Anant Raj Limited (ANANTRAJ) Q4 FY23 Earnings Concall Transcript

Anant Raj Limited (ANANTRAJ) Q4 FY23 Earnings Concall Transcript

Corporate Participants:

Rajat Gupta — Investor Relations

Amit Sarin — Managing Director

Pankaj Kumar Gupta — Chief Financial Officer

Analysts:

Amanjeet Singh — Excalibur Advisors — Analyst

Jitendra Gupta — Systematics — Analyst

Avinash Gorakshakar — ProfitMart — Analyst

Parvez Qazi — Nuvama Group — Analyst

Harsh Pathak — B&K Securities — Analyst

Naitik Mody — OHM Portfolio — Analyst

Ritu Kumar — Growth Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q4 FY ’23 Earnings Conference Call of Anant Raj Limited hosted by GoIndia Advisors. [Operator Instructions]

I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you, and over to you, sir.

Rajat Gupta — Investor Relations

Yes. Thank you, Silvan. Good afternoon, everyone, and welcome to Anant Raj Limited earnings call to discuss the Q4 and FY ’23 results. We have on the call with us today, Mr. Amit Sarin, Managing Director; and Mr. Pankaj Gupta, Chief Financial Officer. We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk that the company faces.

I now request Mr. Amit Sarin to take us through the company’s business outlook and financial highlights, subsequent to which we’ll open the floor for Q&A. Thank you, and over to you, sir.

Amit Sarin — Managing Director

Thank you, Rajat, and namaskar to everyone, and thank you for taking out the time to join us for this call. We really appreciate that. As this is the first time, we are doing a call like this, — so most of you would be knowing about the company, but maybe some of you don’t. So we just give you a brief background and then take you on forward to the — what we’ve done in this quarter, and then we’ll open the floor for questions.

So just a brief background — our family has been in this business since 1902. It was started by our great– The construction business, was started by our great-grandfather. We have three brothers involved in this business, and we are now the fourth generation doing the same business. This construction business now was started by our Founder Chairman, Shri Ashok Sarin in 1969. For the first 20 years, we were a pure construction company, and we were mainly doing construction for Government of India. — daily development authorities and other government bodies.

Simultaneously, while we were doing this, we were making our own land map, investing money into land and holding on to it. by 1990, we had enough land bank of our own, and we stopped doing outside construction and started focusing on in-house development of commercial assets. And that’s how the group was going forward. The first game changer came into the group in 2000 when banks recognize real estate as an industry. And companies like us started availing of loans from banks Prime Bank for Anant Raj Limited has always infra growth has always been a Bank of India. So we started availing of loans from them at that time.

The second game changer came in 2003 when the government abolished land ceiling. And this allowed companies like us to consolidate. Prior to that, our companies were — our assets used to be all scattered in various companies because of land ceiling laws. But once the land ceiling laws in certain areas were abolished and in certain areas are simplified, this allows people like us to consolidate. When we started the consolidation process, our Founder Chairman decided that all the bin of the growth should be done in the listed company amongst about almost 100 companies, which the group had an all-existing company, we only had one listed company, which for the company now Anant Raj Limited.

Prior to that, it had different names, but now this is the name. So all the consolidation was done in this company. At that time, the honorable NCLT was not made. So the mergers had to go through the process to the honorable High Court of Delhi. And this used to take some time. So we did three mergers starting from 2005 to 2010 — and in these three mergers, whatever assets the family had were all merged into Anant Raj Limited. And going forward in 2010, it became one company because this is as far as the structure goes, the focus — while the mergers are also going on, the focus of the company has always been commercial assets.

We were a specialist of making — we still are — we were kept specialists of making commercial buildings and leasing them out along with all facilities. And this we were very aggressively doing. And during this period, we today have made almost five million square feet, which is ready. So — and leasing was going on. But 2010, ’11, the company realized that the leasing is now slowing down, and this is a good time for the company to come back into residential, like the company used to do private previously. So the company zeroed in on basically two areas where the company wanted to develop residential.

The first area was in Gurugram the second one was in Neemrana — the Neemrana was a low-cost housing project, which has already been completed and handed over. And this low-cost project has become a very good cash earner for the company. And the company is now trying to repeat this formula in other parts the country also, whereas we go and apply land from the government and then we do low-cost housing and that. So that’s one segment. We’ll elaborate that later as we go on. but the main focus of the company was in Gurugram, where companies developed a full-fledged township. And now as we speak, the company today has about 200 acres of this land bank in this sector, whereas we have another 50 acres, which we have tied up, which is eventually going to be in the company as well.

