Ladies and gentlemen, good day and welcome to DLF Limited's Q2 FY25 Earnings Conference Call. We have with us today on the call Mr. Ashok Tyagi, Managing Director, DLF Limited, Mr. Sriram Khattar, Vice Chairman and Managing Director, Rental Business, Mr. Aakash Ohri, Joint Managing Director and Chief Business Officer, and Mr. Badal Bagri, Group CFO, DLF Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Badal Bagri. Thank you, and over to you, sir.
Good afternoon, everyone, and thank you for joining this call. Sriram will be joining us in a few minutes from now. First of all, to begin with, I would like to wish all of you a very happy Diwali and hope all of you had a good time with your family. Let's start with the quarterly highlights. New sales bookings for the quarter stood at over INR 4,300 crores, which was led by our successful maiden launch in Mumbai, the Privana West , which was extremely well received.
Our momentum on the super luxury segment continues to be robust. Consequently, cumulatively, our sales for the first half of this fiscal stand at over INR 15,750 crores, which is in line with the guidance which we have provided for this fiscal. Collections were at INR 2,672 crores, which was in line with the demands raised based on the construction and payment milestones.
We continue to have extremely high collection efficiency across all our launch projects. We would like to highlight that this number does not include the collections of JV, which is the Privana West, which was approximately INR 240 crores. As the construction progresses and corresponding payment plans are there, we expect the collections to inch up in the second half of this fiscal. As guided earlier, our construction is witnessing a ramp-up, and consequently, we saw an increase in the outflow for construction expenses at INR 925 crores. Overall gross cash balance stood at over INR 9,200 crores, of which approximately INR 8,350 crores is in RERA accounts. We repaid INR 963 crores of debt in the current quarter, leading to our outstanding debt position as of September 30th to be INR 1,487 crores.
In line with our strategy of increasing shareholder returns through higher dividend payouts, we paid 1,485 crores of dividend in this quarter, implying a INR 6 payout per share, reflecting a 20% growth year- over- year. Consolidated revenues stood at 2,262 crores, EBITDA at 902 crores, and PAT of 1,171 crores on a consolidated basis. This includes a one-time impact of approximately 600 crores on account of the settlement done on the Tulsiwadi project, which was entered into in the previous quarter in the month of July. This has been accounted partly in other income and exceptional item. CRISIL has upgraded the credit rating of DLF Limited, and it stands at AA plus with a stable outlook, which reflects our strong balance sheet, our healthy cash flow generation, and sustained business performance.
As we have highlighted in the past, apart from pre-sales, our focus area continues to be gross margins and surplus cash generation. At the end of this quarter, as of 30 September, our gross margin potential stood at over INR 40,000 crores, and surplus cash potential stood at over INR 44,000 crores. On the annuity business, our operational rental portfolio stands at 49 million sq ft, which is one of the largest organically grown businesses. We continue to maintain extremely high levels of occupancies. On a value basis, it's around 96%, and area basis, almost 94%. Non-SEZ office is over 98%, and retail continues to be at 97%, 98%. Over DCCDL, rental income grew to INR 1,362 crores, which reflects a 15% growth year- over- year. PAT grew by 23% for the same period.
DCCDL net debt stood at INR 17,335 crores as of September end, and net debt to EBITDA on an annualized basis stood at a healthy 3.1 x. DCCDL has been awarded a five-star rating by GRESB for its ESG initiatives and has been awarded as the global sector leader in this space. Our pre-sales continues to be very, very strong. Atrium Place, which is 3.1 million sq ft, our pre-sales levels are all at 93%. Midtown Plaza, where we have received the OC, the pre-sales pre-leasing has been at 85%. With this, I'll hand over to Michelle for Q&A.
Thank you very much, sir. Ladies and gentlemen, we will now begin with a question-and-answer session. Please click on the Ask a Question tab to ask questions to the people who are connected on Webcast. You may also ask audio questions by clicking star and one on your touch-tone phone.
So, Badal, it is pre-leasing, not pre-. Pre-leasing,
yes.
That's just a little bit of a.
