Major chunk of profits to come from residential: Anant Raj

In an interview with CNBC-TV18, Amit Sarin, Director & CEO, Anant Raj Industries spoke about the latest happenings in his company and sector.

Below is a verbatim transcript of the interview with CNBC's Mitali Mukherjee and Udayan Mukherjee. Also watch the accompanying video. Q: In our last interaction, you pointed out that you would do a net profit of about Rs 500 crore for FY11. Do you have the same target in mind or would you better the figure?

A: We are on track no. The reason for that figure going up is the rental income of the company which is stable now. This year, we will cross 100 comfortably and a major chunk of the profit will come from residential. We have been focusing a lot on residential for the past one year. Anant Raj is now coming back into residential in a big way as last year was a very good year to acquire land and that is what we did. We focused a lot on land acquisition and almost completed it now. We are on execution mode now.

Q: Can you give us a roadmap for the rental income from the commercial leased space? How is it expected to ramp up between now and the next two years? How much of a quarterly rental income run-rate are you looking at?

A: We have reached a quarterly figure of about Rs 20 crores now. This year we will comfortably cross Rs 100 crore. The company has given a lot of focus to commercial execution in the last four years. We had 2 million square feet prior and almost 5 billion square feet is ready now. We have approximately 7 million square feet of ready space, out of which 50% is already leased out. Last year, the major increase in leasing was observed after Diwali. So its effect will be seen in future quarters with the figure going up. Two years from now, we would comfortably get about Rs 50 crore in a quarter or even more. Q: Since residential is your new focus area, what kind of launches are you looking at over the next 12 to 24 months in NCR? Could you give us some sense of the roadmap of your launches?

A: Last year, we focused a lot on residential acquisition as it was a good time to buy with the land prices and sales going down drastically. In the beginning of the financial year, we were a zero debt company and had only Rs 500 crore of cash in the bank. So, we got aggressive in land buying and focusing on residential. Today, we have already acquired FSI of almost 1 crore 20 lakh square feet. We have launched three projects and got a good response for them. The biggest strength of these three projects is the fully protected downside as the land acquisition prices are low. We can compete at the on-going rates and still make good margins than anybody else. We have launched about 560 flats for the first phase in Manesar. This project is called Madelia and we have got a very good response for it. We launched the flats at about Rs 2,500 to 2,600 where the prices have reached Rs 3,000 to 3,200 and have good EBITDA margins. Now, we are planning to launch one project in sector-91, Gurgaon. Due to the land acquisition, the projects are placed in good locations and are focused in the NCR, so selling flats in those areas would not be a problem. We are very comfortable as we got our land acquisitions last year when the land prices were very low, so the going up rates is not bothering us much. Q: Will the collections from Manesar show up in the quarter that just ended? Roughly, what kind of collections you had in total?

A: Manesar is not a very big project with about 560 flats only. Our top-line for them is just Rs 480 crores even if the numbers of flats appear high. The collections will show up completely within this year. Q: Can you give us some update on the Gurgaon project?

A: Gurgaon is pretty big project and is about to be launched soon. The land acquisition is complete and fully paid for, and we have started working on that. The first phase of about 700 flats will be launched now and the top-line for that is about Rs 600 crores. These two projects will be a major contributor for the company this year.