income increased to 31% from 27% last quarter. The real estate segment clocked a turnover of INR 260 crore and EBITDA of 14% in Q1 FY 2022. The hospitality segment clocked a turnover of INR 20 crore in Q1 FY 2022, and leasing segment clocked a turnover of INR 112 crore and EBITDA of 77% in Q1 FY 2022.
The interest and finance charges for Q1 FY 2022 stood at INR 22 crore. Consolidated PAT after MI for Q1 FY 2022 stood at -INR 40 crore. There has been reduction of INR 80 crore in overall debt in Q1 FY 2022. The cash and cash equivalents stand at INR 1,173 crore as on June 30th, 2021. Consequently, the company's net debt outstanding as on June 30th stood at INR 3,047 crore, out of which BEL shares INR 2,117 crore, that is 75% of the debt pertain to commercial portion and for which 70% is backed by the rental income. I now hand over to the moderator for question and answers. Thanks.
Thank you. Ladies and gentlemen, we will now begin with the question- and- answer session. The first question is on the line of Aditya from ICICI Securities. Please go ahead.
Good afternoon, everyone. Thank you for the opportunity. Most of my questions will be on the rental business. First of all, quarter's rental revenue, or rental revenues have been flattish quarter-on-quarter in spite of the waiver we have given for the mall rentals. Was the deficit being made up by incremental leasing revenue, or you have taken higher CAM charges for the quarter? Just some clarification on that would help.
Yeah. The rental has started coming from WTC, impact of straight lining. Of course, we will be receiving rentals in this year. Already Amazon has started there, so this rental increase will be there going forward.
First of all, Chennai would have contributed how much for this quarter? Chennai rentals.
Quarter will be around, say INR 15 crore-INR 20 crore.
INR 15 crore-INR 20 crore. Sir, okay. For Chennai now, for the full year, what is the sort of rental you would expect to collect now?
I would not like to give guidance, but it should be above INR 450 crore is what I can say.
No, sir. I'm referring specifically to Chennai, the Chennai property. How much rental based on current, whatever leasing has happened as of current, do you think what would be the sort of run rate, assuming no incremental leasing happens during the year?
This year we will do around INR 75 crore of rental by year-end.
Okay, sorry, rental by year-end. The next question, obviously, you mentioned about a 1.5 million sq ft leasing pipeline. Could you give us a color like when is the closure of some of these transactions expected and in which properties, the breakup if you usually give?
This is Subrata. See, overall, the active pipeline that we are having currently is INR 1.5 million. Okay? Out of this, INR 0.8 million is at Brigade Tech Gardens, INR 0.5 million approximately would be for WTC Chennai, INR 0.1 million is at BIFC Ahmedabad, and rest all together is INR 0.1 million approximately. Quite positive pipeline. As far as the transaction closure timeline is concerned, it would also depend upon how the companies move towards re-occupancies. A significant portion of these will actually get accelerated. That's what we are getting to know.
Okay. Just to clarify, you mentioned INR 0.9 million in Tech Gardens or no, this is not? Sorry, I missed.
INR 0.8 million.
Okay. Sir, in terms of a target, right, you are saying INR 0.5 million for WTC. You are expecting WTC to be fully leased out? Is that the target we are looking at or an aspiration?
Yeah, as far as the target is concerned, we are actually expecting WTC to get fully leased out, okay? The only thing is, as I said, the re-occupancy also will drive the leasing business because, see, as far as the site inspection and the RFP release momentum is concerned, we are seeing significant increase. As you are aware, unless and until they get an understanding that when people will come back to office, they may not actually want to lock into the premises, because from that day, the count will start for the rent-free period, isn't it?
Sure. You said WTC you are looking to lease out fully and for Tech Gardens, any similar like we are at almost? Yeah.
Conservative would be at least four quarter because, see, as I speak, currently we are INR 0.8 million, but recently we have also entered into discussion wherein a few more requirements are coming by, okay. Like a few of our existing tenants, they have actually increased significantly as far as the manpower is concerned. Now, when they reoccupy, there will be a need from them also. Okay. One tenant who actually withdrew last year, they are still having a license, SEZ license in BTG. They are again coming back with the same requirement. All these positive developments are there. That's why we feel that as we go forward, this pipeline quantum will also increase.
Sure. One final clarification. As Atul mentioned that assuming with incremental leasing of INR 450 crore sort of rental is achievable, assuming incremental leasing for those. Is that correct?
Yes, overall. Overall, yes.
Okay, INR 450 crore. Fine, sir. I'll come back with more questions. Thank you and all the best.
Thank you. The next question is on the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a recent performance during the quarter. My first question is on this 1.5 million sq ft of pipeline. How many approximate inquiries would be covered under this? As a size, basically I wanted to know.
