Ashiana Housing Limited (523716) Earnings Call Transcript & Summary

Welcome to the Q4 and full year FY '21 Earnings Call of Ashiana Housing Limited. Please note that this webinar is being recorded, and the transcript of the webinar will be made available in a week's time from the call. The results and investor presentation have been mailed to you, and it is also available on the stock exchange. In case anyone does not have a copy of the same, please do write to us, and we'll be happy to send it over to you. Before we begin, I would like to remind you that our discussion today might contain forward-looking statements. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinion only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. To take us through the results of this quarter and answer your questions, we have today with us Mr. Varun Gupta, Whole-Time Director of the company; and Mr. Vikash Dugar who is the CFO. Mr. Vikash will make his opening remarks, and then we'll move over to the Q&A. [Operator Instructions] With that said, I hand over the call to Mr. Vikash Dugar. Over to you, sir.

Thank you, Binay. Good afternoon, everyone. We sincerely hope that you and your near and dear ones are safe and in good health in these difficult times due to the ongoing pandemic. Thank you for joining us to discuss performance of the year and the fourth quarter of FY '21 of Ashiana Housing Limited. I extend a warm welcome to all of you. Area booked recorded in FY '21 was 14.97 lakhs square foot as compared to 19.82 lakhs square foot in FY '20. Area booked recorded a healthy 8.3 lakhs square feet as compared to 4.14 lakhs square feet in Q4 FY '20, aided by the launch of Ashiana Aditya Phase 2 in Jamshedpur and Phase 5 of Ashiana Umang, Jaipur. The sales were at 3.57 lakhs square foot in the previous quarter. We handed over 8.55 lakh square feet in FY '21, out of which 2.93 lakh square foot was delivered in partnerships. This was against a delivery of 8.76 lakh square foot in FY '20. Revenue recognized from completed projects in FY '21 was INR 188.74 crores vis-à-vis INR 249.15 crores in FY '20. Total comprehensive income in FY '20 was positive at INR 4.08 crores vis-à-vis negative INR 28.95 crores in FY '20. Margins at a TCI level last year were impacted due to mix of projects and onetime exceptional items like impairment of unaccrued selling expenses, INR 17.39 crores and write-off of INR 5 crores due to discontinuation of our Gujrat operations in Halol. Margins in the current year favorably impacted by saving in marketing and selling expenses and overheads. We have become more judicious in incurring marketing expenses and reduced overheads through savings and traveling costs over office overheads and other costs. Area delivered in Q4 FY '21 was 2.67 lakh square foot, out of which 1.94 lakh square foot was delivered in Ashiana Housing and 0.73 lakh square foot was delivered in the partnerships. This was against a delivery of 4.06 lakh square foot in Q4 FY '20. Revenue recognized from completed projects was INR 64.90 crores for Q4 FY '21 versus INR 62.42 crores in Q3 FY '21. Revenue recognized from completed projects was at INR 80.37 crores in Q4 FY '20. TCI was negative at INR 5.13 crores in Q4 FY '21 vis-à-vis positive INR 13.26 crores in Q3 FY '21. Pretax operating cash flows was positive at INR 171.65 crores in FY '21 vis-à-vis positive INR 34.22 crores in FY '20 due to higher collections across projects during the year. Equivalent area constructed was at 11.6 lakh square foot in FY '21 vis-à-vis 9.85 lakh square foot in FY '20. Pretax operating cash flows was positive at INR 67.16 crores in Q4 FY '21 versus positive INR 63.9 crores in the previous quarter. Equivalent area constructed was at 3.9 lakh square feet in Q4 FY '21 -- square foot versus 3.54 lakh square foot in the previous quarter and the same was 3.27 lakh square foot in Q4 FY '20. Our construction commitments were in line with the delivery schedule. On this note, I would like to conclude my remarks. We will now be happy to discuss any questions or suggestions that you may have.

[Operator Instructions] First question is from Harsh Beria.

I have a question about your sales in Jamshedpur. Previously, you had said like markets like Jamshedpur do not have adequate absorption capacity for new projects. However, if you look at like the Aditya project, you had 2 quarters of sales of 3.5 lakh and like 2.7 lakh square feet in the last 2 years. On the contrary, in bigger markets like Gurgaon, you have not even seen absorption of 1 lakh square feet in any quarter. So why is the company not focusing on more projects in smaller cities like Jamshedpur, where you get better margins due to lower ad costs and probably better value for invested capital?

