AXIS Capital Holdings Ltd (AXS) 2022 Q1 法說會逐字稿

Ladies and gentlemen, good day, and welcome to Prestige Estates Projects Limited Q1 FY '22 Earnings Conference Call hosted by Axis Capital Limited. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Samar Sarda from Axis Capital Limited. Thank you, and over to you, sir.

Yes. Thanks, Malika, and good afternoon, everyone. So today, again, we are represented by the senior management of Prestige Estates Projects. Mr. Razack, Chairman and Managing Director; Venkat; and Amit Mor, the CFO. Can I request Mr. Razack for his initial comments, please?

Hi, Samar, and hi, everyone. I think we've got a lot of people on the call. It's once again a pleasure to be on this call and give us our insights on the last quarter's performance. You've seen the numbers. I think with the 2 months plus lockdown, the teams have done an amazing job to see the sales that we did. We are pretty pleased with it because just with virtual meetings and everything else, we managed to clock INR 735 crores (sic) [INR 734 crores].

Even the collections also, though we had some our own internal doubt, we crossed the INR 1,000 crore mark. And the good part is that in spite of the lockdown and opening up, I think the current quarter also, the traction has picked up superbly well And the business has come back to usual. That was the March quarter numbers, and I think we are looking at something very positive.

And I think even on the leasing side, this month, there has been a lot of traction, and we are closing deals. It's just not about discussion or whatever. We've signed NOIs, we have signed agreements. And so that's giving us a lot of courage. And I think all in all, we are all focused -- pretty focused to keep doing our job, and there are a lot of launches in the pipeline, apart from -- during the lockdown period, of course, there were no launches. And completions also, we just completed 2 small projects, and those are both in Bangalore and many more are in the pipeline for completion. So I think the teams have worked hard in spite against all odds.

The only disclaimer that I can do is that in case there's a third wave or in case there are any more lockdowns, which will affect business. But otherwise, if things are even in this condition, I think we are good to go. Even Hospitality has picked up. The green shoots, you can see people are already having the events and everything else and the occupancies are slowly rising. Though there's no international travel, which will take some more time. But otherwise, even there, there is no cash loss at the moment in the month of June and July, more in July rather than June. So things are good. We'll see how things pan out as we go along. I think I want Venkat to add up whatever comments he wants to.

Thank you, Samar. Thank you, sir. And welcome, everyone, to post results conference call. Quickly, let me take you through the operational highlights, financial highlights and other significant important things that we have done during the quarter. As Chairman was mentioning, the operational highlights. We had overall (inaudible) of INR 734 crores of new sales during this quarter, that most of them in spite of lockdown and virtually interacting with the customer. Collections are over INR 1,000 crores -- INR 1,022 crores.

So if you look at the mix of sales, the just launched projects, the projects that we have launched in the last 6 months gave us 26% of new sales. Ongoing projects [33%], 41% of the pre-sales have come from the completed projects. And in terms of geography split, close to 80% have come from Bangalore and the rest from the other regions that we operate in, Hyderabad, Kochi and Chennai.

Going forward, Q3, we have launches lined up in other regions other than (inaudible) region that we are present right now. That is Mumbai. We will look at launching in Q3. Prestige Jasdan Classic, that is at Byculla, Prestige Daffodils at Pali Hills and Prestige Cosmos at Mulund. These 3 projects are on the final leg of approval, and we are confident that Q3 subject to no lockdowns being there, we'll be able to launch. That's like adding a new geography to our business. Likewise, Prestige Bougainvillea Gardens, which is a residential development in sector 150 of Noida.

There also, we're in last leg of approvals, and we should be able to launch that project as well in Q3. So these 3 new regions will get added. We'll have 4 projects in terms of residential outside of South India by Q3. And major projects that contributed to the sales are Prestige Park Drive, Prestige Waterford, Prestige Finsbury Park, Prestige Golfshire, Palm Residences, Tranquil in Hyderabad, Jindal City which is ongoing project, and Royale Gardens, so on and so forth.

Also, if I have to give you one more parameter in yardstick, the sales have come from -- 75% of the sales have come from the unit pricing -- units costing less than INR 1 crore, and 21% of the sales have come from INR 1 crore to INR 2 crores, and the rest of them are above INR 2 crores. Moving on from operational highlights to financial highlights. During the quarter, we had total revenue of INR 1,473 crores. EBITDA of INR 403 crores and PAT of INR 92.5 crores.

The revenue recognitions have come from various projects to name a significant one. That is the White Meadows, [Palm Residences], Golfshire which is a completed project and one pre-sale of commercial building that we had done which is to [Adobe]. So these contributed to the revenue recognition during the quarter.

