Mahindra Lifespace Developers Limited (532313) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q3 FY '20 Earnings Conference Call of Mahindra Lifespace Developers Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Adhidev Chattopadhyay from ICICI Securities. Thank you, and over to you, sir.

Yes. Good evening, everyone, and thanks for joining us on the call today. Today from the management, we have with us Ms. Sangeeta Prasad, the MD and CEO of MLDL; Mr. Arvind Subramanian, the CEO of Happinest; Mr. Vimal Agarwal, the CFO; and Mr. Sumit Kasat, the Head of the Investor Relations. I would now like to hand it over to the management for opening remarks. Thank you.

Good afternoon, friends. First of all, a very happy new year to all of you since we are meeting first time in this year today. Let me start off with some of the good things which we have done. And personally, very delighted on the way Happinest Kalyan has panned out in the last quarter. So all kudos to the Happinest team. Our thesis of understanding that verticalization and specialization does work has been proved, vindicated by the stupendous launch and the response of Happinest Kalyan, 782 EOIs worth INR 260 crores, which we will be booking in this quarter. So the booking has not happened in last quarter because these were happening in the last part of the last quarter. So we expect to see a substantive booking in this quarter from Happinest Kalyan. The other launch was our Vicino launch in Andheri East. We did a first-phase launch to test how the market responds. So around 60 units launched, 33 sold out, and these have been booked in Q3. We have EOIs, which we will be booking in this quarter. So these are the 2 highlights as far as sale is concerned. Total sale for the quarter was INR 196 crores, primarily coming from the mid-premium segment, fueled by the finished goods sales coming from Antheia, Windchimes and Aqualily. Aqualily flexi homes also saw a sellout in Q3. So these were the highlights as far as the sales of residential business is concerned. Now I will quickly go to the very other important thing in today's world, which is how is the cash looking. I am again happy to inform all of you, quarter-after-quarter, the relentless focus on collection has been yielding us results. So we, in the residential business, collected INR 242 crores in the last quarter, and the total for the year YTD Q3 is INR 735 crores. We expect that the collection focus by the CRM team will continue and will give us further buttress into the cash situation of the company. While Windchimes, a part of the Mahindra Homes JV, saw a completion of 0.43 million square feet. What impacted us in the stand-alone was the lack of any phased completion. So as you all know, in the stand-alone business today, all the projects are the ones which were launched in the last couple of years. We'll see completion earliest in maybe the last quarter of the next financial year and forthcoming. So that's one thing which I wanted to make ourselves sensitive to, that the stand-alone revenues from MLDL will come primarily from finished goods sales in the recent quarters and not from completion. While there will be some small phased completions, we have Eminente commercial where we are in the final stages of receiving the occupancy certificate. There isn't much in store apart from finished goods sales coming from, again, Antheia. The work done for all the projects in stand-alone as well as consolidated is progressing well. There were some skirmishes because of labor mobilization, which we have covered up, and we will be ensuring that our credo of delivering on time continues in the forthcoming handovers. As you all know, whether it is Vivante in Q2 or Windchimes in Q3 or Luminare are on top of the significant completions, they've always been; if not ahead of time, surely on time. So that's one thing we would like to stick to as our strength. Last quarter, we were focusing on getting our projects in Mumbai and Pune ready for launch. Incidentally, because of the changes which happened in the political scenario, there were days -- not days, weeks where BMC was not at its smartest best in approving. So we are seeing some of the approvals coming in this quarter. And I will speak a little more about the launches. You have heard about them. But just to remind you, while Vicino's first phase was launched in Q3, we see subsequent phases which are in advanced stages of approval. Coming into our kitty, for launch, late February, early March, whether bookings will happen or we'll just collect EOIs depends on the exact when we get our approvals, but marketing and sales team is ready to launch. The other project which is -- we have got the revised IOD, the project in Chandivali. So we are pushing for the subsequent set of approvals of CC and RERA, so that should also see launch in the next month, if not -- and that's the project in Bombay, so 2 projects in Bombay which we are gunning for. And the third one, is again personally gratifying, is the project in Pune which we did an agreement to sale, if you remember, in the previous year, this quarter, so advanced stages of approval. So it actually vindicates our hypothesis from land to launch, what has been our focus to convert -- collapse the lead time. So that's something which I see that March or early April, we will see the product going into the market and giving us -- the team is very confident of these 3. We have a small phased launch for Roots in Kandivali. As you recall, we sold out the first phase of 83 units. The remaining 43 is awaiting the TDR approvals, and we should be into the market very soon. So these are the projects which in the near firmament as far as the mid-premium is concerned, while Arvind will talk in detail about what happened in Happinest Kalyan and the forthcoming Palghar 2 launch. That's the other one which we are looking at for launch late this quarter or early next quarter. Land pipeline, I know we have been talking about it for a while. Just to give you a heads-up on land, we would like to talk to you about the lands which are in advanced stages of term sheet. We believe that it is important for you to give you a picture, but I cannot share with you exact details of those term sheets. But to cut the clutter, 2.5 million square feet between Bombay, Pune and Bangalore, which is the focus, are in advanced stages of discussion. From a term sheet point of view, commercial negotiations are done. So we are in the throes of completing the term sheet. Again, Arvind will talk a little more detail. There, also, we see over 1 million square feet term sheets in advanced stages of negotiation, again, in the -- mostly in the MMRDA region. So that focus is on because I know that as a company, that's the critical area for fueling our growth engine. Now the business which has impacted us a lot in this financial year and which has been hitherto in the profit-fueling mechanism for this portfolio of products which we have in our company is the IC & IC business. I don't want to preach to the choir. As you all know, the macroeconomic scenario, especially from an industrial investment point of view, from industrial productivity, capacity utilization, it's very ironic. A couple of quarters or, if I may say, year back, we have thought that capacity will be coming in, but last year has been adverse, a reverse effect. We have not seen capacity coming in. While we have a pipeline, we are seeing the challenges of those pipeline being converted into reality in terms of lease deed. And that is another thing which has impacted our financial performance, specifically the profits of this portfolio of real estate companies within the Mahindra stable. I will -- as we go along between me and Arvind and Sanjay, we will try to give you a little more detail into what's happening into each of these businesses. As of now, I would like to reiterate that our credo of land, launch, completion and collection are the 4 we are focusing on. Some of it, happening very well. Some of it, a little slower than anticipated. But the team is geared up with specific verticals looking into their own areas and focusing on getting this thing done. Completion. One of the things which we are doing even in completion is for all the forthcoming projects, we are micromanaging the towers. In fact, each tower is a project so that we can get it into the revenue stable as soon as possible. But these are lean time at -- as far as completion goals, there are small. There's one in Nagpur, which I gather will be coming in for completion in this quarter; otherwise, restricted completion in this quarter. So the focus is on the operational performance. Thank you. And I would like Arvind to give us a little more deep dive into the Happinest business, how is it going, the launch and the forthcoming launches.

