Puravankara’s current land bank stands at 88 million square feet: Abhishek Kapoor, CEO

Abhishek Kapoor, Chief Executive Officer, Puravankara Limited, talks about Q1FY22, business outlook, land bank, upcoming projects, sales booking, debt situation among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: Provide highlights of the quarter? The company has managed to come into profits from a loss of Rs 17 crore last year. How did you manage it and what is your outlook for the future?

A: We are very happy with the performance of the last quarter. In this quarter, we have made a strategic sale of a commercial asset and due to which our profit and revenue have increased. Apart from this, our total revenue has increased by Rs 542 crore, and this has given us enough liquidity to launch further projects and make new acquisitions as well. Secondly, we did a sale of Rs 314 crore in the last quarter, which was hugely impacted by the second wave of COVID. Interestingly, all of these sales that have happened is from the ongoing and completed projects. So, there is a huge difference because last year in the same quarter during the first phase we made two online launches but this time without any launch we have sold products worth Rs 314 crore. Thirdly, which is the most important thing is that our total debt has reduced a lot and our cost of debt has also reduced a lot. All this together puts us in a strategically strong position for further growth in the industry and new acquisitions as well.

Q: What is your current land bank? Also tell us about your ongoing and upcoming projects, what is their size and overall geographical spread for those because you have more presence in the southern-eastern region?

A: Currently, we have a land bank of total 88 million square foot of which about 22.50 million square foot is under production. This year, we will launch around 15 million square foot (around 1.50 crore square foot). In this, the main launch is in Provident affordable housing, and it is around 70 lakh square foot. Area of around 40 lakh square foot is present in plotted development and 35 lakh square foot is in Puravankara. Our main advantage is that we are present in nine cities in South and West, which provides a geographic spread to us and we have a full range of products, maybe it comes to affordable housing or upper luxury. Due to this, we get an opportunity to do more projects and launch more projects. With this strategic advantage, I think, our prospects are quite good this year with these launches. 

Q: Can you please provide details in terms of the number of projects that are being launched, their location and their segmentation as you are present in all the three verticals affordable, premium and luxury?

A: We have, recently, launched ‘Purva Land’, it is an arm of plotted development. Last year, we launched a project of which 80% was sold during the COVID and lockdown. With that confidence, our expansion plotted development has happened at a great pace in the last one year. Our of, as I said, we are launching a 40-lakh square foot plotted development and I would like to update you about it. The project is based in Bangalore and Chennai and this launch of 40 lakh square foot will take place will happen between these two cities. In addition to this, in Provident, which is an affordable housing, big projects will be launched in Mumbai, Edappally in Kochi, which is around 36 lakh square foot. Last year, we did a transaction with International Finance Corp. (IFC) in which IFC did investments with us and the project will be launched with it. So, these are the two big projects of Provident. Under Puravankara, we have three other launches in Bangalore, Mumbai and Chennai. So, Puravankara’s projects will be launched in these three markets. With this, a total range as I informed you from plotted development, affordable housing to Purvankara’s luxury projects will be launched. Important is that these projects are coming from different geographies. As they are coming from different geographies, we will not reach the saturation point in any geography and its advantage reaches the brand and the market. 

Q: How was the sales booking during the quarter? Going forward, what prospects are visible ahead of the festive season and do you think that the festive season will be good this time compared to the last year? What kind of expectations do you have in terms of performance during the festive season?

A: Our outlook for the upcoming festive season that will last for four to five months is very positive due to which our confidence is quite high on the new launches. The confidence is coming due to two to three reasons even though the commodity prices have increased, and our prices have also gone up in the last two quarters. If you have a look at our data, then the average realization per square foot has increased despite this we have seen increased momentum in sales. The clear reasons for this increased velocity although the prices have increased because of two things that have happened in the last one-year (i) interest rates are at their lowest compared to any time in the past. You can have a look at the interest rates of the last 10 years and today you are getting home loans below 7%. So, it is a very conducive time for purchasing decisions. (ii) a consolidation has occurred in our industry, so the customers who are buying clearly know that they are supposed to buy from a strong brand with a strong delivery record and performance record and have strong financials. The advantage that it has is that lot of the people are going to the developers who are well managed, professionally run, well organized as well have a financial bandwidth and can deliver. Interestingly, even the financial institutions are also funding those who have this organization strength and capability. So, in the next three to four months, it seems that the market will continue, and the sustained demand of the market will be there because during the COVID people have realized that they should have their own house. Earlier, what was there that you are residing on rent or in a joint family but today your requirements have changed. 

Q: You have reduced your debt during the quarter. What is the current debt structure and by when do you plan to be debt-free?

A: Currently, we have a debt of around Rs 2,100 crore and in the last two years, we have consistently reduced our debt. Even our cost of capital has also been reduced to 11.78%. Our debt-equity ratio which stood at 1.34 earlier has come down to 0.9 now. I think, the current levels of debt are quite comfortable and will remain stable because the number of projects we will launch the more our investment will be monetized and as our investment will monetize our return on capital invested and equity will increase. So, I think, the current trend of launches at the current debt level we are very comfortable with. In fact, with more launches, if the debt goes up a bit, then there is no issue because it is relative to the business we are doing. You can get to see that the debt of many big companies stands around Rs 10,000-20,000 crore to Rs one lakh crore and so on, but it is because their count of business is more. So, our count of business is going up, but the debt has reduced. So, it is putting us in a uniquely advantageous position due to which we are comfortable at these levels as well.