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

Ladies and gentlemen, good day, and welcome to the Q2 FY 2022 Earnings Conference Call of Mahindra Lifespace Developers Limited. We have with us on the call Mr. Arvind Subramanian, Managing Director and Chief Executive Officer; Mr. Vimal Agarwal, Chief Financial Officer; and Mr. Sumit Kasat, Head, Investor Relations. [Operator Instructions] I now hand the conference over to Mr. Arvind Subramanian, Managing Director and Chief Executive Officer. Thank you, and over to you, sir.

Thank you, Margaret. Thank you, everyone, for joining the call. Good morning and welcome to our Q2 FY 2022 earnings call. As you all know, many of our key operating entities in the residential business like Mahindra Homes and Mahindra Happinest and all the entities in the Industrial Parts business are not consolidated on a line-by-line basis, and I'd request you to bear that in mind as you look at the financial statements. I wanted to start with a little bit of how we are seeing the demand trends in the 2 segments we operate in the residential and the industrial business and then talk about highlights of the quarter gone by in terms of our performance. On the residential business, we see factors driving the strong demand that we are all seeing. One, there's clearly still some pent-up demand from prior quarters when the activity levels were low, that is still coming through as we speak. But equally, that pent-up demand which is kind of a short-term trend is also getting boosted up by a changing preference and we've talked about this in prior conversations where our research as well as our conversations with customers who are coming and visiting us is clearly indicating that families through the lockdown period have realized that they're living with some compromises, which they now like to alleviate whether it is bigger apartments, whether it is nuclearization whether it's better amenity better managed development. So all of those are giving me a lot more confidence about the mid- to long-term demand in the residential segment. The third aspect is affordability with mortgage rates at an all-time low, that has boosted affordability. Combine that with the fact that household savings have clearly increased over the last 1.5 years with less discretionary spend less spend on things like holiday travel, entertainment, et cetera, which has boosted household savings. And finally, a supply-side consolidation, which is again very clearly visible across all the major markets. These are the factors that are playing into very strong demand. We are seeing this across price segments, across geographies in our portfolio. And also as we look at the peer group and others in the industry, this is a trend that is very clearly visible. Turning a glance to the industrial parks business. Again there, we are seeing -- and we've been talking about this for the past year, at least, a very strong shift in geopolitics which is favoring countries like India as a manufacturing destination and the central government, in particular, but also many of the state governments have now come to the party with very favorable manufacturing investment incentives. So the Atmanirbhar Bharat Scheme, the PLI schemes that have been announced have also been backed up by state-level incentive programs on sectors like renewables, like electronics, et cetera, which is auguring well for demand in the industrial business. But interestingly, and this was a comment that one of the participants at the last National Council meeting made, which I found very telling. If you look at the trifecta of demand growth, pretty much across categories, all consumer categories are reporting demand growth, high capacity utilizations in most manufacturing plants and low credit costs -- low cost of debt. That combination suggests that over the next few years, there just has to be an increase in manufacturing investment. It's almost inevitable. And that again, from a mid- to long-term perspective is a wonderful tailwind for us to ride on. If I look at the quarter gone by, I think these trends have clearly played on our rating performance. On the residential business, we've achieved quarterly sales of just over INR 300 crores to INR 303 crores and this is in what is typically a seasonally weak quarter. Q2 and particularly from Mumbai real estate tends to be a seasonally weak quarter because of monsoon. And the fact that we've been able to show almost 100% growth and many others have as well tells you that there is a very strong demand trend. During the quarter, we had a good mix of sales in both our mid-market housing, in our premium residential development as well as in our value homes. We had a new launch in Mahindra World City Chennai, where we launched the Mahindra Happinest project, which has received stupendous response, 348 units launched. And as of yesterday, we have sold more than 300 so 80% of the inventory, 80% plus of the inventory sold in 2 months of launch, particularly for the Chennai market, that is quite historic and that complement our marketing and our sales teams for that achievement. Looking ahead, H2, we have a slew of launches planned. In Q3, we should be having our Bangalore project on Kanakapura Road coming to market. We are also expecting to get the RERA approvals for launching the third tower at Luminare in Gurgaon, and we will be bringing our Villa project in Alibaug to market as well. And in Q4, we expect to be bringing our second Kalyan project, the land that we had acquired in March of this year that should be -- we should be in a position to launch that in Q4. So we have good launches planned in all our key micro markets in H2. Land, this is something that's been on all of your minds. Many of you have been nudging me even between these 2 investor calls that we've had, we continue to build very strongly towards the target that we had set out, which was to add about INR 2,000 crores of GDV year-on-year for the next couple of years, which will set us up well for the midterm -- the first set of goals that we have for 2025. We've concluded one deal in the Western suburbs Mumbai in [ Dahisar ] which is about 5 lakh square feet. It's a joint development project. It's again something that many of you have been asking whether we will be pursuing joint development and I'm very excited about that project. Further down in the pipeline, deals that are in advanced negotiations, 2 kinds of deals that I would like to highlight. We continue to look at some attractive outright transactions in both Mumbai and Pune, but also have some interesting society redevelopment transactions that are in advanced stages of negotiations. One of the operational disciplines that we have been focused on is how do we keep sales ahead of construction activity so we want our presales to be leading construction on a particular project, and we want collections to be in lockstep with sales. And I'm happy to note that we are tracking with that. We've had a strong quarter from a collections perspective as well, not just from a sales perspective and we will continue to maintain that discipline because I think that sets us up well for driving the cash cycle of the business, which drives IRR, which I've mentioned in the past is the key metric that we focus on in the residential business. Completions, we've had -- we got our OC for Tower C at Luminare, which was about 4 lakh square feet and we are expecting many phase-wise completions over H2 in both Mumbai and Pune. The IC&IC business is also hitting its stride and that is giving me a lot of confidence. I've been talking about this on the past several calls that inquiries were building up nicely, but conversions were a challenge because travel was restricted. We are now seeing those conversions happening as well, and we've had a strong quarter with about INR 75 crores of land lease revenue in our IC&IC business. So if I take that combination of INR 300 crores of presales in residential and INR 75 crores of land lease revenue in IC&IC, that's the run rate we need to be on to meet our goals for the immediate quarters and going into the next year. So I'm happy that we are starting to hit that kind of required run rate. We do have some catch up to do. This Q1 was lower than those numbers. But I'm very confident as I look ahead to Q3 and Q4, that we will catch up with that -- from it. Let me turn over to Vimal to summarize our financial highlights for the quarter.

