Good morning, ladies and gentlemen, and welcome to the Signatureglobal (India) Limited business update conference call hosted by ICICI Securities 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Chattopadhyay from ICICI Securities Limited. Thank you, and over to you, sir.
Yeah. On behalf of ICICI Securities, I welcome everyone on the call today. As always, from Signature Global India management, we have with us Mr. Pradeep Kumar Aggarwal, the Chairman and Full-Time Director; Mr. Lalit Kumar Aggarwal, the Vice Chairman and Full-Time Director; Mr. Ravi Aggarwal, the Managing Director; Mr. Devender Aggarwal, the Joint Managing Director and Full-Time Director; Mr. Rajat Kathuria, the Chief Executive Officer; Mr. Sanjeev Kumar Sharma, the Chief Financial Officer; and Miss Preetika Singh, the Head of Investor Relations. Now I'll have to hand over the call to the management to take us through the recent announcements, which they have done and way forward for the company. Over to you, sir. Thank you.
Thanks, Abhishek. Good morning, everyone. Welcome to Signature Global's Investor Call. RMZ and Signature Global are setting a stage for transforming commercial platform in Delhi NCR. Through a strategic joint venture in Gurugram, this partnership marks the beginning of institutional Grade A commercial ecosystem in one of India's fastest growing business corridor. By combining Signature Global deep NCR market expertise, spanning land acquisition, approvals, and acquisition, with RMZ global capability in design, development, leasing, and asset management, we are creating a scalable, scalable, scalable platform for future-ready commercial assets. This collaboration is designed to be redefine the Gurugram skyline and build enduring commercial destination in Delhi NCR. This is a significant milestone in our growth journey. India's commercial real estate sector is on a strong structural upcycle. The market is projected to expand from approximately $50 billion to...
in 2025 to nearly $250 billion by 2034, reflecting robust long-term growth fundamentals. India continue to be one of the fastest growing office market globally, with annual leasing of 50-60 million sq ft in recent years. Demand is being led by global capacity centers, IT, ITeS, BFSI, and multinational corporation. Total office stock has surpassed 800 million sq ft, with sustained additional of Grade A supply across leading cities. Within this landscape, Delhi NCR remains a dominant office market, and Gurugram stands out with a 100 million sq ft office stock, stable rental, healthy occupancy level, and strong demand for global corporates. Southern Peripheral Road is emerging as a next commercial growth corridor, supported by strong connectivity to Dwarka Expressway, NH 48, and Golf Course Extension Road, along with the ongoing infrastructure upgrades and metro expansion plans.
At Sector 71, this joint venture will develop a landmark mixed-use commercial project comprising premium retail, Grade A office space, and world-class hotel, designed to meet a global standard of quality and sustainability. For Signature Global, this marks a strategic expansion beyond residential development into large-scale commercial real estate through an institutional partnership model. Over the years, we have delivered over 16 million sq ft across multiple residential segments with a disciplined execution, governance, and customer-first approach. This foundation positions us strongly enter the commercial segment with the confidence and long-term vision. Together with RMZ, we aim to create a high-quality commercial platform that delivers sustainable value for our investors and stakeholders. With that, I now invite our CEO, Mr. Rajat Kathuria, to share further detail on development. Thank you for your continued trust and support.
... Yeah. Hi, good morning, everyone. Thanks for joining the call today morning. So, you know, over the years, we've always focused on the housing business. In the last 10, 11 years, we've always worked around a build-to-sell model, and we've evolved our way through in the housing business to, you know, achieve a particular sweet spot, wherein we've preferred to stick to the NCR region as well as we prefer to stick to the mid-income housing market. Over span of time, the definition of, you know, mid-income housing, may have, you know, drifted a little with prices have, you know, of land and construction have gone up, so, you know, mid-income today stands at higher price points than what it used to, be there about, you know, in the pre-pandemic era, at least.
