Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty two Earnings Conference Call of Brigitte Enterprises Limited. We have with us on the call the management of Brigade Enterprises Limited. As a reminder, all participants in line will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded.
I now hand the conference over to Mr. MR 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, investor's call. We hope all of you and your loved ones are doing well after this second wave of the virus. On behalf of the Breguet Group, I would like to welcome you to this earnings call for the Q1 of financial year 2022. I'm joined by our Executive Directors, Ms.
Pavitra Shankar and Ms. Niruka Shankar. Our senior management team is also present on the call, Mr. Atul Goyal, CFO Mr. Rajendra Joshi, CEO, Residential Mr.
Vinit Verma, CEO, Hospitality Mr. Subrata Sharma, COO, Office, Leasing and Mr. Om Prakash Company Secretary. The 2nd 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-nineteen 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 waiting to go.
We are all vaccinated. Despite a muted quarter 1 this year, the company was able to carry out a very successful QEP of INR 500 crores in June 2021, which was oversubscribed 6 times. 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 1,000,000 square feet of new bookings with a value of INR 4.70 crores. This is a growth of 91% by area and 111% by value compared to the period of Q1 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 twenty twenty one, which recorded a sharp increase in site visits and bookings once the unlock guidelines came into effect. Our projects across Bangalore, Chennai and Hyderabad continue to deliver consistently high results.
On the collections front, it was an all time second highest at INR 531 crores, driven by continued strong sales performance and good construction progress at all project sites. We would also like to know or like you to note the conservative approach followed in terms of reporting our operational numbers. Our pre operational our presales numbers are always shown net of cancellation of bookings done in current as well as prior periods. We also do not consider bookings towards presale 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 argument 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. In our coming to the Office segment, we continue to focus on collections of lease rental and are happy to inform that we have achieved 99% cumulative collections in quarter 1 of the financial year 2022. On the leasing front, there was increased momentum in terms of leasing inquiries, RFP releases, requests for proposal releases and site inspections, those 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 IT sectors, which is likely to enhance the increased need for office spaces as companies commence work from office. We are in discussion for approximately 1,500,000 square feet across projects.
In addition, we have achieved a strong leading velocity at the Brigade Tech Garden Centre, Gipp City, Ahmedabad. Our strategically located and well designed projects, Brigade Tech Garden World Trade Center, Chennai, are attracting prospects because of their superior value proposition, and we are focused on transacting the remaining space within the next 3 to 4 quarters. Moving to our retail business. The lockdown in the quarter 1 adversely affected our margin. 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 1st lockdown. In the quarter 1 FY 2022, we built 40% of the financial year 2020 rent in the similar quarter in comparison to just 20% in the last year financial year FY 2021 or the quarter 1. 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 Bangalore. We are expecting the retail business to normalize by the beginning of Q3 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 square feet 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 3 in this financial year 2022. Finally, to our hospitality business. In quarter 1, 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 8 hotels was 23% compared to 43% in the quarter 4 of financial year 2021. Nevertheless, it was still 5% higher as compared to the 1st lockdown in quarter 1 of financial year 2021. ARR, that is average rents in the hotels, continued to remain stressed in quarter 1, having reached close to 60% of pre COVID levels in quarter 4 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 driven 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 8 hotels, 7 hotels have had operating cash profit in the month of July. We are hopeful the momentum that we see 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 will be questions and answers. Thank you. Thank you.
Good afternoon, everybody. On behalf of the company, we would like to welcome you to the earnings call for Q1 FY 2022. While we have witnessed a competitive softer recovery in Q4 FY 2021 in our top businesses, the economy was again hit by a second wave of COVID in Q1 FY 2020, which slowed down the recovery pace. However, the momentum has picked up again and after lifting long term restrictions, then we expect a recovery in the coming months. On the company side, this quarter has been better than the 3 quarter ending last financial year where we faced 1st lockdown into COVID in terms of business performance and the experience has helped us to manage 2nd wave better.
Let me give you some key highlights of our performance in the last quarter. We successfully raised QIP of INR 500 crores, which was oversubscribed by 6.25x. I'm also happy to announce that our rating has been of credit to ICRA A plus further strengthening the confidence of stakeholders of the company. We have recorded 83% growth in real estate sales of 700,000 square feet during this quarter, which are in 400,000 square feet during same quarter last financial year. For Q1 FY 2022, the sales registered at INR 480 crores, recording a growth of 92% over the same quarter last financial year.
As on 30 June 21, Brigade has authorized 18,110,000 square feet of ongoing project, and we propose to launch 1,901,000,000 in the ensuing quarters. On the leasing side, we achieved 99% rental collections with casual increase in re occupancy in the operational portfolio. We achieved new leasing of 1 lakh during the quarter, and we have an active pipeline of around RMB 1,500,000. On the retail side, the impact by lockdown during the 2nd wave was severe, but 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 2nd wave and renewed restriction in Practica Hospitality Business Occupancy.
