Cash generation of INR 382 crores during the full year. Demand in the residential business exhibited a strong comeback in the fiscal. New sales booking for the fiscal stood at INR 3,085 crores, reflecting a year-on-year growth of 24%. We witnessed growth across geographies and product segments. We launched the initial phases of independent floors in DLF City in New Gurgaon, which received encouraging response from the market and witnessed healthy absorption, vindicating demand for quality products in established locations. New sales booking from launch of the new product was INR 908 crores during the fiscal. We continue to bring further phases of this product across the Gurgaon market. We have worked hard on getting our cost structures in place and happy to share that we have successfully managed to reduce our cost or cash overheads from INR 775 crores to INR 458 crores during the current fiscal.
A reduction of 40%+. We are confident that we'll be able to sustain these levels going forward. On the finance cost side, we were able to bring down our interest cost to approximately 8.4% in exit March, which is a reduction of 143 basis points on a full year basis, which resulted in cash savings of INR 50 crores during the fiscal. This translates to an annualized savings of approximately INR 75-80 crores. We also saw a consistent ramp-up in our collections, and consequently our net debt stood at INR 4,885 crores, a reduction of INR 380 crores during the year. We remain committed to bringing down debt levels in the medium term. We continue to work on our ESG journey and as a significant achievement during the fiscal, DLF Limited was the only real estate company to be included in the Dow Jones index.
We joined the rank of just 11 companies from India. We are hopeful that we will make further strides in our sustainability initiatives. We are enthused with the recovery witnessed in the residential market and expect this growth cycle to continue in the long run. Given the strong outlook for the residential segment, we continue to embark on this upcycle and remain committed to scale up our new product offerings across segments and geographies, including Delhi, Gurgaon, and South. We plan to launch projects adding up to approximately 8 million sq ft during the fiscal. Our home launches have got continues to exhibit growth and hiring activity is expected to rise. Hence, we continue to maintain a positive outlook for the rental business in the long term.
We strongly believe and remain confident that our strong balance sheet, quality assets, and new product pipeline will enable us to withstand any short-term dislocations caused by the pandemic. We are ready and poised comfortably to ride the growth wave once normalcy returns to the market. I'll end here. Open the floor for Q&A session. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please type your question and click on the Submit Question button. Your question will be read out and answered by the management. You may also ask an interactive question. Please click on the View Questions tab, enter the credentials and click on Q&A tab on the left side of the panel. Click on the Submit Request. The operator will announce when it is your turn to ask a question. Please accept the prompt and unmute your microphone to proceed with your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. While we wait for participants to join on the audio for asking video questions, we will take our first text question, which is from the line of Adhidev Chattopadhyay from ICICI Securities.
The question is: What was the total office area which expired in FY 2021, and how much of that was released? What are the scheduled expiries for office portfolio in FY 2022? Thank you.
Okay. I am Sriram Khattar. I'll take that question. The expiry in the INR 33 million portfolio was INR 1.5 million, and between 75%-80% of it was released. In FY 2022, the expiry is roughly the same. It's about INR 1.6 million, and we expect the renewals to be between 75%-85%.
Thank you. We'll take our next text question, which is from the line of Venkatachalam Ramaswamy from Edelweiss. His question is: What is the gross new sales value for Q4 FY 2021?
Yeah. For the full financial year, new products are contributing to INR 908 crores. For quarter four, it is INR 464 crores.
Total sales for Q4.
Total sales for Q4 is INR 1,058 crores.
Thank you. Our next text question is from the line of Murtuza Arsiwala from Kotak Securities. His question is: Can you provide a breakup of pending construction costs for the extant development portfolio as well as the launch of new developments? Thank you.
I think we provided some details on that. I'll just Slide 20. Yep. The total payables we've shared is INR 1,242 crores and of which construction payables are almost close to INR 700 crores. CapEx is INR 331 crores and the new development is INR 230 crores. That's broadly the breakup of this INR 1,242 crores, which we shared in our presentation.
Thank you very much.
Given that 1Q is obviously going to be pretty much a washout, you think we can still maintain the 3.5 or maybe an annualized velocity of about INR 4,000 crore for FY 2022. That's the second one. Third is, Tyagi sir, basically on this net debt slide, it seems to me that on slide 28, you will pretty much, in two or three years, when as this inventory goes down, you should pretty much be zero debt. Given that you have this cash surplus. Should one assume that you will basically reinvest a lot in your new projects to effectively grow the business? Effectively will the debt come down to only INR 2,500, INR 3,000, or will you go down to zero? That is basically the question I'm getting at. Thank you.
Okay.
