Bangalore market is one of the strongest realty market, says Suresh Kris of Brigade Enterprises despite the unsold inventory rising in the city from 27,000 units in June-2011 to 84,000 units in June 2015.
In an interview to CNBC-TV18, Kris says H2FY16 will be better for the company than H1, adding that the company hopes to grow 30-35 percent year-on-year (YoY).
Below is the verbatim transcript of Suresh Kris’ interview with Ekta Batra and Anuj Singhal on CNBC-TV18.
Ekta: Wanted to start with regards to the Bengaluru inventory build up in the residential market. Can you tell us how that is panning out in terms of statistics and where exactly is Brigade Enterprises placed in terms of inventory right now?
A: The Bengaluru market per se is very good compared to any other city in India. The demand level is reasonably good, that is what I could say. Even though when you go on directly the residential demand from the commercial absorption rate, commercial absorption rate, we were talking about some of the research talks about 17 million square feet this year. When you just go and multiply about five times, it could be around 85 million square feet. And we have those kind of sufficient inventories in Bengaluru in both the organised and unorganised sectors.
And as far as Brigade is concerned, we have the total ongoing residential project to the extent of around 15 million square feet out of which we have readily sold around more than eight million square feet and balance is there. And we intend to launch around more than five million square feet during the second half of this financial year out of which around 1.5-2 million square feet has been already launched. And Brigade wants to sell its launched projects over a period of the project duration. We will not go and sell immediately during the launch or prelaunch. Maybe upto 20 percent we will go and sell upto the launch, balance only during the project lifecycle to protect the cost escalation if any.
Anuj: Let us talk about your business a bit more. In Q2, your sales volumes were down. For second half, both in terms of sales volume and realisation, what kind of guidance can you give us?
A: We will be able to maintain maybe a slight increase in the realisation project-wise. You may not be able to tell for the average realisation, because this also depends on the product mix which you launch because even though the project may be profitable with a slight escalation, may be around 10-12 percent per annum, but when you go and launch the project which is less than Rs 5,500, because Rs 5,500 is the average price realisation up to H1. Suppose you go and launch any project for Rs 4,000-4,500, the average realisation will definitely come down. So, that is not the correct indicator to go and say that it is under loss or something, it is still under profit. Only that depends on the product mix you enter into that. That is what is consistently, I used to tell the media.
And the volume is concerned, for H2, we believe that it could be more than H1. I am talking about the new sales. Then the revenue recognition is concerned or the profit and loss is concerned, we have been telling consistently that Brigade will have about 30-35 percent growth on year-on-year (Y-o-Y) basis not only topline, more so in bottomline also.
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