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Edited Transcript of PRESTIGE.NSE earnings conference call or presentation 27-Jan-20 9:30am GMT

Q3 2020 Prestige Estates Projects Ltd Earnings Call Hosted By Axis Capital Ltd

Bangalore Jan 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Prestige Estates Projects Ltd earnings conference call or presentation Monday, January 27, 2020 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Irfan Razack

Prestige Estates Projects Limited - Chairman & MD

* Konanki Venkata Narayana

Prestige Estates Projects Limited - CEO

* V. V. B. S. Sarma

Prestige Estates Projects Limited - CFO

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Conference Call Participants

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* Abhishek Bhandari

Macquarie Research - Analyst

* Atul Tiwari

Citigroup Inc, Research Division - VP and Analyst

* Govind Agrawal;AlFAccurate Advisors;Analyst

* Kunal Lakhan

Axis Capital Limited, Research Division - VP of Realty and Aviation

* Manish Agrawal

JM Financial Institutional Securities Limited, Research Division - Research Analyst

* Mohit Agrawal

IIFL Research - Assistant VP

* Murtuza Turab Arsiwalla

Kotak Securities (Institutional Equities) - Senior Analyst

* Puneet J. Gulati

HSBC, Research Division - Analyst

* Rajesh Disale;SBI Mutual Fund;Analyst

* Sameer Baisiwala

Morgan Stanley, Research Division - Executive Director

* Swagato Ghosh;Franklin Templeton;Analyst

* Tanuj Mukhija

BofA Merrill Lynch, Research Division - Associate

* Vinit Manek;Karma Capital;Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Prestige Estate Q3 FY '20 Earnings Conference call hosted by Axis Capital Limited. (Operator Instructions).

I now hand the conference over to Mr. Kunal Lakhan from Axis Capital Limited. Thank you, and over to you, sir.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [2]

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Thanks, Faizan. Hi. Good afternoon, everyone. Thanks for removing time to attend Prestige Estates Q3 FY '20 earnings con call. From the management team, we have today Mr. Irfan Razack, Chairman and Managing Director; Mr. Venkata K. Narayana, Chief Executive Officer; and Mr. V. V. B. S. Sarma, Chief Financial Officer of the company.

I would now like to hand over the call to the management for their opening remarks. Over to you, gentlemen.

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Unidentified Company Representative, [3]

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Hi, everyone. Thank you for your last participation. I will request Venkat to give the update and give his opening remarks.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [4]

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Good afternoon. Thank you all for taking time out to be in post results conference call of Prestige Estates for the Q3. The quarter that has gone by has been a very good quarter for us. You might have seen some of our numbers, the presales, a little over INR 1,300 crore for the quarter, we sold around 1.61 million square foot. The collections also have been good, we closed INR 1,100 crore. The collections are good primarily because what we are selling is -- apart from the -- just launched projects which have very few ongoing inventory and completed projects. Therefore, the collections are also very good. The rental income for the quarter is around INR 233 crores. The annualized basis, it will be higher. But for the quarter, it is so much. And we have delivered during the quarter 4.91 million square foot, and we have launched during the quarter, 1.84 million square foot.

Overall, if you look at operationally, it's been a good quarter. And going forward, the current quarter as well as the entire -- this calendar is going to be far better because of a lot of upcoming projects launched. The list of the projects has been given in the presentation as well. So at different locations, Mumbai, Chennai, Hyderabad, many in Bangalore, we've got the projects in the last mile of approval, some of them we just received the approvals in the RERA registration. So therefore a lot of projects up for launch. So we should see growth from where we are in terms of the sales numbers.

In addition to that, if you look at accounting point of view, we have got the revenue recognition, many projects coming in this quarter, primarily in [Chhattargh], Falcon City, Prestige's Lakeside Habitat, Prestige Gulmohar and Prestige Technostar. Therefore, our total revenue for the quarter is at INR 2,696 crores, with a EBITDA of INR 734 crores and PAT of INR 216 crores.

And for the -- this quarter, the debt equity stands at 1.86, our total debt is INR 8,674 crores and the net worth stands at INR 4,651 crores.

So the important fact that we want to highlight is that in terms of deliveries, if you have noticed, FY '19, we had delivered 24 million square foot of projects across various segments that's been -- they got deliveries from us in the given years. Even this year has been fantastic. This month, we had a few more completions, inaugurations. Overall this year, so far we have delivered around 20 million square foot. The last 2 years, almost 44 million square foot.

And there are a little over 15 million, 20 million square foot of projects at different stages of approvals, those will come for the launches.

In terms of execution, timely completion, deliveries as well as launches, we are on track with respect to what we had said at the beginning of the fiscal. And going forward, with entering into the new geographies, we believe that we'll be able to take off from here and grow to the next level.

So with this brief, we would open the forum for question and answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions).

The first question is from the line of Atul Tiwari from Citigroup.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [2]

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Sir, the debt number, what was the consolidated net debt number at 3Q FY '20 end?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [3]

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Consolidated net debt is INR 8,647.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [4]

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Okay. INR 8,647 crores?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [5]

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INR 8,674 crores. INR 8,674 crores. Our net worth is INR 4,651 crores.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [6]

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Okay, sir. And sir, this quarter, the presentation does not -- the investor presentation that was uploaded on the website, it does not have a segmental revenue and EBITDA number, which you guys had started sharing for first quarter and the second quarter. So shall we be sharing it henceforth? Or have we discontinued that practice for this quarter?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [7]

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We will be sharing it henceforth.

I mean in the sense, the numbers get aggregate, the segments revenue bifurcation, per se, the numbers that, internally, we were able to allocate the revenues and we will verify it and publish. Since they're not audited per se, we have removed this quarter, and we'll get it audited next quarter and published.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [8]

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Okay. So for the next quarter, you -- [this for] the second half the numbers will come through. So for the full year, we should get some clarity.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [9]

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Yes. Yes. Yes.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [10]

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Okay. And sir, any color on the recently announced projects with DB Realty? What is the nature of the project, area, et cetera? How much investment will be required? That will be helpful. That's my final question.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [11]

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Sure. So during last quarter, there are 2 announcements that have been made with respect to [PG] Realty. One was with respect to we're picking up a 29% stake from [3P International Garden] that's 1 in [PG's fiscal budget] that was announcement last quarter. This project is going to be developed on joint venture, joint development basis with a total potential of between 1.8 and 2 million square foot area. So it's in the stage of conceptualization and design. So this is [our intention] and this is what we have picked up. The recent announcement that you're referring to is the DB Lokhandwala project [that we design on that]. The total usable area comes to around 4 million-plus square foot and we have invested a 50% stake in that [SPV] and there are diligence that are underway. So hopefully in the next couple of months we should be able to complete the diligence and have -- get into the design and planning mode.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [12]

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So this will be 100% [leasable] project, they've already [comprehended this].