Saurabh, let me take the first question on your question of so-called rising vacancies and whether INR 4,500 crore rental, we are on track for that for 2024, 2025. I just want to share some data on the vacancy. As of March 31st, our vacancy is around 12% in the entire portfolio of 33 million sq ft. Also with the same focus on Camellias, where year-on-year, if you see for the past, say, I can safely say three to four years, there has been a consistent delivery on sales with an increased value of per unit sales as well as both gross and net turnover. That also, that being said, even this quarter, the start has been pretty good for all the rest of the inventory, and we are in line with whatever the guidance that we provide.
Both this year, Part A, as well as the rest of the business and The Camellias and super luxury, we will be able to meet those numbers.
Okay, sir. Aakash, just one follow-up here. Have you taken any price hike in any project at all?
Yeah, Saurabh. I will be happy to announce to you that, glad you ask that, not only here, just last quarter, when we launched the floors. Let me tell you, in just one zone of that floors, in one of the geographies, in just about three launches in about six weeks, we took the price up by INR 1,500 a square foot. In the other zone, which launched in, say, about two weeks from that time, we took the price up by INR 4,000, between INR 2,500-INR 4,000.
Not only to your question, in every business of ours, across the residual inventory, I'm saying, which at one point, Saurabh, in 2018, with respect, I'm saying you guys thought it was all junk, but we have now been able to not only sell well and also create value in terms of increase in IRR net gains and all that. Everything has gone up. Plus, let me tell you, in The Camellias alone, if you see our the price increase in almost every phase of the independent floors that Aakash has launched, every phase is price hike a higher than the previous, and the market so far has been accepting that.
One of the very interesting things that brokers in Gurgaon will tell you, that ever since from November, we brought our independent floor in the market, the price of the plots has jumped by anywhere from 30%-40% in the secondary market in that sense. I'm also happy to tell you that Alameda, which is in New Gurgaon, is now retailing at about over INR 1 lakh a square yard, and not one sale, Saurabh, almost I'd say about over 20 sales. I think we are demonstrating enough strength on ground, but not talking about it right now, but I think the numbers will show.
Thank you. This is great. Thank you.
Thanks, Saurabh.
Thank you very much. Our next question is a text question, which is from the line of Puneet Gulati from HSBC. The question is: What drove increase in finance and construction costs in Q4? And is this run rate a new norm? Your notes to account talk about some acquisition of some entities. Can you talk about what do these relate to? What is the balance construction CapEx for DCCDL? Thank you.
Yes. I think she's just with me.
On the acquisition of the entities, Puneet, basically, you may recall that we had a clutch of entities with whom we had entered into development agreements over the course of the last decade. Even though the development rights of those entities were completely with DLF, but the nominal title of those entities was still with those third-party entities. Across the last 12 months, we have, in different phases, been acquiring those entities to ensure that we have a 100% title on those lands. I'm very happy to mention that with the entities that we acquired in this quarter, now almost 100% of those Gurgaon and rest of India land that were earlier with us through a development right or joint development agreement, have now been fully acquired by us.
From a title standpoint, from a future growth standpoint, now this is in a far more secure position than what we were, say, a year back. That is as far as those acquisitions of those land owning, about 35-odd land owning companies are concerned.
Yeah.
On the CapEx, this is the Chennai CapEx you talked about. I think that the number is close to INR 150 crores or INR 155 crores, to be precise. On the finance cost full year basis, Puneet, the number has dropped by almost 40%, but your question is more on Q4, which is the exit cost for Q4 is INR 191 crores, which compared to Q3 is down from INR 198 crores. If I compare year-on-year basis, it is down by 19%. The cost is on a declining trend. That's one. If you're asking me, is this something we are able to sustain on a full year basis, the answer is yes. In fact, if you really look at our cost for this quarter, we are confident of bringing our cost down by another 20 basis points even this quarter.
We are not only confident of meeting this number, but beating this number.
Thank you, sir. Our next text question is from the line of Milan Mehta from HSBC. The question is: When is our GIC JV project scheduled for launch? Any specific debt reduction target for FY 2022? Thank you.
On the GIC JV residential project, look, that is going through some approval issues in Delhi. I mean, just to sort of put it in perspective, this is the biggest single project from an approval standpoint that Delhi has seen since Capital Greens launched about a decade back. Even their approval policies are sort of being tested, if I will. The lockdown didn't help. We are optimistic to be launching it hopefully in Q3 of this year with all the approvals in place. That is as far as that is concerned. The second thing, Milan, on the net debt, as we mentioned earlier, look, we are clearly focusing on reduction of net debt. As a principle, except for the safe guidance, we do not offer an explicit guidance on the net debt number for fiscal 2022.
