Brigade Enterprises and GIC, Singapore’s sovereign wealth fund, have signed a Memorandum of Understanding (MoU) to set up a Rs 1,500 crore joint venture, says Suresh Kris, chief financial officer, Brigade Enterprises.
Speaking to CNBC-TV18, Kris says the JV is signed only for residential projects in Southern India.
Kris further explains the average realization of the proposed project could be in the range of Rs 7000- 7500 per square feet.
On the road ahead, Kris says the company is likely to post better Q2 numbers than Q1. The company posted a 10.79 percent increase in net profit at Rs 7.39 crore, for the first quarter of the current financial year that ended on June 30.Below is the verbatim transcript of Suresh Kris’ interview with CNBC-TV18's Nigel D’Souza and Sumaira Abidi.
Nigel: Could you give us details of this Rs 1,500 crore project?
A: This is the Memorandum of understanding (MoU) which we have signed with GIC Singapore which is for an investment of about Rs 1,500 crore in the projects which is yet to come in South India which may be residential or commercial etc and generally the ratio will be 50:50.
Sumaira: So this is a new project?
A: Yes, these are all for new projects where the land acquisition is in stage or something would have been included or something has been initiated. So, this is entirely for new projects.
Sumaira: And when you say it is in South India is it a multi city project or is it based in one of the cities; either Bangalore or Hyderabad?
A: It is not only for Bangalore, it is for all cities in South India.Nigel: Could you tell us what is the sales volume as well we can look at from this project – its Rs 1,500 crore odd, so realisation should be around Rs 5,000-6,000 odd and that works out to around 2.5 to 3 million square feet?
A: Rs 1,500 – 25 percent means Rs 7,000-7,500 crore would be the turnover which you can expect minimum.
Nigel: That’s the turnover that we could look at from this particular project?
A: This is not a particular project; there are number of projects in multi cities and assuming 20-25 percent could be the land cost, so Rs 7,000-7,500 crore could be the average realisation for this investment.
Sumaira: Has the land already been purchased, have the area been decided upon or is it still in the planning stage as of now?
A: This is in planning stage only. It is not that we have already planned and we want to go by that but various lands have been identified.
Nigel: That’s Rs 1,500 crore would be attributed to land cost and construction cost then how does it work out?
A: Residential projects will take care of that – normally it is cash positive. We are talking about investment. In some cases where you want some construction portion then it will also get included but to speed up the whole process this is the MoU which have arranged.
Sumaira: In the last quarter gone by your total area sold has seen a bit of a dip. So, are you confident that the new slate of projects – this is one amongst the other projects which you had announced as well? Do you see enough demand or appetite in south India?
A: The whole India is watching the Bangalore market and the appetite in Bangalore is far better than any other cities in India and majority of sales is happening in Bangalore and our presence is only in south India maybe you will be able to see the next quarter number which maybe better than this quarter.
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