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

Ladies and gentlemen, good day, and welcome to the Mahindra Lifespace Developers Limited Q4 FY '20 Quarterly Results Conference Call 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 morning, everyone. On behalf of ICICI Securities, I'd like to welcome everyone on the call today. From the management, we have with us Mrs. Sangeeta Prasad, the MD and CEO; Mr. Arvind Subramanian, the CEO of Happinest and COO of Mahindra Life; we have Mr. Vimal Agarwal, the CFO; and Mr. Sumit Kasat, the Head of Investor Relations. I'd now like to hand it over to the management for their opening remarks.

Thank you, Adhidev. Good morning, everyone, and welcome to our Q4 F '20 and annual F '20 earnings call. I would first like to share I -- that you are keeping well, keep safe and take all necessary precautions in these times. And I would like to thank all of you for participating in this conference call. I would like to inform you that today, we have with us Mr. Arun Nanda, the Founder, Chairman of Mahindra Lifespace. As you all know, we admire him for his passion and drive, and he was very keen to connect with all of you in these times as he has always been a leader who drives from the front. So I'm very happy to introduce Mr. Nanda once again to all of you. You know him already. Mr. Nanda, would like you to share your thoughts and how you look at the future. Over to you, Mr. Nanda.

Thank you, Sangeeta, and good morning to all of you. I hope you're keeping well, all your family members and your near and dear ones are keeping safe and healthy. And I pray that you continue to be safe and healthy. I normally don't come on investor calls, but there are 3 reasons that I thought I will come and explain to you, one, why did the management suggest and the Board agreed to take that extraordinary provision of INR 200 crores, a onetime hit. As you know that Sangeeta expressed her desire in early February to be relieved in February. And she was gracious enough to exceed to my request to continue till June 30 to ensure smooth transition and finish all the work that she had in her hand. And I would like to share with you what the Board has decided yesterday, and I would also like to talk about the post-COVID situation and how are we planning to deal with it. Let me first start with this provision. This provision is primarily for a project called Luminare, which is a joint venture between a land owner and us in Gurgaon. There's a company called Mahindra Happinest -- sorry, Mahindra Homes Private Limited, where we are a majority shareholder. And they have 2 projects, 1 in Bangalore, which fortunately is doing well, and we had a project in -- in fact, we have a project in Gurgaon called Luminare. This project was launched in 2015 when the market was buoyant. And since then, we have all seen softening of particularly the NCR region, we saw both the muted demand, and we also saw significant drop in prices as high as 30%. There is a problem there of NCR, which is faced by many developers is that it is a very investor-driven market, and that is why we -- although we had lot of bookings, we saw significant cancellations, and that led to the current situation. I must compliment the management. They came back and said that let us be prudent, let us be cautious, and let's take a one-time hit and explain to the shareholders why we have done it. Please appreciate 3 things: one, the candid approach of the management to come forward and take such a large provision. Two, I've repeated it more than once that it is prudent. It is taken -- taking into account the current situation of COVID and post-COVID, and it does not mean that the market may not go up. And the third thing, which is very reassuring for you is that on a cash basis, we will make profit on this project. It's not going to be a cash loss. If you have particular questions, why this, I'm sure Vimal Agarwal, the CFO, will be able to explain to you. But I am on a recorded investor call telling you that we will be cash positive. We will not make a cash loss on this project. It is the accounting entries that have come. And we have been, to use the word, extra cautious in doing that. Let me also give you one another piece of information, which again talks of the quality of management. Sangeeta, Arvind and every project leader, zonal leader, went through every project that we have. And wherever required adjustments have been made. And I do not foresee any problems related to legacy projects in the future. Of course, we don't know what COVID will do. But based on our estimates, we have been conservative, and I don't see any other problem coming in the future. And I wanted to give you a reassurance that this is prudent accounting, this is conservative accounting. And it is because that we are a part of the Mahindra Group, we caught the bull by the horns rather than growing it. And there are no other things that I as a Founder, Chairman, who has been associated with Mahindra Group for 47 years, would worry about. And I want to thank the whole management team for being courageous enough to take such a large hit. The second point I said I wanted to talk to you about leadership transition. Sangeeta joined us in 2008 and has been a pillar of our business. She is a lady who comes with lot of passion, enthusiasm, good governance practices, high ethical values and a very driven leader. In 2013, she took on leadership of our integrated cities business and in 2018, she was appointed Managing Director and CEO, when Anita left. Her contribution in each of these roles has been enormous, her passion for the business and the people is palpable. On the board over the past 2 years since she took over, she has been focusing on 2 things. She had clear agenda, operational performance and some of those things that you have seen in the F '19 sales and collections and all that, and the second is a strategic direction. She had taken lot of exercises, and she has put lot of processes in place. Unfortunately, she will not see -- she has not seen the benefit. But I can assure you her successor and the organization will see -- will reap the benefits of all the hard work she did. As you know that in February, she -- I had mentioned to you that she wanted to resign as CEO. For me, personally, I have been very comfortable with Sangeeta. As I mentioned to you, her value system, her governance standards, and I always knew she would bring the bad news first to me, if there was one. And it was see who brought this Luminare issue to me. And you know in the real estate business, values and governance are very important. And the other things she did well was that she was prudent, whether it was in land buying. She was prudent not to chase commercial real estate when it was the flavor of the month, and I will talk why I'm saying that. And they were also prudent to not just go and say in the press release we've launched early March when we saw the signals of COVID, Tathawade was ready for a launch. The projects in Bombay were ready for a launch, but she herself pulled back and said, we will wait and see. Thank you, Sangeeta. We will miss you, but we take -- we understand that at this stage of your life, you have other interests, which you want to pursue. And on behalf of all the investors, I want to wish you the best. Let me talk a little about Arvind. Arvind has touched my heart in more ways than one. He looks a quite person, but he's a very strong leader. And you have seen how