Century Textiles & Industries Limited (CENTURYTEX) Q2 FY23 Earnings Concall Transcript

Century Textiles & Industries Limited (NSE: CENTURYTEX) Q2 FY23 Earnings Concall dated Oct. 27, 2022

Corporate Participants:

Unidentified Speaker —

Snehal Shah — Chief Financial Officer

K. T. Jithendran — Chief Executive Officer

Vijay Kaul — Chief Executive Officer

Analysts:

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Aditya Karna — Metaverse Equity Fund — Analyst

Viraj Parekh — Carnelian Asset Management — Analyst

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Ajit — Nirzar Securities — Analyst

Ashish Kumar — Infinity Alternatives — Analyst

Harsh Pathak — B&K Securities — Analyst

Hitesh Doshi — Individual Investor — Analyst

Unidentified Participant — — Analyst

Abhinav Bhandari — Soham Asset Managers — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, and welcome to the Q2 FY ’23 Earnings Conference Call of Century Textiles and Industries Limited, hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [Indecipherable] from Antique Stock Broking. Thank you. And, over to you sir.

Unidentified Speaker —

Thank you, Michelle. Hello, everyone, and welcome to conference call to discuss 2Q FY23 earnings of Century Textiles & Industries Limited. Today, we have with us the management of Century Textile & Industries, represented by Mr. R. K. Dalmia, Managing Director; Mr. Vijay Kaul, CEO, Century Pulp & Paper; Mr. K. T. Jithendran, CEO, Birla Estates, and Mr. Snehal Shah, CFO. [Indecipherable] let me hand over the call to Mr. Dalmia. Over to you sir.

Snehal Shah — Chief Financial Officer

I’ll give some opening remarks. This is Snehal here. So very good afternoon to everyone joining us today. First of all, wish you all a very happy Diwali. It is our pleasure to welcome you all to this earnings conference call for the second quarter and first half of the financial year 2023. Let me quickly take you through the quarterly industry developments and as well as our business highlights. The global economy, as you all know, continues to face headwinds due to uncertain geopolitical situations and high inflation. The rising interest rates across the globe to fight [Indecipherable] pressures are weighing on the economic activities.

Current situation in India although has improved with Indian consumer demand remaining resilient. Coming to our company’s performance for Q2 FY ’23. Well, the good news is that, Q2 of this financial has been the best in the last so many quarters as far as memory goes. Given the environment, this is a commendable performance. The pulp and paper business has had a stellar performance with a lifetime high revenues and NSR in each of its segments. The real estate bookings were also buoyant. For the second quarter of financial year 2023, the consolidated turnover grew by 21% Y-o-Y to INR1,211 crores.

The EBITDA for Q2 FY ’23 grew by 42% Y-o-Y to INR189 crores with consolidated EBITDA margins of 15.6% and the net profit after tax stood at INR71 crores, which grew by 122% Y-o-Y. Now let me take you through some of the key highlights across our three business verticals. Starting with the real estate business, in Q2 FY ’23, the real estate industry saw continued positive momentum. Despite increase in overall interest rates, residential real estate registered robust growth due to a renewed trust towards homeownership. A stable job market and steady infrastructure investments have further cropped up demand for quality housing.

For the second quarter, the real estate business revenues stood at INR33 crores and INR66 crores in H1 FY23. Real estate leasing income is steady, although there is a slight drop of 6% on Y-o-Y basis, primarily due to some old renewals at a lower rate considering current market trades. EBITDA is lower due to higher corporate expenses, due to growth in business. Booking value for Q2 FY23 was INR561 crores and collection at INR294 crores, on a Y-o-Y comparison it is 180.5% and 286.1% respectively. For H1 FY23, the bookings stood at INR995 crores versus INR245 crores for H1 FY22, representing a Y-o-Y change of 306%. Collections for H1 FY23 stood at INR428 crores against INR124 crores in H1 last year, registering a growth rate of 244% Y-o-Y.

Amidst resounding response from the customer for our Gurugram project, we have launched the second phase of Birla Navya. We are pleased to inform you that we have already sold 67% in terms of value, also launched inventory was INR337 crores. For our already launched projects namely Birla Niyaara at Worli; Birla Vanya at Kalyan; Birla Alokya and Birla Tisya at Bengaluru, we achieved sales worth INR561 crores during Q2 FY23. We have received robust collections of about INR294 crores from all the projects during the quarter on the back of strong and customer outreach. Our collection efficiency is over 95%. We continue to aggressively scale up our business development pipeline. We acquired about 10 acres of prime land in an upscale South Bangalore location. The land is planned to be developed as a high-end residential complex with estimated revenue potential worth INR840 crores. This project will further strengthen our presence in Bengaluru.