But by and large, you know, the housing business has seen very good growth. We understand that business very well, and we've created a very strong, brand name, positioning, and very strong execution capabilities around our housing business. And, for a while, we were looking at, you know, newer growth opportunities where, you know, once we get into, you know, business, we can, you know, scale it, to much larger heights. We've been good with, you know, in the local market with land acquisitions, approvals, execution capabilities, but, there was a missing link with regard to, you know, projects conceptualizing some of these large scale, you know, heavily capitalized projects, and also with regard to leasing capabilities.
That's where, you know, we've were under a lot of debate internally on, you know, what's the right way to, you know, commence such a journey. So, I think, after a lot of deliberation, you know, we kind of met the folks at RMZ. There was a lot of meeting of minds and, you know, synergy with our skill sets. So we decided to set up a platform with the RMZ Group. I think we saw very complementary skill sets, because exactly what we wanted was what we were getting in terms of this partnership. They've executed more than 70+ million sq ft of projects till date and are very actively expanding on the back of institutional capital across the country.
Have limited presence in NCR region, but, you know, see a huge potential right now to expand and do much more business, in the NCR market. You know, the first choice, even at their level, is to look at, you know, the Gurugram market, which can very safely be called as the CBD market for the entire NCR, because bulk of Grade A office spaces are sitting in Gurugram right now. So with this, you know, broader sort of agendas, you know, taking, in, for both the groups, you know, we, we decided to initiate this partnership. So if I have to talk specifically around the deal, we have a 100% subsidiary called Gurugram Commercity Private Limited.
In our investor presentation, we've detailed our land portfolio in Sector 71, which is on the Southern Periphery Road of about 18.5 million sq ft, which emerges out of some 90+ acres of, you know, land rights/ownership. Out of this 18.5 million sq ft, we've been conservatively calling out about 7 million sq ft of development within Gurugram Commercity Private Limited. The actual numbers, as it is kind of getting closer to design, is higher than, you know, our initial estimates. But in this 7 million, which was initially, you know, guesstimated as the development potential, there is a component of residential which is about 30% of the development in this SPV, and about 70% pertains to, you know, commercial assets.
So that's what's permitted within this, you know, as part of the plans for this particular land parcel. So what we intend to do is to carve out the housing business into a parent entity and continue to do housing business 100%, you know, ourselves. That's our core business, you know, for the last decade. But on the commercial side, you know, the once we carve out the residential business, the commercial development, whether it is office space or retail or hotels, of. Technically, okay, about, we thought initially 5 million, but actually it's going to be closer to 5.5 million, is something where, you know, we are partnering with RMZ Group. So GCL, from currently being a 100% subsidiary, you know, we've signed up the transaction.
We have to do certain set of, achieve certain conditions prior to closing, which can't estimate an exact time, but we are hoping that over the next 45-60 days, you know, these, conditions will be met. We will offer 50% stake to RMZ Group, in GCL. As of today, there is land in this company, and we are at very advanced stage of approvals, but at the stage and we intend to design it together along with the RMZ Group. They will invest roughly about INR 1,283 crore, subject to minor, adjustments, but by and large, close to INR 1,280 crore, for a 50% stake in this entity.
These funds will primarily flow back to Signature because we've given a lot of loans into, you know, this entity right now, or there are some third-party loans, you know, so they'll be squared. But by and large, you know, once the transaction gets done, both the partners will own about 50% each in this particular SPV. And hopefully, by and large, this will be a debt-free, cash-free venture as we start it. You know, there could be minor debt or cash, but by and large, the intent is to keep it debt-free and cash-free. The intent is very clear. This is starting of a long journey. We are starting with about 5.5 million sq ft of development, which we intend to do together.
This development will be funded through a mix of, you know, further equity infusions, which may be needed and will be done in equal proportions by both the, you know, companies. But, you know, we'll also be raising construction finance for development of these core assets. The plans are yet to be finalized, but by and large, the asset base getting created under GCL will be from a leasing purpose. You know, the idea is to create a yield play, in this business, and also the intent is to grow this entity. Since we are very strong in this region, we do keep coming across, you know, good land parcels, good opportunities, and, you know, we are quite hopeful that this is just a beginning. We can actually scale up this venture significantly over the coming four to five years.