he managed the Kalyan launch and how in a month, he sold more than 80% in this market. But there are 2 things that I admire most with him, his zeal, passion on one side and his disruptive thinking, what conventionally we used to call innovation. And you saw some of it in Kalyan, but I know what he has been working on affordable housing, and that will be a game changer to the affordable housing system. We want to wish him luck. And let me rest assure you that we are going to be the leader in the affordable housing segment. And I'll come to that later. So let me get back to Arvind. Arvind after his IIT -- engineering from IIT joined Tata in the prestigious Tata Administrative Service. After working for a couple of years, he joined -- he went to IIM to do his MBA. After IIM, he joined BCG. At a fairly young age he was leader of certain -- global leader of certain practice on consumer -- I can't remember the word, consumer. Anyway, he was a partner and he was a senior leader. And after 15 years in BCG, he joined another real estate developer, and he was one of the regional CEOs. Arvind has built a strong team and shown there is an opportunity to disrupt the market with superior products and customer value propositions. To ensure smooth transition, the Board later part of February appointed him as the CEO, and he has been working closely with Sangeeta for these last few months for a smooth transition. And let me assure you from my review meetings, I can tell you that we plan that there will be no gaps in transition. And here again, I would like to thank Sangeeta for all her cooperation and the zeal with which she's making sure that nothing falls between the gaps and the transitions, too. The Board, and I believe he will continue to build on the good work done by Sangeeta, while bringing his own unique perspective and energy. Let me move to the current situation. We believe that for the following reasons, we will weather the storm better than other people. A, we are in the 2 segments of the business, which will revive the fastest. The industrial products and mid-premium and affordable housing. Let me start with the industrial products. You've all been reading about how Trump and some other countries have been talking about China and the geopolitical position -- situation is going to change tremendously. I was very pleasantly surprised that the Japanese Prime Minister, Mr. Abe, made an announcement about a month ago to say that we will give incentives, Japanese government will give incentives to Japanese companies to move out of China. And it's not a small figure. It's billions of dollars equivalent. As you know, Sangeeta had signed a joint venture with Sumitomo. Mahindra Group has a very strong relationship with Mitsubishi. And she has already started a dialogue both with Sumitomo to access Japanese customers, and her team has been in touch with various state governments to ensure that Mahindra World Cities and Mahindra Origins will be the first port of call when these investors do visit us. We are also in touch with all the CEOs of the corridor, the Delhi-Mumbai, the Delhi-Chennai, the Chennai-Bangalore, the Delhi-Kolkata. And as you know, in the old days, we have an agreement with Gujarat government to develop Dholera. But we are actively pursuing. And even, yesterday -- day before yesterday you saw Mr. Modi, again, focusing on this. And we are reasonably optimistic about this. But we are -- see the point I'm making is we are the only people who have these credibility and the experience to do it. And one of the best compliments Sangeeta got was when BMW started production in less than 18 months from the time they signed the land deal. If you go to any of the private lands or the government lands, it takes you 3 to 4 years just to get off the ground. And here, because of our ready infrastructure, 18 months a company like a car manufacturing plant, which is the most complex, not to talk about Perto and others. And we have still huge land banks in the projects in Chennai and few -- and about -- over 1,000 acres in Jaipur, plus, we have 300 acres in Origins in Ahmedabad. It may be 50 acres here and there in the development area, and we have similar size in. Plus we have been accumulating lands not very far from Pune. It is less than 0.5 hour drive from Pune. And I think these are the sectors that we will take into account. The other things that I want to talk about is that we have a strong, very -- strong balance sheet. This is something that the Mahindra Group is very particular about is cash management, and that's the only thing the corporate comes and asks you. We have done all permutations and combinations of the cash we have, the cash flows that we will get and the cash flows that we have to pay. As you know, we are a very lowly leveraged company. And given our cash position, we will weather this storm without any problems, and I'm using the word without any problem. I don't think we want to venture retail and commercial office space at this time. And I'm glad that we did not have any exposure to that class of assets, except a small -- 2 small -- I think we have a building in Delhi, which is actually fully -- more or less fully leased out, and in Mahindra World Cities in -- especially in Jaipur, we have some old customers, but we have nothing which we have to go and look for a customer. The affordable housing segment, according to me, is the fastest to roll off. We have land banks, which are already tied up. We are thinking what to do with our Thane land and how to position it for affordable housing. Originally, we had kept it for IT SEZ but Arvind and team are closely working on how to do that. We have other land banks, which let the management talk about. We have a phase of launch to be done in Palghar. As you know, Palghar recently was made into a separate district with a district headquarter. So I think affordable -- and more important, in both the statements of the Prime Minister, Modi, and Nirmala Sitharaman, have talked about affordable housing, particularly in reference to migrants. And yesterday, there was also an announcement yesterday or day before that they are looking at PPP for rental in affordable housing. And I think that will give a huge lift to it because there are a lot of funds who are looking for steady income, and this is not a market like commercial that suddenly people decide to start working from home or work goes away. These are -- this rental is a steady-state income. So I am quite positive on that. Mid premium, I personally feel, will start opening up in the later part of the second quarter or early third quarter, if COVID comes under control. And people will look for, preferably look for ready-to-move houses, and we have things to offer in -- on -- in that segment. We are fortunately not in the luxury segment, which is going to be affected. We have -- you have been asking Sangeeta about land banks. I cannot talk about it because we are still in different stages of negotiation. And let me tell you that the company has been left -- handed over by Sangeeta to Arvind in a very strong position. Please don't go by 1 year's accounts. The accounting standard, coupled with the onetime provision, is not a reflection on the health of the company. I assure you that happier days will be here soon, and I look forward to talking to you in happier days soon. In the meantime, I'll sign off by saying God bless you and your families with good health to tide over the current position. God bless.

