Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q4 FY 2021 Results Call of Puravankara Limited, hosted by Emkay Global Financial Services. We have with us today, Mr. Ashish Puravankara, Managing Director; Mr. Vishnu Moorthi, Senior Vice President, Risk and Control; Mr. Abhisek Kapoor, Chief Operating Officer; and Mr. Neeraj Gautam, Vice President, Finance. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Rahul Jain of Emkay Global. Thank you, and over to you, sir.

Good evening, everyone. I would like to welcome the management and thank them for this opportunity. I shall now hand over the call to the management, Mr. Neeraj Gautam, Vice President, Finance, for the opening remarks. Over to you, sir.

Thank you. Good evening, and warm welcome to all of you. I hope all of you and your loved ones are safe, doing well. Thank you for joining us for Puravankara Limited's Fourth Quarter and Financial Year 2021 Conference Call. My name is Neeraj Gautam. I am Vice President, Finance of Puravankara Limited. The quarter's presentation and financial results ended March 31, 2021, are uploaded on the stock exchanges. I'll start with a brief update on the business and highlights of the quarter and the year. Following that, my colleagues and I would be delighted to answer any questions you may have and take suggestions that you would like to give us. The last financial year has been a challenging one. Last year, post the first wave of COVID-19 pandemic, economic activities seemed to be coming back on track and the effects of COVID appeared to be receding. However, we concluded the year on a positive note in Q4. The recovery in the sentiment towards the real estate sector across India, which started during Q3, continued to gain momentum during Q4. The second wave of COVID during the end of the year resulted in a higher number of infections and loss of life. However, the state governments have been considerate and permitted construction activity during the lockdown period. As a result, our construction sites are fully operational with appropriate COVID norms. We expect the sector to continue its recovery in subsequent quarters. Coming to the business highlights, the pandemic accelerated our digital initiatives, including completely digital launch, and online booking of residential units. The launch -- we launched 6 projects during the year, Provident Woodfield , Purva Atmosphere, Purva Aspire, Purva Emerald Bay, Purva Promenade and Purva Clermont. By launching the Purva Clermont project, a world home collection in Chembur, we have reentered Mumbai market. Moving to the sales highlights. Q4 FY '21 continued to witness a strong recovery and a significant jump in sales, which stood at 0.99 million square feet, up by 46% year-on-year basis. For FY '21, we have clocked 3.43 million square feet sales, up by 21% year-on-year basis despite a much weaker Q1 numbers. As a result, sales value during Q4 FY '21 jumped by 98% to INR 753 crores compared to INR 380 crores in the previous year. For the full financial year, sales value increased by 28% year-on-year basis to INR 2,202 crores compared to INR 1,714 crores during the last year. On the project completion front, we have completed Kenworth Phase 1 in Hyderabad and Sound Of Water Phase 1 in Bangalore totaling up to 1.2 million square feet during FY 2021. Moving to the financial highlights. Our consolidated revenue for Q4 FY '21 was INR 339 crores compared to INR 304 crores in the previous quarter, implying a quarter-on-quarter growth of 12%. EBITDA for the quarter was INR 114 crores compared to INR 101 crores during the same period last year, up by 13% year-on-year basis. During the quarter, we achieved the profit after tax for the quarter of INR 8 crores compared to a profit of INR 0.35 crores in the previous year. In addition, we continued to generate operating surplus after interest and taxes, which was INR 72.1 crores during the quarter. The sequential improvement in operating inflows continued during the quarter. We collected INR 441 crores and impressive rebounds from INR 188 crores during Q1 FY 2021 and is up by 79.76% on a quarter-on-quarter basis compared to INR 375 crores during Q3 FY 2021. The revenue recognition for the full financial year FY 2021 was muted due to lesser possession and handover of units compared to last year. As a result, we recognized revenue of INR 1,054 crores. EBITDA was INR 374 crores. Our operating surplus after interest and tax was INR 496 crores for the year. And positively, we have reduced our net debt by INR 237 crores. On an overall basis, we saw an increase in interest among homebuyers looking for larger homes, better amenities and projects that are well designed, driving consumers to consider Puravankara and Provident, both well known to offer those features. We have a healthy launch pipeline for FY 2022 with a new vertical Purva Land for plotted development projects. The resilience demand of residential units, including residential plots is encouraging for us. We are fully poised to capture the upcoming recovery in the residential sector with our well experience and capabilities. In Q1 FY 2022, we have raised INR 685 crores through a strategic exit from a commercial underdevelopment project. We are using these funds towards supercharging our growth and partly towards reducing our debt. We have an update about our Board as well. We are delighted to inform that 2 eminent and experienced professionals have joined our Board; Ms. Shailaja Jha and Mr. KG Krishnamurthy. Shailaja Jha has been a civil servant, a technocrat and academician with over 30 years of experience. She is an associate professor with S. P. Jain Institute of Management and Research. She worked with the Government of India, L&T Infotech, Cognizant Technology Solutions, Wipro Limited and Infosys Limited before starting her stint in teaching. She holds the MMS degree from BITS Pilani. Mr. KG Krishnamurthy is an IIT Kharagpur alumni with the management degree with Jamnalal Bajaj Institute of Management, Mumbai. He was Managing Director and CEO of HDFC Property Ventures Limited and a Senior General Manager of HDFC Limited prior to that. He has been into real estate financing for last 4 -- 40 years and in [indiscernible]. The company will benefit from their profound knowledge and experience. With this, I conclude my remarks. Thank you for all joining us at this conference. We're now happy to answer any questions, comments, or suggestions you may have.

