Puravankara Limited (PURVA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Puravankara Limited Q3 FY '22 Earnings Conference Call, 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, Executive Director, Chief Executive Officer and Chief Financial Officer; and Mr. Neeraj Gautam, Executive Vice President, Finance. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr.[ Anish Bansal ] from Emkay Global Financial Services. Thank you. And over to you, sir.

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

Thank you, [ Anish ]. Good evening, and warm welcome to all of you. I hope you and your families are staying safe and doing well. Thank you for joining us for Puravankara Limited's Third Quarter FY 2022 Earning Conference Call. My name is Neeraj Gautam, I'm Executive Vice President, Finance of Puravankara Limited. The quarter's presentation and financial results ended December 31, 2021, have been uploaded on the stock exchanges. I will start with a brief update on the business and highlights for the quarter and 9 months. Following that, my colleagues and I would be delighted to answer any questions and you may have and take you would like to give us. The EM project presented earlier this month promises to be growth-oriented and which a further budget that is expected to develop the country's economy, infrastructure and logistics. The thrust on capital expenditure, which saw a substantial hike of up to INR 7.5 lakh crores in FY 2023 will play a significant role in boosting the overall economy and that will create a backdrop of opportunities for the real estate sector. The announcement towards investment for urban planning and [indiscernible] and increasing the state of estates to adopt many plan parcel number will deliver structural changes that will help unlock the sector's long-term potential. Allocation of INR 48,000 crores towards the PMA program show the government's determination to boost affordable housing. The centers -- central government towards digitizing lend support will bring transparency in each of the business. The residential market has been recovering with a strong sales momentum in the last few quarters. The resilience of [indiscernible] even after the second wave of COVID in markets like Bangalore, Mumbai, the government intent[indiscernible] increased the demand further. In terms of our performance for the quarter, we have completed the quarter with a steady momentum in sales. During the third quarter FY '22, our sales value has jumped to INR 666 crores, an increase of 17% on a year-on-year basis and 12% on quarter-on-quarter basis. The area [indiscernible] up by 9% compared to [indiscernible] in profit Q3 FY '21 and Q2 FY '22. The sales realization has also improved to INR 6,700 [indiscernible]. This is an increase of 10% compared to Q3 ] FY '21 and 3% compared to Q3 FY 2022. We sold 690 units in the quarter, which is an increase of 4% compared to the previous year and a rise of 10% on a sequential basis. Coming to the financial performance for the quarter. Consolidated revenue for Q3 FY '22 was INR 246 crore compared to INR [ 204 ] crores in the previous year corresponding quarter. Our EBITDA for the quarter was INR 86 crores compared to INR 115 crores during the same period last year. Total comparative income for the quarter stood at INR 126.5 crore compared to a total comprehensive income INR 127.5 crore during the corresponding quarter in the last year. In terms of our 9 months performance, we sold 1,616 units, corresponding to the volume 2.32 million square feet. Sales value grew to INR 1,576 crore, which is 9% higher than the INR 1,449 crore on a year-on-year basis. The sales realization also improved to INR 6,795 per square feet from INR 5,989 per square feet last year. It is an improvement by 7%. In terms of our 9-month P&L performance. We have achieved a good improvement in profitability metrics. For 9-month period, our total revenues from operation stood at INR 1,050 crores compared to INR 713 crores for the same period previous year, implying a year-on-year growth of 48%, our EBITDA stood at INR 526 crore compared to INR 263 crore for a comparable period previous year, in line with year-on-year growth of 19%. We have also consist of the increase in input costs. Construction cost is 32%, 35% of our sales price. And an increase in sales price mitigates the consequential impact. And the [indiscernible] development, we are continuously evaluating a percentage in rupees, which is where we today. We are delighted to update you that we have invested in [indiscernible] the partnership fund to acquire 85% of development rights of 11.25 acres of land in Bangalore KBB area during the quarter. The estimated development potential of the project is 1.40 million square feet. Secondly, we entered into a giant development market agreement for a premium residential development of 3.85 acres in [indiscernible]. The estimated development potential of this projected to 0.5 million square feet. Both these projects are under design and approval estate, and we'll be launching with these projects in the next 2 to 3 quarters. Further, we are pleased to update you that we are continuously optimizing our debt and reducing our cost of debt. We have reduced our average cost of debt to 10.5% from 12% a year ago. Our net debt at the end of Q3 FY '22 stood at INR 1,867 crores compared to INR 2,372 crores at the end of Q3 FY '21. The net debt-to-equity ratio stands at 0.89 compared to 1.25 a year ago. We are on cash flow management front, we have consistently been waiting cash from our operation. Our operating inflow almost doubled for 9-month period and it has stood at INR 1,756 crore compared to similar 9-month period a year ago, INR 848 crores in FY 2021. We generated an operating surplus of INR 754 crore during the 9-month period. The balance collection from [indiscernible] our stood at INR 2,278 crores on December 31, 2021. The value of our total for sale inventory is INR 4,662 crores. And [indiscernible] we leased INR 3,692 crore to complete our all inventory open. It will result in an operating surplus of INR 4,239 crores. Beside this, we have not opened for sale inventory in existing projects, with an estimated surplus of INR 1,993 crores. On launch -- new launch trend, we wanted to update you that we have launched 2 projects during the quarter. [indiscernible] quarter development project in Bangalore and [indiscernible] airport into premium residential housing project Mumbai. We are -- we continue with the focus on the launch pipeline. We have 72 projects with a development position of over 18 million square feet in our launch pipeline in the next 3 to 4 quarters. All these projects are a big of approval process and are on track on the [indiscernible] launch time line. We are encouraged and excited by the trend emerging from the quarter. We are also preparing the organization for a new and sustained growth trajectory and gaining market share across our key residential markets. The return to Mumbai, the expansion in the U.S. market, the sustained launch program across our key markets in all our 3 brands, all deal [indiscernible] well. Importantly, we have taken concrete steps to ensure cost optimization, contract management and operation efficiencies. All these are likely to bear fruit in the coming quarters and indeed years ahead. With this, I conclude my remarks. Thank you all for joining the conference call. We're now happy to answer any questions and presentations you may have.