Thank you, sir. Thank you for sharing your thoughts so candidly. It gives all of us assurance and confidence. And yes, as we all know, we have the capability, which you explained. And also you have shown us the areas of focus. So we will -- and I'm sure the team led by Arvind, will focus in a directed manner to take the company from here to much, much higher areas and pedestals. So now, sir, we will continue with the...

I just want to make 2 points before I go. One is that Arvind will take over as Managing Director and CEO from 1st of July. And the second, I did not mention the date. I just wanted to be -- make sure. Second is that the management will take you through a detailed presentation. I have a meeting of Mahindra Holdings, which is starting in the next few minutes. So I would like to be excused at this stage. But should anyone have something specific, please approach us through Sumit. At an appropriate time, we will get back to you. Thank you once again, God bless you all.

Thank you, sir.

Sangeeta, can I sign off?

Yes, sir, since you have a Board meeting. We would have liked you to stay, but I know you have a Board meeting.

Thank you.

Thank you, sir. So once again, good morning friends. I think the Chairman has laid out the future vision for us, the focus areas and specifics as well as shared with you that we have the resilience and the robustness to leverage that future. So I will quickly go through the business performance of Q4 and F '20, some of which is available with you, but it -- I think it's important that we discuss it once more. As you all know many of our key operating entities, like Homes, Happinest and MWCDL, MWCJL are not consolidated on a line-by-line basis, thereby not reflecting the overall organization throughput. With that footnote, if I may say, I would like to start with the specifics. In the residential business, we actually did INR 818 crores of sales in the last financial year. If we consider the Luminare cancellations, which you know, is a significant amount, which is around INR 150 crores, the net sales would be then INR 670 crores. But I would like to compliment the team for the INR 818 crore because there has been an effort on that direction to get that number. Yes, we missed the number of a 4 digit which we had in F '19. We were wanting to repeat that number. However, we decided in March when 2 launches which Chairman spoke about were ready to launch we decided that it was wise not to launch at that juncture and wait for the right time so that we have -- we repeat our successful launches. We also achieved a quarterly sale triggered and catalyzed by the Happinest Kalyan performance of INR 397 crores. And we expect that such performances will continue as we move on and as we have built our robustness on the sales and launch excellence. Then I will go with one of the things during this COVID time, we have -- I would like to say the employees have really stepped up a lot, working from home, balancing home and life and ensuring they are connected with the customers, both existing and potential, and using digital as a mechanism to connect with them and also ensuring that we try to get all our collections and some sales and as we go along, we'll be using digital as a mechanism as a catalyst to affect our business much more successfully and efficiently. I had mentioned to you earlier, we consciously took a call not to do some of the launches, which would have given us sales figures and helped us achieve better numbers. But circumstances and unusual ones at that sometimes tell to take unusual, yet wise decisions. The only 2 launches we had as organic launches were Happinest Kalyan and Vicino, which you are aware, I've spoken to you in Q3 in detail. And Arvind will further speak about it. And we had few other phases at Boisar, Antheia which were ongoing phases. The new project launching, which were planned in Q4 F '20, as you are aware, the Bombay land and the Pune land, the Chennai land and the ongoing phases of the Vicino project will be launched timely and wisely to leverage customer sentiment as we see -- and we'll observe the market, and we'll keep you informed on that. Now I'll go to the collections and that's where I feel that in a market like this uncertain market, rigor on collections is a key driver for future resilience. So here, again, there has been a miss. We would have loved to cross the 4-digit figure for the second time over for this company as we did in F '19. But last month of the year, as you know, we had to slow down on collections because customers had other sentiments. And -- which was plaguing them. So we have reached INR 930 crores, we would have loved to go to the 4 digits, and the Q4 collection was INR 197 crores. The new loan approvals, as you know, are progressing at much slower pace. So we will see in the short-term a muted collection, which we expect with all the effort and the collaboration of the financial entity and the government things would improve. During the year, we had a completion of 1.07 million square feet, and we had in Q4, completed 0.18 million square feet development in Bloomdale and the commercial area in Happinest Boisar. I'll spend a few minutes on the construction activity because of COVID circumstances. As you know, it came to a complete standstill due to the lockdown. Then there was a phased resume of work in various sites. This keeping all the compliances as well as the safety and well-being of our stakeholders, we have started work in the areas and the sites where we could. But I think all of us know, today, the country is going through something much more. The migrant labors are in a certain shape. We all need to have compassion. Many of them want to go back home, rightfully so. So we will still see muted construction activity and as things improve, and we put mechanism in place as a country and as developers, we will see construction activity progressing. Land pipeline, we have been continuing to engage with landowners. I know in the last quarter, I had said that we were in advanced stages. We had consciously and wisely done is we have kept the engagement hot and warm. We are completing all our negotiations, and we are doing in principle agreement, but also keeping in mind the current situation, setting expectation with the landowner that the commercial terms may undergo as we sit with them, some changes as we proceed into the future. We have seen cooperation from the landowners because they believe people like us will stick through to the fact, will pay them. So we will see some opportunities there. And we will talk about it. So at present in mid premium, we have 6-plus active deals, which are in -- as I said, in warm and hot stages of negotiations, both in the outright and JD phase across Pune, Mumbai and Bangalore. Arvind will touch up on the affordable land parcels as well. It's in the