[Operator Instructions] First question is from the line of [ Kanika Rastogi from CPS Capital ].

Recently, there have been some news articles mentioning land sale by Puravankara to Godrej. Can you please comment on whether the transaction has been completed? And how is it going to benefit us?

Sure. So Puravankara currently has a portfolio of 9.5 million square foot of office space. So these are lands already available to the company, and we've identified them as good locations for developing office. As a strategy about a year ago, we took a call to exit 2.5 million square foot out of the 9.5 million square foot. We'll continue to build the 7 million square foot that we already have at the right opportune time. So out of the 2.5 million square foot, 1 million square foot is what we sold to the fund. It was a commercial development project. The transaction is completed. We have received the first tranche of money, which is around INR 500 crores -- INR 512 crores. The balance will be received shortly.

Okay. Okay. That's helpful. So on a general strategy basis, we have seen that Provident funds were the focus area for the group. Now given people see for more space driven by work from home, do we still see the smaller, affordable segment being the faster growth engine?

I think Provident will continue to be the flavor in this country. So I think people from a smaller 2-bedroom want to get into a bigger 2 bedroom. People from even smaller one want to upgrade to a provident, which is a newer development, slightly larger, modern amenities, et cetera. Having said that, we are sort of keeping our eyes on the ball and seeing how long or sustained this work-from-home concept will continue, right? I mean, is it a 1-year blip? Is it a 2-year blip. Eventually, we are already seeing a lot of companies make certain sounds to say that people need to come back to work. Collaboration is important. There's a lot of cross learning that happens on the job. But I think both Puravankara and Provident have done well. I mean if you look at our sales.

Also from the customer's point of view, affordability will continue to be a limitation. And hence, they will only be able to afford a certain ticket size. So 1 has to cater to that ticket size, and that's the largest part of the market. Having said that, obviously, we are making product innovations to be able to deal with the pandemic challenges and work from home in a manner which suits these customers' needs while we address the ticket value. So there are product innovations that are available in the market, which will solve that challenge, which we're talking about. But having said that, the pandemic definitely has not changed the wallet size and the ticket value -- affordable ticket value of the customer.

Okay. I have some questions on construction activity also. How is the progression in construction activity being? And are there any labor issues on the ground or like any wage hikes or something?