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [13]

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Yes, but one [area] -- yes, it is. [The matra] is going to a [mixed use] development which [we'll have repaid out of developer]. As far as the [BKT] is concerned, it's again going to be a buildable project, which has an option to [build stock in]

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [14]

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Okay. And is the land clear here, in the [Biha matra] project, I mean is the land in a position and cleared of all the hurdles or is there some rehabilitation that needs to be done?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [15]

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[That work] is underway. There is -- we have agreed to purchase [what people have said] economic rights [particular interest] but development is underway. So as and when we complete it [we will be happy].

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Operator [16]

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The next question is from the line of Puneet Gulati from HSBC.

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Puneet J. Gulati, HSBC, Research Division - Analyst [17]

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Just a bit more color on this 2 [recent transactions.] How much would you have paid for that 29% stake and then for the [besa matera]?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [18]

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The 29% stake our commission we have paid 150 crores. And the Jijamata Nagar we have paid a commitment fee and that is [when we pay the loss of the business initiative is the flipping cost, one-time.]

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Puneet J. Gulati, HSBC, Research Division - Analyst [19]

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So only for 15 crores you have got a 50% stake in the project?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [20]

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No, there is a balance to pay [when it comes in], but the balance will be paid after the [delivery].

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Puneet J. Gulati, HSBC, Research Division - Analyst [21]

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How much will that be, roughly?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [22]

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[Another] 34.

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Puneet J. Gulati, HSBC, Research Division - Analyst [23]

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34 crores. And will you assume any debt in this [SJV]?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [24]

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These are material issues [I can't tell right now.] On both of them actually there's no debt. [So we will not be assuming any debt.]

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Puneet J. Gulati, HSBC, Research Division - Analyst [25]

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So for a 4 million square foot sale that -- area you basically got it for something like 50 crores?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [26]

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Yes, but there is other land-related aspects, that's why it's a -- the exact number there is going to be -- we need to build a [SRA they had it] we need to put up [rehabilitation housing] all those costs will be part of the land cost stake. So it is going to be incurred by both the partners.

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Puneet J. Gulati, HSBC, Research Division - Analyst [27]

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So is that arrangement in both these projects, is it as one, as what will be in Jijamata Nagar?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [28]

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Yes. And the second one is a small portion in [PK].

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Puneet J. Gulati, HSBC, Research Division - Analyst [29]

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And all these regulatory rules are -- they are in place now?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [30]

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Yes.

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Puneet J. Gulati, HSBC, Research Division - Analyst [31]

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Okay. Okay, good. Secondly, if you can share some -- what's happening on the leasing side. There was no update on, how much did you make lease this quarter, and what is your rental expectation also going ahead?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [32]

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In terms of Bangalore, leasing has been good. We had set a target of 2.5 million square foot. We are at 60% of that at this time. The balance also we get leased, the projects have just got completed. And we just inaugurated this quarter, January, so it just started. Again, it's over a 1 million square foot, half of it is leased already to [absent chair] but the remaining also, they have a hard option. And if they don't take, we'll lease to somebody else. So this is the update on the Bangalore leasing. Of course, there are other projects that we are building in Chennai and Hyderabad, there are a lot of re-lease inquiry. Our leasing momentum overall has been good. So as and when the buildings get completed, we should be able to lease it. So there's nothing that is really substantial in [either] market.

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Puneet J. Gulati, HSBC, Research Division - Analyst [33]

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So what would be your expectation of leasing income, say, 2 years down the line?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [34]

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The forward-looking statements, you know what is under construction. We have given the slide, Slide #9. Right now, 10 million square foot is operational. And 14.98 million, 15 million square foot is ongoing, and 25 million square foot is under various stages of planning. So therefore we are going to add to it almost 27 million square foot now at a reasonable rentals of -- even if you look at the current market rental, whatever the potential that we have, that will get added to existing rental income.

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Puneet J. Gulati, HSBC, Research Division - Analyst [35]

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Sir, so the last time when you gave this breakup of the ongoing projects from office, it was something like close to 5.65 million square feet. That has gone up to 14.98 million? Is that how one should think about this?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [36]

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Yes. It is 14.98 million. 14 projects ongoing. So this also has been given.

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Puneet J. Gulati, HSBC, Research Division - Analyst [37]

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So 5.65 million has gone up to 14.98 million.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [38]

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Yes. If you see the next slide, the breakup of 14.98 million is given to you. So it's Tech Cloud, Tech Pacifica, Park, Star Tech -- which just got completed, it was ongoing till December -- Alpha Tech in Pune, Tech Park IV, Cessna B10 have just got completed this month. And Delhi Aerocity, of course, got added. And the remaining, you can see 9, 10 -- up to 14. The 14 we announced that have got completed. So this is the list, 14.98 million. In this -- around 3 million is going to be [part are] sold or partly sold. The rest all is going to add to the rental income.

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Puneet J. Gulati, HSBC, Research Division - Analyst [39]

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Okay. And what is the time line for completion of these projects?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [40]

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Some of them just got completed this month itself. So therefore, like for example, Phoenix got completed and Star Tech got completed this month itself. The remaining, the maximum time [given] for completion of these projects would be -- all of them, 36 months from now. And some of them will get over next year. The remaining, maximum period of 36 months from now.

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Puneet J. Gulati, HSBC, Research Division - Analyst [41]

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So just can you help me understand, how did that number go up from 5.65 million to 14.98 million? Were there some projects that you were not including earlier got included this time, or...

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [42]

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One minute, I'll just take a minute to reconcile. So it is not. So even if you look at the last quarter presentation, Slide #20. So we have mentioned 12 projects, 13 million square foot under construction. 13 million. 13 million has gone up to 14.98 million because we just added this quarter if you look at launches, those are office projects. [Pontu and] Tech Park -- Tech Pacifica, those 2 if you add, it will become 14.98 million. You can look at the last quarter presentation. 12 projects, 13 million square foot. Now we say it's 14 projects, 14.98 million square foot, with the 2 launches.

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Puneet J. Gulati, HSBC, Research Division - Analyst [43]

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Because in the last quarter presentation, Slide #26, you give this breakup.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [44]

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Referring to 20 what, sir?

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Puneet J. Gulati, HSBC, Research Division - Analyst [45]

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Slide #26. Last quarter's presentation.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [46]

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26 is about property management.