See, in this pipeline, it is a kind of mixed. Okay. There is one major oil company who are looking at a bigger quantum that is approximately 0.6 to 0.7, means together, okay, out of 1.5. Apart from that, there are smaller inquiries, midsize inquiries, as well as anywhere between 1- 2 lakh sq f t as well. It again depends upon the properties and the locations. Okay. Like, see, in BIFC, that is Ahmedabad, is majorly from many companies. The cumulative of it would be approximately 0.1 million. Okay. Approximately 12 - 13 companies.
These RFPs or the nature of the RFPs or the underlying segment. Are you seeing a change in the trend like typically earlier IT/ITeS companies used to be the first space? Is it like this time we are seeing more demand coming from financial services or other something like manufacturing or you consider oil and gas as one of them. If you can just highlight a bit more color on the nature of RFPs being floated now versus where we are back at pre-COVID. Has there been any change in the.
Sorry, I couldn't get your question. Can you please repeat it?
Yeah, as I was saying that these RFPs which are being quoted in the market, demand for these RFPs. Are you seeing any structural changes in the nature of the underlying segment which are looking out for space? Is it like traditional IT/ITeS which is looking out for space, or is it more getting inquiries coming in from financial services or manufacturing sector? Any comparison with the trend, which was there pre-COVID and now, any change in that trend and demand from the customer segment-wise if you can just give some color on that?
As far as the pattern is concerned, though in this first quarter, what we actually know is pan-India leasing, the majority of the leasing portion came from engineering and manufacturing sector. As far as the RFPs are concerned, we still see that majority of this is driven by IT/ITeS. As far as the overall requirement is concerned, still it's more than 80% IT/ITeS.
The question is on where is.
We all know that it's in sync with the kind of trend that we are seeing in market because majority of the hiring has happened in IT/ITeS. As soon as they come back to office, even if a portion of them are work from home, they will still need the additional space. With the post-COVID scenario, I think they will not want to densify. It is in sync with the market trend, and it's quite natural that the majority of the RFPs will be from IT/ITeS.
Okay. The ones you allocated was more from the all India side, the large part of almost half of it.
Initially, in the first quarter, we are seeing the trend. It was mostly driven by the engineering manufacturing, because the IT/ITeS are not in office. As soon as they come back to office, the requirement from that sector will increase significantly.
Okay. Sir, my second question was on the residential business. You have about INR 1,100 just cash. First of all, how much of this is earning some return and how much of this will be lying in escrow accounts and all? Even if we adjust for that, what will be the cash component? How do we intend to employ it in this year in terms of land payment and land acquisition? Have you finalized any land parcels from the business development side? If you can give some highlight on the pipeline of the company in this area, and how much of this money will go towards land payments over the next two years.
These residential collections are mainly in RERA accounts. We cannot take out that money and use for land. We have taken that QIP money, and we'll be using that money for buying on land. There are some prospects which are being looked into, and we'll come back again when we finalize those land deals in coming quarters.
Nicely ballpark, this year on land, this and next year. Cumulatively, we can finalize how much you intend to spend on land.
Your voice is not clear, Parikshit.
I was asking that cumulatively, this and next year, how much of land purchase are we targeting from the growth perspective? If you can give some ballpark sense on that.
No. See, currently there is an active consideration for land parcel of about INR 150 crore. We have entered into some kind of term sheet. The balance are under different stages of negotiation. We may utilize maybe bulk of the money if the right opportunities come by. Everything is dependent on the right opportunities. It is more like the purpose was to have some kind of a war chest to seize the opportunities that come by.
Sir, just a last question on pre-sales. Last quarter, fourth quarter, we did about INR 1,000 crore. Just about INR 1,000 crore of pre-sales, monthly about INR 300 odd crore +. When do we expect to hit, start hitting that run rate again? How was the July month for you? If you can just give some sense on that.
Q1 certainly was muted. We were nearly at about 47%-48% of what we were of Q4. July fortunately seems to be doing better. All of it really would depend on the restrictions that will get imposed because the residential real estate will pick up and do well only if the customers visit the site, and particularly in the weekends. I think those are extremely important in this business. While we have geared up for virtual selling, et cetera, I think the customer visiting the site is important. We do see that there is demand, there is potential, but these hindrances or roadblocks will obstruct growth if they continue.
How was July month? Have you reached some few big crores?
July month was good. As I said, it's an ongoing month. I would say that it was much better than the last year July.
Thank you. That's all, sir. Thank you very much.
Thank you. The next question is on the line of Yash Gupta from Angel Broking. Please go ahead.
Good afternoon, everyone. Thank you for the opportunity. Sir, first question is on the residential Bengaluru market share. What's the pre-sales share we are having in the market, and how it's changed in the last one year?
I would say the contribution of Bengaluru to our total sales in the last one year has come down. It was about 80% in Q1 of last year. It has come down to 60%. Simply because the new launch in Hyderabad and the new launches in Chennai have done quite well. Today, between these two markets, they contribute nearly to 40% of our total sales.
Sorry. Sir, my question is, what's the share of our pre-sales Bengaluru in the overall Bengaluru market? Is that we are gaining the market share in the Bengaluru in the pre-sales number or not in the last one year?
