CMD MR Jaishankar expects 1.5-2 msf of launches in the next 2-3 months.
Brigade Enterprises has launched a new luxury project in north Bangalore called Brigade Northridge. Speaking to CNBC-TV18, CMD MR Jaishankar said that the company expects revenues from this project to be to the tune of Rs 350-400 crore. Shares of the company hit a fresh 52-week high in trade on Friday after gaining over 170 percent this year.
Below is the verbatim transcript of MR Jaishankar's interview with Sonia Shenoy and Sumaira Abidi on CNBC-TV18.
Sonia: Can you start off by highlighting details on this project, what are the average realisations that you will clock in with this luxury project and what kind of revenues or profits are you looking at from this venture?
A: We have recently launched the Brigade NorthRidge at Bangalore north. We will be constructing about 700,000 sq ft and the revenue from this project will be in the order of about Rs 350-400 crore.
Sumaira: What would be the average realisations you think?
A: Average realisation will be in the range of close to Rs 5,000 currently. It is expected to go beyond that.
Sonia: Can you give us a sense of what the project plan looks like in the next six months, what is the rollout both in the Bangalore region as well as any other states for Brigade itself?
A: The rollout in the next three-four months will be in the range of about 1.5 to 2 million sq ft. In Bangalore south and in Bangalore north we will be launching additional projects and in Q1 or Q2 of FY16, we are planning to launch about 2-3 million sq ft of residential in Chennai, which is in approval stage currently. We are hoping that we will get all the approvals by then.
Sumaira: Recently your subsidiary Brigade hospitality would announce that they would be investing about Rs 200 crore in some hotels in Kochi. Can you take us through what is the plan over there, when can these hotels come onstream, what will be the contribution from there?
A: We have recently purchased a plot of land from Kochi Info Park to construct a four star hotel of about 200 rooms. The investment is not Rs 200 crore as I mentioned earlier. So the investment on that project will be somewhere in the range of more than Rs 100 crore. But we will also be starting another hotel in Gujarat International Finance Tec-City (GIFT), Ahmedabad, which is a three-star hotel. That may also entail an additional investment in about Rs 60-70 crore. These two hotels together will be about Rs 180-200 crore investment that is what I had indicated earlier. By the time these hotels will be completed, it will be FY18.
Sonia: You did mention that on this luxury project that you launched, you are expecting margins or EBITDA of 35 percent, what could the blended margins be for the company in the second half of the year?
A: It is a bit premature to say that now but I think we are growing in this range of about 30 percent EBITDA in whatever we are doing. It maybe difficult for me to forecast now for the second half immediately.
Sonia: The government has recently notified the FDI norms for real estate and construction, so they have relaxed the norms, can you tell us what kind of a benefit will it be for companies like your own, have you seen any kind of foreign interest in projects?
A: This is definitely a welcome move particularly it will help a smaller projects, which hitherto were not able to attract FDI. So far the minimum size of a project that was required was 50,000 sq meters and USD 10 million now that has been reduced to 20,000 sq meters and USD 5 million which is likely to benefit high value projects in the CBD areas particularly in Delhi Mumbai area which even for 20,000 sq meters the investment will be substantial and which was not possible to attract FDI. Projects like that can now attract FDI. In addition to that number of small to medium size projects and by small to medium-size developers will be able to attract FDI. This is certainly welcome. In addition, the service plots are also allowed FDI in the automatic route. This will be definitely beneficial for plotted development, all theseI am sure are government’s policy to encourage housing for all by 2022 which is Prime Minister’s ambition to do that by 150th birth anniversary of Mahatma Gandhi.