[Operator Instructions] The first question is from the line of [ Ritesh Sheikh ] from Motilal Oswal.

Firstly, on the launch then, so very strong pipeline for FY '23. So there is couple of presence pushed out from Q3 launch to Q4, okay? And so overall, in terms of launches, how confident are we in terms of launching these projects because there are a few of our peers are facing issues in terms of approval? So just wanted to check how many launches actually we can see coming in the next couple of quarters?

Thank you for your question. I think on a ballpark basis, generally, we are confident that at least 90% will be launched over the next 3 to 4 quarters. If I have to break them into buckets, almost 40% of the projects listed here for launches have already got approval. And we await -- and have either got RERA or waiting for RERA approvals. So that 40% bucket is done. Other 40%, we have already got approval, not -- 30%, we already got approvals and applied for RERA, right? The balance is what is in the approval stage. So this is that statistic is fairly confident of, at least, hitting a 90%, 95% number in the next 3 to 4 quarters.

Right, right. And the Sound Of Water II and Purva Zentech Business Park were delayed for some RERA delays or just...

So as we speak, Sound Of Water II has already been launched. As we speak, Purva Zentech Business Park has already launched.

Okay. Great. And my second question is on your land bank in [ Chennai ]. So I see a 4 million kind of a reduction in future land bank potential. So has that land being monetized to someone or how was it?

So land that we had bought on the [indiscernible] on the Bangalore, Chennai Highway. So we monetized that land last quarter.

Okay. And any -- I mean, how much -- for how much consideration, if you can share that details?

About INR 59 crore.

Okay. Okay. And my last question is on your partnership with Keppel Land. So how are we going to explore this partnerships? Because I think we were planning for some commercial developments as well, and we were looking for some private partners or someone.

So look, so as far as our commercial development is concerned, we have a potential of about 6.5 million of commercial space already available with the company, for which, we have started the projects and now are looking for sort of platform partners. The JV with Keppel, currently, we have -- had one commercial project. And we have a residential project, which [indiscernible] has given on joint development to Provident Housing, which is ongoing, which has done well. The commercial project, we took a call 2 quarters ago to exit that. So Keppel is taking over that entire commercial project.

Okay. Okay. And would we like to extend that partnership to our upcoming commercial projects with Keppel or?

So for our [ 6.5 ] existing sort of portfolio of commercial, we are talking to other international funds.

The next question is from the line of Dikshit Mittal from LIC Mutual Fund.

Yes, sir, just to confirm that you had indicated launch pipeline of 18 million square feet. And you mentioned that 90% will be launched in 3, 4 quarters or maybe lower than that?

Yes, I mentioned 3 to 4 quarters, yes.