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Puneet J. Gulati, HSBC, Research Division - Analyst [47]

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No. It's the summary and growth trajectory. You have -- after -- so property management. So that is not the part of this same thing?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [48]

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No. Sir, I -- please refer to Slide #20.

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Puneet J. Gulati, HSBC, Research Division - Analyst [49]

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Okay. Okay, we -- I'll call up separately to discuss this here, yes.

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Operator [50]

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The next question is from the line of Abhishek Bhandari from Macquarie Group.

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Abhishek Bhandari, Macquarie Research - Analyst [51]

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Venkat, I had 2, 3 questions. Number one, we are joining hands with a stress (sic) [distress] group like DB Realty, and especially in those projects where there traditionally has been risk around SRA and all. So just to clarify over here, on whose part is the responsibility of SRA clearance, approvals and shifting life? With you, or with the partner?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [52]

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Sure, I think that's a very good question, Abhishek, happy New Year to you as well. I think here, I'll spend a little time explaining about the strategy that we are following and what is the game plan. As you know, we've been Bangalore-centric, and we have presence across South India, and we've been doing the business in South India for quite some time. Now the strength that we have built over a period of time is execution capability and selling, marketing and managing the properties. That's how last year and this year put together, we could deliver 44 million square foot in the market, where every now and then you keep seeing in the newspaper non deliveries from the various developers. Now this was an opportunity that we are looking at capitalizing, our brand strength and our capital is the trust and then execution capability. So we were looking at how do we take this to next level, our operations and how do we grow, wide up into various geographies, how do you get into other markets, so that we can capitalize on these consolidation opportunities? Issues that are relevant in the current market.

So most of the issues, if you look at today are twofold in the real estate. One, the lack of discipline in terms of honoring and delivering on commitment that people have made. Number 2 is about the failing to execute the project. So now in a pre-RERA regime, it's easy for anybody to self declare that they've got approvals and they're going to launch and sell. The selling is the easier part, but within execution and delivery is the hard work that one needs to do for 2, 3 years for honoring the commitments. That's where everybody fails, and that has been our strength. Now we looked at these geographies and identified some good properties which came our way, a lot of people from Western region are still pursuing and bringing us the transaction. We identified a few of them, and we looked at it and I said, our strength is execution, designing, planning and all of that. At a land level, the ground level, the land related and then diligence, the land related and approvals and the licensing part, we wanted to have partners who can do that work for us, take up that responsibility so that we build on our strengths rather than explore into unknown territory, building this relationship at the ground level, getting the approval, [the licensing and] all that, it's a time-continuing process. So this is where we identified partners for Western and Northern regions and shared the responsibilities. We'll do what we are -- we've been good at, and they'll help us getting the approvals and the clearances.

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Abhishek Bhandari, Macquarie Research - Analyst [53]

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Okay. And are these meant to be completely constructed by us in terms of investments? Or will there be investment even coming from the other partner? I think Irfan was mentioning at the start -- at the background that you might want to do some starter sales, if I heard it correctly?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [54]

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Ah. so the thing we can even do, but within -- the demand for the lease in those markets is very good. So therefore, 2 options. If we need money now we can do [partners]. Otherwise, we can build the development, lease it and probably look at putting into the yielding portfolio to be retailed. So both options exist. So since there is a lot of demand for the leasing, I think we'll [retail and go through the yield] mechanisms. You're saying possibility because there's also inquiries for startup sales in that location. So entire construction, the responsibility for design, construction, leasing and all of that, so branding, all that is going to be out of [PE].

So if you look at the bids that we are taking, Abhishek, is we are keen to develop those projects. And keen to capitalize on our strengths and put up some good development. This is going to be definitely [these are not commoditized and cannot be] development. But with the outflow so far, we are committed because we are also infusing money, are giving money only for the project only after satisfactory diligences and completion of [CPs.]

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Abhishek Bhandari, Macquarie Research - Analyst [55]

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Okay, sure. My second question, Venkat, is that if I look at your CapEx program, I think somebody asked 15-odd million square feet total in the commercial side and around 1,200, 1,300 rooms in the hotel side. So could you just give the total spend? What you have planned in mind for these 2 items over the next 4 to 5 years? I'm assuming this will take 4 to 5 years to complete.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [56]

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Which one, sir?

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Abhishek Bhandari, Macquarie Research - Analyst [57]

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Both: commercial 15 odd million square feet and hotels 1,229 rooms, which are under construction, including the Aerocity and JW. What is the total CapEx?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [58]

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So as far as these are concerned, there is amount of money that is -- the amount of money that has already been spent. Now the balance to spend with respect to all; that is commercial, retail and hospitality, all put together, our share is around INR 2,856 crores.

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Abhishek Bhandari, Macquarie Research - Analyst [59]

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INR 2,856 crores to be spent over the next 4 to 5 years?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [60]

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Yes.

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Abhishek Bhandari, Macquarie Research - Analyst [61]

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Okay. And, Venkat, continuing on this. While it's good to get a lot of deals from these stressed developers, but when we have so much of CapEx lined up on our own annuity portfolio where we are super good. And entering into a market like Bombay where -- sorry to say this, but we are untested yet. We have a good brand in Bangalore but not -- I don't know how much of that equity still carries into Bombay. And with such investments, the DB project in Lokhandwala itself would have INR 800 crores to INR 900 crores of SRA investments. Do you think -- are we becoming too much ambitious in taking up a lot of projects at the same time?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [62]

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We looked at this as a very opportunistic stance and also we need to compare that with the [available strength] of execution and move on to the next geographies. We are carefully doing it. Not much of outlay, as I told you, you know what we have spent so far. We are partnered. Now we need to get the approvals, next leg of money, outflows, anything substantial that we need to put in is only towards construction. That money will go only after the approvals have been obtained. To that extent, we are mitigating the risks involved with this. And see -- this is predominantly, these 2 are commercial. Now tenants, more or less, across India for various commercial properties are more of the same. Those are the people whom we have been dealing with. Yet okay, so they are not exactly the same, 50%, 60% of them is going to be the same, IT, the financial industry, even companies where we are doing business, we know about them. Like, for example, Hyderabad, we are doing something. The people who are coming and inquiring about Hyderabad projects are more or less our existing tenants in Bangalore. So it's not that it's fully unknown territory.