Our two commercial assets Birla Aurora and Birla Centurion continue to generate stable rentals. With the festive season in full swing, the industry outlook remains positive. There is a continued surge in favorable homebuyer and investment sentiments towards real estate. Our differentiators of very high customer centers CP extreme focus on being design-driven and being digitally-enabled, while offering superior project delivery will play a key role in making us one of the top real estate developers in the country.

Now moving on to the pulp and paper segment. In the quarter gone by, the paper industry demand was on recovery side and therefore positively impacted the growth of volumes and prices in all its segments. Paper demand was on an uptick due to opening of schools after summer breaks and upcoming festival seasons in October ’22. The packaging board and tissue segment is witnessing strong demand with rise in packaging for e-commerce, food and elite food products, FMCG and pharmaceuticals. The demand growth for hygienic issues owing to urbanization in India and post-COVID ’19 figures. The two main factors which are still affecting the global trade scenario are the Russia and Ukraine war, and the aggressive pricing by China and Indonesia in the international market. The pulp and paper business has contributed significantly to this quarter’s numbers on all accounts. It has crossed 20% EBITDA margins after a very long time. The business achieved production of 1,15,032 metric tons with an overall capacity utilization of 96% with sales volumes of 1,08,902 metric ton. In Q2 FY23, our net sales grew by 37% Y-o-Y to INR942 crores, driven by better realizations. EBITDA grew by 44% to reach INR193 crores with EBITDA margins improving to 20.5%, primarily on account of operating efficiencies, which let me tell you, it’s still work in progress. In H1 FY23, sales stood at INR1,799 crores, EBITDA stood at INR327 crores and EBITDA margin stands at 18.2%. With the ban in polystyrene foam-based tableware products from 1st July ’22, the demand for bagasse-based tableware product has increased substantially and prices increase has been taken accordingly.

The tissue segment is expected to perform better in Q3 with major tissue consumption centers being fully operational. The board segment market is expected to be subdued due to lower demand and competitive low-priced imports. With the reopening of most paper consumption centers and subsiding high input prices or to medium outlook for the Indian paper industry appears to be [Indecipherable].

Now moving onto the textile division performance which is facing challenging times in global markets. However, apparel fabric demand has been stable in the domestic market, export inquiries declined considerably due to rising interest rates, increased borrowing cost along with high spike in gas charges, weighing on economic activity of the final textile end use customer, consumers in USA and European Union. Demand for printed segment was stable on account of long delivery period and higher cost of yarn dyed fabrics. Sales for the second quarter stood at INR224 crores while for H1 FY23 sales stood at INR491 crores. EBITDA loss is at INR6 crores for the quarter as well as for H1.

High volatility in raw material prices is making the customer cautious and most of the customers have kept orders on hold and are running at minimum inventory, without making any extra bookings considering expected decrease in raw cotton prices in the next season. Production in home textile across India is running at significantly lower capacity.

Overall Indian economy is doing well, and as our main market is in the domestic apparel division, we expect steady demand and regular business from Q4. We are also happy to release our FY22 integrated report showcasing our status on ESG as well as our roadmap for future. This is our first prepared on voluntary basis but will be part of the BSBR HR report which will be mandatory from FY23. We urge our investors to go through the report. In conclusion, we are happy that we had an overall strong performance this quarter despite the macro challenges. The company will continue to pursue its goal of sustainable business and working on all controllables to lift its performance in an uncontrollable external environment.

We can now open the floor for question-and-answer session. Thank you very much.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Nishit Shah from Aequitas Investment Consultancy Private Limited. Please go ahead.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Good evening sir, my question relates to paper division. Sir first I would like to understand more on the imports part. Sir, you said that imports are coming in and that is creating pressure in terms of price. What is the kind of pricing differential of imported paper production domestic prices?

Vijay Kaul — Chief Executive Officer

No, Nishit Shah, this is Vijay Kaul here. Regarding import of paper and import of gold products, mostly about the gold products, not much on the paper front, because there are certain varieties which are still not produced in India, that is what has been the basic [Indecipherable]. And there have been one confinement and this is only on import for writing and printing, but that was done by a particular trader for a different purpose altogether. Thereafter there is more imports on that. The major imports have been on the [Indecipherable] They are the difference in the prices, just about INR4 to INR5 lower than our Indian price.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

And sir in terms of volumes, will see imports now increasing?