Sure. Thank you, Sangeeta. Good afternoon to everyone. So as Sangeeta mentioned, we got Happinest Kalyan to market towards the end of the last quarter. I think it's a good case study for a lot of the things we've been talking to you about in terms of our approach to the business. Firstly, just for those who are not familiar with the land parcel, it's a 9-acre land parcel in -- on the Bhiwandi-Kalyan road in Mumbai. This is a market which has seen a lot of activity in the last 2 quarters. Many competitors have made significant launches in that market. And we were probably the third or fourth player -- significant player in that market to bring a new project, a new launch to the market. We concluded the land transaction on Monday, the 4th of November and were able to get our RERA approval the same week. By Friday of that week, we had our RERA approvals and launched the project on Tuesday the following week. So within 8 days from completing land acquisition to launching the product in market, this is because of our focus around trying to get land with approvals and all the preparation that went into the sales and marketing launch ahead of time, that we were able to get to market that quickly. The launch was planned as a 2-phased approach. So firstly, we launched about 500 units. And within that, it was a 2-phased launch. There was a book-building phase, which is planned for about 4 weeks, followed by actual allocations and allotments and bookings. The response was overwhelming and prompted us to do 2 things: One, we also brought the second phase to the market, so we now launched all 7 towers. And we also shortened the window for the book-building phase from 4 weeks to 3 weeks. In the 1st week of December, we started allocations. And as we mentioned, we've done just under 800 units by the end of December where customers have paid their first booking in checks. Very high confidence that all of those will get converted into firm bookings this quarter as -- and move into registrations as well. I think it's been a -- the feedback from the market has been very positive in terms of the superiority of the product. That has been the standout reason for success. Getting the right customer insight to guide our product development and design efforts has helped us stand apart from the competition in what, as I mentioned, was a fairly crowded market. As we're looking forward to a lot more success in Kalyan, what's -- the success of the launch has also prompted us to re-sequence the construction activities. So we are now constructing the entire project as a single phase. All 7 towers will get constructed together, and we expect to deliver this well ahead of the deadline we've promised. Looking ahead, we are going to -- we are gearing up for the launch of Palghar 2. As you might recall, Palghar 1 was, again, a launch that was a stupendous success. Over 90% of the inventory in Palghar 1 was sold within a year of launch. And we're hoping to repeat that success with Palghar 2. From a land pipeline perspective, we have about 1.2 million square feet of land in advanced stages of negotiation. We will share specifics with you as we get into definitive documents. We're expecting some closures in the next 2 or 3 months. Let me request Vimal to take you through the key financial highlights.

Good afternoon, everyone. I'll just read out the key financial highlights for the quarter. As per the financials prepared as per IND AS and, more specifically, as per the completed contracts method under IND AS 115, following are the key numbers: The consolidated total income stood at INR 85 crores as against INR 330 crores in Q2 F '20. The consolidated EBITDA stood at INR 5.9 crores as against INR 20 crores in Q2 F '20. The consolidated PAT, post minority interest, stood at INR 1.8 crores as against INR 15.8 crores in Q2 F '20. So far as debt is concerned, the company has a net debt of INR 54 crores on consolidated level basis as per IND AS consolidation. At gross level, that is about INR 190 crores at borrowing cost of about 8.7%, while the cash in hand is about INR 136 crores. With this, I'll open the floor for further questioning and then we'll go one by one. Yes.