Clearly, the trajectory should continue on a downward spiral.
Thank you. Shall we proceed to our next question, sir?
Yeah.
Thank you. Our next question is from the line of Abhinav Sinha from Jefferies. Mr. Sinha would firstly like to congratulate Mr. Tyagi on his elevation to CEO. There have been other board and management changes as well, including induction of two family members on board. Can you please detail the thought process behind these changes a bit, such as any realignment of responsibilities? His second question is on residential business. Can you provide some granularity on new launches in the value homes segment, premium and luxury housing? Third question is on lease business. Has there been any reduction in office rentals in key markets such as Cyberc ity and Chennai? Thank you.
Okay. Thank you, Abhinav Sinha. From an induction of the two daughters of Rajiv Singh, our Chairman, onto the board. Frankly, I think both Savitri and Anushka are now in their mid-30s. I think it was generally felt that from a promoter family guidance and ownership standpoint, this was the appropriate time for them to come on board in a non-executive capacity right now and start observing the operations of the company in far closer detail, if you will, and hopefully it gives them the right experience to go forward as things progress. That is really as far as that is concerned. As far as the appointment of the two CEOs is concerned, as you know, we had two CEOs who retired last year, Mr. Mohit Gujral and Mr. Rajeev Talwar.
Even from a strategic standpoint, there were vacancies that existed, and hence two of the whole-time directors were re-designated as the CEOs then.
Okay.
Was on the sale.
was on the sales. Yes, okay. Go ahead.
Yeah. The next year, we are looking at total launch plan of 8 million sq ft, and the details we had shared in the analyst deck, but I'll just briefly summarize it for your benefit. Of this 8 million, the independent floors we talked about based on the success we had in the last six months of last fiscal, we'll be continuing with that, close to 1.8 million launches. That will be in Gurgaon market. We are looking at launching 1 million-plus of commercial in DLF 5, New Gurgaon, and Delhi market. Value homes of close to 3 million, we are planning in Gurgaon, Tri-city, and Chennai. I'll hand it over to Aakash to build on this.
Yeah. Basically, what we are also seeing is that consistently, there has been a demand in all segments. If you saw our performance last year and also the previous one, whether it's the super luxury segment or the value homes or now the new product that we launched on the floor, I think what I'm seeing in the market is, people, because of our lack of new launches, I think that space that was created was taken over by others. I think, it's an overwhelming response that I can respond to, were to do those comparisons. This further goes to demonstrate that today, real estate, of course, being an asset class that is being preferred, but I think if you compare it with any other developments or other real estate companies, it's a very interesting fact.
You will see our collections are even doing, I'd say, almost at par with the sales, where people have the confidence today to actually break their mutual funds. A lot of you wouldn't like that, but now actually divert this money to real estate assets, which I'm seeing, and earlier I thought it was an aberration in our last call, but now I'm seeing this as an endorsement of what we've been doing all along. I think that's a message that I'd like to give you all.
Thank you.
On the question of the rental rates in Cyber city, Gurgaon, and in Chennai, two facts: one, there is no increase that is happening. Two, the rental rationalization is happening at the periphery, but that is happening for a short period of time. There is always a risk-reward ratio which we weigh in terms of trying to keep a place vacant or rent it out at marginally rationalized cost for the next three, four years, but have the rental ticking in. There has not been any dramatic reduction in rates. Thank you.
Thank you, sir. Our next question is a follow-up from the line of Milan Mehta from HSBC. He would like to know, does the sale guidance stand if GIC JV project gets delayed? Thank you.
Yes, Milan, the sale guidance of INR 1,000 crores a quarter is well cushioned, even in the extremely unlikely event of the GIC JV getting delayed.
Yeah. Thank you. We'll take our next text question, which is from the line of Nikunj Mehta from HSBC Asset Management. The question from Mr. Mehta is, how do you see traction in The Camellias in terms of sales velocity and pricing post-completion of Clubhouse? Thank you.
Thanks. If I can just quickly go back to the last, say, couple of years or three years of traction of Camellias. It's consistently performed at a certain level and with a price increase. If you've seen, there's almost been a 25% increase from what we started off, say, in about 3.5 odd years. Going forward, the clubhouse, unfortunately, because of the second wave, everything had to be deferred. That is something that people are yet to see and believe that a product like this can exist within India. I'm benchmarking this with anything else that is ever built in the world. I don't think there's anything that can come even close to a Camellias and the clubhouse in the whole world.
