The Phoenix Mills Limited (503100) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Results Conference Call of The Phoenix Mills Limited. [Operator Instructions] Management of the company is being represented by Mr. Shishir Shrivastava, Managing Director; Mr. Varun Parwal, Deputy CFO; and Mr. Pawan Kakumanu, Deputy CFO. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Shrivastava. Thank you, and over to you, sir.

Thank you. A very good afternoon, ladies and gentlemen, and I hope that you are all keeping well and staying safe. We take pleasure in welcoming you all to discuss the operating and financial performance for the first quarter of FY '22. In our retail portfolio, consumption was at approximately INR 260 crores in the first quarter FY '22 versus INR 1,440 crores in Q4 of FY '21. Local restrictions were imposed across our malls in April '21. These restrictions were only removed end of June 2021 and in states except Maharashtra. All our malls, except those in Maharashtra, are operational and operating as per local guidelines. We are extremely happy to see swift recovery in consumption for the malls that are operational. In July '21, our operational malls recorded a consumption of approximately INR 200 crores. Adjusted for the number of operational days and select nonoperational categories, we are seeing consumption recovery at approximately 93% of July 2019 levels and 120% of March '21. As a percentage of July 2019 consumption, watches, jewelry and fashion accessories were at 91%; electronics at approximately 82%; fashion and apparel at 75%. This ramp up this time around has been much higher than the recovery that we had seen after the malls opened after the first lockdown last year. We remain very positive in our consumption recovery outlook for the second half of FY '22, given the increasing pace of vaccination across the country and easing of local restrictions. Moving on to our commercial office portfolio. Our commercial office portfolio continues to remain resilient. Collection efficiency for the commercial portfolio in Q1 was in excess of 92%. Fountainhead Tower 2 at Pune, with a leasable area of approximately 250,000 square feet, has started generating revenue from this quarter with tenants moving in. Revenue contribution should improve significantly from the second half of FY '22. Fountainhead Tower 1 in Pune has a leased occupancy of approximately 95% and is fully operational. Work at Fountainhead Tower 3 is now complete, and we are awaiting occupation certificate. A quick update on the expansion at our Lower Parel site. Project Rise, which is an office-led mixed-use development will substantially complement our existing retail and hospitality landmarks at Lower Parel. We've recently received the IOD. During June, we paid approximately INR 280 crores to secure 1 million square feet of development potential. And we have further paid another INR 65 crores towards the development charges. Meanwhile, at our other projects under development, we are progressing with our plans for offices at Wakad at Pune, Hebbal in Bangalore and Chennai and expect to share more detailed updates on construction status for the various under planning office assets in the second half of FY '22. Our mall projects, which are under development, we expect the mall Phoenix Citadel at Indore and Phoenix Palladium at Ahmedabad to be operational sometime in FY '23. With regards to our 2 large malls in Wakad at Pune, which is Phoenix Millennium and Phoenix Mall of Asia at Hebbal, we expect these to be operational in FY '24. Moving on to our residential business. We have witnessed good traction in residential sales, mainly led by the reconfiguration of our Kessaku property into smaller units and the robust demand of ready-to-move inventory. Between April and July, we sold 8 apartments at One Bangalore West and Kessaku, which represents an area of approximately 33,000 square feet and a sales value of about INR 50 crores. Customer interest in our property remains extremely high. We are now launching a very attractive subvention scheme to cover both the completed units at Kessaku as well as the under construction Tower 7 at One Bangalore West. We expect the subvention scheme to give a massive boost to our sales trajectory in the coming quarters. With regards to our hotels, well, they've had a testing time in the months of April and May. However, the business has looked up from June and we are seeing increasing traction in staycations, social events and corporate events between July and August. The St. Regis, Mumbai reported revenues of approximately INR 130 million -- INR 13 crores, while Courtyard by Marriott contributed about INR 2 crores. At The St. Regis, we have invested in upgrading our property with an eye on the future. We believe that as things recover and return back to normal, our various strategic upgrades at the hotel will enable us to recover faster and reemphasize the hotel's positioning as the epicenter of all marquee corporate and social events in the city. We have carried out upgrades at several facilities of The St. Regis, including improvements to the guest experience, upgrades to our banquet facilities and new restaurants being launched, amongst others. I'm pleased to share that Seven Kitchens, our all-day dining, is now open in its new avatar. We are also delighted to announce the launch of our new Middle Eastern restaurant called Sette Mara at The St. Regis, Mumbai. We expect the second half of this year to be much better for hotels, driven by leisure travel and social events. We had stated our strategy to keep on adding at least 1 million square feet of retail to our portfolio every year post FY '24. Earlier this year, we had completed the acquisition of a land parcel in Kolkata and this greenfield development opportunity will be the first such addition to our portfolio beyond 2024. I have already covered the delivery time lines for our 4 ongoing mall projects. While the pace of construction and site had slowed down on account of local restrictions, all our sites are operational, and we are not expecting any significant delays in our time lines to commence operations at these assets. Retail interest in our under-construction malls also remains extremely high, and we've seen significant traction in leasing activity in the quarter gone by across all locations. A quick line on our debt strategy before I request Varun to update you on the financial performance. Our strategy continues to be to optimize the capital structure. We have consciously deferred construction finance until -- for our under-development projects until development risk is significantly mitigated. As we reach time lines where we are about 12 to 18 months away from completion of various malls, we intend to draw down some construction finance. And the intent is to convert this into LRD facility soon after these malls become operational. I will now request Varun to update you on the financial performance. Thank you.