[Operator Instructions] The first question is from the line of Gautam Gupta from Nine Rivers Capital.

We've been looking at Mahindra Life for a while. And as Sangeeta mentioned, I believe, a lot of the profitability has been driven in the past by IC & IC and the residential part may not have been that profitable. Would be good to get some color from management on how do you see this moving? Both the Happinest and non-Happinest, how would the unit economics move? Maybe the launches that you've had in the last few quarters, how different are they from what we've delivered maybe in the last year?

So first of all, just let me clarify what I said that this business has seen the portfolio management working well. The IC & IC has fueled profitability. I never said that the residential diminished...

No, no, I didn't mean to imply that. I just said -- yes, yes.

No, no, I am just explaining because sometimes when we say things, it should be -- it leads to interpretation. I wanted to clarify that. Nothing related to you. It is about me. If I have not communicated correctly, I should clarify. So the whole idea of this portfolio management game, frankly, is about having different products in the -- in your portfolio which gives you, at different points of time, the help to improve your financial strength. So let me explain. So if you look at what has happened in the past in residential, everything was on percentage completion. So every quarter, we could see something or the other, depending on work done, getting recognized. Now there is the stark absence of percentage completion. Do I believe personally in the medium to long term? That's very good. We will become more driven towards operational parameters. That's what I mentioned earlier. So when we are buying a piece of land, whether it is in Happinest or in mid-premium residential, we are keeping a very strong look into the financial aspect of that particular plan proposal, what it will do to us. But as you are also aware, markets have changed. So velocity over expecting superordinate margins, I think, is becoming the reality. Earlier in residential business, people would hedge all units, wait and watch. The days of wait and watch is over. If you can sell profitability and not profiteer, and sell well and complete well, that's the order of the day. That's how we are looking at our business as far as residential is concerned.

Fair enough. So I understand where you're coming from. And I think it's a mature way that you all have been managing it. I would rather sacrifice a few basis points to margins and protect ROCE, protect cash. I understand that piece. I think it's been explained to us earlier also. I just wonder if there is any color you can give us in terms of the residential portfolio. And I understand also the overheads, there's a timing gap. But even at the gross level, let's say, land and construction costs, if I can call that a gross spread. Is that changing substantially going forward, either because maybe we've got our costing down or we've got our pricing a little better than we had earlier, also, we are a much more recognized brand than we were maybe few years ago?

Yes, that's the pursuit always in business. Let me explain. One of the things -- I'll again bring the very key success factor in this business, which is shifting from waiting and watch to velocity. We get all the parameters, like I think Arvind spoke about it for Happinest Kalyan, I spoke about it for the Pune project, how can my eyes structure my deals where I do not -- see, even if I'm doing so, first, am I doing outright or joint venture or joint development? So if I'm doing outright, can I structure the payment term with the landowner in tranches rather than one go? So whether it is Happinest Kalyan or Pune, that's what we have done. Frankly, for the Pune one also, the last tranche will be paid only when the approvals come and I am almost on the verge of RERA. So that's one way of ensuring that the -- at least the IRR improves because you're not investing. The second is by doing faster approval and selling my holding cost. So where the margin, also the way we look at margin is also the holding cost, the interest cost, the financial cost. This is where the cash also, the cashability, comes in. So these are all interconnected pieces which is what we are focusing on. And that's where we see that the residential part of the business, whether Happinest or mid-premium, will see changes. And the third very important thing, which in real estate was never a big thing, is the manufacturing mindset of looking at period and fixed cost because no one looks at it because wait and watch gave you the -- because you now can't depend on price appreciation. You only have to depend on how efficient are we and how effective are we in terms of selling and completing. So those are also the internal reengineering which is we are working on. In fact, at present, in all the parts of the business, we are doing a program management to get ourselves to think and work in that direction.

[Operator Instructions] The next question is from the line of Amit Dalal from Tata Investment Corporation.

So given this whole accounting problem that we have, if you were to just give us the number, what was the -- what you would consider recorded sale for this quarter in terms of the value and number of square feet broken up between Happinest and non-Happinest?

I'll just give you the number. So for the quarter, we did INR 196 crores, which is equal to 0.26 million square feet of sales, primarily came from the mid-premium, which is INR 186 crores out of INR 196 crores from the mid-premium. As you remember, I told you, Happinest Kalyan, which had a stupendous launch, the booking of around INR 260-plus crore will be happening in this quarter. And Arvind, how much square feet would that be?

Sure. About 5.5 million -- 5.5 lakhs.

2.5-odd lakhs will come from Happinest Kalyan...

0.5 million.