So far -- so we were fortunate. I think in most cities, construction activity was allowed. But while they were allowed, I think there was a slight disruption, I would say, maybe 35%, 40% for about 30, 40 days on account of free flow of material availability and infusion of more labor, increased labor. But otherwise, sites were on. Now that things are opening up, they are almost back to about 85%, 90%, and the disruption was only for about 40 days. Also, the fact that we went out of -- we as a organization has taken a lot of effort to vaccinate all our labor on the site, -- has also enabled us to retain the labor as well as increase the labor force quickly. So that's been helpful, the effort in terms of vaccination drive.

Okay. If I may just ask one last one. Does the raw material costs seem to have increased sequentially? Can you please give some color on that? And with the increase in steel and cement prices, what will that change look going forward? And how are we going to manage our margins and profits with these rising input costs?

So I think everyone is aware that the way steel and cement prices have acted over the last, I would say, 1 or 2 quarters. I think we are aware of it. We hope and believe that this may be a short-term blip and may come back to normal levels. But in the meantime, we have -- almost on a monthly basis, we are reviewing our selling prices across all our projects depending on which stage of construction these projects are in and how much balance work to go is. We have revised selling prices upwards to somewhere capture these increases in selling price across projects. So if you see our presentation, which you see Puravankara, the prices for completed, we increased there by 10% and ongoing projects were -- also went up significantly. One reason of that 22% increase in the Puravankara selling price, one is also the product mix because we had Chembur launch there, but also the ongoing projects, we are reviewing prices on a monthly basis and seeing where all there is room to increase, we're increasing the prices.

[Operator Instructions] The next question is from the line of [ Akanksha Sharma from JK Advisors ].

Can you throw some light on how the first quarter has been until now considering the disruption that is caused due to the second COVID wave?

I think the first quarter has been muted. The first time around, I think the only hinderance really was the physical lockdown. People were still at home. They were still -- the genuine homebuyers were still considering reviewing, taking calls. The second wave, I think, people were falling sick, families, members were falling sick. There were some fatalities as well. So it was muted. But I think this month, we're seeing some turnaround. And we hope that by July, August, the numbers should come back.

Very helpful, sir. Sir, if you can comment a bit more on what you see in terms of the sales momentum going on from the Q4 level?

If we -- if Q3 and Q4 is a benchmark, I think coupled with the 14.5-odd million square foot of new launches that we have planned across cities of Pune, Mumbai, Bangalore, Chennai, Cochin between both the brands of Puravankara and Provident, which basically gives you the different ticket sizes as well. We are confident that the momentum of sales should continue, if not get better.

Got it. And in our focused markets, what has been the consumer behavior this time versus last year? And is buying a house now not being prioritized or is it being deferred? So what kind of situations are you facing?

Our sales numbers are there, right, for you to understand the trend. I think one thing to this -- one positive thing to this pandemic, people have realized the importance of owning their own home. So we are seeing that. There's a huge polarization, of course, towards the stronger brands. So I don't know if everyone is experiencing the same level of sales. But quarter 3, we had done 0.92 million square foot of sales, which is the highest we had ever done in a quarter without a launch. Quarter 4, we beat that record and we have done 0.99 million square foot, again, the highest that we've ever done in a quarter without a launch. And please note, this is on account of steady, almost monthly, small but sure price increases, first of all.

Okay. Got it, sir. Sir, also if I can just squeeze in one more question. So from a strategy perspective, if you're confident of the residential up cycle, does it not make more sense to be really aggressive on business development right now as and you know before the cycle actually kicks in?

Absolutely. So we are obviously leveraging the brand. We are constantly in the market. But like we said, we'll find the right -- we have enough land asset base available. So we are working on -- so the 14.5 million square foot is already in various stages of approval. We are working on our existing land assets that the company already owns in terms of initiating design, concept, et cetera. We are also in the market to look for good joint development and look for opportunities, so right.

The next question is from the line of [ Niraj Singh from KB Advisors ].