similar vein. IC business, yes, the year was muted for the IC business in totality. Let me be very candid with you. The macroeconomic scenario was not helping us to connect while we had strong leads. But there is a silver lining. And I think the Chairman touched upon it. As a pleasant surprise, I would say, while we were in tough with the customers and the leads were hot pertinent, we actually in the month of March signed some lead deals. In conventional wisdom, we would have not thought that would be true because that is a sign of times to come for this business. The people are feeling comfortable and confident to come into the World City kind of ecosystem because they see it as a much more safer and hygienic place. And here, I would like to compliment the World City team that the amount of positive feedback I have got and the management have got for both B2B customers and B2C customers reinforcing their confidence that a World City economic -- World City ecosystem in these kind of circumstances and environment is the best place to be. They can start work. They can live better because the density is lower. So I think there is a method in the madness which we have started and we must leverage this opportunity win. With Sumitomo, we are having active discussions, how we can leverage the Japanese shift from other geographies to our geography. We are working on a joint plan with them. We are making our positions and place felt in the state governments. We are participating in committees to bring in investment to this country and at a national level with the group support. We are also trying to put in recommendations for policies, which will attract investment into this country and specifically to the ecosystem, which we have built. So I'll pause here and just step back and say, whether it is mid premium, affordable and IC, we have the robustness and the resilience to leverage the future. Now I will touch upon what the Chairman spoke to you about a onetime impairment we have done on account of our project in Luminare. People may think in uncertain difficult times what are the type of decisions we take. And as management, we felt it was prudent, and we need to be abundantly cautious and, of course, the highest standards of corporate governance and take bold decisions. And I think I must tell you, we all rallied around each other. The Board gave us support, and we said, we must take a onetime exceptional provision in our books so that when things improve, things would be much better. And I know you, as our prudent investors, will understand and appreciate that such a decision taken speaks of the management's resilience and trust in the brand and its future. The good part is there is no cash risk in this business. We are going to be cash positive, specifically in Luminare, and as Chairman spoke about, we have evaluated all our projects in fine tooth comb and we are good. So that's some comfort and assurance I want to give you as the outgoing MD and CEO. When I hand over to Arvind, that the company is in good shape and let's all leverage, work together well, get all our efficiencies and effectiveness to leverage the future. And as you all know, the impact of consolidation of this onetime decision -- of an exceptional decision is around INR 200 crores in the books of the consolidated financials and around INR 240 crores in the stand-alone. So now I would hand over to Arvind to take you through the developments in the affordable segment. I will also take this opportunity, Arvind, welcome to the new role from 1st of July. I know you and I have been working together for months. So you are totally clued in. Now on to you for talking about the affordable business.

Thank you, Sangeeta. Look, I think last year, the affordable business, the highlight was Happinest Kalyan. As you know, we launched Kalyan in November of '19. The launch itself was done in record times. We acquired the land on a Monday, did the conveyance, got our RERA approval the same Friday and launched it the following Tuesday. And that speaks to both the amount of preparation that had gone into the launch, but also the continuing ease of business in the environment. The launch was met with great success. Overall, as of 30th of -- 31st of March, we'd sold 901 units out of the 1,241 units with over 300 -- INR 305 crores worth of sales. So it's been extremely well received. And this is despite the fact that it was actually the fourth big launch in that micro market in Q3. The registration processes have also been going on very well. We had planned and had already set up -- enabled ourselves for the registration. Over 700 customers have paid their stamp duty amounts. By the end of March, before the lockdown came in, we had registered just under 300, so about 270 customers had completed the registration formalities. So we see, as soon as the lockdown is lifted, we will be able to proceed at a pace to complete the remaining registrations as well. And buoyed by the strong sales response, we decided to take up all the towers for construction in a single phase. It was originally planned as 2 phases of construction. But all 7 towers and the multilevel car parks, all 8 structures are being worked on together. We've progressed very well on construction. So again, before lockdown, we had already reached plinth of 3 out of the 7 towers, and excavation has been completed for 2 more towers. Just touching quickly upon the other Happinest projects. We also launched a new block in Avadi. There are 2 blocks remaining. So one of those 2 blocks were launched in early March. It had got very good early response, but we had to pull back because of the lockdown towards the 3rd week of March. Out of the 40 units in that block, 15 units were sold within 2 weeks itself. At Boisar, we have completed all phases of construction and have now got the OC for all phases as well, including the CFC, other commercial center. And we have around 100 finished units left there to be sold. For Palghar 2, which is the second project in Palghar, we have all the approvals in place. And we will time the launch depending on our read of the market as soon as we feel the market is ready to absorb that. We are fully ready from an approval perspective as well as a marketing and sales preparation perspective. Land, as Sangeeta mentioned, on the mid-premium side, we've been very actively engaging with landowners on the affordable side as well. We have active negotiations both in Mumbai and Pune. And we're following the same principle across both segments, which is having a good faith negotiation with the landowners, but keeping a very explicit condition on the table that once the COVID situation is behind us, we will both reassess the right commercial, depending on what the market scenario is at that point. With that, let me request Vimal to take you through the financial highlights.