Thank you, Shishir. Good afternoon, ladies and gentlemen. Thank you for joining us on this call. Continuing with the briefing, which Shishir gave, I would like to share with you some of the key highlights of our consolidated financial performance. Our income from operations for quarter 1 FY '22 stood at INR 2,043 million, which is at 33% of quarter 1 FY '20. Our EBITDA was at INR 761 million, which was at 26% of quarter 1 FY '20. And we have reported a loss after tax of INR 262 million. Retail vendor income came in at INR 870 million, which was at 34% of FY '20. Our quarter 1 retail EBITDA was at INR 919 million and this was at 36% of quarter 1 FY '20. Our commercial office portfolio continues to remain very strong, and we reported a total income of INR 365 million and EBITDA of INR 247 million. We expect the EBITDA from the commercial office portfolio to cross INR 1,000 million or INR 100 crores for the full year as occupancy ramps up across our assets and we release additional area in the newer assets. Overall, from a cash flow perspective, our inflows from operations were at INR 2,110 million while other receipts from our transactions with CPPIB and GIC were at approximately INR 15,220 million. Our outflows were at approximately INR 736 million, out of which operating expenses were at only INR 76 million. Our CapEx for quarter 1 FY '22 was at INR 1,160 million. And while the pace of construction has been slow given the restrictions imposed in various cities, we expect this CapEx spend to pick up in the remaining 3 quarters. Like Shishir mentioned, we made some FSI payments. And for the month of -- for the quarter ended June, our total payments for the Lower Parel project was at approximate INR 325 crores. We also repaid debt of about INR 350 crores during the quarter, and this was supplemented by additional debt, which we took at Island Star Mall Developers and at our commercial office towers in Pune. Our overall interest expense stood at approximately INR 800 million for the quarter. From an operational perspective, we had an operational free cash flow of INR 550 million for quarter 1 after considering interest and tax payments, but before principal repayments. Our consolidated gross debt stood at INR 43,567 million as compared to INR 44,865 million at the end of quarter 4 FY '21. Gross debt overall was down by about INR 130 crores for the quarter. We paid off approximately INR 3,500 million across principal repayments in quarter 1, and we also paid down certain revolving credit facility. Like I earlier mentioned, we took some additional debt at Island Star Mall Developers, which was approximately INR 150 crores, and at our office towers in Pune of INR 75 crores. Just to highlight, the office towers in Pune were constructed completely out of equity, and this is the debt that we have taken against the operational Tower 1 in Pune, which has an annual EBITDA of approximately INR 15 crores. Our average cost of borrowing is now down to 7.9% from 8.17% last quarter. Our cost of borrowing is down by 27 basis points in the last 3 months. We have further had more interest resets in July and in the first week of August, and we expect our cost of borrowing to further decline in the coming quarters. Post the transactions, which we announced with government -- GIC and with CPPIB, our group liquidity is in excess of INR 1,662 crores. This excludes funds of almost INR 700 crores, which are parked in revolving credit facilities at this point in time and remain available to PML should we need it for any CapEx or acquisition opportunities. Phoenix share of gross debt today stands at about INR 3,237 crores. Adjusted for the liquidity available with Phoenix in the form of bank balances and investments, our share of net debt is at only INR 1,686 crores today. With an extremely strong balance sheet position, we are prepared for any challenges that the current environment may throw, and we continue to focus on timely completion of our under-construction projects and expansion into new cities that we have identified. With this, we would close our opening remarks, and we'll open the call for an interactive Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.

Congratulations on a good set of numbers and the improving consumption across the malls, which are open. My first question is now with the coming back of the consumption in excess of 80%, what's the outlook on the rentals? Have the rentals now reached to the pre-COVID levels? That's my first question.

