Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Q2 FY2022 Results Conference 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. Abhishek Kapoor, Chief Executive Officer; and Mr. Neeraj Gautam, Executive 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, Executive Vice President, Finance, for the opening remarks. Over to you, sir.

Thank you, Rahul. Good evening and warm welcome to all of you. I hope you and your families have a safe and joyful divine. Thank you for joining us for Puravankara Limited's second quarter FY 2022 earnings conference call. My name is Neeraj Gautam. I'm Executive Vice President, Finance of Puravankara Limited. The quarter's presentation and financial results ended September 30, 2021, has been uploaded on the stock exchanges. I will start with a brief update on the business and highlights for the quarter and half year. Following that, my colleagues and I would be delighted to answer any questions you may have in fixed revisions you would like to give us. Fortunately, COVID cases have substantially reduced across the country and the large population has been vaccinated. The economy is on the [indiscernible] performance of all major sectors, including IT, infrastructure, manufacturing are encouraging. The residential real estate sector continues to witness strong demand. We see polarization in demand among the top developers with the steady rise in home offices as an aspiration, added by low interest rates, we are optimistic about the sector outlook. Coming to our operational performance for the quarter, our consistent efforts to ensure business community and mass adoption has resulted in 117% growth in sales bookings during the quarter compared to the previous quarter. Sales during the quarter stood at 0.9 million square feet compared to 0.42 million square feet in the quarter ended June 30, 2021. Sales value stood at INR 597 crore, up by 90% compared to INR 314 crore in the quarter ended June 30, 2021. Today, our ready to move inventory constitute only 7.7% of total unsold inventory open for sale and stood at only 0.4 million square feet, which is at the lowest level in the last 5 years. In terms of our financial performance, our consolidated revenue for the quarter was INR 272 crore compared to INR 220 crores in the corresponding quarter for the previous year, implying a year-on-year growth of 24%. EBITDA for the quarter was INR 104 crores compared to INR 81 crores during the same period last year. It reflects year-on-year increase of 29%. Our PBT was INR 18 crores during the quarter compared to a loss of INR 13 crores during the corresponding quarter in the previous year. Our PAT for the quarter was INR 12 crores compared to a loss of INR 10 crores during the corresponding quarter in the last year. On a half yearly basis, we have received a booking of INR 910 crore for 1.33 million square feet of sales to INR 810 crore for 1.53 million square foot of sale during the half year of last year. We have recognized revenue of INR 814 crore and PAT of INR 166 crore for H1 FY '22 compared to INR 411 crore of revenue and a loss of INR 27 crores during H1 FY 2021. On cash flow front, we have been focused on our collections and received an operating inflow of INR 383 crore for the quarter and INR 1,200 crores for H1 FY 2022. We have been generating operating surplus consistently for the last couple of years, a balanced collection for our [indiscernible] stood at INR 1,986 crore as of September 30, 2021. The value of our open for sale inventory, only open for sale inventory is INR 4,515 crore. As it is with, we need INR 2,696 crore to complete our core inventory open per sale. It will result in an operating surplus of INR 3,805 crore on completion of all these projects. Besides this, we have not open for sale inventory in existing projects with an estimated surplus of another INR 2,081 crores. As on September 30, 2021, our net debt stood at INR 1,860 crore, our lowest level in the last 5 years. We will remain focused to keep our debt at optimum level. Our net debt to equity accordingly also trending down and have set at 0.9x versus 1.41x a year ago. Our average cost of debt stands at 11.0% as of September 30, 2021. With the current economic development trend and market consolidation, team Puravankara is geared up to seize the opportunity. We have accelerated our launches and actively pursue value-based business development activities. These new acquisitions will be funded primarily through inter-metro and equity funds. We foresee a growing appetite for investments in our tech savvy generation opening up for new demographic target, our collaboration with IBM will reinvent our processes and fuel takeaway innovation. The integration of SAP cloud environment will fast track our reason of assessing real-time market fluctuations and creating an intelligent workflow. Puravankara has always pioneered tectonic changes in real-estate industry and aims to set presidents by making unique landmarks and community living of the highest [ level ]. We are delighted to inform you Mr. Sanjeeb Chaudhuri, an eminent professional and a seasoned banker and current Chairman of IDFC First Bank has joined our board as Independent Director. Mr. Sanjeeb Chaudhuri has over 4 decades of senior multinational business experience across global banks and companies. He was listed among the top 25 Media Visionaries in the Asia Pacific in 2016 and is a featured speaker at premier global marketing and media events in Europe and Asia. Mr. Chaudhuri has deep knowledge of consumer and commercial markets for products and services across major developed and emerging markets of India, the rest of Asia, the Middle East, Africa and Europe. He has firsthand experience generating multimillion-dollar efficiencies from simplification, offshoring, technology-based operating solution. Puravankara Limited will benefit from his profound knowledge and experience. With this, I conclude my remarks. We are now happy to answer any questions, comments or suggestions you would like to give us. Thank you.