Yes. Thank you, Arvind, and good morning to you all. Just mention a few aspects related to financial performance for Q2 F 2022 versus Q1 F 2022, and all these numbers are as per Ind AS accounting. The consolidated total income stood at INR 65.7 crores as against INR 164 crores in Q1 F 2022. The consolidated EBITDA, including other income and share of profit from JV stood at INR 31 crores as against negative of INR 16.8 crores in Q1 F 2022. The consolidated PAT after non-controlling interest stood at INR 6.5 crores as against a loss of INR 13.9 crores in Q1 F 2022. Your company has consolidated gross debt of INR 266 crores, while cash in hand and bank balance is INR 250 crores. The cost of debt stood at 6.7% on a consolidated basis, while stand-alone cost of debt for MLDL stood at 5.7%. I'll now request if we can open the lines for participants for further interaction. Thank you.

We will now begin the question-and-answer session [Operator Instructions] The first question is from the line of Adhidev Chattopadhyay from ICICI Securities.

First of all, I have to congratulate management finally getting on track for the land bank additions. First question, just if you could help us understand this new project in Dahisar. Is it -- what is the nature of this land? Is it a society redevelopment, is it a tuck project where you've taken up the balance portion from another developer or is it a brand-new land parcel? And by when do you expect this project coming to the market in terms of launch? And second question I have is, obviously, you alluded to the pipeline, so if you could throw some more color that within your -- how many deals we could expect to announce across markets?