And in terms of construction spend, overall, if you look at out of collections, we have spent during the quarter -- towards residential projects and commercial projects that were meant for sale, close to INR 632 crores. We had towards commercial CapEx projects, INR 151 crores. The retail projects that are ongoing, INR 71 crores; and the Hospitality, INR 57 crores. Overall, we had spent during the quarter (inaudible) [INR 911 crores]. So this is a brief about the presales that we have done operationally and financial update and the revenue recognition. In addition, during the quarter under review, we concluded the transaction that we are pursuing with the NCLT. We have paid money and taken the position. That is a project at Mulund, which is named at Prestige Cosmos.

With this brief, I would like to open the forum for the question and answer.

(Operator Instructions) The first question is from the line of Adhidev from ICICI Securities.

Sir, few rental business related question. But firstly, if I'm referring to your business segment review, this is Slide #5 in the presentation. The capital employed on ongoing projects, that number has gone up from [INR 2,700 crores] in Q3 to almost [INR 4,700 crores] now. This is the capital WIP. So could you may help us understand which projects have contributed to this INR 2,000 crores increase in the last 6 months.

Once second, let me get the slide out.

You are referring to, Adhidev, Slide #5?

Yes, yes, Slide #5, footnote which is there. Capital employed excludes amounts spent on ongoing CapEx projects in the third footnote. Point number 3.

3,273? You are referring to 3,273?

No, sir. Slide 5. INR 47,524 million. Capital employed.

Capital employed excludes amounts spent on ongoing CapEx projects and related debt of INR 47,524 million and INR 11,424 million respectively. That's the footnote.

So those are basically amounts invested for the Mumbai project (inaudible)

Sir, why (inaudible)?

No, no. Actually, I think this is -- that's a little futuristic. This is actually the office whatever we've employed the first line only, so please read. That last line, I think Venkat will explain.

See, apart from whatever we have mentioned in the office segment, which are for the ongoing projects, Adhidev, are you with me?

Yes, yes, yes. I can hear you.

[Half of those] monies that we have spent towards office and those projects are not yet yielding projects.

Yes. So this INR 2,000 crores is mainly Mumbai, this delta above INR 47,000 crores (inaudible)?

Partly, yes. Could be Mumbai, could be some -- the hotel projects and office and hotel projects in Delhi. But then it's a combination of -- even in [Bengaluru] also, we've paid INR 150 crores to this landmark. So it's a combination of a whole lot of things, which we are now work in progress. But those will come for construction maybe in the next 2 quarters.

Okay. Okay. Sir, just another follow-up on our upcoming projects. So there was an article in media saying that we are planning to spend around INR 3,500 crores in Mumbai, (inaudible) 43-storey tower in BKC...

(Operator Instructions)

So to continue sir, there's an article in media a couple of days by that you intend to spend INR 3,500 crores for our Mumbai commercial projects, which includes the 43-storey tower in BKC and 63-storey tower in Mahalaxmi. Sir, could you just give us some color, has the development plans been finalized? And do we have the [Hyde] approvals and other approvals in place over there for the Mahalaxmi and the BKC commercial projects?

(Operator Instructions)

The question that you asked was INR 3,500 crores, you read the media report. Now that's the overall spend that is there over the next 5 to 6 years, it's not going to be spent today itself because we are doing this Liberty towers. It's a 270-meter height building, that's one tower and the other is shorter. There are 2 towers there, and overall, about 2.4 million, 2.5 million square feet of leasable, rentable or salable area.

Then the other is in BKC 1 and 2, that's called Prestige 101. And there, again, we have about 4 million plus. We've got a Phase 1, Phase 2. So this media report is to say that everything of that is completed and it's not going to get completed overnight. So that's the overall spend that is required to be done, and that spend will go for more than 5 years, maybe 6 or even 7 years. That's the whole thing. The spend -- average spend per year will be about INR 500 crores.

Okay. And sir, just a bookkeeping question, what is the total amount invested to date from these 2 projects, BKC and Mahalaxmi?

I don't have the number offhand. I think Venkat can share it with you. We -- what happened is, if you ask me what is my commitment, my commitment in Turf, that is in Liberty Towers is INR 500 crores refundable deposit. And in case refund doesn't come, we'll get extra space. And my commitment in BKC 1 is INR 300 crores for Phase 1 and INR 325 crores for Phase 2, that is nonrefundable. So this is my commitment. And in case there's any other payment apart from that, it will be more towards acquiring some space at a certain number, which is beneficial to the company in the long term.

Between BKC 1 and 2 as well as (inaudible) all together, we have invested close to INR 700 crores so far.

(Operator Instructions) The next question is from the line of Puneet from HSBC.

So my first question is on the FSI premium exemption that Government of Maharashtra is giving. Would you be able to make use of that for your projects this year? Or do you think you'll be willing to buy that only in future years?

That's a very good question. As far as FSI premium reduction for both the office projects that the BKC and Mahalaxmi is the responsibility of the landowner. So whatever benefit that comes will accrue to them. But we do have 3 other projects which we are doing, which is Cosmos, which is Jasdan Classic as well as Daffodils. These are the 3 residential projects. We are taking the full benefit of the reduction in the premium.

