Property prices may tumble in FY12: Brigade Ent

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Brigade Enterprises Q4 net profit was down at Rs 27.2 crore for the quarter ended March versus Rs 32 crore, in the same quarter a year ago. Revenues declined Rs 83 crore from Rs 133 crore, in the same period previous fiscal.

Speaking to CNBC-TV18's Latha Venkatesh, MR Jayshankar, chairman and managing director (CMD) at Brigade Enterprises said that though the profits have fallen, the company expects to achieve Rs 625-650 sales target in FY11.

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

Q: Comparing your revenues quarter-on-quarter (QoQ), it has fallen to Rs 83 crore versus Rs 133 crore from previous quarter. An extraordinary amount came into your profit and loss last quarter because of the sale of land, deducting that sale, can give us an idea of how your numbers fair like to like?

A; Compared to the previous quarter of last year there is a dip, but it is primarily due to accounting methods adopted in real estate sector. Precisely, the way recognition principle is handled by the accounting standards. As far as third quarter is concerned, we have not sold any land. We have sold only a commercial property.

Q: What about your sales and revenue performance on quarter-on quarter basis? Did you see an increase in bookings or sales that can reflect in first quarter; we would like to understand the progression of the company?

A: Not a substantial booking increase in Q4 compared to Q3, it is more or less steady. Going forward, we don't see any huge jump because of interest hikes. But, our World Trade Centre is now getting occupied and the leasing is in progress too. Meanwhile, we have started receiving revenues from Brigade Metropolis.

Q: Could you tell us more about the residential space and give us numbers, in terms of what volumes you did this quarter, what did the realizations look like?

A: As far as numbers are concerned, we have sold about 0.7 million square feet and the average selling price is Rs 5300 per square foot.

Q: What do you plan to launch in the residential segment over the next 12 months?

A: In the residential space, we have lined up projects of 30 million sq ft. Out of this, about 9-10 million sq ft is in the first phase as some projects are large integrated.

Q: What about the sale of hospital property that helped you reduce debt? Where does the debt stand currently at this point?

A: For now, the debt/equity ration stands at 0.69:1.

Q: Considering the rate hikes, where do you see the average selling price going in FY12 from the earlier Rs 5,000 per square foot?

A: The average sale price of Rs 5,300 is an unusual thing. Going forward, I do not expect average sale price would be in the range of Rs 5,000. It is likely to fall in the range of Rs 4,000.

Q: Is the rental income from retail mall and hotel slated to start operations by FY12?

A: Yes.

Q: Can you give us an approximate figure?

A: It should be upwards of Rs 100 crore.

Q: Calculating both the mall and the hotel together?

A: The retail is expected to yield revenues only in the second half of the year, whereas the office building may be included for all four quarters.

Q: A brokerage house expects you will do Rs 625-650 crore sales in FY12, Do you think it is overestimated as the report was written before the rate hikes?

A: No, our consolidated turnover including the subsidiary is about Rs 457 crore. Quite a bit of revenue recognition due to accounting methods is not showing in the books.

 Q: Is Rs 650 crore sales target not a tall order?

A: Yes, it should happen.