Sorry, 0.5 million, I meant that. So 0.5 million would come from Happinest Kalyan in this quarter, which has got, as I said, the advance booking in last quarter, and 0.26 million square feet came from mid-premium amounting to INR 186 crores, total being INR 196 crores.

Sorry. So this is Q3 I'm saying?

Q3.

Non-Happinest gave us a revenue of INR 186 crores?

Let me explain. All these are sales booking value. As I explained earlier, if I complete a phase, then only it gets revenue recognized. Amit, we have had this discussion earlier. Now...

I'm saying as -- I'm saying -- I'm not discussing the P&L now. I'm saying, as a business, what you would consider completed sale in terms of getting 10% upfront or whatever you take from the customer, that sale is the book sale, okay? And then you may defer it over an X period of time. So that would be how many square feet in Q3? And what was the value?

INR 196 crores equal to 0.26 million square feet.

For Q3, right? And that is, primarily, you said non-Happinest?

It sounds bad. Primarily mid-premium. Non-Happinest doesn't sound nice.

And Q4, you will see -- you are giving an indication of INR 280 crores from Happinest, correct?

From Happinest, plus the INR 260-odd crore, plus the mid-premium which we will be booking in this quarter.

To meet the normal booking, we should do about INR 180 crores, INR 200 crores, right?

We believe that the -- if the launches with the approvals get through, we should be able to do a better job of it.

Were you even giving a non-IND AS P&L in the past? Just to as a -- just as a feel for -- and in this thing, you used to share that or not, I'm not -- I don't remember.

No, no, we have not. Only in the first year, we had done some comparison. That was a transition year. After that, we thought we would rather focus on improving our operations rather than doing 2 sets of financials.

Yes. But that would always be lumpy, I guess. Yes.

Yes, yes. So Amit, you have actually brought a pertinent point. So it is actually a shift from looking at lag indicators of revenue and profit. What am I doing? And that's the question the gentleman asked earlier, what are we doing today to do things which can safeguard tomorrow? So am I collecting cash? Am I completing? Am I getting my land? Am I doing my launches and getting sales? That's what we are focusing on.

Now if you take Happinest versus -- what did you call it, mid-premium segment, right?

Right. Yes.

The -- and of course, this is very difficult to know because it really depends on the velocity of sale. But your expected margins would be what, for INR 100 crore of revenue, right, comparing one model against the other?

It would be in the -- it will be late teens and early 20s.

And this is -- what margin is this? This would be what, EBITDA margin? What margin would it be?

EBITDA margin, around EBITDA would be like that.

You have to take interest also into consideration while giving me the margin, no?

Yes, yes, we will take interest into consideration. The whole idea is between EBITDA -- not EBITDA, EBIT and PBT, how do I reduce the gap by doing what I told earlier, the velocity. So one of the things which impacts our business is the holding of a project. If I don't get the approval, some of the past projects, because of the DCR 34 being in quandary, we have had to wait a long time to get those projects launched. So the interest of commence, adversely impacted. Some of the -- I hope now that DCR 34, we won't have -- the government will not focus into getting another DCR in place, so we will have the stable approval clarity and we will get our approval faster.

In this Bombay project, which you have launched, do you think that you're seeing enough interest from people? Or is there a lag in the number of inquiries to number of bookings?

So of course, in the affordable segment, I think the genuine customers are just waiting for the right product, as has been vindicated by Kalyan project. Indeed, mid-premium segment, as I told you, what is happening, because of the trust deficit in the market; good brands, when they are coming with good products are seeing fairly good response because the investor speculation days are over. So whoever is coming is asking a lot of questions, wanting to know more granularly. Just taking a little more time, Amit, to convert. But now when a site visit happens, it's a genuine customer. So that is one thing which we have felt when we launched Vicino or when we launched Roots earlier in Bombay and -- which we are expecting to see in our Chandivali project. Already, initial -- because we are pre-RERA, we can't go and stock in the market, but people are interested in these suburbs where we are coming up with projects.

I mean do you see Vicino seeing active demand?

Yes, yes, we are seeing active demand.

The next question is from the line of [ Arpit Ranka from Kovil Investments. ]

A few questions from my end. To start with, we saw INR 90 crores cancellation in Luminare last quarter and INR 50 crores this quarter round about. What's the outlook for the next quarter and maybe one after that? Is the worst behind basically?

Shall I say a phew, as in PHEW? So as you know, I don't know whether you were in the investor call last quarter, these are the fields which we had done earlier, 3, 4 years back, at a certain price. So we took a prudent decision if customers who had bought at a certain price and are not willing to carry on with us at that price, we gave them the option, if you want to retain or you want to cancel. Out of the 65-odd which were in that stage, 30-odd remained, and the 35-odd which you have seen agreed to cancel with the forfeiture of 10% as per RERA, which we kept with us. So as I said earlier, most of the cancellations are over. Now at least we have a respite into selling what is available with us at the right market price to the right customers.

