DLF Limited (DLF) Earnings Call Transcript & Summary

On behalf of DLF family, my name is Vivek Anand, I'm sure most of you know me, right? So I think we had a busy day since morning. First of all, I would like to welcome the expert analysts who come from different parts of the country today here with us. They've been with us since morning. They plan to be with us for the next 2 days, just today and tomorrow. So a very warm welcome to the expert analyst community. We also have our distinguished Board here on our right, right. Thank you, sir, for being here with us. We have honorable Chairman here, Mr. Rajiv Singh. We have the entire leadership team with us today. We have DLF colleagues here today with us. So we have a great opportunity for all of you to really have an interaction. The way we propose this session is we want to keep it very informal, right? We really want to -- there is no presentation we planned. I think we've had enough of presentations when we get into quarterly and annual results discussion. So today, there is no presentation. We'll encourage you to really ask questions. And we'll be happy to take on any questions you may have with regard to our performance, with regard to our strategy, with regard to our trends what is happening in the industry, with regard to outlook or any other question you may have. It's a great opportunity for all of you to ask questions directly. You've been asking me a lot, but today, it's a chance to really directly hear it from the Chairman, sir, right? The way we plan this evening is we will have this session now, which will go up to 7:00 o'clock. Post-7:00 o'clock, we've kept an hour for fun activities. I think we had a busy day since morning. So we really want to have some fun before we have a break and then we get into drinks and dinner. We planned to finish by 9:30 or 10:00, but depending on the energy levels of the group, how much you want to carry on, right? So I'll just stop here. And I think you know everybody on the stage. So let me start from the right, Mr. Devinder Singh. He was here with us today when we went for the New Gurgaon tour. So he is the CEO and the whole-time director of DLF. Then we have Sriram, who is the Managing Director of RentCo business. You had a chance to interact with him during the lunch session. Then, Ashok Tyagi right? He is the -- again CEO and whole-time director of DLF, again you know him very well, right? Mr. Singh right. Then Akash, again, in the morning, you had a chance to meet him. He was there on the -- in the New Gurgaon tour. He was there with us. And Vishal Damani, he's the business head, who has joined us recently, and he is the business head for metros, which is Delhi and Mumbai market. And then we have RK who is our technical head. And again, he's joined us recently, almost 2 years back, right? So that's the leadership team here, right? And it's time for us to really get going, right? I'll just stop here and just leave the floor to you guys to really start firing the questions. Thank you.

Thank you team DLF for the site tour through the day. Just to start off the conversation. I think about 18 months back, you all put out a refreshed plan in terms of direction of the company, new launches, expansion beyond super luxury. It seems to be working really well. So if I could, is it something that you believe is working well at your end, something you are happy with? Or should we think of it as maybe Stage 1 of where you want to take DLF to? Any thoughts there?

So thanks. We started off 18 months back. We gave some direction. And yes, as far as your question is concerned, I think it's working well. The good part is that today, the teams are fully aligned. I can say this for every member of the team and the coordination is very good. I think everybody is pretty hungry. All across geographies, we've had this business identified. We had residual stock that we've completely sold out. Wherever I have been in the last 18 months, one thing common that I picked up is there is -- why is DLF not here? And why are we not launching? And today, I think almost 8, 10 of you came to me and we had these conversations about Bombay. So as you know, we've given some direction, but across the Board, today, I can safely tell you both from the point of revenue, the customer relationship management, which we completely transformed. Business, you've seen my colleagues on the dais. Each 1 of them is looking at their businesses. And of course, they have their vision to grow it. The Chairman has given us his direction, his idea of where we need to go. So overall, I can tell you today that I think looking back 18 months where we stand today, we're in a far better place, far more confident. Some of you did see that today in our discussions and complemented us and thank you for that. And going forward, I think the teams -- we have -- we are also investing heavily on -- in this entire system on recruitments. Wherever we see gaps, we are bringing new people. So you will see, as far as going forward for the next, at least 3 to 5 years, we are fully aligned and looking forward to the business. So please watch out.

Sure. And maybe just as an extension to that, I think it's been amply clear since the morning, how much you invest in the brand and how close that is to you? At some stage, do you think there's an opportunity to maybe target affordable and mid-segment housing maybe under a different brand name?

Thank you. I think we've thought about it quite a bit. And I think the answer is no. We will not pursue that opportunity. And -- strictly because it's a very construction intensive activity and as you're well aware, we outsource our construction. The value addition we can look at in that business is low. I think we've already mentioned in our earlier presentations that we are generally focused on adding higher margin, both P&L and cash flow to our portfolio. Right now, I think, definitely, I don't want to say mid-income, but definitely the so-called lower income housing short of a social obligation, which we do meet from time to time is not part of our agenda.

Saurabh from JPMorgan. Quite disappointed to hear your plans on mid income. The question essentially follows on your stated strategy of increasing ROE, that's part of your presentation. I mean, if you -- I mean, you've covered 1/3 of your journey in some terms of reducing debt. But if you look at the return on equity, it still in the low single digit, still needs to go up. And the only way -- to my mind, it goes up is via sales. So in the absence of not doing mid income, how do you double your sales from current levels? That's the first one. And the second one is -- essentially is 0 debt still a plan? Or I mean, are you happy with your current debt?

It's not if I'm happy, are you guys happy with that. But anyway, the point [Foreign Language] frankly, I'll tell you honestly that -- I'll answer your second question first, it is an obvious answer. Yes, we are committed to bringing our debt to 0 level. So that does not change. At the same time, we're not doing anything foolish to achieve it. It's being done in a sensible way by actually creating value and encashing the value. Our land disposals have now slowed down too far in between for some completely strategic reason. If we find we can't do anything, we'll get out of it. But otherwise, we are choosing to build upon it, number one. Second, I think this question keeps coming back time and again. I'm going to tell you guys 2, 3 things, which I think all of you must know. And first and foremost, we are now obliged to follow a new accounting standard. So there's a lot of lag between what we are doing today and what we are reporting today. Our reporting unfortunately is of something we did many years back. So when it gets completed, it hits the books. So that's one thing I think all of you must account for. And in my view, ideally create 2 models. One, what is happening and what, second, you think is happening? Second is a bit of approximation, but it won't be too bad. Secondly, look, the important thing here is, I mean again, it must be understood that in our business, profit is a combination of sale price less cost generated but a very significant number and more so in companies like ours is increase in underlying value, okay? All over the world, it is not only option, it is mandatory that companies have to mark their portfolio to market regularly, quarterly and annually. If you look at any large international real estate company, a vast overwhelming bulk of its profits or God forbid losses come from the mark-to-market here. A very small percentage comes from underlying profit "operations." So in our case also we do and we can't because the loss don't permit us sort of officially mark-to-market. But internally, we do look at that are we adding and generating value to a portfolio or not? I can't go into very specific numbers, but I can certainly say that at least we are satisfied that we are meeting "high ROE numbers" once we take the totality of our portfolio. Strictly from an accounting profit and strictly from a lag accounting profit, ROE numbers will keep improving, but to be very honest with you, it will take time and that is not our journey. It will be a resultant of our journey, but that is not our journey. So we won't go out and liquidate our landholdings to create synthetic profits to meet a number. We will encash them when we believe we've reached a fair value potential and then report it. I think, look, to your point, in our case, life changes very fast. Our large equity base today possibly is a deterrent to the ROE strategy but it is also a fortress to a bad timing. So these things change from time to time. We are very, very content with our balance sheet. We are very content with our strategy of financial strategy. I am not seeing any reason to really change it or chase any target for one reason or the other. Doubling of sales, as you mentioned, I think we have shown a fairly good track record in sales. I do believe growth will come in the future. But again, we are not going to chase a target of growth for the sake of growth. If it adds value to our portfolio, we will go for the sale. If it doesn't add value to the portfolio, as you have seen today, New Gurgaon, maybe here in Camellias. Also as a company, we don't sort of stop working. We don't become idle. But we like to reinvest and reinvest until we believe we can create enough value and then take it to the market. So that is something, I think, as a strategy. I know it is a little countercyclical to what people think about today. But we do believe our strategy has been vindicated over the last 75 years. And honestly, I do believe it's valid for a fair degree more in time to come.

Sir, just 1 follow-up on that. On the mid income piece, the view is just that your construction cost, with your corporate costs, you just cannot be competitive in that market? Because if I analyze your competitors, 30%, 35% keep coming from mid income even the listed guys so why should...