Okay. Because, sir, if we see the current last [ 5 ] or 6 maybe this quarter also the launch has been pretty muted, like if you compare to other players into a similar region in terms of launching as well as sale. So it has [indiscernible] performance. So any particular reason for that? And how are you confident that in maybe in the next 4 quarters, you can launch around 18 million square feet?

So that's where I had given some color. Yes, in the past, we were a few delays in approval because of COVID, various other reasons, et cetera. But like I gave a percentage to get some idea of this launch pipeline, almost 40% of the projects have already gotten approval. We have applied to RERA, somebody already RERA. In fact, 2 projects listed in there are already launched as we speak today. There is a balance 30% where approvals have come and they've applied to RERA. And then the balance is where it's all working on approvals. Based on that statistics, that we're fairly confident that we should minimum hit a 90% number in the next 3 to 4 quarters.

[indiscernible] the 2 launches, which was done in the quarter, which is 1.4 million square feet and [indiscernible], we have already taken 2 project to the market, which is [indiscernible], which is Bangalore. The have a tint the market, which is a product development under our land bank, which is already in the market at this point of time.

So under the list, #1 and #2 already been launched. #3, we have approvals in place. They're going to be applying for RERA. Under Purva land, the #5 has already launched.

Okay. Okay. But sir, like in terms of delay in approval, is the company specific issue or -- because we are not seeing that kind of delays in other companies in the similar region.

I don't know what other companies are doing, but I think it's a general issue because of COVID because a lot of officers who are responsible for approvals were on COVID duty. And therefore, certain -- and committees are not sitting. So I think according to me as [indiscernible] -- there's no specific concerns on any of these projects, which is unique to the company.

Okay, sir. And sir, in terms of sales velocity, what kind of sales velocity you expect in terms of -- after this launch? And how many years do you expect to monetize?

So typically, the residential projects have a life cycle of -- on an average of 4 years. Profit development has an average life cycle of 18 to 24 months.

Okay. And sir, this INR 18 8 crores commercial workman also, right, 6.5 that you mentioned?

Out of the 6.5, what we have just taken started construction on is -- under Puravankara, you see #5. That's the only one that is taken to market because we had existing LOIs, et cetera, for that project. The other balance, I would say, the balance, 6 million square foot is currently in the approval stage, for which we are looking for a fund, sort of international fund, JV partners to build that commercial platform.

Okay, okay. And sir, lastly, if I see the launch pipeline, in Provident, you seem to be very aggressive. So any particular reason that because it's the kind of low price offering, right, as compared to Puravankara in terms of premiumization. So any particular reason that you think the demand in that project only? Or is it a conscious status, sir?

No. So I think one is the way we look at it is these are 2 independent companies run by 2 independent heads who are both to grow the business as best as they can. Having said that, yes, Provident, considering the ticket sizes, you tend to see a little bit higher volume than the luxury. Value-wise, they probably will be the same or the luxury maybe little higher in terms of total value of sales. But in terms of number of units, you will see a higher number in Provident.

We'll move on to the next question. That is from the line of Bajrang Bafna from Sunidhi Securities.

Sir, I just want to break, you have opened for sale close to 5 million square feet and then not open for sale is again close to 5 million square feet. And then you talking about some 18 million square feet is the launch pipeline going ahead. So just to ask on this front that we have been pretty slow in terms of sales velocity in the last 3 quarters. But what sort of number that you are looking at for, let's say, FY '23? We might be closing this year at 3.5 million square feet, hopefully. But next year, what is the target in terms of sales that you have put up for yourself?

One correction there, when you say 18.12 is the developable area. So that's the constructive area, to just give a sense of how large the projects are. The salable area of that is 13.16 million. So it's not 18.12, Point 1. Point 2, on a sustainable basis, from our ongoing projects under construction, we have demonstrated we are able to get a run rate of anywhere 3 million to 3.5 million square foot. Now the minute you add launches to that, right, you see, during the launch, we -- and again, if you see the last 4 years, in 8 out of 10 launches, we've been able to sell anywhere between 35% to 50% of the project in the first quarter. So the quarters where you start seeing these launches come in, we'll see a big bump up.

Okay. So can we expect when you are working with, let's say, 13 million square feet kind of launch pipeline in the next one year, almost 40% to 50% is possible next year? Or should we work with a lower number?