Okay. Yes. Sounds good. So the second question I have is on, what is the right way to think about IRR for our Happinest project? So for example, maybe you can walk us through, say, Happinest Kalyan? What's the capital outlay that we will run through the project as it gets -- and cash? So billing, I presume, you've already sold INR 260 crores. So if I just -- using the same run rate...

Can you repeat your last line?

Can you walk us through, basically, Kalyan as a case study to understand how does the ROCEs for your Happinest projects work? And what's the right way for investors to think about it? So can you walk us through that?

Yes. Sure. So I think for the Happinest business, the way we are gearing the business model is towards a high-velocity business. And therefore, one should look at this, as you rightly pointed out, as an IRR play as opposed to simply a margin play. So margins will be, as Sangeeta pointed out, in the teens, but IRRs will be multiples of that. And that's what we are tracking to in both Palghar as well as Kalyan.

Okay. So now that's good to hear, but just to extend Kalyan as a case study, as you said, so the booking done so far is, let's say, INR 260 crore for 5 lakh square foot sold and the total project phase is about, say, 8.5 lakh square foot. Assume you are able to complete the project by, say, December 2020 or even further, depending on what you think is the right estimate for that, according to your best case, so we'll end up getting, maybe, say, sales of about INR 400 crore to INR 450-odd crores from the entire project. Against that, what is the capital which we have had to invest as of now and maybe in -- by the time we end up finishing it? Just give us a sense as to how much money does one of these projects kind of make for you. And then as you said, you're signing up more deals around this and stuff like that, so it helps us to sort of understand the relevance of Happinest in the context of Mahindra Lifespace as a whole.

Yes. Sure. So the -- I think I will give you some thumb rules rather than -- because we don't share project-wise profitability, but I'll give you thumb rules on which we operate the business. So roughly about -- between 20% and 25% of the revenue will be the capital outlay in combination of land and working capital for construction.

Okay, okay. So the multiplier is fairly large and if you can complete the project in 1 year or 1.5 years, as you said, the ROCEs can be significantly higher and...

Yes, yes. I wish we could complete it in 1 year, 1.5 years. We have still a little bit work to do to get there. We're currently tracking at about 3 years for 8 lakh square foot.

Of course, and I was just using basically, but thinking through...

No, no. We were both very tempted actually.

No, no, let's just work towards it maybe. And if you, Ma'am, don't mind maybe one more question from my end. So as it grew, so what has happened is few large business houses have ended up becoming leaders in the real estate, and we come from Mahindra Group. And as a group, we have a fairly large amount of land parcels, of course, and one of this -- the land parcel happens to be Kandivali, if I'm not mistaken. And as you all know, it's not -- no longer industrial part of the city, it's more residential. And this is more like from a 5-, 10-year kind of a trajectory. I'm not wanting to understand what happens a year out or 6 months out or something. So what is, again, the right way to think about it? Because it's an advantage, assuming I mean, I'm not saying we get undue advantage just being part of the group. But given that we are one of the top 5 developers in the country who know the business, rightly we should kind of be playing a part as and when that opportunity becomes available. So is it something even we should be aware of, should be conscious of? Or is it something which is completely not related to what we are doing?

I think the good part is we have answered the question in the best possible way. It would be our desire to see that for the group, if there is a piece of land, what is the best use of that land. So at present, the best use of the land is making the mobility business thrive. We always keep track of that at a group level. And there have been, in the past, in fact, I think the Roots project is housed on a Mahindra land. I think Antheia also was a similar project. So I'm happy, and I'm sure Dr. Goenka and his team are listening to you as well. Because you're right that it is something, which can be put to more productive use, we should put it, but that's all I can say at this point of time. And we will constantly be talking to -- we are in constant conversation with each other as a part of the group to see what is the best, whatever is available in the group.

Okay. No, sounds good. Just to extend this. So purely from understanding in terms of capability in terms of doing scale, so assume some of these large -- or not just this -- sorry, any [ PD ] or something that we do. Currently, we are doing, say, a run rate of about -- even last year, we did [ PD ] of I think about 1.5 million. So do you think the consent is partly -- no, not good deals coming around? Or do you think given the current set of organization, people and everything, do you think that this is the size where we can aim for right now? Because other players are thinking really big in terms of multiplying their scale, operationally, I'm talking about, nothing else. So again, how do you think about that because even assuming that the Kandivali, which is a large 80-acre and it will be, say, 10-, 15-year kind of pipeline as and when it becomes available. As an organization, do you think we are ready for that kind of scale? Or do you think there's some work to be done? Or are we even thinking about it?

We are thinking about it. And as you can see, that's the -- one of the reasons that I like Arvind to add after this. The reason is to -- the verticalization because Happinest, I don't think I have to explain to you is a scale game any day anyway. Similarly, the reason we have verticalized this that we have focus, we have organization strength at this point of time to see how the scale can happen. In both businesses parallelly. That's another way of bringing scale. So the -- since it was together, one could have impacted the other. Now these are parallel independent variables. So that's one thing which we have done and which we are seeing as a preparation for getting scale in place. So I don't think there is an issue of organizational heft coming in the way of scale. There is always a gestation. As you know, this is a gestation business. As we get our land and as we start producing and completing, you will be seeing scale, which will include also inorganic, if whatever, as you said, in the group if there is land which you can leverage. Both Happinest and mid-premium are looking at those opportunities. Arvind, would you like to add anything?