[Operator Instructions] We have the first question from the line of [ Ritesh Sheth ] from Motilal Oswal.

Firstly, on the launch pipeline that you had mentioned, how confident are we in terms of like all the approvals and everything is in place? Or are we seeing any delays in terms of getting the approvals because we have seen for a couple of developers in your market, the approvals are not coming as fast. So how confident you are in terms of getting the launches?

So I think for most, we have approvals already. So for example, if you look at Lalbagh, we already have the approval in place. I think what we are referring to while our launch pipeline spreads across Bangalore, Chennai, Cochin, Coimbatore, Pune and Mumbai, I think you're referring to the in past currently in Bangalore City. So I'll just address that bucket. So as far as Lalbagh is concerned, we have the approvals already in place. We should be launching in the next 30 to 45 days. Sound of Water Phase 2, we have the approvals in place. Zenium 2, we have the approvals in place. Only one where we are now getting into the approval phase would be item number 7 and 8 under Puravankara. But we already have enough in terms of the next at least 2, 3 quarters, enough of launches already available with approvals in hand.

Sure. Great. Good to hear that. And secondly, on the collections this quarter, seems considerably low versus Q1, but also versus your usual run rate of around INR 350 crores to INR 400 crores odd. So any sense on that? I mean, why it's so low?

No. So we did lose about 25, 30 days sort of meeting all our vendors, contractors, et cetera, in light of all these commodity price increases, etc. All that has been closed and you should see that sort of accelerate and gain more traction in the following quarters.

Sure. Great. And how is the demand traction? Obviously, after the quarter ended in September, basically in October and coming into the festive season. Has the momentum being hold or are we seeing month-on-month improvement from September to October, October to November? Was the trend there?

So we see the -- I think, depending on the project micromarket city, I think general is, I think the demand continues to be the same or we've seen certain pockets where we have seen some significant improvement.

Got it. And one last, if I may. On your -- the debt that you are looking to raise, is it for refinancing? Or is it for growth opportunities? Any clarity on that?

Currently, I think what we are -- the aim is to get our cost -- weighted average cost of debt down. So most of it is towards that exercise, that we're replacing it with cheaper cost of debt.

Okay. But your average cost is right now also, it's 11.3%, and I think you are raising again at similar rates. So would it make difference that much?

Sorry, say it again?

Your average cost right now, if I see for this quarter, it's 11.3%. And you are raising this one with 11.2%.

We're raising at 11.2%. It's -- this debt is being raised for a project at Cochin, Marina 1, we are facing a debt of INR 220 crore. Part of it is the NCD. And that is a little costlier side. However, CF part, which is INR 40 crore at 10.25%. This NCD fees will go towards repaying of existing debt of PNB Housing Finance, which we had taken when the project was a lender days, and that debt is a little costlier higher side, it's at 12%, 12.5%. So that particular debt will be come down by more than 1.25%. So to that extent, debt will come down.

Sure. Got it. And otherwise your -- sorry, complete, sir?

Yes, please go ahead. So besides this one, this INR 180 crores of the debt will come down by 1.25%. And besides that, we are also working on a couple of more transactions, which will eventually bring down our debt not less than, I mean, by the end of 3 to 4 months by 100 basis points and more.

Okay. So by end of this year, probably we'll be down to somewhere around 10%?

Yes.