It'll put to shame a lot of five-star hotels, and we are also making sure that the services levels of The Camellias are backing this up to the hilt. There is nothing left to chance. To answer that question, yes, we are already seeing, in fact, let me answer this in a way that everybody understands. We started a rental program that you all asked us in the last call. Happy to now announce to you that just two days back, and the smallest apartment size, it was 7,400 sq ft, got leased, and that was not our apartment, it was our investor's apartment, got leased at INR 725,000 a sq ft.
INR 725,000.
Sorry, INR 7,250 crore per apartment and plus the maintenance. What that actually means is today we are at The Camellias, we are at about INR 37,500 net off. We are doing say about INR 33 odd thousand. This easily has the potential of going up by, if you even capitalize that rental, that's about INR 40,000. First, yes, even in this quarter, as I mentioned to you, the receivables have gone up because our discount patterns have come down by almost half. I assure you, going forward, the potential is what I just mentioned, per square foot is reasonably high.
The velocity of the sales-
Velocity of the sales, as you see in results, have continued to be there. The pandemic, after this whole thing left and people kind of got a breather, within that, there were about almost three to four Zoom calls. Of course, as soon as it ended, there were about five to eight site visits, which were done in the first three days of the lockdown ending. I am seeing traction. I am seeing demand. We've worked very hard over the last couple of years to create that. The messaging is all over the world. I think if you ask me with regard to how many people are right now interested, I can safely tell you there are upwards of about almost 50 people that we are in a conversation with who are in the A category, which I call the hot category.
I think we will make sure that, to your point, we will make sure that not only the price goes up, but also the value does. Thanks.
Thank you very much. We'll take our next question, which is an audio question from the line of Kunal Lakhan from CLSA. Please go ahead.
Yeah. Hi, good afternoon. We have about an unleased area of about 3.3 million sq ft in our under construction portfolio, and of which almost 2.5 million sq ft is in Chennai alone. My question is, with the kind of slowdown that we are seeing in new leasing in the midterm-
The 1.5 million are already pre-leased to the extent of 500,000 sq ft. These will be ready by Q3 to early Q4 of FY 2022. We believe by the time they come up, we are making all efforts to see that they are predominantly pre-leased.
Sure. Just let me ask this differently. In case, in a hypothetical situation, if we don't end up pre-leasing or if there is no execution of the option value, where would that INR 4,300 crore or INR 4,400 crore rental stand at the end of FY 2024?
Let me explain that. I think let me first correct it. The question which Saurabh had asked, I had answered that FY 2022, the March exit rental will be such that FY 2023 will be INR 37,000 crore, INR 3,800 crore. Please appreciate that in addition to the existing rentals that we have, Cyberpark, which is 2.5 million sq ft, will be at its full potential by the end of this year in terms of the tenants having to start paying their rentals. It's already reached about 70% of its full potential. The Block 12 in Chennai will also give the full rentals. Then we will have the benefit of One Horizon Center acquisition for the entire 12 months.
Given that, we will reach INR 3,700-INR 3,750 for FY 2022. Based on the exit rate, we will move on also aided by the fact that retail, which we have a normal potential of 700,000 to 750,000. In the current year, we are projecting about INR 375-INR 400 crores. This will have its full potential in the coming year. I think we are fairly in line to achieve what I mentioned earlier.
Kunal, with respect to your question on the REIT, I think what we will be, hopefully, is that we should be REIT ready in about four quarters from now. We have more or less frozen the restructuring decisions that we need to take, and I think now it's a question of implementing them through the various modalities that are required. When the REIT actually gets listed is frankly a decision between the two shareholders, DLF and GIC, and the state of the markets at that time, frankly. That I would rather defer to how things are four quarters from now, but we clearly are targeting that we should be completely REIT ready by that time from a structuring standpoint.
Sure. Thank you so much. That's very helpful. My second question is on, you mentioned earlier in your comments that we may surpass INR 4,000 crores of sales. Considering we are looking at an upcycle in housing and the strength of our brand and balance sheet, do you think we can return to our sales run rate of INR 7,000 crore-INR 8,000 crore annually, which we used to clock, say, prior to 2012?
Yes, we can. I don't think there is a doubt that we can't. The issue is also frankly that in all fairness, we don't want to necessarily be on a treadmill where we're generating 10%-15% EBITDA and generating INR 10,000 crore or INR 8,000 crore of sales per annum. That has never been our goal. That will never be our goal. I think what we will rather be focused on is a certain EBITDA and a certain margin run rate, and hence creating products which not only sell well but also are EBITDA accretive in generating.
