Base rate hike won't impact sales: Parsvnath Developers

Hike in base rates by banks won't impact our sales, says Pradeep Jain, Chairman, Parsvnath Developers. Recently, many banks hiked base rates because of Reserve Bank of India's (RBI) liquidity tightening measures.

"I don’t think it will hit us because of the mortgage rate. If we work out 50 basis point versus input cost increasing, land prices keep increasing I do not foresee the consumer is going to stay back to buy property," he told CNBC-TV18 in an interview. Also Read: Mumbai mkt in much better shape than perceived: DB Realty Below is the verbatim transcript of Pradeep Jain's interview on CNBC-TV18 Q: First if you could tell us the direct impact that these base rates would have on home loans eventually on demand as well?
A: Related to the home loan the base rate keep increasing – first the base rate increase impact the company borrowing and input cost increase with that because all the ancillaries industry input cost is going to be increased. The other side, the consumer who is buying the property although the government give the advice to all the financial institution and home mortgage company not to increase the home mortgage rate of interest but if they increase definitely going to impact the pocket of every individual or aam admi. Q: How are you expecting your own sales to be impacted?
A: I don’t foresee any impact because of the mortgage rate, 25-50 basis points increase because property prices keep increasing, input cost keep increasing. If one sees the last couple of years approximately 5-10 percent annual basis the input cost keep increasing. If we work out 50 basis point versus the input cost increasing or the property cost increasing and sanctioning and the land prices keep increasing I do not foresee the consumer and the user going to stay back to buy the property. Q: There is a lot of talk that non-resident Indian (NRIs) now find a lot of value in buying Indian property because the dollar is fetching a lot more – are you seeing a lot of demand from NRI investors – how much it might may have increased?
A: We have seen the interest of NRIs to look to buy property in India but dollar has become uncontrolled situation today – like some of the consumer they want to buy property on Rs 60 now it is 65 and nobody knows where this is going to hold on a price but definitely with the increase of dollar or depreciation of rupee NRIs have interest of conversion because they got better conversion price to buy the property. Q: You said that any of these hikes in base rates will not really impact your demand too much – earlier you had outlined that you are expecting to see a 30 percent growth in sales and profits in FY14 - given the slow down that we have seen in the market, would you still hold on to the guidance – do you think it is a tad too ambitious?
A: Yes. We hold that because our company is completely concentrating on execution, delivery and as we keep giving the position of our ongoing project and selling the ongoing project, unsold stock we are getting better returns. Recently in Q1 we launched a House of Happiness scheme 25:75 without any subvention – we got a very good response out of that scheme and we hold our earlier statement for the year.