I just have a few questions. Firstly, on the realization, have we seen any kind of improvement on the residential side? And now that the volumes have been good in the sector for, let's say, last 6 to 9 months, do you spot any opportunity for price hikes in the projects? Or will that have to wait for a later title -- for a later stage and cycle?

We have been increasing prices almost -- I think if you look at our quarter 3 versus quarter 4, our realization has gone up. It is on Page 16 of our presentation, sales quarter 4 versus quarter 3. There's a 10% increase in Puravankara completed. There's a 22% increase in the ongoing projects of Puravankara. So we've constantly been taking the prices up.

Including Provident.

Including Provident. If you look at Provident ongoing, the realization has gone up 12% from quarter 3 to quarter 4.

Okay. Okay. That's helpful, sir. Another one on the residential side is, would it be possible for you to quantify, for the quarter and the year, the percentage breakup between the major cities?

So I'll give you a ballpark. It's there. Again, I think that number should also be there in the presentation. But I think ballpark, Bangalore would contribute about, I would say, 40% of our business. Chennai, Cochin, Coimbatore and the other Southern cities and Hyderabad contribute another 25 -- 26%, and the balance would come from Mumbai and Pune.

Got it. Got it. My next question is on the construction activity. Could you throw some light on the construction activities as to where the projects are headed? How the customer inquiries are, whether it is online or offline? And if it would be possible for you to quantify as to if there is any delay in the ongoing projects?

So yes, there was an impact of the first wave of the pandemic. And hence, in fact, RERA did extend the time line for completion of the projects by, 6 plus 3, 9 months at the option of the developer. While we were coming back to normalcy levels in the last quarter, obviously, the second wave hit and there was some impact, but we are returning to normalcy again. So having said that, there is a delay in terms of delivery of the projects. But in terms of customer inquiries, definitely online and our digital platforms and our marketing initiatives that we've had, we have built over time and the distribution we have, has certainly supported the brand in delivering the kind of numbers and the growth numbers that we have mentioned in our presentation. And we believe that the online and digital platform, especially our bookmyhomenow.com has enabled us to launch projects digitally, which was never the case. In fact, we did the first digital launch in the country, and we have continued to use this online booking platform, booking engine and improve that -- enhance that capability significantly over the last 1 year, to create a very, very real online buying experience. So I think that is a big shift that real estate was never bought online, and that is a big shift that the customer is willing to evaluate and take those decisions online now.

Got it. That's helpful, sir. Just one last one on the commercial office side. Could you share some detail on how the demand trend looks like in the market on the commercial side? That was the last one.

So we, as an organization, have already built about close to 3 million square foot, but we have sold that, but we still continue to manage the leasing and the rents. So far, I think while there's no sort of economic impact on Puravankara as a company, but we make a management fee, managing the lease and the rent collection, et cetera. The rest have been coming in almost at 95%, 98%. So there's no hindrance there. About our future portfolio of office that we have planned, fortunately, again, for us, I think the locations are very good. So for example, we have a large office development in mind on Bellary Road in Bangalore, which we believe today is the Sunrise destination. If you understand Bangalore Whitefield and outer-ring road, which were the hubs of IT office, today, those are done, dusted, it's completely built out. Today, we are seeing office development come along the new airport road, which is where we want to consolidate. So that is 1 location where we had land. So similarly, about 3 or 4 projects, totaling about 7 million square feet, we believe that they are strategically placed. Of course, before we start construction on those, we will see how the sentiment and the market is. On a general moot point, I think the disruption in office would probably be there for 1 year, 1.5 years. I don't believe it will be more than that. Yes, there may be concepts like flexibility in terms of timing or coming into office 5 days a week, which may affect the demand by maybe 5%, 10%. But the companies about 7, 8, 9 months ago who made announcements that 50% will be work from home, 100% will be work from home, I don't think that is a reality. I don't think everyone has the flexibility to have that working space at home or that quiet corner, besides the fact that there is some wee bit of efficiency that comes in group working in collaboration, et cetera, which you can't get sitting at home. I think this office space sort of confusion should normalize over the next 1.5 years.