No. [Foreign Language] I think I mentioned clearly, you guys had 2 things in 1 word, mid-income and affordable. So I think all that. So I've clearly distinguished that we are not in the lower-income housing, save and except meeting certain social obligation, which we always do. But in the middle-income housing today, what you went and saw in New Gurgaon. I do believe you went and visited some floors also. In my opinion, that is strictly middle-income housing. Those apartments are priced at 1 to 1.5, nice apartments, close to work centers. I think by any yardstick, 1 to 1.5 would be what we consider mid-income housing. [Foreign Language] What I want to tell you guys is what you must remember in this company is that what is our success? Our success is in taking something which was nothing. It was raw land and taking it up the value curve here. We go through the journey. We -- this land here where we are sitting, was not high-income housing or super high-income housing. It didn't -- it wasn't made that way. This land where we are sitting had 30 foot [indiscernible], okay? It was completely this land which we are sitting on was bought by us because people in other parts of DLF City would not [ part ] with their land until we bought this residual "junky land" from them. We bought it, we developed it, we added value to it and so on and so forth. Our first sale here in this part of thing was in the 3-digit numbers, not even a 4-digit number, okay? Those apartments are still there today, nice apartments. People are very happy living in them. They are 950 to 1,000 square feet and they were sold for, I still remember a number under INR 10 lakh. That was our success story. So [Foreign Language] what I want to tell you guys is, it is not that we don't want to be in the mid-income housing. It is not that we are not in the mid-income housing. But our success is that we don't remain in the mid-income housing. We take that product, work harder and convert the mid-income housing product into a high-income housing. And that is why our customers are happy. That's why we are happy. And that is our real story. So today, journey always starts at some point. But we take it to God willing, a slightly higher point. And that's why I said, whatever it takes to make, say, New Gurgaon successful, different price points, different product points, we are constantly investing and putting it out. We make decent money at it. No harm in that. But I said, our journey is how to take it to better and higher values. So mid-income housing, I think we don't have too much of the stock left over. Luckily, we've graduated in the last 15, 20 years. But wherever we have it, Chandigarh is another example. We are more than active in the upper mid-income segment [Foreign Language] if you want to use that word.

This is Kunal from CLSA. Sir, firstly, on like we have clocked very high sales in FY '22. So I just wanted to get some sense where do we go from here? And if I go by your new launches planned for '23, it looks pretty flat compared to FY '22. So where do we aspire to be in '23 and say, what kind of growth we plan to achieve over the -- over the next 3 to 4 years?

[Foreign Language] I think, look, I don't think we are flat. I don't think we are aspiring to be flat. I think the simple fact is we have taken a basket of sort of products in different geographies at different product points, different price points and are bringing them to the market in an organized systematic manner, sometimes approval cycles delay something a little bit here or there, but nothing as such, which is completely changing the picture. In that context, we are not moderating our sales or we are not moderating anything. Sales velocity will be depending on how the market is accepting the product. We are confident about its acceptance. So as I said, what you all have to understand is the number of -- and this is all part of our quarterly published reports is a number, which is in excess of, I think, INR 40,000 crores. Now moot point is does it get translated into sales in X number of years, you can divide it by the X number of years. Also, I'd like to say that that's a number we have given you today based on what we are working on today. I don't think we have made any statement that we will stop working on anything else new. We will, and we will add to that number. So that number -- the dynamic number, it will change every X number of quarters, I presume. And therefore, I think we are looking at reasonable growth in the future also. It may not be as good as what we experienced last year. But I think you should not go away with the message that we are not looking for growth. We are looking for growth. And I think we have the product line pipeline inventory available to meet that goal. And unless there's something catastrophic which happens in the economy, I don't think so. I think we will have good -- strong growth in the time to come.

Sure. My second question is on your cash flow, sir. Like we already generating free cash flows in our residential business. And say, whenever the REIT happens, we being the largest unitholders in the REIT, we'll be getting substantial distributions in DLF. So what do we plan to do with this kind of cash flow going ahead? That's one. And my next question is actually contradicting that question, is in terms of like currently looking at the up-cycle and looking at the market environment, would we opportunistically look at raising equity?

I can again answer the second question. The answer is no. But to your first question, look, I think I'd like to believe maybe I'm wrong, that we are in a unique opportunity where we have now largely completed our investment cycle in DevCo. We have reached a high degree of maturity in terms of new and constant cash flows by way of rental in our RentCo. I think all our reasonable growth aspirations can be met quite comfortably. The cash surplus, which we hope to generate, and we are confident of generating after meeting the liabilities, which exist. Our intent would be to keep some prudent taste. But rest of it, I think we would like to see this company becoming a company, which not only has a value accretion to its shareholders but also an income to the shareholders. So I do believe a large portion of it will go in dividend distributions as time and opportunity permits. So we are committed to a fair degree of payouts hopefully in the years to come.

And on the equity raise, sir?

[Foreign Language] I think we are not going to raise -- I hope not. Let me put it this way. I hate to say anything here, nobody knows anything, but the simple fact is no. Equity raising is not part of our plans. And I think under all circumstances, the kind of cash flow, which our business will be able to throw up would meet our ambitions quite comfortably. So I don't think equity is required here.

Kunal, I'd just like to answer your first question and just add to what Chairman just said. So if you've seen, first, there was residual stock. I refer to the previous analyst meeting that we did in 2018, '19, where there was a certain value that was put on that stock. And I just about got into the system where you all felt that it should be discounted. So today, I think from there on, the concentration first was to clean up the previous stock. We cleaned up the previous stock. There was no discount given at a premium. Our collections have been strong there. And then, of course, making sure that wherever the new launches are. So if this year you've been tracking, it's been evenly distributed between super luxury, premium and the rest of the business across the country, across price points, across geographies. And going forward, whether it is Goa or Panchkula or wherever these projects of ours are, looking at where the values where we will maximize and get into. But it's not -- definitely not going to be flat. There is enough to do, and we've aligned our teams all across the country to do that. So next time when you all have time, and we take you to Tricity, we take you to Kochi, Chennai. All our teams will be happy to know they are extremely aggressive and wanting to get into more business. So that we can assure you of as and when we get into those areas, we will monetize well.

Yes. This is Puneet from HSBC. My question is, you've had over the last 2 decades, some great years and some not so great years. Do you constantly think of making any change in your vision or change in the way business needs to be done or how the organization needs to evolve from here on?

[Foreign Language] I think we've had great years, we've had not so great years, et cetera, it's fine, but let me put it this way. We look at our business a little bit long cycle. So rightly or wrongly, a year is not really our kind of make-or-break for a strategy point of view. Again, at some point of time, I do hope we'll put this data out. But all I can say is even the last decade has been extremely satisfied. It depends how you measure it. But from every metric, I think we did very well, the decade and a half post the IPO likewise. So I don't think really something is there, which has influenced us negatively. But as I said, you learn as you go along. And 2, 3 learnings are there. And 1 of the learnings is be careful, don't get into the volume game. A lot of things go wrong. Cycles in India are unpredictable, and we have to be careful. So I know everybody keeps talking about this affordable game, this game, that game, et cetera. I'm just going to say it if somebody takes you guys seriously, most likely is going to go bankrupt. So I hope guys don't take you seriously when you give this kind of advice to people. But the simple fact is 2007, 2008, a similar situation was there when the global financial crisis unfortunately hit the world. At that time, we reacted by assuming that the world will be a different place going forward. Pricing would be a different thing going forward. And we thought time is there. We should use the sort of environment, which we thought that time would be in the future to aggressively cut prices because we can buy cheaper, build cheaper.... and offer into the marketplace. And that turned out to be a nightmare, okay? The unanticipated cost increases, far out-shadowed whatever margins we had contemplated at that point of time. And we had to swallow our lumps painful as they were, deliver the product to the customer and so on and so forth. Many of my colleagues in the industries who followed our footsteps or followed along with us or God knows whatever it was, maybe more successfully than us held huge volumes, unfortunately did not have the capital to make that delta funding and rest, as we all know, most of the companies went down. So [Foreign Language] I think the lesson we've really learned is be very, very cautious in your commitments, be aggressive in your thinking and in your, I would say, outlook. But when you come down into a micro basis, be slightly cautious, price cautiously, promise cautiously because at the end of the day, there are too many factors in this industry which can go wrong. I think we are the only industry, which is being asked by law to price without any escalation clause, fixed pricing for delivery periods in excess or up to 5 years, okay, with no protection of force majeure, no protection of even protection against statutory increases like taxes, et cetera, et cetera. It's a very risky thing to do. Almost no other company can do it. The odd part is my contractors allowed escalation. Everybody has allowed escalation except me. So what we started the journey. Today, we are sitting around talking high margin, high income, this, that, I hope to God that comes out true. That only when the project finishes, then you kind of give a sigh of relief [Foreign Language] what I was left over, thank god. So it's a tricky business. So I'll only say one thing. Our strategy has not changed in DLF for the last 75 years. We just always maintained 1 strategy, add value to your product and be fair and be honest to your customer, nothing else. But with the growth of the country, with change in people's attitude, products evolve. We've just been working to make sure that we give them the product, which their revised sort of economic circumstances are not demanding. And I think we're going to continue with that. That's the way I see it. Our RentCo business was an addition 20, 25 years back. It's doing well. We'll continue with it. So answer to you is strategic changes are not year-to-year. And luckily for me, I'd like to say, even the last decade has not changed anything more except made us a bit more cautious and wiser.