Occupancy stood at 23% in Q1 FY 2022 vis a vis 11% during the same quarter last financial year. It has witnessed a gradual recovery in July 21, but 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 trade lines from INR 300 crores from banks. Our average cost of debt has been coming down consistently over last few quarters and was at 8.14 percent as on June 21 versus 9.56 percent as on June 20, a 142 bps reduction that would result in an annualized payment of around INR 60 crores per annum.
Coming to consolidated financial performance. The consolidated revenues for Q1 FY 'twenty two stood at INR391 crores versus INR240 crores for the same quarter last financial year and increased by 8 of 83%. The consolidated net operating income for Q1 FY 2020 stood at INR120 crores as against INR58 crores in Q1 FY 2021. EBITDA margin including other income, increased 31% from 27% last quarter. The real estate segment closed a turnover of INR260 crores and EBITDA of 14% in Q1 FY 2022.
The Hospitality segment clocked a turnover of INR 20 crores in Q1 FY 2022 and Leasing segment clocked a turnover of INR 112 crores and EBITDA of 77% in Q1 FY 2022. The interest and finance charges for Q1 FY 'twenty two to debt INR 22 consolidated paid after Mi for Q1 FY 'twenty two's 2 debt minus INR 40 crores. There has been reduction of INR80 crores in overall debt in Q1 FY 'twenty two. The cash and cash equivalents stand at INR1173 crores as on June 30, 2021. Consequently, the company's net debt outstanding as on June 30th is stood at INR 3,047 crores, out of which, BRTCHE reached INR 2,117 crores, 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 from the line of Aditya from ICICI Securities.
Most of my questions will be on the rental business. First of all, quarter's rental revenue, our rental revenues have been flattish quarter on quarter in spite of the waiver we have given for the mall rentals. So 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.
Yes. So the rental has started coming from WPC. It's a impact of straight lining. So of course, we will be receiving rentals in this year. Already, Amazon has started there.
So this rental increase will be there going forward.
1st quarter in Chennai would have contributed how much for this quarter, the Chennai rentals?
Quarter will be around, say, INR 15 crores to INR 20 crores.
INR 15 crores to INR 20 crores. So, Randa, based on okay. And for cellular now, for the full year, like what is the sort of rental you would expect to collect now considering current outlook?
Not like this guidance, but it should be above INR 450 crores is what I can say.
No, sir. I'm referring to Stenyi, the Stenyi property. Means how much rental based on current whatever leasing has happened as per current leasing, what will be the sort of run rate? Assuming no incremental leasing happens very well.
This year, we will do around INR 75 crores of rental by year end.
Okay. So rental by year end. And the next question, obviously, you mentioned about a 1,500,000 square feet leasing pipeline. So could you give us some color like when is the closure of some of these transactions expected and in which properties the breakout which you issued is due?
So this is Subrutto. See, overall, the pipeline, active pipeline that we are having currently is 1,500,000, okay? And out of this 800,000 is at brigade tech cartons, 0.5 approximately would be for W2C, Chennai, 0.1 is at B IFC Ahmedabad and rest altogether is 0.1 approximately. Now quite positive pipeline. As far as the transaction closure time line is concerned, it would also depend upon like how the companies move towards re occupancies.
But a significant portion of these will actually get accelerated. That's what we are getting to know.
Okay. So just to clarify, you mentioned $900,000 in dead gardens? Sorry, I missed it. Dollars 8,000,000 dollars 8,000,000. Okay.
So in terms of our target, right, and you are seeing $500,000 for W2C. So you're expecting W2C to be fully leased out? Is that the target we are looking at or an aspiration?
Yes. As far as the target is concerned, we are actually expecting W2C to get fully leased out, okay. The only thing is, as I said, the re occupancy also will drive the leasing business because as far as the site inspection and RFP release momentum is concerned, we are seeing significant increase. But 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, their account will start for their entry period, isn't it?
Sure. So you said WPC are looking to leave out fully and for tape card is any similar like we are at
yes. The cost of it would be at least 4 quarter because as I speak, currently we have pointed, 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. Tenants, they have actually increased significantly as far as the manpower is concerned. Now when they're reoccupied, there will be a need from them also, okay. And 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. So all these positive developments are there. So that's why we feel that as we go forward, this pipeline quantum will also increase.
Sure. And then final clarification. So as Ashul mentioned that assuming with incremental leasing of RMB 450 crores of rental is achievable, assuming incremental leasing. Is that correct?
Thank you. The next question is from the line of Paritjat Kanpal from HDFC Securities. Please go ahead.
