The company has so far sold 6 lakh square feet out of the 13 lakh saleable area, said NM Gattu of DB Realty.
DB Realty's project DB Orchid Heights in Mahalaxmi has received nod from Maharashtra Government for development of 3.0 floor space index (FSI) versus earlier 2.5. With this new development the company's IOD potential goes up from 23,000 square meters to 37,000 square meters, which is up by 60 percent, said CFO, NM Gattu.
Post the incremental FSI, the company expects total sale potential from this project to be around Rs 4000 crore and the revenue recognition to flow in by end of CY2015, said Gattu.
The company has raised Rs 350 crore debt for this project and the consolidate debt on the books currently stands at Rs 500 crore, he said.
Before the incremental FSI was awarded, the company had envisaged the total saleable area at 13 lakh square feet, out of which 6 lakh sq ft have been sold so far, said Gattu.
Below is the transcript of NM Gattu's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.
Nigel: Could you tell us in terms of saleable area how much extra would this bring to the table?
A: The total saleable area of this project is envisaged at about 13 lakh square feet and we had approval initially under DC Regulation No. 33(7) to the extent of 35,000 square meters and out of this minusing the rehab area and Maharashtra Housing and Area Development Authority (MHADA) surplus area, we had the intimation of disapproval (IOD) for 23,000 square meters. However with this increase in FSI from 2.5 to 3, our IOD potential goes up from 23,000 square meters to 37,000 square meters, which is up by 60 percent.
Reema: So, 14,000 square meters is the incremental amount that the company perhaps can develop and therefore sell. So what are the expected realisations that you expect from Orchid Heights and therefore what will it mean in terms of incremental revenues?
A: DB Orchid Heights is located in the vicinity of is Viveria and Belvedere Court in Mahalaxmi and the recent sale as reported was Rs 75,000 square feet in Belvedere and going by that standards and this being under construction, if you were to discount it to a number of even Rs 40,000, we would have incremental sale potential of another Rs 1,500 crore. The total potential that we envisage from this project is about Rs 4,000 crore.
Nigel: I was going through the last disclosed figures with regard to this project. How much have you already sold?
A: We have about 46 percent of area sold till date; out of the total potential of 13 lakh we have sold 6 lakh and now with this incremental potential which will give us another further booster of selling the incremental area. We will proceed accordingly and we will expect the IOD for this incremental FSI soon.
Nigel: When do the revenues as well as cash flow come into your books? Have you already started recognising some part of it?
A: The revenues would be recognised once we hit 30 percent mark but as of now we have collected about Rs 300 crore cash flow from this project and with this approval, further IODs and the construction progress from hereon, we expect a committed sales cash flow which is already there on paper to mature to us.
more to come