Sure. Thanks, Adhidev. This is an outright fresh land parcel. It is not a distressed asset or society redevelopment. It's about just under 5 acres, very well located and as I mentioned, will give us about 5 lakh square feet of carpet area for sale. Going forward, we are well on track to achieve that INR 2,000 crores of GDV accretion from new land sales within this financial year. Fingers crossed, if everything falls in place, we should be slightly higher than that.

Okay. And sir, this Dahisar project, is there any GDV or any gross sale value sort of number you have in mind, you'd like to share with us?

So it will be about INR 1,000 crores, 5 lakh square feet, that market is at about 20,000 on corporate. So it will be about INR 1,000 crores.

And launch in a year's time or looking something...

In FY 2023, we should be able to launch that.

Okay. And next question is just on the IC business, sir you said the INR 75 crores of run rate is something you'd like to maintain over the coming quarters. Do you see any upside risk to these numbers or are you being conservative when you're saying this? Or is it something which we more or less see that we can achieve consistently?

Well, hopefully, upside is not a risk. It's an opportunity. But yes, look, I want to be a bit cautious because, as I said, we have seen the pipeline building up the inquiries building up in the previous quarters, but this is a lumpy business with long sales cycles and therefore, it becomes a little hard to predict a quarter-on-quarter performance. But I am seeing, as I mentioned, a strong pipeline of very advanced conversations for Q3 and Q4. So I'm cautiously optimistic that we'll be at or better in that run rate.

The next question is from the line of Parikshit Kandpal from HDFC Securities.

Arvind. First of all, I'd like to congratulate to you on this transaction. So do we assume that this is a turning point, a big turning point for the company now so that overhang of [indiscernible] very conservative kind of a company now with this transaction. Maybe I think this is one of the largest transactions in the history the company. From here on, it looks like to be a turning point, so do you allude to that?

So I don't know -- I mean, turning point is a bit dramatic, but we have been building up towards this on multiple fronts over the last year or so. It's not just about doing the transaction it's also about having that platform to deliver the project well, to sell well in a launch so all of those capabilities backdropping new land acquisition with confidence that you can bring it to market in a timely manner with great launch success and then deliver it within a time frame that you've promised is equally important. And we've been investing over the last couple of years in building those fulfillment and operational capabilities. So I think with every passing quarters, we are getting more confidence, with every launch that we're doing, we are getting more confident that we can step up to the plate. If you look at some of our recent launches, it's an endorsement that the thought process and strategy that we have on the residential business, about a product-led strategy seems to be working. Customers are responding well to that so that's giving us confidence. We are beefing up our construction capability. We are beefing up our design capability, so all of that kind of fits together.

Okay. Sir, second question is on you touched upon that you're looking at 2 types of transactions in advanced negotiations. One is the outright other is the societal redevelopment project. So put together the GDV on these 2 funnels have been losing about INR 5,000 crores?

Sorry, how much?

INR 5,000 crores.

No, no. These 2 transactions alone will be INR 5000 crores. As I said, we will typically look at individual projects with GDV in the range of between INR 500 to INR 1,400 crores, INR 1,500 crores at the high probability of the advanced pipeline today is sitting at about INR 3,000 crores if you convert over the next 6 to 9 months.

Okay. And beyond that, how's the prospective pipeline looking at. So first of all, I would like to understand how big is your BD team [ qualification ] happens here. So are you present in larger deals, which other peers are announcing. So do you get an opportunity to present yourself there? So how do you change these deals? And how is the overall prospect pipeline looking beyond this advanced product line which you have talked about INR 3,000 crores.

