Not looking to raise funds now: Indiabulls Real Estate

Indiabulls Real Estate started business in 2005 and is targeting cumulative sales of USD 5 billion by 2015. More than 90 of its projects are in Mumbai, the national capital region and Chennai.

Ajit Mittal, Executive Director of Indiabulls Group told CNBC-TV18 that the company is not looking to raise funds currently as its existing projects are generating sufficient amount of cash flows to meet their funding requirements. The real estate player which has already launched projects in Mumbai, NCR and Chennai region will be looking to foray in other cities like Indore, Vadodara in Gujarat, Kota, Jodhpur. Below is the edited transcript of Ajit Mittal’s interview with CNBC-TV18. Q: I understand your main focus will be to launch the next phase of existing projects in Panvel, Chennai Greens or at the Gurgaon Dwarka Expressway. What kind of a price appreciation are you expecting? A: Phase-II would be launched close to the price what phase-I is currently commanding. If one considers the price point of phase-II with the beginning of price point of phase -I then there is upside potential of close to 100 percent.
Given the past track-record, all these projects have already witnessed steady price appreciation. So, my sense is that the current prices at which these projects are being launched or are going to be launched there is a significant upside potential for all the buyers. Q: Are you seriously contemplating doubling the price from the first launch? A: Absolutely and this has been demonstrated by the past track-record. For example, Panvel phase-I which was launched about 2.5-3 years ago it was launched close to Rs 2,200 a square feet – it is currently going at around Rs 5500- 6000 a square feet in less than three years. Q: Your Indiabulls Blu project now has competition in Worli. It is pretty clear Lodha Developers is looking to increase market share by pricing its new high end project the Blue Moon 40 percent lower than Indiabulls Blu project. Are you going to lower the price of Indiabulls Blu which right now I understand is Rs 45,000 a square feet? A: I won’t like to comment on what other builder is offering, but let me just clarify once and for all that these two products are absolutely not comparable. You can’t compare apple with bananas. So, this is a project bang in the middle of Worli, it is the most high-end ultra luxury premium project and the price at which we are offering currently is already very attractive compared to its peers. If you look at some of the other projects in the area, the finished ones this price is close to half of what it is. The other builder’s project which you are referring is just not comparable both in terms of location and ambience. The sheer density of population within the project all those parameters absolutely are not comparable. Q: But the Lodha project is on a road parallel to Indiabulls Blu. So why is it not fair to compare? A: It does make a world of difference. The one project is right in the heart of Worli whereas the other one is in Lower Parel, the one you are referring to. My understanding goes that these are totally different locations. _PAGEBREAK_ Q: Are you looking to foray into new cities? A: We are already in Mumbai, NCR, Chennai region and other cities. We could potentially launch projects in Indore, couple of places in Gujarat like Vadodara for instance, Kota, Jodhpur. Q: When are you planning to launch projects in these cities? A: Right now our plate is full. The kind of projects that we are currently involved in, is itself very significant. There is a very significant pool of projects currently that are under execution. So, we will do it at our own pace and at an appropriate time. Q: You are saying Indiabulls Real Estate hands are full with existing projects. Does that also mean you're not looking to increase your land bank? Is Indiabulls like other developers looking at consolidating its land bank? A: We are always open to both the possibilities. We have been increasing land banks steadily. We are also open to disposing off some of the land parcels but right now we have the optimum size of our land bank and we are not increasing too offload anything. We are buying whenever the opportunity comes. We will consistently add to our land bank. But we just don’t get into geographies which don’t make much sense to us. We want to be more city-centric rather than getting too far into the interiors. Q: Every developer seems to be behind schedule. How delayed are Indiabulls projects? A: We are not behind schedule except maybe couple of projects where the approvals were stuck for reasons best known to the authorities. Otherwise, we have always been known for our speedy execution. These two commercial projects that we developed in Mumbai one Indiabulls Center and Indiabulls Finance Center were executed in record time. _PAGEBREAK_ In three years flat these projects were delivered whereas the people who bought property in and around the same area didn’t even go beyond the plinth area. So, we have always been ahead in that respect. For other projects also the execution is the key for us and we don’t get stuck sometimes there are reasons which are beyond your control which lead to some kind of delay. Most of our projects are pretty clear on all regulatory fronts and approval fronts. Q: Indiabulls Real Estate did do a buyback of 5 crore shares for around Rs 273 crore. Post that what is the debt position of the company? Is the market still finding Indiabulls Real Estate debt to be too high? A: This is a complete misconception that we have unusually high amount of debt. We do not really have high amount of debt. On the contrary, we have been right from the day one very moderately leveraged company.  I am aware that a large number of developers have high level of debt on their balance sheets which is probably not sustainable. However, we in this respect have been very conservative right from the day one. This might come across as very counter intuitive but we have retired some of our old debt in the last three-four months. Last quarter we retired close to Rs 275 crore worth of non- convertible debentures (NCDs). We have also generated significant amount of cash flows and we have been able to buyback our own stock. There has been a buyback which has been concluded in respect of Indiabulls Real Estate. There is no question of having large amount of debt. On the contrary, we are one of the least leveraged real estate developers in the country. Q: Are there any fundraising plans at Indiabulls Real Estate? A: Not at this stage. We don’t need any further funds either by way of debt or by way of equity at this point in time. Plus our existing projects are generating sufficient amount of cash flows to take care of all our funding requirements.