Okay. Understood. And any color on why the net debt went up on a quarter-on-quarter basis?

Primarily because of -- we use the cash balance to acquire new projects. Number one, the major project payment that we have done, the new we have added is Aristo that is now named as Prestige Cosmos, close to INR 370 crores of money has gone towards that. And there are the new land acquisition that we have done in Bangalore, which is called now Prestige Landmark at (inaudible). We have invested in land parcel at -- that's called logistic -- for logistic park towards (inaudible).

And we have invested to purchase the land in product development, which is going to be launched soon (inaudible). And then the JV projects that we have tied up with our existing land owner. So these are the projects mostly towards acquiring new projects is where the money has gone. In that, major payment is almost close to half of it is towards Prestige Cosmos in Mumbai and Mulund.

And what is the launch plan for this year?

All the 3 projects Mr. Razack was mentioning just now, with respect to premium that is Prestige Jasdan Classic Byculla, Prestige Daffodils Pali Hills, and Prestige Cosmos at Mulund. All 3 will be Q3 launches.

And for other cities like Bangalore?

Bangalore and some of these projects will get launched, 2, 3 of them will be by Q4.

Okay. So 2, 3 (inaudible) by Q4 other than these 3 (inaudible) ?

Yes.

The next question is from the line of Kunal Lakhan from CLSA.

My first question was on our presales guidance of INR 6,500 crores for FY '22. Now how much of this is dependent on the mobile launches?

We are looking at least 20% of the sales to come from -- 15% to 20% from Mumbai. And (inaudible) we quite confident. Otherwise, also, we've got a lot of launches in Bangalore. So as Chairman was mentioning, subject to no lockdown being there, we believe that it's achievable target.

So is this lockdown the only hurdle or -- on the -- the revenue on the approval side?

Primarily. So other than that approval-wise, we're almost there. The last leg of approval most of them are now (inaudible). That will affect Q3.

Okay. Fair enough. My second question was on the commercial side again. So these 2 projects put together, what is the CapEx, again, if you can remind us, totally INR 3,500 crores across these 2? And how much will be our share again?

So the entire construction cost will be up. So broadly, the construction cost is INR 3,500 crores across these 3 projects.

And we would have 50% stake in both of these, right?

Six million square foot, 3 million square foot belongs to us.

Okay. Got it. And sorry, one last question from my side. Also on the Aristo deal, INR 3.7 billion we have paid so far. And what is the balance payment share? And again, if you can refresh our memory on the deal, 6 million square feet is a total salable area and about 1-odd million square feet is something that we have to hand over to the developer. And there is some payment of which partly we have done INR 3.7 billion. Is that correct?

Yes. So the deal terms, Kunal, just to recalculate, INR 370 crores of upfront payment and 850,000 commercial areas built-up area to be given to (inaudible) . Of that INR 370 crores we have paid, the remaining in 3 years' time, we'll have to bill them leave it up to [construction] operators. Other than the remaining area is a salable area.

And there is no further cash payment? INR 370 crores is all the cash payment?

That's all. There is no further cash payment.

The next question is from the line of Murtuza Arsiwalla from Kotak Securities.

Lot of my questions have been answered. Just a couple. On Mumbai, could you just give us a status on when do you see sort of project execution starting across these projects. I understand we've been pushed back by a quarter. But generally, if you could give us a color on project execution. And just to clarify, the -- almost about INR 900 crores of quarter-on-quarter increase in net debt would be largely attributable to cost loss and the remainder would be land proceeds (inaudible) ?

Yes. As I mentioned, close to 50% of it towards Cosmos and the balance is towards the various other land that we have purchased are given as a deposit. And as far as the Mumbai projects are concerned, 6 of them, 3 of them are residential, which we spoke of Q3 being launched. In that, Prestige Jasdan Classic work has already commenced. So the other 3. Turf, we have started rehab tower already. And as far as BKC Phase 1 first project is concerned, the land is (inaudible), the land is cleaned up. We are waiting for the approval. Phase 2 will start maybe by Q4 or early next year.

The jobs -- both -- all the jobs, which are now construction, even Cosmos has been handed over to L&T. The Jasdan Classic is also being done by L&T. The work is going on pretty good. Execution wise, I think we have done well. We were just waiting for a [command week] to happen before we registered for Jasdan (inaudible). That will happen sometime this week. Once that's done, we are ready to run the (inaudible) numbers received, we'll be ready to start marketing that, including (inaudible) including Cosmos.

I think by next quarter, we'll be having a lot of projects in Mumbai to market.

Mr. (inaudible), your line is unmuted.

Yes. Thanks. I missed that. So good afternoon, everyone. Venkat, I just wanted to double check. You had earlier mentioned that your net gearing upper limit is going to be 0.5. Is there any change to that given all the business development that's going on in the upcoming CapEx?

No change, We'll stick to what we have guided.