Vijay Kaul — Chief Executive Officer

Earlier there was an anti-dumping duty on certain products, so we couldn’t import. Now the anti-dumping duty has been renewed. But if people have to get qualified vendor that’s been part BIS where they have be declare that what is their turnover, what products they are making, the company has to declare. [Indecipherable] important into this country, so they have maintain all these and then only they can import. They’re allowed to impart only after they get the clearance. Import will commence because that is because European market on the growth market as on today is going for a recession. There will not be much of a demand in those segments. Instead of supplying to Europe and USA whereas the market has gone bad, so definitely there will be pressure on India to get these kind of product from the market. But as the rupee also modified, dollar incoming and rupees going down, maybe that will also have some effect of not that much of imports coming into the country. We have to watch now starting from November, we have to keep a close watch on these kind of things.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

And sir, I’m looking at this NSR movement and our NSR for export is significantly higher than domestic. Do you see this trend continuing?

Vijay Kaul — Chief Executive Officer

Now the NSR of [Indecipherable]. Because earlier because of the higher grade, the NSR was going high, but now as the freight costs are coming down, it will be reasonable.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

And, sir, how much percentage of our volumes do we export?

Vijay Kaul — Chief Executive Officer

I think in overall terms, it is not more than 10% to 15%.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Okay. Lastly I want to understand our input cost trajectory. Are we seeing our input cost now trending downwards?

Vijay Kaul — Chief Executive Officer

No, not at all. [Indecipherable] cost is going up. So the coal cost is already, they’ve not come down from the figure of INR14,000, INR15,000 per ton. It is still on the higher grade. There is great rise in terms of pulp prices. It’s really $25, $30 correction, in $1,000, there is $30 correction. But that we’ve clarified with the weakening of the rupees against dollars.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Sir, this is softwood?

Vijay Kaul — Chief Executive Officer

No, this is hardwood as well as softwood.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Sir, what is the reason of Indian wood prices going up?

Vijay Kaul — Chief Executive Officer

[Indecipherable]. Today there is a trend in India that everybody should increase the prices to whatever extent they can. And giving various reasons for that — policy per mile transportation is cheaper, various other things are costlier. So because of that they are increasing the price.

Snehal Shah — Chief Financial Officer

Can you provide some scope for others to ask questions. We can come back to you later on. People please control number of questions people ask.

Nishit Shah — Aequitas Investment Consultancy Private Limited — Analyst

Okay, sir.

Operator

Thank you. [Operator Instructions] The next question is from the line of Aditya Karna from Metaverse Equity Fund. Please go ahead.

Aditya Karna — Metaverse Equity Fund — Analyst

Hello sir, first of all congratulations for your performance. So, basically my question is in the textile business. As the PAT rises by 118% as compared to previous quarter, and we are seeing declining in turnover of textile business. What is your take on this?

Snehal Shah — Chief Financial Officer

I’m sorry, I didn’t get your name.

Aditya Karna — Metaverse Equity Fund — Analyst

My name is Aditya.

Snehal Shah — Chief Financial Officer

The decline, if you see, there is no decline in the turnover on a year-on-year basis on the apparel fabrics. The basic decline is actually in the home textile business and, little bit on the yarn business. So the apparel business which is mainly focused on the domestic, it’s doing well, it is growing, particularly on the realization front to cover up the input prices and fees et cetera. But what has impacted us on the turnover side is the home textile business which has actually slowed down, which is mainly dependent on export and export to developed countries. Their economic condition is not so good, there is a slowdown, there is risk of inflation et cetera. That is where we have actually lost our turnover in the textile business.

Aditya Karna — Metaverse Equity Fund — Analyst

Okay sir. Thank you sir.

Operator

Thank you. The next question is from the line of Viraj Parekh from Carnelian Asset Management. Please go ahead.

Viraj Parekh — Carnelian Asset Management — Analyst

Hi, thanks for the opportunity. Congratulations on great set of numbers. One question from my side. Just to follow up on the [Indecipherable] talking about. The input cost not softening. Correct?

Snehal Shah — Chief Financial Officer

On which business you’re talking about? The pulp and paper right?

Viraj Parekh — Carnelian Asset Management — Analyst

Yes. NSRs have moved really well from quarter four INR67 per kg to quarter two INR84 per kg, mainly talking from the domestic point of view. What is the price hikes you have taken in this year from April till-date, and any other price hikes do you see in future [Indecipherable]?

Snehal Shah — Chief Financial Officer

Kaul, basically his question is that how much is the input price increase that we have passed on to price increases, and whether that trend will continue or whether we will be still going forward and increasing the prices?

Vijay Kaul — Chief Executive Officer

The price whatever cost increase has been there, we have been able to pass on around 5% of that to be consumer, and balance whatever we have achieved in certain cost cutting measures which we have done in order to improve our efficiencies in the operations. Going forward, it looks little difficult, now we further increase the prices. But yes, we have a lot of scope in improving efficiency and cutting down various costs and all that.

Viraj Parekh — Carnelian Asset Management — Analyst

Thank you, sir. Just one clarification. Can you give me a number as a percentage of how much approximately is still from April to as on date?