Just to add, we believe that vaccination, as it rolls out towards the end of this year, will certainly bring back people to offices. And if you see in the Western markets, directions are being given for employees to be back in the office because it brings the business back and efficiency back. We see that trend more likely to continue in India as well. I mean by the end of this year, once the rollout is -- of the vaccination is quite comprehensive, especially in the urban areas, I think companies will want their employees back. And in fact, what we are hearing is that a lot of companies are getting feedback from their employees to get them back into the offices because that's required. So on an overall basis, we believe that this will stabilize. It's a short-term blip, but I think this vaccination and the overall normalization of the economy will enable to get the commercial demand back in the market.

[Operator Instructions] The next question is from the line of Vaibhav Kacholia from VK Capital.

Ashish, you mentioned that we have 1.5 million square foot of office space, which we are looking to monetize. So any targets in terms of time lines? And what could be the value of this, part of the thing which we are looking to sell?

No, no. So I said out of our portfolio of 9.5 million square foot, a year ago, we had taken a strategic call to exit 2.5 million square foot. One part, we have already concluded the transaction. The other one, we are still in discussion.

Okay. And what could be the possible value? So out of 2.5 million square foot, 1 million square foot is sold. So I'm saying the remaining 1.5 million square foot, what could be the possible value?

It all depends on what we finalize. So we can -- we don't want to sort of give a guidance on that number. I think as and when we conclude the transaction, we will let you know.

Okay. Got that. My second question was, Ashish, like what kind of sales can we aspire to do in the long run or maybe even in the shorter term like quarterly or annually? Can we increase on this 0.99 million square foot once things stabilize post the COVID thing, maybe say by third or fourth quarter and in FY '23?

Absolutely.

Okay. So like what kind of numbers? Can we do like 1.5 million square foot, 2 million square foot per quarter? Is that what we would aspire to do?

It all -- okay. Now when you combine ongoing projects with the kind of launch pipeline we have, I don't believe 1.5 million square foot is a difficult target to achieve. We should be able to even cross that. But sales in a specific quarter is a function of ongoing launches. So for example, in one quarter, if we get 2 launches, I think we can surpass even probably 1.75 million square foot or 2 million square foot number. In certain quarters where we don't have a single launch, that quarter may end up at 1.1 million square foot, 1.2 million square foot, right? But yes, to simply answer your question, I think achieving with the launch pipeline and the ongoing projects, once the sentiment further improves, I don't think achieving 1.5 million square foot should be difficult.

Got that. And what would be the EBITDA margins for our residential projects? And what would be the EBITDA margins for our plotted developments?

EBITDA margin for our Puravankara projects is close to 30% and Provident projects is close to 20%. Plotted development project, we'll be making 35% plus EBITDA margin.

Okay. So plotted margins are higher than residential? And is there some constraint in terms of the market's ability to purchase plots? Or is that a more profitable business for everyone, all builders and us?

It's -- we have launched the plotted development project Provident Woodfield during last financial year. Sales and the realizations, both are fantastic. And plus, in addition to that, project will be completed in -- only in 2 years' time period, and we'll get the entire selection in, recognize all the revenue. And hence, to that sense, plotted development projects are giving better revenue and shorter cycle of money -- payback period and better IRR on investment.

Got that, got that. Fantastic. One last question. What is the long-term debt level which we expect the company to be in the range of, sir?

At the end of financial year, we were at the debt of INR 2,299 crores. Out of that, by now, we have already paid around INR 200 crores. And we are...

I think INR 1,900 crore -- INR 1,800 crores, INR 1,900 crores is a comfortable number, which I think, we are hoping to achieve in the next 12 months.

And we will not be looking to reduce it further from there. Then we'll be looking for new opportunities post that level, is it?