In the last one year, we have gained market share in Bengaluru. See, because the residential real estate market, there are different agencies which put out different numbers. We expect that our market share is in the region of about 6%-7% in the city of Bengaluru of the total sales.
Okay. Thank you. Second question is on the Brigade Tech Gardens in Bengaluru. Since very long time, we are talking about the hard options and about all in all, still the leased area is at the same level. What's the major issue that we are facing in the Brigade Tech Gardens?
As far as the hard options are concerned, a portion of it should be confirmed in about a week or two. We are in discussion with the tenant. This is because they are also expecting their employees to come back. They still want to go ahead with the adoption. They have the requirement because their hiring has been very robust. At the same time, they have to phase the take-up based upon the re-occupancy trend. Apart from that, Brigade Tech Gardens, we have recently closed a market transaction, plus two transactions are in principle confirmed. Again, I would like to reiterate that unless and until people come back to offices, this velocity will still be slightly low. The interest is there. We are seeing site inspections happening, we are seeing the RFPs actually coming by.
It's just a wait for another, say, one quarter or so.
Okay. Sir, last question on the real estate residential market. In the presentation, we have written the strong pipeline of the ongoing project of 18.11 million sq ft. It will be a launch pipeline for next three years?
That's correct.
That's correct. Okay. Thank you, sir.
Thank you. We'll move on to the next question. That is on the line of Pritesh Sheth from Edelweiss Wealth. Please go ahead.
Yes, sir. Thanks for the opportunity. My question is on the residential side. Last quarter, you highlighted about 7 million sq ft of land deals across Bengaluru, Chennai, and Hyderabad. Those are still under active discussion, and what's the status on that?
As I mentioned for the earlier question, we have signed a term sheet for one of the properties in Chennai, which should give us about 1 million sq ft of the saleable area. It is under due diligence process. Once that is done, we will go through with the transaction. Rest of the things are still under various stages of negotiation.
Okay. Just on the leasing part, 100,000 sq ft were leased out in this quarter. What are the rentals that you're getting? Still near to the market or are there any pressure in the rentals?
As far as these 100,000 transactions is concerned, about 50% of it has come from Ahmedabad market, that is BIFC. There, we have been able to push the rentals higher than our weighted average earlier. We achieved a kind of around 5% premium over there. Apart from that, whatever transactions we have closed, it's in line with the market. I wouldn't say that the rentals, we are actually stressed in terms of the rentals. We have achieved greater rentals, higher rentals than the weighted average rentals for the respective properties.
Okay, fine. Thank you. That's it. Thank you. All the best.
Thank you. The next question is from the line of Shivansh Shah from Saral Management. Please go ahead.
Thank you for the opportunity, sir. My first question is, what is the average occupancy rate at GIFT City Ahmedabad for the office building?
See, BIFC, as on date, so far as I remember, it would be around 28% as of the last quarter. As we speak, we already have in-principle confirmation for another 22%. We should cross 50% in this quarter, and we are expecting around, say, 70% by the end of this financial year. That's how it is progressing. BIFC has been robust.
Also, sir, one more question on the Bengaluru front. What is the incremental revenue as rent realization in terms of percentage? How much is the rent being increased in year-over-year?
As far as the overall rentals are concerned, this year, from the existing, it would be somewhere around INR 400 crore, and whatever the additional will come from the new leases, like particularly WTC Chennai. As we go ahead, even in Brigade Tech Gardens or Bengaluru, whatever we close over the next three to four months, another three or four months would be the rent-free period for the fit outs. The new lease rentals will actually be meager. It will all hit in the next financial year.
No, I'm asking in terms of rent realization, as in in terms of rent realization, how much is the year-on-year increase in terms of.
If you are just asking for about the increase delta, so it would be somewhere around 4.77%. In many cases, we have 5% per annum, in many cases, we have 15% every three years. We haven't seen a kind of withdrawal or renegotiation in the rentals. It would be on an average 4.77%.
Okay. Thank you so much, sir.
From the existing leases.
Yeah. Thank you so much. I got it clear.
Thank you. The next question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Firstly, on your residential portfolio, you launched Cluster III of Xanadu in Chennai during the quarter. Can you briefly comment on the pricing here and how is the pricing behaving here? What we understand is that unlike Brigade Residences at WTC Chennai, projects at the Mogappair location, including Xanadu, are not seeing anything between price hikes. If you can comment on that.
I didn't get the last part of your question. Are you asking on the pricing at Xanadu, Chennai?
That's right. Pricing and how is it behaving compared to Brigade Residences at WTC Chennai over the last quarter or so?
Clearly these two are very different micro markets, Mogappair and the Old Mahabalipuram Road, where the IT sector is located. The Brigade Xanadu is performing extremely well, has performed very well in the last quarter, in the last few quarters. The average realization there is in the range of about INR 7,000-INR 7,200. The volumes have been quite good. We have done about 25-30 units a month in the last quarter. The residences, which is on the IT corridor, also has seen quite good traction in the last quarter, and the realizations there are in the range of about INR 10,000-INR 10,500 as well.