Vijay Kaul — Chief Executive Officer

From April to September, it is almost about 15% around.

Viraj Parekh — Carnelian Asset Management — Analyst

If I am not wrong, the last price rise was around July, August, is that correct?

Snehal Shah — Chief Financial Officer

From INR68,000 we’ve gone to INR85,000 NSR. So we can calculate, the percentage is roughly 25%.

Viraj Parekh — Carnelian Asset Management — Analyst

No, sir. I got that answer. I was asking, when was the last price rise taken, was it around July-August, when was the last price hike you’ve taken?

Snehal Shah — Chief Financial Officer

Last was in August right.

Operator

Mr. Kaul’s line has been disconnected. I’ll connect him back. Give me a moment.

Snehal Shah — Chief Financial Officer

Viraj, I think it was last was in August, but probably it was on-board. So I don’t know when was the price — there are three segments. Mr. Kaul would be knowing. When was the last price hike we had taken in each of the segments?

Vijay Kaul — Chief Executive Officer

We took in the month of September itself, from 1st of September.

Snehal Shah — Chief Financial Officer

Last towards the month of September right?

Vijay Kaul — Chief Executive Officer

Yeah. We did correction in Q2. We didn’t do correction in board only in the month of September, that’s on 1st of September.

Viraj Parekh — Carnelian Asset Management — Analyst

Okay sir. Thank you so much, all the best. I’ll get back in queue.

Operator

[Operator Instructions] The next question is from the line of Alpesh Thacker from Antique Stock Broking Limited. Please go ahead.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Thank you for taking my questions, and congratulations for a very good set of numbers, sir. My first question is on the real estate business. Actually, in your opening remarks, you told that there was this re-leasing thing which happened in our leasing properties. Just wanted to know in which tower this re-leasing happened and you also mentioned that there was this downward revision of the rate at which it was done. So what was the rate earlier and what is the new rate at which the de-leasing happened?

Snehal Shah — Chief Financial Officer

Thank you Alpesh for your question. See basically, because of the excess supply and reorganization of the commercial market, there has been lot of rationalization happening. So if Hindalco has taken about 1.5 floors, which is sort of five, six years back and after all their escalations, the current rentals have gone up to about 210 or so which was clearly much about the prevailing market rate. So we rationalized it because they were getting much cheaper options in international et cetera. So we have recalibrated to about INR175. But it will keep going up 5% every year. So that’s the rationalization in that.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

So in terms of percentage, how much would be their leasing part, like out of 0.6?

Snehal Shah — Chief Financial Officer

It’s about 50,000 square feet.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Second question is also again on the real estate part, especially on the residential part. Did we take any price hike in our Century Mills project?

Snehal Shah — Chief Financial Officer

We’ve taken about 7.5% increase in prices, we did in some time in September.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. Got it. That’s it from my side, thank you.

Operator

Thank you. The next question is from the line of Ajit from Nirzar Securities. Please go ahead.

Ajit — Nirzar Securities — Analyst

Hello. Good evening all of you, and first of all, congratulations for a very good set of numbers. Sir I have one question real estate division and one on paper. On real estate is, the difference in EBIT stand at consolidated level, predominantly due to losses in the real estate division at consolidated levels. Sir, could you please explain more on this as to from where these losses are coming and elaborate more about accounting of the same and how long these losses will be there?

Snehal Shah — Chief Financial Officer

Okay, Ajit. As far as the numbers in the standalone goes, the two commercial buildings are actually on the books of the parent company, that is Birla Centurion and Birla Aurora as well as Century Bhavan. Standalone is basically the rental income minus the FMS expenses, maintenance expenses, that is what is reflected in the standalone of numbers. Whereas the subsidiary is spending on the corporate overhead. Those are all losses because basically we cannot recognize EBITDA of our projects unless and until they’re completed. So till that time which probably would be next year we will be showing losses which are mainly corporate expenses like salaries and little bit of marketing, et cetera that we incur.

Ajit — Nirzar Securities — Analyst

Next question is on our paper business. As we have seen, the EBIT margin of our paper business has increased from 12% to 17% that consol level. How sustainable is this margin and what is your outlook for the margin for next two, three quarters going forward?

Snehal Shah — Chief Financial Officer

So basically what you are seeing the increase right, actually in this quarter the margins are about 20%. Basically the realizations have gone up in line with the increase in input prices. And as Mr. Kaul said, we could only top 85% of those rights to the market. So technically we actually lost a little bit on that. Where the margins have improved is in the last six months we have done a lot of efficiencies which is actually reducing a lot of our costs and I’ve said in my speech also that this is work in progress. So we are expecting a lot of savings going forward in the second half as well as in the next year. Most likely, I can’t give you exact guidance as to where we will reach, but our target is to match the competitors that we have.