The first question is from the line of Aakash Gupta from Nomura. Please go ahead.
Hi, am I audible?
Yes, sir. Please proceed.
Hi, sir. Congratulations on good performance this quarter. My question was on your launch pipeline in the second half. Where are we on the Goa project? And then we saw a pickup in the Dahlias sales this quarter. How should we think about the Dahlias sales for the rest of the quarter? That's my first question. And then my second question is on the FY27 launch pipeline. What projects are we looking at for launches there? Thank you.
Aakash, you want to take it?
Yeah, I'll take this. So, thanks, Aakash. First of all, your question on the present status of Goa is all approvals are received. There is a court case that is going on in Goa, which is not related to us. But I think as far as we are concerned, we are getting launch ready in Goa, which we hope to bring hopefully in this quarter. Otherwise, definitely next quarter. That's Goa.
Your question on Dahlias is Dahlias has done well for this quarter. You may have heard the news yesterday about this big sale also that happened. Dahlias is on its track, but Dahlias is not a mass product. We take Dahlias on an invitation basis only, and that will continue. So, so far, so good. We've done over 50% of sales in Dahlias, and we'll continue our kind of a course there.
With regard to launch pipeline for 2027, we've got good things happening then as well. We've got the Hamilton II project lined up. We've got another Privana. We've got some developments in Panchkula. So, we've got the next 18 months kind of clear visibility of what we want to do and how we want to do it. Right now, as Badal was saying, that our main focus right now is making sure that our construction capabilities are strengthened so that our customer commitments are on track. Aakash, does that answer it?
Yes, sir. Just a follow-up question on the pre-sales guidance. I think we have a guidance of INR 200 billion-INR 210 billion for FY26. We have already done INR 160 billion- INR 170 billion in the first half. Is there any upside risk to the guidance for FY26?
No. I think as far as we are concerned, we are going to be working on that particular commitment as of now. I don't think at this point in time we'd like to overcommit ourselves. But as you know, we are focusing. Our main focus has always been on margins, and you've seen the report, and we'd like to maintain that trajectory.
Got it. Got it. And so, one final question on the Yari Road land parcel. Is that coming in FY27?
Road will, I mean, not FY27, maybe end of it. But at this point of time, we've got, I mean, the sequence that I've kind of mentioned to you first is how it is going to play out.
Understood, sir. Thank you so much.
Aakash, we are in the process of getting the final licensing and some of those things on there. So I think Aakash, Mr. Ohri is right. There are two Aakashes, one is dealing with right now. So it will come sometime, hopefully in the next 18 months. But obviously, there are some things that still need to be there to make it completely ready for coming to the market.
Understood, sir. Thank you so much and best of luck.
Thank you.
Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, I think congratulations on very, very strong numbers on pre-sales. So, Aakash, my question, so I quite didn't get what is the launch pipeline for the rest of the year. So what I could gather is that Goa is the next launch. So after that, any other launch for the rest of the year?
Yeah, we've got the Arbour II, the senior launch that is pending. We've got some things in Panchkula that's going to happen. Obviously, Dahlias, the next phase before we formally launch it sometime in Q1, the main launch. But definitely in Q4, we'd be doing some more, I'd say, invitations in Dahlias. So we've got our hands full, Parikshit, right now for at least the next quarter and a half. So we've got these two, three things lined up.
Okay. And sequencing-wise, you said Q3 is Goa. So Goa will be upwards of 3,000. So what will be the gross development value of Goa? And also, if you can highlight The Arbour II tentatively, what is the timing and what kind of GDV you are expecting to reach?
So I'll tell you, Parikshit, if I may step in. Across the next 18-month cycle, we have Goa lined up. We have this Arbour senior living lined up. We have hopefully one round of Privana lined up. We have one round of what is usually called Hamilton II, Hamilton II. We have the next phase of Privana West. We have Panchkula. Across the next five and a half quarters, how these three things are eventually launched will be a function of the approval cycle and the underlying demand in those places.
We are a business which, frankly, does not position ourselves disproportionately on the depth of line of sight into how a particular quarter is looking or not looking, frankly. It's a long-cycle business. But across the next 18 months, I have broadly laid out, Aakash has also laid out, the sort of launches that we are looking at.