Hi, sir. Congratulations on a recent performance during the quarter.
In this timeline, it is a kind of mixed, okay. There is 1 major oil company who are looking at a bigger quanta that is approximately 0.6 to 0.7, it means together, okay, out of 1.5. But apart from that, there are smaller inquiries, mid sized inquiries as well as anywhere between 1 to 2 lakhs per beta as well. It again depends upon the properties and locations, okay. So like see, in BIAFC that is Ahmedabad is majorly from many companies.
The cumulative of it would be approximately GBP 1000000, okay. So approximately 12 to 13 companies.
Then these RFPs, the nature of the RFPs or the M and A segment, so are you seeing a change in the trend, like typically on the IT and S, you see a lot of screens? So is it like this has there been any change in the Sorry, I
didn't get your question. So, Scott,
yes, since I was saying that these RFPs, which are being quoted in the market, so demand for diesel RFPs, So are you seeing any structural changes in the nature of the underlying segment which are looking out for space? Is it like traditional IT IT, which is looking out in space or a bit
more
getting employees coming in from financial services or manufacturing, etcetera. So any comparison with the trend which was there pre COVID and now so any change in that trend and demand from the customer segment? Why would you give some color on that?
See, as far as the pattern is concerned, though in this Q1, what we actually know is Pan India Leasing, the majority of the leasing portion came from engineering and manufacturing sector. But as far as the RFPs are concerned, we still see that quality of this is driven by IT, IT, yes, as far as the requirement, overall requirement is concerned. So still it's more than 80% IT, IT, yes.
This question is on Bharat.
We all know that out of facility, it's in sync with the kind of trend that we are seeing in market because majority of the hiring has happened in IT, IT, okay. Now as soon as they come back to office, even if a portion of them are work from home, they will still need additional space. And with the post COVID scenario, I think they will not want to densify, okay? So it is the same with the market trend, and it's quite natural that the majority of RFPs will be from IT, IT.
Okay. Because the one you highlighted was more from the all in that side, the large start
up, almost half of it. Initially, in the Q1, we are seeing the trend. So it is majorly, it was mostly driven by the engineering manufacturing because now the IT, ITs are not in office, okay. Now as soon as they come back to office, the requirement from that sector will increase significantly.
Okay. My second question was on the residential business. Now you have about $1100,000,000 cash. So first of all, how much of this is having comfort and then how much of this will be landing in extra accounts and all? But even if you adjust for that, so what would be the cash counter and how do we intend to employ it in this year in terms of land payments and land acquisition.
So have you summarized any land parcels on that business? Is this a rough insight if you can give some highlight on the media front of the company in this year? And how much of this money will go towards land payments over the next few years?
So this residential collections are maybe in rare accounts. So we cannot take out that money and use for land, but we have taken that QIP money and we'll be using that money for buying on land. There are some prospects which is being looked into, and we'll come back as and when we finalize those land deals in coming quarters. But No. See, currently, there is an active consideration for land parcel of about INR 150 crores.
We have entered into some kind of term sheet. But the balance are under different stages of negotiation. We may utilize maybe bulk of the money if the right opportunities come back. Everything is dependent on the right opportunities. So it is more like the purpose was to have some kind of a war chest to see the opportunities that come back.
B.
Balaji:] So just the last question on fuel savings. So last quarter, Q4, we did about INR 1,000 crores, just about INR 1,000 crores of P and A, in monthly, about INR 300 crores plus. So have we when do you expect to hit start hitting that down rate again? How much did you buy months for you if you can just give some sense? On.
So Q1 certainly was muted.
We were nearly at about 47%, 48% of what we were off Q4. But July, fortunately, seems to be doing better. But all of it really would depend on the restrictions that we 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, etcetera, I think the customer visiting the site is possible.
We do see that there is demand, there is potential, but these hindrances or roadblocks which obstruct growth if they continue.
So how about July, I'm sorry, are you still doing the growth?
As I said, it's an ongoing month. I would say that it was much better than the last year in July.
Thank you. The next question is from 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 Bangalore market share. So what's the presales share we are having in the market? And how it's changed in the last 1 year?
So I would say the contribution of Bangalore 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. So, sir, my question is what is the share of our presales Bangalore in the overall Bangalore market? So is that we are gaining the market share in the Bangalore in the presales number or not in the last one year?
So in the last one year, we have gained the market share in Bangalore. We estimate 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 above 6% to 7% in the city of Bangalore of the total.
Okay. Thank you. Second question is on the Big Ed Tech Garden in Bangalore. Since very long time, we are talking about the hard options and but all in all, still the lead area is at the same level. So what's the major issue that we are facing in the Bangalore Tech Garden?
So as far as the hard options are concerned, a portion of it is should be confirmed in about a week or 2. 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 hard option. They have the requirement because their hardening has been very robust.