Okay. Great. And second question, I don't know if you have briefed earlier. Any update on the Phase 2 of the (inaudible) deal?

Phase 2 will get completed this quarter.

Okay. And that would mean INR 1,600 crores of enterprise value comes in?

One asset, we have -- we may not be doing it now. Once Prestige take Pacific, we have taken out of the transaction. So to that extent, we get reduced, the other 4 assets will be part of the transaction.

Okay. So what's the deal value now?

INR 1,300 crores.

Okay. Okay. Great. And just 1 or 2 more, if I may. Any thoughts on unlocking value in 2 of your larger land parcels, one in Jargari and the other in Goa?

Currently, we are not thinking about any of those. But it will be a great land parcel as we move ahead because Bangalore to (inaudible) . So that will hopefully become a project in the next fiscal. Goa, there is some land-related issues that we are sorting out, post which we will do development there.

Okay. Great. One final, if I may. And that is on the housing demand in general, Irfan, we heard your comments about the strength in the demand in -- continuing in the second quarter. So just taking a broader term view, maybe a year or 2 year out, is this a next -- is this a new big residential up cycle that's coming. So your thoughts on that, what's driving this and how you want to capitalize on this?

No, the up cycle has already come and there is a lot of momentum. But along with that, there's also consolidation that's happening. It's not that everybody is doing well or everybody is doing bad. People who have consistently delivered are the people who are selling today. And fortunately, we are one of those. And as far as I see, this demand will be sustained, it will keep going. And since we've got now newer markets, I believe the revenues will keep going up. When I say revenues, I mean sales. Because, of course, revenues will be booked only on completion as per the accounting standards today.

All in all, like now we are now ready, getting ready to launch a very large development in Bangalore called Prestige City. And there's a huge traction for it, huge interest for it. They're just waiting for the (inaudible) number and then waiting for the right timing in the sense, getting everything together and make a big bang launch. Similarly, even in Noida, we are just waiting for approval. I think the moment we get that we've got a lot of interest even there. We are very positive. According to me, there is a lot of interest. Now even we had a project which we just completed about a year ago, which is Lakeside Habitat, which are 3,500 homes and 272 villas.

Everything is sold. It got completed last year. Whatever inventory that was remaining with us is 100% sold. Not even one single unit is available for a project of that scale. End-to-end from greenfield to completion, we took not more than 4.5 years and then probably another overflow of maximum (inaudible). So with that, it's all done dusted. Most of the money is almost collected. And we're out of the projects. So that gives us courage to do projects of this scale. And people also like projects of scale because they're getting that much more open space, that much more facilities. And they're getting a very, what I would call an environment, which is an enclosed and a clean environment, especially now in these uncertain times of COVID.

So they have a very protected environment, which is, I think, the order of the day. The smaller buildings will always have a bit of a problem. Even our luxury development, Prestige Golfshire where we had a bit of a stress in between, now even that has selling off, and I think that the next 2 quarters will be fully sold out. There won't be a single unit and then whoever has bought will be the beneficiary because there will be a pressure on the price. The demand is going quite unabated.

The next question is from the line of [Amit Khetan] from (inaudible) Capital.

Just wanted to confirm when do you plan to launch a Smart City in Bangalore and Highline in Chennai.

See, that's -- now it's called the Prestige City. We took off the name smart because it's the smart world is being used very loosely. So we're just calling it the Prestige City and just waiting for the (inaudible) number. We have applied for it. As I said, as soon as we get that, there's a huge traction because it's got some 3 components. One is the [plotage] component, then there's the villa component, and then we also have the apartments.

And apart from that, we also have the retail mall. Of course, the mall will start construction simultaneously, it'll get ready in the next 3 years. But all approvals are in place. Everything is in place. Infrastructure work on site is going on in full swing. So if everything falls in place by, say, either this month end or the first week of September, we should launch it.

Got it. And what about Highline in Chennai?

Highline in Chennai, we've just got the last -- there was approval that needed to come. There was some shifting of some (inaudible) and things like that. So that approval is also released. Now the plan since it was a big lag between then and now. there's, again, some thinking that has happened. So we've redone all the plans. We've cleared the plans now. I think it's getting tweaked a bit further and the architects have to do their job.

It will get locked in, in about a week or 10 days into CMD, and it depends on how soon the approvals come in, and even that project we are on. And now I think the timing is also right. Even the Chennai market has stopped, there's no new big project in Chennai. So this will be quite a welcoming one for Chennai.

Got it. Got it. And I missed this, I think, what is the size of the Daffodils project in Pali Hills?

Daffodils is a very small, it's a tiny project, but of course, the values are very high because the selling price is much higher there. Overall, I think we'll have about 30,000 square feet to sell.

32 apartments.

32 apartments. I mean, say, above 50,000 square feet, we'll have to sell. 32 apartments are there. And I think it's about 50,000 square feet or 55,000 square feet -- 58,000. That's what Irfan says. So that's what we'll be left with. But that's also approval, everything is there. We already paid the fees for the various charges and the (inaudible) will be signed in the next day or so. So it's all on track.