I think yes, it all depends on what -- see, one is, you don't want to have a lazy balance sheet as well, right, and just get the entire debt down. But it depends on the kind of opportunities we have. But from an operational level, I think INR 1,800 crores to INR 1,900 crores is a comfortable number is what at least our short-term target is. Once we achieve that, I think we will review.

The next question is from the line of [ Seema Lamba from T&A Advisor ]. [Operator Instructions] The next question is from the line of [ Seema Singh from AB Advisor ].

Just wanted to understand your excellent collection. What is the reason for this jump? And what would be the breakup of that collection like how much is from residential and how much is from others? If you could help with that, please?

There is a growth in collections in compared to quarter-on-quarter basis in this financial year. During the beginning of the quarter, we collected INR 188 crores, but the end of the quarter, there is a continuous growth in the collection. Our collection is 90% -- our collection is from the residential projects and 10% of our collection is from our lease rental and sale of small commercial assets.

And I wanted to ask on the Karnataka stamp duty part. I guess that comes into effect from April. So how much of our inventory would be eligible for this cut?

Could you repeat that question?

That question.

I was talking about the Karnataka stamp duty part. How much of our inventory would be eligible for this cut?

It's the stamp duty cut, Karnataka.

Karnataka has not announced any -- that was for apartments under INR 30 lakhs. So that will not be applicable to Puravankara or Provident, so we won't benefit from that.

Understand. Understand. And sir, 1 last question on the genral strategy. We had seen that Provident projects was the focus area for the group. Now given that people are working from home, do you still see smaller reportable segment as being the faster growth engine?

So I think Abhisek answered this question a little earlier. So yes, I think there's a general trend for people to take 1 step higher, like 1 size bigger. So even that is from a product which is smaller than a Provident product, people are upgrading into a Provident product. While there is work from home and while there is this pandemic that's going around, I don't think people's affordability has changed. So Provident with its ticket size, with its functional design, still continues to be extremely desirable. Having said that, we are trying to make certain design changes within the Provident apartment itself in terms of creating a certain niche to sort of facilitate a work from home if required. We're also looking at certain community business centers within projects as a part of the clubhouse, which will give the residents that flexibility.

The next question is from the line of Vaibhav Kacholia from VK Capital.

Sir, can you tell us a little more than updates about the plotted development sales plans and some updates on that?

So we are quite excited with this new vertical. We did our first launch in fact, Woodfield, which was on 11th of May 2020, 9 days after the lockdown in Bangalore opened up. Within that week, we sold out about, I think, 75% of the entire project within the first week at a 14% higher realization in that micro market. Entire launch sale was done online end-to-end from the presentation to the booking to the application, everything was done online. So there is a certain section of the market that likes plotted development for various reasons. I mean it is an investment in land. You get the flexibility to buy the land today and build their house over a period of time. So a lot of markets like I think Bangalore, Chennai, Southern markets, obviously, but also, we are seeing that benefit or that interest in cities like Pune now. So we have created a separate vertical, which is called Purva Land. So you'll have Puravankara that does the office and the luxury housing, you have Provident that does the premium, affordable housing and Purva Land will be focused on plotted development. The first project of which has already been launched, like I mentioned, Woodfield. Under Purva Land, we have now identified an additional 5.5 million square foot which will be launched over the next, I would say, in the next 5 to 12 months across the cities of Bangalore, Chennai and Coimbatore. We are also in talks with a few land owners to take this product to Pune.

Right. So sir, why didn't we launch any other projects in FY '21? Given the great response we had to the Woodfield project.

We launched 6 projects in FY '21.

No, no plotted.

Plotted development.

Yes.

So any new project to launch, there is a time required from the time you acquire the land, get the clearances, do the due diligence. So while we have a pipeline we have accelerated and sped up the whole process of getting sanctions, planning and ensuring that we deliver on the whole project as well. But having said that, it's -- for a brand like us, it's very important to do it right and to ensure that the trust in the brand is maintained. So -- that process takes time. And I think now we will see that delivery happens.