Thanks, Parikshit. So we believe that -- I think with the malls reverting back to close to pre-COVID levels of consumption, we believe that there should be no impact going forward on rentals. Our discussions with our retailer partners are ongoing for what is the discount that we should be offering them for the period of the malls being shut. So that is an ongoing discussion. We -- as we had done last year, this time around as well, we waited for the restrictions to be eased and for the malls to be operational for consumption visibility before we entered into educated and reasonable negotiation with our retailer partners.

So when do you expect the pre-COVID rentals to start shaking now or after adjusting for the discounts and for the -- given the malls were shut?

Sorry, Parikshit. Can you please repeat your question?

See, when do you expect the rentals to reverse to the pre-COVID levels now since the consumption has now exceeded more than 80%? And so the time frame from which the malls have shut, what do you want to basically bake in these numbers [indiscernible] if you can just confirm. After doing this adjustment when do you expect the...

I would say for malls that became operational in the period of June and -- which was June and July, I believe that we should be able to get to normalized rentals without any impact of further restrictions, et cetera, by -- from starting the second half of the year. Yes. But I would also suggest also -- rather refresh your memory that we have even -- when I say normalizing rentals, we are only talking about reverting to the minimum guarantee rent as per contractual terms. We anyways have a revenue share component, which we have negotiated to be higher for the period where we offer any waivers. So with consumption reverting back to normal, I think the impact of that is also going to be very, very less -- very significant, and we should be able to recover rentals higher than the discounted minimum guarantees.

Okay. The second question is on the business development side now. So we have added Kolkata now. So have you started working on any other new greenfield opportunity in the mall segment in newer cities? And any likely closures possible in the financial year on that?

So we are actively looking for growth opportunities. We have raised capital in our joint venture with the government of Singapore, with GIC. And there is a primary infusion of cash over there to fund the growth opportunities. So under that JV, we are actively looking for some opportunities. There's nothing to share at the present because it's all at the initial evaluation stage.

Okay. Just my last question, you did touch upon that the last quarter you had seen good response on the lease in the under construction asset. If you just can share some numbers how has been the movement there in terms of pre-leasing.

Sure, we can give you a broad overview on the leasing activity that we have seen in under-construction sites. Perhaps I'm going to request Pawan to give you a more recent update.

We had started our leasing for under-construction assets about a month ago once COVID-19 second lockdown had moved away and we started our interaction. To refresh your memory, a significant amount of leasing was already completed in Indore and that is picking up pretty well as well given that this is among the first ones to open. We expect to end the year at almost 60%-plus leasing equity to be completed. Even in our other assets, such as Mall of the Millennium, which is in Pune; Mall of Asia, which is in Hebbal; and Phoenix Palladium in Ahmedabad, we are also seeing significant traction coming up. I'm also very happy to share with you that our traction even in the recent times, we have been able to close in-line rentals at higher than what we had planned in our business plan. So we believe the traction continues to be very, very strong for market-leading assets.

For Ahmedabad...

As Pawan mentioned, by the end of this financial year, we expect -- at Mall of Asia, Bangalore, we expect to be at about 55% to 60% leased. We are in active discussion with more than 140 brands, including several luxury brands. With a large group, we have concluded the initial discussions to bring in 50 brands across the center. Phoenix Mall of the Millennium at Pune, we expect to be close to about, again, about 50% by the end of this financial year. Phoenix Citadel, Indore, which is likely to open in FY '23, we expect to be at about 70% by the end of this financial year.

And what about Ahmedabad, sir?

Ahmedabad has actually already -- has already achieved about a 70%-plus leased occupancy. And that will -- that's a mall that will also become operational sometime in FY '23. So we expect by the end of this financial year to be at least at 80%, 85% leased.

The next question is from the line of Adhidev Chattopadhyay from ICICI Securities.

Phoenix Rise already made FSI payments, so what will be the total development size and what is the overall budgeted cost? And what is the expected completion time line along with what have been your cost savings with the FSI payments you are paying? Yes. That is the first question.

Sorry, could you repeat the third part of the question?

What -- FSI payments we have made, right, which is IOD, what is the sort of savings we have had? I mean so I'm trying to understand have you made all the payments we need to do right now? Or is there more savings to come in the future?

Okay. So on the FSI payment, we have paid about INR 280 crores already. And there is about a INR 400-odd crores saving there because the normal charges, premiums would have resulted in about a number of close to INR 700 crores. So we have paid the premiums on that and secured that FSI. There are development charges that have to be paid after which one will move with the process of the CC, et cetera. That's about another INR 65-odd crores, which we have also paid and expect the next stage of approvals in some time. The overall project cost, excluding cost of land, et cetera, we expect it to be at about INR 1,000 crores. And the overall development potential is about 1 million square feet -- 1.2 million square feet, which includes roughly around 300,000 square feet of retail and 900-odd-thousand square feet of commercial offices.