Harsh, see, to generalize across locations basis of 1 project, I wouldn't say, it's true of the location. Jamshedpur is a very specific context with us because we have been present there for a very long period of time and have a great brand name. I think that makes a huge difference. Jamshedpur, the peculiar problems are lesser around selling, but more in access to good title, clear lands, which are very hard to come by in that particular city. So Ashiana Aditya and Sehar were launched, I think, after a gap of maybe -- over 2-year gap where we had 0 sales because we were not able to get access to a project in the first phase. So in Jamshedpur, we are constantly looking for a parcel. But again, that's not true of Jamshedpur. That's true of Ashiana and Jamshedpur with our brand name that exists. So I think more than anything else, for us to get sales, we have to establish our brand presence in whichever micro market we participated. And as earlier, we continue to be bullish on Jaipur, Jamshedpur. We're looking -- I think things are improving in Bhiwadi as well. Outside of Gurgaon where we are, again, sort of Sohna and Gurgaon and now Bhiwadi, which is more core NCR market, generally, the play of the company in the larger cities will continue to focus more on Senior Living like in Chennai, like the new transaction we have done in Pune. We have one regular housing project we are planning in Pune. But outside of that, we've got to be more focused on Senior Living in the larger cities.

So is the Wazirpur project also going to be a Senior Living project?

Wazirpur, I said Gurgaon. I said, Gurgaon, we will do regular housing. Again, we believe we have now got into a stage based on the Sohna project where our brand name is starting making a difference, and we'll do regular housing there.

Okay. One data keeping question. How many units were booked in this year? Like last year, it was 1,505. What were the number of flats that were sold this year?

Vikash, would you have that number with you? Just give us a moment. That would be 1,131 units.

Okay. So the average realizations, like for flats has really increased from like 44 lakhs last year to 47 lakhs. Is this like -- does this number have some kind of predictive power? Or is it just a reflection of the markets where you are selling?

It is more a reflection of the markets where we are selling, but we have seen typically -- what we are getting a sense of the company is that, a, sales prices on a per square foot basis should go up. And there is a tendency to -- for the unit sizes to increase as well on an average basis. I think both of those are also coming together very, very small, early signs of it, but we see that happening in the future as that's what we're thinking.

And is this like if you sell like bigger flats, is this better on a gross margin basis? Does it have any differentiation on that aspect?

Not really, Harsh, so much. It's very similar on the gross margin basis. Slightly bigger flats are slightly cheaper to construct. So there will be a slight impact on the gross margin, but very, very minimum.

On the kind of gross margins, you are still making as about INR 1,000, INR 1,200 per square feet for your upcoming like an ongoing projects? Is that the right number to work with?

We should look at -- so ongoing projects and upcoming projects around INR 1,000 square foot, we will release what the margin we made on the delivered units like we do every year, that will come out. You can take a cue from that. But INR 1,000 a square foot of gross margins seems very reasonable.

And 1 last question is, are there going to be new project launches in FY '22? Or is it going to be like the previous things like extension of ongoing projects?

There is -- we are working on 4 project launches. Either they will happen at the end of this financial year or the beginning of the next financial year. We are very touch and go. COVID had some impact on our ability to get approvals over the last 3 months. So we are working on 4 projects to be launched within the last quarter of this financial year or the first quarter of next year. But other than that, there are a slew of phases of existing projects planned to be launched [ this year ].

What are the markets in which these new launches will take place?

The new launches are planned in Pune, Gurgaon, Bhiwadi and Jaipur.

And I guess the Pune would be a Senior Living?

The planned project in Pune is the regular Comfort Homes project. The Senior Living project is -- we just signed up, it will definitely go to the next financial year for launch.

[Operator Instructions] So we have the next question with Raghav Singh.

Can you hear me?

We can.

Okay. So my question is related with the project completion date. Let's say we have Jaipur Daksh or Jamshedpur Aditya where we had large booking in FY '20. They are expected to complete by FY '24 and/or early FY '25. So does that mean all the projects, all the flats will be delivered and 100% revenue will be recognized within this time frame? Or you start handing over after your project is complete, that therefore, the revenue will be recognized maybe next 3 to 4 months? How does that actually happen?

So Raghav, at the time of completion once the project is completed, we typically would be recognizing the revenues in that quarter itself because we start issuing intimation of possession letters right away. But it does take -- it's not at any given point of time -- issuing of intimation of possession letters do take, I would say, 30 to 60 days across our various projects to do. Secondly, the thing I wanted to say the expected completion time that we've mentioned in our project summary in the presentation, those are the dates that we have given to RERA. We would expect to substantially -- complete the project substantially earlier than this. I think I mentioned it last time, but we forgot to issue it. We will issue that. We will put to -- call Mr. Vikash ji, if we can do this quickly expected completion time as per RERA and when do we actually expect to complete it, I would probably think we have a 12-month -- in general, a 12-month buffer in these timelines that are provided in the chart.

Okay. Understood. So that means the revenue recognition will happen after actual completion date, not before right?

It would happen after actual completion, yes.

Cool. My second question is related with the run rate of bookings that we are making. So we rebounded sharply from somewhere 9 lakh square feet to 19 lakh and now to 14 lakh. So do you expect that we are going to increase it? Or do you see some kind of stagnation going forward in future?

