Revenue recognition should be good in coming quarters: DB Realty

DB Realty’s June quarter standalone numbers were muted as revenues from only one of its projects could be recognised, Anil Kumar, Chief Financial Officer, told CNBC-TV18.

The company posted a standalone net loss of Rs 8.7 crore during the June quarter against a net loss of Rs 113.9 crore a year ago. The coming quarters should be good in terms of cash flows and revenue recognition, Kumar said. He expects pre-sales to rise 20 percent this quarter compared to the June quarter.

DB Realty would try to disclose consolidated numbers September onwards, he said.Below is the verbatim transcript of Anil Kumar’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.Anuj: No point discussing these standalone numbers because it is hard to believe that a company like DB Realty would have sales of Rs 5 crore, we all see your really big projects in Mumbai. So, tell us by when do you expect consolidated numbers? A: We had this implementation of the IND-AS for the first quarter. So, given that we have a multitude of subsidiaries and we also need to consolidate the accounts, we opted to go with Sebi’s relaxation that we will only disclose the standalone number for the sake of record purposes. However, going forward, the company would endeavour to disclose consolidated numbers which would be more appropriate given that most of our projects have happened with the subsidiaries and our joint ventures. So, from September onwards the company would endeavour to disclose consolidated financials.Sonia: Can you at least tell us at least what went wrong this quarter? The sales have been under quite a bit of pressure for many quarters now. What kind of presales have you done this quarter and are you still seeing demand very muted? A: Two things, I think from the standalone point of view, we had only one project which came under the revenue recognition which was the DB Woods. Obviously the results have been very muted from a standalone perspective. From a group perspective, we still see a very large underlying demand. We did presales of close to around Rs 260 crore in the last quarter and we expect the numbers to ramp up as we go along. We have a few launches and a few presales that would be coming into the market in the ensuing quarters. So, we believe that the coming quarters should be pretty good in terms of both, revenue recognition and cash flows. Sonia: What are the unrecognised revenues that the company has at this point and from which projects are they and what is the expectation as far as presales is concerned for the next couple of quarters? A: We would expect the presales to grow at least by another 15-20 percent on a quarter-on-quarter (QoQ) basis from now on for the coming financial year. In terms of presales and un-build revenue, we have close to around Rs 400 crore of un-build revenue in our books which will have to be coming into the books in next four to five quarters. Anuj: I wanted an update on the Dahisar project because the buyers have taken you to court. What is the update on that front, on that project? A: We are in discussion with the customers on that project and I think we have got that entire machinery to make sure that the project gets delivered as early as possible. The projects, we have been in discussions with our contractors and the other vendors so that the project can be finalised in the coming two quarters. Anuj: What is wrong with that project, is this a liquidity issue, is this something else, if you could tell us that?A: It is a multitude of issues that have been on the project. It is just not a liquidity issue. I think from the liquidity perspective, we were well funded on that particular project to complete the project. It was a kind of the project conceived and the amenities and the timeline that were taken by the contractors and other vendors that has actually delayed the project. Sonia: Can you give us an update on the balance sheet as well, what is the consolidated debt on the books of DB Realty currently and how much do you plan to bring it down by say over the next 6-12 months?A: The company has just embarked upon a very tool pronged approach. One is we would like to look at monetising as much as assets as possible so that we would be able to bring down our debt. Second one is to look at the debt profile itself and to reduce the interest burden in the coming quarters. So, on a consolidated basis, our debt position is of around Rs 2,450 crore which we would want to pare down by at least another Rs 1,000 in the next 12-18 months.Sonia: You are looking to monetise your assets, what kind of assets do you have that you are looking to sell and are you in talks with anybody at the moment? A: Monetisation of assets is not just about how we want to sell an asset, we are looking at joint ventures or tying up with other partners where we would unlock a part of the capital upfront and a part of the capital comes over the project execution cycle. So, we are in discussions with a few land parcels which we would want to monetise through joint development arrangements. Sonia: How much will that bring you say over the next six months or so because currently you said your debt is at almost Rs 2,500 crore, over the next six months how much are you looking to bring in? A: We should look at to reduce at least another Rs 750 crore of that in the next 12 months.