So out of the 200 acres, which we already have, we’ve already developed and sold 60 acres. And in the 60 acres, there’s cutstock floods, Villas plots and fully furnished villas. This we have already delivered. And out of this with 43 acres, we have done a joint venture with Birla, where the project is called Birla Navya. This is a joint venture between Anant Raj Limited and Birla estates, which is owned by Century Textiles. So the first two phases of these projects have been successfully launched and the third phase is being launched now. So the project, this one is also doing well. The balance area, which is about 97 acres, which is there, is now fully being developed by us, and this consists of a prime project which we launched last year on the birth of our former Chairman, Mr. Ashok Sarin. This is Ashok Estate, which we’ve already launched and half of this asset has already been sold.

So that’s how we are taking things forward. once the demerger prior 2015, the company started with a demerger process, which was completed and all orders obtained from the honorable NCLT in August 2020. Once the demerger was done when the company came back into his focus of developing further land banks, obtaining further licenses. And in the last two years, the company has obtained licenses of almost 40 acres, which is amongst the highest in our sector and launch new projects. Ashok Estate is one of them the third phase of financial illustrate is the other one, and that’s how we’ve been launching projects after projects in this on way thing.

So if you talk about the financials here, which we which we closed on 31st March, the company, for the first time, crossed a turnover of INR1,004 crores, which is for the first time, the profit also looked very encouraging from INR54 crores, we had a INR151 crores. So going forward, our prime focus and the main cash earner is the sector 63, which is Gurugram and the factor which we focus on. And these 97 acres is today eligible for almost 1.5 million square feet of area, which we plan to develop in the next five years and completely monetized.

And major part of this monetization will happen in the coming two years. So that’s how we are taking things solid vis-a-vis this. Other than this, the company’s next focus for the past two years has been data centers. The company has three assets in which the company is has already started its first data center. The first asset which we have is in Manesar, which is eligible for 50 megawatts — the second one is in Rai, which is eligible for 200 megawatts. And the third one is in Panchkula, which is eligible for 50 megawatts and other.

So together, it’s about 300 megawatts. We are eligible for. We already have the land and the buildings ready for it. The first phase is three megawatts, which the company has already started. And in Manesar, we plan to completely do about 50, 5-0, and which we plan to in the next — in the coming two years. That’s was the data centers. Data center is a brand-new business in the country. which has just come up because the government of India primarily thinks that the Indian data should not be allowed to store it outside the country, which is the case and, in fact, all big countries follow the rule.

They don’t allow their data to be kept in other countries. And all countries is also thinking on the same lines — so this gave birth to the data centers. And at Anant Raj, we were sitting on ready-buildings, which have already been certified by various bodies that they are eligible for data centers. So that — this gives us a huge edge building is ready, the permissions are already there, and now three is up and running, and the balance is being executed. So that’s how we are taking things forward.

So now I’ll open the floor to everyone if you have any questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amanjeet Singh from Excalibur Advisors. Please go ahead, sir.

Amanjeet Singh — Excalibur Advisors — Analyst

Am I audible?

Amit Sarin — Managing Director

Yes, Amanjeet, you are audible. Tell us, please.

Amanjeet Singh — Excalibur Advisors — Analyst

Sir, congratulations on a great set of numbers. It’s really heartening to see your debt reduction journey and the path you’re on. Really hard to see on the refinance but also from Apollo and really good initiative on restarting the investor calls, and I hope this will continue.

So, I have a few questions, given it’s our first call, sir. I’ll just start. Sir, we’ve been reading across in the past year that the NCR region, the property price increases has been relatively distribution compared to the rest of the country. So, what has been the key factor currently you driving up the prices? And do you think that the demand will be there? And what is your view on the space on NCR?

Amit Sarin — Managing Director

You’re very right. See, the rest of the country is also doing well, but the NCR region, particularly is doing especially well. And in the NCR also, Goran is doing extraordinarily well. The main reason for that, I guess, is because the infrastructure in Gurgaon has fairly, really improved. I don’t know if which part of the world you are in right now, but–if you see the NCR and you see especially Burgan, Burgos one area where the government is really focused in the past few wears on the infrastructure, and this is helping people like us, number one. And especially after Covet, we see a lot of end-user demand coming in.

Today, almost 17% of our sales are being done to end users, which we feel a bit good strength for us going forward because end user demand is a very sustainable demand and one can rely on it and have future plans of growth according to it, accordingly. So, we feel that Gorgon is there to stay for the time being. And of course, Gurgaohad gone through a big recession for almost seven to nince years. And this only started changing in ’21, and it is same for the good. If you–if you put a number towards how things have changed, prices have gone up by almost 60%. And this is something which we are experiencing on ground. And we feel that this is sustainable because it is backed by end user demand.

Amanjeet Singh — Excalibur Advisors — Analyst

Got it. Got it, sir. Sir, with regard to Ashok, it states, right? Sir, I believe the revenue potential you mentioned is about INR1,000 crores and half is booked — so when is a half is book, so what about the cash flow? So that INR500 crore you already received or you should be receiving soon?