No, I think, Raghav, [Audio Gap] increase, we need to be the first. So earlier, the challenge was sales, and we sort of resolved that and got to 19 and 14. Now, the biggest challenge in front of the company is actually launching new projects and creating more inventory that is salable. We are at it. As I said, we have 4 new projects planned for launches, and we are working on 2, 3 more to sign up and get those launches going. So as and when those launches keep coming, this annual run rate should start increasing.

I don't have any further questions. Just from the Jamshedpur, I can tell you, you have a very good brand equity buildup over there. So if you launch any project, it will sell like hot cakes. This is a ground feedback -- on the ground feedback I'm giving you.

Thank you, Raghav. Much appreciated.

We have the next question from Rohit Potti.

Congrats on an excellent performance. My question is on the commodity prices. So I think historically, we've had this breakup that around 15% to 20% of our total sales value would be the land cost and then around 40%, 50% would be the -- I believe, the construction cost. So just curious to know what is the commodity price? How much does that contribute to, let's say, percentage of total sale value that you're seeing today? And do you see that compressing our margins?

Material cost, [ would reflect ], I would say, 30% of our sales value, total material construction cost. Vikash ji, would you have any different thoughts on that number?

So it is approximately 60% to 65% of the construction cost. So it will be in the region of that 30% to 35% of the sales price. You're right.

So about 30% to 35% of sale value. So that is what is happening. At this moment of time, again, our view is that sale prices in real estate are going to increase. There is -- overall, the conditions for that are ripe. And in our opinion -- again, we don't know the future. In our opinion, the increase in apartment sales prices will be more than the increase in input costs.

That was helpful. So the average realization inching up, is it a function of the product mix that larger cities and Senior Living, we are selling more?

So I would say, over the last year, predominantly, it was a mix thing, very slight price increases that were happening. But like this financial year, we have already increased prices across the board. And I would say now increase in prices might be visible going forward in actual realized prices.

So this financial -- so what is the price increase that you've taken this financial year? And last question, you've done a couple of large land transactions, which is heartening to see. Do you intend to continue? Or do you intend to focus on launches this year?

So sales prices up right now, I think it would have gone up by 1.5 percentage points on average across across the board. And I have a view that annual price increases of between 5% and 10% annually is something we should see for the next few years. We have a lot of catching up to do. I was just thinking about it, in the 14 years I've been at work, real estate prices, overall, of those 14 years have been below CPI inflation in the country. So I would -- I think overall that there is a little bit of catching up to do. So that's one. Second, we are focusing on launching new projects for the next 3 years. In that, launching the project that we have taken up and taking up new projects at the same time will continue. So we continue to be scouting for more transactions and working at launching the transactions that we have already done.

We have the next question from V.P. Rajesh.

So Varun, what is the guidance for this year's launches?

V.P., I think we should look to launch about a 1.5 million square foot of projects this year.

Okay. And is it -- can we expect an acceleration in the following year from that? Because last year was bad because of COVID. This year, again, we have lost a couple of months. So what would be the thought process on fiscal year '23?

We should accelerate -- V.P., we should accelerate the next financial year in terms of launches, for sure. I'm hoping that we should start hitting about 2.5 million, 3 million square foot of launches a year, hopefully.

Okay. And my second question is regarding Noida. I think you had mentioned that you were in discussions with some parties to acquire something. So any update on that?

It will take some time now. We are in discussions. Commercials and all have been agreed, but Noida has its own peculiar regulatory issues. So we are still doing diligence on the regulatory risks before we announce anything or take it to really advanced stages. So I think maybe another 2, 3 months for us to evaluate regulatory issues on that.

Okay. And lastly, on the time -- gap between the time you acquire the land and launch, what's your current delta? And how are you looking to reduce that?

It is 12 months. I don't think we are able to reduce it, frankly, given the regulation, maintaining 12 months is actually -- I would be happy if we are able to maintain 12 months.

[Operator Instructions] So we have the next question from Himanshu Upadhyay.

Hello? Am I audible?

Yes. You are.

Yes, Himanshu.

Congrats and especially on the 2 land deals, what we have done. Very heartening to do -- to see the things happening. You said that you want to continue to look for newer opportunities in the market. Can you give some light on what is happening on the ground? So are the prices remaining -- land prices remaining there? Or you see the launch opportunity is very strong? How are you seeing the things, if you can...

Land prices have inched up, Himanshu, over the last 12 months, I would say, particularly in the last 6 months of the last financial year, land prices have gone up. So we continue to focus on more JVs, therefore, where the impact of this is lesser. We also are in evaluating a little bit more outskirts and places where the impact on land prices have been lesser. And still we're looking at trying to find value opportunities in the current market.

And the markets where we would be focusing would be? It's Pune, Gurgaon only or...

For new transactions, right now, the focus of the company would be Jaipur, Jamshedpur and Chennai.