You know, with a start of, 5 million, we see an opportunity here to grow this to, let's say, 15-20 million over the next four to five years in terms of its, portfolio size. And, you know, once developed, it will be a significantly large business in itself. The intent is to maintain 50% stake by both the parties. Neither do RMZ wants to dilute or nor do we want to dilute. And, you know, both the parties are fairly confident that, equity can be infused into this entity at a comfortable pace by both of us.
Talking about ourselves, see, we currently, if you look at our portfolio, of just, if you just look at part of the portfolio, which is, like, recently launched and forthcoming projects, which is roughly 42 million sq ft, you know, that is expected to create a GDV in excess of INR 65,000 crore. We've partly achieved some of these sales and, you know, rest are, you know, expected to be achieved over the, you know, coming, let's say, you know, years. This leaves us with a massive, you know, operating surplus, and hence, the idea is that we deploy only a portion of it into GCL and start creating a yield portfolio alongside RMZ in this entity. I think by and large, that's the thesis and that's the, you know, background to this, trade.
Just to add on, I think, the residential business, which we are carving out of this entity, that in itself is significant. We'll have, another saleable area, within that, development of anywhere between 2-2.5 million sq ft, and that in itself, has, you know, GDV potential of about INR 5,000 crore. But, that's kind of, you know, coming as part of this overall, you know, numbers we've shared with you as part of Investor Day . We were hoping that, you know, this deal gets closed before our previous call.
We would have managed to do the entire update at one go, but, you know, the last minute, you know, signing took a week longer, and hence, you know, we thought we'll, we'll set up another call, and that's why. You know, thanks again to all of you for joining this call today. But, happy to, you know, address any, questions which you have, with regard to this trade or, with the intent of this partnership or anything, again, with regard to our core business. Happy to address, each one of those queries.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question from the line of Murtuza Arsiwalla from Kotak Securities. Please go ahead.
Hi, sir. Just 2-3 questions. One, on the INR 1,283 crore, which is there, can you give us a break up on, you know, what is the fresh money that's coming into the entity? What is the stake that is being bought? Any break up out there. And, you know, you've put in a number of the value being of the entire development being close to INR 14,000 crore-INR 16,000 crore. Could you give some building blocks around that? What is the rental expected? What are the timelines that you're looking at in terms of completing this project, et cetera?
Sure, Murtuza. So, Murtuza, this, the broad contours around the stake being offered and the consideration are the three.
We want this entity to have or let's say, on the closing date, the intent is the SPV will be able to establish, you know, almost close to 3.9 million sq ft of FSI and about 5.5 million sq ft of tentative, you know, saleable area in that SPV. We also intend to make it debt-free and cash-free. There are set of existing loans in this entity. There are, there are certain payments which are supposed to be made to, you know, the revenue department, DTCP, Haryana, with regard to this particular development. So we are just kind of crystallizing these liabilities and achieving certain other conditions.
To the extent we have to clear up liabilities in this entity, which is expected to be upwards of about INR 1,000 crore, we'll seek that much money in form of a primary infusion into the company. You know, this INR 1,000+ crore then either goes, you know, a small portion of it, maybe, you know, goes to DTCP, or, and bulk of that money comes back to SGIL, you know, because we've given fair bit of loans into this SPV till now. About INR 1,000+ crore will be in the form of primary infusion. The balance will be in the form of secondary stake sale of investment by SGIL to RMZ.
Both put together will add up to 50% stake being offered to RMZ, but as of today, we cannot exactly determine the quantum of liability on the closing date, and hence, you know, that split will be available once we are closer to closing. So that's on the deal contours. As far as the project development is concerned, see, this 5.5 million, Murtuza, will be anchored around an office space development. As of today, SPR is emerging like the next, you know, critical CBD-alike area.