The exact timing of these will, frankly, be a function of the underlying demand and the approval cycles of each of these individual projects.
Understood, sir. So the second question is, I mean, for the last many series of launches, we have been seeing a complete sellout, including the Privana West. So Aakash, can you give us some flavor on the demand now in subsequent launches? So are you seeing a similar kind of trend, or do you think that now the thing is of past and maybe the velocity will slow down as the realizations have gone up and it'll be more distributed now with the construction of the project?
So are you talking about new going forward? What are you talking about?
New projects, the new projects which are lined up for launches.
Parikshit, as you know, every time there are doubts and all that, and there are certain markets which operate differently. But as DLF, we operate differently. So for us, as far as we are concerned, I think I've said it before also, for me, the world is my playing stage. So it is not concentrating on any particular geography of what I mean.
Wherever there is an Indian outside, wherever there is, let's say, an investor within the country, a strong person who's keen, for me, it's like a continuum. We continue to market brand DLF. So as far as we are concerned, yes, we kind of get into this first-day-first-show mostly. But again, to prepare for that, it takes time. But Mumbai has been an overwhelming response. We just did our brokers' reward and recognition yesterday. It was again a full house.
So all that will continue to happen. But I think, yeah, if you ask me that right now going forward, we'd like to keep each launch as take it one-time launch. And I think we'll prepare for them as we do regularly in how our processes work. I don't think we can take any launch for granted or any market for granted or any individual. But for us, as I said, we continue to find DLF as one of the most prominent and most preferred asset class, and especially in the residential offering. One thing that I can just answer this question for you is that today, the demand for DLF is not geography-specific. I am getting responses from across the country. And that is my policy of one DLF. It doesn't really matter where you are.
As long as it's an asset, as long as it's something that is giving you great returns and fantastic living value, I think that is what is driven home. That is where I have investments from every potential investor coming into a DLF property launch, whether it is in Mumbai, whether it is in Panchkula, whether it's in Gurgaon or Delhi.
Okay. So basically, my question was, are you seeing any slowdown in demand? And what I could gather is that you continue to see the strong demand, and the velocities which we have seen in the past may continue to happen project by project. Is that the right assumption?
Yeah, yeah. I only speak for DLF right now. So I just.
Yeah.
Yeah. I just feel that we have a certain set of people we've created or have worked with for over years. And I'd like to believe that, look, we will go back to them and their kith and kin and our extended relationships. And I feel that DLF today is a very strong brand to reckon with and has become a good source of investment. I'm happy to tell you that the top equity brokers have also invested in the super luxury real estate today. So I think that itself is a fantastic validation of what the residential business is doing today of DLF.
Okay. Just last question, Aakash. So now, Noida's prices have come in line with what Gurgaon or they're coming closer to that. And also in MMR after the successful Privana West. So how are you looking at business development in these two locations going ahead to get incremental market share and growth on pre-sales?
See, Noida. I think as and when we get a good deal in Noida, we will be there. Noida is something which has been also calling us for some time. Mr. Tyagi sitting here, he's also listening to you. So as far as Noida is concerned, yes, we are if you ask me whether I'm prepared for Noida, the answer is yes. And we will come into Noida as soon as we get a good deal. We just want to make sure that for us, it's an opportunity cost of time and money and energy. Either you continue to spend time to clean up a land parcel or you get something which is reasonably clean so that we can get involved, we'd go with the latter. And Mumbai, the same. I think we're right now going to be busy with our phase II launch.
The first launch has been a very humbling experience. So we will continue to keep our head down and do our job there. And yes, as and when there are other opportunities in Mumbai, we are going to be doing that. In fact, as I speak to you, I'm in Mumbai meeting a lot of new kind of CPs and everybody. So yes, we're excited to hear questions.
Thank you.
Thank you.
Thank you. The next question is from the line of Murtuza Arsiwalla from Kotak. Please go ahead. Mr. Arsiwalla, we are unable to hear you right now. Please unmute yourself and speak, please. As there is no response, we will move on to the next question, which is from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Hello. Am I audible?