And we have built and delivered almost 35 million square foot of office so far, over 100-plus buildings. So people have seen where I visited here. I think that's going to help us. We don't see that -- we're not playing a blind game. We know what we are doing. One, we are 1 or 2 properties away from entering into that market and stabilizing. And this is exactly what we did a couple of years ago into -- when we were entering into Hyderabad, or when we were entering into Chennai. So it's just one more city. Same process, same issues, same things addressed up to now -- that way, if you're doing 2 cities -- business in 2 cities, in real estate, especially, it's as though we are about to go in 2 different countries. Nothing is same. Land, the documents are different, the height, BFSI permissions, road width, all -- everything changes. So they will be used to this, and we think it's the right time. We think it's the right time and as you -- as I explained to you, we're very carefully doing it. So we're not going overboard and at the same time, we want to capitalize on the opportunity.

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Abhishek Bhandari, Macquarie Research - Analyst [63]

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Sure, Venkat. And just a clarification. Yes, I probably read it in terms of residential being a part of Jijamata. And Venkat, one suggestion, when we have started disclosing so much in the previous presentations. It's a step back when we have stopped disclosing this segmental debt profile, WACC, whatever data it is. So my humble request to you that you please go back to your previous long slides, at least a lot of data is available and it's always better to be consistent with whatever data we are giving to the market. Thank you and all the best for 2020.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [64]

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Thank you very much sir, we'll definitely do that.

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Operator [65]

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The next question is from the line of Tanuj Mukhija from Bank of America.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [66]

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Congrats for the good presales numbers. Just one thing. Can you remind me what is your current level of unsold inventory? And what is the percentage of completed, ready-to-move-in unsold inventory levels?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [67]

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The completed, ready-to-move-in unsold inventory is around INR 3,000 crores.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [68]

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[Remaining] inventory?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [69]

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And -- so INR 3,000 crores, except for 2 projects, the remaining inventory has been moving. All our sales -- if you see the launches, the residential launches last 24 months have been very minimal. All the sales that whatever we have been plotting, we have been plotting from the inventory of ongoing projects and completed inventory. Even this completed inventory of INR 3,000 crores that you see, you may see the higher number. But then, as I mentioned in the beginning, last year, we delivered close to 24 million square foot in the predominantly residential. Even this year, what we delivered 20 million square foot is, again, predominantly residential. Last year, 10,000 plus homes, this year, around 8,000, 7,500 plus homes. So therefore, the -- except for 2 projects, that is White Meadows and Golfshire, which have been a little slow moving, that inventory is around INR 1,200-odd crores. The remaining has been moving -- the inventory we are able to churn that inventory, and we've been able to sell.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [70]

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Okay, understood. And just one more thing. Obviously, you have massive growth plans for office, retail and also for residential space. And you have a high amount of CapEx to be incurred for the office space. Could you remind us how do you plan to fund this? And what do you think is your comfortable level of debt?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [71]

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Sir, of whatever we said we need to spend on the balance of finish, portion of money, of course, will come from the bank. The remaining money will be in the form of equity. As we are drawing down the money for the completion of the ongoing projects, the debt may increase. But at the same time, we are repaying month-on-month the money with respect to already yielding projects. The [line] payments are going to the bank. So the incremental increase will be relatively small.

The second aspect is we need to look at the unlocking value from the yielding projects so that, that can be redeployed into -- on the construction in upcoming projects. So therefore, retail and as well as office, both yielding properties, capitalizing the value, unlocking and churning the capital becomes key. And that's one of the strategies that we have in mind.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [72]

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Okay. Just to delve a bit deeper on this front. Currently, net debt-to-equity is about 1.87x, which is higher than what was guided for at the end of last year. Sir, if you can just give some clarity as to what's your guidance for FY '21 net debt to equity? Or any guidance on the leverage numbers?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [73]

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So 3 points on this, I would like to spend, last year to now, is that the reason why it has gone up is we did have some acquisition of stakes that we did in various [SPGs]. We bought 100%, -- 50% stake from our partner, now become 100% owner in Hyderabad mall. And likewise, we bought stake from CapitaLand of Singapore, and there was a payout. And we are now 100% are majority partners in those malls, where there is no other partners. And we also acquired one large office development from other [infrastructure] fund. So this is how that debt has gone up, not only from actual outflows, but also because of accounting consolidation where as and when we become 100%, the entire debt [can come] from consolidation.

Now what is missing in the books is, as you move to a percentage of completion method, the time limit between redoing a transaction and that getting reflected in the books has now -- has widened, it's now 3 years. In fact, one more point that I have to add is, we [derisked most] close to INR 1,400 crores of net worth also. Is that -- because when we moved from a POC to completed, even that was there, the debt equity, what the way our partner part should have been far less. That's the other thing. So a lot of projects which are currently underway and doing well, we've got good response and all of that, are yet to come into the books. Therefore, you see the outflow that has happened already, and the inflows are deferred till the project is completed. That's the impact that you're seeing. But we look at -- overall, if you were to go down the path of churning our capital from the yielding portfolio, I think we'll substantially grow our rental income, multiply with respect to whatever is under construction and are under planning, and debt levels more or less will remain the same. So we're going to unlock the capital from there and redeploy here because the yields and redeployment and building are far higher. Maybe we can, again, cap it and [lease] it. So that cycle we'll have to go through. And it's a matter of time we'll be in that part.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [74]

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Okay. Sir, just last question from my end on...

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Operator [75]

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Sorry to interrupt you. This is the operator, Mr. Tanuj Mukhija, may we request that you return to the question queue for follow-up questions, as there are several participants waiting for their turn.

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Tanuj Mukhija, BofA Merrill Lynch, Research Division - Associate [76]

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I mean just one question, if I may. Just if you can elaborate on your unlocking plans for the office a little because your portfolio size currently may not be sufficient to list them independently? And I'll jump back into the queue for more questions.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [77]

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Just to answer on that point. See, right now, office and retail put together, we have little over INR 1,000 crores of rent coming in. And overall, in terms of the size of the project, we have around 14.28 million (sic) [14.98 million] square foot, that is yielding. Now a lot of under construction, both retail as well as office, will also get completed in, say, 12 months from now. So close to around 5 million, 6 million square foot should get done from 12 to 15 months from now, that will get added. And when we're actually doing re-digging, we even have beyond that 20% under construction also. So therefore, if you're looking at hybrid, which is a mix of office and retail, I think there is a sufficient scale to go down that path.

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Operator [78]

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The next question is from the line of Swagato Ghosh from Franklin Templeton.

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Swagato Ghosh;Franklin Templeton;Analyst, [79]

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Sir, firstly, on the presales number that you have reported, this 1.61 million number. This includes how much of commercial status hold?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [80]

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Commercial, we had a large sale that had taken place during the quarter, that's around INR 450 crores, around that number.

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Swagato Ghosh;Franklin Templeton;Analyst, [81]

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Sorry, 4?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [82]

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INR 450 crores.