You know, after Cyber City in Gurugram, I think this is a spot seeing maximum traction in terms of, you know, commercial developments, the, the upcoming infrastructure, you know, the way it has come up, whether it is very good connectivity to Golf Course and Golf Course Extension Road, or to the Sohna Road, or to the, you know, Dwarka Expressway market, or to the NH 48. So, you know, it's kind of probably best position or most well position in terms of, you know, the infrastructure of the city as of today. So, this will be primarily anchored around office spaces of about, let's say, 3.5-4 million sq ft. The balance area, you know, will be a split of either retail spaces, which could be in the form of, you know, very high-end design district.
The concept is being worked upon very closely by both the sides. There'll be, you know, maybe one or two hotels in this SPV. So that's about 5.5 million sq ft of development. The guesstimated rental and capital value per sq ft, post-development, is in that range of, you know, INR 26,000-INR 28,000 per sq ft. You know, inching closer to INR 30,000 a sq ft is what has been estimated by both the parties.
But this INR 1,000 crore, has it been paid and there is a loan payable to Signature Global, or this is still money payable, the DTCP, approximately INR 1,000 crore?
No, no, no. This is money which... So this is, like, you know, a lot of investment which we initially made to acquire the asset and to acquire the approvals. DTCP will be a smaller fraction in this entire, you know, sum.
Okay. Okay.
But effectively, Murtuza, we'll have almost like 1,000+ crore, post any sort of DTCP payouts or even taxes, which will cleanly accrue to Signature Global. Or by and large, you could say that, you know, the net debt, which is sitting at about, you know, INR 10 billion today, you know, should come to a zero level or maybe a negative level by the... Once we close this trade.
Okay. Thank you.
Yeah. Thank you.
Thank you. We have the next question from the line of Pritesh Sheth from Axis Capital. Please go ahead.
Yeah, thanks for the opportunity, and congrats on the transaction. Just firstly, on this, you know, INR 1,000 crore, you know, if I recollect well, I think we acquired this 93-acre, whole of 93-acre at around INR 1,000-INR 1,200 odd crores. So correct me if I'm wrong. So, you know, in that sense, will we only get the apportioned, you know, payout or, you know, this INR 1,000 crore will completely, you know, be utilized to, you know, pay for whatever liabilities that whole 93-acre had? Second on, on the, retail piece, right? I mean, you know, RMZ have developed, the office management capabilities, but what's, what's the, intent on the retail side? Will it - will those capabilities be jointly developed by both the companies?
Yeah, so those are my two questions first.
Pritesh, the entire Sector 71 acquisition, you know, yeah, happened at much lower values than what are being discussed right now. You know, I don't have the exact numbers right in front of me, but yeah, I think we've overall acquired... So this 13.5 million sq ft is, by and large, owned by us. There is very, you know, small portion of JDs. It's bulk of it is owned by us, and the balance is in the form of collaboration. The acquisition or historical costs are much lower. This particular entity was... within our acquisition bucket, you know, price relatively higher, but much lower than the current values.
I don't have the exact number, but I don't think we've acquired this entire 25 acres for more than I think INR 500 odd crores would be like a tentative acquisition value. But, you know, we've invested on top of it. We've paid some amounts for getting approvals. We've held this land for a little while now. But yes, I think once this transaction consummates, we'll, a lot of the, you know, money will flow directly into, you know, the. You know, it will be like an upside for us. So definitely the historical cost is much lower. As far as the capability set is concerned, yes, I think office spaces, office is something where RMZ has massive leasing capabilities, and we'll, we'll get to leverage that capability.
On the retail side, I think, that capability at their end is being built up. They started doing bit of retail, not like a mall format or a box format retail, but more in the form of, you know, high, you know, high-end retail spaces. So, you know, retail capability is something which will get enhanced, alongside this development as well. Hotels, of course, you know, we'll, we'll try and get some, you know, top brands to run the hotel or hotels within this, entity.
