Also read: Purvankara plans 10 mn sq feet of launches this fiscal
Below is the transcript of the interview.
Q: A piece of news has been doing the rounds that Puravankara has entered the Coimbatore market. Can you just take us through your plans there and how aggressive do you plan to be and why exactly would it be a lucrative market for you?
A: The potential in the Coimbatore market is very good and there are not too many large players in it. We had one launch about a year and a half ago under the Puravankara brand and it did exceptionally well. We had a recent launch under the [affordable housing arm] Provident brand again in Coimbatore and that has also sold very well for us.
So, it may not be a very large market in terms of size but definitely a niche market and we will look at a couple of more projects there.
Q: Can you give us an idea of how Q3 has been? We are just about two days to end the quarter, how much could you sell by way of flats?
A: In terms of a quarter it has been very stable. Firstly, new launches have done exceptionally well. We had a recent launch where we sold almost 52 percent within the first 15 days itself. Second, even in terms of pricing, we have gotten very good pricing; an average pricing of close to Rs 5,300 a square foot.
Ongoing projects launched in the last one year have also been selling well.
Q: Average realisations would be higher than the Rs 5100 a square foot odd you reported in the Q2?
A: If you compare March to September average realisations for Purvankara have gone up almost 20 percent to Rs 5,200 a square foot. For Provident, it has gone up 23 percent at Rs 3700 a square foot.
Q: Would you have recovered from all of the cost overruns within the legacy projects that actually pulled down EBITDA in the previous quarter or is that a niggling problem still?
A: Most of it is out of the way. However, for one or two projects again, there should not be any large increases in terms of cost.
Q: I just wanted to focus on the point that you brought up with regards to the sales or the 52 percent of pre-sales that you have seen in a particular project. Could you just highlight which area that was in?
A: This was in South Bangalore. The project is called Purva Westend. We pre-launched that about 15 days ago and it is about 1.1 million square feet. We put up about 400 units and closed a little over 300 apartments in the last 15 days. It is a mix of two and three bedrooms, average size there is about 1400 square foot. It is south of Bangalore on Hosur Road, which is very active in terms of the IT offices population.
Q: How is business looking in 2014, at least the first half; whatever visibility you have? We have got strong numbers from IT companies plus some softening rates at least for new homeowners or borrowers. Will all this add up to a positive cocktail?
A: We are quite excited about 2014. We have a healthy and exciting pipeline of launches, close to 12 million square feet in the immediate future. The mix is about 8 million square feet under the Puravankara brand and about 4 million square feet under Provident. The 8 million under Puravankara would consist of about four projects in Bangalore and one in Chennai. The 4 million square feet of Provident are three in Bangalore. So, we are quite excited getting into 2014.
Q: How is the Bangalore market panning out because we have heard anecdotal evidence with regards to maybe inventory build up taking place but we have had other Bangalore-based companies come and speak about how they have also seen strong pre-sales taking place. What exactly are prices trading at, at this point in time for the Bangalore market and is there any sort of inventory build-up problem there?
A: One phenomenon that we have experienced lately is that we see excellent sales during pre-launch and launch. Then you see the run rate per project slowing down a little bit and towards completion, we see a very aggressive uptake. In terms of average pricing in Bangalore, it is in the range of about Rs 6000 a square foot. So, still very affordable I believe.
Q: You have finished your institutional placement programme as well as offer for sale (OFS). How comfortable would you be in terms of your balance sheet at this point in time? What is your net debt standing at and how does your cashflow pan out possibly in the second half?
A: The net debt-to-equity came down from 0.81 in March to 0.64 in September. The cost of debt has come down almost 60 bps. We are getting significant comfort from cash flows especially from our ready-to-move-in inventory which has been selling well for us. So, very comfortable right now.
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