It's all in phases, right? Now for example, some of the projects over here, what we are stating is the size of the entire project. Now for example, if you look at under Puravankara Project #4, [indiscernible], right? Now the total square footage of that project is 2.17 million square feet. Now you cannot expect that we'll be opening up the entire 2.17 million square feet. I don't think anyone does that. So we will end up opening 700,000 or 1 million square foot as the first launch. Of that, you can expect 35% to 40% to be sold within the first quarter or next 2 quarters. So you have to look at it in that we have to apply the phasing.

Got it. sir. Can we expect this run rate of 1 million square feet which you are establishing for, let's say, Q3. So close to 4 million square feet plus is a salable target for us next year, with an average realization of close to maybe the similar number, INR 7,000 per square feet? Would that be a right assumption to go ahead?

I would say that's a fair assumption, yes.

Okay. And in terms of, sir, operating margins, you already commented on the opening remarks that 40%, 45% is the construction cost that you can work with. But broadly, what sort of operating margins that you are comfortable with these projects on an average basis?

See once you see operating margin is all the cost up to the project and the sales guide, we are comparing with [indiscernible] of the operating margin. That is where we work.

30% less, correct?

Yes, 30% plus probably in project maybe 25% -- 25% to 30% and 25% to 30% to 35%. If you go to [indiscernible] projects my margin will be slightly better than the current [indiscernible] projects.

Okay. And sir, average that project, that period you have already commented, 4 years for the residential and maybe 2 years for the villas and all. So on an average, yes. So sir, if we go -- I think -- I would really appreciate that last quarter, we have requested that if you could provide some more details on your launch pipeline. I think in this presentation, you have included a lot more details than as compared to previous quarters. But if you could also give us a sense that, what sort of time frame for the completion, the exact time lines for each and every project? I think you have already quoted for each and every project. And the completion time line, if we can get a sense on that, perhaps it will be more beneficial for us to...

Line, we met last time, we'll again interact and do some more deliberation offline on more granular details and a bit.

The next question is from the line of [ Varun Dia ] from Dimensional Securities.

Sir, firstly, I wanted to know if you could give some outlook on the plotted line in terms of margins and revenue.

So the total potential here is about 2.3 million square foot that we have. Typically, as Neeraj mentioned earlier, the margin is anywhere between 30% to 35% in profit development. And we are looking at -- in terms of top line, we're looking at somewhere around INR 1,000 crores from this 2.3 million square foot.

Okay. And you launched one project in Mumbai. So do you see the average realization going up?

So there are 2 projects, in fact, in Mumbai. One is in Chembur. That obviously, the realization is higher. And the other one, we are just in the process right now. We just launched, which Neeraj spoke about a little while back called Palmvista which is a [indiscernible]. Obviously, that one is aligned with the typical realization, which is around INR 6,500 a square foot. But yes, Chembur, obviously, will have a much higher realization.

Okay. And one more thing. Your land bank is around 48 million square feet. So I wanted to just know, is there anything on the litigation, or what are your plans for the development?

So of that 48 million, as you can see, we are already own 13 million square foot. The rest of the land is there's a mixed bag of subsequent basis, which will come in. And also, there are lands wherein we need clearances to be done and conversions to done and so on and so forth. So those will take some time, and therefore, the phasing of the launch. But to answer that question, these are all lands paid for. So I think then it's only a question of ensuring the clearances come through, the approvals come through and when we do the launches.

We'll move on to the next question. That is from the line of [ Per Muchhala ] from [indiscernible] Advisory.

Firstly, congrats on pleasing period over the month. Can you hear me? Yes, we can. Something conversion releasing a good amount of capital from the sales of, I think, [indiscernible], right? So one was about the sale to that we did. Are we expecting more cash to come soon? And how much would that be?

There is another INR 170 crores is expected to come from that transaction. That is depending on the -- getting the additional FSI approval for the project, which is under the process. We have already applied for the plan approval. And as soon as approval comes and is loaded, then we'll get the money from.

And do you think that's a reasonable thing to happen or might be difficult?

It's a reasonable thing to happen. That very bit of government now, if it's very much in, that is why we agreed upon a sign the contract. But the moment we file that condition was a transfer to [indiscernible] ratio.

Okay. One last question was regarding this entire nonresidential business that we are trying to develop. I think we've gone back and forth on the warehousing platform. And now there is some -- something with the asset management company that you were developing. And so as investors, we struggle with understanding how to value the potential of the nonresidential piece. So can you guide us on what the concrete plan is? Or are we still debating it?

No. So the concrete plan clearly is the focus on Provident, Puravankara Residential, Puravankara commercial, which is about 6.5 million square foot, and we are going to scale that up as we sign up the platform and plotted development in Purva land. These are the 4 clear drivers of growth for us across the 9 geographies that we are presenting. So we are very clear in our strategy in terms of what products and what markets we want to [indiscernible] .

