Considering listing on exchanges but no timeline set: Lodha Dev

Lodha also clarified that there is no split in the family.Below is the transcript of Abhishek Lodha's interview with CNBC-TV18's Sonia Shenoy.Q: The real estate market has been very tough in 2015. We have had slowing demand at least for a majority of projects, oversupply etc. What is the expectation for 2016?A: I believe that real estate is closely linked with the overall state of the economy. The Indian economy this year has started heeling itself but there is still a long way to go. It is a similar state with the real estate market. While the demand continues to grow moderately, there isn’t the kind of optimism that one had seen in 2006-2007 and it is very much to do with the state of the economy. As most people predict the Indian economy will grow at somewhere between 7-7.5 percent over the next 3-4 years, then it is very clear that the real estate market has to do quite well because in the history of the global economy in the last 100 years there has never been a situation where a country has developed, has grown and housing has not grown along with it.Q: My problem with that argument is that a market like Mumbai is very different because it is sort of like a linear city, there is not so much scope of expansion as well. To that extent you have lot of oversupply in the market. Look at Lower Parel itself, 10 years back you had only Lodha that was developing big time, now there is a whole host of players that have bombarded the market - DB Realty, Oberoi etc. Do you fear that not just on one hand there is slowing demand but on the other hand there is increasing competition that could eat into your pie?A: You have to look at demand and supply as two separate things. First statement I made was about the fact that demand in India will continue to grow if the economy grows. I think that is something that is a fact. Against the demand what kind of supply comes in there is a multitude of factors. It is factual that there will be more competition if the industry is doing well and equally when the industry is not doing so well some of the fringe players will get out of it. So, supply and demand is a function of the market place and it will keep going up and down. Inherently if one says that the Indian economy is going to grow, the Indian consumer is going to do well then one has to realistically  understand  how can it be that real estate where 70-80 percent of India's middle class wealth lies will not do well. Those two arguments can't go in hand with each other, either the economy will collapse in which case real estate will also collapse. However if you believe the economy will do somewhat well or moderately well then real estate will equally do well.Q: What about prices, every year we say this year prices are going to crash but the crash hasn’t come just yet. However now I am hearing that there is a softening of prices by about 5-15 percent in some of the micro markets in Mumbai. Is that a fact?A:  Since 2010, so now it has been almost 6 years that experts have been predicting the fact that real estate prices are going to fall. It hasn’t happened in 5 years and I see no reason why it will suddenly start happening in the 6th year. The fact of the matter is that real estate margins are fairly tight anyway and you have a situation where there are a number of players who are going to be unable to complete their projects. So, even if they cut prices, people are not foolish enough to go and buy from them. There are a number of reputed  brands each one of them who have a pedigree, have the financial wherewithal and have the commitment to building their brand over a long period of time and maintaining their reputation and those are the only brands from whom people are buying today.This year up to December we have done about Rs 5000 crore of new sales which is the highest we have done in the last 4 years. We will probably end the year somewhere around Rs 8000 crore. It is not just us, we have had a number of launches from other pedigree players, Godrej had a launch in Mumbai, Oberoi had a launch in Mumbai which have all done well. So, it really tells you that when good quality supply comes to the market place the reality of the fact that people want to live in good quality homes or have good quality spaces to work in kicks in. If you talk about players who had their projects ongoing for 10 years or 7 years then they will say that the market is bad but it should be bad, right? Who is going to put in their money if they have no confidence that the project will get completed?Q: So, are you trying to tell me that the worse for the real estate sector perhaps is behind us and we won't see the situation like we saw a couple of years ago?A: I am not sure what happened a couple of years ago. Real estate really experienced a sharp down turn in late 2008 after Lehmann Brothers. Ever since then what one has started seeing is a maturing of the market. More and more of the sales are going towards the reputed branded players. People are very concerned about quality, they are not looking for necessarily only the lowest price because they know ultimately only a good quality home which is delivered well and delivered within time is going to appreciate in value and protect their investment.So, that is the growing sign of maturity in market place where sales are going to the branded players and going forward that is going to be the main trend.Q: One concern or complain that a lot of people