Yes. So increasingly, we are getting pulled into the market's slew of deals. We are competing head-to-head with all the leading developers on a couple of deals and so that's kind of good that we are seeing the flow, and we are being invited into that. We are getting noticed from the supply perspective. But, there are several kind of up-market transactions as well, which come to us in preference to others, either because of people we know or they want to work with brands like Mahindra so there's both kinds of deals; the sourcing happens through all the logical channels, which is the IPCs, the local and brokers, et cetera. We have -- as I had mentioned earlier, we've chosen to focus on 2 cities, Mumbai and Pune and even within those are now starting to prioritize some micro markets that we would like to definitely establish a presence in or deepen our presence in. So again, we've oriented our team towards those micro markets and starting to scout proactively for these projects.

Okay. Sir, just lastly beyond MMR and Pune, anything if you're working around in southern markets now because that market is where we have a launch coming up. So beyond that, you have to start planning from your project maybe 1 year down the line after that launch. So are you looking at any opportunities in the Bengaluru market.

Not immediately. What we'd like to do in Bangalore is maintain that beachheads of Kanakapura will take us through for the next couple of years. We want to get deeper into Bombay and Pune over the next 2 years and as we do that, we will certainly start expanding our presence in Bangalore as well. We don't want to vacate that market. We do think it will be the third market that we would want to grow in. But, the goals that I had shared in some of our earlier calls, we're getting to INR 2,500 crores of sales and INR 500 crores of industrial leasing by 2025. We think we need to make substantial progress towards that in Mumbai and Pune over the next 2 to 3 years before we then open up the third market, which, as I said, is almost certainly going to be the...

Sir last question, so beyond the INR 3,000 crores of the pipeline. So what are the other MoUs which we have in place which we can cement over the next 2, 3 years, depending on the CPs.

Sorry, what is the other?

MoUs, which we may have in place, which may be fructifying over the next 2 years depending on CP -- the owner has to meet or the developer will have to lease...

I mean there is a reasonable pipeline. I won't put a number on it, but as I said, INR 3,000 crores is the advanced pipeline, there will be heavily priced value in various stages of discussion early to kind of mature stages of discussion. But those are probably beyond the 6- to 9-month time frame that we see those closing.

Yes. So any value on that? Or will you not be able to give the assumption?

Too early to put a value because these constructs are also evolving, how much of it we will do as outside, how much would be joint development, et cetera. So too early to pin a value on this.

The next question is from the line of Manish Agrawal from JM Financial.

So my first question is pertaining to the debt figures Q-o-Q. So the debt in the residential business has gone down by INR 100 crores, while in the industrial business has gone up slightly by INR 30 crores. So what exactly is happening? Has the cash from Ashiana business come in?

No. So Manish, I'll request you to look at it at a total sector level, these are cash [indiscernible] optimize the overall fund utilization. From that perspective, you will see the position again reversing in the next quarter to the extent of the numbers you have just mentioned.

Okay. And Ashiana cash has come in?

Majority of it has come in, the balance will come in within October, over the next 1 week or so and that will be used to retire some of the debt in that entity.

Okay. And what was the price since the deal has happened?

Sorry?

The price of the deal.

We can't share too much of specifics.

Okay. Sure. And the second question is regarding the collection. So over the past 4 quarters, collections have been declined in Q-o-Q. So any particular reason or just in line with the construction cycle?

The construction has been extremely strong, but if you look at the aging of the outstanding, most of the amounts or the moneys are in the bucket and that is the only reason you are seeing the cash collected being low. In terms of quality of receivables, it's probably one of the best and as has been mentioned, is probably one more indicator about industry revival per se, and you will see very, very strong numbers in quarter so far as collection is concerned.

I think one of the factors to kind of keep in mind when you look at the commission numbers is, the Luminare OC came in, in early September and that has a large collectible there. So much of that collection will happen in this quarter.

Understood. And lastly, on the Ahmedabad activation plan. So when exactly are we looking to do and what sort of pipeline do we have in the industrial parks over there?

