Nitesh Estates' Rs 300-cr B'lore project sees good demand

Even in a micro market if you bring a product at the right price then there are takers, says Ashwini Kumar, ED & COO, Nitesh Estates. The company launched Nitesh British Columbia in south Bangalore last Thursday. From the first day, it had seen about 50 bookings, and the response increased over the weekend, he says.

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Kumar feels this project will see revenue realisation in the next fiscal year. In the current fiscal, revenue realisation will not be possible because it is related to percentage of completion and project overtaking the minimum threshold won’t be possible this year, he adds. Below is the verbatim transcript of Ashwini Kumar's interview on CNBC-TV18 Q: Let us talk about your latest project in south Bangalore, have you launched it yet, what kind of demand has it seen in the opening phase?
A: Nitesh British Columbia is what we launched on last Thursday. It has 388 units, in this project we have tried to make it around value so we have planned the space very well, we have also seen to it that there is a minimal amount of common area which is there. At the same time all apartments are designed in such a way that you can have a long open unrestricted view at the same time that also aids in ventilation.
By the very first day itself we had almost about 50 bookings, again over the weekend we have seen very strong response a lot of people who visited our sites. So we are pretty excited by the fact that this particular micro market if you bring a product at the right price then there are of course takers.
_PAGEBREAK_ Q: The total size of the project is about Rs 300 crore. How much of that can you realize in this fiscal year and even in FY15?
A: Since the realisation is related with the percentage of completion and the project overtaking the minimum threshold, this in the current fiscal I think we may not be able to see revenue recognition, but only in the coming fiscal year we would be able to see the revenue recognition. Q: How much will it be in the coming fiscal year? Will you be able to complete the entire project in next fiscal year or even in FY15?
A: It will take three years or so, we will hand over only in 2016. So over three years it can spread out so roughly the recognition would be roughly about one third in the first year and balance 25-30 percent in the second year. And the final recognition will happen in the third year.
Normally if you go by one third of sales, construction happening in the same pace then you would see only about one ninth which gets realized in the first year. Cumulatively you see roughly about up to two-third getting cumulatively recognized in the second year, only the bulk gets actually recognised in the third year. However, the pattern will be much better than that since we are seeing a good amount of traction on the sales side. Q: How is FY14 shaping up for you? What kind of EPS number you think you will end the year with?
A: As we stand today if you look at our past we are facing the future with a lot more confidence and our Q1 results have been good. As I talked to you the total pipeline of projects which are already under construction is about Rs 3,000 crore. Again if you look across segments, if I look at the residential portfolio first there are about 14 projects and they are scattered all over Bangalore in all the prime areas. Again they are across price points, ranging from Rs 4,000/sqft right up to Rs 30,000/sqft. There are high rise condominium developments, there are low rise condominium developments, there are villa projects. So we have a very wide variety to offer to the customers.
Over the years, we have also been able to raise our average price of realisation very significantly. Over the last one year itself we have raised it by 40 percent, part of it is also because of the fact that the type of product basket that we have is little different but we have seen that even on the old projects which we have been selling earlier, the customers are prepared to pay a higher price to us. So those are some of the positives that we see and that is how I am saying that we have a lot greater confidence in the future of our company.