We have the next question from the line of [ Anirudh VN ] from [indiscernible].

Hello, am I audible?

Yes.

Okay. I had 2 questions specifically. The first question is, now that we have such a large land bank and -- what would be the management's guidance over the next 3 to 5 years about the concept of land banking for mortgages of time? And like how would you do it? I mean, would you continue to do it and buy it, spread it over a period of 5 years or just buy it and launch the project and sell it? Or would you continue to do JV? Like what's the strategy on land going forward?

Okay. So one point is that I don't think anyone with any sense today, will embark on that exercise that people did 10 years ago in terms of land banking and aggregation in its true sense, wherein you buy smaller piece of land and then consolidate and that entire acquisition sort of spreads over 3 to 5 years. So as an organization, we're extremely clear that our business is development. So any new acquisitions that we do will be with the intent to turn the project around -- from acquisition to launch, not more than 6 to 8 months, right? So that is the strategy here. So clearly, no more land banking, no aggregation, looking at lands. Now we already have an extensive sort of land bank. So where are we acquiring these new lands? These are in newer suburbs, newer micro markets, right, where we don't have example in Bangalore, right? We have lands in the south. We have lands in the East. But rest of Bangalore, which is now also sort of an emerging suburb, we had just 2 land parcels. So there, we may add some more. What is the strategy for new acquisitions? I think it will typically be joint development, A. B, we also have a couple of equity platforms, like we had mentioned earlier, along with IFC, et cetera, where our investment is hardly 20%, 25%. So we will either do joint developments or then use our platforms with institutions like IFC to acquire new lands.

Okay. Okay. And the second question that I had is on your subsidiary, Starworth, what's the strategy going forward? I mean, are you going to have more of construction through Starworth and you have this precast also that you had been working on. So what's the long-term strategy on that is what I would want to kind of understand.

Sure. 2 things here. One is Starworth relationship with Puravankara and Provident, that is completely an arm's length relationship. So every time Puravankara-Provident launches a project, we actually tender out, depending on their competitiveness they win bids or lose bids. So today, if you go across the board, we are working with all varying contractors across our projects like GMC, Shapoorji, TATA Projects, L&T, to name a few. Starworth is hardly contracting about 3 out of 10 or 15 of our projects. Right?

Right. Right. Right. So I mean I'm just saying considering that.

Point number 2, independently we believe that Starworth, independently, we believe that we are playing in a specific niche. Going forward, we are seeing not only Puravankara, but also other developers in this space, institutions, hospitality projects, et cetera, are seeing the benefit of precast. So today, Starworth is positioning. So while it has the expertise to build conventionally or aluminum formwork, we also have the added advantage of being a handful of guys in the country who are today currently have a precast factory setup and are building. Over the last one year, unfortunately, due to COVID, but we received a lot of interest from developers across the country who have visited us in Bangalore, seen the factory, and we are now participating in bids to take up those contracts.

So you do see a reasonable future going forward. I mean, it's not up for.

Absolutely. Because if you see the big names today, and their order books are all one INR 1.5 lakh crore plus order books. The minute you come out of that bucket, then you have, of course, then you will have the Shapoorji, et cetera, at INR 40,000 crore, INR 50,000 crore order books. After that the stack just crumbles, there's just no one there who's credible.

[Operator Instructions] We have the next question from the line of Dhananjay Mishra from Sunidhi Securities and Finance.

Sir, we have a strong pipeline. Also, we have a strong pipeline, which is not opened yet. So what is the kind of sales we are looking for next 2, 3 years in terms of like 1.33 million square feet we have done in first half. So is there any target for next year or next to next year in terms of sales looking?

We typically don't give guidance in terms of -- see now annual -- half yearly or annual sales is a combination of 2 things. One is your ongoing -- let me say 3 things. One is our ready to move in which today we've seen at the peak, we were sitting at 2.5 million square foot of ready to move today, which stands at 0.43 million square foot. Second is the current sustenance, ongoing projects. Third, it's a function of your launches, right? If you see over the last 3 to 4 years, 8 out of 10 of our launches, we've been able to sell almost, I would say, 65% to 80% within the first 2 to 3 quarters of that launch. So I think it all depends on how many launches we are able to. Sometimes, it's just a timing issue where you may miss a launch from planned on March 1 to the second week of April. And the entire sale gets pushed to the following year. But having said that, I think we are confident if these launches come out as we've planned. But for a couple of months here and there, I don't think achieving a 5 million square foot would be difficult.