You will see an extremely large plotted development launch, hopefully, in Bangalore in the next maybe 30 to 45 days.

Okay. Fantastic. And you said 5.5 million square foot in the next 1 year or so approximately, right?

Next 1 year. Page #17, we have given you our launch pipeline under -- with brands, so you have Puravankara, what are the launches quarter-wise; Provident, what are the launches; Purva Land, what are the launches.

Got it. Fantastic. And so what would be the value of this 5.5 million square foot, approximately ballpark range? In fact, earlier also, there was a news article that some INR 2,200 crores or something of land sales is what we were targeting when we had launched Purva Land, right?

So I think our value today would be about -- I think it should be about INR 2,500 crores.

Of this 5.5 million square foot, which we are launching in the next 12 months?

Yes. I think what we've covered right now and there is clear visibility is 4 million square foot, which is there on Page 17.

Right.

Right? I think one, we're just waiting to conclude. So of that 4 million square foot, I think the average value should be about -- it should be about INR 1,500 crores.

Okay. And then if you add that 1.5 million square foot further, then it can go up to INR 2,500 crores, is it?

INR 2,200 crores.

INR 2,200 crores?

Yes.

Okay. And sir, at the overall company level, what kind of EBITDA margins will we see going forward in FY '22, FY '23?

So as I mentioned earlier, the EBITDA margin for plotted development is better than our residential luxury project as well as affordable housing project. On a weighted average basis, we will be making EBITDA margin of 30% plus.

30% plus?

Yes.

On an overall company basis?

Yes, overall company basis. And currently also, we are making EBITDA margin of 30% -- 27% to 30% for Puravankara Limited; 24% to 27% for Provident Housing; for plotted development, our expected EBITDA margin are better than the residential luxury project as well as the affordable housing project.

Right. Got it. And Provident, you said would be closer to 20% in the future, right?

Yes, 20% to 25% in the range.

20% to 25%.

Some of it is making better EBITDA margin, some of it will be less.

The next question is from the line of [ Seema Lamba from T&A Advisor ].

Very encouraging numbers, first of all. And we are seeing growth over the last 3 quarters. But some questions, I just wanted to ask around the balance sheet there. We continue to have more than 1/3 of our revenue going into paying interest. So when do we see that to change?

Yes. If you look at our debt slide in our investor presentation, in last 2 years, we have reduced our debt by INR 440 crores. In the 2029 (sic) [ 2019 ] -- end of 2029 (sic) [ 2019 ], our net debt was INR 2,743 crores. And as on March 31, 2021, our net debt was INR 2,299 crores. Out of this, we have already paid in the last 3 months, almost around INR 175 crores. And this trend will continue as per existing schedule itself, and we'll be targeting a debt level of INR 1,900 crores kind of -- by the end of this financial year.

So just to add, debt is a factor of the number of projects you are taking to the market. And if you see this year, the number of projects and the volume that will come into the market will further enhance our ability to reduce debt and monetize those investments. And therefore, on an overall basis, -- If you look at your top line numbers and then cost of capital, that will start looking much lower. So I think that's important in context of how many projects are on the floor and how much square footage is in the market to look at what's your debt level. It should not be looked at in isolation. While -- we'll continue to endeavor to reduce debt. That's a separate conversation. But if you look at the top line numbers and the volume that is there in the market and the investment getting monetized as a percentage of that, it will continue to drop.

I would like to get the statement of Abhisek. We'll look at debt per square feet, which will continuously be even better by the launch of new projects. Debt per square feet under production.

Correct.

Right, sir, that's very helpful. So can you perhaps clarify what kind of debt this is and why we have seen the cost sort of go up the trend even though there's a general trend of lower interest cost, does that interest cost help?