Okay. Okay. And why -- see, we have been in the Chennai market for quite some period, okay? But we have not got any other opportunity. Are there any other particular issues in that market also? Or do you think it is just, we have not...

This project size was good in itself, and we were also trying to create scale, brand, some pricing before we start scouting. We've now been scouting -- actively scouting for about 18-odd months, but of that 12 months substantially in COVID. Hopefully, we should be able to close a couple of transactions.

Okay. And 1 last question. We said that we are raising prices or blended it or across the project, it is 1.5% up, okay? Are we seeing the customer sentiment being also strong because, one of the things last cycle, what we saw was marketed a -- just a thought that prices will increase, a lot of inquiries will keep on coming at the thing because the fear is the prices will increase very soon. Have we reached a stage where if some news is out that the prices are going to move up, the inquiry levels suddenly start shooting or customer level interest increases. Are we seeing that level of enthusiasm? Or do you think it is just the plain raw material price rises there, hence, we need to raise the prices?

No, I think overall prices are ready for an upswing overall within the industry itself across the board. That said, so for us, also the price increase has come in in June itself. It's not been there throughout the quarter. And there has been a COVID impact. But now over the last, let's say, 2 weeks when the markets have clearly opened up, things seem to be coming back to normal. It's not as if that there is any fear that -- and slowness in visits and inquiries. Visits and inquiries are up. And to me, sale prices are going to go up for 2, 3 clear reasons. One, as I said, if you take a 14-year CPI and you take house prices in the markets we are in, in most places, our house prices would be trending below inflation for those 14 years. Second, interest rates are at the lowest ever in our country that -- at least that I know of. And third, in that same period, salary growth has been there over the last, let's say, 5, 6 years. Interest rates have come down, house prices have been flat, and salaries have increased, barring the impact of COVID. And four, supply side, dynamics are very, very favorable on the real estate side. We have had very few launches over the last 3, 4 years. Lot of developers have exited the business. Capital for developers remain a constraint. It all provides, to me, a long-term bull market in real estate for the next 5, 6 years. That's the view I have. Again, as I said, I generally don't like to make predictions and forecasts, attending the call over a period of time would like to know, particularly [indiscernible] forecast. But for us, it seems -- my view is that this is a longer-range price increase that we see over here.

Okay. And 1 last question. In FY '15 to '18, what we saw was the area constructed was generally ahead of area booked, okay? And in last 3 years, the area bookings have been ahead of equivalent area constructed. From here on, do we think that both can move in tandem means -- or at least area constructed has to start improving in FY '22 and onwards, which has been generally...

So FY '22, we would see a significant jump-up in area constructed, more than a 50% rise. They should start moving in tandem more or less going forward.

Okay. And 1 last thing. So what we also saw there were the sales or area booking bottomed in FY '17, '18, okay? When we did 6.9 lakh and 7 lakh square feet what we were selling. And after that, we have been continuously moving up. So do we see that the P&L would also start improving from FY '22 onwards? Because the low area booking or the low area getting constructed is now behind and now the improvement should start seeing on the P&L side also.

I would expect that the movement on the P&L side would start improving financial year '23 onwards, [ not '22 ]. 1 full year because that's when our deliveries will start kicking in.

We have the next question from Anish Jobalia.

This is Anish from Banyan Capital. So I just want to understand on the Bhiwadi market, like you -- in your initial comments, you did mention that we are seeing expectation of new launches. So if you could comment on the Bhiwadi market, given that we have quite a bit of land over there as well as forthcoming projects? So I mean, how to think in terms of scale and numbers like if you are doing today x, like how are we expecting that to ramp up going forward?

Yes. So in Bhiwadi, I think one thing, Anish, which is happening largely is we are shifting strategically towards more and more Senior Living, okay? So our 1 large project there, which is Ashiana Town Gamma, we have renamed the project now. We have shifted that to Senior Living going forward. It will reduce some salable area. But overall, my understanding has become in Bhiwadi that Senior Living is becoming -- getting great traction, good pricing, the right kind of customer base who can really afford to pay increased prices if you give them a good product. So what we are really asking for is give me a better product, give me better services, we are willing to pay more for it as compared to being someone who's price conscious. So a, strategically, we are shifting more and more focus towards Senior Living in Bhiwadi. So I think more than the volume play in Bhiwadi, I think, is going to be a margin play. And that's what we should look to do going forward.

Okay. And secondly, you mentioned that the kind of gross profit per square feet that we're booking is around INR 1,000 going forward, if my interpretation is correct. So now given that you just mentioned about your comments on sales per square feet increasing and that too faster than the inflation in our commodities, overall construction costs, would you not kind of, let's say, with the cycle pick up over the next 5, 6 years, kind of expect that gross profit per ton -- sorry, per square feet to keep inching up? Like because in the past, we were always doing INR 1,100, INR 1,200, but now you're talking of INR 1,000. So just wanted to get your sense of why we are expecting these kind of numbers? Are we being more conservative, et cetera?