Yes, sir. Please proceed.
Hello. Am I audible?
Yes, sir. You're audible. Yes.
Yeah, yeah. Okay, okay. So first question is on Dahlias when you mentioned that we'll have another phase of opening before the official launch. What sort of phasing out that we would want to do in terms of our inventory? So would it be similar to what we have done this quarter or more than that? How are we looking to phase out the rest of the inventory in Dahlias? That's my first.
Yeah. So Pritesh, Dahlias, as you know, is like a INR 100 crore plus kind of an investment. So again, just one thing that I want to say, it's not going to be a mass thing, but we are getting reasonable traction and pull. Even yesterday's news, we were trending number one in Twitter and everywhere else. So there's a good amount of attraction. We've got an attention we've got actually for Dahlias across the country, actually.
What is happening, the top five, 10 families in every big city is now reaching out to us, which is, again, something that we're working very hard on. So yes, we'd like to kind of maintain what we did for one more tranche of whatever placements that we want to do. But our process of kind of meeting people and all that is continuing.
And I feel we should be able to, we are already over 50%, 55% already sold. But I think our main game is going to begin after the experience center is ready and the whole show and tell starts, which is post-April. And then, of course, the price points will substantially go up from there. So I think let me put it this way. What we had to do for The Dahlias, we have done. And right now, now it has to kind of play its own game. And I feel that the game has just begun in The Dahlias. Please keep watching this space. But I think we are not going to be in any hurry and kind of just offloading. And nor is it a product which will. It's not that kind of also affordability and all that is going to play a big aspect there. Pritesh?
Sure, sure and yeah, yeah, I'm here and just for clarification, how many units were sold this quarter, and in terms of average realization, where we are in Dahlias?
The Dahlias, we're about, I think, close to 16,000 plus and there.
We sold 18 units this quarter, Pritesh. Okay. On cumulative basis, we have sold 221 units.
Yeah.
And pricing?
Pricing? Pricing in terms of what? Per unit?
Per square feet.
Yeah, per square feet.
Yeah, per square feet is now about. It's over a lakh.
Sure. Great. Okay.
And on carpet, it's now almost about 1.25 to 1.5 depending on where you are, where you're located.
So almost a 10 years kind of a pricing. Okay, okay. Second question on the collections. I'm sort of just trying to figure out how should I look at it. INR 2,500 crore annualized run rate of INR 10,000 crore. We have sold almost 15-20 thousand crore every year in the last three years. Right? Ideally, I would want the collection to catch up to that number. But alternatively, when I look at what we have sold in terms of major projects, right, Privana, Arbour, and Dahlias, cumulatively is around INR 46,000 crore. If that's supposed to be realized in the next four to five years, then this 10-11 thousand crore collection run rate is kind of enough, right? So do you expect this collection to scale up?
Or I think this INR 10,000-INR 12,000 crore annualized run rate should be a good number to look at, at least from the sales that we have done. And probably incrementally, once we add up more in terms of sales, then there would be growth in that collection. So just some thoughts on that.
Collection is as per schedule.
Pritesh, I think, as you rightly pointed out, our average collection for the last two quarters has been in the range of INR 2,700-INR 3,000 crores. As I also mentioned in my opening commentary, that the collection is dependent on the timing of the construction, how the construction develops, and it's all payment linked. Our collection efficiency remains extremely high across all our projects. In the second half, many of the milestones will come in, and you should expect uptick in the overall collections in the H2 of this financial year. On average, I would say INR 13-INR 14 thousand crore is the number broadly going forward, I think you can work on for the next year.
Perfect. Perfect. That's helpful. And lastly, on Atrium Place, how are we going to recognize the rentals coming from that asset into the cash flows? I think in P&L, we'll do in that one line JV item. But just in terms of cash flows, where should we look at for that number?
So Pritesh, I think as it is a JV, I think the cash flow is going to come only through either interest payout or dividend payouts in the parent company. So as of now, no cash flow has been included from Atrium. The profit will also come as a one-line pickup, as we see in DCCDL as far as DLF Consult is concerned.