Clearly with the kind of launches that Aakash Ohri has planned, with the complete potential of the GIC joint venture, which is about almost 9 million sq ft across the next four to six years, I see no reason why this INR 4,000 odd crore a year should not keep on growing, as long as the overall macro situation remains constant. In all fairness, we have desisted from giving an attractive growth path to it right now. We believe that once we have a few quarters of consistently four-digit sales per quarter behind us, we can lay out hopefully a faster growth path anyway.
Yeah, of course.
We are confident.
Just a related question on that. Do you think, beyond the launch pipeline that you've highlighted, there is potential to bring in a lot of plotted developments across our portfolio?
No. Most of the plotted developments, actually what we are doing in the last since October, November, and will continue for the next two years, is to convert them into floors and monetize them that way, which clearly is a more lucrative way. Throughout this year, except for the GIC JVs, we are not planning the launch of any of the high rises in Gurgaon. At some stage, those will see a comeback and those will see a significant comeback. That's when the sales growth should start gathering momentum even further. Except for one-off plotted launch, there may not be too many plotted launches per se. Am I right, Aakash?
Sure. Thank you so much. Sorry, go ahead.
I was saying that plotted, as you know, has had its own traction, and acceptability. To immediately convert that into floors or create value, I think that has been lapped up much faster. Plotted as far as the land is concerned, well, has its own pluses, and that will remain. I think today, the demand and both from the point of view of condominium living and yet living independently, with a certain amount of services thrown in, I think both those things are running as those demands are running concurrently today. Today the customer wants a ready-to-move-in opportunity rather than get into a mode of construction. I think that's what Mr. Tyagi is saying. We will monetize it through that process.
Thanks again, and congratulations, Ashok, on your elevation to the CEO. Thank you, and wish you all the best.
Thank you.
Thank you. We'll take our next question, which is a text question from Sameer Baisiwala from Morgan Stanley. Firstly, he would like to congratulate and give his best wishes to Mr. Tyagi. His questions are, first question is: What are your thoughts about golf course extension micro-market? Is there a business rationale for you to build presence there? His second question is on commercial leasing. The question is: When do you expect new leasing markets to open up at pre-COVID levels? When do you expect completion of Downtown Gurgaon and Chennai? Any plans on phase II Downtown Gurgaon? The third question is, he would like to know your updated thoughts on Tulsi Wadi and Chanakyapuri. The fourth question is: How much time do you give yourself to sell down Camellia's inventory? Thank you.
Would you like to know about Golf Course Extension Road from a residential development point of view or from the commercial development point of view?
Maybe, sir, you can come to.
Sure. Okay. I'll leave the leasing questions to Sriram Khattar, but on the two questions pertaining to the resi market. The Golf Course Extension Road, frankly, especially ever since the entire Cyberc ity to Golf Course Road underpass got constructed, has actually become a pretty attractive micro-market. The players there are doing well. We have one extremely strong site of 25 acres there, which is on our radar and at some stage will come in the launch pipeline. Clearly, Golf Course Extension Road has a good micro-market in that piece of the entire geography. Your question on Tulsiwadi or Chanakyapuri. Tulsiwadi, the slum rehab activities are going on. They were slightly impacted in the last three months because of the Mumbai lockdown. There's one tower which is now ready. Obviously, the entire rehab process will commence once the lockdown gets completely lifted.
We expect, and I don't fully understand the nuances of the Mumbai approval policy, but what I'm told is that the first phase of the sale building should be at least technically available for launch in the next about nine odd months. The exact timing of launch and all of those things will obviously have to be discussed between the three shareholders and decided. As you know, we have only about 27.5%.
shareholders in that RE. Clearly, we do believe that now the hard grunt work, a significant chunk of that is behind us, and hopefully the sale pipeline should commence in the next 9 to 12-month process. Chanakyapuri, I think clearly we continue to work on the planning and all those things. As we had mentioned last time, we are still hopeful if we can get some additional approvals to be able to increase the development potential of that entire township. That may still be maybe one to two years away from actually completing the planning process really. Most of the legal issues with respect to that land have all gone away, including its eligibility for developing residential and all those things. Now it's only a question of how much development potential are we able to eventually get out of that one.
On the two questions on the rental side. The first one was, when do we expect the leasing to get to pre-COVID levels? To answer that, the pre-COVID levels of office leasing were between 6 to 7 million square feet in terms of gross leasing per annum. I believe that if this vaccination program continues and a substantial portion of the population is vaccinated by this year-end, FY 2023 should be near around that level. If not the full 100%, at least 90% of that level, which is FY 2023. In terms of completion of Downtown Gurgaon and Downtown Chennai, Downtown Gurgaon, the first phase of 1.5 million will be completed late Q3, early Q4 of FY 2022. Downtown Chennai is in two phases. The first phase will be completed by the middle to third quarter of next calendar year.