The next question is from the line of Rishabh Parekh from Sunidhi Securities.

Congratulations on a really good set of numbers, especially considering the circumstances. I had just one question. In the upcoming residential segment cash flow slide, we have increased our estimated value quarter-on-quarter from INR 16,500 crores to about INR 23,000 crores. I'm assuming this is because Cosmos came online. However, the cost of development hasn't changed. So it is still at about INR 10,600 crores. So I just wanted to get a sense on why that is.

So in the residential segment slide, you are talking about the receivables of INR 7,000 crores, the balance is spend upcoming.

No, on the upcoming slide, Slide #9, the cost of development is the same as last quarter. However, the value has gone up by about INR 7,000-odd crores. So just wanted to understand why the cost of development is still the same.

(inaudible) has been added. The budgets are getting frozen. So therefore, the budgeted cost is not (inaudible).

So what would be the approximate cost of development at Cosmos?

Approximately INR 4,000 plus it would be the cost of square foot construction costs. (inaudible) [INR 2,700 crores].

The next question is from the line of Rajesh (inaudible) from (inaudible) Capital.

Just to get some more clarity on your Mumbai launches. So when you say the approvals are in progress and you're waiting mainly for RERA. Could you exactly say what -- if, let's say, you're not able to launch in Q3, what would have been the reason? What is the most biggest risk to the projects not being launched in Q3?

The plan was to launch in Q3 only. So that's how we have been planning. So therefore, we are pretty much on target to launch these projects.

Right sir. What I mean is, if from here to Q3 is not very long time away, it's just 3 months. So if -- for some reason, it were to be delayed, what are the main risks that you foresee that it might happen?

If not in Q3, it will happen in Q4. We are very confident it will happen in Q3. There is no major risks in any of these projects. So we are awaiting, as we discussed earlier, premium benefits, which means all planned submissions, et cetera, have to go by 19th of August. All will be submitted and we are confident that we'll get the approvals and we'll be able to launch. So the only risk would be (inaudible) get pushed to next quarter.

And from a market perspective, given that you've set 3 fairly large projects to be launched in a short period of time in Mumbai. How have we developed our network of marketing channels in Mumbai, which is a new market for us.

I mean the reason will be different. This is something which we have been doing over and over. We are originally from Bangalore. We started here, headquartered here. We did -- when we expanded to Chennai, we have a process, we have a system. We built a strong sales team. We also networked with the channel partners. We also look at Mumbai's little fragmented market.

We look at that region, that particular micro market who are the past people who we have to partner with channel partners who have got a better reach, who can get us better sales. So all this work has been done, and we've been -- and whenever we expand to be it Hyderabad, be it Chennai, be it Kochi, we have done it. Of course, Mumbai is a little larger. We've got a game plan. We are at it. I think a mix of channel partners as well as direct sales.

We have also developed a good team for Mumbai. They are all in place. And as soon as somebody sees, unlike the old days where you could start selling without RERA. So now everything has to be in place and RERA number has to be in place. So even particularly this just done, we delayed our getting the RERA number purposely because we said let some confidence come in, in the buyer's mind since we're the new player there. We said let some concrete start getting poured.

Now the foundations have happened for both the blocks. And that -- if you register now and sell that now, people will have confidence and definitely, we'll sell. Cosmos is a project which has already started because we had approvals in place. Now it has to be only renewed and the necessary premiums have to be paid. In fact, in the earlier days, we used to pay premiums as you built. Now since the rebate being allowed, we are paying the full premium and taking the benefit of the discount, which is half of it.

So that's a big benefit. So we are paying it up front. So there's no more question marks from that. And I believe even that project will take off almost immediately. We've got a good bandwidth. We've got a good team, and I don't see any reason why there should be any stress in the system to market.

Okay. And the Blackstone project -- sorry, Phase 2 has been delayed. I mean you expected it earlier in the year, and now it's still not done. What has been the issue there? And now you're saying...

(inaudible) the lockdown issues, the lawyers, they're not working; the government offices, they are not working. Because you see when you want the due diligence process that happens especially for land, there's a whole lot of incumbent certificates and certified copies and (inaudible) , all those things that you have to apply for and get from the various departments. Since everything was on slow mode, also including the lawyers, it took a little longer.

But I see that this quarter -- this current quarter, that deal should get closed in its entirety. And I don't see any doubts on that, and that will be the sort of a beginning of a new era with Blackstone because we are doing some under-construction deals with them, which they will be our 50% shareholders. And that will also give us a huge boost into our system, and it will help us to do it quickly and go to the next step.

Last question for me. One of the assets you are not transferring roughly about INR 300 crores worth. If you could give some more color on that. And also, last year, when you first introduced the deal, you had mentioned that there's a potential upside of about INR 1,000 crores if certain things were to happen. Could you give us an update on where we are on that?

