Real estate developer Puravankara Projects is aiming for revenues of Rs 1600 crore this financial year, says Group CEO Jackbastian Nazareth. He is hopeful of selling 4.5 million square feet to be able to achieve the guidance.
In an interview to CNBC-TV18, Nazareth said the company has sold close to 4 million square feet, on strong demand for ready apartments as well as for new launches.
The company's cash flows from its recent offer-for-sale issue will help in accelerating momentum on construction, Nazareth said. Puravankara raised Rs 115 crore from the OFS, which was priced at a discount to market price.
The company's net profit for the quarter ended March rose 71 percent year-on-year to Rs 78.70 crore.
Below is the verbatim transcript of Jackbastian Nazareth's interview on CNBC-TV18
Q: With regards to your offer for sale (OFS), you chose to give a fairly steep discount to the market price to get that done – did you need to do that because the market price also followed that OFS price and came off quite sharply?
A: We spend a lot of time looking at what options we had when it came to an Institutional Placement Programme (IPP) and OFS. Market determines the price. We take cognizant of the fact that it was heavily discounted.
Q: You had a very good year in FY13 – revenues went up more than 50 percent, what is the outlook for FY14 now on the higher base?
A: What you have seen the whole of last year has been the work of the last three years. Our focus remains on execution. We have sold close to 4 million square feet, 3.96 million to be precise – a combination of ready to move in apartments, new launches and robust sales and the new launches has helped us to get this momentum.
We are in a comfortable position,today, where our cash flows from the sales that we have done in the markets are helping us in accelerating momentum on construction. For real estate companies, now, we need to look at ourselves as an engineering company and focus on the execution. We would be clocking close to about Rs 1600 crore in terms of revenue for FY14. We have set ourselves a guideline of 4.5 million square feet of sales for the current financial.
Q: Could you just break up 4.5 million square feet in terms of which key launches do you hope to do through the course of this year and in which markets specifically?
A: As far as launches are concerned, given the two brands, we will be doing 6 million square feet of launches in Puravankara and 4 million square feet of launches in Provident. In Puravankara, we will be launching two projects in Bangalore, one in Chennai. In Provident, we would be venturing into new market for Provident in Coimbatore.
Q: There is some concern on the condition of your balance sheet – what is your debt? Your interest cost was higher this quarter as well – any plans to bring down those debt levels or remove some of the interest cost pressure?
A: Yes. The IPP and OFS has helped us to garner about Rs 307 crore. Besides, we would be repaying all the debt obligations that we have and by doing so we will save about Rs 45 crore by this repayment. We intent to put this fund to use, to accelerate construction, you will see our debt going down immediately by Rs 300 crore.
Q: What do you expect realisations for both Puravankara and for Provident on an average in FY14, given the profile of projects that you are launching?
A: Last year, we did about Rs 4300 per square feet for Puravankara and Rs 2900 per square feet for Provident. In both cases, given the launches that we have done and the new launches that are coming in micro markets, I see Puravankara in the range of almost Rs 5000 a square feet and Provident moving to about Rs 3200 per square feet. It would be a 15 to 18 percent rise.
Q: Any other money raising that Puravankara will be required to do through the course of FY14 – you raised quite a bit through the OFS, IPP. Will you need to tap the market again?
A: No. I don't think, because if I want to explain our portfolio, we have three baskets of products coming out of 2010. We have a basket which called 'ready to move in' which will bring in a lot of cash flows. It will bring in almost Rs 1000 crore in the next 18 months plus we have sold well in this second basket of launches that we did over a period of last 18 months. These cash flows will only auger well for the existing construction.
The future launches in specific micro markets that we have chosen to launch, I am hopeful that this will help us. I see no need for us to go back into the market to raise funds.