Okay. So this 9.6 million launches we have planned for next 9 months -- I mean, Q1 FY '23. So is it safe to assume that at least 60%, 65% we will be selling till March 23.

It depends on the timing of those launches. Like I said, this success we are able to achieve, again, while the strategy is to get sustainable velocity upfront rather than being caught up into cycles over the 4 and 5-year cycle of the project, we have to also ensure pricing, right? So this substance that we've demonstrated over the last 3 to 4 years, like I said, 8 out of 10 of our projects, we have achieved this percentage in the first 3 quarters. So there's something that we launched, example, in the quarter 3 or quarter 4, you will see some bit of that percentage fall into this year and then the balance gets spilled over to the following year.

Okay. And this 1.33 million square foot is only our share, not including everything?

No. Yes, that's our share. No, no, one second, let me clarify that. I think 0.08 is what you reduce. We have disclosed that in our presentation. If you see the bullet point. What is it?

Yes, 0.14 is something which is...

Yes, 0.14.

Okay. Okay. So that is for joint venture partners, the JD partner. So we sort of move that. And in terms of -- I mean, realization, which I think we are entering into Mumbai and Pune market. So where do you see in terms of -- now we are at 6,500. So do you see when we have more projects coming from launches in these regions, Mumbai, Pune regions, so realization will also improve?

Of course, it will. So at end of the day the realization is the product mix that we have. So as you see, the launches come up in Pune and Mumbai, you will see that average realization go up significantly. For example, today, Chembur is sitting at INR 35,000 a square foot.

Okay. And sir, one clarification. We have these 3 projects in launch pipeline that is Zenium and Purva Zenium business and -- sorry, Zenium and Sound of Water. And that is also in there, this slide were not yet open. So what is this? I mean, why?

Yes, you're absolutely right. To that extent, there's overlap. See, this launch pipeline includes the new phases of Zenium, Sound of Water and Windermere. These 3 projects are also part of my inventory, not open for launch.

Okay. So should we count only one?

It's Sound of Water 2, Zenium 2. So we're opening up the second phase for launch.

Okay. So this is first phase and second phase. We should count twice or we should count only once?

No, no, twice. So what is accommodated in ongoing is only the Phase 1. What is -- in the launch pipeline is the Phase 2.

Because the area and everything is similar in some cases.

Specifically, some of these projects, what we have done is we have divided them like into halves, like 50%. And therefore, we'll see the areas of Phase 1 to Phase 2 look similar on.

That is where confusion was there because the same area, same thing. So I thought.

Understood, understood. However, we are clearly mentioning on the slide that how much surplus is coming out of inventory is open for sale.

We have the next question from the line of [ Preeti Nair ]from [ KC Investment ].

Sir, I have a couple of questions. What I would like to ask is, will the increase in the sales prices be able to fill up the gap in the increase in the input cost?

Yes. So we have been -- one is I'm not too sure how long this will go. Definitely, we come through these situations almost once or twice a year in the past. Whereas this time, I think it's been here a little longer. Having said that, starting, I think, December, Jan of this year, we meet almost every monthly basis. And we review each project in terms of margins, in terms of selling price, et cetera, and we've been taking prices up wherever required to ensure that margins are not affected.

Okay. Okay. Sir, I would also like to ask the new debt acquired. Is it for the new acquisitions and launches or for the working capital requirements?

This debt we are referring about, which we have notified to the stock exchanges today. This debt, INR 180 crores we are raising by issuing NCB. This endues of this money was to repay a costlier debt, which we have taken at [indiscernible].

Okay. Okay. Sir, lastly, I'd like to ask is, will the debt equity ratio be maintained the same in the future around the same level of 0.9?

So we will maintain it, and we will better it. We have then recorded profit for Q1, half year basis. And more and more, we are recognizing revenue, network will increase, and then we'll try to maintain data of the optimum level. And hence, the combination of both debt-to-equity ratio will improve hereon.