So Ahmedabad, we are now actively in the market. Whenever you see the new industrial park, it's really important that you get the right target market and the right profile of the anchor client. So while there are several people who are willing to do small transactions there, et cetera, we are being a bit cautious because we want to position the park in a certain way and want the right kind of anchor to be able to position that. Like in every such development, and if I were to take an example from a completely different asset class, which is retail, when you start the mall, you will want the right anchor tenants there and not just sell small shops to or lease small shops to multiple people. So that's the stage we are at. We are hoping within this financial year, we will have that fructification, but we don't want to be desperate and do business, which doesn't set the top up well for the -- the next 5 years needs to stand on the shoulders of what we do this year.

The next question is from the line of Nikunj Bahety from Quest Investment Advisors.

I have a couple of questions. Firstly, we are looking at a revenue pre-sales number of INR 2,500 crores from INR 695 crores as of FY 2021. So I believe new launches and completions would be the key metrics one has to track. I understand you previously touched upon the same, but can you highlight the initiatives we are going to take and are taking on the same front -- and can you also quantify the same in terms of annual run rate we are likely to see going forward?

Look, I won't give year-on-year targets for that sale, but as you rightly pointed out, INR 695 crore in 2021, INR 2,500 crore in 2025 so one could interpolate between those numbers and that's roughly the trajectory we need to be on and as you rightly pointed out, it will require new land parcels, new launches, new phases of existing projects, all to be activated with a regular rhythm to it. And I had mentioned that in H2 this year to start with, we have at least 3 or 4 important launches lined up. We are fully prepared, have done our homework and hopefully, we'll see the same success that we've seen in recent launches.

Sir, my question was more on -- more towards the kind of investment we are making to build that potential to scale up to that level. So I understand we are making new launches and adding to our land bank, but what are the initiatives which one has to actually undergo to actually have that kind of scale? And what are the key challenges to actually meet that scale, if you can talk on that?

Sure. So one, there's kind of financial investments and then there are capability of people development that one needs to do, which is not just quantifiable in money terms. On the financial side, as we had laid out earlier, if we have to add about INR 2,000 crores of GDV worth of projects year-on-year, it will require us to spend anywhere up to INR 500 crores per annum on land purchases and this is assuming much of it is outright. So [indiscernible] that investment will be lower to that extent but let's say, INR 500 crores per annum of land investments from a financial capability standpoint. On the people capability, a lot of work has been happening to -- as I mentioned earlier on the call in terms of building our marketing insight, we see on residential we are very clear that we want to be leading with differentiated products with very strong product-led strategy. For that, we have a very clear path and investment plan and capability building around consumer insight, product design and go-to-market, which is led by Viral and Jitesh from marketing and design, respectively. Back that up then with what we are doing on the sales side. We've built out a very strong distribution platform. Over the past 18 months, the number of active distributors with us, which is our channel partner base has grown almost 8 to 10 fold. And this is not just about empaneling our channel partners, it's about then working with them, getting them excited about doing business with us, engaging with them, we have a digital app with which we keep them informed on collaterals for every new launch. They're able to track their brokerage payments through that app, the status of their lease, what is getting converted, what is not. Look, best-in-class from an industry perspective, what we've developed in terms of engaging with our distribution base. But equally, it's not just about distribution it's about building out loyalty sales, it's about building our digital and presales. So all of those over the past 18 to 24 months has seen step changes in terms of our IT capabilities, people get reduced and process gets reduced.

That was really great insight. My second question and last question is on the marketing strategy again. So we see that when the project is launched, especially in case of affordable projects, there is initially a very good demand, but towards the end of the project, we see some fading of the demand. So how are we going to tackle the same and what are the strategies you are building, if you can share on the same?