No, it will reduce going forward basis. If you look at our weighted average debt cost was 11.95% at the end of the financial year. This was also contributed due to some debt we have taken for acquiring land in the financial year. Those debts swap in the nature of debenture NCDs and which were at a little higher cost than the construction finance debt, and hence, it was high -- weighted average cost was higher. However, on a going-forward basis, the launches which we are planning, those all lands are acquired by us. We are only owning either land or the development rights. And hence, we are not foreseeing any debt related to land acquisition and thereby, our cost of dues will come down.

Understood. In terms of -- I just wanted one more on something in terms of your construction activity. Are there any labor issues that you've seen on the ground? And also, if you could explain if there are any wage hikes or cost increases related to that?

So as I mentioned earlier on the call as well, yes, there was some impact on the second wave. The first wave was really tough, the labor really dropped significantly, very, very significantly. And to come back to normalcy, it took us time because of the reverse migration. But in this wave, yes, there was an impact, but it wasn't as severe as the first wave, and we are trying to come back to normalcy levels quickly. We believe that in the next 1 or 2 months, at most, we should be back to -- in fact, we should be crossing our numbers prior to the second wave. Not only that, our vaccination drive with our labors has very, really enabled us to retain as well as, in fact, get our labor strength back and scale up faster. So I think the CSR initiative that the organization has taken in terms of hygiene and ensuring that work continues and the payments are made has enabled us. Having said that, is there an increase in labor cost. There is a marginal increase. But at this point in time, somebody mentioned in the earlier call, commodity prices have definitely gone up, and that's a bigger concern at this point.

The next question is from the line of [ Reshma Shah from Shah Associates ].

Congrats management for the great set of numbers. Sir, I just wanted to check on the pricing side. Are you giving any discount currently due to increase in sales. Also, can you throw some color on the pricing trend in the real estate market?

So if you can just refer Page #16 and Page #14, so I'll walk you through Page #16, which shows you the price increase from quarter 3 FY '21 to quarter 4. Puravankara on our completed inventory, we have achieved almost a 10% higher realization. Ongoing has been 22%. Now the entire 22% is not on account of price increase per se. It's also -- we had Chembur as a product mix. But yes, across Puravankara projects have increased prices, and we've been able to so far hold on to the sales velocity. Provident has gone up 12% on our ongoing projects. So we've been constantly reviewing prices on a monthly basis and wherever possible, have been increasing prices.

Yes. I think you will see this queue with organized players. If you see, in fact, the customer has become far more discerning now, and he understands that the product which is available from a category B or category C developer at a great discount, may not necessarily be the right buy because the concern is of the capital that the customer is deploying into the purchase, and that's a significant part of their savings. So I think obviously, from our point of view, we have seen the traction both in terms of volume and pricing. I mean, that is basically definitely visible in the numbers in the last quarter and the price appreciation, which happened simultaneously.

That is very helpful, sir. Sir, my second question is on any update on the commercial real estate strategy as we are one of the best pure play in residential player. But on the corporate space, as they are returning back, will there be a mix change?

It's not something that we have at any point in time as a strategy, we intend to continue to build up our commercial platform. We currently have about 7 million square foot to launch. And as I said earlier on the call, we believe that the commercial market -- see the demand has not gone anywhere. The growth has not gone anywhere. It's just -- people have deferred their decisions. And once vaccination comes to a certain level in certain states, especially in the urban centers of the country. We believe that the offices will be back in action and decision making will pretty much be back. So our long-term strategy is definitely to continue to build up our commercial portfolio, not just the 7 million square foot, but we are looking at opportunities in the market wherever available where we see that there is an upside to do the transaction. So we'll continue to build up our commercial business.

Thank you. Ladies and gentlemen, as this was the last question for today. I now hand the conference over to Mr. Neeraj Gautam for closing comments.

Thank you once again, ladies and gentlemen, for your time and attention. I hope me and my colleagues are able to answer all your questions. However, if you require any further discussion, we are always available for the discussion during the coming weeks. Thank you once again, and wishing you a happy weekend.

On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.