Thanks, Arvind. I'll now briefly cover the consolidated financials for FY '20 as well as for the quarter ended March '20. The consolidated total income stood at INR 646 crores as against INR 654 crores in FY '19. The consolidated PAT post minority interest stood at negative INR 193 crores as against INR 120 crores in FY '19. For the quarter ended March '20, the consolidated income was INR 111 crore as against INR 85 crores in quarter 3 F '20. The consolidated PAT post minority interest stood at negative INR 224 crores as against INR 2 crores in quarter 3 F '20. As mentioned by Sangeeta, this amount includes the onetime impact on account of Luminare project. So far as debt is concerned, the company has INR 99 crores of net debt on consolidated level as per IND AS. At gross level, debt is about INR 231 crores with a debt cost of 8.67%, while the cash in hand, which we have is about INR 132 crores. Our cost of debt right now is lower than the previous quarter, which was 8.75%, now it's 8.66%. That's all from my side. We can now open the bridge for Q&A from the participants. Thanks.

[Operator Instructions] The first question is from the line of Rachit Kamath from Anand Rathi.

Actually, I don't have a question. I just had a query before, but then it was solved.

The next question is from the line of [ Mahavir Meda ] from an individual investor.

Ma'am, I would like to ask 4 questions and one suggestion. I have one suggestion. First, I would like to ask you that today, Mahindra Lifespace's shares are available at 15% to 20% of its actual value and 50% of its net worth. Why we don't buy back our shares? Or why promoters are not increasing their stakes? That is my first question. Second one is any development on Thane land, which can be actually -- which may be in future our main area of earning? And any development on Mahindra & Mahindra land at Chandivali? Second one. The third question is, any plans to cut expenditures as we skip dividend to save cash flow? And fourth one, will we get advantage of companies shifting from China to India in IC & IC. And I would like to give a suggestion that we shall demerge our 3 companies like affordable housing, that is -- we have partnership with the HDFC, second one is IC & IC and third, mid and premium housing to unlock shareholders' value. That's it.

[ Mahavir ], I think -- first of all, I must compliment you that you are a very connected investor. You're always keeping track, that keeps us on our toes. So thank you for that. So let me talk about, first, the operations part, and then we'll go to your first question, last. So the first thing you spoke about was about the land. Basically the Thane land and company land, group land, isn't it?

Yes, yes.

Thane land, I would like to tell you that we are already worked a lot in the last 1 year to look at the product mix, what could be the right product there and the Chairman touched upon it, that we are looking at the affordable market as a very prime mover for that land. And that's work in progress. When you -- before you launch, you have to do a go-to-market, you have to do a proper product mix study, a market study. All that is on and as we go through in the future, you will see there's a lot of work also happening on the regulatory front. Because we need certain approvals. So Thane is top of mind for us, [ Mahavir ]. I just wanted to assure you because sometimes what happens, you are not able to see things in front because there are things we cannot share with you upfront. It will go against the brain because we have to have some confidentiality, but I want to assure you. And on the group land, that is another initiative, which we have started talking to the pertinent group resources on the land inventory. I again cannot tell you in specific. There's enough advance work done on that. Yes, in the last 2, 3 months because of the COVID situation, the discussions -- because each one is prioritizing on their core business, as you can understand. Having conversations on this have been a little slow. But the last year, 9 to 10 months, a lot of progress has happened. And I'm sure, have you stay with us and see things happening in the future, you will see improvements and actions. And even happens with backup action. The backup actions are not available with all of you because we cannot give you all that information. Now on the expenditure part. You're very right that we have created an organization, which is on the scale, prepared itself for a scale. So sometimes we have to upfront some of the investments in expenditure so that we can prepare. So for instance, let me give you an example. To prepare to make Thane go-to-market ready, you need a team, don't you?

Yes, right.

The operating team, regular team cannot work on it, then they will lose their focus on launching a Tathawade or a Happinest Kalyan or whatever it may be. So then you need a separate team. So at this point of time, unfortunately, because of the accounting standard, all these costs get accounted for in the P&L. Isn't it, [ Mahavir ]?

Yes, right.