Just to add on to this, 4, 5 years back, there were 2 commitments. One was not to sell projects before you get an OC and second, not to enter into new cities. Should we see that changing now?

Okay. Let me put it this way. Commitment is a harsh word so -- indication. But anyway, you're right in what you say. And thanks for reminding us. We remain true to that. So basic point, we are not really going into any new city, okay? But we are going to complete our now very profitable opportunities in "existing cities." So we have -- we are in multiple cities, but we are not really going into "new cities," number one. And we stick to that, okay. Number 2 is, as far as our build strategy, our build strategy is mandated upon that we must be sure about the ability to deliver on time and hopefully deliver on cost. That moment the engineering cycles become absolutely certain contracts get awarded, then we can take a call so. Today, what we've just done is that we are not rigid about the OC story, but we are reasonably rigid still about the confirmation of cost and delivery story. As a result, I think all of you have been -- you've seen today, following a reasonably cautious approach, we took the first baby steps post that new time. And most of our newer projects, most of them turned out to be basically products where the risk of delivery and already cock up in costing is about the least floors and so on and so forth. And in high rise, we offered for sale our Midtown project. When it has achieved, I'd say, almost 50% structural completion, a lot of the issues were done almost, I'd say, 95% contracts issued and so on and so forth, and we could price it correctly, we could offer it with a delivery schedule, which we are extremely sure about. So I think we will remain in that mode and bring new product to market, but only when we are confident about its timings and its costing. So it may not be on the day of approval, it may be after some substantial work has been done on it. It will vary from product to product. But yes, we will remain in that mode. But yes, if you say, have you removed the OC condition as an absolute condition, the answer is yes.

Okay. The last one is, if you think about the mix of products which were launched last year, it was some bit of group housing, some plots and some floors. Should we largely think that, that mix will continue? Or would you go on to do a lot more group housing and less of plot and floor sales?

[Foreign Language] As I said earlier, the thing is very simple. The lowest value addition, easiest to do, of course, but the lowest value addition is sell the land, "plot." After that, you do limited value addition, sell the floor. And you really want to make your life miserable and really go for value addition, then you start making multistoried housing, okay? So this journey is something we will keep doing. So where we sold the plots today, we will start selling the floors. Where we are selling the floors tomorrow, we'll be selling the multistoried apartments. This cycle is our company's perennial cycle. And where we are making buildings today of X floors, tomorrow we'll make them X-plus floors. So this is our growth journey. I think you will see it being repeated all the time. Every time we start, we may start with a plot and go up that journey quickly. Most of the proportion, as you see going forward will be in, I would like to believe, high-rise housing. Floors would be a significant contributor for the next few years. After that, I do like to believe that maybe we'll have no more floors left and everything will get converted to high-rise housing. That is assuming, life goes on the way it's going today.

So is it a fair assumption that you think that group housing is higher return on capital than sale of plots and floors?

[Foreign Language] Return on capital is a question mark. Again, we come back -- in a plot, you get your money back very quickly, okay. In a group housing because of RERA now, more so and you get your money back, I think somebody is joking if they can feel they get the money back less than 4 to 5 years, okay? So plot is a couple of years, group housing is 4 to 5 years. If you ask me a question that do we make that much extra money that it's worth it, answer I would like to say is yes, okay. But it's a mix. We think about it all the time. And that's why I said where we end out, we sell the plot. When we are halfway through, we sell the floor. And as the product and time progresses, the margins become bigger and bigger, we go for the housing. So it's a valid question. Right now, I think it looks good. And yes, group housing, despite the time delay, still effectively gives a better return over time.

This is Mohit from IIFL. My question is on your long-term vision on the RentCo. So is the strategy there to continue to leverage on your existing land bank or FSA, in which case, you will be an NCR focused REIT in the next 5 to 7 years? Or do you want to go into newer cities or be a platform where smaller developers could bring in their assets and thereby expand into newer cities like Mumbai or Bangalore?

Okay. Good question. I don't know, firstly, if we have released our RentCo development potential on the -- in public domain. So I would just like to -- have we or not yet?

So the 2 downtowns in...

No, no, the future potential.

The future potential -- sort of total future potential in the downtowns and within Cyber City in public domain.

Generally in other cities and all. I don't know. So look, to be honest with you, I don't think we -- thanks for bringing it to our notice. We will release it. Okay. So maybe more granular questions can be answered then. But I can give you a general point of view. Again, let me put this way. We slightly differ from my colleagues in the industry, where we like to make the money by developing the asset and then renting the asset. So we like to believe that we make money on both ends of the equation. First, we make the "DevCo money," we don't encash it, but we make it. And then we make the RentCo money. This derisks us greatly because really our land is kind of paid for and hopefully at reasonable rates. So our paybacks on new construction actually turn out to be very, very fast. And it gives us the flexibility to sort of be a bit more aggressive in our development schedule. If I get into the business of buying, then look, at the end of the day, you can call it 2 types of business, buying real estate, selling real estate is real estate, but then that's a financing business, okay? I'm not saying we are averse to it. We have done some joint development. We bought a building in Horizon Center. We did this time to time. We'll look at it. But the good news is the pipeline we have which will be more disclosed to you and grows with time, has so much embedded development potential that really the need to go out and buy asset for growth sake is not required. We'll buy an asset if it makes sense for diversity, we'll buy an asset if it makes sense for -- or somebody is giving it for hopefully nothing. We'll look at buying it. But luckily for us, our vision, our hope, our desire to maintain a good growth rate in the RentCo business. Luckily, our own pipeline is there for a fairly long period of time to support that. Geographical issues are there. Bangalore is, of course, a very attractive market, et cetera, et cetera. So is Mumbai. I'm not against it. I'm not saying we are for it. If some opportunity comes, we may take the opportunity, but we may still take the opportunity by buying a piece of land and then building upon it and so on and so forth. So we'll have to take a call. Last but not the least, are we going to create a RentCo, which will become a takeout for other developers at all? I'd like to hope that, that's not what we will end up being, I'd like to say that, yes, at some point of time, if you use that vehicle to grow by doing some kind of larger sort of synergy type of moves, maybe. But I don't really see us sort of buying out small, small assets. There are many other issues involved with it, technical included, which will preclude us from just going and buying something off the shelf, et cetera, et cetera. So our development standards, touchwood are quite, quite strict. And many developers may or may not be able to meet them. So may not qualify in the category you're talking about. So allow me to put that data up and you'll see it, it's good enough for sustained growth for a fairly long period of time. But beyond that, if you have any other questions, post that, we'll be happy to answer them.

This is Manish Agrawal from JM Financial. My first question would be pertaining to the depth of the Delhi NCR market in the residential segment but -- because what we have seen that whenever DLF is launching products, the sales have been very good and consolidation across the industry is visible, more so in the Delhi NCR market. So if you could just highlight are -- is the market relatively underserved as per you?

No, it's not underserved. [Foreign Language] first and foremost, I think somebody asked me, they said lunchtime also. Fortunately for us, Delhi NCR is possibly the fastest growing urban agglomeration at the moment and is forecasted to be so for at least the next couple of decades. So there's a lot of economic activity. There's a lot of money being generated in the city or in this region and a lot of demand for housing, et cetera, et cetera. Yes, you're absolutely right. It is underserved because unfortunately, a vast majority of developers, especially those of certain size and scale in this part of the country more so than other parts actually have either gone out of business or chosen to go out of business. So the availability issues are certainly quite stock here. And therefore, I think, you can call it for the short term, it is -- the supply is lesser than what it should be. The government was also not particularly active. Delhi, as you know, was largely met by [ DD ] and [ DD ] also has chosen to take a little bit of a backseat. So there is a little bit of a shortage. There's no two ways about it in terms of availability of various types. But I don't think there's any, I mean, I'm going to say, distinct sort of vacuum of any product. You also must remember there's a very large secondary sale market. And Delhi earlier and NCR was somewhat a bit more investor driven than the rest of the country. So I think those investors are also being able to get out and sell to so-called actual users. So next year or 2, I think it's kind of fairly balanced here. After that, if some new launches do take place, maybe there's a balance. Otherwise, I feel that the market will harden because supply will be less than what demand would be in the time to come.