Okay. And this -- you have mentioned in the presentation some dedensification here at High Street Phoenix, some 0.5 million square feet. Is that including -- is that 0.3 million part of that or that is part of Rise exclusively?

Yes. So this includes the 300,000 square feet of Rise that I mentioned, the Lower Parel expansion project. In addition to that, we have now converted some area of the Palladium basement to retail and we are currently working on the interiors over there. And also in the Sky Zone, we have added a level 3 and -- levels 2 and 3, so 2 floors of retail have been added in Phoenix House above Sky Zone.

Sure. And just on the construction timeline now, when do you expect the broad completion of this project?

Project Rise, so the 300,000 -- the 200,000 square feet of retail is already -- work is in progress. In the next few months, I would say, we will be able to make the space operational. Part of it is already operational -- leased and operational. The Project Rise alone, which is the 1.2 million square foot development, we expect to break ground maybe in the next few months. And I think FY '26 is -- will be the first full year of operation.

Okay. And -- FY '26, okay.

Will be the first full year. So we would probably end up operating some part of FY '25 as well.

Okay. Okay. Fine, fine, fine. And -- okay, second question is on our group liquidity position for the GIC, the first tranche of money which we received, the INR 1,100 crores, obviously INR 800 crores came through -- INR 800 crores-plus came through primary and rest through secondary. How has been the upstream to Phoenix as a stand-alone entity? I mean is it all lying at the SPV level, that money? Or has there been some settlement between the stand-alone and the SPV?

So it was INR 800 crores of secondary and balance was primary. Now out of this INR 800 crores, roughly around -- just give me one moment. Sorry, to continue from where I was. About INR 800 crores, which was a secondary or repayment of liabilities from these SPVs to P&L, cumulatively INR 800 crores that came into P&L. We have used it to pay down certain OD facilities. We've used some part of that to pay for the premiums for Project Rise, et cetera. And roughly INR 281 crores continues to sit in the SPVs, which are part of the joint venture with GIC and some part of the growth capital. We expect that as we identify opportunities or before the end of 12 months, when the balance INR 400 crores comes in, so we have about INR 680 crores, INR 700 crores or thereabouts to spend for growth opportunities under the GIC JV.

Okay. Sure. And last question is on the committed, which is a rights issue for Island Star of INR 400 crores [indiscernible] So have we -- is there any clarity, if we'll be making any commitments by both the partners this year or next year sometime?

We've already infused INR 200 crores -- approximately INR 200 crores each into that JV. We have already infused the money that -- in June this year. And that money we have used again temporarily to park within the revolving credit facilities and the balance continues to stay as treasury investments in Island Star or its subsidiaries.

Okay. So just to understand correctly, at an aggregate for Phoenix level, INR 1,100 crores has been come into GIC and another INR 200 crores has come into CPPIB for this quarter, the first quarter. Is my understanding correct?

Correct. So INR 1,100 crores from GIC and roughly INR 200-odd crores is coming from CPPIB plus they have also invested in our Kolkata project, where at the first instance, they've brought another INR 180 crores, which was paid out to -- part of it, INR 150 crores came up to Phoenix, which was a short-term loan that Phoenix had given to that subsidiary, which was returned. So that is the liquidity that has been created in this last quarter.

The next question is from the line of Biplab Debbarma from Antique Stockbroking.

Sir, my question is pertaining to the leasing that you did. I just wanted to know what would be the -- among this, you would have 300, 350-odd stores in your typical mall. Amongst these stores, how many are the brands that are common across your malls? And how many of those brands have preleased in your under-construction projects?

So I would say that about 75% of the brands would be common across all our malls. Roughly, all the malls have about 320-odd stores. So 70 -- I would say 70% would be a more accurate number, which are common across malls. Several of these are -- they are owned by groups and large -- and we have an anchor. So I would say at least half of these have signed up at across all of our locations or are in active discussions with us, and we'll be executing their LOIs sometime soon.

So we also expect by the time this under-construction mall becomes operational, around 60%, 70% of this -- I mean these brands are more or less would be occupying your new under-construction malls?

Yes. Yes.

Okay, okay. Sir, second question is on your expansion in HSP, not the Phoenix site, I'm talking about the expansion. I believe it is some 97,000 square feet. Sir, once this becomes operational, what would be the total leasable area in HSP Palladium that is Phoenix share? What would be the total leasable area of Phoenix share once this become operational?

So Phoenix Palladium, as I mentioned to you, now the entire property at Lower Parel is branded as Phoenix Palladium. Excluding Project Rise, 97,000 square feet was the expansion in Sky Zone of Phoenix Palladium, which is on the second and the third floor of the building where we used to earlier have offices, and we have now converted those into retail space. And we've also purchased some of our long-term tenants who own spaces there. We purchased those units back. So this is 97,000 square feet. We have a further approximately 90,000-odd square feet, which is an expansion of the Palladium building, which sits below the St. Regis Hotel. So the basement of that structure, we have now converted into retail. So that is where we said that approximately 200,000 square feet is the expansion and another 300,000 square feet will get added as part of the Project Rise greenfield development.

