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Ajmera Realty to invest around Rs 1,000 crore in four projects despite COVID-19

The projects in Mumbai, Bengaluru and Pune would be spread across 15 lakh sq ft. Ajmera Realty also plans to complete four projects in London this fiscal.

Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd

Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd

Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd, is an optimist and believes the long-term real-estate story remains intact. He is looking forward to launch four projects, spread across 15 lakh sq ft in Mumbai, Bengaluru and Pune this year.

The 40-year-old Ajmera, who is into adventure sports, and has completed four full marathons, is a firm believer in paring debt and hopes to reduce it by 20-30 percent more this fiscal.

The company recently decided to exit from its project in Bahrain.

In an interview with Moneycontrol, Ajmera talks about the impact of the second COVID wave on residential and the commercial segments. Edited excerpts:

 Ajmera Realty& Infra India has reported nearly 10% rise in net profit during the quarter ended March 2021, at Rs 31 crore, led by higher residential sales, mainly ready-to-move-in (RTM) apartments. Is the real estate sector’s success, post the second wave, likely to revolve around RTM?

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Post COVID-19, buyers have realised the importance of owning a home, and, that too, bigger spaces. This prompted us to launch three projects in the last quarter of 2021 – one in Bengaluru and two in Mumbai. We pumped in about Rs 500 crore and saw sales touch Rs 90 crore. In all these projects, we witnessed healthy sales. So, demand is not just restricted to RTM units but across segments. This has also helped us build our cash flows.

We are positive about the next few quarters, unless a third wave decides to play spoilsport. In the last two months, the sector has touched a low due to the complete lockdown.

Are you planning to launch new projects in 2021?

We look forward to launching four projects this calendar year – two in Mumbai, one in Bengaluru and one in Pune. We have a pipeline of about 15 lakh sq ft of project launches this financial year, and we are hopeful that this plan will be on track. The company’s investment in these projects would be close to Rs 800-1,000 crore, and this will be matched by internal accruals and construction finance. They will comprise both residential as well as commercial projects.

These projects will primarily comprise 2 and 3 BHK units and a few 1BHK units. Prices would differ from city to city. In Bengaluru, housing units are priced around Rs 5,000 per sq ft; in Mumbai, they cost around Rs 18,000-20,000 per sq ft; and, in Pune, around Rs 8,000-Rs 10,000 per sq ft.

So far, all plans and permissions are on track. We are endeavouring to finish all formalities as soon as possible. I am hopeful that once things open up and people start moving out of their homes, momentum will pick up, leading to increased sales.

The current debt stands at Rs 745 crore. To what extent are you hoping to reduce it in FY22?

We are targeting debt reduction by 20-30 percent. New launches last fiscal helped us with healthy sales collections. We saw about 30 percent increment in our cash flows, which, in turn, helped us reduce debt by 27 percent. The overall debt last year stood at Rs 940 crore and is down to around Rs 750 crore this year. This really helped us to build the momentum because we do not believe in having too much debt on our books.

The company has proposed the demerger of 6.5 acres of commercial undertaking projects at Ajmera i-land, Bhakti Park, in Mumbai’s Wadala locality into its wholly owned subsidiary Radha Raman Dev Ventures. The proposal is pending for NCLT approval. Please elaborate.

Wadala will be the most happening suburb in Mumbai because it is connected with a monorail, a metro, an expressway and even highways. Going forward, the government of Maharashtra may try and set up a BKC 2 in Wadala. Once that happens, the area will become a prime commercial destination.

We are planning to demerge one of the adjoining land parcels and develop it into a commercial destination. As much as 6.5 acres of this is part of our layout plan and we intend to carve out a separate entity, so that we can partner with the best of funds and see annuity income coming out of this project.

In order to get a better valuation for the shareholders, the company and the project, we have thought of demerging it into a separate entity. Thereafter, we will be developing it. The matter is still pending before NCLT.

Are you planning to increase prices this year, post the pandemic?

The cost of steel and cement have hit the roof since the last six months. So far, we have not increased prices but if input costs increase, we would have no option but to increase prices. If it happens, prices are likely to go up by 10-15 percent.

Would you be applying for project timeline extensions with RERA?

As per RERA orders post COVID-19, we already have an automatic extension of six months for our projects, and, following the current lockdown, we have requested for a further extension. However, we will now have to apply for project extensions individually but we are confident of completing projects at the stipulated time. Labour issues are also not as bad as last time. There is still 70 percent labour available on site but supplies have been impacted.

Tell us about your overseas projects in Bahrain and in London

Internationally, we have a presence in Bahrain and London. We have four projects currently under execution in London. We had one project in Bahrain, perhaps the tallest residential tower in the city, but we managed to get a better valuation and exited the project recently. The formalities are currently on.

We have four projects in London in the mid and the affordable segments. These comprise a mix of flats and row houses. There are 15 row houses, 32 apartments and 15 bungalows and another five apartments in Kingston and Southall. These are currently under execution and our plan is to finish them within 2021-2022, despite the pandemic.

We saw demand and sales for ready homes pick up in India last year after the first wave, and we are hoping the same would happen in London as things open up.

Vandana Ramnani
Vandana Ramnani
first published: May 28, 2021 11:02 am