So Anish, we have been doing now -- we have come down to about INR 1,000 square foot, which will start -- which has been not reflected in the P&L so much. Now some of those projects will get delivered and so some of the deliveries which are happening now, which are planned in FY '23, there, I think the margins will be a little constrained and will be closer to this. But new launches, the projects, which will be launched now and which we'll sell going forward or new phases that we are going to launch, we do see an improvement in gross margins. And I would expect more than INR 1,000 a square foot to come in and hopefully increase further as we increase sales [ process ].

We have the next question from Ankit Kanodia.

So historically, we have maintained that land is like a raw material for us, and we do not like to invest in land beyond a point, right? But when -- currently, when we are seeing, as in our assessment says that 3 to 5 years or maybe 6 years, as you mentioned, of bull market in real estate, are we going to -- what is our assessment here? So would we like to change our stance and build up inventory, maybe even leverage our book a little bit more aggressively now and build up the inventory when we see the prices rising in the next 4 or 5 years? Or we will continue to be...

No Ankit, we will treat land as a raw material, and we will not look to land bank. Our due on land will be that we are acquiring the land for a project to be launched and not for -- to [ buy land ].

I'm not talking about having a land bank without having the project, but it may happen that if we get a land right now, say if the region in which we are already there, and we have the projects. So if we can be a little aggressive in acquiring land today, we might get a better margin going forward, right?

But it will be that the intent of launching as soon as possible. I will not -- we will not intend to buy a land that we will launch 3 years. Hence, we'll intend to buy a line or acquire a land either in a JV or through outright purchases where we intend to launch as of today or get approvals and launch as soon as you can. And that intent will not change. And within that, we are hunting for value transactions.

[Operator Instructions] We have the next question from Raghav Singh.

I've 2 more questions, actually. So basically, the way I see Ashiana, our company is that we are kind of kings in Tier 2 cities, especially I can talk of Jamshedpur, where I have more experience. The way Ashiana is seen and there are the number of competition we have in these cities is actually driving our next project success. And somewhere, I think it's reflective in the way you said that in Bhiwadi, senior citizen projects are picking up because we have been selling senior citizen projects over there. So instead of -- probably these kind of projects being picked up by the market, it's probably because of the brand building or the kind of work we have done in the past. Same thing, if replicated, is easier for us to sell. Now my question is angle of -- we have a stronghold in Tier 2 cities, but we are still venturing out to a bigger market, let's say, Pune or Gurgaon, Noida, where there are the bigger players or all the players are there, right? So the competition is definitely high. So do you think breaking more into a bigger city is a more -- strategically a better way rather than expanding ourselves where we have done a lot of groundwork and we can easily sell projects? That's my first question.

Raghav, I don't think it's an either/or question. Right now, we need to maximize sales in places where we are already present. So that's, to us, Jaipur, Jamshedpur, Bhiwadi where our brand name is already strong. Jodhpur, we have a very strong presence and brand resilience. And in that, we continue to look for land and projects. These are also markets where it's harder to find projects, given their nature, but we continue to do that. And at the same time, we need to find newer opportunities to grow the business. And in that, we are looking for pockets where markets are bigger, but we think we can have a competitive edge, whether it's in Gurgaon, where we can take a rubber from a brand in Bhiwadi and in -- now in Sohna and look at that or it's in Pune and Chennai in Senior Living or it's in Pune in markets where we believe that the kind of work we do in customer centricity we bring is not as available within that micro market pocket. And we believe that we can compete in those places with our strengths. That's the sort of thought we have. It's not an either/or choice that you continue to expand in current markets or just look at newer markets. We have to do both. Otherwise, we will not be able to grow at the pace we want to grow.

Okay. Fair enough. So my next question is related with the pace of growth of Indian economy clustered in major cities. So in my own assessment, I think a lot of growth came from -- was IT-led where the IT sector employed a lot of people and they bought a lot of flats. The other one where we will present in Tier 2 was largely PSUs, which are getting money after pay commission hike and all these things. Now as people are saying that probably the next cluster of growth can be from chemical segment, not necessarily so much in IT segments. So there are certain economic zones or cities, which may potentially see many people having good salaries because that overall sector is blossoming. And that again will be Tier 2 because most of the manufacturing plants are not in the metropolitan cities. So do you think you -- I think you attempted that in a way by going into Halol, right, a few years back. But do you think that as a viable strategy as another branch out apart from [indiscernible] in the bigger cities?