So sir, including this 200, what would be the -- your -- excluding that Project Rise part?

Excluding Project Rise, we'll be approximately 900-odd-thousand square feet, 970,000 square feet.

Phoenix share, right, sir?

Yes, sir. Phoenix share. That is only at the Lower Parel location, if that is -- your question is typical of -- is focused only on Lower Parel, right?

Yes, sir. Yes, sir. Yes, sir. Okay. Sir, one final question. I was just comparing your rental revenue in first quarter FY '22, excluding Palassio is less than your rental revenue in first quarter FY '21. Whereas the consumption is -- in this quarter is higher than the first quarter FY '21. I know these are not the normal times, but I'm just trying to understand what happened. I mean why, despite higher consumption, you have lower rental revenue this quarter compared to first quarter previous year?

So for the purpose of our rental income recognition, in this quarter, we have been -- I would say we have been quite conservative. As I had mentioned at the start of my call, we have -- the circumstances this year around are actually very, very different as they were in Q1 FY '20 -- FY '21. People are getting vaccinated. We're seeing consumption trends pick up much faster as opposed to the last lockdown. So while we have taken a conservative view, our confidence remains that we will be -- actually we'll able to see a much higher rental recovery. And in fact, the billing that we have done is also significantly higher than what we have provisioned for this quarter.

We take the next question from the line of Kunal Lakhan from CLSA.

Shishir, I'm just trying to understand that your borrowing cost has been coming down consistently. It's almost at sub-8% now. I'm just trying to understand, again, your strategy of using more equity towards expansion versus debt, which is now really available at cheap cost.

Right. No, very valid point. I think we've also, in the last -- I would say, in the last quarter, we worked actively on reducing our cost of debt. We have typically seen that at least on LRD, one is getting a significantly better rate. Construction finance, however, continues to be available in the range of about 8.5% to 8.7%. We have -- plus in the -- I would say in the -- until the end of the last financial year, banks were not readily looking at construction finance and the terms were quite onerous and typically not the kind of terms that Phoenix has agreed to in the past. So to derisk the projects and to ensure that the development timelines are met, us along with our JV partners, CPPIB, where bulk of these assets sit, development projects sit, we took a very conscious call of ensuring funding closure by way of equity. And as we proceed with construction activities and development risk has gotten mitigated, we will be drawing down construction finance. In the last month, we made significant strides on construction finance as well. For our project at Indore, we've received some -- we've been able to negotiate some fantastic terms. We believe that in the last 12 to 15 months of the completion of works before the mall becomes operational, we will be drawing down construction finance on that project, freeing up some of the equity for expansion. And soon after it becomes operational, we will move into an LRD structure. So just to give you a very quick update on some significant debt activity that has happened at our end after the completion of Q1, which is only in the month of July, at Phoenix Palladium, part of our debt, the ROI has reduced from 7.85% to 7.25%. At our Phoenix Palassio, which sits under the SPV called Destiny, we have refinanced the debt there, and we brought the cost down from 10.6% to 7.55% in July alone. Our construction finance at Palladium Ahmedabad, the ROI is down to 8.3% from 8.6% earlier. And we continue to work on bringing the cost of debt at other SPVs also down by evaluating multiple options.

So fair to say that your LRD rates are about 7.2 -- around 7.25%? The construction finance that you're getting, it's around like 8.3% to 8.6%?

That would be absolutely correct.

Okay. So there's almost like a 120, 130 bps difference in...

Exactly. Exactly.

Fair enough. So that would mean that by FY '23, since you're expecting completion of Indore and your other malls, so there'll be a lot of debt will be converted into LRD and that means that there's a lot of unlocking of equity also there. So in that case -- in that context, right, I just want to understand like how is the acquisition environment today like versus what it was like 6 months back in terms of the new deals that you're seeing. Are -- firstly, are you seeing increasing number of deals? And are those deals coming at better terms?

I would say that on greenfield and brownfield, we are seeing some very interesting terms and good deals. On ready assets, I've mentioned on several previous occasions that there are not -- there aren't too many ready malls that fit the bill for us. The malls that we like, once the lockdown restrictions have eased, they are all doing extremely well. And I don't think that the promoters or the owner groups are looking at exits on all of those malls. But certainly, on greenfield and brownfield, we are seeing some very, very good opportunities.

When you say greenfield, brownfield, are these like under-construction malls or these are like...

So greenfield are plots of land and brownfield would be under-construction malls.