Sure. Continuing on your residential portfolio, we've been hearing about shortage of construction material in Mysuru. Any thoughts on the same and whether this can impact your ongoing and upcoming projects, like Topaz ?
No, currently there is no shortage of raw material. There is no issue in that. That's what you said, no? Shortage of material.
Yeah.
Currently, there is no shortage of material. The Topaz is almost complete. We are in the process of obtaining the completion certificate, and that should happen in this quarter for sure, is what we expect. There is no issues at present on material availability or labor availability for that matter.
Sure. On the commercial portfolio, on the previous call you mentioned that Brigade Southfield has been completed with fit-outs underway and rentals expected from July. However, your FY 2022 presentation shows it's under construction with a balance CapEx of around INR 25 crore. Can you help us understand that aspect?
The project is complete, and the rentals will commence from July 1st. The documentation is complete. Whatever little bit of expenses to be incurred is based on, see, when clients occupy some equipment, we need to install based on their timing, their requirement, and bit of coordination will be required. As far as Brigade is concerned, it is leased and rents will commence from July 1st .
Sure. Lastly, on your retail portfolio, can you help us understand the current consumption trends and at what level of consumption you expect the rentals to normalize? Also, as a follow-up, there is this quite a thing as a built-in or contracted escalation over FY 2020-FY 2022 would be materialized once the rentals normalize. That's my last question. Thank you.
Okay, thank you. Good afternoon, Nirupa here. Basically, what we are seeing is that the FY 2022, the Q1 of FY 2022 is again significantly better than what we witnessed in Q1 of FY 2021. For instance, if in FY we recovered only about 50% of the rentals from FY 2020, in FY 2022, we are projecting a much significantly higher recovery. Currently, we are projecting only 65%, it could be much higher. In July has been extremely positive. If I just look at the month of July, even though the footfalls was just about pre-COVID levels, the sales consumption in terms of what the malls did was almost 90% of what it was pre-COVID levels, if I compare like-to-like stores that were open. We are seeing a fairly healthy recovery. Some amount of rental relief in obviously Q1 when there was the lockdown.
Maybe about 75% of the stores will have some sort of rental relief in Q2. By the way, 60% of the stores will have some sort of rental relief in Q3. Four, we're looking to sort of stop all the rental reliefs because or maybe just 10%-15% of the stores might have it based on whatever negotiations we've had. By and large, assuming there's no further shocks to the system, we should be on track to get back to 100% lease deed rentals from next fiscal year. Like I said, 85%-90% will be back to lease deed arrangements by Q4 of FY 2022.
Generally, we have quite a bit of stores that have come for churn or come for renewal, and I'm happy to say that on average, the rentals that we're able to negotiate with the tenants is on average, I would say 23% higher than what they were before. If it's just a renewal, on average that amount has actually gone up to 30%. Suppose somebody was paying us INR 100 is going to INR 130. We've been able to get significantly higher rentals for whatever vacancies that there are or any churn that's there in the malls.
Sure. Thank you. Thanks.
Thank you. The next question is on the line of Mohit Agrawal from IIFL. Please go ahead.
Yeah, thanks for the opportunity. My first question is on the business development. You mentioned that significant portion of the INR 500 crore QIP money will go into business development. Could you share what kind of GDV addition or top-line addition you are looking at with this proceeds? That's the first part, and the second part of that question is that can you take more leverage considering that on the residential you have very low debt? Can you take more leverage on the resi side to add more projects considering the market is little stressed for unorganized developers?
On a generalized basis, we can say from based on the funds raised, we will be depending on whether a particular project is purchased, land is purchased, whether it is taken on joint development. It all depends on that. If it is purchased only, it may add, say 5, 6 million sq ft. If it is not purchased, if it is only for joint development, it has a potential to add even 25 million sq ft. That way it will be a combination. You also rightly mentioned that we have the potential to increase our debt, because the debt equity ratio has come down due to a combination of reasons, and which is increasing our overall equity by raising the QIP and also by reducing our debt due to performance of the projects. That way, there is a good opportunity there.
Just the residential itself, it is a 0.3:1 debt equity ratio. The overall debt equity is about 0.86:1. There again, our CFO has said this several times, that part of it includes the joint venture partner's debt. If you remove the joint venture partner's debt, we are sub 0.6:1, is the debt equity ratio. I think Atul, CFO, will add few more points.
Mohit, you are right that our debts are low in residential. For buying land, we'll not prefer doing a debt because land financing is one of the most expensive financing. We'll be effectively using the QIP money to buy the land, and maybe the construction finance we'll do through the debt. That is our strategy. If there is a good land, we can look at that also. Right now, we have enough QIP money, and we would use our residential debt only towards the construction financing of the new projects.