The block that we are building of 1 million sq ft, which is already pre-leased, will be completed within 12 months after that.
Okay. Thank you.
18 square, yes.
Thank you, sir. Our next question is an audio-video question from Mr. Puneet Gulati from HSBC. Mr. Gulati, may I request you to please accept the prompt on your screen to proceed with your question?
Yeah, hi. Thank you so much. This is a follow-up question. Just on the same interest cost and the construction cost, if you notice, in Q3, your finance cost was INR 128 crore, which went up to INR 211 crore. Similarly, construction cost Q3 was INR 232 crore, went up to INR 394 crore. That's what I really want to understand in Q4, what really led to this increase in the construction cost and finance cost?
No, I think you'll have to repeat the question, please. Right, for my understanding.
Yeah. Sorry. In the cash flow statement, there is a finance cost which has gone up to INR 211 crore from INR 128 crore in Q3. Similarly, on the construction cost, it is INR 394 crore versus INR 232 crore in Q3. What is driving this increase in both these costs?
Finance cost, clearly, I think that's to do with the NCD interest what we paid. As you know, the NCD interest gets paid in the month of March.
Okay.
While we accrue it every quarter, but the payment happens annually. That's almost close to INR 90 crore.
Right. Okay.
that got paid during the quarter. That's answering the first question. Second question is on your construction CapEx.
Yeah.
INR 207, INR 230, that's largely to link with the construction activity. As the construction activity has increased, the payments are actually linked to that. It's nothing but a large part of the payments, almost close to INR 400 crores got paid because of the increase in the construction activity during quarter four. In fact, I'll say second half of last year. While it picked up in December quarter, but a large part of the outflow happened in March quarter.
It's INR 394 crore kind of quarterly run rate is what one should assume going forward as well?
No, I have given the guidance, it's around INR 1,200 crores, so you can take INR 100 crores or INR 25 crores-INR 300 crores.
Okay. Understood.
Per quarter, right?
Yes. Okay. Understood. Similarly, there is other income increase for DCCDL. What does that relate to?
The other income increase in DCCDL is primarily due to the accounting standards which requires us to do the fair market valuation of the asset acquired. We have acquired One Horizon Center completely in February, and since the earlier acquisition of about 50% got at a rate lower than what we acquired the second 50% at, the difference between the two was acquired and has come as other income. That's primarily the other income.
Yeah. Got it. Understood. For the balance construction cost for Chennai, you said INR 150 crore is the balance construction cost for DLF Downtown Chennai. What would be the balance for DLF Downtown Gurgaon?
Yeah. Let me share the figures with you.
Yeah.
The first two towers of 2 million, the total cost is about INR 800 crores. We have incurred about INR 200-250 crores, INR 275 crores, and the balance INR 500 odd crores will be spent. On the third tower, which is pre-leased, we have not spent much at the moment, I think, in terms of mainly the architectural fees, et cetera. That which will be constructed over the next 24-30 months, the cost of that is about another INR 400-450 crores.
Okay. For Downtown Gurgaon?
Downtown Gurgaon, the first INR 1.5 million, out of INR 600, we spent about INR 350 crore, INR 375 crore. The balance INR 200 odd crore will be spent, INR 225 crore will be spent in the next one year. Typically, what happens is that even after the building is up and running, because of retention and other clearances, the payment for that project continues for a period of 12 months after that, and the carry forward is roughly 10%-15% of the total project cost. If you take Cyberpark as an example, while the total project cost was in the ballpark of INR 1,350 crore-INR 1,400 crore, we still have about INR 100 crore, INR 150 crore of retention money and other monies to be released to the contractors for Cyberpark.
Understood. For the physical structure is almost complete.
The physical structure is complete. The MEP and facade work is ongoing.
Okay.
It got a little slowed down because of the second wave. I think we are well in line to get our occupancy certificate by end of this calendar year, early next year.
Okay. Understood. For the balance 1.5 second phase at Downtown Gurgaon, how much would you need to spend?
1.5 million in Downtown Gurgaon?
Yeah.
Yes. That, I think, we can go with a ballpark figure of about INR 4,500 a sq ft on 1.5 million. That's another INR 600 crore that we need to spend on that.
Okay. Inclusive of all approval costs?
Yes. I think, yes, it's inclusive of approval cost and architectural fees, et cetera.
Understood. My last question is on the board composition. Now you have two additional members on the family side joining, replacing the earlier CEOs. In your notes, you also mentioned two independent directors resigning. Is the balance between independent and non-independent still the same, or do you have to recruit more independent directors now?