Ajit — Nirzar Securities — Analyst

Okay, and sir could you please explain little bit about which costs we have got efficiencies?

Snehal Shah — Chief Financial Officer

So major cost is in our chemicals that we use, in the packaging that we use. Anything you want to add, Mr. Kaul? Again we’ve lost him probably.

Operator

No sir, he is already connected. Sir, kindly unmute yourself and speak Mr. Kaul.

Snehal Shah — Chief Financial Officer

Other than chemicals, I think we also improved a little bit on our capacity as well as…

Vijay Kaul — Chief Executive Officer

Chemicals and packaging, and also the consumption rational of different…different chemical which we are using, on that also, on the rationale front also. Suppose we’re using 1 kg, we are now using 0.75 kg, like that.

Ajit — Nirzar Securities — Analyst

Okay, so majorly on chemical front?

Vijay Kaul — Chief Executive Officer

Chemical front, on the packaging front.

Ajit — Nirzar Securities — Analyst

Okay, sir can you just quantify the percentage of chemical costs as a percentage of sales before and now and the same for packaging?

Vijay Kaul — Chief Executive Officer

I don’t think that we should quantify right now, because the work is still going on, so it is very difficult to quantify.

Ajit — Nirzar Securities — Analyst

Okay sir. Thank you so much. All the best.

Operator

Thank you. The next question is from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.

Ashish Kumar — Infinity Alternatives — Analyst

Thank you, sir. Couple of questions which I had. One was in terms of the revenue booking on the real estate side. When do you expect to start booking on the Worli project revenues in our P&L and also in terms of cash flows when do you expect the cash flow positive on that project?

K. T. Jithendran — Chief Executive Officer

Hi, Ashish. Thanks for your question. So as far as revenue recognition is concerned, this will happen only when the project or the phase is completed as per the policy of completion method that we are following. So for projects like Birla Vanya in Kalyan, Birla Alokya in Bangalore, and one face of. Birla Navya in NCR, we expect the revenues to be recognized and kicking in from next year onwards, because they are expected to complete certain phases of each of these projects. As far as Birla Niyaara is concerned, we just started the construction and we just launched the project in Feb. and started the construction in June. So we expect to take another five, 5.5 years for us to actually completion of Tower A and the revenue recognition will kick in only then.

Ashish Kumar — Infinity Alternatives — Analyst

Sure. And in terms of the cash flows, when do we expect the Niyaara which is the largest project for us? When do you expect it to become cash flow?

K. T. Jithendran — Chief Executive Officer

Cash flow we expect it to do because our sales velocity has been at a much faster pace than what is expected. So in a couple of years of on Phase 1 we should be cash positive on Tower 1 by about two, 2.5 years. As of now we already collected about more than INR300 crores there. Birla Niyaara, we have collected almost INR340 crores. We are sitting pretty comfortable there. I expect the project to become cash neutral at a much faster pace. About close to INR1,300 crores of sales now.

Ashish Kumar — Infinity Alternatives — Analyst

So in terms of the peak debt maybe would be INR2,000 crores peak debt for us before it starts coming down sir? At a company level?

K. T. Jithendran — Chief Executive Officer

Ashish, basically, I’ll give you bigger picture. Essentially, the real estate business with its existing projects that we launched, whichever project that it has launched is expected to be a cash flow positive in FY24 itself. But then of course, they are not going to sit on the existing projects, they will be still doing more getting more projects. So on the new deals et cetera, we might have to spend about which — if you consider something like INR1,000 crores every year, that is what probably and consider that, they will be spending. I am looking at a total debt position would be somewhere close to INR2,000 in FY24 max peak debt.

Ashish Kumar — Infinity Alternatives — Analyst

That’s very helpful, sir. Sir there was one other question which I had, which is now that your paper business also being very well, as well as the real estate business also seems to have, now gone up. But the business dynamics for the two businesses are completely different. So any thought process in terms of demerging the two businesses because, otherwise, if you want to do a pure-play real estate business then a large portion of the value comes from the paper business always?

K. T. Jithendran — Chief Executive Officer

Ashish, this question comes almost every earnings call, and the answer is very simple for that. Right now you asked the question about peak debt, whereas to keep our peak debt at minimal level, we are dependent on the cash flows of the pulp and paper business where the CapEx is not as much as what we require in the real estate business. So unless we have demonstrated and executed a few projects and delivered et cetera, and we feel comfortable that the real estate business can stand on its own, that probably would be the time when we will start thinking about it. I’m not saying that not at the back of our mind, but it is not an immediate priority for us at the moment.