What we can do, Pritesh, is maybe from the quarter ending March, we can have a one-pager on the operating performance of Atrium so that there's complete visibility on the rental collections, leasing percentage, all of those things from your standpoint.
Fair enough. Yeah.
Of course, of course.
Pritesh, Atrium Place as an entity has a total development of 3.2 million, out of which 2.1 million the occupancy certificate came this quarter, and this 2.1 million, about 1.9 or between 1.9 and 1.95 million is already leased. Tenant fit-outs are progressing fast, and we expect the rental income to start coming in from December, but for all three put together, the rental income will come by about April of next year. That's one data point. The other data point is that the last tower of 1.1 million is under construction and is slated to be completed in May, June next year. By the way, it's already leased, and it should be handed over, and then the rentals will start six, seven months after that. So in its.
Sure. Perfect. That's helpful, and answer my question.
Yeah, and when all the four towers are rented and the rental comes in full force, I think the gross rental income is in the ballpark of INR 600-INR 650 crores.
Got it. Got it. Perfect. Thanks. That's it from my side. And all the best.
Thank you. Participants are requested to click on the raise hand button available on their Zoom screen. You may please raise your hand to ask questions. The next question is from the line of Abhinav Sinha from Jefferies. Please go ahead.
Hi. So just following up on the previous question on the rental income. So the three retail assets that we have completing this year, when do you expect them to start contributing to the P&L as well as the cash flows? And what should be that number?
So the rental income should start from the coming quarter, Q4, and will continue to accumulate till Q3 of next year or Q2 end of next year. That's because the OC for Midtown Plaza has come. We track the OC of Summit Plaza this quarter and the OC of Promenade in Q4. And after the OC comes, it typically takes 10ish to 5 months to do the fit-outs before the income starts coming in. I think on a cumulative basis for the three malls, the rental income should be about 450?
INR 450-INR 400 crores.
About INR 400 or close to another INR 60 crores for the Summit Plaza office towers. So about INR 450, INR 460 crores.
Okay. So that should be, say, the exit run rate in FY27, right? INR 400 crores.
Yes, absolutely.
Absolutely. Yeah.
Okay. And sir, yeah, I mean, have we started thinking about which assets to start working on? Because we are almost done with this round of CapEx in DLF Limited.
In DLF Limited.
Okay. So in DLF Limited, we are looking at identifying with Mr. Khattar and his team the potential assets that we can take on once these three plazas are commissioned. And if you look at the five-year projection that we had put out in the analyst presentation, actually, that does lay out some of those assets. And but I think serious work on those would possibly begin by early part of next year.
Early part of next year, and if you open your notes on the five-year projections we had given, we had tentatively laid out the assets that we are going to work on and develop over the five-year period.
Okay. Tyagi, on just continuing a little bit here. So we now have REITs being classified as equity very soon, and there has been a bit of a run-up. So any thoughts again on considering a REIT of DCCDL?
So Abhinav, I say that in all fairness, as you have said earlier also, that for us, the entire strategy of CyberCity monetization, the timing and the form would largely be driven by what our partners want. And from whatever we have understood so far, at least in the next, I'd say, medium term, right now, there does not seem to be any imminent plans of that. So I'd say at least for the next three years, possibly, we are not looking at anything serious.
And again, things are once we are close or once they are closer to making an option, we'll evaluate all the options that exist in the market at that time. REITs are looking good today. They were looking bad nine months back. Who knows what the situation is eight months, I mean, 18 months down the line? So yeah, it's quite a dynamic situation here.
Purely from a DLF standpoint.
Thank you for that.
Abhinav, purely from a DLF standpoint, we are clearly not in any hurry to monetize this entire great asset that's been created. But if at some stage the partner wants a public payout, at that time, we will definitely honor their wishes.
Right. So just one last bit on the Kolkata IT SEZ. I think that revenue recognition is still pending, right? So will it conclude this year?
