Expect PAT of Rs 50cr this fiscal: DS Kulkarni Developers

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Sumit Arora, VP Strategic planning and business DVPT of DS Kulkarni Developers said the current year seemed to be pretty good. He expected profit after tax (PAT) of Rs 50-52 crore this year.

Here is a verbatim transcript of an exclusive interview with Sumit Arora on CNBC-TV18. Also watch the accompanying video.

Q: We have seen a full tilt really in the markets over two years, there seems to be confident returning into paper money but on the ground we have had our consumer confidence index reiterate that it is at its all time low, what are you seeing in terms of buyers, are you seeing a more discerning buyer looking at much lower price points or has confidence returned in a big way into residential real estate buying?

A: Things are definitely getting brighter by the day. I see a lot of customers who were holding on earlier, they are not coming back and for fresh purchase of homes. The residential apartments have picked up, commercial is still not doing great as it was doing earlier. But the residential market has picked up well. Especially, in the city where I come from that is Pune, where we see a lot of demand happening for past few months now and we have been booking almost say close to 50-60 units per month, earlier the average was 10-15, so that's a kind of pickup we have seen. Going forward, it is going to be a volume business and we have to work like a manufacturing sector now. We have to keep on producing more units at a reasonable price and for that matter we have some 22 million square feet of land bank with us, which we plan to develop in the next 8-10 years. This will all be in affordable segment, say a one bedroom unit would be about Rs 9-10 lakh which is sold any given day. We are happy to be called a regional player but we are strong in our market.

Q: What were the prices say in early 2008 and then what were they by December 2008 and where are they at this point in time?

A: You can say the prices which have reduced by around 15-20% across the board, however now not much inventory is left at those prices and most of it in our case was already booked, so there was hardly any inventory left. We are launching new projects at very attractive pricing, so that we can work on volumes. So the prices start from Rs 2,000 to 2,500 levels, which I believe has given the demographics of a city like Pune, I believe that definitely falls in the category of the affordable segment.

Q: Is your operating margins going to reduce and if you can elaborate a bit more on the commercial segment, how much are rental income down and where do you see the pickup coming in?

A: Most of the large players have got their own setups now, so big companies like Infosys, TCS for that matter have their own campuses. So they don't to the market for a huge supply, but in terms of IT rentals they have reduced by almost 25% and even at those levels there is not much demand happening.

On the operating margins, our accounting policy is percentage completion method and it all works for increase in stock for that matter. So our operating margins effectively is around 30%-35% but the profits will be realised in the years to come by the time the projects get ready.

Q: Can you tell us that some idea of what would you do by way of revenues and EPS this year?

A: This year seems to be pretty good. We are looking forward to book say in PAT terms close to Rs 50-52 crore at this year and all put together next three years we are looking forward Rs 33-50 crore in terms of PAT and this all will come from our residential inventory and our 99% inventory is residential and we are all in good markets, Pune, Bangalore, Chennai and Bombay.