In an interview to CNBC-TV18, Irfan Razack, chairman and managing director of Prestige Estates Projects says, he expects sales of Rs 2,000 crore in FY13.
Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video (at http://www.moneycontrol.com/news/business/expect-salesrs-2000-crorefy13-prestige-estates_695590-0.html)
Q: I will start with your Chennai project where we understand there has been quite a strong response which has been received. Can you just take us through the details of that first?
A: The Chennai project is in Porur. Name of the project is Bella Vista. We launched it on the Pongal day this year. It has done amazingly well. It is totally more than four million sq ft and it has 2,600 apartments. As of date, we have sold little over 50% of the project, which is fantastic, in just about three months time.
Q: Can you give us an idea of the Bangalore commercial market? We understand that office rents, especially commercial property rents are improving there. On a six months basis year-to-date 2012, how much better is it compared to 2011?
A: In the fiscal year 2011-2012, we have been fortunate, we have leased out something like 3.1 million sq ft of office space. The demand is still there and leasing is still going on. I believe even this year i.e. 2012-2013 we will touch another three million sq ft of leasing. When I say it is our company, overall I think last year Bangalore leasing was something like ten million sq ft. So, pretty much we get a 30% market share here.
Even in Chennai, we completed one of our developments called Prestige Palladium of Mount Road, on Greams Road, even that has done very well, the entire building has been leased out as of date at good rental yields. I believe though the supply may have slowed down because people would have been a little cautious, hence the offtake is quite good. So, the rents also have stabilized and are doing well.
Q: What is the trajectory on rents? Since you spoke about volume as well, give us an idea of how it compares with year ago levels both volume of property that is moving as well as the rents at which they are moving?
A: The rents have gone up. Infact, they have to go up, there is no choice because the input costs have gone up. Also, the good thing is that the supply is getting slowed down a bit, hence the demand-supply ratio gap is not that great and hence the rents also have got pushed up. On the Outer Ring Road, today, we are talking of rentals between Rs 45 and Rs 50, which a year ago we would have been talking of between Rs 38 and Rs 42.
Q: What your project pipeline for FY13 would then look like? Also what sort of pricing do you expect because there are some brokerages which do expect you not to move that much on pricing in order to increase volumes?
A: Infact, I would probably not want the prices to move up because again if I breach my affordability barrier, my volumes and my selling stops. So, as far as I am able get my product in place, the pricing and my costing right, I would rather keep on producing and offering it to the customers at a very reasonable and affordable number.
When I say affordable, it could be affordable in any bracket that is there. Like last year it has been a fantastic year for us, we had given a guidance of Rs 1,500 crore of sales in the FY11-FY12. We have exceeded the Rs 2,000 barrier. I think we are in the range of Rs 2,100 crore is the sales that we have done in FY11-12.
I believe even that same trend will continue in this current year. Though my guidance, I won’t be giving Rs 1,500 crore, but I will be giving a guidance of Rs 2,000 crore for the next year. Hope, we exceed that.
But price range, we are trying to see that even if it goes up, it goes up marginally. So, it helps by us to keep buying and the product doesn’t go out of their rich. Now, with the interest rates going down by half a percent and the likelihood of it going down further because hopefully the economic factors provide for it, I think there will be much more activity.
Q: You said Rs 2,000 crore, you mean FY13 revenues, is that what you are referring to?
A: I am talking about sales. There is a difference between what sales I clock during a financial year and what revenues I book. Our revenues are linked to completion of 30% and occupancy certificates and all of that. So, sometimes the revenue trigger doesn’t kick in. But if you look at it, the volume of sales we have done at some 3,500 in 68 units in FY11-12. We have crossed Rs 2,000 crore barrier. In the year 2012-2013, it will be a guidance of Rs 2,000 crore.
Q: I was looking for a guidance on revenues, what kind of percentage growth in revenues you can expect?
A: Revenues will be lumpy. Though I will have this in the pipeline, ofcourse FY13 booked revenues will be much larger than FY12 because all the sales that I have done in 2011-2012 and 2010-2011 will start coming in for recognition in financial year 2013. Margins also will be pretty much the same as what we have had in the current year. I think margins will hold out.
Q: What is your debt and your debt/equity?
A: Right now, we are looking at a debt/equity ratio of about 0.5 with an overall net debt of about 1,000 crore. Even this debt more than 50% probably even 60% of this debt is basically leased rental discounting, most of our debt that we have is more for capex project. Even if there is some debt on my residential, it is only just to see that there is some bit of flexibility. It is where the capex projects, whether it is hospitality or retail or even office where we are retaining for rental, those are the ones that will consume the cash for the debt.
source: http://www.monecontrol.com / MoneyControl> Home> News> Business> Business News / source: CNBC-TV18 / Monday, April 23rd, 2012