But at the same time, they have to fail the take up based upon the re occupancy trend, okay. Apart from that, Brigitte and Gardens here recently showed a market transaction plus 2 transactions are in principle confirmed, okay. So we are seeing the same velocity. Again, I would like to reiterate that unless and until people come back to offices, no, this velocity will still be slightly low. But the interest is there, like we are seeing site inspections happening, we are seeing RFPs actually coming by.
So it's just a wait for another, say, 1 quarter or so.
Okay. So last question on the residential real estate residential market. So in the presentation, we have written the strong pipeline of the ongoing project of 18,110,000 square foot. So it's will be launched by plan for next 3 years.
That's correct.
That's correct. Okay. Thank you, sir.
Thank you. We'll move on to the next question. That is from the line of Pratish Seth from EDUWAIS Wealth. Please go ahead.
Yes, sir. Thanks for the opportunity. So my question is on the residential side. So last quarter, you highlighted about SEK 7,000,000 of land deals across Bangalore, Chennai and Hyderabad. So those are still under active discussion.
And I mean, what's the status on that, that kind of question? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] As I mentioned in the earlier question, we have signed a term sheet for one of the properties in Chennai, which should give us about the 1,000,000 of the saleable area, and it is under due diligence process. And once that is done, we will go through with the transaction. So rest of the things are under various stages of still under various stages of negotiation. Okay.
And just on the leasing side, so 1 lakh square feet you have leased out in this quarter. What are the rentals that you are getting? Is it still near to the market? Or are there any pressure in the rentals? So as far as this 1 lakh transaction is concerned, 50% of it has come from underbar market, that is the ISP.
So there we have been able to push the rentals higher than our weighted average earlier. So we achieved a kind of around 5% premium over there. And 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 and greater rentals, higher rentals than the weighted average rentals for the respective properties.
Okay. Okay. Thanks. Thank you. That's it.
Thank you and all the best.
Thank you. The next question is from the line of Shivansh Shah from Charal Management. Please go ahead.
Thank you for the opportunity, sir. So my first question is what is the average occupancy rate in at G IFC Ahmedabad for the office building? See, G IFC as on date, so far as I remember, it would be around 28% as of the last quarter. But as we speak, we already have in principle confirmation for another 22%. So we should cross 50% in this quarter.
And we are expecting around the 70% by the end of this financial year. So that's how it is progressing. BISC has been robust. And also, Suraj, one more question on the Bangalore front. What is the incremental revenue as rent realization in terms of course entering?
How much is the rent been increasing year on year? So see, as far as the overall rentals are concerned, this year we would cover from the existing, it would be somewhere around INR 400 crores and whatever the additional will come from the new leases that particularly WPT Chennai. As we go ahead, even if we get Tegaardins or Mangalore, whatever we close over the next 3 to 4 months, okay, another 3 or 4 months would be the rent free period for the pit house. So the new lease rentals will actually be meager. It will all hit in the next financial year.
So 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 And normally, And normally if you are just asking for about the increased delta, so it would be somewhere around 4.77% if we just because in many cases we have 5% per annum, in many cases we have 15% every 3 years. And we haven't seen a kind of withdrawal or renegotiation in the rentals, okay. So it would be on an average 4.77. Okay.
Thank you so much, sir. Existing of the existing leases. Yes, yes. Thank you so much. Got it.
Clear.
Thank you. The next question is from the line of Karan Khanna from Ambit Capital. Please go ahead.
Thanks for the opportunity. So firstly, on your residential portfolio, we launched Cluster 3 of Xanadu in Chennai during the quarter. Can you briefly comment on the pricing here and how is the pricing behaving here? Because what we understand is that unlike big residences at WDC Chennai, Could they exactly Mogapar location, including Zhanadu, are not seeing anything between price hikes? Can you comment on that?
So I didn't get the last part of your question. Are you asking on the pricing at Zhanadu, Chennai?
That's right. Pricing and how is it behaving compared to Brigitte residential at WTC and A over
the last quarter or so? So clearly, these 2 are very different micro markets, Mogabay and Old Nobile Brim Road, where the IT sector is located. The ZARADU, Chennai 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 7,000, 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 have seen quite good traction in the last quarter, and the realizations there are in the range of about 10,000 to 10,500 as well.
Sure. And continuing on your residential portfolio, we've been hearing about shortage of construction material in Mysore. So any thoughts on the same and whether this can impact your ongoing and upcoming projects like Tokas and Paseo?
So currently, there is no shortage of material. There is no issue. That's what you said, no shortage of material. Yes. Currently, there is no shortage of material.
And 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. And 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 Brigette Southfield has been completed with split outs underway and rentals expected from July. However, your actual FY 'twenty two presentation shows it's under construction with a balance CapEx of around INR 25 crores.