So these that are not part of Blackstone are concerned in Phase 2. One is a small asset called [Pallavaram] in Chennai. And there is another asset called Pacifica, which is now Bangalore, which originally we contemplated to make this part of the Phase 2 transaction, now we are not (inaudible). We are wanting to keep [both of them]. And the second question that you mentioned, I didn't quite follow. Do you mind repeating?

There is a potential upside to the deal value if certain conditions were to be met. There was some excess -- I forget the details in terms there's some excess land in some of the project or something like that, which you said if it did happen, then the deal value would go up.

No, no, no, there's nothing of that sort. See these transactions put into 2 parts, Phase 1, which we completed in March, which is almost 82% of the total transaction value. And this is the Phase 2 that we are talking about right now for [effect]. There's nothing like -- there's a arbitrary, some variable numbers that have been plugged in. And nothing that I can (inaudible). So to define deal terms, which is even shared with everybody, filed with (inaudible). So we are going accordingly whatever according to the plan.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

So my first question is on -- you mentioned that you have invested some (inaudible) for the logistics park. So just clarify what is this -- is it a new segment which we are adding? And -- or is the business (inaudible) ?

So we already have a logistics and warehousing park at a place called [Mulund]. Now in addition to that, we have picked up 2 new land parcels and 2 different parks of the city. One is towards a place called (inaudible), the other is towards (inaudible). So once these are in -- one is in design stage acquired and other one is we are completing the acquisition process. So with this, we will have 3 part ideas to I guess to -- again the potential to explore the opportunities in a logistics warehousing and industrial parks.

And how big will the development area be (inaudible) combined (inaudible) land parcels?

This is around 30 plus acres.

35 acres?

Yes.

All 3 put together, you said earlier, you have 1 land parcel in Mammood, another in (inaudible).

Close to 100 plus.

100 acres?

Yes.

And in terms of million square feet, how much is (inaudible)?

(inaudible)

My second question is on the Mulund Project Cosmos. You said at INR 370 crores, you have paid out this quarter and you only developed about 0.85 million square feet worth of commercial area, and hand it over to the lenders, right? So this 0.85 million square feet will encompass how much of CapEx? (inaudible) Is it like [5,000] square feet?

Which one?

You said 0.85 million square feet of commercial area will be handed over to the lenders. So how much of CapEx will be incurred to build out this area?

Around INR 4,000 to INR 4,500 per square feet.

Okay. And besides that, is there any other liabilities, any debt you have assumed on this project other than entire INR 6 million, INR 7 million (inaudible)? So balance, INR 5 million will be the total development area of the future. (inaudible)

No other liabilities.

No other liabilities and the resolution has happened, no other teams or any bank. I mean -- so everything is clear. No other liabilities is clear...

No other liabilities.

Okay. Just lastly, on the Mulund land. So the Mulund [tight] over supply market. We have seen some of the larger players still struggling to sell there. We see about (inaudible) coming year completion about 1/3 the project is sold till now. So what kind of differentiation you in this market, so that you can do volume. So in the first phase, how many (inaudible) are you looking to launch? What will be a differentiation year so that you can get a better income in this market?

Now the Cosmos, that is the Mulund Project, what happened is we've got 2 buildings called (inaudible). These are towers which have been partly sold. So our focus will be to take these 2 towers up, complete it, sell what is the remaining stock and also hand over the stock to the existing customers. There's some INR 300-odd crores, maybe around INR 400-odd crores, which is collectible from the existing customers. Apart from this, there is a 36-month deadline for us to build that 800,000 square feet of office building for the [COC].

There is a second phase, which will give us quite a lot of square footage, which is the most interesting and the best located, which is facing the hills and the forest. We've already designed it, but we do not want to launch that just now. We'll keep that as a Phase 2. What we will do is we'll complete these 2 towers, bring in the confidence in the market for the type of look, feel, quality that we've done. And then -- and only then, we'll look at Phase 2. But if there's a good response, we'll get the approval soon. And that's the only phase that we have not even applied for the approval. But the Phase 1 approvals are in place as well as for the commercial tower approvals are in place.

This is where the construction will start. There will be enough cash flow in the system, not only to complete these buildings and also there will be a lot of collections that will come from the existing customers. We don't need to either borrow. Maybe there will be some seed money that we'll have to open a little bit to see that we fund the construction initially. But the rest of it will come from presales and from the existing customers. That's our view on Mulund and I'm quite positive about it.

(inaudible) Phase 1 area (inaudible)

I think a little above 6 million for the whole project.

(inaudible) which you are going to open now, the Phase 1 which you are going to open now?

Which we'll open now. It will open now and will be around 3.6.

The next question is from the line of Abhinav Sinha from Jefferies.

A couple of things. One, in Mumbai, now with 700 plus 370 for Cosmos and you are referring to some developments (inaudible) also paid. Is that total investment of close to INR 2,000 crores? Is that a fair number?

