Sujay Kalele- managing director, Kolte Patil Developers says the company’s poor Q2 numbers have been due to no major project being revenue recognized in the quarter.
In an interview to CNBC-TV18, Kalele says the company’s sales were similar to Q1.
However, the days ahead look bright for the company as six projects will be coming for revenue recognition in H2FY15.
“About 3 million square feet of project is supposed to be recognized in H2. The next phases for projects Sanjeevani and Life Republic will be launched in Q4,” he says.
Below is the transcript of Sujay Kalele's interview with Latha Venkatesh and Ekta Batra on CNBC-TV18.
Ekta: Revenue down 16 percent and profit down 60.5 percent, what happened this quarter?
A: As mentioned in the last quarter that first half we don’t have any major projects hitting the revenue recognition threshold. So the quarterly run rate for the revenue is pretty much flat. The profit has been lower as compared to last quarter because of higher hiring cost and marketing cost. So as we have launched a few projects so we have to book the admin and marketing cost but we cannot recognize the revenue.
We will see revenue and profit uptick from Q3 and Q4 and Q4 being the highest for this year. As far as order backlog goes, the new sales again were very similar to last quarter at 0.6 million sq ft and average price of Rs 5,800 roughly, total sales of Rs 345 crore, the collections were higher by about 10 percent as compared to last quarter. On the balance sheet side, again very stable at the end of last quarter debt to equity was 0.17 now it is 0.16. With about four new projects launches expected in the next quarter in Q3 rather, the sales momentum will further increase and with three projects, which we have commenced construction in Q1 expected to hit in Q3 and Q4, the revenue and profit number should go up.
Latha: How many projects may come up for revenue recognition in this quarter and next?
A: In the half year, we will have six projects with total sq ft area of 2.5 million.
Latha: Therefore, what kind of recognizable revenue growth can you expect full year?
A: Revenue growth we don’t guide. Pre-sales we had guided that it will be closer to 3 million sq ft this year. We have already done 1.2 with no project launches in first half. We are very comfortable that we should be anywhere around 2.7-2.8 million sq ft, which is about 35 percent higher than last year’s pre-sales.
Ekta: The last time you spoke to us, you said the first phase of your Sanjivani project is expected in Q4 FY15, does that still stand?
A: Absolutely.
Ekta: What about your other projects?
A: Life Republic we are launching the next phase in Q4. We have already commenced the pre-construction work on the next phase of our Life Republic Township project. We will commence construction and pre-sales of our Sanjivani Township also in Q4 and the other bigger projects where we are launching 3 million sq ft of next space, we are hoping to launch that in November, next month.
Latha: What were realizations in Q2 and what are they in Q3?
A: Q2 -- the average realizations was 5,800.
Latha: Q3 looks better or same?
A: No, it should be slightly better sequentially if you see last four quarters, the average realization has been higher by 3-5 percent every quarter.
Latha: You were at 5,400, you went on to 5,600 in Q1.
A: And 5,800 now.
Latha: What is the employee cost and ad expenses? The extent to which it has risen is looking a little scary, does it settle down at current levels?
A: Yes, because the hiring expenses -- typically Diwali bonuses and all of that get paid in Q3 because Diwali was in first half of the October, we decided to pre-pone the bonuses and as a result we paid in Q2.
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