The next question is from the line of [ Ritesh Sheth ] from Motilal Oswal.

Just one question on -- any update you want to provide on the commercial monetization that you are looking to do with the private equity partners. So any progress on that?

No. Currently, the discussions are still on. Having said that, I think a clear strategy, we have about close to 6 million square foot of commercial space of land available with the design planning is already concluded. We are in the process of getting approvals. But we will not sort of start construction unless we have a client or an LOI in place. So for example, one of the largest ones in that bucket, we are currently participating in almost 4 or 5 RFQs that have been floated by IPPs. And only when we have clear visibility is when we would start work there. I think as these happen parallelly, we will also be talking and discussions are on to see if we can get this into a platform.

[Operator Instructions] We have the next question from the line of [ Anirudh VN ] from [indiscernible].

Yes. I mean, so I just wanted to know now that this input -- I mean there is input cost also that has gone up. So what percentage of input costs -- I mean, of sales price increase would kind of offset the input cost to maintain the previous margin, pre-COVID margins because we already reached it is what I would want to ask.

So I think there is no fixed number per se because this pertains to multiple projects which are at multiple stages of development. So for example, in some cases where we have already finished the structure and we are nearing finishes, the impact is different. Some projects where we have just launched, the impact is different. We are closely, like I mentioned earlier, closely monitoring this. The pricing committee meets almost -- I think in one case, we met once in 15 days. Now it's once in 30 days. So we're ensuring that almost anywhere between 2% to 4% is what we have increased over the last 3 to 4 months. You have to keep in mind that price increases have to be done gradually. Therefore, we're doing bits and pieces so that the existing inquiry base that is with us does not go completely dry. So this is an active exercise, and we are very watchful of it. And we are confident that we should be able to sort of ensure that we maintain our margins.

Okay. And assuming all the variability in input costs and also the fact that in the face of [indiscernible] assuming a project in happens quickly what are the return metrics, return on capital that you are internally targeting going forward for the ongoing projects? I'm talking about projects that are in the early stages.

Return on capital employed, we look at as a balanced level. So in our network.

So for each project, what is your internal metric is what I'm just -- just a general?

Internal metric for project level, we target 25% profitability, PBT and as well as IRR as well. For any project, I'll say not making 25% PBT so we are not entering any project. That is a threshold for any project.

We have the next question from the line of [indiscernible].

So I have a couple of questions. My first question pertains to the precast technology. So having the precast technology in place, how much has it helped the business in terms of saving the construction time as well as in terms of cost?

So in terms of technology, I think we -- our attempt is to deploy technology at multiple levels. We are wrestling one thing that we've already done is precast. So precast gives you tremendous saving in terms of not only time but also in terms of standardization of quality where it reduces your rework and you're able to provide a quality product in a timely fashion. And just to give you a sense, I think today, of course, we have to bear in mind today customers as well do not want something that fast. So they plan their monthly outflows, the EMIs, et cetera, that as per milestone progress. So we ensure that we meet some sort of a criteria, but we're able to compress the time almost, if required by almost 50% if we deploy precast as a technology. Coming to other software-type technologies, we have taken our decision now from our current ERP we are moving into SAP cloud. IBM is implementing partner. We initiated an exercise about 45 days ago. We are confident we will complete this entire program by the March 31. On the sidelines, we've been using -- or we're already using Salesforce for inquiry management, but also we're trying to deploy some amount of machine learning and AI into the inquiry platform. We are trying to also have a more robust app through which we can engage with our existing customers just to better their experience. We're trying to -- also, we have a product already in place once the SAP gets implemented to also track our construction on a real-time basis and build-in a lot more efficiencies there. Lastly, I think we would love to also stay connected with our buyers once we deliver the unit. Unfortunately, in real estate, once we deliver the unit, it ends up in an ugly divorce between the developer and the customer. Having -- if you've done all this and get better that experience would love to stay in touch with them to just basically understand their usage to stay connected to build that loyalty not today, but over a couple of generations and over a couple of decades.

Yes. Yes, I understand. I understand. Okay. And sir, my next question is the sales during this quarter have doubled. So is this a pent-up demand with all -- with everything opening up after the lockdown or?