Sure. And if you could highlight the plans for DLF Phase 5 in particular going forward?

Plans for DLF 5, I think the numbers are out there with -- for all of you. We have successfully demonstrated in DLF 5 various product types and have set good examples in various product types. Horizon Center is the corporate center of choice in the NCR. The building you are in is now the super luxury choice in the NCR benchmark for many others. And we've also had a very successful product in the crest, which meets a very aspirational, very high-quality need. So I think our plans for DLF 5 are that we will bring new schemes to the market to serve basically all 3 of these segments where we have shown success. So -- yes, so what I will have at least in the near future, 3 different schemes. They're not part of our disclosures yet because there's nothing more than just a figment of imagination. But in the next few quarters, I do hope we can start sort of making some commitments towards new opportunities in DLF 5 and it would be in luxury, super luxury and commercial, I think we are seeing good opportunity in all 3 of them.

And lastly, does Noida interests us as a large residential market?

Yes. Noida, does interest us, but let me be blunt about it beyond interests us, that's about it because we are trying hard, but there's so much of litigation and so much of history there that to really get one's hand on a good piece of land, which can both be sizable as well as be fitting with our brand and our image is proving to be a bit of a challenge. So we are trying. But nothing has sort of concretized so far, but we are trying and will continue to try.

Pritesh here from Motilal Oswal. So at one point, we are looking at REIT for our rental business model. And at other side, we have 40 million square feet of operational portfolio with another 24 million square feet in development potential. And REIT, if my knowledge is correct, 80% needs to be operational and 20% is only allowed as under construction. How are we going to balance that side of our journey for making this portfolio much bigger?

[Foreign Language] I will say 2, 3 things. First, I think I want to clarify here. We are getting ourselves ready to be in a position to do a REIT in case we so wish to, okay? I think there's no clear finality of decision that we are doing a REIT. This decision will be taken by both partners at the appropriate time. But we want to certainly make ourselves capable of doing a REIT in case it is possible and all our disclosures to date are informing you that steps towards becoming REIT capable are taking place, number one. So please, let's not -- REIT is 1 of the many options we may have or not have, okay. Second, in a REIT, there is a bar by value. There's not a bar by physical nature. So 20% of the value can constitute what may be considered underdevelopment portfolio or development portfolio, okay. In our case, that number rightly so possibly would be more. Two things happen here. One is the passage of time. We have a number of CapEx programs going on as time goes by, new assets get added, new income gets added, that problem becomes lesser and lesser. That's number one. And second is -- and this is part of the REITable processes, do you hive off some of the assets in case you feel too much value is left on the table? Or do you kind of "discount those assets" to fit it into the 20% valuation cap? The net-net of that at the end of the day is who gains from that so-called discount. It is, the present shareholder really doesn't care, the future shareholder to a small extent gets a cheaper entry and maybe a better time to come. So I don't think it's such a big problem. And I don't think that's really central in our mind. I think our mind is more around a lot of statutory and other legal processes, which have to be followed, which we are undertaking. Determination of value, this, that and all, I think we'll take it at the right time, provided REIT is the option, we go for at that moment in time.

Sure. That answers. And secondly, while we are in Camellias, that project, obviously did very well last year with INR 2,500 crores odd of sales. Now here, we are left with very few units to sell. So we have a big number to fill for next year. And looking at your launch pipeline right now, it's -- I mean, we are trying to find where that space or blank space can be filled. So in that scenario, how are we looking at growing our presales for next year?

[Foreign Language] I think as I mentioned too, we've got that whole pipeline of so-called inventory, which is being created. And as I said, during the year, possibly, we'll add to it. So the obvious loss of Camellias to the extent of volume, which we did last year, which was extraordinarily good, would certainly be felt, but I'm more than confident that we've got many, many other options to fill it up, including in geographies where we were not present earlier. So in an odd way, we'll have a bit more of diversity. I'm not worried about the availability of product to meet our sales goals. I think we've got enough options. And we've factored in, in our thoughts that Camellias would naturally be sold 1 day and life has to go on beyond that. And I think we are comfortable to repeat our statement that we will try to grow the company beyond where it is today and that takes into account the fact that we won't have the full-time support of Camellias for that objective. But we still stick with that statement.

Sure. And lastly, an update on Mumbai, where are we at negotiating our terms with the JV partners that we have and at what stage we can see that getting launched?

So I wish I knew the answer to that question. But let me put it this, we're trying hard. So look, it is our desire to see a satisfactory resolution to that process. Nothing is quick here. So I don't think it's going to happen in a vast tearing hurry if it happens at all. We've been prudent about taking certain accounting charges to reflect the uncertainty, but we are trying hard to let me try our best to at least make sure the project does well and survive, no matter in which circumstances and with whom. We are negotiating with a very open mind. And let's see how that process goes. Difficult for me to make a judgment there. But I do feel that Bombay is a market where we can look at some incremental sales volumes. It may not be immediately, but definitely in the medium term, I do hope we'll have some good opportunities to do in Mumbai and allow for a certain sales volume, which can be meaningful for us considering our size of operations in the NCR. This can be a decent counterweight, I hope so.

Yes. Sir, just 1 question. What would be FY '23 presales guidance?

That question, okay [Foreign Language] I think we have just started the year. I can -- I'm not going to use the word guidance, but I'll say desire. So we had extraordinarily good last year. Akash and his team are highly motivated to improve upon it. So we are confident we'll do better than that. We are reasonably confident that we should do a double-digit growth on that number. How far it takes us, I can't say right now. We are the start of it. Maybe this question is better answered by around the middle of the year. But definitely, I'd like to say that a double-digit number beyond what we have done this year is certainly our desire.

This is Adhidev from ISEC. Sir, on the DevCo business, so you had revised your total realizable value to around, I think, INR 47,000 crores based on whatever price hikes you were able to take last year. Now given the weather -- environment where costs are going up every year, what is the upside risk used to those numbers? Yes.

Upside risk or downside?

Whichever way I mean you would like to look at it?

Cost increase, yes, yes, yes...

No, sir, the total value of the inventory or the pipeline you've highlighted in your presentations...

As we've already explained to you, we are looking at possibly cost inflations to the extent of depending on the nature of our product, as it seems right now roughly around 10% plus in aggregate number. It goes up a little higher for products, which are a bit more metal and steel intensive, et cetera. Even if you take a number between 10% and 15% on the cost, okay. Luckily for us, we were conservative. We kept some contingency margins in the past also. But still, we may be looking at, on the worst case, a cost increase of between 5% and 10% net hitting on sort of construction costs. Let's talk a bit more conservatively and say, okay, let's say, even if 10% goes up. 10% going up in the product mix, which we have indicated to you, as you've already mentioned, our product mix, fortunately is margin rich. And therefore, that 10% should, in that INR 47,000 crores, be nothing more than a number, which is a couple of thousand crores. And therefore, a 5-odd percent price hike should take care of the inflation impact, God forbid, if any. Further, our desire may still be to maintain margins, and therefore, the price increase may be 7%, 8%, 9%. We are reasonably confident that we'll maintain the margin. Can we maintain the percentage? I hope we can, but we will try. But it's not in the larger scheme of things because of the nature of our product, nature of our margins. It's not that difficult number to meet because we have -- our products are reasonably margin-rich going forward.

Okay. And just a follow-up on that. What sort of price hike annually over the life of a project from launch do we now typically target going forward, something that we will be happy with? That's all...

