Indian economy is witnessing a tough environment. For the first time in
several years, the industry is facing the pressure of higher inflation
and subsequent higher interest rate, the pressure of coalition politics
leading to slower decision making in India and the turmoil in USA and
Europe leading to rupee depreciation has created an environment that is
I have always believed that real estate is as much a financial business
as it is real estate. And in this challenging environment, it was
important what Anant Raj did.
And this is what we are proud of. Over the last two years, our
experience told us that we were somewhere in the bottom of the real
estate market as far as Delhi and NCR were concerned. The larger
behemoths and acquirers of land banks were burdened with debt and were
selling land parcels. We believed it was time. We thought that our
approach was finally taking complete shape. We have a sizable base of
build-to-hold annuity assets whose incomes will keep growing as
occupancy increases and now, we have a sizable build-to-sell
residential land bank that will generate free cash.
We identified that given the attractive pricing of land parcels, time
was right to re-enter residential in a big way. We identified locations
like Delhi, Gurgaon, Manesar, Sonipat, Neemrana and acquired 225 acres
of land bank for Rs. 900 crores. Given that most of our cash reserves
were committed to executing annuity assets like commercial, IT parks
and retail, we leveraged our balance sheet and acquired these land
parcels. To us, this is our confidence on the location, price and the
future monetisation of the new land parcels we bought. We were very
clear that given the interest rate environment, we need to have a
faster cash cycle for this investment.
And therefore, residential was the best option.
Here is why we are bullish on the residential land parcel that we have
One, the locations are great. Both the current demand and its future
potential look brilliant.
Our 40 years of experience and knowledge of Delhi and NCR makes us
believe that we have chosen the right land parcels.
Two, the price of the land parcels are also at the bottom end of the
curve and therefore, look right. With right land cost and construction
cost, and Anant Raj quality, we feel we will be able to price our
projects very competitively, and hence gain market share in our
Three, locations like Gurgaon, Manesar and Neemrana have inherently
more demand than supply. We believe that we will be able to launch,
pre-sale and generate cash flow for construction from customers, not
requiring us to bend backwards for construction funding.
Four, Anant Raj has demonstrated superior execution over the last
several years. We believe we will build fast and give possession faster
resulting in faster cash cycle for the company.
We have already pre-sold 3000 units. We expect that we will deliver
13.1 million sq.ft. of residential projects across premium and
affordable over the next five years. In terms of net cash inflow, this
means Anant Raj cash will increase manifold.
Anant Raj has been executing its portfolio of commercial, IT Park/SEZ
and hotels over the last few years. As on date, we have a total of 5
million sq.ft. of commercial, retail and 5 hotels. We have invested
about Rs.1200 crores so far in these assets. In 2011-12, the annuity
income from these assets increased to 91.76 crores from Rs.76.18
crores. The commercial portfolio is about 50 per cent occupied and all
the hotel assets are already leased out and generating revenues. We
expect to grow our annuity income over Rs.150 crores in the next 12-18
months and still have room for further growth to Rs.200-250 crores in
next 3-4 years.
BALANCE LAND BANK
Even after the development of the 13.1 million sq.ft. of residential
and the completed 5 million sq.ft. of commercial and hotels, Anant Raj
will have a further 47 million sq.ft. of land bank to develop further.
Most of this land bank is paid for.
We at Anant Raj are big believers of timing. We feel that in the last
few years, we have remained to true to our belief. We sold when we
thought markets were at the peak and have now acquired, when we feel
the markets are nearing bottom. This helps us remain competitive. It
puts us into a virtuous circle when others are struggling to come out
of their vicious circle and debt trap.
As we look ahead this is what I see :
Growing annuity income, large cash flow from residential projects, and
prime land bank to further develop. This is what Anant Raj represents
Before I conclude, I want to thank every stake holder that has helped
us reach such a strong position today. I thank every customer who
bought his dream house from us. I thank every corporate, big or small,
who chose us to grow his business. I thank the hundreds of masons and
technicians who worked overtime so that we keep our delivery and
quality commitment intact. I thank every member of team Anant Raj for
the passion and the hard work they bring to realize our collective
dream and keeping customers happy. I thank every bank that has trusted
us with funds irrespective of the market cycles. I thank the entire
capital markets eco-system for projecting Anant Raj ''different'' from
others. I thank the Indian government in general and the Delhi and NCR
governments in particular for creating demand for homes, offices and
hotels in areas where we operate.
Thank you all.
Ashok Sarin Anil Sarin
Chairman Managing Director