Yes, that's a good question. And honestly, I mean, it's very hard to have a standard answer to that. Our approach has been we want a very strong high-volume launch. We want to be able to sell 60% plus at the launch itself. That sets you up very well for the rest of the life cycle of the project because then pretty much you become, from a financial perspective, cash flow positive -- net cash positive by year 2. Once you have that cushion, it allows you to then play the rest of the life cycle, either with an inventory-led story where certain kinds of inventories held back and brought later for future activations or with other tactical campaigns that one could do. And we've tried different things in different locations depending on what works for that particular location. So what we did in Happinest Kalyan, which was launched in 2019 was very different from what we did, for example, in Tathawade, which was launched in March this year -- February, March this year. And we will -- as I said, there's no one-size-fits-all answer, we will try different things and see how to manage that tail inventory that you rightly pointed out often becomes a challenge to address. So far, touch wood, we've had reasonable success in managing that product life cycle.

Last question, if I may. So you mentioned that the [indiscernible] land is likely to add INR 1,000 crores of GDV, if I'm not wrong. So can you also mention what is the construction cost, which this project is likely to incur? That's it from my side.

Yes, we'll not be able to share the specifics on this one. And the product, it still will either get developed at mid premium or maybe slightly up or lower than that and construction costs will be really dependent on what we finally decide at the time of going to market.

Yes. But roughly, I think in a market like that, one should assume that land and approvals is about 30% to 35% of the GDV -- construction cost is another 30% to 35%, I would say.

[Operator Instructions] Next question is from the line of Rohit from Samatva Investments.

My first question pertains to the Thane land bank. I just wanted to know if you could provide some numbers regarding what is the potential GDV from the project? And what kind of projects we're going to do there, whether it will be the affordable housing or the mid-market segment, any details on that part?

Yes. So Thane, we are still working through different end-use scenarios on that. There are different policy environments under which we can develop that particular project. It's a very large land parcel so there are some overall kind of whether it's the integrated township policy or other kinds of policies that exist -- so it's a bit early to assess therefore what the GDV value is going to be because it will depend on the mix between different asset classes that we eventually end up with there. I think we'll be in a better position to firm up our thoughts by end of this financial year, the first quarter of next financial year.

Okay, sir. My second question, I know it's a bit early, but I would just want to understand the redevelopment projects in Bombay because many of your competitors, they are going very aggressively on their redevelopment part. How big can this project segment be for the company in the next 3 to 4 years down the line?

Look, I think it can be very big. And particularly in Mumbai, if one were to think about it, there are 2 sources of land, either industrial land that has to get repurposed for residential or it is societies that have to get reversed and the third is, of course, slum redevelopment. We are currently not keen to do some redevelopment. We don't understand that space well enough but society redevelopment as well as industrial to residential kind of land conversion, we are active in both those spaces. I think both of these are going to be very large. We are, as I mentioned at the start of the call, as part of our advanced land pipeline, we do have a couple of society redevelopment transactions. But likely, the first few transactions we do, we will do it along with a local developer who understands how to manage societies, tenants, things like that because those are things we've not done before, and it is a very specific capability. So we'll work in partnership with a local developer in the initial few society redevelopments that we do.

The next question is from the line of Ronald Siyoni from Sharekhan.

Yes. Congratulations on good sales numbers and collections. My first question would be that after 7 quarters, you have reported operating profit, so was there any one-off item in showing this operating profit during the quarter?

No, there wasn't. It is purely operations, there's been no one-off items at all.

Okay. Because earlier that was in the mind that because of higher fixed costs, the operating loss will continue for a few more quarters before you turning operationally profitable. So we can expect our operational profitability to continue from here on or there can be times when it can result to operating loss booking?

Yes. Look, a lot of that will depend on how the IC&IC business shapes up. The IC&IC business, as you know, revenue recognition happens immediately and therefore -- and it's a high contribution business. So if -- based on what I spoke about earlier, if that demand trend and fructification of demand into actual leases continues to strengthen quarter-on-quarter, then we will see good profitability. With the residential business, it tends to be a bit lumpy because it's on completion of contract method. So quarters in which we have OCs coming in significantly will have revenue recognition and profit recognition in other quarters will be lower. So it will depend a little bit on the mix between these 2 businesses and how that performs.