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Swagato Ghosh;Franklin Templeton;Analyst, [83]

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INR 450 crores. Okay. Any details, which project?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [84]

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It's a project at outer ring road [platform].

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Swagato Ghosh;Franklin Templeton;Analyst, [85]

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Okay, okay, okay. And sir, can you just elaborate on how, like, this would work because we are selling it at a [straight-out] basis? Will it somehow compromise our quality of the asset, while you are trying to lease it out because there are multiple owners. So would we -- would that asset be at a slight disadvantage versus, say, a wholly owned asset?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [86]

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This particular sale has been made to the end user. He will [specify the requirements to] the company.

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Swagato Ghosh;Franklin Templeton;Analyst, [87]

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Okay, okay. Okay, fair enough. And second question is, sir, for the upcoming project list that you have given for the office ones, all the projects, the land is already with us?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [88]

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Yes. Land is already reserved, and some of them are in design, development and approval stage.

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Swagato Ghosh;Franklin Templeton;Analyst, [89]

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Okay, okay. And one last question is, the segmental data you have stopped disclosing, but can you help us with the debt -- net debt number for the residential segment?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [90]

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The total net debt (sic) [to equity ratio] is 1.86x. We have added this in the financial slide. Now Slide #5, the total net debt is INR 8,674 crores, net worth is 4,651, debt:equity is around 1.86. Close to 40%, 45% of our debt is residential, 40%. The remaining is lease until discounted from hospitality and other segments.

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Operator [91]

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The next question is from the line of Mr. Kunal Lakhan from Axis Capital Limited.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [92]

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Venkat, just a follow-up on the asset monetization side. So in terms of REIT, do you plan to do a REIT which will be a public REIT or a private REIT? Or would you even consider selling stake to large private equity investors?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [93]

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In the long run, REIT is the game that we want to play. And as you know, if you add office and retail and give us 12 months' time with the completion that we have, I think we have reasonable size to hit the public market. But specifically to answer your question, there are 2, 3 large investors who had approached us and who have been discussing to partner for the pre-REIT as well. So to participate in the portfolio now and become anchor when we do a public market REIT. So if you are referring to that information, yes, there is some discussion. So that what would happen is that we don't need to wait for the size and scale to do the public market REIT. As far as we are concerned, the money would come in now, that will help us reducing the debt are building -- debt levels are building under construction loans which we are borrowing additional money. So the growth also will be fast tracked and eventually, we'll go to the public market, and they also stand benefited, and we also [use] the portfolio.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [94]

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That's very interesting. So what kind of monetization in terms of size are we looking at to these couple of large investors?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [95]

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That number would be between $300 million to $400 million is what we're looking at.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [96]

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And this should come, like, you think 12 months is the time line for the REIT. So you're talking about next 3 to 6 months?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [97]

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Yes. 12 to 5 -- 5 to 15 months is the time line that we have kept for the REIT. So therefore, this transaction in all likelihood should happen, yes, mostly likely by end of this fiscal.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [98]

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Oh, that early, that's quite interesting. Okay. And secondly, on our long-term plans for these new markets in Mumbai and NCR. Like in Mumbai, we have done these couple of acquisitions, which are prime in terms of the locations and -- but like those were restricted to say DB land. But how about like -- what is the long-term plan in terms of like future growth with -- like how do you see the pipeline panning out for you, both in Mumbai and NCR?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [99]

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Sorry, Kunal, last line, I could not hear you.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [100]

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What I was trying to ask was like, what is the pipeline for you in terms of projects for Mumbai and NCR and what is the long-term plan over there?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [101]

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So Mumbai, other than the 2 DB projects that we spoke of, we have Byculla, which is a classic joint venture project. And where we are tied up. It's part of our investor presentation. That will come up for launch soon. And you also have -- must have read in the newspaper that, to that extent it's public, that we were one of the contenders to take over a project from a developer, [at risk of the] developer, at Mulund, a large development, almost close to 6 million square foot of residential development. Now that's also in the final leg. And hopefully that should also come through. This is a plan for Mumbai, these 4, 5 projects.

As far as the NCR region is concerned, we have a project in Aerocity that is DIAL, a large hotel, convention center and also close to [600-plus square foot of office]. One [sure] development. We also have a residential project at Noida, it's in documentation stage. So currently, these are the plans for these 2 regions. So now we will launch these projects and see the kind of response that we get. And most of them -- these are joint development -- joint ventures. So basis which we take a call to take up the newer projects.

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Kunal Lakhan, Axis Capital Limited, Research Division - VP of Realty and Aviation [102]

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That's very helpful. Just lastly, on the new launches front, I remember, like at the end of first half, we had a huge pipeline of launches still for the second half. But we did about 1.8 million square feet. How does the launch pipeline look for Q4 -- and Q4 particularly, have you launched any project so far? And what is basically the pipeline for Q4?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [103]

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The pipeline is quite huge in terms of projects in Bangalore as well as other cities. Just to tell you, last week we did -- around last week, 8, 10 days ago, we launched new project in Bangalore, that is not Bangalore. This is the first launch under HDFC platform. So far, we have deferred that capital into 2 projects, Prestige Smart City at Sarjapur Road, and Prestige Finsbury Park at North Bangalore. So this was launched and happy to share that we have got very good response. The Phase 1 of this project is around 1,000 units. We have sold around...

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V. V. B. S. Sarma, Prestige Estates Projects Limited - CFO [104]

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40?4? 400% is -- sold about 20% -- no, no. Phase 1 of 1,000 units, 1,000 units, we have sold 50%.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [105]

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Yes, around 50% is what we have sold. So it's been a very good response for the project. It's at North Bangalore, so Finsbury Park. That's the first launch for this calendar year. Hopefully, many more will follow now soon.

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Operator [106]

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The next question is from the line of Murtuza Arsiwalla from Kotak Securities.

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Murtuza Turab Arsiwalla, Kotak Securities (Institutional Equities) - Senior Analyst [107]

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Two questions. Would it be possible to share some kind of breakup of the revenue and EBITDA on the segments for this quarter? Number one.

Number two, on the DB opportunities, any indicated spend that we are looking at besides the initial investment? And are we evaluating other investment opportunities, either with DB or any other developer in Mumbai market?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [108]

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So the present transaction, as I told you is at Mulund residential development, which is at NCLT level. And as far as the payments with respect to DB projects are concerned, now what we need to make are only project related, approval related or the construction related, which will be now as we move forward after the completion of CPs.

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Murtuza Turab Arsiwalla, Kotak Securities (Institutional Equities) - Senior Analyst [109]

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Sure. And possible to share any composition of the revenue and EBITDA by segment for this quarter?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [110]

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Should be able to give that mostly, from next quarter, we'll bring it back to the slides.

