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Indiabulls Real Estate Ltd.

BSE: 532832 | NSE: IBREALEST |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE069I01010 | SECTOR: Construction & Contracting - Real Estate

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Jan 15, 16:00
80.60 -3.10 (-3.70%)
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NSE Live

Jan 15, 16:01
80.55 -3.25 (-3.88%)
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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2009

Chairman's Speech


Dear Shareholders,

As we complete another successful year, the Company has been able to sustain its growth in its endeavour to enhance shareholders'' wealth. The Company has kept its focus on catering to the customers as per their requirements and has, thus, undertaken several projects in various parts of the country. The growing demand for office space and the increase in the income of middle income group (MIG) has facilitated the growth in the real estate sector. Factoring in the demand for houses for residential purposes as well as rise in number of customers with office space requirement, the Company has a well-diversified presence in both commercial and residential real estate development. Your Company has projects across the price spectrum, from mid-income, premium to the super luxury space.

Fresh Fund Infusion

At the outset, I am pleased to apprise you of a seminal initiative we have taken. Your Company has entered into a joint venture with Blackstone Group L.P., globally renowned real estate private equity investor; and monetized 50% stake in our two marquee commercial assets in Mumbai, namely India bulls Property Pvt Ltd (One India bulls Centre, ''Sky Forest'' and ''Sky'') and India bulls Real Estate Company Pvt Ltd (India bulls Finance Centre) at an Enterprise Value of Rs. 9,500 crores. The deal, achieved in a record time, was momentous and one of the largest Real Estate Private Equity Investments in India. Moreover, in July 2018, the Company executed definitive transaction documents with the entities controlled by Blackstone Group L.P., by which the Company will divest 100% stake in the non-core commercial assets in Chennai. Possibilities are being explored to make the most of the opportunities offered by the commercial real estate. Other Key developments during the year

Partnership with Mandarin Oriental Hotel Group (Hanover Bond, London) - Your Company has partnered with Mandarin Oriental Hotel Group for its integrated development, Hanover Bond. This is not only the first Mandarin Oriental hotel and residences in Mayfair, but also the first truly integrated hotel and residences to be delivered in central London. Exit from non-core areas

- Sale of residential assets at Chennai to a third party investor, for an aggregate consideration of Rs. 285 Crores.

- Executed definitive transaction document(s) with the entities controlled by Blackstone Group L.P., by which Company will divest 100% stake in the non-core commercial asset in Chennai.

The graphic below depicts the key growth drivers and the portfolio mix of the business:

Economic overview

The economic scenario in the country has been favourable with India registering a GDP growth rate of 6.7% and, thus being one of the fastest growing economies in the world. The year 2017-18 marked with economic recovery from the impact of demonetization, from the slowing of growth in the first quarter of the year. Also, the year saw the implementation of a historic reform ''Goods and Service Tax (GST)''. Riding on these major changes, the economy has managed to beat the growth estimates, ensuring a favourable economic scenario for the real estate sector particularly.

In India, real estate is the second largest employer after agriculture and is slated to grow at 30% over the next decade. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. Housing sector is expected to contribute around 11% to India''s GDP by 2020. The number of real estate deals is expected to go up in the coming year on the backdrop of various Government measures to boost the confidence of investors as well as consumers.

The push by the Government to develop infrastructure in the country will help the real estate sector. This sector is poised to benefit from infrastructure developments such as the Mumbai Metro, Dwarka Expressway, Trans-Harbour sea link, Navi Mumbai International Airport etc. Commercial office absorption, a lead indicator of housing demand remained robust in 2017, with leasing crossing 42 million sq. ft., office space vacancy now stands at multiyear low levels. A multi-fold increase is expected in net office space absorption, to cross 100 million sq. ft. by end of 2020 in the top eight cities of India.

Key highlights: sustaining growth momentum

In the year gone by, the Company has had a commendable financial and operational performance. It gives me immense pleasure to convey the performance highlights for 2017-18 as follows:

- Profit after Tax (PAT) Rs. 2,015 Crores in FY-18 vs. Rs 397 Crores in FY-17

- Earnings per share (EPS) increased to Rs. 42.46 in FY-18 vs. EPS of Rs. 8.66 in FY-17.

- Maintained Credit rating of AA- for long term debt and A1 for short term debt, highest amongst its real estate developer peers

- Gross Development Value of on-going and planned projects is Rs. 30,130 Crores On-going projects

With the recovery in the real estate deals in the country, the Company has been expanding its base in its key markets such as Mumbai Metropolitan Region (MMR), National Capital Region (NCR) etc. The Company''s ongoing projects have 28.5 million sq. ft. saleable area with a Gross Development Value of around Rs. 30,130 crores. Each project is a result of thoughtful solutions, highest quality and an optimum mix of different categories. These are testimony of Company''s diversified portfolio across price segments.