Those are hard things to comment on, Raghav. The Halol as a strategy failed. Jodhpur is also -- as a city has not done the required bit in Tier 2 cities. So some of these, we are not economists. We can't have a play on that. The way to do is you place a few bets, and some of them work very well and you ramp them up. So we have placed a similar bet in Jodhpur and similar in Jaipur, it's easy to say, Jaipur is a much larger city in the first place, but we would have also said Jodhpur had a lot less competition. Jaipur worked. Jodhpur did not. We ended up doing a lot more projects in scaling up in Jaipur. We are doing this with Senior Living. We are looking at newer markets we've gone to. Pune and Gurgaon are very, very different clusters and very, very different economic activities. Idea would be to place some of these bets, see which does well and try and scale them up in a location where we do well and start doing more projects and get as much for our branding. We have no ability to predict where jobs will get created. We will only get to know that we are there once the jobs are created. So that's the way it's going to be for us.

Thanks, Varun. I believe the -- in bigger markets, if we are venturing in probably the model, which has worked wonderfully well for us, where our own guys are selling and our own guys are doing the maintenance, do you think we have to probably go to the distributors to break more into these markets or...

Yes. For non-senior living projects, we'll have to go to distributors in these markets. But maintenance will be carried out by our own guys. And even the sales process, we will carry through an in-house team, the distributors will be more to bring in the customers to the project. But showcasing of the project, briefing of the project, talking about the brand, we will try and control that a lot more by our sales.

We have the next question from Harsh Beria.

Can you give like a broad split between investor and end user demand for your current selling projects?

I wouldn't have that data. Vikash ji, would you want to take that up? Would you have some give around that?

I would not have the latest data because of some bit of change in recent years. I won't have right now.

50-50, Harsh, I would approximate, but changes project to project. It would be hard to give you any hard-coded information.

Is there some kind of investor demand that's coming back that you see in the market? Or is it still mostly led by end users?

Yes. The demand over the last 2, 3 years for long-term investors continues. People who are investing to rent or keep, there is investment demand. And it's been there for the last 2, 3 years. The demand of the guys, who are investing to trade out at possession, it's not come back.

That number has significantly diminished over the years, but then the long-term investors, some bit of demand is, of course, there.

Okay. The next question that I had is on -- so I have seen a lot of Ashiana banners in Ranchi. And I think there is some kind of brand equity there. Do you guys have plans in the Ranchi market?

We are exploring a couple of transactions, but it's not something like we have plans to enter it. It's more like on the soft play, we are just understanding our market a little bit. Eastern India is just a difficult place to operate and do a lot of projects in there. As I said, selling is easier. Supply side is more difficult.

Okay. And do you have any updates on the Kolkata land? Is that still stuck? Is there...

Kolkata project is still stuck.

I have 1 suggestion for Ashiana, and that is like the Investors section. This can be substantially improved, the investor section of the website.

Okay. Can I request you to write in specific improvements we could do, Harsh. We would be happy to take those up, if you can write in specific things we could do that you might have seen as well.

I'll definitely do that. And also, you only have like the snapshot results until FY '19. It made some kind of a rebound, for sure. I'll write in more specific recommendations...

This is with respect to the website, right?

Yes, this is with respect to the website, Ashiana Housing website.

If you can write to us, we would highly appreciate.

We have the next question from Rohit Shimpi.

Congrats on good numbers. So just 2 questions. So one is, so considering we have seen a large jump in the OCF performance in Q3 and Q4 and also you mentioned that the construction commitments would increase in FY '22. Do you see this even more broadly, FY '21, OCF as being sustainable? Or do you think that there are extraordinaries, which are pulling that up in this year?

Vikash ji, over to you?

So cash flow from operations number were healthy due to higher collections in FY '21. We hope that the healthy situation of cash flows should continue in FY '22. That, again, is a leading indicator in line with the improvement in OpEx. So we expect the cash flows to continue to be healthy in current year.

Yes. But Rohit, I would just say that the numbers in FY '21 in terms of INR 170-odd crores are just [ abnormally set ]. But at this moment of time, if we are able to sustain INR 100 crores of OCF for a couple of years, we'll be happy with that because construction commitments will jump up.

Correct. Okay. So to understand that better, this year, FY '21 would have seen lower construction relative to your earlier estimate and hence, the OCF is higher, right?

Not -- or yes. So a little bit lesser than our estimate, we also saw collections a little earlier and stronger than we expected as well. So both of those things have come in. This year, again, construction commitments are lined up, and I don't think we are going to waver from that. On the sales side, we are also a little worried how things will behave because one thing that happens whenever a COVID wave hits, even if sentiment is high, ours is a business, which is very difficult to transact and it's not an urgent purchase. So sales slow down significantly for those 3 months, it can be easily deferred. So I think that's also something that might be also a little bit wary. But after that, OCF, about INR 150 crores, INR 160 crores a year is something we hope to sustain year-on-year after that. But right now, this financial year '23, if you see, north of INR 100 crores is what we have forecast, and we would be happy with that. That's what we have also forecasted a year ago for the next 2 years. This year just became significantly better than what we expect.