Ashish Kumar — Infinity Alternatives — Analyst

Sure, now fully appreciate that. And if I can ask maybe one more question on the paper business, if we look at some of the leaders in that some of your peer group they’re operating at, the June numbers which are out for some of them they were at INR20, INR22 per kg as EBITDA INR2,000 a ton, whereas this quarter we still need INR16,000. Do you think that in the next three to four quarters we can start hitting the number which is comparable to the peers? I’m taking industry out, because industry I understand can be quite volatile?

Snehal Shah — Chief Financial Officer

So Ashish, I mean, before Mr. Kaul answers, when you compare ourselves with competitors, it depends on which competitor you are comparing it to us and then based on that, you have to understand what is their product mix and what is our product mix, what is the raw material they use and what is the raw material we use. So based on that if you do a little bit of comparison, then probably you will have a better idea what should be our margin as compared to their markets, because the capital employed is also to be considered when you consider all the factors you just kind of look at the margins.

Ashish Kumar — Infinity Alternatives — Analyst

I was talking about the two large listed players, independent paper base? And I agree with you, one has almost 100% integration into pulp and that has an 80%, 90% integration?

Snehal Shah — Chief Financial Officer

Yeah. As I mentioned earlier, we are also on the trajectory of doing some efficiencies et cetera as we said, work in progress, probably better time for you to compare us with them would be probably somewhere next year.

Ashish Kumar — Infinity Alternatives — Analyst

That sounds good, and wish you all the best.

Snehal Shah — Chief Financial Officer

Yeah, thank you.

Operator

Thank you. The next question is from the line of Harsh Pathak from B&K Securities. Please go ahead.

Harsh Pathak — B&K Securities — Analyst

Hi, sir, good evening. First of all, my first question is on Birla Navya Gurugram. We see that the sales are encouraging since 67% of Phase 2 has been sold in the second quarter itself. And now from the presentation it seems that there are only 60 units remaining to be sold between Phase 1 and 2. But still there is half of the inventory yet to be launched. So when can we expect more launches there and also the [Indecipherable] other markets that you can please discuss?

Snehal Shah — Chief Financial Officer

I didn’t catch the last part of your question. But, we’ll come to that. For the first part of your question on Birla Navya, yeah, you’re right. First phase is 100% sold out. Second phase is 67% sold out. Between the first phase and second phase there has been a huge increase in prices. We started first phase at about 10.5 thousand finished 12, now we are selling at INR16,000 per square foot Phase 2. Phase 3 which is largely about, roughly as you mentioned about half of the inventory, which is block A, first part of that will start, we are planning to launch sometime in February which is Q4. By that time, hopefully we would have done bulk of the sales of balance inventory on Phase 2 also. That’s the position there. I didn’t catch the last part of your question.

Harsh Pathak — B&K Securities — Analyst

Sir, I was asking on the launch pipeline in other micro markets as well, in Kalyan, the second phase of Niyaara, 50%, 60% is already sold out now, and also Bengaluru market you have signed some deals there. So you can please discuss that too?

Snehal Shah — Chief Financial Officer

Sure. So we have two new projects in Bangalore. One is 52-acre apartment near the airport, and another now 10.5 acres or 10.25 acres in raja rajeshwari nagar. Both these launches are slated to be in the next financial year. We just acquired these parcels, one in April, and one in last month. So we are working on it. But hopefully by Q2, Q3 of next financial year, we should be launching it. As concerned of Birla Niyaara, the second phase which is Tower B, that we’re expecting in December of next year, and Navya as I mentioned, which is in Gurugram, we’ll be launching in February of this financial year, that is Q4, and maybe a part of it in April, May, June the rest of it. As far as Kalyan is concerned, all phases have been launched. And now we are nearing completion of the project. And similarly the other projects in Bangalore, all phases are launched.

Harsh Pathak — B&K Securities — Analyst

First of all in Phase 3, what is the size that we are expecting to launch in Gurugram in Q4?

Snehal Shah — Chief Financial Officer

Similar size or slightly small. I think more or less similar sizes of what we launched now. [Indecipherable] The density is more or less the same. Gurugram as you know worked on the density formula, because density remains the same, so the sizes would be the same. I’m presuming you’re asking the size of the apartments?

Harsh Pathak — B&K Securities — Analyst

No, not the size. I mean the size of launch in terms of…

Snehal Shah — Chief Financial Officer

As I mentioned, whatever we have launched till now is a similar site, close to about INR1,000 crores.

Harsh Pathak — B&K Securities — Analyst

Okay sure And any reasons why we are keeping the Niyaara Phase 2 launch in December, because I think significant inventory is already sold out in the first tower. Any reasons there?