Yes, [ Arpit ], let me just add. I think scale at every step of our value chain, the ability to scale is important. And both Sangeeta and I have been gearing the organization up for that. Now just taking you back to the Happinest Kalyan launch example, to be able to cater to 800 units of sales happening in a 3-week time frame, on our busiest day, the first Sunday of the allocation window, we were doing a booking every 3 minutes and 20 seconds. That is an example of scale. To be able to manage that, there was a lot of planning that went into the IT systems. All the sales were digital. 88% of our payments were made digitally. Only 12% by check. So all of this is part of the planning and execution that goes into planning for scale. Similarly, on the design side, on the construction side, we are investing and doubling down on building our in-house capabilities, on construction management, on design management and on delivery management to make sure that all the residential -- the entire residential portfolio is geared to deal with scale.

The other thing, we are also using -- started using a lot of technology in getting our internal organization equipped to handle more data because, as you know, if you have technology as your crutch, as your catalyst, then it also helps to get not only the customer side, which Arvind -- and construction management side, but also the data management of how we are doing, what are the areas, where are the leakages in terms of financial leakage, how we'll legally manage. That's one area where we have realized that there's so much -- the moment you get [ drawn to SFDC ] data, you get a lot of information through which you can analyze and mark -- direct your marketing investments also. So there are many elements. And as we both said, we are geared up for that. You will have to be a part of this journey and be a little patient.

Yes, yes. It's very reassuring and from what we can make out it looks like we are using the slowdown to gear up for the upcycle as and whenever it comes, so best wishes for all that lies ahead.

[Operator Instructions] The next question from the line of Adhidev Chattopadhyay from ICICI Securities.

If you could just elaborate on what are -- or what is our business development pipeline now for the coming 12 months because, right now, in terms of pipeline, I understand we want to close few deals which are there? But apart from the deals within pipeline, what is the fresh pipeline for the next year, which you're targeting?

So as I said that the ones which are in advanced stages is around 2-plus million in the mid-premium and 1-plus million in Happinest. Apart from that, we have around good pipeline. And when I say good pipeline, I don't [ mean ] firm leads or anything, I mean, which are -- which we are negotiating, discussing, evaluating, around 4 million square feet, which are in negotiation stage -- pre-advanced negotiation stage.

Okay. Sure, sure. And in terms of land prices, do you see any expectations moderating yet? Or do you still see the -- find the land parcel very expensive in relation to the margins you want to make?

I was meeting some bankers in the morning today, and we were discussing how India still continues to be feudal and the zamindari system is still going to be there for a while. But that apart, so obviously, people who have had land parcels and have been on a high horse are, first of all, realizing maybe outright sale may not be the only mechanism. They are willing to negotiate even on the terms of preference. It is taking time, but we are distinctly seeing people wanting to talk about different deal structures, which they were not amenable to earlier. That is helping us because we also want to see that we have a portfolio of transactions, which are not necessarily outright. So that we can share risk and capital both with the land owner.

Okay. Fine. My second question is again on this Kalyan-Bhiwandi micro market. Now after Thane, this market seems to have really picked up over the last 12 months. As you mentioned earlier on the call, there have been a lot of launches in that area by a lot of your peers and yourself also, all of which are met with quite a good initial response. Do you see the market being large enough to continue to sustain this sort of demand even in the coming year, considering that a lot of these projects are pretty large in size. And we're expecting quite a lot of inventory to come in even for the next 4 to 5 years,

So look, I think the definition of what is the market and where does the demand come from is also undergoing a lot of change. In Kalyan, we saw 20% of our bookings coming from the western suburbs, which would not be the traditional land one would use in this market. One would have thought that the catchment area would only be Thane, Mulund at best and further north up to Ulhasnagar or Dombivli. But as I said, we got 20% of our bookings from western suburbs. We got about 5% from Vasai-Virar. We got another 5 -- almost 7% or 8% from outstation market, so these geographic limitations that we have in our mind to say this is a micromarket and the demand this year, particularly in the affordable housing segment with end users, they are willing to crisscross the city for the right product at the right value proposition.

Sure. And specifically, these sort of projects, sir, what is the turnaround time in terms of from launch to execution to delivery? Like how would you like to pace it?

How would I like to pace it is very different from how it is. But -- so as I said, here from land -- completion of the land transaction to launch was 8 days. From launch to getting 2/3 of the sales was 6 weeks and... So we are, as I said, constructing the entire -- all 7 towers as a single phase now. So hoping to deliver it well before the deadline that we've committed.

Okay. Sure, sure. And just my final question is on the Mumbai, the market within the city, in the suburbs and the city. In terms of the demand scenario, have you seen it improving over the last 6 months? Or have you again seen a deterioration in interest? What is the overall sense you're getting?