Okay. And last question is on the momentum that we are seeing in the completed inventory sales. So notably, there a project like Anmol in last 2 quarters has done really well versus, let's say, the Bhiwadi non-senior living projects have been broadly in a similar range. I mean what's the color you're seeing on the ground in -- the reason for this difference that you're noting here? Is it type of customers? Is it something else?

So, Ashiana Anmol, particularly the one in Sohna was very senior sales and marketing effort there. We got -- a, we got a strategic partner in Anarock which would have made a huge difference in in learning about the new market and executing a lot of sales strategies. And there were other things, which were -- which was -- there was very serious intervention by the management team to change a lot of the sales and marketing functions within that micro market, the way we operate. So that's what happened in Anmol, what I would say largely. And other places, we are slowly and slowly reducing completed stock. I'm hoping that we'll not add much. In Vrinda Gardens, I think inventory of another maybe 4 quarters will get added when it gets completed, we have to complete that faster than we wanted to due to some regulatory issues. But that said, after that, we don't -- I don't think we'll add a lot more completed inventory. That is also helping in overall inventory.

But to that extent, you are not seeing say the -- we saw a lot of excitement in completed inventory in certain cities getting sold quickly, right? And maybe I'm still thinking from a Mumbai, Bangalore perspective. Are you seeing that in your markets and particularly Bhiwadi because that's where you've got the largest completed inventory?

Yes. I don't see tremendous excitement or sudden change in excitement over...

It isn't any kind of loss in demand, I would say. Generally, we sell around 25% to -- 25% ballpark is the kind of sales we get from the -- out of the total sales, 25% approximately is attributable to completed inventory.

We have the next question from the line of Ankur Jain.

Hello?

Ankur, you're not audible, you need to be little louder, please.

Can you hear me now?

But faintly. We can hear you, you can continue like this. I think we'll be able to address.

Okay, I'll try to speak louder. So it's not a question on the operations of the company, but it's a dilemma I'm facing and maybe you can help us resolve it. So me and my wife, we visited the flat, one of your projects in Bhiwadi, and my wife really liked the flat. So she said that we should buy one for our old age. And my view was that the company is good and the stock is cheap, we should buy the stock for our old age. So this is the dilemma that we have. Can you please provide some inputs?

I would say buy both. I wouldn't be able to say one way or the other, Ankur. Thank you for your trust. I would suggest to buy both if you are looking to do either of those 2. But in my opinion, in these questions, I generally listen to my wife on a lighter note more than anybody else. She is the right opinion maker on that front.

We have the next question from V.P. Rajesh.

So I was just looking at the presentation. So from the current projects, you have around 13 lakhs of inventory or not inventory, but sellable area of 13 lakhs. And then in one of your slides, you mentioned around 54 lakhs of projects that you have planned, right? So if I put that together, that's about 67 lakhs or so. But the catch is that around 20%, 25% is coming from Bhiwadi, which is I would categorize it as a slow-moving market or, correct me if I'm wrong in that assumption. So the question is that if I back out that 25 out of 67, I'm left with 42. So what is the time period over which you think this will get sold? So 2 questions really. If my assumption on Bhiwadi is correct? And then if you ex Bhiwadi, what is the time line in which it can get sold?

There's one input over there that in case of Bhiwadi also, we need to segregate between Senior Living and Comfort Homes because the focus and the kind of run rate in sales is different. There is a lot better traction in Senior Living. So we need to demarcate the 2 and then look at the numbers.

No, that's a fair point, Vikash. And if you can just guide me like ex Bhiwadi, what is the time period? And then for Bhiwadi, what is the time period?

It depends. Even there are some other, Neemrana is also slow. Gurgaon is also slow. Chennai is relatively quick. Lavasa is also a very slow in this thing. Jaipur is very quick. Yes, it's hard to say how things will move one way or the other. There is a larger portion in Bhiwadi than you suggested. I would also -- V.P., the thing is we've taken a 2 million square foot project in Gurgaon, we've taken -- we have 2 million now in Pune that we'll also bring to the table. My view overall as a company is that we want to get to about 2.5 million, 3 million square foot in the short term right now in, let's say, 3 years time period. And that's the churn we will have. It's hard to say overall when will the entire portfolio churn depending on where we are. But overall, it seems okay, like as Vikash ji pointed it, even in Bhiwadi one of the things that we have taken, the largest chunk of the square footage that you see, which is in Gamma, they're 18.4, we have moved that to Senior Living, and it's going to come down to 18.45 maybe closer to 13 or 14 because we might do some villas and we might make the project more upscale where we think by reducing square footage and making the project nicer, we'll more than be able to make it up in the pricing that we'll be able to achieve and given the land cost that is there. So there -- and then my expectation is that Senior Living should start hitting about 2 lakh square footage a year in Bhiwadi, we did about 1.15 lakh, I think, last year in Ashiana Nirmay, if I'm correct.