Okay. Second question would be like right now, we are seeing a lot of inflation coming up in steel, cement, and this would be continuing for at least another 6 months. And if this kind of inflationary environment continues and suddenly, if post say 1 year, the interest rates start to inch up, then do you see that this thing will concern you over the longer term, say, not today or in 1 year's time, but maybe 2 to 3 years down the line that residential demand might see some dampening because of purely because of inflationary and easing up of interest rates.

Yes. Look, I think the cost inflation is real, and it's definitely pinching. When we put it together, we are seeing with all the commodities, steel, cement, copper, plastics, all being at all-time high. We are seeing roughly a 3% margin impact if we put all those impacts together. Now that 3% margin impact can be defrayed in multiple ways, which is what we are doing. One is we are going back to the drawing board and sharpening our value engineering and design efficiencies and trying to get, let's say, a percentage out of that. We are systematically taking price increases and this is something that we were doing even before these cost inflations. Vikas has spoken about this in the past, where we want to have a discipline where every quarter we take prices up by small amounts, 1.5%, 2% quarter-on-quarter because I think that builds confidence in the buyers also that the value of their property is growing. And the third is to look at sourcing efficiencies. Can we consolidate our buying, can we negotiate smarter, et cetera. And finally, the fourth which I think is unique for us and players like us is a cost of capital advantage, right? We have almost 300, 400 basis points cost of debt advantage compared to many of the other developers in the market. So we should be able to turn that into an advantage from a cost perspective. So if we put these 4 together, yes cost inflation will, of course, continue to be a concern. Nobody wants cost to be out of control but I do think there are enough tools in our toolkit to be able to address that.

But I was more talking about the industry demand. Can it dampen the demand this kind of scenario over the post 2 years?

I don't think so. I don't think the demand is that price elastic, that 1%, 2%, even if -- and many developers have been talking about taking prices up by 2 or 3 percentage points. We've not seen a reduction in demand. In our own portfolio, we take projects that we've done good launches, and we have taken prices up by 6% to 10% after the launch, and we're still seeing a steady increase in demand. So I think with a category like real estate, customers are making a long-term commitment. I don't think the 1% or 2% swing in pricing is going to throw them off.

And my last question would be, during last year also, we have seen suddenly launches increasing, so has there been any changes in the time period in getting the approvals, whether this situation of getting approvals used to take a much, much longer time period earlier and launches are few. But suddenly, we see a few slew of launches in the industry. So not only to the company level, is it there is a general decline in time period to get approvals and then bringing the project to the market earlier than before it used to be. And is it specifically related to a region-specific thing like Mumbai or Pune or is it across India?

Yes. Look, I think this needs to be viewed along with the various development rule changes that have happened. So with BCPR in Mumbai with the unified DCR in Pune and Mumbai suburbs, et cetera there's been a lot more [ qualification ] of what is possible, what is not, which has reduced the ambiguity and discretion, which used to cause delays earlier. So I think that has contributed strongly to -- let me say, there's more predictability and approvals, whether it is faster or slower -- in most cases, it is starting to move faster, but I'm still not confident enough to say across the board, it has become faster.

The next question is from the line of Anish Jobalia from Banyan Capital Advisors.

So I have the following questions. You mentioned in your opening remarks about some of the projects that you will be launching in H2. Would it be possible for you to pencil that out to in terms of square feet, what are you expecting?

I don't know the numbers offhand, but Sumit or Vimal do you have that?