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Operator [111]

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The next question is from the line of Sameer Baisiwala from Morgan Stanley.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [112]

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Venkat, if you had not put your company logo, I would haven't recognized your presentation. You have cut down so much detail which you used to give us earlier, other segmental revenue, free cash flow, leverage, guidance versus achievement, many things.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [113]

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Sameer, that's a good one. There are some reasons to do this. We'll bring it back.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [114]

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I don't like it as much.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [115]

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So there are reasons to do this. So we'll bring it back next quarter.

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V. V. B. S. Sarma, Prestige Estates Projects Limited - CFO [116]

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It will come back, just now there are -- we have now restricted ourselves for certain reasons.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [117]

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Everything that you've been used to, you've been asking for and much more in the back sir.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [118]

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Okay. We look forward to that.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [119]

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And we'll do from next quarter geography-wise not even just segment-wise, because the geographical presence is also increasing. So it will help you understand -- because we're entering into the new market, so people are a little apprehensive as to how we're going to do that. So therefore, to help all of you understand that, even geography-wise we'll do this.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [120]

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Okay, great. We look forward to that. Venkat, now on a more serious note. So you had given us the turnover target of INR 5,000 crores to INR 5,500 crores. And I think you've already crossed INR 6,100 crores in 9 months. What's the outlook going forward?

And second, related to that versus you doing 25 million, 26 million, this year, previous year completions. Now the total stuff that you're left with is 26 million of the ongoing resi. So how much are you going to complete next year and the year thereafter?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [121]

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So next year, completions are also a big -- may not be as big but whatever the projects that we are committed to the customers, that we'll get done. But we'll also launch this year at least 12 million, 15 million square foot. At least 12, 15 million square foot. And this time around, more than the volume, we should also look at the value because if we were to launch something in Mumbai, the value will be far higher than the top launching in [near area], but will be also a part of it. So 12 million to 15 million square foot launches this coming fiscal is possibility.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [122]

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Yes. So, Venkat, my -- and this is just accounting, so people will focus on cash flow, but just from an accounting basis, are we looking for a year or 2 when we are going to see on a reported basis, a fair bit of dip in the reported turnover?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [123]

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So we have close to INR 13,000 plus crores of unrecognized revenue as of now.

Okay, so -- and also, the inventory point of view, the close to 75% of whatever we are constructing right now we've sold, we have 25% of the remaining in the inventory. So we have, in addition to INR 13,000 crores unrecognized, we have completed inventory, which I told around INR 3,000 crores. We also have [bought] under-construction projects, some stock with us, so that will also get sold. And then these 2 will definitely add up for the turnover point of view. And of course, the new 12, 15 million square foot that we are going to launch this year is not going to come immediately. That's going to take 3 years for the revenue recognition. During this period, as I told you, we have around unrecognized revenue of INR 13,000 crores and overall, completed plus other ongoing projects stock of INR 8,000 crores around INR 21,000 crores.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [124]

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Okay, great. And the second question that I have is on the entity level post the GIC transaction, are you looking to have more dilution?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [125]

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The GIC transaction is completed, as you know. The preferential allotment I think has been done. Now -- so given the growth opportunities, given the strategy that we have in mind to grow this organization to the next level. Because as I said, the key strengths deliverable around this time from any play that is expected is the ability to execute and complete the transaction and customer engagement, keeping them happy. That's where -- that's what we've been doing over a period of time. We will play it out as things go by.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [126]

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So -- I -- we can say, if I've understood correctly, you have not put a full stop to it, there could be more coming? Is that what you are saying?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [127]

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Yes. Maybe, yes.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [128]

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Okay, great.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [129]

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There's no full stop, I'll say, because it's always a function of what we need to do as organization, what is the growth? What are the opportunities? The highest amount of consolidation that are happening here. So normally, if you have to get some land and then clean it up, get the approvals and launch, it is 15-24 months' time. If something is coming up and which is of our liking, it so happens Sameer, 3, 4 years ago for a very same land parcel, 3, 4 developers should have been considered, we would've win the race. So it must have gone to somebody else. We wouldn't have voted for it or for whatever reasons, the same land at better terms is coming back today. Either from the lenders or from the developers or wherever it is. So therefore, I mean, these opportunities, I don't know, 2 years from now, 3 years from now, when -- after the consolidation, happens a few large developers remain and they exist and going across the business would be prevalent or not. But the terms at which they are coming, and the returns that they're going to generate by deploying now, are very attractive. So therefore, for that, if we need funds, we should look at raising.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [130]

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And I presume these are not INR 200 crores, INR 300 crores kind of ticket size. They're much larger, isn't it, the new opportunities? And so therefore, you need to raise also much larger amounts?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [131]

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Two things, whether they're going to have outright purchase or we are going to do joint development or joint ventures. Sometimes in this kind of transaction, good to have the earlier person as a partner so that we know exactly what their issues are and can take in help on resolving, [vis a vis] trying to figure out on our own, which will take a couple of years then between in resolving, couple of months. So we need -- there is no standard formula for this. We need to look at project-by-project and accordingly we are playing. Outright by per minimal, outright by per minimal.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [132]

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Okay, great. Just one final, with your permission. Sir, a simple question on Bangalore market. Are we any time looking at price increases? Or will it remain a volume game for the foreseeable future?

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [133]

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The price, we don't want it also to increase too much too fast. Again, it brings in the pay in, as long as our margins are protected and these transactions are happening, that's very good. Obviously, as we go along, price does increase, along with inflation and everything else. So I just don't want the price to increase for the sake of increasing the price. As I said, if we are having a decent margin, I think we should let go and keep selling.

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Sameer Baisiwala, Morgan Stanley, Research Division - Executive Director [134]

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Sir, price has not increased for the last 3 years, I would imagine. So.

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [135]

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Not really. If you take it that way, every project that we've launched, from the launch date to today, there is an increase in the price. And it's a mere sort of a perception that the price hasn't gone up. Like Venkat just prompted me, he said Falcon City. When I launched Falcon City, it was sub INR 5,000 crores. Today, it's selling for INR 8,000 crores when we completed, and it's a matter of 3.5 years. So the customer does get the benefit. And it's fair enough. Now if I try to sell my entire inventory at INR 8,000 crores, it will be uphill task. But since we have given it at a certain number to the customer, we've also made a margin. So -- certain -- a certain bit of leakage on the market. Margin will be there, I'd rather that leaks to the customer than to the banker.

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Operator [136]

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The next question is from the line of Mohit Agrawal from IIFL.