We are not happy with any price increase, okay? I think that's not what we want to do. There are 2 types of things here. One is that we deliberately built in, into our pricing strategy in terms of project conception where it's understood, the early bird gets some benefits beyond the later person, but there are 2 parts to it. One is deliberately it is structured that way. You can call it a price increase; I just call it part of the average pricing strategy. Real price increases beyond that. That happens if the product is more than accepted by the marketplace. And if it's more than accepted by the marketplace, then we get what we may consider if disproportionate price increase here. Most of the products we end up getting that. And therefore, most of our products, we would like to believe that net-net, there's a double-digit price gain here. The key issue is, do you manage to hold on to that in your margins or part of it gets frittered away by inflation or contingency? It varies. So net-net, I'm just going to tell you that aspiration, if you ask me, should be about a net 5% to 10% increase over the life of the project in real prices. If we can achieve that, I think we've done a good job over and above anything which we have created just as a tiered structure of marketing here. So the starting price to closing price, 20%, 25% up in nominal terms would be a good achievement here.

Sure, sir. That is very helpful. That answers my questions.

This is Venkat from Tata Asset Management. So I'm aware that in the launch pipeline, you've spoken about 2.9 million square feet launches beyond the NCR market that you guys have. If you could give some more color about what are the key projects in these cities? And what could be the upside potential to this launch pipeline?

The upside potential -- outside potential to the launch pipeline, as I said, we are working on a number of new things. As they fructify into something which becomes a valid disclosable issue, we'll tell you. So that please excuse me from saying that to you because if it was definite, it was sure we would have put it in the number. I think future communications will answer that question. On the other side, I think what are -- within our disclosed pipelines, what are the kind of exciting projects which we have outside? -- Now this question is outside Gurgaon NCR?

Yes, yes. Outside Gurgaon and Delhi.

Okay. So we basically have -- look, we have, well, at least 2 good projects in Goa. One is a commercial project, and one is a residential project. We do believe it will be quite well received, and they are of decent size and scale by Goa standards. We have, again, a very aspirational possibly benchmark setting project in Chennai, which again, hopefully, post approvals we will bring to the market in this time frame. That will again be a major one for us. And last but not the least is we have actually extremely exciting opportunities in the Tri-City area of Chandigarh. And those also, I think, will be coming to the market in the near future. So I think if you ask me, 3 big ones are Goa, Chennai and Tri-City Chandigarh, outside our comfort zone of Delhi/Gurgaon.

Right, right. And just as a follow-up, so if you could talk a little bit about how are you also scaling up your teams in these particular cities? And an extension to that is also, are you also thinking about maybe philosophically not immediately, but in medium term, beyond NCR, what could potentially be your second or third largest market?

Markets are -- firstly, let me talk about the teams. I think one lesson we learned. Somebody asked me earlier about what have we learned over the last thing. One of them is that make sure your team is more capable and better than your ambitions and aspirations. So we have, this time, been very cautious that we are investing in teams prior to the event and not after the event and possibly somewhere in life, you have limitations. If we do have severe limitations, we'll recognize them and limit our ambitions accordingly, okay? So to the team, I think I'm happy to say that we've gotten apart from our NCR area, which Devinder is running and Aakash is pushing the sales, we have been fortunate to build up a good strong bench. I think basically, R.K. is here. R.K. apart from being the Chief Technical Officer of the company, also runs our southern portfolio and he's based in Chennai. So there are major changes. Earlier, unfortunately, we were a little colonial in our mindset, so we we'd want to run everything sitting here in Delhi and so on and so forth. And that had its own sets of problems, and I think we've realized it. So R.K. is there full time. With R.K., he's got a very, very strong team on all aspects of the southern region, including a CEO for the southern region. So it's been tightly and closely supervised and our ambitions in Chennai, et cetera, et cetera. I'd like to mention also, I think in RentCo, it was mentioned about being NCR, but we have a huge project going on in Chennai, and we've completed a huge project in Chennai. So Chennai, even from a rental market, we will be a very -- we are a very significant player and we will become even a more significant player as we go along. So R.K. and his team are there in the south. Vishal has -- looks after our operations in Delhi, western region, including Mumbai, Goa. And he's just getting into picking up some of the loose ends in other parts of the country where we have still got, again, good opportunities and some stock available. Vishal is also aided by, again, a very comprehensive set of people and who have -- some of them are here, I think, possibly in the evening and little later, you can always interact with them, and some of them are new. So I don't know who will be asking who, how many questions, but I guess you guys will figure it out. And we have fortunately a strong dedicated team to look after our approvals and business development in these geographies, again, headed by Vineet and well supported by another Rajeev Singh in our company, maybe the more competent and capable Rajeev Singh in our company. So we -- at this time, I've just made sure that those arrangements are in place before we jump around too much here. And luckily, they are there and they're doing well. And last but not the least, as I said in our overall planning is, our RentCo operations are completely independent, run by Sriram with a very, very strong team assisting him in all aspects of it. So I'd like to believe that finance, other people you've all been, I think, interacting with -- the depth in the company is quite strong. So building up our human resources has been something which was important to us, important lesson from the past. But to be honest with you, have we achieved the finality? Answer is no. We are sort of improving it as we go along. And I just want to assure everybody that it's one of our more important things is to have not only good results, but good results delivered by a good team in an institutional manner. So institutionalizing our process despite all the uncertainty is something which we are trying our best to work on. Good results so far. Hopefully, they will continue growing in the time to come.

Right, right. And the second and third city beyond NCR, is that something which place on your mind?

Second, third city, as I told you, we have a fair degree of stock in Chennai, both commercial and residential, so important city for us. We have a decent opportunity in Hyderabad. We hope time will tell that we have a decent opportunity. In the western part of the country, we have some land parcel in Pune. We have decent parcels in Goa. And we are actively engaged in dialogues in Mumbai. So I think that -- if you ask me, that will turn out to be a distinct center. So if you go outside NCR, Tri-City Chandigarh, hopefully, Mumbai, Pune, Goa, hopefully. And last but not the least is Chennai and its environment. I think these will be 3 important opportunities outside the NCR, which are there today. And I think for the next 3, 4, 5 years, I think these will be important. After that, we don't know which one we'll reinvest in and how much growth will take place here.

Understood. And one final question was on the National DevCo side, some of our legacy projects have been -- have not been doing so well, right? So what are we doing, I mean, as a mitigative measure to kind of...

I think let's -- if you ask me this question a couple of years back, I would have agreed with you and maybe tried to avoid this question, okay? But I'm just curious, which one do you think is not doing well?

I mean generally, I mean, when I look at the...

[Foreign Language] Let's -- tell me which one because...

[Foreign Language] recent quarterly result [Foreign Language]. Overall, I mean, I think [Foreign Language] inventory around INR 1,500 odd or INR 2,000-odd crores.

No. That's what I wanted to say. Good news is, touch wood, National Devco projects have done extremely well. Our inventory cancellation should be seen as a sign of strength and not as a sign of weakness, okay? I also want to say, it's not inventory cancellation, it's a provision for cancellation, okay? Many of the cases where we are now going back to people and saying, okay, if you don't want it, please give it back to us, okay? Most of the guys are saying mind your own business, here is the check and thank you. So a large percentage of it is not being realized as actual cancellation. There are 1 or 2 places where statutory issues are unclear and out of prudence, we may decide to sort of give the customers an opportunity to reinvest once things become clear. But that is something which we are still looking at. But net-net in National DevCo, Delhi apart. As I told you, our Tri-City Chandigarh has done extremely well. I'm not talking about figures which are not public, they are all public. But by any published data, any websites which you go into actual points, effectively our price points in the National DevCo in the Tri-City area have doubled in the last 2 years, okay? Not only doubled but have been accompanied by strong volume here. Similarly, I would like to say, in the other parts of the country where we had some stock, most of the stock has been sold off, some projects were transferred to Blackstone and have been taken out of it. But we had a very, very successful launch in Chennai end of last quarter. I think it's been reported in the quarterly results. Again, this is a published data, so I can speak freely. Interestingly, now this is a piece of land we bought many, many years back, frankly, was thinking about what to do with it, et cetera, et cetera. We even explored the possibility of selling it as land. We were exploring the possibility of selling it as land at even a slight discount to our acquisition price, somewhere INR 1 crore, INR 1.5 crore. 80-odd acre, 90 acres of land could not find much success even at that price. I think, went back, creating a full-fledged southern presence helped, we went into the ground, did a very good planning, very good development approvals... The beauty of this land was that it's very, very close to the TCS Corporate Center, and have created a nice community where now we have effectively realized, correct me if I'm wrong, but somewhere between INR 7 crores to INR 8 crores an acre?

INR 9 crores.