So can
you help us understand that aspect?
So it is the project is complete and the rentals will commence from 1st July. So the documentation is complete. And what are little bit of expenses to be incurred is that 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. But as far as Brigitte is concerned, it is leased and rents will commence from 1st July.
Sure. And 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 a
slight increase in
the built in contracted escalations over as of 'twenty to 'twenty two would be materialized once the rental is normalized? That's my last question.
Okay. Dhirupa here. See, basically, what we are seeing is that the FY 'twenty two, the Q1 of FY 'twenty two is again significantly better than what we witnessed in Q1 of FY 2021. So for instance, if in FY 2020, we recovered only about 50% of the rentals from FY 2020. But in FY 'twenty two, we're projecting a much significantly higher recovery.
Currently, we're projecting only 65%, but it could be much higher. So in July has been extremely positive. So if I just look at the month of July, even though the footfalls were 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 look at if I compare like to like stores that were open. So we're 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. But by the end of the year, 60% of the stores will have some sort of rental relief in Q3. And therefore, we're looking to sort of stop all the rental relief because or maybe just 10% to 15% of the stores might have it based on whatever negotiations we've had. But by and large, assuming there's no further shocks to the system, we should be on track to get back to the 200% lease deed rentals from next fiscal year. But like I said, 85% to 90% will be back to lease deed arrangements in by Q4 of FY 'twenty two.
Generally, we have quite a bit of stores that have come to come for churn or come for renewal. And I'm happy to say that on average, the rentals that we were 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%. So suppose somebody was paying us INR 100, it's going up to INR 130. So 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 from the line of Mohit Agarwal from IISN. Please go ahead.
Yes. Thanks for the opportunity. My first question is on the business development. So you mentioned that a significant portion of the INR 500 crores QID number will go into business and nothing. Could you share what kind of GBV addition or top line addition you are looking at with this proceeds?
So 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 Raveed side to add more projects considering the market is pretty stretched for unorganized developers?
Yes. 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 is it all depends on that. If it is purchased only, it may add, say, 5,000,000, 6,000,000 square feet. If it is not purchased, if it is only for joint development, it has a potential to add even 25,000,000 square feet. So that way, it will be a combination.
But you also you rightly mentioned that we have the potential to increase our debt because the debt to equity ratio has come down due to a combination of reasons and which is increasing our overall equity by raising the QAP and also by reducing our debt due to performance of the projects. So that way, there is good opportunity there. Just the residential itself, it is 0.3:one debt equity ratio. Those and the overall debt to equity is about 0.86:one. There again, our CFO has said several times that part of it includes the joint venture partners' debt.
If you remove the joint venture partners' debt, we are sub 0.6 is to 1 is the debt equity ratio. Yes. I think Atul, CFO, will add a few more points. Mohit, you are right that our debts are low in residential. But for buying land, we'll not prefer doing a debt because land financing is one of the most expensive financing.
So we'll be effectively using the QIP money to buy the land and maybe the construction finance will do through the debt. So that is our strategy. But if there is a good land, we don't we can look at that also. But right now, we have enough QIP money, and we will 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 crores if you are investing INR 300 crores, INR 350 crores, what is the top line that investment can generate in terms of rupees crores?
So see, as I mentioned earlier, if it is going to be purchased only the entire money is used for purchase, then the in terms of revenue, it can add INR 3,000 to INR 4,000 crores, anywhere between INR 3,000 crores. And if it is entirely joint development, it can add INR 15,000 crores. But if you take a combination, but I suppose INR 9,000 to INR 10,000 crores is a possible estimate.
Sure, sir. That's helpful. So my second question is on you alluded last time around that you've 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? So we did take price increase literally during the quarter. During the quarter, we were a little careful because lockdown was still operative. From 1st July, we had taken a pricing fee, but the increased realization has been a mix of changed product mix and in certain cases pricing.
And sir, how much of this realization increase has happened since July?
So in terms of price increases across most, we took about 2% to 3% price increase at the first time. So clearly, there is a pressure
on costs due to increase in costs
of commodities like steel and other metals. So we did take a price increase. We do see that prices will form up due to this cost pressure.
Sure. And then the last question, this is for Atul. We have about INR 1,000 crores of debt as CapEx debt in our in out of our total INR 2,200 crores gross debt. So once WTC rentals start coming in fully over the next 1 to 2 quarters, how much of this INR 1,000 crores CapEx debt gets converted into LRD?
So right now, in WTC, debt right now is around INR 600 crores. So this will get converted into around we have already converted actually around INR 1200 crores, and it will actually, LRD will go up to INR 1600 crores in
Sorry, sir. Incrementally, how much LRD?
You can say around INR 700 crores to INR 800 crores.