But if you ask me for a business leader, I would think those costs are actually investments for future. Notwithstanding that, we have started a -- from last year, we have started a rigorous activity on fixed cost management on all elements, administration, marketing, sales. We have already seen some improvements in that. In fact, even in the COVID situation, we have further accelerated that initiative. Vimal is leading that effort with the team members from all locations, and we will see improvements in that area even in the fixed cost. So as Mr. Nanda was mentioning, [ Mahavir ], there are certain actions we take. You don't see the impact immediately because these are important, significant large initiatives. The third, you spoke about integrated cities. I think you were not asking a question. You were actually saying take that opportunity, Sangeeta and team. So point taken. The opportunity, as I mentioned earlier in my opening remarks as well as the Chairman mentioned in his, that there's an active strategy in place, three-pronged. Working with our JV partners, especially the Japanese ones; second, working with the state governments and participating in influencing the state governments to take some decisions for the betterment of the states as well as our cities and working with the center. These are -- this is the three-pronged activity through which we want to reach out -- in fact, I would like to tell you, as I mentioned earlier in the month of March -- and this question, thank you for the 4 questions, will help answer questions for others also in this way. What we have seen is a particular company actually signed an LOI for a country cluster in Origins, Chennai. Can you believe it in the month of March? Because they believe it's safer to come to this place. So these are some of the signs that give us confidence that if we proactively work on these things, and this has been because of proactive work by the IT team for the last 6 to 8 months that the country cluster has signed an LOI, even in the troubled times, the uncertain times. Fourth on buyback, I know you have given this suggestion earlier. I would like to assure you that we are looking at all ways of how, but the first way we are looking at how do we leverage all the potential we have as a company with our tax resilience and robust balance sheet and our market and brand presence. How do we actually operationally and organically make this company a much better company? I would think, [ Mahavir ], you would agree with that, that should be our first priority. And that's what we are focusing on. As far as your suggestions are concerned, suggestion's welcome. We will evaluate them and come back to you. And dividend rights, you rightly mentioned, we did it to conserve resources so that we can tide over and leverage the future. Thank you, [ Mahavir ]. And again, stay safe and stay healthy.

The next question is from the line of Himanshu Upadhyay from PGIM.

My first question is on the Vicino 1. We launched a very small part of the Vicino but still, we find it to be much more the slow moving in comparison to what Vivante and Roots were -- or the sales happened in those 2 projects. What is your view? Do we need to rethink on the product? Or how are you looking at this project, which is under launch or we have already launched and another 2 stages may be there to be launched in this product?

Do you have any more questions or you want me to answer now?

I have some others also.

Okay. Would you like me to answer one by one?

Yes, yes, yes. That would be better.

Okay. Himanshu, again, the same message to you, stay safe. I would like to share with you, yes, we launched a very small portion of Vicino, frankly, because we wanted to understand how the market responds to the product. And we saw that in the first month, we sold 50% of the product. And then we, of course, saw some movements, which were not as we expected. So the other 2 phases, which we have not launched -- which we did not launch because we are also waiting for certain approvals, has a different product mix. So Himanshu, what we are looking at -- this is also the sign, which is helping us to evaluate the product mix. And the combined product mix, I think what happened in the first phase, which is a restricted product mix. So what happens if a customer comes in and they see a restricted product mix, then they're not able to make a choice. In fact, we got a lot of leads and pipeline for the subsequent phases, which we have not yet launched. So I believe that once we get all the phases into the market at the right time, not today, but as the markets become better as COVID situation improves, which we know will become a success. But we are constantly evaluating if there's anything we need to do. Thank you for your question.

Yes. Second was on the Luminare. We have launched one phase where -- which is completed and inventory is there. Second is under construction and the third, we need to launch, okay? How are we thinking about the third launch? Is there any scope to redesign, do something differently in that? And what is the -- how is the -- again, it's a JD project. So what is the partial view set of how is he thinking and is he in line with us? Or just some thoughts on that project? And the sales momentum, has they increased after the reduction in price, are you seeing something of that sort or some more clarity on the way the project will move from here on?

Yes. So Luminare, as you rightly said, has 3 phases, just one minor correction. We had launched both the phases, the one which is under construction, much earlier. Both the first case -- first tower and the second tower, we had launched, but what we did was we have given in the last 1 year after the OC, a lot of focus on the finished goods because that market is more interested in finished goods. And we would like to -- while we have sales in that in construction phase, because we have launched it earlier, we would like to give it a focused relaunch once the finished goods -- once we get the OC, because I think that's a -- we think that's a better strategy. Now as far as the Phase 1 is concerned, as you know that there was significant cancellations of the earlier bookings, which were booked at higher price. That saw a little bit of deceleration and a mood change. But after that, in the last 3, 4 months, we have seen a consistent improvement in sales at the current market prices. So the cancellation event actually was a dampener, but we saw a revival in the market. And in fact, I would like to tell you in February, March as well as these 2 months, we continue to have strong leads, but unfortunately, because of the current COVID circumstances, the sales have not been effective. So once the situation improves, Himanshu, the finished goods will surely see a continued improvement in sales. The second phase, as I told you, which is in construction. While we are not deferring any customer to buy, we would like to give it focus once the OC is received. You are right. It also gives us step back time for the third phase. We will have to look at regulatory, customer and market impact, which we are evaluating now. To see how the third tower becomes a successful launch. We have some time. So that helps us to focus on the strategy for the third tower. We have not yet come to a conclusion, and it's important to be aligned to the market and the customer before coming to a conclusion as well as the regulatory environment. As far as our JV partner is concerned, the clusters for our knowledge and expertise of the real estate market, they are willing to -- we collaborate with them, and they're willing to listen to our intelligence and our approach. So there is no issue there.