INR 9 crores an acre. So where we were struggling 2 years back, hoping we find some guy to buy it at INR 1.5 crores an acre and not succeeding. Now we have sold it for an effective value of INR 9 crores, even if I remove development cost and all, still say INR 7-odd crores, 4x here. So I think there's almost everywhere what we are seeing is that the results are good. So I think now those old stigmas, if I want to call it of National DevCo legacy projects, these are some words which we used to use inside the company. I'm surprised how you got hold all of these words. But anyway, now we are proud of them. Legacy is something we should be proud of. So it's okay.

Indore is...

Even Indore is doing well, everywhere it's doing well. In fact, now I'm quite upset that we have no stock left. Don't worry about it. I think, look, the lesson we've learned, as somebody mentioned earlier, is if you go into any market, you have the patience, you do a good job, you're fair to the customer, okay. You may have some temporary macroeconomic difficulties, but eventually, it works out. And that is a trend we are seeing actually every single place in the country. Gurgaon and all, we do that a little bit extra. It becomes more evident, but it's actually true across the country. And now we are confident that if we put a mind to it, we can possibly succeed in most locations.

Biplab from Antique Stockbroking. First of all, thank you for hosting us. My first question is on like DLF has been in real estate business for many decades. And it's a fairly large organization. And it might -- we can assume that it might have become a little bureaucratic in structure. Just so trying to understand the decision-making process and the time taken for making a decision, say, you have sensed an opportunity that there is a revival in real estate or revival in uber-luxury. And from there to finally making a definite definition, what kind of -- how much time it takes normally? And how many levels of decision makers involved? So if you could give a slight insight on that?

Well, look, your first point is valid. Any organization, unfortunately, over time, tends to accumulate a bit of bureaucracy. We are no exception. We also deal with bureaucracy, morning, noon and night. So many times, I think we start mimicking the government in many of our ways, okay, excuse us for that. But look, the important point, and let me put it this way is that first and foremost, it's something we have to worry about. But a little bit of institutionalization, cross-checking doesn't hurt. Today, it's not bothering us very much because most of our land parcels are something we've been debating for 10 years now. So there's nothing new as such which we -- is really holding anything up. We've just been debating it and finding hoping for the right time here. Most of the timing is now okay, 1 or 2 may still remain, we can keep debating it. So it's not a problem today, it's not holding us up in any manner whatsoever. But going forward, in our company, if you want to know the decision-making processes, our CEOs have with them a business development team, a product management team, a design team, approvals team. I think it's just one level there, plus the CEO. These guys make a recommendation. And at the corporate level, at best, there's one more level, which looks at it. So I don't really see more than 3 levels really involved in coming to an effective decision on a particular opportunity. That's said and done, as I said, a little bit of care is always welcome, and we do try hard to seek now some third-party validations. So many, many times, we are now earlier we were not, we were [ mostly through the trend ]. We do try to get a market survey done, we do try to understand market demand, we do try to understand our costing better and so on and so forth. If you want to know how long does it take us to really make up our mind from the time an idea comes up to the time we feel, yes, it's ready to roll it out, I would say, about 6 months.

My second question is on the interest rate. At what interest level and the interest rate level would be -- would you become very, very cautious? I mean, I know that HNIs are your -- primarily HNIs are your customers. But if you see that my understanding is interest rate going up, somehow impedes the growth. And if businesses are not making money, so businessmen won't be making money and CEOs won't be making money. So indirectly, that impacts the derived demand, which is residential. But of course, see, now it is around 7%, so 7% to 7.5% okay, fine. But at what level you will be really alarmed, at what level, sir?

Okay. Now there are 2 forms of interest: what's in it for my customer? What's in it for me? I would be deeply alarmed if the interest rate for my case approaches or crosses double-digit numbers, okay? It's not that it bothers me because fortunately, our debt profile is now reasonably low. But it's very, very -- it's damaging to sentiment. And part of the real estate process is sentiment-driven. So I think anything up to that number would still be acceptable. Coming to the consumer who takes a home loan from the mid-6s, which is today, I think what most people have been able to get hold of. I think if it remains, hopefully , 8% 8.5%, I think it won't -- anything at 8% starts worrying you. 8%, 8.5%, you get deeply concerned. So I think double-digit 10% for a developer, 8%, 8.5% for a consumer. I think once you start crossing these points, then I think you have to start going into caution mode here. I mean, you should be in caution mode today also, but then you need to go into the worry mode here.

This is Murtuza from Kotak. Sir, I have 2 questions, one on the development business, one on the rental. On the development, you've done fantastically well. When we met last about 3 years ago, the sales that you were guiding that time today are doing that much in a quarter. What to you is the limiting factor in terms of scaling up more? Is it just the underlying demand in the market? Or is it also your own, while maintaining the DLF quality, the management bandwidth, execution capabilities, et cetera, which also are a limiting factor in terms of scaling up beyond where we are right now? So that's on the development business.

Look, I think very frankly, there's too many answers to this question, but I'll try my best. See firstly in the last 2 to 3 years, as you know, we've gone through a roller coaster, all of us. Life was good, great, terrible, disastrous, [ good, great ], it's gone up and down. So I think what it's taught us is that don't think too much, life is whatever it comes out to be, okay? Secondly, I think we was always cautious, through this process become a bit more cautious. So therefore, what happens in our case is that in the earlier days, and I'm talking about your reaction time would be very quick because you look [ into an ] opportunity. You have the land with you. You get the approvals, in those these approvals were also pretty quick. There was no environment clearance. There was nothing -- you get approval within, say, 4 to 6 weeks. Say, within a quarter, you are in launch mode here. Today, unfortunately or fortunately, whatever the process may be, the approval cycles between environment clearance, building plan clearance, RERA clearance and so on and so forth, possibly in every project start becoming in excess of 1 year, sometimes even 1.5 years, okay? So the reaction time is now that much slower here. And we are no different in it. A lot of the new stuff we are doing today, we are working actively on it. But by the time we bring it to the market, it has got that 1, 1.5-year lag, and that's part of the game here. Second and more important point, I think you guys have to understand is that post RERA, you really cannot make any changes here. Even if the changes are logical, justified, demanded by somebody, you can't make it, okay? The requirement of seeking consent, active consent from a majority of your customers is almost impossible to achieve if you really set out at it. So not only do you have a long process time, but you also have to remember that through that project cycle, that's it, its final here. So a little bit more thought has to go into it because you really can't change anything later here. So once again, like I said, we have been forced in the company or in this industry to offer product at a fixed price for long periods of time. Frankly, we are also being forced to predict trends which are at least a few years away, and it's a risky business to be there. So our growth cycle bringing to market is only impeded by arriving at surety and certainty of both these processes. Capability-wise, I think we have got now enough capability to build whatever can be reasonably sold. Last but not the least is unlike some other people in the industry, what we end up doing is if we find that some land parcel where by waiting a little bit more, some better optimal utilization can be done, some more government FARs are available, then sometimes you also take a little bit of time to utilize that land parcel. So net-net, these are more of our constraints. Operationally, as I said, we really don't hold ourselves down. And whenever sales do become a constraint, that day, naturally, we'll acknowledge it and slow it down. But so far, that doesn't seem to be on the horizon for the time being here.

Sir, on the rental business, obviously, the last 2 years, the world has seen a lot and vacancies did increase. We've seen them sort of bottom out, but we've not seen the reversal happen. Any sense on the ground when you're speaking with tenants? Obviously, a lot of businesses have grown in size. They've hired a lot more people, but we're not seeing that momentum on leasing and improving sort of occupancies. Any time line or color that you can give on this?

Look, in RentCo, there are 2 parts. So let me answer one part, which is easy one to answer is retail. Retail, we don't have any of these problems, okay? We are almost fully leased, and there's a reasonable pipeline for leasing in future too here. Coming to the office business. What I want to point out to you is -- and this is true in every other part of the economy and office business is no exception. Maybe it's more than others. There's a tremendous flight to quality here. And it's very surprising. But all new projects at what we feel are fair and reasonable rentals have and continue to receive very strong leasing demand. It is only in the middle segment where companies are reevaluating their own positioning. That part of this vacancy has arisen here. I think, in my personal opinion, there will be a second step up of companies who will go from what I'll call B plus to A minus. And those companies will have to make the commitments. Those commitments, I would like to say, maybe take place in the next year or 2 years. So this absorption of vacancy will be, I would like to say, 1- to 2-year cycle, absorption of vacancy. But creation of new capacity and demand thereof, touch wood, is actually as per schedule, and we are not seeing any negative trends. Net-net, in our overall portfolio, this constitutes a very small percentage because these are some buildings where some of our tenants who have left -- have left at what were historically low rentals. And God willing, we'll be able to release them at possibly today's rentals. It's a year or 2 of aberrations, which we'll have to live with. I do think in about 24 months, this cycle would be stable here.