But for the 6.5 million of commercial, are we looking at some kind of asset management structure? Or are we going to hold it? And what kind of time line are we looking at?

See the asset management structure is already in place. So we do have assets under management as we speak. But as a commercial platform builds up, I'm quite certain that business will scale up. The reason it has not scaled up is because we are not -- so now with the new approach that we are looking at doing, there is a new strategy, that's been put in pace. We believe that business will scale up. And as it scales up, so will the asset management. And as far as the exit is concerned, since we are looking at a platform transaction, we're obviously going to hold the assets. Some of the smaller assets, we may not. But most of the assets, we will hold as a part of the platform from us.

We'll move on to the next question, that is from the line of [ Suraj Nawandhar ] from [ Sampada Investments ].

Sir, I wanted to understand your outlook on the debt. We have been continuously reducing it, but what is your long-term outlook for next year?

So we have been stable as far as our debt numbers are concerned. And if you see what we have been able to achieve in a big way has been the reduction in cost of debt, especially in the last 1 quarter over 3 to 4 months. We see that further marginally getting better. But the way really the right way to look at debt is the debt per square foot of the square footage in the marketplace. So in that context, our debt will continue to reduce because the quantum of square footage we're going to take to the market is going to be substantial. And as the sales proceeds come in, obviously, and the construction progresses, there may be CF that may be required for these projects. But having said that, I think what -- the right context to look at is that per square foot and that will continue to reduce.

[Operator Instructions] The next question is from the line of Amish Gupta from [ JP Securities ].

Sir, for my first question [indiscernible] land parcels, you already have a good presence in certain part of the India. And so are you looking towards some more land parcels in other parts of the country? Or if as in you will focus on this area itself as in different parts of India or southern part? Can you please give a light on it?

Yes. So we are very, very focused on South and West of India, and that will continue to be there. Our major focus is going to be between Mumbai, Pune, Bangalore, Hyderabad and Chennai. That's the key driver for us, and we will go deeper in these markets. We believe that Mumbai will give us value per square foot to be able to -- and that's also going to enable us to get higher realization per square foot and add value. There is a cost, it would be latter. Pune, again is very like Bangalore. So we will continue to scale up our operations there. And similarly, between Chennai, Hyderabad and Bangalore.

Okay, sir. And sir, could you please quantify the size of land parcels that will be acquired, if you can?

That's a very forward-looking statement, but we continue to be in the marketplace, and we will share the details as we go along.

Okay. Okay, sir. Understood. And my next question is, so you launched 2 projects that is Provident, Palmvista in Mumbai, and Tivoli Hills in Bangalore, right? So what is the salable area? And what is the kind of traction you are seeing over there in terms of, say, inquiries and bookings?

So Tivoli is total of 1.4 million square foot, and we have seen very good traction as far as Tivoli is concerned. Of the launch of our phase, we have already sold over 60%. As far as farm [indiscernible] is concerned, it is about 1.2 million square foot, of which the Phase 1 that we have opened, we have already sold about 55% of it. And we intend to scale up because we just launched. So we are in the process of launch at this point in time, and we will see the numbers go up. So very positive in terms of the brand and in terms of the product acceptance, and a lot of excitement in the market in these launches. So looking positive, looking positive.

The next question is from the line of [ Divya Salian ] from [ Fort Capital ].

Sir, I have 2 question. The first one is offset, you have entered in the plotted development business. What is the kind of market that you are looking at in size terms?

Project development, sorry, late development.

Yes, yes, it's development.

Okay. So development, we are at we have a total piping of about 5 million square feet. Of this 1.4 million has already been launched, which we mentioned in Tivoli Hills. And the rest of the projects are very, very visible in terms of launch. In fact, another project, which is already under launch. There is one more, which is the Southbay, which was mentioned earlier, is already in expansion. So that will go into launch in this quarter itself. And the others are already in the expansion stage. So we are very, very bullish about the product development because we believe that there is a huge consumer demand. And the quality of development and the way we are positioned in the marketplace is way ahead of the market.

