Thursday, February 3, 2011


You have done a couple of land deals recently. Are you shifting your focus from home sales to asset sales?

We have done only two deals recently, where we have sold FSI (floor space index) to other developers. One in Goregaon where we have sold Rs 600 crore of FSI and the other is Popular Car Bazaar in Andheri, where we expect cash flows of Rs 700-800 crore. We are maintaining our focus on residential projects and only when there are big opportunities for FSI sale will we do that.

How much debt you need to repay by March 2011?

We have Rs 150 crore to repay till March 2011, which we are gradually paying off. Then, till November 2011, there is no repayment scheduled. Between November and March 2012, we have to repay around Rs 350 crore. We can handle that comfortably.

You have around Rs 4,000 crore of debt on the books. How are you planning to reduce it?

As of September 30, 2010, we had a debt equity ratio of 0.4. By no means is it high. But given the tight liquidity conditions, we are looking at both residential sales and FSI sales to generate cash flows. We will take a call in our next board meeting on whether to use positive cash flows from FSI or residential sale to reduce our debt. We do not have any pressure on debt, but we still want to reduce it by 20-25 per cent in the next 12-15 months. We have generated Rs 1,200 crore through qualified institutional placement (QIP), which we are using in various projects.

What is the progress on the Mumbai International Airport project?

State agencies have come out with a list of those ineligible for rehabilitation. It is for the government to take care of that. We are ready with around 7,000 apartments. As soon as government is ready with eligibility norms, we will hand it over to them. By the end of March 2011, we will complete another 8,000 units and by by the end of October 2011, another 10,000 units. We have generated 11 million sq ft of TDR (transferable development rights) from the project so far, though we have not shifted a single family because TDR generation is not linked to rehabilitation.

How are TDR sales?

Pretty good. They are in the range of Rs 2,800-3,400 a sq ft. If the overall condition remain tight, there could be some impact on sales. It also depends on the conditions of other developers.

What are the plans on residential segment?

On the Mumbai outskirts, we should sell 5,000 apartments or a minimum of three million sq ft of space every year. We are planning to launch projects in Shahad, Panvel and Bhoisar on Mumbai’s outskirts; within Mumbai, we will decide whether to sell FSI or apartments, which should total up to 2.5-3 million sq ft. We are planning to launch projects in Kochi and Shahad soon and deliberating on the timing of launch in Pune and Kandivali.

Residential prices went up 42-43 per cent in Mumbai last year. Analysts expect 10-15 per cent correction. What’s your view?

Yes, prices have moved sharply. We feel they will keep moving from here because of shortage in supply and slow execution by some developers. Since prices of inputs such as cement, sand are going up, we feel home prices will inch up from here. Unless there is any huge debt pressure, we do not expect correction will happen in home prices.

But home sales have come down by half in Mumbai since the beginning of the last year. Your comments?

We had tremendous sales in the past one year. We sold 5,000 apartments in Palghar (on Mumbai outskirts) in December 2010. There is a drop in sales in certain pockets and high end apartments. But we are neither in those pockets and nor do we do high-end apartments. In all our projects, we have crossed the 50 per cent mark in terms of inventory.

What is your strategy to push home sales when affordability is a question mark in cities such as Mumbai?

As a policy, our launch price is five per cent lower than the market. We do not think affordability has come down, as income levels have gone up by 25 per cent in the past one year.

There are reports that developers are borrowing at 24-28 per cent from private lenders. What has been your experience?

Rates are bound to go up, as overall rates are moving northwards. But that does not mean developers are going to Gujarat to raise funds at 35 per cent. Banks are averse to lending to individuals or firms where there is an excess exposure or whose projects are not cleared. But we are still raising non-convertible debentures at 12.5 per cent and our average cost of funds are at 13.5 per cent.

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