Got it, got it. My second question was on your discussion with municipal authorities of Mumbai and Pune because Maharashtra has allowed the malls to operate. But I think it's up to the municipal authorities. What's the sense like what is the thinking like? Because I mean, like if you look at high street, it's kind of flooded, but malls now remain shut. So what's the thought process there? What are we seeing?

So I would say that we are extremely, extremely concerned about the fact that our malls are not operating in Maharashtra. We also genuinely believe that the environment that we would provide to our consumers and visitors to the mall would be far, far superior in terms of sanitation, social distancing as opposed to crowded markets and high street locations. I think these are representations that we are making through the appropriate forum to our state government, in fact, to the disaster management authority and the city, the corporation. We've gone ahead and ensured that we provide the safe environment. Across all locations, across all malls in the country, we have vaccinated more than 20,000 people, which include not only our staff, but also our retailers' staff, the service providing contractual employees, housekeeping, security, everybody. So we've ensured that we are ready to go, and as soon as we get the nod, we will -- we are ready to offer a fantastic, safe and shopping -- safe shopping experience to our customers.

But will they be evaluating it after 15 days or it would be like a month-end only?

It's -- I don't think I can hazard a guess there. The committee meets every alternate week so...

Sure. Just lastly, a bookkeeping question. On Project Rise, the INR 1,000 crores of project cost, just clarifying that this excludes the INR 345 crores that you have paid already. This is over and above that, right?

No. It would include all of that. It includes all of that. It also includes some estimate for construction finance, IDC, interest during construction.

The next question is from the line of Pulkit Patni from Goldman Sachs.

Sure. Shishir, my first question is in line with what one of the previous participants asked. If you compare on a Y-o-Y basis, we would have expected, given the footfalls, given that there was a lot more leniency in terms of home deliveries, et cetera, that revenues on the retail side would have been slightly higher than last year. So when you say you've been conservative, should we expect there would be more revenue possibly that could come pertaining to this quarter in the outer quarters? Or how should one look at that particular number?

So if we look at Q1 FY '21, our billing for that quarter was roughly around INR 115 crores. And Q1 of FY '22, our billing has been INR 226 crores -- sorry -- yes, INR 226 crores.

Got it. Got it. Okay.

Would you like to explain your question further, if I haven't answered it correctly?

No. I mean I'm just -- when I compare -- so I think that billing number makes it much clearer because when I just look at absolute revenue recognized, that doesn't seem to be very different there.

So absolute revenue recognized was INR 84 crores and INR 87 crores for these same quarters. But we've gone on a conservative basis the direction from our auditors as well, so we've taken that very conservative approach.

Okay. That helps. My second question is, given that we've had 2 waves already, any sort of structural trends you've seen in terms of any future changes required in any specific kind of tenants that you think you would like to have or any specific tenants that you would not like to have? And particularly, this question is in context of multiplexes in the under-construction malls. Any thoughts on changing the percentage of area that we typically allocate for that? So just some thoughts on that would be helpful.

No. I think after a lot of internal discussions and looking at our architectural plans, et cetera, I think we've come to the conclusion that the malls that we had originally designed were designed with a lot of these large open spaces, open indoor, outdoor F&B villages, et cetera. And that is the trend that is picking up today. So we've not seen any change in the category mix as such. Multiplexes continue to be confident and optimistic about the future, and we've been in discussions with them for their expansion across locations. So really, what we are doing in our new malls is ensuring that we have a lot of these -- of course, there are upgrades in the MEP, I would say, in the MEP design itself to comply and probably exceed what is the statutory requirements in terms of fresh air changes, et cetera. But in terms of basic design, I think the malls are -- don't require any significant change.

[Operator Instructions] Next question is from the line of Atul Mehra from Motilal Oswal AMC.

Just one question. Can you -- in one of the previous questions, you said that in the greenfield and brownfield projects, you are getting better views than finished ones. So one question here is given that our longer-term growth aspiration is long and strong, so from that perspective, do you sense that this, in the next 12 months' time, 18 months' time, could be an opportunity for you to not grow at 2x in the next 4, 5 years on your mall portfolio, but perhaps grow 3x or even higher. And basically, can precede the entire boom that we might see in the next 5 years' time rather than, say, going more linear and adding one mall at a time or 2 malls at a time? What is the current trajectory? So any news on that, maybe you guys can look at this as a much bigger opportunity and step-up given that you also have funding capabilities unparalleled to most of the peers in the sector. So any views on this?

