Rs 250 crore to be invested for developing affordable & mid-income housing projects: Kamal Singal, MD & CEO, Arvind SmartSpaces

Kamal Singal, MD & CEO, Arvind SmartSpaces Ltd, talks about opportunities in 2020, the status of its nine projects, its partnership with HDFC Capital and budget expectations during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:  

Q: How was 2019 for your business and what are the opportunities you see coming ahead in this new year 2020?

A: On average, the year 2019 was good for the industry as well as for us. We were expecting more but the overall growth has remained a bit muted one due to the ongoing environment, however, we were in the positive zone. The last quarter numbers and trends suggest that 2020 will bring an upward trend. The government has taken various steps on various fronts to improve the market and affordability. I feel there, government steps, effects are visible now and its impact will be visible in the industry in this quarter and subsequent quarters and we will be able to see healthy growth in coming quarters.  

Q: You have nine projects in Ahmedabad, Bengaluru and Pune. What is the status of these projects and the type of response it is getting?

A: All these projects are being executed right now and are on track and are happening as per the scheduled timelines. Two of these projects will be delivered soon and the remaining projects will be delivered in the next 2-3 years. We are also increasing the current pipeline and will launch new products soon. 

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Q) What is the status on the affordable and mid-income housing projects that was planned last year with HDFC Capital as your partner? 

A) We entered into a partnership with HDFC about two months ago and have started working on it. The fund will have focus on affordable and mid-income housing and have a particular focus on cities like Ahmedabad, Bangalore, and Pune. We are looking at projects and evaluating them and expect that around 4-5 projects will be acquired under this fund and joint venture. These projects will be placed in the market soon. Under the fund, we have an investment plan of around Rs250 crore for the development and launch of affordable and mid-income housing projects spread in an area of around 3-4 million square feet. 

Q: Tell us about your new offering, new projects and new plans and schemes you working on.

A: I will not be able to provide details of the imminent plans in specific terms just because a quarter has come to an end in the recent past and we are into a silent period. But, we have said in our guidelines that we have a pipeline, top line, bottom line of growing at an average rate of 25-30% and we are working on it. We believe that we will be able to maintain our growth momentum of track record, growth and future plans, project acquisition plans. The results of this quarter (December quarter) will be made public soon and provide new guidelines. 

Q: How is your loan or debt situation and how are you handling it?

A: We are very conservative about the debt. We are running this company with a plan to restrict the debt within a conservative limit. Our debt-equity ratio is at a manageable level or around 0.6-0.7. The stringent level of debt has been planned just to make sure that it doesn't have an impact on our growth. The HDFC deal becomes more relevant in the same context because we don't have any repayment obligations and side effects of leveraging. At the same time, we have received long-term capital in this form. So, the growth has been debottlenecked and also limited our debt. Right now, the debt levels are manageable. We are quite behind in terms of industry standards and norms and will maintain it, the debt level, in the same way. 

Q: The government has done a lot for the real estate sector but do you have some more expectations from this budget?

A: Budget has a direct impact on our sector. In the last 2-3 years, the government has supported the sector a lot either through the budget or other ways. But the industry will have specific expectations from the budget, like pass on of the interest rates down to the consumer/buyers, with a hope that it gives a boost to the sector. Benefits of the interest rates haven't been passed on in a way as we were expecting, however, RBI has taken several steps and has slashed interest rates at its end but it hasn't reached the consumer. So, we expect that the government comes with a framework that ensures interest rates are lowered. Any tweak to income tax may give a boost to consumption. The government has already taken a good initiative in the context of corporate tax but there is a need to do the same in case of personal income tax as it will increase the disposable income and people may able to afford more houses. So, we expect that the government may take some initiative on the personal income tax front.