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Mohit Agrawal, IIFL Research - Assistant VP [137]

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Sir, just one question. Can you share the spends that we have done on the resi projects, on CapEx projects in land bank this quarter?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [138]

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Sure, sure, just give me a moment. So this quarter, the overall spend on construction is INR 750 crores. And on the residential and commercial meant for sale is around INR 522 crores. CapEx is around INR 160 crores, Retail -- CapEx Commercial. Retail CapEx is around INR 58 crore and hospitality, around INR 10 crores rupees. So INR 750 crore rupees. And on land overall is around INR 320 crores. That includes land refundable deposit and the stake acquisition in DIAL as well as the DB project as a vendor of BKC.

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Mohit Agrawal, IIFL Research - Assistant VP [139]

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Sure, sir. Sir, how do you see the run rate. So I see on the resi bit, you have used to do about roughly about INR 2,800 crores annual spend. Do you see that run rate continuing on an annual basis? Or -- or do you think that will be -- you'll step up that number?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [140]

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Yes, on commercial projects, I think that is one category we look at project win for sale. The 9-month spend has been INR 1,800 crores, so it will be around that number. So overall, the construction spend for this 9 months is INR 2,550 crores across all segments. Residential alone is INR [1,800] crores.

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Operator [141]

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The next question is from the line of Vinit Manek from Karma Capital.

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Vinit Manek;Karma Capital;Analyst, [142]

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Venkat, I had 2 questions. The 15 million square feet of ...

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Operator [143]

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Sorry to interrupt you, Mr. Vinit, can you please increase the volume of your phone?

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Vinit Manek;Karma Capital;Analyst, [144]

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Yes. Venkat, I had 2 questions to you. The ongoing upcoming commercial that we have, 15 million square feet, which is lined out. So is it a complete share to Prestige or there is same part to the JD developer or someone?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [145]

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The recent one that just now what I mentioned, INR 2,856 crore?

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Vinit Manek;Karma Capital;Analyst, [146]

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Yes, yes.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [147]

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That is only our share.

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Vinit Manek;Karma Capital;Analyst, [148]

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Okay, okay. And apart from that, sir, our resi projects, that 26 million square feet which is ongoing. So how much would we look to spend over the next 2, 3 years for our resi projects?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [149]

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Resi balance to finish?

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Vinit Manek;Karma Capital;Analyst, [150]

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Yes, yes, yes.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [151]

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Residential balance to complete is around INR 3,700 crores, sir.

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Operator [152]

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The next question is from the line of Mr. Govind Agrawal from AlFAccurate Advisors.

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Govind Agrawal;AlFAccurate Advisors;Analyst, [153]

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Venkat, another question on the debt. If I've understood right, you gave the guidance of the debt level of around INR 8,600 to be maintained for next year as well?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [154]

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Sorry?

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Govind Agrawal;AlFAccurate Advisors;Analyst, [155]

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The net debt, which is currently, you said INR 8,674. The guidance for the next year, which is FY '21, you expect this to remain same around this level? Or will it...

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [156]

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Same -- at the same time grow the rental portfolio to the next level. So that's what I was hinting at. The funding for under construction projects is going to be a, by way of bank rate. To the extent we are repaying, it will not have any impact. And also by unlocking some value from yielding projects and redeploying. That's correct, what I mentioned.

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Govind Agrawal;AlFAccurate Advisors;Analyst, [157]

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Right. But if I recall the meetings I had with your colleague 3, 4 months back, where he gave the complete details about the cash flows over next 3, 4 months. And the debt:equity would come down to 1.4x. And also absolute amount of INR 6,500 crores. So I'm just failing to understand as to what has changed in 3 months where, certainly, it remains at this level. I know you mentioned about acquisition of the Hyderabad mall and also capital, et cetera. But those numbers are not big enough kind of things. So the 2x of the debt level is definitely worrying.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [158]

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Right. No, so 2 aspects to it, sir. One, if you look at debt:equity, will it come down to 1.4x? Answer is right. It will come down because the absolute amount of debt remains where it is, but because of the increase in the net worth of the company, which as I said, there could be offering. And then further, whatever we discussed while answering the earlier call about the REIT related and all of that, the denominator will increase, debt:equity will definitely fall. As far as the numerator goes, the additions are last 1 quarter, whatever we did. That's what I announced in terms of DB project at BKC and at Lokhandwala -- sorry, Jijamata Nagar. These 2 projects were not there when we spoke, and these are the new things that have come in. So therefore I have considered the spend with respect to these projects as well. So to that extent, rental income will definitely go up. So the size of the organization will grow. Debt will remain as it is. Debt equity will definitely fall as I'm explaining to you.

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Govind Agrawal;AlFAccurate Advisors;Analyst, [159]

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Okay. I see. My second question is on your JV with HDFC Limited. So where you mentioned you just launched one project. So if you can give a little more details on the other projects, these -- what are the status of those projects?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [160]

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There are 2 projects. One is the Prestige Smart City, that itself is a project which is mix of many projects. So we have there project development. We have a villa development. We have the residential apartments, and a little bit of commercial as well. So that is going to be developed at those projects. A large one, get launched probably in the Q2 of the next fiscal. And the other project where we have invested has already been launched. As I was mentioning, if you look into earlier call, Phase 1 of that project was around 1,000 units. We have already sold in last 2, 3 weeks, 50% of it. There are other projects that we want to put in the portfolio. We are right now in discussion stage. And these are the only 2 right now. So there are a couple of them we are discussing. Hopefully, we should be able to put them as we go along to the platform.

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Operator [161]

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The next question is from the line of Rajesh Disale from SBI Mutual Fund.

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Rajesh Disale;SBI Mutual Fund;Analyst, [162]

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I just have a question about occupancy levels in the commercial properties and the retail properties. So could you like, help us with average occupancy levels and whether any of the properties are like lagging behind?

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [163]

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The occupancy levels are near 0. With retail -- yes, I mean, the vacancy levels and the retail will definitely have about 4%, 5%, 6% vacancy based on the churn that we keep doing and move tenants from -- the nonperforming tenants often time get a new grant and [they can use it]. And as far as office is concerned, as of today, it's a good news from your question is how far this will sustain. But whatever we have built and are building is already spoken for.

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Operator [164]

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The next question is from the line of Swagato Ghosh from Franklin Templeton.

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Swagato Ghosh;Franklin Templeton;Analyst, [165]

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Sir, on the strata sales, I had a few follow-ups. Firstly, can you help me with the valuations for some of the transactions you have seen?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [166]

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Which transaction, sir?