Plotted development has always, I think, has been there. But fortunately -- unfortunately, I think that the branded players, for some reason, was [indiscernible] doing apartment building because part of development at that point was actually, I think. We typically not developments come around the outskirts of cities. And if you go back maybe 5, 10 years, basis didn't have the right infrastructure. All the railroad, highways that are being built, a lot of the outdoor plans typically where market development comes out. But because of [indiscernible] more than from city centers, maybe 45 to maybe an hour. So therefore, you've seen a lot of the big brands, which is sales get into it. I think it's a fairly large market. In percentage terms, as of today, as we are tracking it with the data available, I think almost 10% of the prospective apartment buyers are actively evaluating, shifting to a plotted development. For a couple of reasons, I think the motion of owning land, I think the flexibility that we can buy land today and build your house over maybe 2, 3 years. You get that facility. Third, I think the shift being a post-COVID of having a horizontal development COVID to come out of their apartment. In the product development, we are able to come out. You're able to walk around. So I think these factors have contributed to that push in development.

Okay. And how many projects do you have in pipeline on the plotted business? And by when these projects will be completed? And what are the -- or where are these projects based?

A total of 7 projects across 3 cities and 5 million square feet we are talking about and they're based in Bangalore, Coimbatore, Chennai. Yes, these 3 markets at this point in time.

[Operator Instructions] The next question is from the line of [ Arun Mehra ] from [ Money Life ].

So coming to your launch pipeline, Provident accounts for around 42% and Purva is land is 22%. So what would be the ideal mix that you would want to have in the future which you would be comfortable with?

So from the point of view of square footage, we will continue to see Provident and Puravankara constitute equally up to about 40%, 40% and about 20% in will remain as Purva land.

Okay. So that will be a park.

Yes.

So coming to your geographical locations, 45% share is coming from non-Bangalore like outside Bangalore. So do we see this number rising, down?

Yes, yes. Very much. We see this number is rising, especially for the West. As we sign up and launch more deals, more projects, we definitely see it going up from the [indiscernible] .

Okay. And this general overall demand environment, what would be your thoughts on that, your outlook on that?

Still very positive. We have seen very positive traction across the markets. We believe that this demand is here to say, this current interest rate regime as far as home loans is concerned, it's here to stay. And then the government push in infrastructure is definitely going to drive up the economy towards growth. So on an overall basis, we believe both housing. And in the next few months, the 2 quarters, we'll also see commercial comeback. So we are very, very optimistic that we are in a good upward cycle at this point in time.

The next question is from the line of Bajrang Bafna from Sunidhi Securities.

Sir, on the commercial projects, what is the potential rental income that we are looking at maybe from next couple of years' perspective? So if you could provide some time line and some rental potential that could be there for the company will be really appreciated.

So it's a mixed bag, as I mentioned earlier. But having said that, these projects are just starting to construct and some will start during this year. So from the point of view of rental income, we are not looking at anything less than between 3 to 4 years to start completing these projects and starting these -- the income from these projects, unless they're a cost [indiscernible] sold so -- which is very few. But having said that, we are looking at anywhere between 3.5 to 4 years to be able to see any rental coming from these assets.

Okay. But sir, any ballpark number on that? Like what could be the potential of these projects, which you are starting right now? What could be the -- [ one ] dollar is a reference for.

Typically, reference point. Maybe [ INR 10 ] and number, at the end year end, $0.80 to $1.2.

Okay. Got it. And what is the total area, which we're going to construct on this commercial side, maybe in 4 years' time frame?

As we mentioned, I think over the next 4 years through 5 years' time, what we already have in the portfolio will go into production. And then we are -- obviously, as we sign up the platform, we'll scale up that.

Okay. What could be that number? And what is the average cost of construction that will be involved in building that? And how we are going to fund that?

So cost of construction is largely around INR 3,500 a square foot. And as far as construction is concerned, it's a mix of equity and debt. Our lands are all paid for, as we mentioned earlier. And with the platform, we'll bring into the business, as well as the construction finance that is required. Now as you sign up transactions, obviously, the debt cost comes down, like in all the facilitation and commissions.

Okay, okay. And any number that you are comfortable to disclose to us in terms of potential in [indiscernible] for this?

It's already mentioned. It's already 6.5 million signed up. and which is going to go into production over the next year, 1.5 years, 18 months' time frame. And then we will add to it. So that 6.5 million flat is something that -- sorry?

6.5 million square feet?

Yes, yes. That is already mentioned, yes.

The next question is from the line for [ Abhishek Lodha ] from [indiscernible] Securities.

This is Abhishek. Just want to understand, I mean, what is the difference between Provident development and apartments with respect to economics for the customer and the pedigree of customers choosing it? So basically, I want to understand how much is the customer paying high priced compared to the apartment in the same micro market?