Okay. INR 700 crores to INR 800. Okay. Thanks a lot, sir. All the best.
And then for you're asking for WPC, correct? Yes, yes. WPC. Yes.
Thank you. Thank you.
The next question is from the line of Praveen Akhtar Kajdi from Eagle White Securities. Please go ahead.
Hi, good afternoon gentlemen and thanks for taking my question. So a couple of questions from my side. What would have been the revenue contribution from BTG this quarter, rental contribution?
Yes, BTG, it will be INR 16 crores a month.
And what would have been the contribution from the launches that you did this quarter to your presales in Q1?
Presales contribution. Pre sales contribution from new launches. Pre sales contribution from new launches. This quarter. Pre sales contribution from what we qualify as about 38% to 40%.
Because what we call as a new launch in our definition, I believe, qualified, is that any project that we have launched in the last 6 months for us qualifies as a new branch. So from that segment, about 30% to 40% of our sales by value came from the new branches.
Sure. And lastly, we have mentioned the strong launch pipeline. So 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 1,900,000 square feet already and another 1,200,000 square feet will be launched maybe this quarter. It's all we have the permissions. It is subject to registration coming, etcetera. And more projects will be there to be launched in the quarter 3, quarter 4.
Now some are under approval stage. So we are waiting for those clearances to happen. Probably when the next quarter investors call come, there'll be more clarity, sorry, on the launches that we can do in Q3 and Q4. So we have the projects and the it's primarily approval stage and there are registrations. It is everything you're adding for a certain amount of time.
Sure, sir. Thanks. That's it from my side.
Thank you. The next question is from the line of Amit Agrawal from Nirmalbank. Please go ahead.
Thanks a lot for this opportunity. Two quick questions. Firstly, just 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 Q1 gone by and how it's going to be brought down as Nilapar was pointing out? And number 2, is it possible to get a breakup of collections separated into residential, retail and office and hotels? Is it possible to get that for this Q1 FY 'twenty two, the previous year
and the previous quarter? Thanks. These are the questions.
Yes. 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 plus retailers to negotiate with, so what we did in order to save time and also what worked for us using the similar rentals relief as what we gave last year. So it varies slightly from category to category. Obviously, cinemas will have a different than vanilla stores and different from anchor stores, different from food and beverage. But by and large, what we are trying to do is if the revenues are between 0% to 50%, then we are trying to charge 50% of the rental income as per the lease deed.
If it's between 50% to 60%, then typically around 60% of the rentals of minimum guarantee. If the rent if the revenues bounce back to between 60% to 80%, then we try to charge 75% of the lease fees. And 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% to 25% of the stores are doing less than 50% of their business.
But I would say maybe 30% of the stores, I would say, but by and large, most of them are between 50% to 75% of their pre COVID business. I'm talking for the month of July, not during lockdown. But it is encouraging to see a significant doing percentage doing above 80%. So there, we will get at least 100% of the rental income.
Sure, sure. Thanks. And the second question, Asum, on the collection breakup? Yes. Asum will answer that.
You want collections overall?
Yes. The overall collection, which
is mentioned in the cash flow like 7,172,000,000,000, okay. Any what I wanted to know is break up internal residential, retail, office and hotel. Is it possible to get that?
Yes, yes. So we had a collection of INR 5.57 crores in real estate. Commercial REIT was INR 94 crores. Retail was INR 12 crores. Hospitality, INR 31 crores.
And PMS, which is our management company, it was INR 23 crores. So this total up to INR 717 crores.
And what was it last year, if I may ask?
Last year, overall collection was INR INR 2,711 crores.
Yes. The data was positive.
I'm just comparing it, how is it moved?
So Q4 I can give you this way. Q4 was INR 1118 crores overall. Q3 was INR 6.81 crores. And 6 months, 20.20 crores because the impact of lockdown was there.
Sure, sure. Thanks a lot. That's all for my help.
Thank you. We'll move on to the next question that is from the line of Pratesh Cheheda from Lucky Investments. Please go ahead.
I have three questions. 1 on the retail, what was our pre COVID rental and square feet? And is there any addition there?
Yes. So pre COVID, so if I look at FY 'twenty, the rental was around INR 111 crores. And we have currently 3 malls. We launched a new one in October 2020, Orion Uptown Mall, which is about 2.65 lakhs square feet. We have Orion Avenue, which was there pre COVID also, 2.64 lakhs square feet.
And of course, our flagship mall, which is Orion Moller Brigade Gateway, which is 8.34 lakhs.
About 1,200,000 roundabout. Yes. Okay. And my second question is 1 third of our capital employed is in hotel. Incrementally, do we have any capital allocation plan between hotel, rentals
and residences? [SPEAKER UNIDENTIFIED COMPANY
REPRESENTATIVE:] No, no. Currently, we don't have any allocations with hospitality.