Got it. Just a couple of follow-ups. On the rental side, you know, while you gave the capital value of INR 30,000 per sq ft, if I ballpark calculate, it should translate to around INR 250 per sq ft rental or, no, I think 200-odd per sq ft per month as the rental assumptions that you would have made. What would be the CapEx and the completion timelines for this?
So on the office side, I think the rental expectation 5 years hence is in the range of INR 125-INR 130. On the retail side, of course, it is much higher, could be INR 250+ years hence, what we ... And timeline-wise, I think we, it should take about 5 years from the, you know, start date to get the project completed. I do not want to give a particular number, but, yeah, hard cost will be in the range, you know, your and my estimate will be not very different. But, you know, since that entire design is yet to be frozen, you know, we haven't yet come to a detailed, you know, cost budget for the development.
You know, all of us know, you know, the range in which, you know, hard costs typically line up for projects like this.
5 years, you said, for the entire project, 5.5 million sq ft, or it will come in phases?
Mostly, see, it will be single phase driven. There could be bit of, you know, there could be some bit of, you know, some towers may come earlier than later, but till plinth level and from a services perspective, everything is single phase. Then we can always say on, you know, on the commencement date, maybe we are starting something earlier and, you know, some other tower a little later, but, but, yeah, we'll be able to commence bulk of this development within five years.
Sure, got it. Thank you. That's it from my end.
Thanks, Ritesh.
Thank you. We will take the next question from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Hi, good afternoon, and thanks for taking my question. So, first question is, I mean, when you said that, of this 1,283 odd crore, bulk of it will come to the parent company, can we look at this transaction in a way that maybe the 80-90 odd acres of land, which is under this SPV, RMZ has kind of valued that land at about INR 1,000 crore-INR 1,200 crore? I mean, would that be a fair way to look at it?
So 50% of that is getting valued at INR 1,312.80 crore. They're taking 50% of that.
Sure. And what would be the accounting treatment for this entity, let's say, five years down the line? I mean, if we maintain a 50% stake in this JV, you will do it as a share of profit from this JV, or how will it work?
I'll ask Sanjeev to answer this. I'm quite bad at accounting.
So, what will happen, Ritesh?
Parvez.
Parvez, that twofold accounting. One, for the sale of stake on consolidated basis, it will throw a profit vis-a-vis the book value and this INR 1,283 crores. When it comes to the accounting for the consolidation, it will be an equity accounting, which will be one liner in the balance sheet as an investment, fair valued every quarter or profit and loss adjustment every quarter, not fair valued. On one line in the P&L, which will be profit from this entity. Just like a joint venture, because no one of us will have a control, direct control on this SPV.
Sure. Lastly, when do we expect to start construction here?
Within this calendar year itself, I think. Over the next 6-9 months is when we intend to break ground.
Sure. Thanks and all the best.
Thanks, Parvez.
Thank you. We have the next question from the line of Abhishek Chattopadhyay from ICICI Securities. Please go ahead.
... Yeah, thank you for the opportunity. So just to follow up on the previous question on the accounting, so this will be primarily a joint venture, and any loans or debt, right, will be off the books during consolidation? Is that a correct understanding here?
No, it will not be. What will happen, if in future any loan is given, because the current loan will get cleared off with this around INR 1,000 crore infusion. But in future, if whether we or RMZ gives any loan to this SPV, that will go as a loan line item only, as if it is given to third party.
Okay. So, so just to again just to reclarify here, so the money which will be coming right now, right, for DTCP and other approvals, the money will come to Signature Global parent, right?
Yeah.
Any incremental CapEx, right, which the Signature and RMZ will do, you will have to infuse equity again in this SPV to do the CapEx, or how does it work, apart from the construction finance you may take at the SPV level?