Yes, Atul. Let me answer your question. You are right that this is a time of opportunity that will offer competing malls that are coming up close to locations where we already have a strong foothold. We've seen several projects not proceed as a mall, but getting converted to other office use -- other use. So I would say that you're right. I think the supply will continue to be less in the next 3 to 4 years or 5 years as well. And while our -- if you look at our statement where we had said that by FY '24, we want to reach a 12-million-square foot GLA mall portfolio and beyond that add at least 1 million square feet a year, I think we have already recalibrated the opportunities and we may be looking at a higher GLA being added on beyond FY '24 each year. So you're right, but we are being very selective about the locations and the markets where we want to be and focusing mainly on Tier 1 opportunities.

Right. Got it, got it. And on the same question in terms of -- are there any constraints? Or when you think about, say, growing 2x like in our stated goal, if you have to grow at 3x in the next, say, 3, 5 years, are there any management in terms of the bandwidth constraints or would you be -- in terms of the number of sites you want to run at one point in time, are there any other constraints that in terms of limit growing even faster than the stated goal?

So I would say capital is not a constraint for us, Atul. In fact, we have the firepower to really go out and expand the footprint significantly. Bandwidth is also not a constraint because our teams are -- continue to be well staffed, and we have -- and we've always grown our bandwidth as we've seen the requirement well in time. I think the -- there are 2 points. One is the opportunities themselves, right? As I said, we are being extremely selective and we want to be in specific markets first, where we believe becoming a dominant consumption player is not a very difficult task to achieve. We want to focus on those. And -- but we would not go extremely wide. We would not go with any cookie cutter model. So we're looking at only creating these best destinations. And that's why I think there are only limited opportunities that one can pursue at a point in time because there are a limited number of cities where we would like to have a presence.

Right. Got it. Just a second question on the residential side. So in terms of why we are having the inventory, is there an outer date by which, say, the management has in mind in terms of, like, say, FY '23 end or something that you want to be completely done with the residential piece and maybe liquidating it even in a social manner? Is there an outline because like if you're sitting on any inventory, it occupies management bandwidth, right? So if you are done with it completely, you don't have to think about residential ever again. So any news in terms of an outside date by which you want to be totally done with residential inventory?

So Atul, in this FY '22, our estimates are to achieve sales of about INR 350 crores, INR 350-odd crores, right, so that is what we estimate to achieve here. We completely appreciate your view that it does occupy management bandwidth. But we have a very, very different dedicated sales -- dedicated residential team that focuses on that. I would say that it's about -- it will take us about 3.5 to 4 years to complete the sales of all of -- of what we've built and also complete Towers 8 and 9 and exit those. So I would say about 4 years -- 4 to 5 years, including Towers 8 and 9 and OBW. But we are open to any -- we are open to working perhaps the purchase of our larger inventory for single towers. So we are open to those opportunities as well, and we have -- we've been having initial discussions, but there's nothing again to really talk about right now.

The next question is from the line of Venkat Samala from Tata AMC.

My first question is really a bookkeeping question. FY '21, I just want to understand what is the total amount of billings that we've done? And against that, what has been our collection? And the second question there would be our hospitality segment profit numbers have come off Y-o-Y despite registering a better revenue. If you could give some sense what's really happening there?

Venkat, for your first question, I think in FY '21, our total collections were about INR 770 crores. About 50% of that came only in the last quarter of the financial year when the malls were operating at full steam and it's approaching virtually pre-COVID levels of consumption. In terms of billing, I will get -- you can connect with Varun and get the details on that perhaps on a separate call. What was the second part of your question?

The hospitality EBIT was lower Y-o-Y despite having our revenues increased by about double, yes.

So in the last year, when we were in the midst of the first lockdown, we had taken several measures, including salary reductions and -- so deduction on employee cost. We had shut down several services. And therefore, the cost of electricity was lower. All other ancillary operating costs were reduced. This time around, we have marketed the hotel for staycations, and we are seeing some fantastic occupancies of close to 90%, 100% over the weekends. And consequently, the operating expenses have gone up. Also, as Varun -- as I captured previously in my opening remarks, we have undertaken several upgrades in the interiors, et cetera, which have all been expensed out. So I would think roughly around INR 8 crores, INR 9 crores in July, about INR 6 crores, INR 7 crores in June, perhaps another INR 4-odd crores may have happened in May.

Right. Right. Right. Okay. Okay. Understood.

Yes. And last year, we had received some additional benefit in terms of reduced costs on electricity, utilities, et cetera, by the local authorities. So that had impacted our EBIT performance positively last year, which is not available this year.

Okay, okay. Fair enough, fair enough. okay. My second question is, I mean with the improved outlook that we are seeing, obviously, the consumption recovery this time seems to be more accelerated compared to last time. And your expectation that assuming there are no further waves, et cetera, we expect the MGs to normalize by the H2. And obviously, with consumption to be better and you are saying that some part of the revenue that we had foregone last year, you would be collecting through higher rev share percentages. So is it fair to expect that H2, our rental income could be higher compared to pre-COVID levels?