Okay. My last question is out of 5,000,000 square feet, how much is Chennai and Bangalore? And what is our market share there? And to what extent is these two markets organized? And what is the growth rate of those markets residential?
Yes.
So residential, Chennai, we would be a small player because we have 2 projects in the last 2 to 3 years is where we have been active in the Chennai market. So our market share would be very small. But 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. And we've just started we've done extremely well.
Again, only one project, so market share would be very small. Banjo, I did mention, we would be about 6% to 7% of the total market, growing by one of the sources because as I mentioned, there are multiple sources for market sizes. And if you look at who does and if you go by somebody else, we will be probably in double digits. But if we go by one particular source, which most of us use over a period of time, I think we're going to be about 6% to 7%.
And how much to what extent is Bangalore market opening amongst listed and larger unlisted players?
How much of Bangalore market is amongst the larger and the listed players? Is that your question?
Yes, listed and 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 3 years. The share has moved up probably from about 30%, 40%, over 60%, 70%.
And the size of Bangalore market?
Bangalore market in terms of unit sales is about 40,000 to 45,000 units a year.
At about 1,000 square feet?
Yes, at about 1200 square feet.
Okay. Thank you very much, sir.
Thank you. The next question is from the line of Shivan Shah from Farrell Investments. Please go ahead. Shivan, your line is unmuted. Please go ahead.
Yes. Have we considered putting our commercial assets, hotels and malls and commercial offices into a REIT and listing it or something or selling it to 1 instead of lease discounting? Not for the time being. I think we do get various services and offers. Each of them would be evaluated from time to time.
But if you ask me whether it will happen in this financial year, no, the answer is no. So 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, but certainly not in this financial year.
Okay, perfect. Thank
you.
Thank you. The next question is from the line of Alpesh Thadkar from Antics Stock Broking. Please go ahead.
Good afternoon. Thank you for taking my questions, sir. The first one is a kind of follow-up from previous participants. Like you mentioned that 100 and 50 crores of land passing CapEx is planned for FY 2022, 2023. So what is the kind of where we are and also where we are in active talks with the party.
So 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 1,000,000 square feet of saleable area and with maybe a revenue realizable of INR 800, INR 2,000 crores.
Okay. Okay. Fair enough. And in terms of what would be our strategy between Bangalore 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?
See our CEO residential Joshi did mention. Earlier, we had about 80% of the revenue from Bangalore market. And this year, it is could be 60% 60% is to 40%, Bangalore and non Bangalore. So I think it may continue in the same fashion, 60% to 60% to 40%, with a plusminus 5% variation maybe there.
Okay. Okay. And my last question on the what kind of launch run rate would we target over the next couple of years given the strong underlying demand in the residential businesses across board and most of the people are or the management from different companies are saying that we have a strong demand there. So what kind of launch on it can we see going ahead for our company? That's it from my side.
Yes.
So we will certainly plan to launch somewhere in the range of 7, 8,000,000 square feet per year. We have a land bank to give a 35,000,000 square feet of saleable area, which are all with proper lands with where it can come to the market in the next few years based on the our own requirement, demand requirement, etcetera.
Okay. Thanks a lot for the clarification. All the best.
Thank you. Ladies and gentlemen, we'll 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 Bangalore market and obviously the consolidation fees and the strong undercurrents which are supporting housing market. And obviously, we do have the QIP money war chest that we can use to sort of catalyze our growth. So do we have any vision in terms of where we want to be in terms of pre sales in the next 3 years?
I would put it that this way, it all depends on opportunities and the general economy. But generally, when this question is asked earlier, I have said we would aim to have a growth rate anywhere between 20% to 25% and maybe 30% growth year on year is what we aim. I think that is the intention.
Okay, okay, okay. Fair enough, fair enough. So does that hold for this year as well? I mean, how do we look at this year assuming that there are no more 3rd waves, etcetera?
See, the intention is definitely there, and our team is working towards that. And as you rightly said, if there is no third wave, we do certainly, we expect a much better growth rate, much better figures than last year. And yes, as the MD, I'll be pushing the team for that 20% to 25% growth. And yes, so we are let's see. God willing, it should happen.
Right, right, right. 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 will be the contribution from IT, ITES and financials to of our current leasing that is?
As Sukrat earlier mentioned, 80% is IT, ITES and the remaining 20% is non IT, IT, yes. And so very substantially, it will be from MNCs because some of the large Indian companies have they've all got their own campuses and their own buildings. So that's where from the big guys within the country, less business, but from MNC, it will be the bulk of the business.
Right, right. And this also pertains to the current leasing portfolio that we have, right?
Yes, I think more or less.
