DB Realty expects Rs 2000-3000cr sales in FY14

Real estate major DB Realty reported a loss of Rs 33.40 crore at the earnings before interest, depriciation, taxes, amortisation (EBIDTA) level as the firm is yet to recognise revenues from its flagship DB Crown project, says CEO Vipul Bansal.

Speaking to CNBC-TV18, Bansal says the revenue recognition from DB Crown will come through only in the third quarter of the current financial year. "On the sales front, the last six-months were pretty good for us. We did about Rs 341 crore of sales in the last quarter. We have taken a conscious call that we are only selling projects where there is approval; otherwise there always remains an ambiguity on the project," he says. DB Realty expects sales of Rs 2000-3000 crore for FY14, Bansal says adding, "About five million square feet of prime projects are currently under pipeline." Also read: DB Realty to roll out 3 projects, eyes Crown for jewels Below is the edited transcript of his interview to CNBC-TV18 Q: You have reported a loss at the earnings before interest, taxes, depreciation, amortisation (EBITDA) level. Does that mean that you did not book anything in terms of revenues from the Prabhadevi Project DB Crown in the current quarter or the quarter went by? A: Yes. We are yet to recognise revenues for the DB Crown project which, as of now, is the biggest value project going on for us.  The construction is on and the approvals are completely in place. Q: Can you tell us whether in first quarter, a tranche of DB Crown recognition will come in? Will you book anything which has been unrealised so far from DB Woods? A: As far as DB Realty, we are in the process and have been through some pain of the policy changes being a completely Mumbai-focused player. So DB Crown has got its approvals recently and the construction is going on. It is going to take sometime. There is a conservative threshold that we have for revenue recognition which is 25 percent. It is going to take Q3 to scale and that is when we expect our numbers to start showing up. On the sales front, the Q4 of last year, the whole year in general; the last six months were pretty good for us. We did about Rs 341 crore of sales in the last quarter. We have taken a conscious call that we are only selling projects where there is approval; otherwise there always remains an ambiguity on the project. Our cash flows have been pretty strong at about Rs 220 crore in the last quarter. While running the company, the key thing that you tend to focus on, is not your quarter-on-quarter profitability numbers, but whether you are selling what has been approved; whether construction is going on full steam, your new big ticket projects are getting closer to approvals and start-off construction and sales. So the company has been doing very well. So Q3 to Q4 is when you will start to see really strong results and numbers. Q: When do you expect to recognise DB Woods? Will that also come in a couple of quarters from now? Are you still holding any unsold area for that one? A: DB Woods is very close to being delivered. The revenue recognition has happened. For this quarter, there have been some price escalations in the delivery. Therefore the numbers had to be revised and it contributed negatively to the profitability. So that is another aberration. We do have some apartments left over there as an unsold inventory which is part of the plan of trying to sell the inventory linearly over the life of a project for average realisation to be decent. _PAGEBREAK_ Q: What kind of realisations are you getting both for Woods and DB Crown? A: For DB Crown, we get about Rs 28,000-29,000/square foot for all inclusive prices on a saleable basis. For Woods, we are getting about Rs 16,000/square foot all inclusive which includes floor rises, car parking and club charges everything. Q: Can you give us even a ballpark figure given the projects which are at hand? How much square foot you are aiming to sell in FY14? A: We have about 5 million square feet of prime projects. When I say prime projects, each one of them is expected to sell in excess of Rs 30,000/square foot on saleable basis. So the inventory would be well in excess of Rs 15,000/20,000 crore which goes live in next three months maybe. If the project span is at say 16 quarters, you do a linear, so about Rs 2,000-3,000 crore of sales and revenue recognition will kick in much later. DB Crown will be a big driver in our sales and will make our numbers look good especially because of the bottom that we hit with the current year numbers. So all in all the percentage growth numbers and these numbers are not going to carry any weightages that we are going to go back.