Rajeev Piramal, Executive Vice Chairman at Peninsula Land says the company is on track as far as its overall plans and targets. Piramal expects Mumbai to contribute significantly to Peninsula's revenues this year. "We have three projects -- two in South Mumbai and one in Central Mumbai -- that will be launched in this coming year," he told CNBC-TV18 in an interview.
The Mumbai-based real estate firm has sold 100,000 square feet in Pune and expects to sell more in the next two quarters. "The average rate for commercial space in Peninsula Business Park (PBP) is at Rs 21,000 square feet," he says.
Below is an edited transcript of the interview on CNBC-TV18.
Q: Reports that the Aditya Birla Group Real Estate Fund could be looking to buy a large stake in your Pune project. Could you confirm or deny that and what kind of money it would involve in terms of ploughing into the project?
A: As far as that transaction is concerned, there were some discussions with the Aditya Birla Group. But as things stand right now, there is no transaction happening on that project, so there is nothing more to add in that extent. However, as far as all our projects are concerned, yes, we are looking wherever possible and wherever we feel comfortable to do private equity transactions and get equity into the projects.
In addition to our operations, looking at our entire portfolio and looking at properties in a portfolio that we do not feel we can develop in the near future, we may look at divesting some of those as well. Therefore, it is an ongoing process but this particular transaction is not one that is going ahead at this point of time.
Q: Your stock has taken a big knock over the last one quarter after your Q3 numbers, which were sub par because of very poor revenue recognition. Can you take us through whether your business is on track or are you seeing any sluggishness in the market?
A: The real estate business is a very difficult business to track on a quarterly basis. It is something that you look at over a period of time. As far as our revenues are concerned, we are overall on track, our projects are progressing and sales are happening adequately. There will be some impact due to the change in the accounting standards in terms of revenue recognition and in terms of hitting a minimum threshold before we recognise revenues going forward. However, overall, the business is on track. Whatever targets we had for this year, we have met them in terms of sales in our Mumbai projects and outside of Mumbai -- Pune, Nasik, Goa, Khandala and places like that -- are on track and we had strong sales over there.
This year, we are looking at Mumbai to contribute significantly to our revenues. We have three projects -- two in south Mumbai and one in central Mumbai -- that will be launched in this coming year. We look at lot of sales getting generated through that. How much of that we recognise will depend on progress. However, we are comfortable ending this quarter and going into next year that we are pretty much on track as far as our overall plans are concerned.
Q: Can you give us sense of how much inventory you will sell over the next quarter in Peninsula Business Park and whether any of your new projects will start kicking in?
A: As far as Peninsula Business Park is concerned, up to the end of this quarter or going into year end of 2013 we have sold almost 300,000 odd square feet. So, things are going as planned over there.
As far as Pune project is concerned, we have already sold 100,000 square feet. We hope to sell more as we go in this year. The main focus for us in terms of new project this year, we have three projects in Mumbai; two in south Mumbai. These are low volume, but higher value projects. We have a central Mumbai project, which is a 600,000 square feet project, which we will launch and in that we look at volumes coming in from there.
However, we have a good mix in Mumbai, outside of Mumbai. In Peninsula Business Park, we only have about 120,000 odd square feet left to sell in that project out of total of 1.2 million square feet. That we will do slowly into the next year.
Q: Could you give us a sense of what kind of average rates you are being able to book at with specific reference to Peninsula Park?
A: There are two elements to Peninsula Business Park; there is a pure commercial space and there is an IT or financial user space. As far as commercial space is concerned, we have realised about Rs 21,000 a square foot. As far as the IT space is concerned, we are averaging somewhere between Rs 17,000-18,000 a square foot. I think it is a good rate or robust rate that we are able to get and we are pretty satisfied with the way that has been progressing.
As far as balanced inventory is concerned, which we were touching upon earlier –- because we have been able to sell a significant amount of inventory already. As far as how we sell or how we look to lease it and hold it for sometime and unlock the value in different ways. Those options are all open to us due to the fact that we have been able to rather successfully sell quite a lot of inventory this year.