This is Parvez from Edelweiss. So I had one question with you. Overall, the pace of improvement in housing demand, especially over the last 18 months, has taken a lot of us by surprise. I wanted to get your views on how do we see the housing cycle going ahead, considering 3 factors. First is that overall job generation in the economy hasn't been really that great over the last few years. And even now, obviously, there are economic uncertainties. Second, while affordability clearly has improved a lot significantly, but even there, there are headwinds in terms of raw material price increase and the turn in the interest rate cycle. And the third is, overall, we have seen that economic cycles across sectors are getting shorter in duration. So while historically, one would have said that real estate typically has a longer cycle of 7 to 8 years, but we have seen across sectors that cycles are getting shorter. So how do we see the overall housing cycle going ahead? And how do we plan for it?

I think the housing cycle, demand-wise, you've touched on the right points. Economy is doing reasonably well. Income growth and job growth is good. And desire of people post-COVID, even otherwise, even as a hedge against possibly volatile markets. From all points of view, having a house and a good house is topmost on priority and I think will continue. But I think what I want to say since we're talking not in a macro term, but more specifically about the near-term outlook for demand or medium-term outlook for us, is that -- demand has not grown exponentially. So I don't really see that it went up that high that it's going to have any kind of a negative landing here. If we go back and see various factors, that demand over the last decade has sort of reduced or decayed. There's been some growth from that very, very low period of constant decline and limited growth. How much downside that has, I don't think much, okay? Some of these factors will limit its upside further, but that will be it. What we are seeing this so-called "heat in the market" is both a factor of some improvement in demand, but more a factor of actually a reduction in supply. Today, in most markets, there's a flight again to safety, quality, whatever you want to call it. And people are scared to buy from secondary sources. And sometimes those secondary sources are also stuck, they can't even deliver. So net-net, I think those are also not changing. So in my personal view, if somebody asked me housing, demand will not really decline. It may grow but grow at a moderate pace because of the factors we have talked about. If those factors were not there, it would have grown at a fast pace. But I think the growth will be enough to support the pricing equations and demand equations which exist today. I think those for at least one project cycle, which is a 4- to 5-year period, I'm not worried about as I see it today, as I said, barring some catastrophic event.

This is Kunal from CLSA again. Sir, over the last many years, we have followed an approach or a strategy of like having our old land bank and utilizing that by monetizing it by launching projects on that land bank. And even if you go by your strategy of entering into new markets or -- your strategy is basically to just launch projects on the land, which you already hold in those new markets, right? So at what stage, would you look at reinvesting in land? More so in markets where we don't have presence, or we have very little presence? And secondly, by choosing not to do that, are we being overcautious? Or are we doing justice to our brand or our capabilities?

Okay. I think, look, good question. Let me put the following things that we have no bar on investing anywhere. We still have a little bit of land available for a reasonable outlook. So we are not pressed to invest tomorrow morning. It's also not wise to invest when the markets are hot. So maybe when they cool down, hopefully, opportunities will come up. But more important is that outside our core areas, we have started the journey, as I explained to you, of new product offerings and new product launches, et cetera, et cetera. We are lucky, and we are fortunate that our earlier projects, the journey was painful, but the end was okay. This time, we have to hope even the journey is okay. So let me put it this way, wherever we can successfully bring product to the market in a manner which is accepted by the customer meets our goals, we'll be more than tempted to go back into that market and reinvest. We are putting the teams into place. We will have capability, hopefully. Moment that capability is demonstrated, I have no hesitation in saying that we'll acquire more lands in those particular markets. But this is a journey which will take the next couple of years to determine. If extraordinary opportunity comes up, we'll take it. But if it doesn't come up, we'll wait, see where we stand, wait for the market to be slightly cooler and then buy some land in whichever market we want to remain strong and buoyant in the future. Some markets, we will definitely exit, some markets will definitely reinforce and grow. Time will tell.

Samar this side. So Mr. Singh, you touched upon a couple of legacy issues earlier. Edward Keventer, like it's been with us for some time. And as far as we know, [indiscernible] issue. So what is the way forward for monetizing that lucrative land parcel? Because the cost of acquisition of the entire land parcel, every acre is more valuable than the entire book value of that land? How do we monetize it?

Look, as I told you, it's simply a question of when do you throw in the towel, okay? So I think we're not ready to throw in the towel yet. The potential is obvious, value-wise. We have certain visibility, which allows us to profitably encash a decent portion of that land, add good value to the land. But we have a residual sort of opportunity, which because of the location of the land, because of the valuations, unfortunately, is too compelling to ignore. And therefore, I think we will continue to strive hopefully, for not too long more, but I would like to say a couple of years more. I hope we succeed in that process. If not, then maybe at that point of time, we may encash it or develop it for a slightly lower potential. But I'm not willing to give up yet.

And you mentioned about your growth aspiration. A couple of my friends have tried to quantify it. If you could help us quantify it, because most of the people here are from the capital markets.

Your friends will feel bad if you succeed, so I'll avoid that. But let me be frank with you. We did [ 7,000 ] plus last year. I have made a statement that we will do a double-digit growth. Some of these things are still work in progresses, some approvals, timing of which we hope will be soon will come through. I think -- I hope to God that we can continuously up our guidance or direction. But right now, I think you will have to take it at a number which is at least a double-digit 10% more than what we achieved last year. I think that would be the best guidance I would be able to give to you at the present moment.

And my last question is on the cash flows. As a sector, like even in the capital markets, we've moved away from land banking and looking at cash flows. So as a company, we've made roughly INR 26 billion this year, but it's a unique position because we did not have a lot to construct. Camellias has contributed a lot. Floors are again high margin. Now the next 2, 3 years, our construction CapEx will also go up, so will the sales. So how do you see this number actually going up? And a related question to that is, how will you extract profitability from Midtown to DLF? Because we've constructed earlier, I think FY '23 also, it will be probably working capital. It will probably turn negative working capital in '24. So 1 on DLF and 2 in the JV, how will the consolidated cash flow look like?

I'll talk about the JV first. It's a simple question. Second one is a bit more different than the first one. See, JV [Foreign Language] luckily, significant visibility there on construction progress as well as significant visibility on sales progress. I am reasonably hopeful that in the next 24 months, we should be able to largely close both the inflows and the outflows of the project. So to answer your question, within 24-odd months, the cash flow of that project would be available to both partners here. We have certain small working capital finance there, which I expect will be fully taken care of in the next few quarters itself. After that, the surpluses would be deployed towards completion of construction. Sometime next year, I think real surpluses should start emerging. But by the time we can harvest them back to the parent company, I think it would be about 24 months, cash flow-wise. Profit accounting-wise, also would be somewhere around that time only because completed contracts will mandate only when you get the OC, so 24 months. In the other one, look, from a cash flow point of view, I think net cash flows numbers should not vary significantly, okay? Gross cash flows, inflows will be much higher. But as you're rightly saying, because of construction outflows, the outflows also would be much higher. Certain percentage of this being trapped in the RERA accounts. But I think we are reasonably confident that we should be able to maintain our net cash flows to around this mark going forward, which will be available to reduce debt and anything else we feel like.

Sir, Abhinav from Jefferies. Follow-up on the cash flows only. So if you have, say, visibility on around INR 2,000 crores per annum, roughly between DevCo and RentCo, the dividend payout is only about INR 3 per share. I mean, will you see it scaling up every year? Or can you consider a buyback?

Look, I think, honestly, we -- I hope you're right, and that is our hope and desire that we grow our dividend, as I mentioned earlier, over time, whether it's every year or whenever, that I think let's see how things emerge. A lot of people have spoken to me that instead of paying out dividend, you should look at a buyback, et cetera. When we come closer to that story, which means our debt picture is paid off, and we really start dealing with significant surpluses, if it makes good sense financially for both the company and the shareholders, I think it's something we will look at, as I said. It's on the table. I wouldn't say it's off the table, but this is a little bit further away because I think next 1, 1.5 years, this eventuality is a bit academic.

Right. And sir, on the REIT, once the offering is being done, do you wish to reduce your own stake?

As I told you earlier, this REIT is one of the options before the partners and may not be the only option or maybe the go to option. So please qualify to that extent. But I'll answer your question in a slightly different way. It is not our intent to reduce our stake in the RentCo business. Our stake may get diluted by the capital, which may get raised under any option, if at all. We will not be in the process of selling our equity or stake in the business, that's for sure.