So Anish, I think, as Arvind said, we are talking about Luminare project, which is a single tower that entire tower is expected to be launched this quarter. In Kanakapura, we are talking about a 7.5 lakhs square feet of total project area. We would open a couple of towers in that complex in that entire project, not everything will come up together as the Phase 1 gets a good response these next phases will get launched, the way we have done in Tathawade or Chennai. In addition to this, we are also talking about opening some additional phases in Tathawade, Alcove, another project that we have launched earlier this year, including the Chennai 1, which we have recently launched, given that it has got almost 85% sold out, we will bring in the additional inventory there. So overall, we are looking at probably more than 1 million square foot of inventory being added or opened up for sales in H2.

So there is -- I think there's a slide in the investor presentation. If you look at Page 19, it has the area for each of the forthcoming projects. Now keep in mind, as Sumit said that not all of it will be brought to market together, so some of these will be phase-wise launches.

Sure. Second question is what would be the contribution to -- our this quarter sales from completed projects?

I think we have a very limited inventory Anish, in terms of completed sales, the inventory that we have is largely Luminare project which got [ received ] in the month of September. So I think we are seeing a very strong demand in that particular project. We are hopeful of probably bulk of the inventory in Luminare should get sold during this quarter. So overall, the value of the inventory that we have is about excluding Luminare is about INR 25 crores, INR 30 crores. Luminare is the bulk of inventory.

So would it be possible to break up your -- this.39 million square foot of sales between some of your important projects. I mean I know that around INR 14 lakhs square feet in Chennai, but others, if you can help us understand that would be helpful.

Sorry, I could not follow the question, Anish.

No. My question is -- the follow-up question is to understand it better would it be possible for you to break up your 39 lakh -- sorry, 0.39 your sales into numbers between your major projects that got sold in this quarter, just to understand what has moved better versus...?

We have mentioned that in our investor presentation in one of the slides, project by project sales side. I mean [indiscernible]. So if you were to look at the last quarter, what was the total volume and look at the volume today, the differential will give you the value during the quarter.

Okay. And could you provide some texture around how we were able to lead a significant sales conversion as that NWCC project would be helpful to know this strategy and overall, what has changed for us going forward?

Blessings of the almighty and hard work. It's always the combination of the 2. As I said, we've spent a lot of time before every launch on getting the product right. So this was another example where the marketing team did a lot of research to understand what's the right product for that particular micro market, how to position it, what features it needs to have, et cetera and then that is backed up by a very strong sales performance, again, activating the distribution in the Chennai market. China is less distribution-heavy market compared to Mumbai but despite that, we were able to get almost -- I think it was 60% plus of our sales through distribution. Mahindra World City Chennai is also a market where we enjoy very strong loyalty sales and corporate sales because of corporates present in Mahindra World City so those 2 verticals also contributed strongly.

As there are further questions from the participants, I now hand the conference over to Mr. Arvind Subramanian for closing comments.

Thank you, Margaret. So look, as I said, we are building up steadily and strongly and that's the most important from my perspective that there is no flash in the pan kind of performance. If we look at our run rate for the quarter gone by, just to reiterate the point I made INR 300 crores of sales on residential, INR 75 crores of leasing on the IC&IC business is the run rate we need to be at for the immediate quarters, so that we can build towards those 2025 goals of INR 2,500 crores and INR 500 crores. I am seeing strong demand, both in terms of depth as well as breadth in the residential business over the next several quarters. I don't think this is a short-term phenomenon. And on the industrial business, because of the reasons I mentioned in my opening comments, structurally, I think there will be a phase of growth capital formation and manufacturing investment in the country and Mahindra World City and Origins, our assets are best positioned they're among the leading destination for manufacturing in those particular markets. So I think the next couple of years hold a lot of promise for us. We are candidly a small business. We have a lot to do ahead of us, but we are building well towards that. Thank you again, everyone, for joining the call and we look forward to staying in touch. And wish everyone a very, very happy Diwali and a festive season. I do hope the next year is far, far better than the last year has been for all of us at a personal level, at a professional level and for the country as a whole. Thank you.

Thank you. On behalf of Mahindra Lifespace Developers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.