Sure. Any top-line estimate that you have, let's say from INR 500 crore, if you are investing INR 300 crore-INR 350 crore, what is the top line that investment can generate in terms of rupees crore?
See, as I mentioned earlier, if it is going to be purchased, only if the entire money is used for purchase, then in terms of revenue, it can add INR 3,000 crore-INR 4,000 crore, anywhere between INR 3,000 crore and INR 4,000 crore. If it is entirely joint development, it can add INR 15,000 crore. If you take a combination, but I suppose INR 9,000 crore-INR 10,000 crore is a possible estimate.
Sure, sir. That is helpful. My second question is on, you alluded last time around that you have taken some price increases in your project. Could you throw some light this quarter? Obviously, the realization going up 5%. Could you explain how much of it is like-to-like price increase and how much would be due to the exchange?
We did take a price increase, little during the quarter. During the quarter, we were a little careful because lockdown was still operative. From July 1st, we certainly have taken a price increase, but the increased realization has been a mix of changed product mix and in certain cases, price increase.
Sir, how much of the realization increase has happened in July?
In terms of price increases across most took about 2% to 3% price increase as of July 1st. Clearly, there is a pressure on costs due to increase in costs of commodities like steel and other metals. We did take a price increase. We do see that prices will firm up due to this cost pressure.
Sure. Sir, my last question, this is for Atul. We have about INR 1,000 crore of debt as CapEx debt out of our total INR 4,200 crore gross debt. Once WTC rentals start coming in fully over the next one to two quarters, how much of this INR 1,000 crore CapEx debt gets converted into LRD?
Right now, in WTC, debt right now is around INR 600 crore. We have already converted actually around INR 1,200 crore, and actually, LRD will go up to INR 1,600 crore in WTC.
Sorry, sir. Incrementally, how much LRDs?
You can say around INR 700-INR 800.
Okay. INR 700-INR 800. Okay. Thanks a lot, sir. All the best.
You're asking for WTC?
Yes, correct.
Yes, yes, WTC.
Yeah.
Thank you.
Thank you. The next question is from the line of Parvez Akhtar Qazi from Edelweiss Securities. Please go ahead.
Hi. Good afternoon, gentlemen, and thanks for taking our question. Couple of questions from my side. What would have been the revenue contribution from WTC this quarter? Rental contribution.
Yeah. WTC, it will be INR 16 crore a month.
Sure. What would have been the contribution from the launches that you did this quarter to your pre-sales in Q1?
Sorry?
Pre-sales contribution.
Pre-sales contribution from new launches.
This quarter.
This quarter. Pre-sales contribution from what we qualify as about 38%-40%. What we call a new launch in our definition, I will qualify it, is that any project that we have launched in the last 6 months for us qualifies as a new launch. From that segment, about 38%-40% of our sales by value came from the new launches.
Sure. Lastly, we have mentioned the strong launch pipeline. How do we see, and do we have plans for any near-term launches, or these launches are going to be there only around the festive season?
See, it is already indicated. We have launched about 1.9 million sq ft already, and another 1.2 million sq ft will be launched maybe this quarter. We have the permission. It is subject to RERA registration coming, et cetera. More projects will be there to be launched in quarter three, quarter four. Some are under approval stage, so we are waiting for those clearances to happen. Probably when the next quarter investors call comes, there'll be more clarity on the launches that we can do in Q3 and Q4. We have the projects, and it's primarily approval stage and RERA registrations. Everything is adding a certain amount of time.
Sure, sir. Thanks. That's it from my side. All the best.
Thank you. The next question is on the line of Amit Agarwal from Nirmal Bang. Please go ahead.
Thanks a lot for this opportunity. Two quick questions. Firstly, I know I might be repeating the question, but I just want to understand what's the rental relief given to the retailers in the first quarter gone by, and how it's going to be brought down, as Nirupa was pointing out. Point number two, is it possible to get a breakup of collections separated into residential, retail, and office, and hotel? Is it possible to get that? For first quarter FY 2022, the previous year, and the previous quarter. Thanks. These are the two questions.
Yeah. Just to answer the first question, see, what we did is, in order to save a lot of time, because we have more than 150+ retailers to negotiate with. What we did in order to save time, and also what worked for us using the similar rental relief as what we gave last year. It varies slightly from category to category. Obviously, cinemas will have a different than vanilla stores, and different from anchor stores, and different from food and beverage. By and large, what we are trying to do is the revenues are between 0%-50%, then we're trying to charge 50% of the rental income as per the lease deed. If it's between 50%-60%, then typically around 60% of the rentals of minimum guarantee.
If the revenues bounce back to between 60%-80%, then we try to charge 75% of the lease deed. If it's greater than 80%, then it's 100% of whatever was there for the minimum guarantee. The good thing is that we're seeing at least 20% of the stores doing greater than 100% of what they were doing pre-COVID levels, which is fairly encouraging. Maybe only 20%-25% of the stores are doing less than 50% of their business. I would say, maybe 30% of the stores are, I would say. By and large, most of them are between 50%-75% of their pre-COVID business. I'm talking for the month of July, not during lockdown. It is encouraging to see a significant percentage doing above 80%. There we will get at least 100% of the rental income.
