Aim to launch 2 million sq ft in Q4: Brigade Enterprises

Suresh Kris, CFO of Brigade Enterprises in an interview to CNBC-TV18 said out of the overall 6 million square feet (msf) to be launched, they have already launched 3 msf and 2 msf will be launched in Q4, he said.The company saw average realisations of 5900 square feet (sq ft) in nine months of FY16 said Kris. The realty firm reported a 16 percent decline in its consolidated net profit at Rs 31.25 crore for the quarter ended December 31 on higher finance costs and tax expenses.Below is the verbatim transcript of Suresh Kris' interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.Sonia: Your stock is down almost 6 percent now. That is perhaps because the sales volumes were nothing great this quarter, it was just 0.4 million sq ft and you have done better in the quarters gone by. Tell us about whether this weakness in volumes will continue and how will you end the year in terms of sales volumes?A: The sales recognised is higher by about 40 percent and the profit, which has been published is no lesser compared to the same quarter or something it is not because of interest cost.The revision of estimate, which we have given in the notes -- the effect of which is around Rs 33 crore, which has not been considered earlier. If at all we wanted to measure the same as of previous year then the growth in the profit would have been 43 percent.Basically, we may have to read along with the notes otherwise, when you wanted to compare apple to apple. Now the growth in the profit is 43 percent instead of minus 26 percent. That is number one.Secondly, the revenue growth as well as profit growth for the real estate industry, again I would like to reiterate that we wanted to measure only on year-on-year (Y-o-Y) basis that is for 12 months to 12 months and quarter-on-quarter (Q-o-Q) definitely it is subject to a lot of seasonalities.Sonia: Even if you compare the margin performance of the company, it has come down to 26.4 percent versus 32 percent same time last year. So the margins for the company have fallen as well. I am just trying to understand whether there is any kind of operational weakness that you are seeing or is this a one-off?A: The notes nobody has read. We have increased estimated cost by about Rs 100 crore or more. That by the effect on the grass margin which we were anticipating earlier, the impact is about 8 percent which we have considered now itself. We have taken a hit in Q3 alone but no one has considered.We have increased the estimate cost due to interest which we have taken in one quarter.Sonia: This will be just a one quarter hit, right, this interest cost estimated cost of Rs 100 crore?A: Which will be having the impact of about Rs 33 crore in the profit, which we have taken in one hit.Reema: 40 percent growth in Y-o-Y basis looks good. How many projects hit revenue recognition threshold this quarter and what is the guidance for Q4?A: There are about 4 quarters which has come into revenue recognition. Out of about Rs 500 crore, which has contributed Rs 150 crore.Reema: How many projects are likely to hit revenue recognition in the next quarter?A: Maybe another 3-4 projects, definitely it will come in the next quarter?Sonia: Can you tell us what are the projects in terms of what is the launch pipeline looking like now and on an average what are the realisations that you would expect to see in the quarters to come?A: So far the average realisation for nine months is Rs 5,500 compared to Rs 5,000 last year but again this also depends on the product mix we sell during the current period and out of about close to 6 million sq ft, we have already launched 3 million sq ft at least minimum about 2 million sq ft we will be able to launch during this quarter. That is what we are anticipating.Reema: So you will launch 2 million in this January to March quarter?A: Yes.Reema: What is the outlook on the leasing business?A: Leasing business we are very comfortable. We have about 1.60 million sq ft of leasable space as of now which we have leased about 1.5 million sq ft and another 1 million sq ft which is on construction basis -- maybe two projects will come during this quarter into the leasing operation.(Interview transcribed by Sonal Jadhav)