Real estate has many more windfalls to brave. Apart from DLF having to call off its Goa project, reports suggest that sales for Ansal Properties are on the wane. The company which pushed in 7.99 million square feet during the last monsoon season has managed to sell only 2.64 million square feet this time.
Dinesh Gupta, chief operating officer, Ansal Properties joins CNBC-TV18 to clear the air and highlight the way forward for the company. He says that realisations have increased for the company, primarily on account of the different asset classes that they are selling to.
Ansal has been moving into the built-up houses and even low-rise group housings and vertical apartments too.
Below is the edited transcript of the interview. Also watch the accompanying video.
Q: There are reports doing the rounds that your sales have reduced in terms of total quantum this quarter on a year-on-year basis, but realisations have improved. Just take us through what the dynamics were this time around?
A: We had anticipated this dip in the quantum because of seasonal fluctuations and typically, quarter two tends to be slower in terms of quantity. Though, realisations have increased, primarily on account of different asset classes that we are selling to. We have gradually shifted from just being a horizontal developer to more of a vertical developer within the townships that we are working on. By vertical, I mean we are moving into the built-up houses or even low-rise group housings and vertical apartments too. That has been the reason for the increase in the average realisation, minimum being about Rs 600 and maximum going up to even Rs 6,300 a square foot, getting us an average of about Rs 1,350 a square foot for the quarter. So I don’t think that’s a very alarming situation, or anything to worry about.
We are going to see quarter three to be much more promising. In fact, I think the sales for the first 10 days in the October have surpassed the September figures as well. So we are quite positive and hopeful that quarter three would be as expected and much more than what we have done in quarter two.
Q: Every monsoon, sales are slow but still last monsoon, you pushed in 7.99 million square feet compared to 2.64 million now. On a year-on-year basis, do you expect the third quarter to be better than the previous quarter, if so by how much?
A: I think comparison on a year-on-year basis would not be a right mechanism, reason being last year, we had launched many projects after the slowdown in 2009-10 apart from the projects which were waiting in the pipeline. We had launched these projects across Lucknow, Mohali, even Gurgaon. So there was a sudden push in the market and that’s why the absorption went up.
Compared on a year-on-year basis last year’s quarter three versus quarter three this year, I think we should be able to see a change on the negative side, but on a quarter two basis, yes, we are going to be on the higher side.
Last year we did 22-23 million square feet for the full year, but this year, guidance has been about 16-18 million square feet. So obviously, there will be a change and the realisations from assets classes that we are selling, that make a lot of difference. So from sales point of view, I don’t think that’s going to be a challenge and should be taken as a negative factor.
Q: The last time we spoke, you mentioned about hiving off two townships in Punjab and Haryana which you would possibly monetize going forward. Can you give us an update on those two projects?
A: We are in the final stages of conversation and negotiations, so it would be not right to divulge any information. Hopefully, we should be able to reveal all the details in the next couple of days. As far as we are concerned, we are in the confidentiality agreement so we can divulge the details once the deal is done. But I am sure that you will get the news soon.
Q: What's the total debt of the company?
A: Currently it stands at about Rs 1,470-1,480 crore. We are planning to get it down by Rs 70-80 crore in Q3, which should put us on target. The management's endeavour of course is to reduce the debt on an ongoing basis and manage the cash flow internally on projects. The focus has been on the execution of projects to make sure that cash flow and internal accruals help us reduce the debt on an ongoing basis.
Q: What’s your interest outgo for the quarter or for the year?
A: On an average, we spend about Rs 48-49 crore as interest cost every quarter. That has been the calculation for the full year at an average of about 14-14.5 per annum.
Q: You see that going up?
A: Not really, I don’t think we are seeing any further increase as there has been many representations from the banking side and even from the real estate side. Any further push on the interest rates would be more counterproductive; anyways, it is counterproductive even now. Nonetheless, I don’t see any further increase though there may be a cooling off period. The next six to nine months time we should see interest rate getting softened. Along with that, of course we are reducing the debt, so even if the average remains the same, the overall interest outgo goes down on a quarterly basis.
Q: Your point about average realizations increasing to around Rs 1,326 per square foot compared to Rs 866 year ago, what would be the average for the year you think?
A: The average for the year, we are looking at close to about Rs 1,350-1,400. In the next two quarters, we are planning to sell more FSIs (Floor space index) to the local developers. That will of course be on a lower side and coupled with a lot of built-up houses, especially in Gurgaon and Lucknow where the average realization is much more than the average. That should allow us to clock the average of Rs 1,350-1,400.
