Debt is cool, focus is on project execution: Anantraj Ind

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The stock of Anant Raj Industries has rebounded nearly 3% intra-day. CNBC-TV18 catches up with the management for a quick update on the developments in the company.

Amit Sarin, director and CEO of the company says that Anant Raj is on track with its targets for FY11. "Debt is at manageable levels and the company is currently focusing on project execution," he says.

Anant Raj did intensive land banking in the past one year and is now poised to pass on the low cost to customers. "We will thus be able to sell and maintain our margins at as high as 60%," Sarin says.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: We understand that you were a zero debt company till sometime in 2010 but that's not the case now but you are looking at once again going back to that scenario?

A: Yes, we were a zero debt company till April 2010 and in fact had cash of Rs 500 crore in the bank. From there, we decided to comeback into residential in a big way. We have spent about Rs 900 crore in the past 1.5 years for land banking.

Basically, the company zeroed in on five residential projects which are pretty big and today, the land bank of all the five projects is done.

In fact, three out of the five projects have been successfully launched by the company; the first was in Manesar followed by Sector 91 in Gurgaon, and then at Neemrana. So we are almost on track with our plans. The debt is not much; it is about Rs 1,100 crore on the company, out of which the company has about Rs 175 crore of cash in the bank. So we are pretty comfortable that way.

Q: By the end of this fiscal year what would your debt come down to. Would you be zero debt in the next six months as well or would it spill on to FY13?

A: Not really. Like I told you the debt is about Rs 1,100 crore and we have surplus cash in the bank even now. The net asset value of the company is about Rs 3,800 crore now, so we are very comfortable as far the ratio goes. This time, we would be focusing on execution rather than reducing debt because our debt levels are as it is very comfortable. Maybe by the mid next-year or end of next year, we will reduce the debt to half in the first phase and go back to zero debt again.

Q: What is the plan in H2 by way of sale launches?

A: We have launched three projects. Manesar project, the residential project is about 700 flats- all sold, followed by our Neemrana project in which the first phase of 500 flats are all sold; the total number of flats there are 2,800. Sector 91 flats, there are about 700 out of which we sold 300.

Q: Could it be sometime maybe the first half of next year that you would probably see the revenue recognition coming in from Neemrana?

A: Not in the first half, maybe the Q4. We have already started execution and it is going on full swing for the first phase which is 500 flats sold. So till we spend about 30% on the execution, we cannot book revenues. So that could happen in Q4 of this year.

Q: What is the outline for phase two?

A: Phase II is going to be 500 flats which we would be launching in December this year. First phase was all sold in 45 days, so we are hopeful about the second phase also. The plus point about this project is, this is for the first time that an organised sector player has launched low cost houses- we are giving one bedroom for Rs 8 lakh within the NCR.

Q: Last year you did about Rs 450 crore by way of revenues, what would FY12 look like?

A: We cannot talk about future number like this, but it will be much better than what we did last year because we are fully on track, the revenue of the company is now growing almost 30-40% from last year. The residential projects are contributing in a big way to the topline, so we will do much well than what we did last year.

Q: You also saw your margins improve closer to 60% mark. Can they be sustained at these levels?

A: Of course they will be sustained. Most of the land banking has been done by the company in the past one year, and one year was a very good time to buy land. We are in a position to pass on the benefit of the low land cost to the customers, as well as maintain our margin. So we feel it's a win-win situation for both.

Q: Would you now be looking to perhaps also move geographically since you are concentrated in north India at the moment?

A: We are pretty comfortable concentrating in our area. Our policy of being a local company is very similar to registered companies all over, and there is a lot of scope within our region. We work in north India and it's pretty big, so we are happy and we have good pipeline of projects coming in.