Okay. And fourth one, this is more to the mid-income housing. Today, we have a unique situation in real estate, where the demand is not there at the current prices, means -- or a very low demand, okay? And no builder wants to reduce the prices because of various reasons, or I would say have become a disruptor even for the newer projects, which are getting launched in last 4, 5 years. How do you see this situation panning out in future earnings? At one price point where the new projects are also coming, we find the movement is slow. And also we are not going ahead in this sector for now 4, 5 years. And what role can you do, I mean? This is also in reference to the new projects wherein you will be launching, okay? So let's say a Saki Naka or a Pune or a Bangalore, the new projects which you want to launch. How are you looking at those projects or the phases? Because one is that you launch and the launch becomes slow, and then we have these issues of low sales. Can you do something of being a disruptor or how do you do it, I mean?

All right. Okay. Himanshu, good question. So I would not like to share a blanket answer. I'll be a little more specific. So it is not true that -- first of all, let me talk about the larger environment because you said that -- you first spoke about the larger environment, and then I'll come to our company. The larger environment today, it's not about price, it's about demand. Today the sentiments are quite poor. So people are worried about their own safety and own well-being. So obviously, they are -- where the price is INR 10,000 per square feet or INR 9,500, I'm just giving you a number, people are feeling uncomfortable to make a long-term investment at this juncture. But on the growth side, at this juncture, people have also realized that a home is the safest place to be. So the moment the opportunity comes and things get a little clearer, people will like to invest in home because even you know, Himanshu, in the last 2, 3 months, all other paper investments have proved us so wrong. At least this physical investment has 2 objectives. It gives you a safe place, what we call a safe haven. And what it does is, it is there. It is not going to disappear like some paper instrument. So what we see is, as the situation improves, the COVID situation, there will be a coming back in the market. Of course, the product reimagining and redesign is very important. You touched upon it, and I agree with you that the right product at the right price becomes -- and the right brand becomes very important. Now let's come to our specific company. We had a very super successful launch in Centralis last year. Centralis is the mid-premium project in Pune. Why did it do well? Because it was in an area called PCMC, where there are people who because of job security want a good home from a good brand. So if you recall, we sold in 3 days. We booked around 300-plus units. So that was -- so the right product at the right time at the right place does have a customer. So that's the most critical success factor. We launched Roots. We sold out the phase which we launched fully in the next 2 to 3 months. So we are of the view, whether it is a Tathawade project in Pune or the Acme project in Bombay or the Vicino with a larger and a more diverse product mix, there will be a customer because our brand as well as the product we are giving in the market will give us customers and we will use all kinds of go-to-market. This is the time when we are stepping back because of the situation and reworking on some of cost strategies. But there is a market and there will be a market. At present, unfortunately, people are not willing to put in too much money because they want to conserve their resources.

And if we see, I mean...

Himanshu. I'm sorry to interrupt, Himanshu. I think we have a few more people are requesting for questions to be asked, and we have limited time. So can you come back again if there is time available? Or otherwise, we can connect with you off-line.

Okay.

Thanks, Himanshu, for asking the questions.

The next question is from the line of [ Arpit Ranka from Koval Investment ].

Yes. So I had a few questions on Industrial City, which broadly got answered, but one specific question is with regard to realization on World City Jaipur. So in FY '20, realization went up to INR 2.5 crores. And we still have about 1,000-plus acres available to us. So is it on a sustainable basis that we see this shift from INR 2 crores to INR 2.5 crores? Or this is more like product mix or something like that?

So both your assumptions are correct. There is a product mix, as you know, an SEZ and domestic tariff area product mix. The domestic tariff area pricing is higher because in SEZ the pricing is a little lower. So it's a -- but the good part is, [ Arpit ] both if you do a trend line for the last few years have seen an increase. So it is not -- never have the weighted average prices gone down. So we believe that it should improve, but did we ever predict COVID happening? So I'm saying that sometimes things happen in our life which take -- just blow us away. But overall, I'm confident that with the current push towards industrial real estate asset, we should be able to sustain because we have been sustaining it for few years repeatedly both in the Chennai domain and in the Jaipur domain.

Absolutely. No, that helps. So on that very same point, so we know our product is good, and we have a head start on this category. But any specific states that have initiated conversations around this over the last 2, 3 months? Or this is -- that's not happened? Let's say, you already have accumulated land around Pune and around Dholera, as Chairman also mentioned, which have been there for like very many years now. So any chances of developing those parcels or a few other states kind of happening in the next, say, 2, 3 years?

Okay. One, Dholera, let me clarify, we have not aggregated any land. We have an MOU with the government and the MOU is to see how we can work together. And so that's about Dholera. And about the Pune, you are right. We -- you know we changed our strategy in Ahmedabad through aggregation to aggregated. So we could do the turnaround of land acquisition much faster. The Pune land was -- aggregation started much earlier. So it is in the aggregation mode. So it's taking a little time, but I want to tell you what we have done is we have therefore ensured that we safeguard the access to the land. So as you know, [ Arpit ], if the access is there, then the land becomes more valuable. Otherwise, people can have bargaining power. So one of the good things is the access. We have almost safeguarded the access, and we have built a certain aggregation. And we should be going about. And we have already other -- good thing is we have already seen interest from strategic and financial partners on that project as well. And the other good thing is the acquisition is at a sub-par price, so we will see an advantage there as and when we launch.

