To book larger rev in coming quarters: Parsvnath Developers

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To book larger rev in coming quarters: Parsvnath Developers

Chairman Pradeep Jain of Parsvnath Developers clarified that the EBITDA margins eroded by rising input costs. He further elucidated that the prices were up by 20% in past six months in Delhi. Jain expects the company to book larger revenue in coming quarters. "We are in tie-up with Choice Hotels International for the hotels business," he added.

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For the second quarter FY12, the Parsvnath Developers ' total operating revenue was up 29% at Rs 254.9 crore versus Rs 197.96 crore (YoY) and the total expenditure was also up 86.3% at Rs 186.1 crore versus Rs 99.9 crore (YoY). The company's profit after tax (PAT) was down 41.6% at Rs 29.1 crore versus Rs 49.8 crore (YoY).

Chairman Pradeep Jain clarified that the EBITDA margins eroded by rising input costs. He further elucidated that the prices were up by 20% in past six months in Delhi.

Jain expects the company to book larger revenue in coming quarters. "We are in tie-up with Choice Hotels International for the hotels business," he added.

Below is the edited transcript of Jain's interview to CNBC-TV18. Also watch the accompanying video.

Q: The big slippage has come in on your EBITDA performance on a year on year basis I am talking about. You are now sitting at somewhere around 28% or so. How much are the costs escalating for you and do you think you could recover whole lot from this 28% margin?

A: On year on year basis, our EBITDA was impacted because of inflation in last 12 months. The cement and steel price substantially increased. Sanction and other administrative costs also increased one side. On the other side, cost of funds also increased since the central bank kept increasing rates almost 13-14 times in last 12 months time. The third impact due to tax rates. Earlier we kept getting tax concession under Affordable Housing Schemes introduced by Government of India but it was withdrawn last year by them.

Q: How do you count for the fact that you have done fairly well in terms of amount of square feet sold. I believe you have sold 2.8 million square feet compared to the previous quarter where you sold only 1.2. Was this done at a slightly higher realization? What were the realisations per square foot? Can you give us some details of the quarter that just went by?

A: The demand on ground is very good in North India, Delhi NCR and other town of North India. The prices keep going up on project on project basis. For example, in Delhi prices increased above 20% in last six to nine months. We are getting the realizations about Rs 13,000-14,000 per square foot.

We are getting realisation of about Rs 10,000 per square feet in Gurgaon in the luxury segment. For housing projects in Gurgaon, other than our high end products in Gurgaon, Dharuhera, Noida, Greater Noida, Raj Bagh and other parts of the NCR we are getting around Rs 3,500-4,000 per square feet. For plot development we are getting about Rs 16,000-17,000 per square yard these days.

Q: How would you look at the current and next quarter? Will you be able to sell this kind of 2.8 million square feet or does it get even better? What are your realisations? How do you see it trending - 10% higher or 5% higher?

A: Parsvnath concentrates on execution and delivery on a regular basis. Presently, we are working around 80 million square feet, and we concentrate to develop and sell those projects. These projects have reached the advance stage of completion due to which we are getting better price and demand. In this quarter, we sold 2.8 million square feet. We could not book the entire revenue of 2.8 million square feet because we are going through the completion. The quarters going forward would be robust in terms of demand, million square feet sales and possession.

Q: As far as Parsvnath Hotels is concerned, when will the first hotel come up? What kind of a timeline can you give us? How much would it contribute to the revenue stream?

A: We recently entered into an agreement with Choice Hotels International to get into the affordable hospitality business. The first property will become operational this month. The pre-opening business has already started in south of Delhi. The first property will go for commercial opening in next couple of weeks. On a month-on-month basis, we have tied up for a number of properties and we will be working aggressively on that. The hotel business revenue doesn't look very robust in this financial year.

Q: How will you look at amount of flats that you can deliver? While the extent of square feet sold was almost double from 1.23 million to 2.8 million in the second quarter, it has been much less encouraging in terms of delivery. It is just 0.22 million square feet compared to 0.66 million square feet in the previous quarter. How will the next two quarters (third and fourth) pan out?

A: We approach to the local authority to get occupancy certificate after our work is complete. In this quarter and going forward, we will deliver our robust delivery schedule. We invoke the third party contract like L&T to quickly complete our ongoing projects. In the current quarter and going forward, I don't foresee any concern.

Q: What's your total debt now? Will you bring it down?

A: In the last 24 months, we kept reducing our debt. The present debt is in the tune of about Rs 1,200 crore plus. We expect this debt to reduce up to 20-30% by March 31. If we can sell some non-core assets in West and South India, it will help us reduce our debt. We have been continuously trying to reduce the debt. Out of our Rs 1200 crore debt, more than 70-80% debt is long-term debt.