I would hesitate to answer that in a simple yes. I would say that we expect our MG to normalize in H2, for sure. And if consumption is at pre-COVID levels, then clearly because of the higher revenue share for the -- in view of the discounts that we have offered in the previous period, should translate into a higher rental income.

Okay, okay. Fair enough, fair enough. I got your point. And one last request, if you could just give a cash flow statement meaning what is the total collections, what is the total OpEx, what is the total CapEx that you've incurred for that particular quarter? And therefore, what are -- what is the total change between your opening cash and cash equivalent? And what is the closing cash and cash equivalent, that will be really helpful in understanding for the investors as to what changes are really happening. If you could please inculcate that, that will be great.

Sure. Thank you so much for that recommendation. We typically cover it in our opening remarks, but we'll -- I will request the team to evaluate if we should build this into our presentation as well, and Mr. Parwal will take a call on it.

The next question is from the line of Mohit Agrawal from IIFL.

My first question is that, is there a vision or a target with respect to our platform with GIC and actually even with the CPPIB in terms of what kind of rentals you would want to achieve before we take it into a REIT -- a possible REIT kind of a structure? So on a medium term, let's say, FY '25, '27, what is that target of rentals that you will see, especially with the GIC platform?

Okay. Mohit, thank you for your question. I'll put it like this: every asset that sits under either of these platforms has the potential, in a normal situation, to deliver us an NOI of about INR 150 crores or higher than that, right? So these are our long-term partners in these 2 JVs. I don't believe the intent is to look at a bundled up exit. We have certainly agreed that at the appropriate point in time, we will evaluate creating a liquidity event by way of a REIT or an IPO, et cetera. However, that is not the goal. The goal is to grow the platform and for both partners to be part of a nice -- of a going and growing business -- of an ongoing and growing business. We expect that under the CPPIB platform, FY '25, we should see an NOI of about INR 700-odd crores. Under the GIC platform, that should be more than INR 600 crores in FY '25.

That's -- GIC target is from the current assets or that is including some acquisition?

No. This is only based on the current assets and perhaps one could consider another -- at least one more project under that, if not more, which could also generate maybe another -- anywhere between INR 170 crores to INR 200 crores.

Okay, okay. Sure. And my last question is basically on your commercial expansion. So the 5 million square feet. Let's exclude Phoenix Rise, you've already explained that. When does the construction start for the Bangalore projects in all? Is it after the completion of malls? And approximately by when do you expect that portfolio to get completed and leased?

Right. So in -- these offices all form part of our large mixed-use development and typically built on over and above the podium level of the malls. So in terms of construction commencement, the earliest that construction can commence for the offices will be when we reach the mall podium level. We have already taken into account the cost of foundations, et cetera, in our -- or rather the structural requirements in the foundations, we've already taken care of that in the first phase of construction. So what happens is once you achieve the top of the mall, you would expect to start constructing and just building those slabs above that. We feel that we should be able to complete the RCC work maybe by the time -- maybe in a period of about 9 months after the malls become operational, we should be able to complete the RCC work and then take it into interior design et cetera. However, I must clarify at this point in time, we are still evaluating on what will be the most appropriate timing to build these out depending on the demand in that micro market. In certain cases, it may be -- it may make sense to deliver these in FY '25. In some cases, it may make sense to deliver them in FY '24 itself.

Okay. So broadly, if I understand correctly, maybe a year or so after the completion of the mall?

Correct. That would be a -- that would be correct.

The next question is from the line of Amandeep Singh from AMBIT Capital.

Sir, firstly, on retail. So sir, when you speak about rental normalization of the MG part saying towards FY '22, sir, can you please help us understand if this is the base rental of FY '20 or this is after 2 years of escalation, say, over FY '20 to '22?

So this would -- see, the escalation as per contract will continue. This is our -- this is for our understanding of last year that escalations as per contract will continue, and the discounts offered for limited periods on the MG will be on those escalated amounts.

Sure. That's helpful. And secondly, on commercial, when you say about rental collections have been to the north of 92%. So can you help us -- or can you highlight tenants from which sectors within the office portfolio would have been impacted? And if the remaining part should be treated as a rental lever or you expect it to be collected in the upcoming quarters?

We expect it to be collected. I think typically, one does see -- not in the normal course, one sees every quarter you will be at about 95% to 97% kind of a collection, and the balance goes through in the subsequent month or whatever.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.

Thank you, ladies and gentlemen, for joining us today. We look forward to interacting with you at the end of the next quarter. In the interim, should you have any questions or follow-on conversations, please feel free to contact our team at Phoenix Mills, and wish you all the very best. Stay safe. Bye-bye.

Thank you. On behalf of the Phoenix Mills Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.