I think it's mixed, to be honest. Like, with every category, you will have winners and losers. But I think the pattern that's very clearly visible is the right product proposition -- combination of good product at a good value proposition from a financial perspective for the customer is still working, not just in real estate, but in other categories as well. I think numerous examples that underlying demand remains strong, particularly in the lower ticket size segments. Because these are end users, they have typically been planning for their purchase for a year plus, often 2 years. They've been in the market something various products. So they are not looking to time the market and say that, "Okay, if I hold back by a quarter, I'm going to get a product 3% cheaper or 5% cheaper." They are waiting for the right product. So if the product ticks the right boxes, they're willing to commit.

[Operator Instructions] The next question is from the line of Faisal Hawa from HG Hawa & Co.

Yes. So with the rejig in the Mahindra Group, with Anand Mahindra now taking more of a non-participatory or a more of a role, which is not very much into organization, do you feel that there could be more urgency into near-term goals and targets as far as financials are concerned? That's one question. Second is do you feel that in the industrial clusters segment, actually, it's our strategy, which has failed because we're like trying to do the same thing again and again. And even though the macroeconomic conditions remain bad, we can't be having so much inventories sitting and waiting for the economy to turn around. It's not that industry or skill development centers or even service centers are not coming up at all in other regions. And third is, do you feel that we can -- we should be doing something in the commercial space or in co-living space to really get the sales up in these industrial clusters?

So first of all, Mahindra Group is 75 years old. I just wanted to bring the element of the eternality. And obviously, I don't want to comment on anything other than the fact that the federation of companies, which have Boards, which have management and which have a governance structure, which pushes people, guides people and motivates people to do better than they have done. So that's about what I have to say, and I don't want to comment more on that. The second thing, you spoke about the integrated cities and you're right that we can't just wait for the economy to turn to make us -- our presence felt. So some of the things, before I ask Sanjay to talk more detail on what he's doing in the integrated cities, some of the things which we have done, Faisal, is we have not looked at, okay, someone will come and buy land and I will wait for them to buy land. So what we have looked at is also which are the sectors, which are rising, so we have looked at food processing, we have looked at logistics, and we are talking to people who will -- may not be able to buy land, but are willing to take a piece of a factory, which someone else will bid for them. So in the last couple of years, we have also built this, some of our transactions, which have happened are build-to-suit transactions with an investor in the ploy. So that is one thing which we are focusing on. The second thing we are focusing on is talking to a few large players who can form cluster, so -- and countries as well. So one of the things, a country has approached us when we were talking to them and we met them and we went there is to form an industrial cluster of SME companies from that country into our Origins, Chennai. So that's another thing, which we are looking at, that not just individual clients, can we do a country or an industry cluster, which comes and takes, say, 15 acres of land or 10 acres of land comprising 5 to 6 companies. That's the second thing which we are doing. The third thing which we are doing to monetize is, we did the IFC transaction. We are looking at, can we get strategic partners more into our land parcels, so that we can monetize, get some funds in and develop faster. As far as the specific other granular advances, which we are doing, I would like Sanjay to join in and talk about it a little more for the short term.

Sure. Thanks, Sangeeta. Faisal, Sanjay here. So while all of us know the key week outlook and as well as the liquidity crunch is leading to more difficult and longer time cycle for even project finance for small and mid-sized segments, but at the same time, over the last 2 quarters, we have started seeing some overall positive developments. The first one was the corporate tax rate cut announcement. How many companies are evaluating that what is the right cost-benefit analysis? And secondly, what is an appropriate structure to look at it? Second, with the new infra projects announcement which has come in, we are seeing that some specific segments, like construction, equipment, ancillary, machines and product suppliers have now started moving ahead in their discussions and that is reflecting directly in all the pipeline. Third thing, realizing the current environment, all the 3 states in which we are present has taken significant efforts to invite new investments. Rajasthan has revamped a very competitive investment policy. Gujarat investment policies under revamp will be -- is expected in some time. Tamil Nadu government has done proactive road shows in all the key target markets. We have started seeing some -- yes. And in all of these, we have worked very -- in a cooperative manner together, co-creating both the visibility as well as the pipeline with all the governments. One of the large things which happened in December-end was, there's also been a notification by the GST Council where there is now an exemption on industrial land lease for GST, where any of the government or state undertaking has more than 20% holding. That was a short-term dip for Q3 for Jaipur because as you know, it has 74:26 holding, but we see that in the long run, with cash being very critical for new customers [ Technical Difficulty ] become better. Some of that has already started manifestation. Jaipur, already in the first half of January, we have already signed 1 agreement to lease and as well as another MOU is also signed in both MWC Chennai as well as Origins Chennai. We also have signed the MOUs where we have a certain part of the advance already from the clients, and the traction for converting that MOU into the leases is underway.

So are we looking -- Sangeeta, are we looking at just connecting with some distress developers who would have to, say, half the project complete or something, and just lend our name to their projects so that we can get some quick sales into our books for the next financial year at least.