We had nine independent directors, of which two, Dharam Vir Kapur and Mr. Memani, retired. Dharam Vir Kapur was about 90, Mr. Memani was about 82, they have both retired. Their tenure ended on March 31st. Obviously because of their age and the fact that they had served those two terms under the new Companies Act and were not eligible for reappointment, they retired. The number of independent directors is now seven, and the number of non-independent directors, including the executive director, with the inclusion of these two new board members, is also seven now. We are now at seven and seven, which is what is recommended by SEBI.
Understood. That's very helpful. Thank you so much, and all the best. Thank you. Next question is from Saurabh Kumar from JPMorgan. Please go ahead. Mr. Saurabh Kumar, I would request you to please accept the prompt and unmute your microphone to proceed with your question.
Am I audible?
Yes, you are. Please go ahead.
Okay. The first question is on the Hines JV. Is there any pre-leasing you have done, Khattar Sir, there? Or that's just Hines' responsibility, and you are pretty much done on that?
No. The Hines JV, Saurabh, as you know, is two-thirds DLF and one-third Hines. The master planning is just about finishing. Because the master planning is finishing, the excavation work, et cetera, has started, but the physical construction will take another few months. We have yet not started marketing it.
The leasing responsibility lies with DLF or Hines, or it's joint?
At the moment, it's combined. I think we have a very deep relationship with Hines for the last 10, 11 years, and we plan to lease in a manner that we are able to leverage on each other's strengths. I think Hines connects in the U.S. from where a number of multinationals come to set up their back offices and captives of an extremely high order. DLF and our leasing teams are very strong in the local markets. We plan to create a synergy between these two to create the best leasing that we can do for that project.
Understood. Second, instead of this REIT structure, I just want to understand what DLF's corporate structure will evolve to. It seems that the REIT will be a subset of DCCDL, right? It will probably, would you put office and retail both in this? What do you think about the development pipeline? You have a 67/33, and then DCCDL spawns like a single REIT or is it two REITs? If you can give some clarity on how your eventual corporate structure evolves now with this REIT.
Hey, Saurabh, I'm delighted that you are finally getting interested in the REIT sector.
I'm not, sir, but since you decided to go ahead with it.
To be fair, whatever little we have sort of drawn this straw man with the tax and everything, actually, the REIT most probably will come above Cyberc ity.
The REIT will be owned by the two shareholders in the previous way, and then Cyber City and other entities will fall below the REIT. That may be the most efficient mechanism from an income extraction standpoint.
Is it just the office business then?
No. That again, Sir, is something that we'll obviously work with the bankers. There are two businesses to be taken. One is the office and retail or only office. B is, how do we ensure that the development pipeline is at a commercially acceptable level of whatever, somewhere in the mid-teens and does not go beyond that? Does that need a certain restructuring? Those are the two pieces that Sriram, Vivek, I, our CFO, Naveen, all of us are working with the tax consultants and the GIC folks.
Okay. The third thing, sir, on this parent company cash flow. Your two projects, the GIC is a JV, Horizon Center is a JV, right? After, as Vivek said, INR 1,200 crore construction outflow, you're pretty much done on the existing projects. I was just wondering because Delhi sales will probably not reflect either in your P&L or in your cash flow statement. Should we expect that from there on after this INR 1,200 crore, you just have inventory and maybe just INR 800 crore-INR 1,000 crore of CapEx? From what it looks like.
Look, the sale responsibility for the GIC JV is ours. You'll still see that sales number appearing in the pre-sale. You're right. From a P&L and an income recognition standpoint, that will follow a more complex method of revenue share and other income heads. There are certain income heads identified as per the JV agreement by which DLF gets the income, and there are certain income heads by which GIC gets the income. That will be driven by both streams in that sense. Like any JV with a sovereign fund. The sale responsibility will completely rest with DLF and its team.
No, I was asking more from a cash flow perspective. We don't see either the income.
The cash flow will come from those same streams. You're right, the sale cash flow will flow from the JV. When the JV pays out those brand fees and revenue share fees and all the other fees to both the shareholders, that's how the cash flow will start, and we will start expecting that.
Okay. After this INR 1,200 crore, whatever you have to spend, basically it's all new projects, right?
Exactly. Absolutely. Yeah. That's absolutely right.
Okay, understood. Thank you.
Thank you. The next question is a text question from the line of Saurabh Taparia from UBS. His question is: When do you expect to generate operating cash on the DLF levels? Even with INR 1,000 crore of quarterly average sales and reduced OPEX, one-off like tax refunds, et cetera, are helping generate positive cash.