So the way we look at this and the consumer profile we have looked at, so a lot of them are family end users, when we recently launched our Tivoli project in Devanhalli. These are customers who are looking at buying the land and building it over a period of time. There are not some people who will on an immediate basis move in there. So the development, once the plotted development is completed, anywhere between 3 to 5 years, they will continue to build on their pieces of land. And from the cost point of view, if you look at it, cost of land and ownership of land is very, very big, because technically, you own the piece of land on which you stay, unlike an apartment building where you are in a undivided share of a society share as it is in different parts of the country. So in that sense, this is your own ownership of land and it has its own unique attraction that the consumers have for it. So construction cost really is up to you, that you decide what you want to spend. So if you technically look at it, then you have the flexibility of funding the construction costs over time and taxability of deciding when you want to build it and how much you want to build. And two is that the construction cost is at actuals. You're really not going to pay a margin on the construction costs anyway. So it gives a great amount of flexibility, and that's been the insight that we've learned. Of course, it's very important for these customers to look at the right developer so that the infrastructure and the plots are actually there as they have been designed to be, especially including the water supply, the drainage, the power, the quality of goods that you do, the quality of infrastructure you do and the common. That's the important piece, which is where the organized players are having an end.

Sir, are you also providing with the facility of constructing for this?

No, we are not providing any facility.

The next question is from the line of [ Manika Arora ] from [indiscernible].

If we see other players in the industry, in comparison to them, our growth has been slow. What is the reason for that, sir?

So for us, last 3 years, if you noticed, has really been -- so about 3 years back, 2.5, 3 years back, we were very heavy on ready to move in inventory. So we had enough ready to move in inventory to liquidate. Our launches were commensurate to the kind of inventory we had. So you don't want to add inventory when you have significant [indiscernible]. So really, the focus was to liquidate those. And if you see that over the last 2.5, 3 years, we have brought that down considerably from 2.5 million square foot to almost 400,000 square foot today, which basically means that now we have a significant pipeline of [indiscernible]. Simultaneously, as we focus on that, we also built our launch pipeline because as you're rightly I'm sure I understand, that projects in real estate take time to get sanctions, to get launched, go through the RERA approval. So it is a -- land goes to conversion, et cetera, et cetera. So we give assets for a while. And now we believe that all our investments, which have been made in land are ready to get unlocked as we launch. And therefore, you will see a different kind of growth path that the organization will be. So when you're looking at RTM, it's different when you're looking at new launches, it's a different cycle you are embarking on. So now we are on that cycle. And fortunately for us, we are entering that [indiscernible] and the market is doing pretty well, and the growth is there, which will enable us to continue and sustain the growth.

Okay. Okay. And so like not very particular I'm asking, but on a broad part we see, what is the revenue growth you are seeing for the next, say, 2 to 3 years?

So on a forward-looking statement and guidance, we don't want to give any guidance. But I'm sure, with the understanding that you're getting from the plan, you can sensitize yourself with the kind of production. In terms of launch pipeline, which we have and open for sale existing inventory, sustained sales and the kind of realization we are making quarter-on-quarter basis, which is evident to kind of make estimates what kind of revenue growth we can achieve in the coming year and coming years.

Okay, okay. And what kind of impact the third wave has on our business?

So the third is really called disruption early on, somebody on the call asked why the projects get delayed. And largely, in the industry, I think third wave had insight because one officer was self-stated and the other officer, then the other officer was sat down for some time and then department and so on and so forth. So what happens is this kind of causes really -- this time, it will be minimal compared to the second year, which was really, very difficult for all of us. I mean I think in many ways, first one is, of course, a complete lockdown. The second one is difficult of loss of life happened, and we were not ready to be vaccinated and all of that. This one was -- in that sense, there was no loss of life, but only disruption, was short term, but very aggressive because you had a lot of people falling sick at the same time and isolating themselves and so on and so forth. So things just become slow to move. That's the only disruption that happened. Potentially, it was a minimal impact. And now pan-India basis, cases are coming down and including Bangalore and Mumbai market, which we are present, are almost coming to an end. And the economy is coming back to normal. And we hope that this kind of environment will continue, and there will be no impact of the COVID.

Okay. And sir, just one last question, if I could squeeze in. What is your take on the NPC commodities stance on [ RE ] sector? And what do you think the stance will remain staying in the coming months over?