That right. 40,000 to 50,000 is the run rate per quarter in Bhiwadi Senior Living.

Yes. So if we start thinking about 2 lakh square foot in Bhiwadi Senior Living, then that's a 7-year churn. So it's difficult to say how -- sort of exactly how long this portfolio will take to churn in. But I have a view that we can start hitting 2.5 million to 3 million square foot a year once we are able to get the Gurgaon and the Pune projects live and kicking in afterwards.

Most of them will get launched in Q1, right? I'm sorry, not Q1, in fiscal year '22?

So in the Pune project and the Gurgaon project, we are looking at in fiscal year '22 or Q1 of fiscal year '23. The new senior living project in Pune, which we've just signed up maybe 3 months after that, maybe Q2 of fiscal year '23. But again, those are early to say. Approvals can always be funny in our business, and you don't know where it gets stuck. Like in the Pune, Ashiana Malhar project, all but 1 approval is in and we need environment to clear. It's all the other approvals, the fire NoCs and the NA and building and all of that have gotten in. And so 1 doesn't know where one might get stuck. But we are looking to launch those as well and get them approved.

And you have paid the seller completely in Pune or is it a JDA?

Pune, it's a revenue shared joint venture, predominantly revenue share, part area shared joint venture.

Okay. And my second question was for Vikash. I was just trying to calculate our operating overheads. So for this year, like if you could just give some guidance, what is the operating cost below gross profit on a run rate basis?

You mean selling -- you mean finance cost, depreciation and other expenses, is it?

Yes. Well, I'm looking at below gross profit, your selling cost and corporate overheads or any other -- basically, before EBITDA. So between gross profit and EBITDA, what are the cost you have on a run rate basis for this year? And maybe Q4 is probably a better number.

So as far as the marketing cost is concerned, again, there are 2 components to it. One is that it is in line with the sales that we do. So that, again, will be proportionate to the kind of deliveries that we do and book revenues, which are lower vis-à-vis FY '21. And then there is a fixed cost element which anyways we are judiciously spending. And the current year, some bit of it will also increase because of the new launches in Gurgaon and Pune. But that will not exactly feature in this year. So overall, there should be a reduction in selling costs because of the variable component to it. And as far as finance cost is concerned, it is directionally reducing because we are repaying the debt. And other costs more or less will remain in line. And as far as other office overheads are concerned, we did some kind of cost reduction this year and some impact of COVID was also there. Like we negotiated certain costs, office rentals and all. We think 60% to 70% of that is sustainable. So we see the other overheads to be more or less in line and in control. They continue to be in control. So that's the kind of...

Just to add to Vikash ji, I would say, operating costs outside -- excluding depreciation, amortization, finance and selling costs that we spoke of, outside of that, our annual run rate now should be somewhere between INR 45 crores to INR 50 crores in the financial year '22.

Okay. Okay. So INR 40 crores, INR 50 crores plus your selling cost is the number that gets on to EBITDA?

Yes. And INR 45 crores to INR 50 crores plus our selling costs and then finance cost and depreciation and amortization, for total cost.

The next question from is Harsh Beria.

So I have a comment on your 20-year like the NCD issued to IFC. So is this 8% fixed interest? Or is there some variable interest component for this NCD?

Harsh, they're all variable return debentures. There are project linked variable return debentures where -- so therefore, they are unsecured, long term, long tenured with any -- no defined repayment or interest -- specified interest payments. The interest vary as per project performance.

So this is kind of a quasi equity kind of bond? Is that interpretation correct?

Yes, it would be. It is quasi equity in structure, if that's the way to put it. But yes, it is what we -- it's project performance linked capital.

It doesn't have a fixed obligation like the conventional NCDs are there. The obligation is in line with the returns made on the -- the cash flows generated in the project.

So they're project-linked. So if they are not equity in the nature, that is not permanent capital that's come into the company. They will have to be -- even the capital will have to be returned back, not just returns and -- but they're linked to project performance.

We have the last question from Raghav Singh.

Can you hear me now?

Yes.

So it's actually not a question, just a suggestion or feedback on the investor presentation, Slide 17, where we have this ongoing project summary, giving this sellable area in lakh square feet versus the expected completion time. I will request if you can just add the potential value in terms of rupees as well. So for investor point of view, it becomes very easy to visualize how much money is falling after which quarter, right? Otherwise, I have to manually calculate. Just a feedback if you can.

Okay. All right, Raghav. We will see what we can do. Point taken. We won't commit anything. We'll understand what to do.

So that was the last question. I will now hand over to the management for closing comments. Over to you, Varun, Vikash.

We would like to thank all of you for being on this webinar and being so patient with all our questions and answers. If we were unable to take any questions, please feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the webinar. A lot of materials we have spoken about is posted on our website, and you can also e-mail your queries for any further clarification. Thank you once again for taking the time to join us on this webinar.

Thank you. Thanks, everyone, for joining.