Right. Sir, third question is on New Gurgaon. So we had a good tour of that earlier in the day. Habitation also seems to have gone up there quite considerably. So next 3 to 5 years, I mean, where do you see the direction in terms of pricing? And what are your aspiration on the product there?

As we've shown you different parts, I think today, my colleagues took you around, and I think it was a good tour, what I was told. Luckily for us, we -- New Gurgaon, I think purpose, part of it to show you was it's a big geography. It's not just a place. It's multiple geographies. And in that multiple geography, we are happy with every part of it. But there are 3 distinct opportunities in the so-called New Gurgaon for DLF, each at different price points. So I think we'll span all 3 price points. I would hope that we are in the -- anything from the INR 1 crore, 1.5 crore bracket, which we are in today. And that product eventually spans, say, the INR 5 crore-plus bracket. So I think I see it generally in that price point. And volume-wise, I think the volume will increase with time as it becomes a more and more popular product for people to buy. So New Gurgaon would be a significant contributor, both sales-wise and I would say even cash flow and margin wise in the next 5 years, much more than today.

Just going back to the topic of quantification, we did pick up sound bites that there have been favorable changes to TOD and TDR in the Gurgaon area. Could you tell us what does that mean in terms of changes to your existing land parcel?

Look, government entitlements have gone up. We are actively looking at, say, I'll -- first, let me just tell you guys something that be careful. Unlimited FAR or high FAR by itself is a trap, okay? It sometimes doesn't make sense to exploit every square inch of it, okay? It may not be true in a city like Mumbai, but it may be true in many other places. So we are looking at the availability of additional FAR in entitlements. They normally come with a certain amount of government charges to be paid, not very significant, but not something to completely ignore. So I'll tell you what we have taken a view, and our view is that these entitlements are not temporary, they are here to stay. And we'll purchase these entitlements as and when a project is maturing and requires them for the launch here. Rather than adding to our so-called inventory bank and paying the government huge sums of money upfront and not use it for many, many years. So annually, whatever our New Gurgaon targets are to the extent they are contributed by enhanced entitlements. We will purchase that entitlement, debit it to the project cost and go ahead and launch it. Overall, to answer your question, the way the government is talking generally, and I'm not saying only Gurgaon, across the country, I find FARs have generally gone up over the last decade or so, between 50% to 100% generally across the board in all product lines, all categories. Some places don't make sense. Some places, they'll be very nice to use.

Saurabh from JPMorgan, again. Sir, just a follow up on your guidance of 10% growth. So if you do the math, then Camellias of INR 2,500 crore is [ slowing ] down.

Just keep it a little bit closer.

Sir, just following up on your guidance of that 10% growth. So if you do the math, then INR 2,500 crores of Camellias, which you had is probably going to tail off into next year, which means that ex Camellias, you have to deliver more like 30% odd growth. So one, do you think that's something which is, I mean, possible? Secondly, sir, just a question to Mr. Khattar, on the DCCDL piece, the point is your free cash flow allows you a much higher level of CapEx. But I mean, you're currently being limited. Is it just a view you've taken on the office on the retail market? Or is there something else you are missing?

Okay. I'll let Sriram answer that question. But on the other part, [Foreign Language] I think your arithmetic is better than us. So you figure out the growth potentials and all that. But let me put it this way that in the total sales program, we have factored in the fact that Camellias will be a limited quantity. Fortunately, for us, the rest of the launches which we have lined up, would be able to deliver enough growth to not only compensate for Camellias, but to compensate for the growth delta of Camellias also. I don't see that to be a problem. I mean anyway, Camellias is not going anywhere. This year, it will be a significant contributor, maybe in a small residual way, maybe next year also. But by that time, I think all our other schemes would be fully on the ground and would have enough sales potential to cover up for anything which may be a vacuum because of Camellias. So that's not a worry at least to me, personally. Sriram, you can answer the question.

Just if I may [indiscernible] Saurabh, if you look at our quarterly analyst presentation also, you'll realize that are closing inventory of active projects, not only finished goods, finished goods plus launched projects is about INR 7,500 crores. And the new launches planned for the year fiscal '22-'23 is about INR 10,000 crores. So in '22-'23, also the total availability is a number significantly higher than what the Chairman's growth guidance was, and in the same scenario should hopefully keep on repeating year-on-year.

Sir, I also add, right? Since this is a question related to maths, Saurabh. So last year, if you see our sales, reported sales was INR 7,300 crores, of which the new products contributed almost INR 4,700 crores. So 2/3 of the sales is actually coming from new products. So the dependence on Camellias has actually come down in the last year itself. And going forward, the contribution from new product will actually move up.

Saurabh, to your question on free cash flows and will they be able to fund the CapEx, if I understood you correctly.

Not that, sir. Point is that cash flow is far more than CapEx because -- so if you do the -- your [ DCCDL ] will probably be making INR 1,800 crores, INR 2,000 crores of free cash. Your CapEx is only INR 500 crores, INR 600 crores. So I mean, there's a divergence there.

So if the cash flow is more, it helps in 2 ways. One, it could help in accelerating the CapEx program, but that is also dependent on which way the market goes and the demand in the market. And the other is that in a typical annuity business, the shareholders are also looking for operating cash flows to them. So it will be a combination of those 2.

Let me answer this question a little bit more. I think somewhere your figures may need to be maybe clarified. I don't think our CapEx programs presently in RentCo are low. So maybe some numbers are missing somewhere. Because as we have clearly stated, we are actively building out almost 4 million square feet in the downtown region. We are actively building out about 3 million square feet, give or take in the Chennai region. We are actively building out in the Noida region north of 0.5 million square feet maybe, as we speak. Since you're talking about RentCo and not DCCDL, -- are you talking about DCCDL or RentCo?

Sir, DCCDL, but...

DCCDL or RentCo?

DCCDL.

So DCCDL, these are the growth plans in DCCDL itself. I think maybe you and our guys can do some mathematics, and if -- I think there's a fine balance between the two. If there is some surplus cash flow, which remains after all this, let me know, I'll take it out of Sriram because he keeps complaining he's got no money to give here. So I think today, in the short turn, our CapEx programs actually are quite aggressive. Whether they continue to be aggressive or not, I hope they do. This question which you're raising that will we have surplus free cash flow, which we don't know what to do with, I don't think that's true. We have a program which is going to fully absorb our free cash flows.

Sir, just one follow-up on this New Gurgaon thing. Do you think that New Gurgaon is now back to where Gurgaon was in 2003, '04? Or do you think it's still sometime away?

The journey continues. So New Gurgaon -- only difference in New Gurgaon slightly is that there's a bit more of land, there's a bit more of competition, but it's also balanced out at least the planning for better infrastructure. So it's going to follow the same journey. We had extraordinary luck, success, call it what you may, in existing Gurgaon. Maybe it won't happen again to that extent. But I think the New Gurgaon journey is at least a 2-decade journey left ahead. And in the next 2 decades, it's going to keep growing. This is a number which I would say time will tell. But somebody told me other day, take this with absolute pinch of salt. So it may be a complete nonsense statement. But today, Gurgaon population-wise, at least according to this person, is bigger than Frankfurt now. It may be nonsense, but let's take it as [ a stance ], okay? And economically, by every indicator, it is emerging to be a significant economic driver relative to all Indian cities. So population growth is large and demographic growth is very strong. So I -- if you ask my personal opinion, what Gurgaon was? Nobody could have imagined it today where it is. I hesitate to say, but I think we really can't even imagine what it's going to be in the next 5 to 10 years. It could be a far more powerful machine than we are all expecting. And Gurgaon could have its own, almost demographics which start approaching the size of significant Indian cities, which we are all talking about today. The kind of people who come here, the kind of spending patterns, the kind of thinking pattern, Gurgaon is slightly unique in the Indian city environment. And I think it's only going to become more and more cosmopolitan, grow more and more. Government also is very, very determined to bring in new type of industry, new type of technologies in the Gurgaon region. Collectively, I'm quite hopeful that Gurgaon will be a 2-decade story minimum.

[indiscernible] We are good. [indiscernible]. So if no more question, right? Anybody else wants to go before we close? Okay, thank you. So thanks to all of you for making it a very interactive session. Thank you, Chairman, sir, for taking on all the questions. So we close the Q&A now. And time for us to just walk out of this hall. We've arranged some activities for you, right? I'll request all of you to make the best of it, and dinner will be served at 8. Thank you.