Plan to launch 6-8 mn sq ft projects this year: Kolte-Patil

Kolte-Patil Developers plans to launch 6-8 million square feet of projects this year and is confident of achieving target of 12 million square feet in FY15-17, said its Group CEO Sujay Kalele.

Welcoming the RBI’s decision to cut repo rate by 25 bps ahead of the February 3 policy, Kalele said he sees borrowing cost coming down.

Below is the transcript of the interview on CNBC-TV18

Sumaira: How is life going to change for you now, with this rate cut coming in by the RBI and banks of course likely to follow suit sooner rather than later?A: It is a very good boost for the sector because not only will our cost of borrowing go down but more importantly the Easy Monthly installments (EMIs) will move southwards and if the direction or the views that are coming across is anything to go by then we can see further deductions but immediately the moment EMI goes down, affordability goes up and hence in the near term we should see good momentum picking up.Reema: But just for the immediate terms, do you see the borrowing costs of Kolte-Patil coming down?A: Absolutely.Reema: So how much would it come down by if the banks say reduce it by say, 25 basis points?A: Physically in the past if we see on the corporate side, whatever has been he base rate cut, 60-70 percent of that has been passed on for corporate buyers and 100 percent of the cut has been passed on to the retail borrowers. So, if 0.25 percent is what has been cut we feel about 0.15 percent should be passed on to us for all the new borrowings that we will do.Sumaira: Okay, your target over FY15-17 I believe is to achieve sales of about 12 million sq ft which should be in a total worth about Rs 7200 odd crores. One, how are you hoping to achieve this and two, do you think you could do even better, given that appetite could now improve?A: Right now I can only say that we are making sure that what target we have given, we achieve that. Any surprises, positive, negative, you know it is part of the future.Sumaira: But how do you plan to achieve it, what is your launch pipeline looking like?A: In this particular year we plan to launch about six to eight million sq feet of new projects. Some the projects that were hold up because of environmental clearance and other approval issues are slowly getting sorted out, so the launch pipeline by every day is becoming stronger.Reema: Let’s talk about the recent development where you have announced three new projects via the redevelopment platform in Mumbai. In the next twelve months, what is the kind of revenue potential that you see from these projects?A: Typically any new project takes about twelve months before we launch the project and so we do not expect these projects to hit the revenue recognition in this calendar year. Next year we expect some revenue recognitions from these projects. The projects that we had acquired in FY14 will hit the revenue recognition in FY15.Reema: Okay, so revenue recognition only in FY17 for these three new projects?A: Yes.Reema: And in general, what are the kind of margins you enjoy on redevelopment projects, say at the operating level?A: They are typically 35-40 percent at Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) levels.Reema: So that would be higher than the blended margins for the company?A:In Pune, yes absolutely.Sumaira: You know slightly a bit if a tangent actually, some of the realty players in Bangalore have reported presales which is sort of weakening. Are there any sort of worries that you are seeing in your end of the world?A: No, not all. Pune continues to be very stable. It has demands across the spectrum and only the bottleneck was the base of approvals but with the recent changes in the governments and the policies, we are seeing some traction building up now on that weakness also.