Okay, okay, okay. Sure, sir. And assuming that we don't have any more survey, etcetera, Based on the discussions that you are having with the tenant, when do you expect the recent uptick?
I mean, which quarter can we expect? I think Q3 FY 2020 2, that is October to December quarter, we can expect leasing uptick provided the international travel and everything resumes. But see, if you from whatever we have read in the media or watched companies people speaking on TV, the hiring process is quite robust. And considering we have JPY 190,000,000,000 or nearly GBP 200,000,000,000 software business in the country. And the NASSCOM has announced it will be a double digit growth, so which is not a small amount at all, a $20,000,000,000 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. So sometimes the office leasing leads the business, sometimes the residential, but they go hand in hand. It is more like we expect to overall in the next 12 months or so, 200,000 more jobs will be created in the IT IT sector.
Right, right, right. Okay, sir. Okay, sir. And one last question. I in response to previous participants' question, you did mention in terms of how recovery happens across different slots, what percentage of minimum guarantee we can expect for the retail mall status.
So my question is, assuming that we do reach 100% of the pre COVID levels across the board, so how do we look at the contractual escalation? I mean, assuming that we know maybe towards Q4 of FY 2020 to us starting FY 2020 3 whenever the normalcy does set in. So the contractual escalation, would that happen over FY 2020 level? Is that the right way to look at it?
No. See, contractual escalation no, just to clarify, contractual escalations will happen as and when they are due or there is no change in contractual escalations as such. And 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, okay, okay, okay. Fair enough. Okay, sir. Thank you. Thank you.
Thank you. I wish you all the best.
Thank you.
Thank you. The next question is from the line of Prem Khurana from Anandaraki. Please go ahead.
Hello? Yes. Am I audible? Hello? Yes.
Yes.
Hi, sir. Thanks for taking my questions. First question on the unsold revenue inventory that we have. So when I look at the numbers now, I mean, until sometime ago a few years back, I mean, the number used to be seriously negligible for us, I mean, less than 1% of the total unsold inventory. But over the last few years, it seems that the number has gone up substantially.
So if you could help us understand the thought process, is it that maybe you're holding on to some of the inventory going to make good for the inflationary pressure? Or does that because now we've become big, we're launching larger phases, which is when you get to have some inventory going to save a new for some time? The number used to be less than INR 100 crores and now it's almost INR 700 crores in terms of unsold ready inventory.
Yes. So this is Rajvind Dilushi. So 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.
So 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 the what was available earlier. So which is why you will see a little higher number in the current quarter, but we will work towards reducing this thing.
Sure. And Rajinder, 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. Seeing that it has been removed from a launch pipeline, so any change in thoughts there?
So the A3 tower in WTC Residences was planned to be a serviced apartment. There was a change in thought. We are still wondering, given this uncertainty in the hospitality sector, we're still working on that option, which is why we have removed it from the launch pipeline.
Sure. And on so Atul, sir, just one question on the number. I think when I if you could please help me reconcile. So when I look at our cash flow numbers, the interest outgo is INR 88 crore. And when I look at the P and L income statement, the number is an excess of INR 110.
So if you could please help me reconcile this difference
with that? Yes. So yes, I got it. So this time, what has happened, Prem, is that we have capitalized PREPLZ at that WTC property, which has been capitalized in March 31. So its full interest is coming in the P and L, which is around INR 20 crores.
So that is a difference which you will see both in the cash flow and in the and the difference in increasing interest in P and L.
So I understand the increase part. I was wondering, I mean, why is there actual outlays lower than the income statement number?
Yes. So what happens is that there is also interest on debentures on GIC, which is coming into the financial numbers, but it is not coming to 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 mine. Thank you for taking my questions.
Only at that A3 in World Trade Center say that it is a 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 one room kind of setup. So it still is the same?
It is same for service apartments that is there, but it is designed in such a way that it can be combined. 2 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 Mr. Lorraine 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 conductor in India. The Great Place to Work Institute also awarded our subsidiary, Bricade Hospitality Services Limited, with the 1st place in India's great midsize workplaces 2021 and 4th 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 intranet and professional mental health support and much, much more. Continuing our fight against COVID, Brigade organized vaccination rights 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 continues to support communities in need. Our real estate accelerator program, Brigade REAP, will be celebrating 5 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 Start AD to deliver value to Aldar Properties, one of the largest developers in the Middle East.
We also had a maiden PropTech Summit called 1 World, 1 Realty that was held in April with over 2,000 participants from 8 countries. BreguetReap also launched India's 1st PropTech focused syndicate fund, PropTech atReap, which went live on the less venture 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 2 awards over the last quarter, the best NGO in art and culture from the Global NGO Expo, and we also got recognition from Europiana, an organization in the EU for IME's digital storytelling of Amrita Varshini. 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 4 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.