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Dinesh Gupta, chief operating officer, Ansal Properties joins CNBC-TV18 to clear the air and highlight the way forward for the company. He says that realisations have increased for the company, primarily on account of the different asset classes that they are selling to.
Ansal has been moving into the built-up houses and even low-rise group housings and vertical apartments too.
Below is the edited transcript of the interview. Also watch the accompanying video.
Q: There are reports doing the rounds that your sales have reduced in terms of total quantum this quarter on a year-on-year basis, but realisations have improved. Just take us through what the dynamics were this time around?
A: We had anticipated this dip in the quantum because of seasonal fluctuations and typically, quarter two tends to be slower in terms of quantity. Though, realisations have increased, primarily on account of different asset classes that we are selling to. We have gradually shifted from just being a horizontal developer to more of a vertical developer within the townships that we are working on. By vertical, I mean we are moving into the built-up houses or even low-rise group housings and vertical apartments too. That has been the reason for the increase in the average realisation, minimum being about Rs 600 and maximum going up to even Rs 6,300 a square foot, getting us an average of about Rs 1,350 a square foot for the quarter. So I don’t think that’s a very alarming situation, or anything to worry about.
We are going to see quarter three to be much more promising. In fact, I think the sales for the first 10 days in the October have surpassed the September figures as well. So we are quite positive and hopeful that quarter three would be as expected and much more than what we have done in quarter two.
Q: Every monsoon, sales are slow but still last monsoon, you pushed in 7.99 million square feet compared to 2.64 million now. On a year-on-year basis, do you expect the third quarter to be better than the previous quarter, if so by how much?
A: I think comparison on a year-on-year basis would not be a right mechanism, reason being last year, we had launched many projects after the slowdown in 2009-10 apart from the projects which were waiting in the pipeline. We had launched these projects across Lucknow, Mohali, even Gurgaon. So there was a sudden push in the market and that’s why the absorption went up.
Compared on a year-on-year basis last year’s quarter three versus quarter three this year, I think we should be able to see a change on the negative side, but on a quarter two basis, yes, we are going to be on the higher side.
Last year we did 22-23 million square feet for the full year, but this year, guidance has been about 16-18 million square feet. So obviously, there will be a change and the realisations from assets classes that we are selling, that make a lot of difference. So from sales point of view, I don’t think that’s going to be a challenge and should be taken as a negative factor.
Q: The last time we spoke, you mentioned about hiving off two townships in Punjab and Haryana which you would possibly monetize going forward. Can you give us an update on those two projects?
A: We are in the final stages of conversation and negotiations, so it would be not right to divulge any information. Hopefully, we should be able to reveal all the details in the next couple of days. As far as we are concerned, we are in the confidentiality agreement so we can divulge the details once the deal is done. But I am sure that you will get the news soon.
Q: What's the total debt of the company?
A: Currently it stands at about Rs 1,470-1,480 crore. We are planning to get it down by Rs 70-80 crore in Q3, which should put us on target. The management's endeavour of course is to reduce the debt on an ongoing basis and manage the cash flow internally on projects. The focus has been on the execution of projects to make sure that cash flow and internal accruals help us reduce the debt on an ongoing basis.
Q: What’s your interest outgo for the quarter or for the year?
A: On an average, we spend about Rs 48-49 crore as interest cost every quarter. That has been the calculation for the full year at an average of about 14-14.5 per annum.
Q: You see that going up?
A: Not really, I don’t think we are seeing any further increase as there has been many representations from the banking side and even from the real estate side. Any further push on the interest rates would be more counterproductive; anyways, it is counterproductive even now. Nonetheless, I don’t see any further increase though there may be a cooling off period. The next six to nine months time we should see interest rate getting softened. Along with that, of course we are reducing the debt, so even if the average remains the same, the overall interest outgo goes down on a quarterly basis.
Q: Your point about average realizations increasing to around Rs 1,326 per square foot compared to Rs 866 year ago, what would be the average for the year you think?
A: The average for the year, we are looking at close to about Rs 1,350-1,400. In the next two quarters, we are planning to sell more FSIs (Floor space index) to the local developers. That will of course be on a lower side and coupled with a lot of built-up houses, especially in Gurgaon and Lucknow where the average realization is much more than the average. That should allow us to clock the average of Rs 1,350-1,400.
....more info