And I think it's no more pent-up demand. I think today, there's a huge consolidation of buying that's happening with all reputed brands. One thing you have to appreciate is due to various reasons over the last 3 to 4 years, I would say, starting from demonetization to GST to RERA to COVID. There's been a huge consolidation in the industry. There's been a huge reduction in launches. So today, Bangalore, while there is no formal data to track it, but I think launches are down almost 65%. But the real demand continues to be there. So we are seeing a huge polarization of buying that's happening with the stronger brands. And therefore, we're able to increase our market share most launches are doing exceptionally well.

Okay. So yes, too. Okay. Sir, my last question. So could you please update us on the performance in the commercial space?

So commercial, I mean, in the past, the company had built about close to about 3 million square foot of commercial space, but we had sold those spaces, but we continue to manage that, the leasing as well as the building maintenance for our investors. Happy to report that in none of those buildings, we have any dropouts or even in terms of collections, we are almost at 98%. So that gives us a sense of where the commercial market is. Having said that, on the other side, on our new to be build portfolio of 6 plus million square foot. I think 4 out of 2 -- 4 out of 6 projects, we are currently part of RFQs that have been floated by CDRs and [indiscernible]of the world. So there is renewed interest that's coming back.

[Operator Instructions] We have the next question from the line of [ Aditya Singh ] from [indiscernible].

I have a few questions. Firstly, in terms of the construction activity, could you throw some light on how it is going across your various projects? And are you expecting any delays in the ongoing construction across your portfolio and whether it would be possible for you to quantify it?

Sure. So in terms of -- we did have some disruption about, I would say, about few months ago, we did have some disruptions, more so from the vendors wanting to sort of sit back on the table. They wanted some amount of -- a little bit of compensation on account of COVID, on account of commodity prices, etc. These are tough discussions. They take some time. No one's willing to open their palm and show their cards. So that took some time. But now I think all our projects, we have finished these negotiations. They are back on track. Our vendors and contractors of have assured that they will work around the clock and catch up. As of now, we do not see -- foresee any delays. This is the catch-up plan that have been submitted by contractors to us across our projects.

Got it. Got it. My next question is in terms of your sales. Could you throw some light on how the sales momentum has been in Q3 so far? And what are your expectations for the rest of Q3 and Q4? And also whether the customer inquiries are coming in for online or offline, if you could throw some light on that?

Sure. So in terms of Q3, I think as of now, it's almost quite similar to the good performance that we sort of delivered in quarter 2. A, the focus, I think, over the last couple of years has been digital. I would say almost in terms of expenditure, almost 55% to 60% of our expenditure is on digital vis-a-vis conventional marketing methods that we've adopted in the past. Even in terms of inquiry, I think that percentage stands at about 46%, 47%. If have to study the inquiries on the initiation of these inquiries.

Got it. Got it. Would you be able to provide some sales targets for FY '22?

We do not give any guidance in terms of future forward-looking sales targets, etc. But having said that, I think if you just look at our past and if you apply the launches that we have, I think, presented to you over the next 12 to 15 months. If you see also in the past, the way we performed in terms of the upfront sales booking that we do within the first 2, 3 quarters of a launch and apply that percentage to the size of the launches, I think you'll get some sense.

Got it. Got it. That's all right. And lastly, just in terms of your debt, what are your debt repayment plans or any strategy towards that for the future? That's my last question.

I think in terms of debt, we brought that significantly down. We are currently at 0.9. We believe that this is a sustainable level. So we'll continue to maintain optimal levels of debt, A. B, in terms of repayment, I will improve the quality of debt and the cost of debt, we'll focus there and seize that debt at optimal level. I think the balance here in terms of repayment plan, I don't think there's -- it's a scheduled plan, we are well under control. For Q3, Q4, we are repaying INR 70 crore, INR 75 crore odd for Q3, Q4. That's all our recommend obligation. Otherwise, we are well in control and we're able to service obligation well in time. Our focus is, A, to improve the quality of debt and reduce the cost of debt. That is where focus and maintain the debt equity level, this optimum kind of 0.9% around. Hope that clarifies your question.

