Not looming under debt concern: Purvankara Projects

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Not looming under debt concern: Purvankara Projects

Jackbastian Nazareth, COO of Puravankara Projects, in an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, said that the company is well poised to manage their debt levels. He said, "Our focus has been on consolidation and execution of these projects in last 12 months."

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Puravankara Projects See previous management interviews See what other Experts & Brokerages are saying about Puravankara Projects Puravankara Pro BSE | NSE 29/05/12 Are Mutual Funds betting on Puravankara Pro?

Jackbastian Nazareth, COO of Puravankara Projects , in an interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy, said that the company is well poised to manage their debt levels. He said, "Our focus has been on consolidation and execution of these projects in last 12 months."

He also added that the company's first quarter has been excellent and they expect to do much better than that.

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

Q: The recent data released by National Housing Bank (NHB) said that the real estate prices have fallen steeply in Bangalore. How much of a price correction have you seen?

A: If you are referring to some article from the newspaper, it was about the Residex. They compared the prices over the years. Contrary to this report, for the last four quarters in a row, prices have increased without any discounts across the board. It has been a robust sale and there has been no sign of decline in sale volumes.

Q: Will the demand environment get worse in the last month? Has not impacted your sales numbers?

A: No, not really. It is not an investment driven market, but more of an end use market. The manufacturing and IT segment have done well for themselves and have got their increments which are in a good range. These people waited for some time to buy their home. As their careers are stable post recession, a lot of end use buyers have come in.

Q: The housing price index indicates that the markets have corrected in areas like Bangalore, Kolkata etc. It is a gauge of the real sentiment on the street. Could there be a slowdown in the next half of the year?

A: It will be sustained sales. In south, there has not been a spike in the sales prices, while Mumbai and Delhi have seen this huge spike last year. This has been a consistent increase and a lot has to do with input costs and consumer segment. The sales have been across the cities like Bangalore and Chennai which is picking up in big league. There wouldn't be any correction coming soon.

Q: What kind of volume growth can Puravankara target as the last quarter was quite disappointing? Do you think things will improve in the next couple of quarters?

A: If you see our guidance for last financial year, we did 3.1 million square feet. We have set ourselves again a guidance of 3.5 million. The first quarter has been excellent. We expect to do much better than that.

Q: What is the current price per square feet? Where will it stabilise?

A: Currently, it is an average of three-and-a-half thousand in the southern markets. We would have about 10-15% increase in the next three quarters.

Q: What kind of topline and bottomline growth do you expect in FY12?

A: I don't like to put numbers to this. If you go by simple rules of having to do 3.5 million square feet of sales which will be a combination of the launched new projects and existing projects coming to a closure, we always keep an inventory that gets ready and sold. Roughly 3 million square feet of inventory will come in ready to move in apartments which has a huge demand at an average of three-and-a-half.

Q: What about your balance sheet because that's been a worry as well? What is the debt situation currently? What would the deleveraging plan look like in FY12?

A: Currently, our D/E ratio stands at 0.67 which is a comfortable ratio. In the southern industry, there are two kinds of buyers - one who look at the Greenfield projects being launched and other are projects that come to a closure.

We operate on a model where we hold on inventory and sell it. We are well poised to manage this debt levels which are comfortable to us. Our focus has been on consolidation and execution of these projects in last 12 months.