Yes, yes, if I remember, we've been accumulating like 10 years ago and all that...

Correct. Correct. So that's where it is no, time and value.

Okay. So broadly, so we can expect a good development in terms of growth on Industrial City in the next 3-year time frame due to the external factor and the positioning that we've had either by design or by luck or a combination of both over the years?

And also the fact that the existing customers have realized it's a safe place to work in.

Absolutely. Yes. No, no. I hope it all shapes up. And the second question is just so rent assets are not too many, just 2 generating about INR 80 crores of rental income from those 2 buildings. Any risk you see to that INR 80 crores in the next couple of years or something? Or you think given the old pedigree of tenants there and offices unlikely that any risk there?

So luckily, we have a very good pedigree of clients, and you would have seen the client list. So we do not see much risk in that, but we will be keeping -- surely monitoring and seeing what's the best movement forward.

The last question is from the line of Prem Khurana from Anand Rathi.

And so, sorry, I mean, my line dropped, so sorry, if I'm repeating the question. So the idea was to try and understand I mean you're working on these couple of launches, I mean Tathawade and on -- and -- but these have been pushed forward because of the COVID-19 situation. And what we've seen is, I mean, whenever we launch a project, I mean we get to sell and people find comfort in our brand and which is why they come and buy in bulk. So the idea was to understand -- I mean, what is that 1 thing that you would look for, I mean, if you want to have that sense that now is the time to kind of come and launch? I mean I understand these would be mostly intangibles, but if you could share your thoughts because launches have been very critical in the overall scheme of things for us. I mean, last year, we could do good because we had number of launches and this year, we were supposed to have more but then because of this uncertain time and COVID we couldn't do that, but if you could share your thoughts on what is that one thing that you look forward to kind of to be able to kind of get the comfort that now is the time to launch?

So since I have been answering a lot of questions, Prem. First of all, Prem, good to connect with you again. You are a very avid observer of our company, and we appreciate you for that. I would revert the question to you. What do you think is the right time to launch?

I don't know, which is why...

I am asking you mainly as a customer and as a investor, what do you think is the right time?

Which is why I said, and most of these would be intangibles. I mean, consumer sentiment is what people look for, but then it is very, very subjective, right? So I think you would have something that you tend to look for as an organization to be able to get that kind of comfort which makes you come to the market?

The easy ones first, okay, the tangible one first. We should be ready from a regulatory point of view, we should be ready from our go-to-market strategy and the reaching out to the customer, the sales strategy point of view, those are the tangibles, which practically we are almost ready, but caveat. Since the circumstances are changed, even the marketing and sales strategy, we should be foolish to keep it static, correct, Prem?

Yes. So -- yes, yes, so...

We are evaluating that at this point of time. And that evaluation can be as much mature as situations change. So the agility -- so one of the intangible factors is the agility to change your marketing and sales strategy in a tactical manner to cater to the changing requirements of the markets. So those are the very explicit factors. The second factor is actually a little intangible because it requires agility and alertness. And what do you -- how do you determine agility and alertness to the market is by seeing what's happening in the macroeconomic environment. As you know the FM is every day giving some policies or the other. How are those policies, macroeconomic policies impacting my specific project, you understand, from a regulatory point of view. And the second is, how is that micro market? What is the inherent demand? What are the inherent type of customers? Is that the right time therefore? If I see that in a PCMC, if we do -- and that doesn't mean only doing residential real estate demand. So how are the companies responding to people for their jobs? Is there some assurance being given to the employees. Once we understand some of these, just not only exhaustive factors, I just thought I'd give you 1 or 2 of these. That is the right time. We will put down a checklist. We have a checklist, internal checklist, of tangibles and intangibles, and we'll decide to launch. But at this time, it is better to be agile and alert to the market and the regulatory condition and then take a call. The thing which we are actually working on is the speed from input to output, Prem. That is most important. I hope I have given you some answer to your question. And we can have a separate off-line discussion where I will take your suggestions as well.

Prem, that was the last question as we have passed the scheduled time. I would now like to hand the conference over to Mr. Adhidev Chattopadhyay for closing comments.

Hello?

Adhidev, your line is in talk mode. You can go ahead, please.

Sumit, in case Adhidev is not able to log in, shall we just conclude?

Yes, Sangeeta, I would request you to give your concluding remarks. Adhidev is not able to come in this time. Sangeeta, please give your concluding remarks. Thank you.

So -- no problem. Friends, I know we are meeting in difficult times. The first thing is the safety and well-being of all of us and our loved ones. The second is the -- how does the economy come back, the government is every day taking some steps. Nothing is good enough, so we need more. And as developers keeping track of the market, keeping track of this macroeconomic condition, engaging with our customers, with our stakeholders, seeing how we can optimize and maximize work at our sites, how we can ensure technology is used as a driver to ensure connect with customers, collections -- care of customer and collections and doing more sales is some of the focus areas. So while all this happens, we will be, as Prem said, in the last question, focusing on how do we make our residential project launches successful, how do we take these land acquisitions, which we are discussing, wisely and mindfully take the right call on the commercial so that we give you a better future as investors and focus on the industrial segment, both at a company level and at a government and global level so that we can harness all our investments made. Thank you. Stay safe. Happy to have connected with you all this while. All the best to all of you.

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

Thank you, Ayesha, for all your help.

Thank you, ma'am.

Thank you, everyone.