[Operator Instructions] We have the next question from the line of [ Amit Nayak ] from [ Nayak Consultant ].

So my question is related to the sector as such. So what trends do you see in the real estate sector following this pandemic? I mean, of course, we see work from home has become a norm. But do you expect the urbanization trend being reversed or modified? And also, will the home design or project designs be affected by this? So what are your thoughts for the same?

Sure. Okay. One is I think there's a clear trend that we've seen. And I think most listed companies, if you've seen our sales numbers I think there's a clear thought of people wanting to move to a more comfortable home, a newer home with modern amenities. That is where we have seen sales across our ready to move-in inventory in construction as well as new launches have fared well. In terms of design, we are now ensuring that this whole concept of maybe a 2.5 bedroom or creating some sort of a niche working space within these -- within the apartment, if feasible and possible, while maintaining the same or the right ticket size, where that is not feasible, they're trying to see if we can adopt working spaces within our clubhouses. Of course, you can't cater the entire project, but flexible working spaces within the club houses where people can have meetings, where people can do a conference call, a video conference, etc. So that is a little bit of design change that we have done to our product. That said if I see the current trend that's happening in terms of the commercial office space and what I'm hearing from the IPCs, I see the demand coming back. I see some companies, what I've heard is, who have given up certain spaces are now going back and trying to get back into those spaces that they had given up over the last 6 to 8 months. So I think this is a temporary phenomenon. And I think, yes, COVID is a time of uncertainty, no one knows how long it will take to go away and will it be 1 year, will be 2 years. But I think if I look at a 3 to 4-year period, I think no one can discount and say, work from home is going to be a permanent way. At least, that's not my belief.

Right, right. Okay. And just to follow-up on this. Also, we have seen like digitization in the real estate sector, with property, tech and so on. So are we adapting to those trends?

Absolutely. So one is we've been the early adopters in terms of Salesforce, a lot of other sort of tech initiatives. Having said that, we are now currently, as we speak, we are moving from our current ERP to SAP cloud. We have roped in IBM to implement that. It was started about 45, 60 days ago. The end date is March 31. Once implemented, we have at least 3 or 4 initiatives from a technology point of view to be implemented once SAP is implemented starting at the inquiry platform level. Secondly, we have at the customer engagement level, once you become a customer. Third is at the site level. And fourth is at the -- once the project is completed to stay connected with our buyers. Besides that, we were the first -- the first guys, I think, in this country to launch the online booking platform, which was last year, I think March 24 is when the cohort lockdown happened and Bangalore opened up on the May 4. May 11 we were the first -- I think the first launched in the country, real estate launch, which is completely done online. So the launch was online, which is streamed live across platforms. And the booking was completely online. So where post the presentation, the customer had the ability to go see live availability, choose his unit, go and pay down payment. So I think these initiatives have really helped us where the cost was zero. Typically, a mega launch, there are huge cost associated with it, you're flying customers down. You have a 5-star banquet book and all sort of costs associated with that. But here, everything was done completely online. And we continue now to ensure that all new launches the customer should have an option to -- while we can come and visit the site and see the location and see the product finish, et cetera, we should have the ability for any of our ongoing all new launches should have the ability to book online.

Okay. Okay. That's really nice to hear. So coming to my next question, it's related to the price rise. I mean, we see that the cost is going up for the supplies in general for steel, cement, material, labor and so on. And if this continues, it might affect the residential industry demand, not now, maybe 1, 2 years later on. And how would this affect the construction cost and the margins and the demand in the future. So do we have any foresight for that?

I wish and hope I had that foresight. Unfortunately, we don't. So we, as a company, have been extremely cautious. We have been -- we've constituted a pricing committee. This is December of last year. We meet almost on a fortnightly or on a monthly basis, depending on the requirement. We monitor each project sort of construction cost. And gradually, we keep adjusting the price anywhere between, I would say, 1.5%, 2%, to, in one case, we increased the price by almost, I would say, 4%. So we are watchful of it. I hope that this increases gets tapered down in a couple of months from now.

