Not looking to raise any funds: Prestige Estates

Dismissing talks of fund raising, Irfan Razack, chairman & managing director of Prestige Estates Projects says the company is only into selling and pre-selling of its products currently. "I don't agree that debt went up significantly. It was just Rs 20 crore up that was on the previous quarter," he told in an interview to CNBC-TV18.

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Below is the verbatim transcript of his interview to CNBC-TV18

Q: There is some talk on the streets about Prestige Estates going in for some fund raising. Could you tell us if the company is looking to do that in any form or fashion?

A: I don't know what the street is talking about. At the moment the only type of fund raising we are doing is by selling and pre-selling our products and getting good positive cash flow. Apart from whatever results we got last quarter even the current quarter (July August) has been pretty good.

Sales have been robust and all and all it has been strong set of sales that we are getting weekly. On August 15 we will launch another big project in North Bangalore called Prestige Royal Gardens which has got 1696 units. Hopefully even that will perform very well.

Q: Some part of the talk may be because your consolidated debt went up quite significantly this quarter. Are you confident that going forward cash flows will take care of that situation?

A: I don't agree that debt went up significantly. It was just Rs 20 crore up that was on the previous quarter. As I mentioned to investors we are in different segments of real estate and residential really does not require any debt. We have positive cash flow from the residential segments.

The money is required where I am doing capex project like shopping malls and IT parks and hospitality assets. This is where pumping more money is required and the whole idea for this behind is to secure some robust rental income for the company in the long-term which we have done.

The Chennai mall is open and that has added up to my overall rental income. CISCO building B7 we handed over. Good news is now we have got the next block order also from CISCO that is another half million square feet. This we have to hand over in the next 12-15 months.

So, the money will be required for these capex projects. Now this is coming from a blend of two ways, one is from the internal accruals itself and plus a certain amount of debt has to be added up to create these assets.

Q: Any further debt that the company needs to take on to fund this capex?

A: I don't think so at the moment. Whatever requirements we had we have already done and every time there is somebody or the other who is approaching us to see whether we can get in some additional cash flow. So probably that is what the talk in the street is. Right now we are not on the verge of any deal that we are doing with anyone. May be certain discussions would be taking place but that is nothing that is of any serious consequence at the moment.

We always have to look at some innovative means to see how we can balance cash flows, reduce debt more than increasing debt and see that the company becomes stronger in terms of positive cash flows.

Q: The market likes your model, you have quite a bit of commercial portfolio that provides a strong rental income stream as well. The residential market is back to the previous peak, the commercial market is still lagging. What has been the situation in the markets that you operate in?

A: Commercial in Bangalore the off take has been pretty steady. In the last three years we have been clocking as a city. The overall absorption is around 10 million square feet. It keeps varying by a million square feet plus or minus year on year depending on the demand. We have fair share of this market, we have also been leasing around 2-2.5 million square feet every year on year.

 Even this year has been pretty good, we have guided about 2 million square feet and now with this half million square feet order which I got from CISCO for the next building, I will pretty much be on course to meet my targeted guideline. You have ups and downs, nothing is constant but another thing in commercial market is you have to be ready to meet the demand. It is not that you can build and deliver as soon as the demand comes. So there has to be that sustaining power and the ability to allocate right location and get ready, make the product and demand will be there.

When you are ready with the product somebody or the other are there and when there is need it just gets done. It is not always that you do a pre lease, you have to do a building with the hope that the demand will catch up.