An overview of the on-going projects undertaken by the Company is as follows:

- Blu Estate & Club - Project has created a new luxury benchmark in the Mumbai city, and your Company has already applied for completion approvals for 2 towers, and will be handed over shortly leading to significant collections. It is one of the fastest execution for such a landmark development.

- Hanover Bond, London - Partnered with Mandarin Oriental Hotel Group for the integrated development. The project has clocked the highest under-construction multi-unit development rate of £7,750 psf, and construction progressing in full swing.

- India bulls Greens, Panvel - First large-scale residential development to get Occupation Certificate from CIDCO-NAINA, and 6,424 apartments are completed with OC. (Sale Apartments: 1590; Rental Apartments: 4834)

- India bulls Golf city, Savroli - The second home for the life-style oriented is generating enthusiastic responses, and Occupation certificate received for the first 16 buildings.

- Gurgaon projects - emphasis placed on execution during the previous financial year was continued this year also, and we have Completion Certificate of completed towers of ''Centrum Park'' and ''Enigma'' projects. Government has cleared impediments to the Dwarka Expressway development, having been designated ''National Highway'' by NHAI, and will be an impetus to the Gurgaon projects.

- All other Projects are proceeding in accordance with its schedule.

Performance overview

Year 2017-18 is demarcated as enlightening year for the sector as many important regulatory changes and developments were introduced, including Real Estate (Regulation & Development) Act (RERA), Goods & Services Tax (GST) and the industry status to affordable housing. Your Company has demonstrated good results after the demonetization hit. Your Company always targets high by assessing current market scenarios and look for potential opportunities with due care and diligence. We continue to maintain adequate level of debts and keep costs under control.

Land Bank: key to future profitability

The Company has fully paid land bank of 1,046 acres in key cities across India, of which more than 95% of the Land Bank is in high value super-metro cities - Mumbai (MMR), National Capital Region (NCR) and Chennai, and which is sufficient for proposed development over the next 5-7 years. In addition to the said land bank of 1,046 acres, the Company also possesses 2,588 acres of SEZ land in Nashik, Maharashtra.

Government initiatives

The year saw the implementation of the Real Estate (Regulation & Development) Act, 2016 in various states. The Act aims to bring in transparency in the real estate sector and give an impetus to consumer confidence. In addition to this, recently implemented GST will not only reduce the tax burden, but will also help in reducing costs. The benefit of reduced costs will be passed on to the home buyers, making it more affordable. Moreover, with the aim to boost investors'' interest in alternative investments, Indian mutual funds have been allowed to invest in Real Estate Investment Funds (REITs) and Infrastructure Investment Trusts (InvITs). It will help in channelizing investments into the sector. Further, the income-based tax benefits to the REITs and InvITs will act as an incentive.

Under the ''Housing for All by 2022'' initiative, the Government aims to provide affordable houses. The Credit Linked Subside Scheme by the Government (CLSS) for the middle income group enabled inclusivity and resulted in increase in the demand for houses. The Government aims to develop Smart Cities as well, in various regions of the country. This will culminate into redevelopment of slums and other unorganized areas into planned spaces, enhancing the overall available spaces for development of real estate projects. An elaborate and much-awaited Development Plan, 2034, for Mumbai is also unveiled, paving the way for high-growth era for Mumbai real estate. These regulatory measures would work as good enablers for the sector.

Our commitment and trust

We always pursue and attempt to do better for your Company. Your Company''s has partnering with Blackstone Group L.P., marks the beginning of a rental platform of your Company with Investors for sale of owned & completed office properties to the Rental platform. Your Company also partnered with Mandarin Oriental Hotel Group for its integrated development, Hanover Bond, and also entered into binding & definitive agreements to acquire prime commercial assets in developed locations (2 Newly constructed commercial buildings, leasable area of 2.5 lac sq. ft. each, at Gurgaon & Prime land abutting National Highway, leasable area of 5 lacs sq. ft. at Gurgaon).

Finally, I express my gratitude to our employees for their consistent, committed and dedicated efforts in achieving the objectives of the Company and for their engagement in our challenging journey. Also, I am thankful to our valued shareholders, bankers and all business associates for their continuous faith and support for accompanying us in our exciting journey.

Thank you!

Sameer Gehlaut Founder & Chairman