All inventory to be ready for sale in next 18 months: Ansal Hsg

Tarun Kathuria, VP-Finance, Ansal Housing in an interview to CNBC-TV18 spoke about the company’ third quarter performance and the way forward.He said the entire inventory would be ready for sale in the next 18 months. Currently the inventory was around Rs 4000 croreThe realisations in the national capital region (NCR) are to the tune of Rs 3000-4000 per square feet. He said the company has long-term plans to reduce debt and would be unlikely to do so in the short-term. The debt for the company currently stands at Rs 600 crore.They have no plans to expand their hospitality business, which is a very small segment, said Kathuria.It was a weak third quarter for the company with net profit down 16 percent at Rs 4.7 crore versus Rs 5.6 crore  for the same quarter last fiscal.  The total income too was down 43 percent at Rs 91.6 crore versus Rs 161 crore year on year (YoY). Operating profit was 29 percent at Rs 13.02 crore verus Rs 18.23 crore YoY.Below is the verbatim transcript of Tarun Kathuria’s interview with Nigel D'Souza on CNBC-TV18. Q: Topline are by close to around 40 percent approximately what kind of method do you follow? Do you follow project completion method or is it percentage completion method? A: Percentage completion method. Q: Could you give us the sense of what exactly were the sales volume what were the realisation in the past quarter and also how they are going to look going ahead? A: The sales volumes are down as the market is taking shape. However due to percentage completion method we have recognised the revenue for the project we have sold in earlier period. Q: Do you expect but the next quarter couple of quarters to be better? A: Little bit better because of the few projects we are expecting to get revenue recognition. So, you can’t project exactly what will be the next quarter in our industry basically. Quarter to quarter comparison is not possible. Our profit is not evenly distributed over the quarter particularly. Q: What about realisations, what were the realisations roughly? A: Realisations are higher than the revenue which we have recognised because of percentage completion doesn’t allow every realization converted in to the revenue in the year itself. Q: Could you give us some ballpark figures is it Rs 3,500 or is it Rs 4,000 per square foot? A: This is the price range we are selling in NCR and bit lower at Rs 3,000-3,500 in town near by NCR.  Q: Last year you had done around Rs 770 crore approximately that is for the full year. This time around at the nine month period you have done only around Rs 530 crore. So we are almost through with FY16 but tell us how will FY17 look? Will we see some growth; will we be back towards that Rs 500-600 crore on a financial year basis? A: It depends on the fresh sales. The project we are handling presently we have a stock more than Rs 4,000 crore. Q: More than Rs 4,000 crore of inventory? A: Yes, which are under execution, It depends on the fresh sales which take place in the next year. The revenues will be booked accordingly. Q: So, out of this Rs 4,000 crore how much will be ready for sale in the next one year? A: Next one and a half year it will be completed; all the projects will be completed. Q: Hospitality business as well you are in is that a very small segment? A: Very small segment not to be discussed and we are not expanding that. Q: Then let us talk about your finance cost as well for the quarter has gone up a tad bit higher. So, what exactly is your current debt position? Are you comfortable? A: Debt position is at the same level which is early year. It is because in earlier year we were capitalising more interest. In the current year we are capitalising less interest as per the accounting policies. That is why in the revenue side you are seeing a higher interest cost. However, basically the interest cost, overall has remained the same. Q: What is your total debt number and what is your total borrowing cost currently? A: The borrowing cost currently is around Rs 73 crore out of which we have charge-off around Rs 41 crore. Q: What exactly is your borrowing cost? What is the percentage? A: Borrowing cost percentage is around 14-15 percent. Q: You total debt is at? A: More than Rs 600 crore level. Q: You are comfortable at these levels or are you looking to scale it down? A: Certainly we are looking for long term, short-term it is not possible to reduce our debt. Q: So, can you give us some guidance by FY17 end what can the debt look like from Rs 600 crore? A: I can’t predict, it depends on the volume sale which has happened. Q: I was just looking at your shareholding pattern. Out of the total promoter holding around 50 percent is pledge where exactly are these shares pledged? A: Shares are pledge with the institution from which the company has borrowed money. Q: There is no pressure on that front? A: There is no pressure it is just taken as a collateral security and the money is borrowed directly by the company for the purpose of construction of that project. We are expecting that project completion in next two years and once the loan is closed they will release our shares. Q: So you are looking to bring down this total pledge amount from around 58 percent roughly? A: Yes.