We are certainly looking at such people. So we have evaluated not 1, but 2, 3 such deals. What we have found is that 1 or 2 risk issues we have found is that when we go to a developer of a certain category and we realize that they have either not registered in RERA or if they are registered in RERA, they are not disclosing the right things. So we are being a little careful, Faisal, because what happens with the brand name which we have, whatever be the terms of reference, it should not impact us adversely. So we are looking at it, but we are looking at it cautiously.

So it doesn't look like something will come out of it even in the next financial year?

That is too long a period to commit that nothing will come out of it.

The next question is from the line of Devesh Kayal from Carnelian Capital.

This is Manoj here from Carnelian. I have couple of questions. First one is, like, I understand that, right now, we are definitely facing a very, very tough macro environment. But if I look like this company from a sustainable execution per annum, so what kind of targets you are keeping for yourself, like, in 2, 3 years time line? And what are the steps you are taking to reach to that? Like if I look at current year, like till now I think we have done around 0.7 kind of sales vis-à-vis last year of around -- I think last year, we did around 1.16 -- sorry, 1.7 last year. So just wanted to understand that. And my second question was like how do we see the profitability difference between affordable segment and the normal segment?

So you're right. We did around 1.7 million square feet, which was triggered by few launches, which was Roots in Kandivali, which was Lakewoods in Chennai and Centralis in Pune, the major launches. I'm not talking about phase launches. This year, we have had 2 launches. One was Happinest Kalyan and the other one was Vicino. Happinest Kalyan, we have still not read -- booked into the sales value, so that will be a quick jump of around 0.5 million square feet to our -- so 2.26. So that will give you immediately a jump into the 1 million square feet and we have launches in place in this quarter, which I have spoken to about earlier. Sumit, can you just tell me between the Acme and Vicino and the other, what is the launch million square feet so that we can convey? So what we are seeing is that, that should bring up the sales value, if not in terms of booking, but at least in terms of UI. I hope you were in the early part of the call when I explained all the launches. Were you there?

Yes, yes, I was there.

So those launches would help us buttress the 1 million square feet number you were speaking of. So we should be able to launch and sell most part of 1 million square feet because we are already on 0.76 as far as Q3 sales is concerned. So that was your first question. Any counter -- any question -- further question on that?

So I just wanted to understand, like, if I look -- means, I'm not worried about, let's say, current year, but if you look at like just coupling on a sustainable basis, what kind of target it -- like, whether you are targeting 2 to 3 million kind of sustainable sales and launches every year, maybe 1 or 2 years down the line once we reach normalcy?

I'm totally -- I think you have forecasted rightly. At present, the focus is on the operational performance and getting land in place. And the good part, as I explained earlier in one of the questions, is both the verticals of Happinest and mid-premium are working in parallel, so that should have a cumulative effect in terms of getting the square feet -- the 1 million square feet into the 2.5 million to 3 million range.

And my second question was, like, how do we see the profitability difference between affordable and mid-premium segment? And what kind of proportion, like, will be between these 2 verticals?

So I think, again, this was spoken about earlier. We spoke about the impact of margins in the late teens. And we spoke about the IRR above 20. What we see, the whole business of Happinest is about -- if both businesses are about velocity, the Happinest one is about logarithmic velocity. It is faster. So the IRR will be the focus in that business. I'm not saying that we will not make margins, but by faster turnaround that should help us to improve the IRR. And the focus on mid-premium, obviously, will be on margins. But also I reiterate IRR because in today's world, wait and watch in real estate is a complete no-no. I would rather sacrifice a couple of basis points to ensure that I sell, I collect cash, and I complete.

So one last question which I have, like, are you looking aggressively on DM kind of model, like, where, like, you get the complete land from other guy and you lend your name, and then like vis-à-vis other developers this portion I'm seeing like very small in your -- in velocity.

Yes, you are right. It's currently very small. So the way we look at it is, what should be -- so we have defined internally certain guardrails that if I'm doing a project, what is my effort outcome ratio? So we are open to be -- and at present, we are flexible. We are open to outright. As I spoke to you about earlier, outright where payment can be made in multiple tranches, so that I can stagger my payment and improve my IRR and reduce risk of paying outright. We are looking at joint development. We are also looking at -- many of our projects are on JV platform, and we are looking at DM as long as the DM is worth its salt.

As there are no further questions from the participants, I now hand the conference over to Mr. Adhidev Chattopadhyay for closing comments.

Yes. Thank you, everyone, for joining us on the call today. I would now like to hand it back to the management for closing remarks.

Thank you, Adhidev. So the closing remarks are not too much. It is getting -- double -- doubling down on the operational excellence part of the business, getting our launches, which we have in this quarter and which are for forthcoming quarters, getting the completions done. We have spoken about it, so I don't want to again repeat. Not moving the radar from cash collection, giving velocity more marks over waiting and watching. And last but not the least, all the term sheets, which are in final stages of negotiations, converting them, so that we have projects in the future, which can help us grow to some of the numbers we spoke about earlier. Thank you.

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