The progress is good. Since it's an SEZ and there is a land parcel as part of the integrated sale, the approval process is rather slow because it not only needs the SEZ approval, but the state government approval also. Our teams are working on it. As we speak, the state government approval has come, and the development commissioner has given his go-ahead. Now it will go to the Board of Approvals for a final approval.
Then it will go through another round of approval for the de-notification. I think we are still about three months away, three and a half months away from monetization. Let me mention that from, I think, August onwards, there was a delay benefit that was attached. Therefore, every month, in addition to the rental, about INR 2.5 crores keeps getting accumulated to the sales consideration.
If you look at the sales value there, the rental and the sales consideration more than take care of the opportunity cost of those funds.
Okay. Thanks and all the best.
Thank you.
Thank you. We'll take the next question from the line of Praveen Choudhary from Morgan Stanley. Please go ahead. As the current participant is not answering, we will move on to the next question, which is from the line of Puneet Gulati. Please introduce yourself and proceed with your question, sir.
Yeah. Hi. Thank you so much. This is Puneet from HSBC. My first question is if you can talk a bit about the cost of construction for Atrium Place, Summit Plaza. How much has it really costed you to build Atrium?
Yeah. So we always calculate our cost of construction based on the gross usable area. So Atrium Place, including the cost of approvals and consultants, it's about INR 6,000 crores per sq ft. INR 6,000 per sq ft. Sorry. INR 6,000 a sq ft.
And if you add the land cost, etc., then how much would it have totally cost the JV entity?
So I mean, if you want me to give the math, the total cost, including cost of approvals and the opportunity cost of the purchase of land and otherwise, comes to about INR 17,000 sq ft. Yes, and if you look on the other side, the average rental is about, if you say, about INR 170 plus the parking income and the CAM income. And if you try to sort of multiply that by 12 and put whatever calculator you like, you will see the gross profits that are there or the value accretion that is there.
Puneet, this includes the land, the approval, the construction cost, the capitalized interest for the last four years, all of those things.
Okay. INR 17,000 a sq ft there.
Yeah. 1,000 a sq ft.
Okay. And on the debt side, while we don't really worry about debt, is there an endeavor to bring down gross debt to zero, or you think because of Atrium Place, now you'll always have a LRD kind of debt which will keep sitting here?
So in what way? In which entity? DLF, DLF, DCCDL, where?
DLF.
So in DLF, I think Puneet's endeavor is to kind of go to gross debt zero. So we are already at INR 1,487 crores, as I mentioned earlier. And we are working towards making, at least at the DLF level, the gross debt to be zero. In DCCDL and Atrium Place, we'll always have long-term loans because that's the most efficient way to operate those assets as well.
Great. That's helpful. And lastly, on the Privana West, like you talked about disclosing on the Atrium Place detail, that will be great if you can disclose the Privana West as well because that's also separate collections which investors should know and the construction spend which is happening there.
Sure. Absolutely.
Yeah. That's all from my side. Thank you so much and all the best.
Thank you. The next question is from the line of Parvez from Nuvama Group. Please go ahead.
Yeah. Hi. Good afternoon, and thanks for taking my question. So one question from my side. When we talked about our potential launches over the next 18 months, and which includes Goa, Arbour, Kasauli, Privana, etc., etc., what would be the total GDV of all these projects?
Parvees, the way we would like to look at this is that if you look at our analyst presentation which we had made, and this is also included in our quarterly presentation, we have a roadmap of a total launch of INR 115,000 crores in the next four to five years or so. We are tracking against that. It is, again, that we have already launched short of INR 50,000 crores. Almost INR 48,000 crores of products have already been launched between last year and this year. We benchmark ourselves to that number. Depending on government approvals and the market situation and the demand, I think we are product-ready, and we will be product-ready. Depending on the market situation over the next two to three years or so, these will get rectified, and these will get launched.
Sure, sir. The second question is some status of the under-construction projects. Lastly, the downtown in Gurugram and Chennai would be great. Thank you.
Downtown. So what would you like to know about that?
What is the status of construction and the likely timelines for completion, both in Gurugram and Chennai?