INR 1,500 crores.

INR 1,500 crores you would have. But this is enough for the launches, right? I think there is no significant number between today and say the October timeframe when we're looking for the launch.

Sorry, I couldn't follow.

So between now and when we get the RERA certificate for these 3 projects, there is no significant investment required anymore. Is that correct?

No. No, no.

Okay. Sir, secondly, you'd referred to Blackstone taking some stake and maybe when you referring to you being in advance of further sort of stake and there a similar way and is it possible that you will sell down some stake in the Mumbai commercial project beforehand?

No. we are not in talks with Blackstone.

Or with anyone else for the Mumbai one.

(inaudible) everything.

Generally, I mean, you guys were, I think, way back in '20, (inaudible), you had also done a lot of these placements with export and (inaudible). I'm just wondering if something like that is on the table in the next...

(inaudible) have an eye on the balance sheet, not increase the debt, make sure that we have got enough elbowroom. We always like to play with presales where we could be rather than getting more and more debt and getting out. So the whole idea is to see that the ship sales safely and not get too overenthusiastic and keep on taking debt because today, the bankers are willing to give me as much money as I want. But I have to know when to stop and what to take money for and what not to take money for.

Okay. I think I will take this as a yes, possibly for this. And sir, finally, just your comment, I mean, initially, you had remarked that even commercial was looking up now. Can you detail that a bit? Are we at the end of the rising vacancy (inaudible)? Are we seeing improvements in rentals, et cetera?

It's actually -- that's a nice question. Everybody is concerned how much office space takeup will happen. Now see, people -- there's more business coming to this country. There's no doubt about it. If you've seen the results of the tech companies, it's just booming for them, and they are getting more and more work. But they can't be sitting at home and doing work. I think mostly, we are sort of a hybrid version. But having -- if you ask me straight, are there new leasings happening? Is there new demand? Are there new RFPs in the market. The answer is a big yes.

We have signed some spaces in various projects. There is a good demand for new campuses also. And it's only a matter of time. Now even wherever we had leased out some spaces where the tenant hadn't started their fit-out, they have started their fit-outs. So I'm pretty sure that there will be more and more demand coming in. As of today, yes, there is some softness. There is some even give up of space. But then the vacancy levels are not as much as the (inaudible). And I'm confident of this market.

As long as we have a good location, good product, the renters also will not drop. They are rental wherever they are, but we are looking at rentals going up, not dropping Over a period of time, as long as I have a good location and a good product. So things are happening, and we are leasing. And I think we leased out substantial even in these times. That gives us the confidence.

The next question is from the line of Mohit Agrawal from IIFL.

Most of the questions have been answered. So a couple of them from my side. On your residential portfolio, what will be your target -- target presales, let's say, 3 years out? And what kind of contribution do you see non-Bangalore, in particularly at Mumbai and NCR to do? So I understand for FY '22, that number is around 20% Mumbai. Do you see that number sustaining at 20%?

Three years from now, we look at INR 10,000 crores of retail and non-Bangalore to contribute to 50%.

50%. Okay. And sir, my second question is, do you have any update on the Jijamata Nagar project, any progress there in terms of -- and when do we see possible launch there?

Work underway. A lot of work that needs to be done before we clean up the site. So this will be most likely FY '24 launch.

The next question is from the line of Praful Kumar from Dymon Asia.

Congratulations for a great execution till now. And when we get extremely positive feedback about your launch in Mumbai. Two questions here. One is on capital allocation in terms of residential and commercial. So in case you see that commercial is still the vacancy rates are not turning the corner, are you flexible to increase capital allocation towards residential side? That is the first question. And secondly, in terms of margins, as you have guided earlier, that as the mix changes, the margin profile shift towards 23%, 25%, just wanted to get your thoughts. Does the guidance stay or not? And when is the -- when do you think the breakout starts hitting the P&L?

As far as office is concerned, whatever we have committed, we are going to execute that. And I think there will be enough data for it. See, now suddenly what happens is we always have to buck the trend in the sense that now and honestly, different mock psychology when somebody says office is not doing well, everybody will turn their projects into residential. When they say office is doing well, they convert their residential to office. But I think that's not the right way to work. What you need to do is every plot, every development has its relevance, and we need to know what to build where.

I can't build residential in a BKC. I don't want to build residential in Turf. In fact, many people came and told me, why are you doing this (inaudible) Liberty Towers, why don't you convert it to residential, you'll get a better realization per square foot, blah, blah, blah. But by the time we change the plan, do everything, the market will be turned towards the office again. So I think there has to be a focus on what products you want to do where and that's how we've been operating and that's how we've been successful. We will not go with the tide. In the sense, okay, there are sometimes if you feel that there's too much supply coming in, best is to park, wait for the demand to come and then continue with the construction.