Are you increasing prices, commodity prices? Are you referring? As I mentioned in my opening remarks, we are cognizant about the increase in prices. If you look at our construction costs comprised of 35% to sort of 40%, 45% of the sales price. And you can say, for example, even a 10% increase in the cost of input costs may have an impact of kind of 4% to 5% on that margin. And at the same time, that is getting mitigated by kind of consistent price increase. If you look at this quarter, so our increase in the level is 7%. So even if it's a 4%, 5% impact on the input cost, but it is getting offsetted by the increase in price. And as of now, we do not estimate there'll be any significant impact in our margin because of the increase in commodity prices.

Let me add. I personally, in my view, believe that the margins will improve as we go along, because if you just see the overall industry demand-supply situation, and you will realize that the ready-to-move inventory is pretty much over. And the launches are very limited to large organized players or branded and/or listed players. And that will ensure that there will be -- continue to be a cap on the quantum of supply you have while the demand has picked up. With that background, I personally believe that the margins will improve as we go along over next one year as the prices continue to go up. But to answer the question, yes, commodity prices may have an impact. But the continued demand-supply mismatch, which we anticipate in the next year or so given the past 1 year and 2 years, in fact, 1.5, 2 years, we believe that there is an opportunity to see some appreciation in real estate.

We'll move on to the next question. That is from the line of [indiscernible] from [ CSP Capital ].

I just wanted to understand what is -- are there any benefits that this budget has for the real estate sector? Could you throw some light on that, if there are any measures that will help the real estate sector?

See there was no specific correlation. However, if you look at the government's focus on kind of infrastructure development, government has announced that they increased the investment in infrastructure for capital investment of INR 7.5 lakh crores. That will have a cascading effect in that economy. And particularly in the real estate sector, that acceptably benefited. Governments continue to focus on affordable housing, we don't get proven by the announcement of finance minister that INR 48,000 crores will be invested in the affordable housing. So that gives a government's intention to growth of the sector. Third, government also announced that the -- with the state governments and formulate a law to the station of the land report as well as inform [indiscernible] process. I think these things were out of far reaching impact on real estate sector [indiscernible] will be benefited. That is how we are looking at these budgets.

The next question is from the line of Amish Gupta from JP Securities.

Sir, I have a couple of questions on other expenses. So my first question pertains to the marketing expense. What are your marketing expense for the quarter in terms of, say, percentage of sales? And as the sector is on an uptick, do you think it will go up in the coming quarters?

I'll explain. If you look at our other expenses, INR 74 crores for the quarter or for the consolidated basis, right? Out of the INR 74 crore, it's close to INR 21 crores, INR 22 crores related to the sales and marketing expenses, about INR 40-odd crore amount related to project and the rest at our general overheads. So other expenses related to the projects are getting inventory with the project cost. And hence, it has no bearing on the immediate P&L for the quarter. However, the marketing expenditure has a bearing on the quarter. And this leaves you we looked at the total sales that we reported for the quarter, not revenue in the P&L. If we compare the total sales, it's close to 4%.

Okay. So understood. Sir, but then other expenses have almost doubled Y-o-Y and by say, [indiscernible] on that?

This [indiscernible], this includes the project cost is in marketing and general overhead. If it because we have taken 2 big approvals during the quarter. For our other [ Chennai ] project, we have just under this is more 50% discounted scheme, which is a state government has announced, we paid that premium upfront, about [indiscernible] split decision of the cost. Similarly in [indiscernible] in Pune, they are also [indiscernible] the premium cost about INR 7 crores and save the 50% of billion cost because of the government scheme, which was available after 31st December then 31st January. So that increased our -- the cost rate we project. For sales and marketing, total cost has also gone up for the quarter. As we mentioned in our remarks, we have launched 2 big projects during the quarter, which is one in Bangalore, one in Mumbai. Besides that, the other projects, which is -- are in the process of launch, there we incurred some one-off expenses. That is what it increasing the marketing expenses. In the similar quarter a year ago, we have not done any launch. We have not done a similar expenditure of approval cost. Hence, the cost has optically, it appears to be double. However, it's not in terms of the sales revenue, in terms of project cost. So go through our detailed financial statement, Regulation 33 in the [indiscernible] entire breakup over the expenses available.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.

Thank you, ladies and gentlemen, for your attention and time. I hope my colleagues have answered all your questions. However, if you have any questions -- further questions, we are always available for a call in [indiscernible]. Thank you once again for joining this call and wishing you all a very happy weekend. Thank you.

Thank you. Ladies and gentlemen, on behalf of Emkay Global Financial Services, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.