Yeah. So, Adhidev, that understanding is correct. Once the transaction gets closed and all money reaches whichever, you know, place it has to reach, the entity will be sitting with, you know, an approved land, with a development potential we've talked about, almost on a debt-free cash basis. Hence, going forward, any, the construction will be funded through construction finance, and the differential will be funded in the form of equity stock loan from the two, you know, partners.
Okay. And just to again clarify the residential component, which you alluded to, right, which will be left. So there will be no cash flow which will be flowing from that entity to this entity, right? That is an independent project which will work on its own terms, right? If that is the-
Yeah. Residential business as an undertaking will be moved to our parent entity prior to this, you know, transaction.
Okay. Okay, and just a final question: so for all these things, is there any tax liability which would come to Signature Global at the parent level, or it, it'll all get settled against the outstanding loans and whatever interest, carry which was there?
So Adhidev, as tax is concerned, to the portion which Signature Global India will sell, there will be a capital gain because we will be completing very soon two years, so it will be a long-term capital gain tax on that. But as far as INR 1,000 crore or around INR 1,000 crore is concerned, there will not be any tax outflow, but definitely in the books, there will be deferred tax liability equivalent to the long-term capital gain.
Okay. So, understand, the cash portion will be only for the secondary sale, not the primary part, right?
No. Yeah, you are right. Nothing will be there on the primary side. Because in the tax, it will be considered as infusion of a fresh equity by one party to the entity.
Okay, okay, okay. Fine. Okay, okay, got that. That is pretty clear. Yeah. Thank you, and all the best.
Thank you.
Thank you. A reminder to all the participants, you may press Star and One to ask a question. We have the next question from the line of Sucrit D. Patil from ICICI Securities . Please go ahead.
Good morning to the team. I have two questions. My first question to Mr. Rajat is: beyond the demand guidance, how will Signature Global manage risk and uncertainty in customer acquisition and financing? What signals will guide your approach to sustaining affordability while protecting the margins? Just want to understand your point of view on this. Thank you. That's the first question. I'll ask my second question after this.
No, sorry, I didn't fully understand. This is, this question is regarding the housing business, so how are you-- What was this question regarding?
I'm
Customer acquisition in the, you know, commercial business.
I'm asking about how you will handle risk in customer demand and financing, not just growth plans, and what signals will guide you, will guide affordability and margins?
Sorry, I'm still not clear. I haven't understood what do you really want to understand.
No worries. I'll come back in the queue.
Regarding which business you're talking... Yeah. Okay, maybe we can talk offline on this. Yeah.
Yeah. Yeah.
What's your second question? No stress. Let's, let's take this offline. That's okay.
Thank you very much. As there are no further questions from the participants, I now hand the conference back to the management for closing comments. Thank you, and over to you, sir.
Yeah. Thank you very much, everyone, for joining the call today. I would just want to reiterate that we are feeling fairly good as far as you know the performance of the housing business is concerned. We've grown that business significantly over the last couple of years, and we've reached a good situation you know in the business, where we are now seeing strong collections. And for the coming calendar year, you know, strong collections happening, good pace of completions going on, and sales are keeping steady. So, you know, all those you know three parameters, we're seeing good performance. And this seems like a good you know timing for us to enter into a new business, and nothing better than you know partnering with a group like RMZ for one of our existing large land parcels.
And what it also does is that, you know, it puts into production, you know, a significant portion of our, you know, land stage resource. So out of this 21 million sq ft of land, which was coming as forthcoming, you know, we've mapped out another 7+ million sq ft of utilization between commercial office spaces and the housing business, which, you know, is now, with advanced approvals, will also come to a launch stage sometime in the calendar year. So it's another, you know, 7 million-8 million, which is kind of coming into production. So really makes our, you know, cash flow situation very robust from a midterm, you know, medium-term perspective.
We are quite, you know, excited and enthused around this, this new business and do intend to, you know, scale it significantly in the coming years. Thank you very much.
Thank you. Thanks a lot.
Thank you.
Thank you. Thanks a lot. Thank you.
Thank you, members of the management. On behalf of ICICI Securities Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.