Like in Bangalore, we are going on big tech park. We said, okay, let's build one building, and the rest of it will do it at our pace. There's no pressure because it's a land which has been bought out. So it's something that we need to strategize as we go along. And you rightly said converting from one asset class to the other asset class in a location which may not lend itself to do that asset class is not the right way to do it. And I don't know what the second question of yours was?

It was margins. The margin profile...

Margins, okay. Margins I think we are focused on margins. Only thing is we are trying hard to bring in efficiency in the construction.

At the same time, see that the price doesn't increase so high that the customer can't afford it. So we are trying to balance our needs with our leads. And we are trying to see that we -- the company gets margins that it is required to get with all the risks that we take. At the same time, see that the product comes out nicely and there's efficiency in the system. We can even leave it for -- you see, if you are a little flat, a lot of inefficiencies increase your cost. So we can't afford to have any inefficiencies. We have to have a focused approach. Like now on these 2 commercial projects, we felt that the best way to go about is to appoint the [BLT]. And we've now appointed (inaudible) and CBI as the BLT for the Liberty Towers and for BKC-1. So they will be handling the whole thing, so they'll be managing.

The teams are having workshops. So the whole focus is to see how, A, the product is built well; B, within the timeline; and C, within the cost. So that's a challenge that keeps happening. You have efficient people working in set certain budgets. I think things will fall within that.

That's great to know, sir. Finally, at global investors, we all are looking at some ESG framework coming from the management. Can we expect something of ESG over medium term to come true?

Yes. We just rechecked the process. We will probably conclude it in next 2 to 3 quarters.

The next question is from the line of Sameer Baisiwala from Morgan Stanley.

Just a couple of questions. One is on Mulund. I understood 30-acre land parcel. So is this a completely clean and clear land? Or are there some slums or some other habitation, which needs to be removed?

Sameer, this land is clear land, it's 33 acres. But yes, we do need to do some rehabs in 2 different components to 2 separate parts of the property. And that is one comes in the Phase 2 and one is in the Phase 1, which is near a commercial block. So that -- but the way we are building that out there's nothing on it. It's clean land and we can start construction. I mean we've already started construction. Our previous developer has started. We have to continue that and deliver it.

Okay. Okay. Great. And sir, the second question is on the ongoing commercial office block. So I think you -- your share is roughly 14.4 million square feet. So I mean, how do we see the rental scale up as you go forward. And maybe in your appendix, maybe you can start adding the year of completion, if you may. So how do we see year 2, year 3 sort of rentals spike over there?

I think we'll give you the guidance because our true total portfolio is now [INR 200,000 crores] ongoing as well as upcoming and retail should give us INR 300 crores to INR 400 crores of rental income. So as Irfan said, we'll start giving now like the way we used to give earlier, the estimated years of completion of projected rentals.

Yes, that would be great. And one final question. Sir, what's the outlook on your residential pricing in Bangalore. I mean we do hear that in NCR and (inaudible) there have been some price increase maybe a little bit in Bombay may happen. So any thoughts on Bangalore pricing going forward?

Our average (inaudible) are around INR 6,700 per square foot because what we are offering. So if you ask us whether they have substantially gone up, answer is no. But they are in the range of that INR 6,250, INR 6,500, INR 6,600, INR 6,700. So that's the range in which we are operating, but nothing beyond 7,000 as far as mid income is concerned.

And you don't plan to increase it over the next whatever foreseeable future?

No. Unless there is a market -- difference, Sameer, you know the way we work. So when we launch it, it's a particular pricing so that we get velocity, we get cash flow. But the same project towards the end of completion or after completion, if you look at, that will be substantially higher, maybe 30%, 35%. But taking care of (inaudible) city, we launched at [5 5]. Now whatever little that we have called we have (inaudible).

The next question is from the line of (inaudible) from Quest Investment.

Small clarification, you said that we are expecting INR 6,500 crores kind of presales in FY '22. That is our target. And out of which 20% we are expecting from Mumbai. So this is from all 4 projects that we are launching?

Three projects plus 1 NCR project. So that makes it 4. Three in Mumbai, 1 in NCR. Four put together, 20%.

Okay. And 20% out of this?

Yes.

Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for taking time out to be on our results conference call. It's a very interactive session. Thank you for the questions. It helps us also to directionally look at where we heading, plan well. We at Prestige, like always, we are committed to deliver the guidance that we've been giving in the call and working hard to ensure that the 2 new geographies that we're adding to our portfolio will turn out to be like the way Hyderabad, Chennai, where we had increased our footprint and significantly going to add to our portfolio be it in terms of residential, office and retail. We believe that the next 3 years are going to be very interesting and migrating times in real estate as a core and specifically for the Prestige Estate. Thank you once again.

Thank you again for all your insightful questions. We appreciate that, and we will take with the feedback as we go along. The teams are working hard, and I'm 100% sure they will deliver and we'll be doing -- as we go along, our numbers will keep increasing. And there is a focus on it. Thank you.

Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.