Projects worth 4mn sqft in pipeline for 3-4 yrs: Peninsula

Peninsula Land's Q4 revenue slipped 61 percent to Rs 106 crore against Rs 277.09 crore a year ago. The company's net profit was down 56 percent at Rs 35.8 crore against Rs 82.7 crore year-on-year. MD & VC Rajeev Piramal said, there may some pressure on the company's margins in the near-term, but with slew of launches scheduled ahead, he is confident of keeping margins strong and getting profitability back.

Also Read: DB Realty expects Rs 2000-3000cr sales in FY14 The company is planning to launch three projects in Mumbai, two in South Mumbai and one in Central Mumbai soon.  "We have about 4 million sq ft in the pipeline. Its overall value could be anywhere between Rs 6,000-8,000 crore depending on how the market goes. We will accrue all of this over the next three-four years," he added. Below is the verbatim transcript of Rajeev Piramal's interview on CNBC-TV18 Q: Rs 106 crore of revenues has disappointed your investors, can you take us through why revenue recognition was low in the current quarter? A: The nature of the business per se is important to mention that this is not a quarter-to-quarter kind of business. It is something you look at over a block period and that is how we at Peninsula look at our business. So, last quarter was low when you look at comparative quarter for the last year. We had a single project, which was the major driver behind our revenues in Peninsula Business Park, but if you look at our results over the year, there is about 39 percent growth in topline on the whole year compared to last year, 25 percent growth on the bottomline. Overall, if you look at our performance over the past year, we are quite satisfied with the way things are going. From Q-o-Q given the nature of our portfolio you will see a few dips and troughs but if you look at a larger or more consolidated period of time, we are on the right path as a company. Q: Are those numbers sales recognition for Peninsula Business Park this quarter and does that get carried over to Q1? A: Not at all. It is just a question of the percentage of sales that we have recognized. Also as far as Peninsula Business Park is concerned now, we still have some unsold inventory that will come online into the next year. So we have 130,000 sq ft still left to sell, that is roughly about worth Rs 200 crore. In addition, we have a number of other projects that are coming on line. Right now, we are moving away from dependency on two-three projects to multiple projects. So in Peninsula Business Park we will continue to contribute to our revenues into the coming year. We are launching three additional projects in Mumbai, two in South Mumbai, one is Central Mumbai in Sewri. We already have construction underway in our projects in Khandala, Nasik, Goa and Pune. We have seen reasonable sales in most of these projects. So we are moving away from being dependent on one-two projects, which is Peninsula Business Park and Peninsula Technopark, which are our older Mumbai projects to a much broader portfolio which has split over a larger number of projects. So, if you look at our overall block in terms of square footage of pipeline, we have about 4 million sq ft in the pipeline. Overall value of that could be anywhere between Rs 6,000-8,000 crore depending on how the market goes. We will accrue all of this over the next three-four years. Fundamentally, we are in a pretty strong position and have been able to replace our asset portfolio with a new bunch of projects. So overall, in a medium to long-term we are pretty confident and we are feeling pretty good about where we are as a company. In the short-term, maybe in the next few quarters, you might see a few bumps along the way but it is important to keep the bigger picture in mind.

Q: How are you doing on realisations because even the margin performance is quite disappointing this quarter, profitability has not been strong? Are you saying these bumps will continue to show through in terms of depressed margins and pretty flat profitability? A: As far as margins are concerned, the reduction in margins is linked to our project which is Peninsula Technopark. In Peninsula Technopark we were getting a direct share of revenue and there was no cost of realty shares to us. So as that project is wound up, we only have Rs 20-30 crore to come in from that project and that has been reflected in our margins. When we look at our margins, we compare them on a like-to-like basis, without that one project, we are pretty much in the same spot as we were before. So, there is some pressure on margins but we are pretty confident with our new launches that are coming on line in this quarter and in the next that we should be able to keep margins strong and see some profitability to come back. So, maybe the next quarter or two might be a little challenging for us but overall we are in a pretty good situation. Q: Out of the new projects that are coming up in Warden Road, Bishopsgate and Sewri, what kind of realisations are you targeting? A: Between these three projects, the area that we have for sale is almost about 600,000 sq ft. If you look at the total value of that, it is safe to say that is roughly worth about Rs 2,000-3,000 crore, so that is our target from these projects. The values will vary depending on the projects but overall we are looking at roughly about Rs 2,500-3,000 crore of revenue from these three projects.