First of all, I think the last financial year itself, I think we've generated almost INR 382 crore of cash. Yes, you're right. Technically speaking, yes, the income tax refunds actually aided that generation. No doubt about that. I think as I already said, our collections, which are improving quarter-on-quarter, our cost base, which has been set, and payables, which I talked about INR 1,200 crore, including all commitments for our inventory. As new products we start launching and they start generating cash, we are confident that this year we will be able to sustain, if not improve the performance on the cash front. I think this quarter may be a bit challenged, but we are still trying our best. On a full year basis, we certainly are committed to improving our performance compared to the last financial year.
Thank you. We'll move on to our next question, which is from the line of Manish Ostwal from Nirmal Bang Securities Private Limited. Congratulations to Team DLF on good set of numbers. This question is, what would be the second wave impact on retail portfolio in terms of rent waiver or vacancy levels? When do you see DCCDL to pre-COVID occupancy level, which is 95%? On DLF Resi-Devco business, how is current sales inquiry and converting sales trends? Your views recently approved Model Tenancy Act and overall housing rental market development in your key markets? Thank you.
Let me take the questions on the retail business and what we plan to do and when do we look at occupancy levels to pre-COVID levels. On retail, let me take you back last year where DLF Retail took a leadership position in the industry and decided to support the retailers by charging no rental during the period where the malls and the shops of the retailers were shut down. Whilst we have not taken a final decision on this, we expect that the program this year will be on similar lines. However, unlike last year, where the comeback to the malls was slow, we believe that this time, because of the vaccination program and because of the various precautions that we have taken, we believe that the retailers will have a better year compared to last year with the footfalls coming back.
How the whole program pans out, I cannot say, but I can only say is that I believe that we should support the retailers this year also by not charging renters during the period that the malls were shut. On the, when will we reach our occupancy of pre-COVID levels? I would tend to think FY 2023, we will be somewhere near the occupancy of the pre-COVID levels. What was your third question?
Sales inquiry.
With regard to the sales inquiry, let me tell you something that happened in April, immediately after the lockdown. I'll give you an example of Kasauli, where there was some lesser-known inventory that was lying with us, which we were planning to bring out in any case in Q2. Then, of course, launched the second phase of Kasauli. The inquiries and this whole option of having a second home, which is an extension of your first home, I think that became a reality, and in three days flat, we sold that entire 90% of inventory in three days. Not only inquiries, to your point, but also people are immediately wanting to make those commitments and putting the money down. One is that. That was one area. We saw similar traction in Tri-city, which is Panchkula and Gurugram.
We saw in Indore, we saw in the floors, as I was telling you. Just as we have started to open, I was making that point about super luxury. I'm happy to let you know that as we stand today, we are already in the numbers, as I said, almost coming close to the double digit in super luxury sales in just this quarter. I'm seeing an increase in residential investments, residential demand. I'm seeing that happen for two reasons. I'm seeing a very clear trend of people wanting to upgrade or increase the size of their homes. The first time I participated in one of the webinars in June, I had made that comment where at that point in time it wasn't substantiated. As we saw in quarters going forward, that's what it is.
I see a big demand in residential apartments and I see a big demand in that business. I also see people now very clearly looking at second homes, as not an option anymore, but as something which has become a necessity. That is something which is good, where an extension and a second home is now becoming a priority for people. That is very clear. The trends are clear, and so are the sales closures. Hopefully, both those points are taken care of. You talked about the Model Tenancy. That I feel is, more or less, we've been conforming to most of that, even previously. If you look at deposits of two months versus six months in commercial, I think for us, we've been following that. I think it'll only add to some of these residential agreements that have recently happened.
Maybe there is an uptick I see there. I think there also we will see some kind of increase and confidence that the market will have. All these measures I'm seeing are only going to increase the demand for the residential sector. Thank you.
Thank you very much. Ladies and gentlemen, that was our last question for today. I now hand over the conference to Mr. Tyagi for closing remarks. Over to you, sir.
Thank you all for joining us on a Saturday afternoon. This seems to be our preferred time for inviting you anyway. All of us are emerging from a pretty tough COVID situation, and I hope all of you and your families are safe and continue to be safe. I think clearly the residential sales is gathering traction, and the commercial leasing business also after some time on account of the COVID, I'm sure has a extremely strong roadmap to grow. We believe that we are now geared up well for leveraging the opportunity offered by both of these businesses, and hopefully we'll continue to stay engaged with all of you.
Later part of the year, hopefully, as travel becomes more prevalent and the residential COVID issues die down, would love to host all of you in Gurgaon again, and show you not only the new Camellias Club, but also the completed Cyberpark, the advanced completion stage of Downtown and whatever else is happening. Clearly look forward to continued engagement. Thank you.
Thank you.
Thank you.