Snehal Shah — Chief Financial Officer

I mean primarily because we wanted to take the learnings of Tower 1, incorporate that in Tower 2, make some changes and flexibilities, amendments and design, and finally the entire approval cycle take its own time. Bombay it takes good 12 to 15 months. We are making some amendments et cetera. The brand remains in the right size, it is on the approval. Usually we’ve launched 100% approval. So that with the environmental clearance and all is going to take it’s time. So that’s why we are planning to — we’ll try to bring it if the approval gets faster earlier but it looks likely that will come up by December.

Harsh Pathak — B&K Securities — Analyst

Sir, in the Navya project that you indicated that the price increases that you have taken from INR10,000 to INR12,000, now at INR16,000 per square foot, this is very encouraging, but what is leading to this price increase? Is it better demand or very less launches happening in the micro markets? What is leading to this trend sir?

Snehal Shah — Chief Financial Officer

There is hardly any land passes left in Gurugram, and especially in the location which is [Indecipherable] extension market we’re talking about. Number two, as you mentioned, the number of launches has been extremely rare, the number of players have reduced, huge amount of consolidation has happened. Strong, stable, reliable players are very few. Therefore there has been a lesser supply and the demand remains strong. I gather that must be the reasons.

Harsh Pathak — B&K Securities — Analyst

Okay, in terms of revenue potential, in this Gurugram project, there is, as compared to the previous quarter presentation, there is a 5% increase in the revenue potential and same in Niyaara, there is a 12% increase. Is this mainly because of the price increases that we have taken?

Snehal Shah — Chief Financial Officer

You’re absolutely right.

Harsh Pathak — B&K Securities — Analyst

Sir, just one last question, if I may squeeze in, in the leasing business, what is the average realization per square foot?

Snehal Shah — Chief Financial Officer

So at Birla Aurora currently the average leasing is about INR200, and in Birla Centurion it’s about INR168.

Harsh Pathak — B&K Securities — Analyst

And on a blended basis?

Snehal Shah — Chief Financial Officer

Take roughly average of this, maybe about 175, 180 or so.

Harsh Pathak — B&K Securities — Analyst

Thanks for taking my questions. Thanks you.

Operator

The next question is from the line of Hitesh Doshi, an individual investor. Please go ahead.

Hitesh Doshi — Individual Investor — Analyst

Good afternoon to all and congratulation on very good numbers. To just carry on from the last participant, what kind of size we will launch over up to next December, what kind of project size, you said Gurugram will be INR1,000 crores. Approximately what kind of inventory we will launch, including the Worli part?

Snehal Shah — Chief Financial Officer

Yeah, thank you Hitesh. As we mentioned, about INR1,000 crores will happen sometime in between February and June, partly in Feb and partly in June as far as the Navya is concerned. Niyaara, as I mentioned, this is another INR3,000 crores of launch, another roughly INR3,000 crores in December, probably a little earlier, we’ll have to figure that out. There will be new first phase launches in Bangalore two projects, both will be roughly about INR500 crores each. And hopefully we’ll have many more new projects by that time, and few more launches must happen. And of course the [Indecipherable] sales from the earlier inventories, unsold inventories like Kalyan, Phase 2 of — the other unsold inventory of the launched project all of that should be happening. Your question is related to the size of the launch or the booking value that we will do in the next year?

Hitesh Doshi — Individual Investor — Analyst

No. I’m just ask the size and I think it is INR6,000 to INR7,000 crore projects we can launch by next December. That is what [Indecipherable]?

Snehal Shah — Chief Financial Officer

Yeah.

Hitesh Doshi — Individual Investor — Analyst

Just one question on paper, are we expecting any price hikes from here or price reduction from here on? Because I’m reading TripAdvisor going down internationally? Just some of the pricing part, nothing about margins or anything else?

K. T. Jithendran — Chief Executive Officer

There will be some correction on prices, but to what extent, we don’t know as on today. We’ll have to wait till 15th of November before we do any corrections.

Hitesh Doshi — Individual Investor — Analyst

So that means we may have little lower margins on the [Indecipherable].

K. T. Jithendran — Chief Executive Officer

Not necessarily. Pricing correction, margins will be lower.

Hitesh Doshi — Individual Investor — Analyst

Okay. So thank you so much and wish you all the best.

Operator

Thank you. The next question is from the line of [Indecipherable]. Please go ahead.

Unidentified Participant — — Analyst

Hi, good evening everybody. I hope I am audible. First of all, congratulations for very good set of numbers. I have only one question. This is regarding the frivolous advertisement which appeared in the newspapers. Now since I’m an individual shareholder, it’s not clear to me whether you will be developing only 14 acres of land in Worli or would you be developing 30 acres of land?

K. T. Jithendran — Chief Executive Officer

Thank you Vishal for the question. So we have about undisputed 30 acres of land, 14 acres on the parcel where we are currently developing, and adjacent to it, there is another parcel which we own which has about 10 acers of that. And in this 14 acres also, there is a commercial parcel, et cetera with another six acres. Overall we’ll be developing about 38% flat.