Yeah. So let me start with Gurgaon. Gurgaon is a total development of about 7.5 million sq ft. It's an integrated development and going down to six basements. So construction is now in full swing. And we expect to complete it by mid-2028. And in Chennai, Tower 4 and 5, the construction is also in full swing. And Chennai is ahead of Gurgaon by about six to eight months. So we should finish the construction of that by the end of 2028.
Sure, sir. Thanks and all the best.
Thank you.
Thank you. The next question is from the line of Ronald Siyoni. Kindly introduce yourself and proceed with your question, sir.
Yeah. Thank you for the opportunity. This is Ronald Siyoni from Sharekhan. I direct. Sir, I just wanted to understand on the cancellations part. We had seen this quarter also, one of the projects getting higher cancellations than sold. So at what point of time the contractual terms do not allow cancellations? Because I believe there is an interest component also attached with respect to cancellations. So at what point of time or the agreement or the construction timeline does the project or does the unit get canceled?
So I'm going to briefly recap our philosophy. Our philosophy over the last few years, recent past, at least, has been that if for whatever reason, technical, commercial, personal circumstances, our customer is not happy with staying in a particular project, we don't create any artificial impediments in retaining him with any unnecessary encumbrances. And hence, frankly, like Aakash can educate you on the cancellations in the last quarter. But there will always be one-off cancellations that will keep on happening because of individual customers, including at times what they thought they will get. And their own requirements may have evolved in the three or four years of construction. And so I don't think it's anything to be alarmed about.
And we definitely, while we obviously want everybody to abide by the contract, we don't use the contract to basically as a SIP. We obviously recover, we understand the deposit, etc. But we don't like to unnecessarily keep the customer artificially encumbered because of the contract. Aakash, please.
No, a couple of things. So Ronald, first of all, this is not a cancellation. This is actually an upgrade. To what Mr. Tyagi said, this is the product. Actually, as the product evolved and people, it came to its fruition and handover started to happen, people realized that they needed larger and bigger apartments. So first, that is a very healthy sign, actually. In fact, we can both going forward also, I think we could say cancellations or upgradation, whatever kind of clarifies further. So even if you look at the scheme of things with INR 16,000 crores of sales and all, it's a very minor kind of a thing.
But these are good problems to have because people have upgraded from a two to a four or a three to a four-bedroom, actually, and then have released their stock, which we happily take back and sell at present price points. The other thing, what Mr. Tyagi was saying, that when the other part, which is a very important part of retaining customers, is also it directly impacts our collections. So we have a very robust system where a third party tracks it within our system.
And they are responsible for collections. And should we find any red flags there, it's independent systems checking each other which flag such things. And generally, we avoid taking laggards and all. Generally, we give people enough time. But at no point in time do we penalize anybody, in fact, even deposits and all that. So I think that's how we go about it.
So collections is a very important factor of thing. And if you've seen, they're healthy because there are good sales. But there will always be these times where people would want to, for whatever reasons, bail out. And I think it gives, in our part, I think it is we report these things not only, but also it gives, I'm sure, the customer and overall market gets strength from how we practice this particular process because at no point in time, we hold on to people who don't want to be part of our system.
Yeah. That's very clear, sir. And thank you very much for the response. Best of luck, sir.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Ashok Tyagi for closing comments. Thank you, and over to you, sir.
Thank you so much, gentlemen and ladies, for joining this. I mean, I think as Badal, Mr. Khattar, and Aakash all took you through the various aspects of our performance, not only for the quarter but also the coming medium term, I think this continues to be a good phase for us as a company and possibly for the industry as a whole. I mean, residential, retail, and office building, all the three verticals are continuing to do well.
We continue to stay focused on responsible launches and selling, constructing to the utmost quality and with the utmost compliances, and trying our best to come up to the maximum expectations of our customers, be it in the commercial business or the residential business. Our own internal standards of governance, etc., continue to be. We keep on trying to improve those quarter on quarter, year on year.
I think, frankly, hopefully, with all this, look forward to reconnecting back with all of you in the new year. Thank you.
Thank you.
Thank you. Thank you, members of the management team. On behalf of DLF Limited, that concludes this conference. Thank you for joining us, and you may now exit the meeting. Thank you.