The company is also exploring and evaluating other markets such as Hyderabad for potential opportunities
Arvind SmartSpaces, the realty arm of fashion and apparel brand Arvind, plans to invest Rs 250 crore in FY20 to acquire and develop new projects across the country, said Managing Director and Chief Executive Officer Kamal Singal.
In a freewheeling chat with Moneycontrol, Singhal said, the company is also exploring and evaluating other markets such as Hyderabad for potential opportunities.
There is a strong and healthy project pipeline which will hit the market in the coming quarters, he said.
Arvind SmartSpaces is launching a residential project in Pune next month and its first commercial project in Bengaluru in the next quarter.
The residential project 'Arvind Elan' in Pune is spread across two acres with a developable area of 1.5 lakh sq ft and will be completed in three years.
In all, the company has a pipeline of over 10 million sq ft of mostly residential projects under development across Gujarat, Hyderabad and Maharashtra even as it is open to more projects through either joint development or outright land purchase.
Including the pipeline and operational space, the company manages around 13-14 million sq ft of properties.
In FY18, debt on company’s books stood at Rs 170 crore.
There is increased optimism in both supply and demand for real estate in the last couple of quarters, Singhal said. Demand will improve in the coming year, particularly in the mid-priced and luxury residential project in Pune in the upmarket locality of Kothrud, he added.
Excerpts from the interview:
Q: For starters, tell us about the upcoming projects.
A: Projects keep coming. As we speak there are two in line; one is in Pune and it is a residential project. It has 2BHK Apartments. Pune project is the first project in Maharashtra. Till now, we were only operating in Ahmedabad, Gandhinagar and Bengaluru. Then we are launching a commercial project in Bengaluru. A couple of quarters back we launched one residential project in Bengaluru. The commercial project will be hitting the market mostly in Q1 of next financial year.
Q: How much investments are you planning for these projects?
A: This financial year we are planning to invest up to Rs 250 crore for FY20.
Q: The one coming up in Pune, is it for higher end or mid-level segment?
A: It’s a mid-sized mid segment product priced at Rs 90-95 lakh for 2BHK.
Q: How many units have you sold so far and total realisation in these markets (Ahmedabad, Gandhinagar, Bengaluru)?
A: Around 1,800 units worth Rs 1,000 crore.
Q: What is your revenue target?
A: In the next four years, we are targeting Rs 1,000 crore revenue (current revenue is Rs 202 crore).
Q: What would drive this growth?
A: We have been fairly steady in Bengaluru, which will take at least double the volume that we are doing right now. Bengaluru remains our major growth engine. Plus we are exploring markets like Pune and next on our radar is Hyderabad.
Q: What are the company's fundraising plans?
A: We will be funding all the projects through several options. For instance, our internal accruals are strong, sales are strong so crowdfunding is one option. The second source is borrowing. We are a less leveraged company. Debt equity ratio is 0.6. We will see if we can take it up to 1. We have ample scope of taking debt on our balance sheet. We remain conservative and we keep evaluating various scenarios.
Q: What are the challenges in a slow-moving market like real estate?
A: The last couple of quarters were better. We believe the worst is over and we are on a strong recovery mode. We have seen good momentum in Bengaluru and other markets that we are present in. We will test the Pune market.
Macro challenges remain. Interest rates are very high. Government is aware of that and has been battling with RBI on that. But what we see is some control over spiraling interest rates.
Q: Has RERA helped you in any way?A: Yes, definitely. RERA gives us level-playing field compared to some of the unorganised players.