Unidentified Participant — — Analyst

Wonderful. Thank you so much and all the best to you for all the launches you will be taking out next year. Thank you.

Operator

There is a follow-up question from the line of Ajit from Nirzar Securities. Please go ahead.

Ajit — Nirzar Securities — Analyst

Ma’am, my question has been answered. Thank you.

Operator

Thank you. The next question is from the line of Abhinav Bhandari from Soham Asset Managers. Please go ahead.

Abhinav Bhandari — Soham Asset Managers — Analyst

Yeah, thanks for the opportunity. One question on the business development side, while you highlighted the launch pipeline for the next 15 months, how’s the pipeline on the business development side?

Snehal Shah — Chief Financial Officer

So as I mentioned, we have signed two projects in Bangalore, new projects. And we have signed several term sheets in Mumbai, NCR, Bengaluru, and couple of them in Pune also. We’re hoping that we’ll be able to close several more deals before the end of this financial year. I think we’re pretty excited with the opportunities available, and we’re also quite excited with the kind of performance have given and the kind of brand reception we’re getting in the market. So hopefully we will have several more projects before the end of this financial year.

Abhinav Bhandari — Soham Asset Managers — Analyst

Sure. The second one was, in one of your earlier statement, I think you mentioned Kalyan, all the phases have been launched. We were under the impression that the land parcel there is much more larger than what we have launched so far. So how should one understand?

Snehal Shah — Chief Financial Officer

So Kalyan, the land parcel where we have the current projects is in progress is about 22.5 acres, where the potential is INR1.3 million. This is divided into three phases. We have launched now all three phases and it will come up for delivery in the next year. We have some other parcels in Kalyan, for example, there is another 70-acre parcel which was slightly at different location, not suited for real estate flotation as of today, and it was an agricultural parts, for that we have now leased out to a long lease to our company for development to our own sister company BITS Pilani for making that Management Institute, and we have the annual lease for that. We have more parcels in Kalyan, but this is all futuristic parcels, 45 acres of there, so which is also futuristic. Those will not come up for development today. All these parcels are in different locations. The 22 acres, the development was currently in progress and it’s been doing very well. So that is where I was talking about.

Abhinav Bhandari — Soham Asset Managers — Analyst

Sure, couple of parcels which we had of our own, I think if I’m not wrong somewhere in [Indecipherable] and Pune, and one in [Indecipherable]. Any progress on those two?

Snehal Shah — Chief Financial Officer

Those are at the right time we will pick them up. At this point of time they’re not ripe enough for the development. Future potential partners. We will bring them up and for development in due course.

Abhinav Bhandari — Soham Asset Managers — Analyst

Sure, and just one last bit on the standalone balance sheet side, where the inventory has gone up by about INR300 crores versus March. Just to get some sense on that?

Snehal Shah — Chief Financial Officer

As we said, we can’t do any revenue recognition, so all that expenditure as well as collections stand either in the liabilities or assets. So the inventory is essentially of the construction work that has happened.

Abhinav Bhandari — Soham Asset Managers — Analyst

That was on the console side, I was asking on the standalone?

Snehal Shah — Chief Financial Officer

Inventory has increased [Indecipherable] in the standalone only. Apart from that, there is some working capital increase in kraft paper and textile also.

Abhinav Bhandari — Soham Asset Managers — Analyst

Would you be able to quantify these two numbers? The increase out of the INR300 crores because of Niyaara, and just to understand why Niyaara getting?

Snehal Shah — Chief Financial Officer

Niyaara is being built on the land which belongs to Century’s. So it is Century’s land owner. And all the revenues are booked in the books of Century and all the expenditure is booked in the books of Century, and developer that is Birla is only getting management fees that is what is known as DM fees. All those inventory of is Niyaara is booked in the Century. That is why the inventories are…

Abhinav Bhandari — Soham Asset Managers — Analyst

All the rest of the projects would be in subsidiary?

Snehal Shah — Chief Financial Officer

Those are all JVs. Kalyan was a JDA. But Niyaara is a DM. Kalyan also would have been in our books, because the land belong to us.

Abhinav Bhandari — Soham Asset Managers — Analyst

Got it. Perfect. Thank you so much sir and best wishes.

Snehal Shah — Chief Financial Officer

Sure, thank you.

Operator

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Snehal Shah for closing comments.

Snehal Shah — Chief Financial Officer

Yeah. So thank you all for participating in this earnings call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers at Valorem Advisors. We are very thankful to all our investors who stand by us and have the confidence in the company’s growth plans. And with this, I wish everyone a great evening and a happy Diwali and Sal Mubarak. Thank you very much. [Operator Closing Remarks]