Sure. Thanks. The second question, if possible, on the collection breakup?
Yeah. Atul will answer that.
You want collections overall?
Yeah, the overall collection which you mentioned in the cash flow, like INR 71, INR 72. What I want to do is a breakup in terms of residential, retail, office, and hotel. Is it possible to get that?
We had a collection of INR 557 crore in real estate. Commercial lease was INR 94 crore. Retail was INR 12 crore. Hospitality, INR 31 crore. PMS, which is our management company, it was INR 23 crore. This total up to INR 717 crore.
What was it last year, if I may ask?
Last year, overall collection was INR 2,711 crore.
Yeah, the breakup, if possible. I'm just comparing it, how it has moved.
Q4, I can give it this way. Q4 was INR 1,118 crore overall. Q3 was INR 681 crore, and six months 2020 INR 712 crore because the impact of lockdown was there.
Sure. Thanks a lot. That's all from my side.
Thank you. We'll move on to the next question. That is from the line of Pritesh Chheda from Lucky Investments. Please go ahead.
Sir, I have three questions. One on the retail. What was our pre-COVID rental and sq ft, and is there any addition there?
Yeah. Pre-COVID, if I look at FY 2020, the rental was around INR 111 crore. We have currently three malls. We launched a new one in October 2020, Orion Uptown Mall, which is about 2.65 lakh sq ft. We have Orion Avenue, which was there pre-COVID also, 2.64 lakh sq ft. Of course, our flagship mall, which is Orion Mall at Brigade Gateway, which is 8.34 lakh sq ft.
About 1.2 million, round about.
Yes.
Okay.
Yes.
My second question is, one-third of our capital employed is in hotel. Incrementally, do we have any capital allocation plan between hotel, rentals, and residency?
No.
No.
Currently, we don't have any allocation towards hospitality.
My last question is, out of 5 million sq ft, how much is Chennai and Bengaluru, and what is our market share there? To what extent is these two markets organized, and what is the growth rate of those markets? Residential.
Yeah. residential. Chennai, we would be a small player because we have two projects. In the last two to three years is where we have been active in the Chennai market. Our market share would be very small. The good news in Chennai is that we are growing very well. Our products have been accepted well, and we therefore look forward to do more projects. We've just started. We've done extremely well. Again, only one project, market share would be very small. Bengaluru, I did mention, we would be about 6%-7% of the total market, going by one of the sources. As I mentioned, there are multiple sources for market sizes, and if you look at hotels, and if you go by somebody else, we will be probably in double digits.
If we go by one particular source, which most of us use over a period of time, I think we would be about 6%-7%.
To what extent is Bengaluru market organized amongst listed and larger unlisted players?
How much of Bengaluru market sales is amongst the larger and the listed players? Is that your question?
Yeah. Listed and the larger unlisted players.
Listed and larger unlisted. Today, we would expect that probably about 60%-70% of the market will be the larger listed and unlisted players. That's what we would expect. Market has consolidated substantially in the last three years. The share has moved up probably from about 30%-40% to over 60%-70% today.
The size of Bengaluru market?
Bengaluru market in terms of unit sales is about 40,000-45,000 units per year.
At about 1,000 sq ft?
Yeah, at about 1,000, 1,200 sq ft.
Okay. Thank you very much, sir.
Thank you. The next question is on the line of Shravan Shah from Parlen Investments. Please go ahead. Shravan, your line is unmuted. Please go ahead.
Yeah. Have we considered putting our commercial assets, hotels, malls, and commercial offices into a REIT and listing it or something, or selling it to one instead of lease or something?
Not for the time being. I think we do get various unsolicited offers. Each of them would be evaluated from time to time. If you ask me whether it will happen in this financial year, no. The answer is no. We will be mindful of all the opportunities that come by, and once we have a critical mass ourselves, we may look at it at a future point of time. Certainly not in this financial year.
Okay, perfect. Thank you.
Thank you. The next question is on the line of Alpesh Thacker from Antique Stock Broking. Please go ahead.
Good afternoon. Thank you for taking my question, sir. The first one is a kind of follow-up from previous participants. You mentioned that INR 150 crore of land parcel CapEx is planned for FY 2022, 2023. Also, that we are in active talks with a party. What is the kind of mix there in terms of JDA, JVA versus outright land purchase?
No, this particular parcel I said, it is an outright purchase, and which can give about 1 million sq ft of saleable area, and with maybe a revenue realizable of INR 800 crore-INR 1,000 crore.
Okay. Fair enough. In terms of what would be our strategy between Bengaluru and other markets like Chennai and Hyderabad for the QIP money that we have raised, and what kind of geography mix that we'll have?