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Swagato Ghosh;Franklin Templeton;Analyst, [167]

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Maybe for the large transaction that you saw INR 450 crores for the cap rate at which this transaction was done?

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [168]

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It's not a cap rate, it's an overall price that we've done. We've got a very good number. I don't want to talk about the number in the conference call. But I think we bought it above the market price itself. It's actually -- it's tilted in our favor because it was an opportunity for us. And the other side it was an opportunity for the corporate was lost because they can't get this location again.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [169]

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And it's already there.

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [170]

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That's a win-win for both, it's a win-win for both. And -- but it doesn't -- it's a sweet deal for us.

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Swagato Ghosh;Franklin Templeton;Analyst, [171]

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Okay, fair. What was the area corresponding to this INR 450 crores number?

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [172]

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Answer is the same. So we'll probably -- I'll tell Venkat to discuss this offline with you.

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Swagato Ghosh;Franklin Templeton;Analyst, [173]

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Sure, sure. Sure, sir. And just a technical clarification, how are we accounting for the cash flow and revenue recognition from these transactions?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [174]

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Completed method.

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Swagato Ghosh;Franklin Templeton;Analyst, [175]

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Sorry?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [176]

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Completed method.

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Swagato Ghosh;Franklin Templeton;Analyst, [177]

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Okay. Okay. So nothing has come in this quarter?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [178]

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We've computed it from a turnover point of view, nothing, only on the operational side, you'll see that so much sales happened. On the turnover, it become only when we complete handover and the new position.

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Swagato Ghosh;Franklin Templeton;Analyst, [179]

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Got it, got it. And one other quick question is on the HDFC platform. Are we open to like for the JDA deals, are we open to partnering like with HDFC? Because for those projects anyways, the capital requirement is lesser. So how are we like trying to fulfill their capital deployment targets?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [180]

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So even if we put it in that there won't be much of capital that is deployable. So therefore, original understanding is still that the JDs are out of this framework.

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Swagato Ghosh;Franklin Templeton;Analyst, [181]

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Right. So does that imply that we actually will get into the capital-intensive projects although our current mix is not really tilted towards that?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [182]

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The capital is available, what is in JD, we will not convert into sales. So it also depends upon the landowner requirement and what kind of a project it is, from whom it is coming. Sometimes it's coming from lenders, sometimes it's coming from NCLT and all of that. So we will not just because we want to deploy the capital and make sure we're funding the platform, convert a JD into outright sale.

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Operator [183]

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The next question is from the line of Manish Agrawal from JM Financial.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [184]

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I just wanted to know the land value currently sitting on your books, book value of the land basically?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [185]

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Book value of the land. There are 2 things. One is the upcoming projects because that land, once it reaches a particular stage it becomes an upcoming project, the value is in the form of -- threefold: the balance received and stock from ongoing projects, value of the upcoming projects and the land bank parcel. Land is primarily split into price in different lands. One, we have at [by median] and some other land parcels, which are in aggregation mode. So those are not there in the presentation. I can share it with you offline. If we can just wait until the last quarter slides, that we have the information.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [186]

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Okay. And secondly, regarding the commercial projects. So 14.98 million square feet you have given in the presentation as the ongoing projects. So that is the total developable area? And how much is the Prestige share out of this 14.98 million square feet?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [187]

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One minute, I can give you, comes to around 8.5 million square feet, 9 million square feet.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [188]

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8.5 million square feet, 9 million square feet. And this is expected to be completed over the next 2, 3 years?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [189]

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Yes. So the beginning of year, actually this month still, we have completed 3 projects. The FinTech is over, that's at 10, 14, Prestige Phoenix is over, actually, 4 projects. Number 7, Cessna B10 is over. Number 3, Prestige Star Tech is over.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [190]

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Okay, okay. And out of -- and the upcoming project is 25.28 million square feet out of which, how much would be our share?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [191]

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Yes, yes. Just 1 minute. Just give me a minute. Around 70% will be our share.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [192]

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70% would be our share. And what would be the broad timing for the upcoming projects?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [193]

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I think most of these upcoming projects will start in 12 months' time.

Actually, almost all of them. And we should be able to complete them in a phase manner, from then on under 3 years' time.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [194]

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3 years' time. And this will be similar for retail also?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [195]

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This will be similar for retail also. Retail, I think partners are minimal. So 2.56 million square feet is the ongoing project. In that, around 65% is our share. On the upcoming projects, around 72% is our share.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [196]

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Got it, got it, okay. And regarding DIAL, we have 50% share in the hotel project, right?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [197]

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Correct. That's hotel plus office. Office of INR 6.5 lakhs. If you take current rentals of 185, 200 that's going by turn, give a cap rate of 7.5%, 8% that value of [INR 7,800 crores]. So office is also an important component there.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [198]

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Okay. So broadly you're saying INR 2,800 crore CapEx will include all these projects?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [199]

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Yes, INR 2,852 crores will include all ongoing projects.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [200]

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All ongoing projects. Okay.

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [201]

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Not upcoming because there are further upcoming as well, includes only all ongoing.

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Manish Agrawal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [202]

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Okay, okay. And how much would the upcoming projects require?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [203]

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We haven't done the budgeting yet for those projects because they are still in the approval stage.

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Operator [204]

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Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [205]

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As usual, thank you very much for the participative questions. It's been quite nice to participate with you and answer your questions. Of course, always available to take any questions further, which you would like any clarifications. And look forward to your support as usual. Venkat, do you want to add something?

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Konanki Venkata Narayana, Prestige Estates Projects Limited - CEO [206]

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Thank you all for participation and your support and the quality questions that you have asked, which will help us explain strategies and the way forward in a better way. And as I told, we will bring in some slides and explain a little more in detail about the way we're looking at the geography-wise, segment-wise, to help you understand things better. More so, because now the completed method, the books are reflecting what we are doing 3 years from now. So therefore operationally, we need to give a lot more information so that you know what exactly is happening. All that I can tell you is now the -- with kind of execution that we have done and kind of opportunities that are coming our way, given whatever is happening, which you know very well in the real estate segment across geographies, we are well poised to capitalize on those opportunities, consolidate and grow to the next level. We at Prestige Estates management and entire team is working hard that -- so we grow the organization beyond the existing geographies to other geographies and also into the other -- all segments that we are presenting. I think next 12 months is going to be very exciting and challenging period for us. So hopefully yes, from now, we would -- should become a bigger, larger company with the newer markets contributing to our operations as well as our financials. Thanks once again for your support. We look forward to continued patronage. Thank you.

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Irfan Razack, Prestige Estates Projects Limited - Chairman & MD [207]

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Thank you.

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Operator [208]

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Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.