So I'm coming to my last question, as we see the real estate sector is really picking up. So we see the developers have good cash flows and everything, but there has to be some differentiation in the industry. So I mean, timely delivery and quality are a given, but factors are you planning or implementing for the differentiation factor, like what makes you unique or any tie up with some online interior designing or something like that?

So I think every -- I think there are 2 things that -- you're right. So today, I think timing and quality are given. What are the 2 other aspects of it, at least in our wisdom in mind, I think one is each project needs to have some sort of a USP or a theme, depending on its location or who my target buyers are. And you would notice, not today, but I would say, over the last 15 to 20 years, we've been the pioneers in creating themed projects, whether it was for our Venezia or if it was Westend, which was more child-centric. So the club houses were provided with tuition rooms, they were provided with ballet centers where kids could learn ballet. It had a jamming room if kids wanted to learn a guitar, right? So it all depends, Palm Beach, which is more on a beach theme. So I think that clearly is one of our USPs. Second, so each project needs to have one. Second, I think, is the experience. And that is what we're trying to achieve with this entire technology rollout, which we have planned post our ERP implementation. Today, when you directly call up a developer and you're talking to a person, I think your experience depends on the quality of the person addressing your call or their concerns. But we hope that with technology, we're able to better that experience for a customer so that there's transparency, there is constant information sharing. And there are reverse that go back to the customer in a timely fashion. So I think that going forward, that -- like -- sorry, repeating that time and quality is a given, but it is the experience and the product that will have to differentiate in the market.

Okay. Okay. And my last question would be related to ESG. How do you perceive ESG-related metrics for the real estate sector?

Extremely important, extremely important. No, I think extremely important on various. I think one just from being a responsible developer, A, I think also from the way the customers would start seeing us also the way are other stakeholders in terms of bankers, in terms of ability to forge relationships with funds, etc. So I think it's an extremely important aspect, and which will change the way we've done business in the past. We have already finalized a good consultant, and we are now currently reviewing each one of our projects and trying to see what changes we need to make in the ongoing ones and will ensure that going forward for future projects, there is some level of sort of compliance as far as -- and reporting as well.

[Operator Instructions] We have the next question from the line of [ Anirudh VN ] from [indiscernible].

I had just a small clarification. Now in the investor presentation, you say this on the slide, projected cash flow, you say value of inventory not open for sale. Now does this include these flats that have been mentioned and not yet open for sale as of September 30, 2021? Like I just want to kind of clarification what this particular figure includes?

It's simple. So basically, it is -- these are all the launched projects. Now each of our projects are extremely large, right? It's about 1 million, 1.2 million, 3 million, etc. So you have one bucket which has been opened up for sale. And then you have the Phase 2 or in some cases, Phase 2 and Phase 3, which have not yet been opened up for sales. So that's the difference.

So in the Phase 1, which there may be a part of sales one, which is not open up for sale. So that is what this is included.

That is a defined basis, which are opened up. So example, if Phase 1 is open, the entire Phase 1 is opened up for sale.

We have the next question from the line of [ Shruthi Nair ] from [indiscernible].

I have 2 questions. So one is, can you throw some light like what steps you are taking to improve your credit rating? And any new how much your rating can be improved going forward?

I think we have 2 more steps to go. In terms of the steps we are working on getting our cost of weighted average cost of debt further down. We are hopeful that over the next quarter when we meet again, it should be down minimum, I think, anywhere between 100 bps to 150 bps and that exercise will continue with that, A. B, by ensuring that we launch our projects. So that will also unlock value and cash flows, which will be another kicker and a jump in terms of reaching out and trying to increase our valuation. And we reach out to our rating agency in Q4 again. They have upgraded our rating in Q1 and Q2. Now on the basis of this reduced interest rate and the new launches we'll again present our case in Q4 and hopefully, rating further updated.

All right. And another question is can the same level of EBITDA and profit margin we expected in the second half of the year as well? And like what are the projections over the next few quarters?

Madam, we do not give projections or guidances. But like I said today, there is consolidation. Today, you're seeing the kind of buying did give some sort of guidance that even quarter there, we believe, will perform. Though we're in the middle of it will perform as good as quarter 2. So things are quite positive.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference back to Mr. Neeraj Gautam for closing comments. Please go ahead.