Our CEO Residential, Joshi, did mention earlier we had about 80% of the revenue from Bengaluru market. This year it could be 60%. 60:40, Bengaluru and non-Bengaluru. I think it may continue in the same fashion, 60:40, with a ±5% variation maybe there.
Okay. Thank you. My last question on the, what kind of launch run rate would we target over next two years, given the strong underlying demand in the residential businesses across board? Most of the people are, or the management from different companies are saying that we have a strong demand there. What kind of launch run rate can we see going ahead for our company? That's it from my side.
We will certainly plan to launch somewhere in the range of 7, 8 million sq ft per year. We have a land bank to give our 35 million sq ft of saleable area, which are all with proper lands, where it can come to the market in the next few years based on our own requirement, demand requirement, etc.
Okay. Thanks a lot for the clarity again. All the best.
Thank you. Ladies and gentlemen, we will be taking the last question. That is from the line of Venkat Samala from Tata AMC. Please go ahead.
Hi, sir. Thanks a lot for the opportunity. Sir, given the opportunity that we are seeing and the way that we are pouring now into the non-Bengaluru market, obviously the consolidation piece and the strong undercurrents which are supporting housing market. Obviously, we do have the QIP money war chest that we can use to sort of catalyze our growth. Do we have any vision in terms of where we want to be in terms of pre-sales in the next three years?
See, I would put it this way, it all depends on opportunities and the general economy. Generally, when this question is asked earlier, I have said we would aim to have a growth rate anywhere between 20%- 25% and maybe 30% growth year-on-year, is what we aim. I think that is the intention.
Okay. Fair enough. Does that hold for this year as well? I mean, how do we look at this year, assuming that there are no more third waves, et cetera?
See, the intention is definitely there. Our team is working towards that. As you rightly said, if there is no third wave, certainly we expect a much better growth rate, much better figures than last year. Yes, as the MD, I'll be pushing the team for 20%-25% growth. Yeah. Let's see. God willing, it should happen.
Right. Sure, sir. Thanks for that. With respect to commercial, if you could just give some color as to what would be the client profile in terms of what would be the contribution from MNCs and how much would be the contribution from IT/ ITeS, and financials, too. Of our current leasing, that is.
See, our Subrata earlier mentioned 80% is IT/ITeS, the remaining 20% is non IT/ITeS. Very substantially it will be from MNCs because some of the large Indian companies, they've all got their own campuses and their own buildings. That way from the big guys within the country, less business, but from MNCs it will be the bulk of the business.
Right. This also pertains to the current leasing portfolio that we have, right?
Yeah, I think more or less.
Okay. Sure, sir. Assuming that we don't have any more third wave, et cetera, based on the discussions that you are having with the tenants, when do you expect the leasing uptick? I mean, which quarter can we expect?
I think third quarter FY 2022, that is October to December quarter, we can expect leasing uptick, provided the international travel and everything resumes. See, from whatever we have read in the media or watched companies, people speaking on TV, the hiring process is quite robust. Considering we have INR 190 billion or nearly INR 200 billion software business in the country, the NASSCOM has announced it will be a double-digit growth. Which is not a small amount at all. An INR 20 billion addition, or if not more, in the coming year is a significant jump in business for the office leasing and residential business too. They go hand in hand. Sometimes the office leasing leads the business, sometimes the residential. They go hand in hand.
It is more like we expect overall in the next 12 months or so, 200,000 more jobs will be created in the IT/ITeS sector.
Right. Okay, sir. One last question. In response to a previous participant's question, you did mention in terms of how recovery happens across different slabs, what % of minimum guarantee we can expect for the retail malls, that is. My question is, assuming that we do reach 100% of the pre-COVID levels across the board, how do we look at the contractual escalation? Assuming that we know maybe towards Q4 of FY 2022 or starting FY 2023, whenever the normalcy does set in. The contractual escalation, would that happen over FY 2020 levels? Is that the right way to look at it?
No, just to clarify, contractual escalations will happen as and when they are due. There is no change in contractual escalations as such. As far as the full rentals are concerned, based on whatever concessions we have given or not given, once 80% of the business recovery is there, we get 100% of the rent.
Okay. Fair enough. Okay, sir. Thank you. Thank you for that. I wish you all the best.
Thanks.
Thank you. The next question is from the line of Prem Khurana from Anand Rathi. Please go ahead.
Hello? Am I audible? Hello?
Yeah, audible.
Hi, sir. Thanks for taking my question. Sir, first question was on the unsold ready inventory that we have. When I look at the numbers now, till some time ago, a few years back, the number used to be seriously negligible for us, less than 1% of the total unsold inventory. Over the last few years, it seems as if the number has gone up substantially. If you could help us understand the thought process. Is it that we are holding on to some of the inventory to kind of make good for the inflationary pressure? Is that because now we've become big, we are launching larger phases, which is when you get to have some inventory kind of stay with you for some time. The number used to be less than INR 100 crore.
INR 700 odd crore in terms of unsold ready inventory.