have had with Lodha particularly is that the delivery time is not up to the mark or at least gets dragged on by a couple of years. For example your New Cuffe Parade project which was expected to be delivered by December 2015. Now there is a delay of another one year. I understand that approvals, etc are an issue with many of your project but what is your argument in terms of why does it take so long and specifically for your New Cuffe Parade project, by when do you think we will get to see occupants in that project?A: Doing any kind of physical work in India is extremely challenging. It is not only a question of approvals because approvals if you are trying to do the right things are not so difficult. But there is a real supply chain today. To give you an example a number of our projects we have gotten, in order to ensure the highest quality, contractors from abroad, a lot from the Middle East. Over the last 15-18 months they have had so many problems in their home markets that they don't really have the capital to do what they were thinking they would do earlier and now you have to step in and fulfil that gap of capital and some are for investments in projects have gone up a lot more than we had expected but we can afford to do it because we have the capital, we have the financing available. A lot of the other projects are just not able to do that.So, one has to take into account that doing physical work in India, any kind of physical work, whether it is building a road, whether it is building a metro, whether it is building a development is extremely challenging. At New Cuffe Parade we have shifted our delivery date by 12 months. It is clearly something that we are not happy to do because our overheads go up, our construction cots goes up, there are a number of reason around it, I don't want to get into what authority and who else is responsible, but yes, the fact is there is a 12 month delay over there. We think that delivering projects on time is really the focus of our company. We currently definitely have delays of between 6 to 12 month for some of our projects. But if you benchmark it against the rest of the competition and some of the data is very publically available the fact that we continue to sell in these volumes speaks about what kind of confidence people have in our delivery capability.Q: So, are you confident that by December 2016 New Cuffe Parade will be delivered?A: Yes, the first four towers at New Cuffe Parade. It is a very large development, it will happen over phases. The first phase, yes.

Q: What about your IPO plans? 4 years back you scrapped your plans and now in late 2015 we saw the IPO market do extremely well, whether it was InterGlobe that got listed, a couple of pharma companies, do you think this is the right time for Lodha to go public? If yes how long do you think it could take for your IPO to come out?A: Public offering is a function of many factors some of them internal and some of them external. Very difficult for anybody to predict whether an IPO happens, if it happens or not. What I can tell you is that that is definitely one of the options we are thinking about. As a company we are probably the largest private company in India or may be the second largest private company in India across any sector. In order to ensure that there is value creation especially for our employees and we can take on the next phase of our growth journey. We will definitely look at many options and one of them would be possibly an IPO but there is really no timing fixed around it.Q: How much would you be looking to raise because you do have - if you just look around you will see the kind of mammoth projects that you have, what are the kind of funds that you would need?A: I would like to restate that if we were to go public it would be largely to create value especially for employees. All of our projects have done very well in terms of sales and are self funding. So, we are not looking to raise external funding for any particular obligation or to complete projects. If we raise it, it would be to get onto the next phase of our growth journey.Q: What about the debt because there were rumours that there were some balance sheet issues, non-payment to lenders, Rs 12000 crore of debt, we don't have any clarity because you are not a listed company but do you want to just put out the facts and tell us what exactly is the status of the balance sheet?A: The company has debt of about Rs 11000 crore. If you have an example of a non-payment to a lender I would very much like to know that because there has not been, let alone non-payment, not even a day of delay in payment to anyone. We may not be listed, all the lenders are clearly available in the public space and I would really like to understand where that information or speculation is being asked, it is absolutely false.As a company we are very comfortable with our debt position. We have currently projects under construction with sales value at current prices of over Rs 80000 crore. So, Rs 11000 crore of debt we are very comfortable with.Q: There has been a split in the group as well. There is lack of clarity on who gets what and who manages which projects, what are the projects that you would manage now and what about Abhinandan Lodha, what does he manage at this point in time, post the split?A: There is no split in the family. There is a business reorganisation where we have two separate businesses, there is nothing which changes in relation to the real estate business.