This is Rajendra Joshi. The unsold ready inventory, if you actually look at it, in the last couple of years, we've actually worked towards reducing the unsold ready inventory. As an organization, we do not keep an inventory to be sold later for a higher realization. In fact, as an organization, we always believe faster the sale, better for the project and the organization. What also has happened in the last couple of years is that we have finished quite a few projects and therefore the ready inventory has come into the kitty, though we have worked on exhausting what was available earlier. Which is why you will see a little higher number in the current quarter. We will work towards reducing the same.
Sir. Rajendra, just to continue on residential real estate, I think last quarter launch pipeline reflected residences at WTC A3 block to be launched in the near future. It seems that it has been removed from the launch pipeline. Any change in thoughts there?
The A3 tower in WTC Residences was planned to be a serviced apartment.
Yeah.
There was a change in thought. We are still wondering, given this uncertainty in the hospitality sector, we are still working on that option, which is why we have removed it from the launch pipeline.
Sure. Atul sir, just one question on the numbers. If you could please help me reconcile. When I look at our cash flow numbers, the interest outgo is around INR 88 odd crore, and when I look at the P&L income statement, the number is in excess of INR 110. If you could please help me reconcile this difference.
Yeah, I got it. This time what has happened, Prem, is that we have capitalized PREPL, that WTC property which has been capitalized in March 31st. Its full interest is coming in the P&L, which is around INR 23 crore. That is the difference which you will see both in the cash flow and the difference in increase in interest in P&L.
No, sir, I understand the increase part. I was wondering why is it that our actual outlay is lower than the income statement number.
What happens is that there is also an interest on debentures on GIC, which is coming into the financial numbers, but it is not coming into cash flow because that is paid as and when money is available from LRD or from some excess money which the company generates out of its operations.
Sure. Thank you. That's it from my end. Thank you for taking my questions.
Only at that A3 in World Trade Center, the launch has not happened, but the construction is progressing.
Sure. Okay. The design is still the same, sir? I think you were planning to have a one room kind of setup. It still is the same?
It is the same for serviced apartments, it is there. It is designed in such a way that it can be combined. Two-bedroom units can be made.
Okay, sure. Thank you.
Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Pavitra Shankar, Executive Director of the company, for her closing comments.
Good afternoon, everyone. In closing, we thought we would like to mention some recent highlights. We are really proud to be recognized among India's top 100 best companies to work for by the prestigious Great Place to Work Institute and Economic Times for 11 years in a row. We're also the only real estate developer to be featured in the list this year. Furthermore, we've consistently been awarded the best in the industry, large workplace study conducted in India. The Great Place to Work Institute also awarded our subsidiary, Brigade Hospitality Services Limited, with the first place in India's Great Mid-Sized Workplaces 2021, and fourth in the small and medium workplaces in Asia, despite this being a crisis year for the hotel industry. We've remained sensitive to the impact of the pandemic on our employees' lives.
Our HR and admin team worked tirelessly to support not only our team, but the team's families as well. We have an in-house medical emergency team to follow up and conduct virtual check-ins with affected employees and family members. We've set up an employee emergency fund, a self-help platform on our internet, and professional mental health support and much, much more. Continuing our fight against COVID, Brigade organized vaccination drives for our employees and their families, our associates, and partners. We've helped vaccinate around 20,000 people so far. We also have an ongoing vaccination facility at our Orion Malls, where anyone can walk in and get vaccinated on all weekends. COVID relief and outreach measures by the Brigade Foundation continue to support communities in need.
Our real estate accelerator program, Brigade REAP, will be celebrating five years since inception, and is excited about launching its first successful exit at 5X the investment. Some of the highlights from the team include a partnership with startAD to deliver value to Aldar Properties, one of the largest developers in the Middle East. We also had a maiden PropTech summit called One World, One Realty, that was held in April with over 2,000 participants from eight countries. Brigade REAP also launched India's first PropTech-focused syndicate fund, PropTech@REAP, which went live on the LetsVenture platform. The Indian Music Experience, founded and supported by the Brigade Group, is gradually opening its doors to visitors as per government norms in the current situation.
This unique interactive music museum won two awards over the last quarter, the best NGO in art and culture from the Global NGO Expo, and we also got recognition from Europeana, an organization in the EU, for IME's digital storytelling of Amritavarshini. Apart from the many sustainability efforts in our projects, we set out to restore green cover in our cities by pledging to plant 30,000 trees to commemorate our 30th anniversary four years ago. We are very delighted to report that we have now reached a significant milestone of 50,000 trees across our various project sites in multiple cities. As Brigade strongly believes in being socially responsible and giving back to the communities in which we operate, we will continue in our efforts to make our cities beautifully green once again. On that note, we'd like to thank you all for taking the time to hear from us today.
All of us at Brigade wish you well. Stay healthy and stay safe. Thank you.
Thank you. Ladies and gentlemen, on behalf of Brigade Enterprises Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.