Amit Sarin — Managing Director

We see — we’ve sold half of it and we’ve received almost INR250 million for it. And the balance is also going to come in very fast because in a cogitate we are primarily selling plots. And while selling dots, there’s not much gestation period because licenses all the roads infrastructure has already been laid. So, we expect the balance to also come in very fast. Half of the — we’ve achieved half sale and we’ve collected half the money for all the sales.

Amanjeet Singh — Excalibur Advisors — Analyst

And what kind of demand are you seeing? So, do you think that you can at least sell the INR1,000 crores by the end of the financial year?

Amit Sarin — Managing Director

Yes, definitely. Definitely. We see good demand. In fact, we are holding on to the demand because the prices actually are going up. In the past four months also, we’ve seen an increase in the prices. So that’s the reason why we store down the sale and watching as to how things go. We’ve seen almost a 20% increase since we launched. And the launch is not very long ago back. The launch was on 1st of July 2022.

Amanjeet Singh — Excalibur Advisors — Analyst

Great. Sir, and these are primarily plots, right? So, the capex involved should not be very high, right, INR [Indecipherable] crores?

Amit Sarin — Managing Director

Not at all. The capex involved in this kind of a thing is for acre, you spend about INR1 crore. That’s it.

Amanjeet Singh — Excalibur Advisors — Analyst

And this is INR28 crores, you said, right?

Amit Sarin — Managing Director

Yes. Yes.

Amanjeet Singh — Excalibur Advisors — Analyst

Okay. Okay. Sir, on the group housing, right? Sir, could you just provide some color on what type of projects that you’re envisaging? Will you be developing it yourself or some partner or it’s going to be mixed use. So, what kind of projects — and what are the time line that you are expecting?

Amit Sarin — Managing Director

In this sector, we already have one partner like we told you petites. But this group housing project, the company is going to do on its own. We are going to get the — we are already tied up with one of the best architects at an international front. And we’re going to be doing it ourselves. The launch date is going to be in the next six months. don’t want to put a number to it right away. But definitely, in the next six months, we’ll be launching it, and we are going to be doing it ourselves.

Amanjeet Singh — Excalibur Advisors — Analyst

Understood. Sir, on the refinancing bit, right? So, I believe that there was an enabling resolution for INR500 crores, then there was a notification in the exchange, the INR250 crores will be the first tranche and Apollo INR200 crores. So, who is the balance INR50 crores in the first transfer?

Amit Sarin — Managing Director

So, it was just 200.We got an expansion from Apollo for 550. We’ve utilized only 200 right now. And this 200 also we have reduced the existing debt. So, the debt actually has not gone up. This is something which we were very concerned of that we will not let the debt go up. But at the same time, we also wanted to start a relationship with Apollo. And as you know, this is Apollo U.S. and one is discussing various options. So, this relationship has started. The balance sanction is there, but the company is not aware of it as of now, and we don’t even need the money right now.

Amanjeet Singh — Excalibur Advisors — Analyst

Okay. So, the fancies available to you for use like for drawdown or are there any other condition precedent that you need to meet before you can draw that down?

Amit Sarin — Managing Director

We are adding land to the sector 63, we are executing data centers. But as of now, we are good with our internal accruals. But this is a backup plan if we need money.

Amanjeet Singh — Excalibur Advisors — Analyst

Got it. Sir, and what is the kind of the pricing differential between the debt that you refinanced? Because the NSDL site mentioned that these bonds are say, somewhere around 14%, but your old bonds are 20%. I’m not sure if this is the right number. So is there like this kind of saving? Or could you just give some color on that?

Amit Sarin — Managing Director

This is almost — you’re almost right. The old one was at about 20%. This is 14%. So, this is further bringing down the cost of debt to the company.

Amanjeet Singh — Excalibur Advisors — Analyst

So, what is the current weighted average cost of debt that you have on your books?

Amit Sarin — Managing Director

13.7%. About 13.7%.

Amanjeet Singh — Excalibur Advisors — Analyst

Okay. So, this refinance is kind of in line with that as well, right?

Amit Sarin — Managing Director

Definitely, yes. Right.

Amanjeet Singh — Excalibur Advisors — Analyst

Sir, any moratorium that you’ve got on these bonds? Or do you have to start to repay– you have to start the repayment immediately?

Amit Sarin — Managing Director

We’ve got a 15-month monitoring.

Amanjeet Singh — Excalibur Advisors — Analyst

Okay. So, in that period, you have no — like no interest payments or just no principal payments?

Amit Sarin — Managing Director

So, we pay the interest, but the principal starts after 15 months. And this is primarily being done we have good cash flows. But at the same time, we want to go on investing in data centers and unlocking the value to whatever extent we can. So, we are now using this cash flows for data centers.

Amanjeet Singh — Excalibur Advisors — Analyst

So the Apollo drop down, if you use it, I mean, you’ll be using it for data center going ahead?

Amit Sarin — Managing Director

Sorry, can you repeat that, please?

Amanjeet Singh — Excalibur Advisors — Analyst

So, the Apollo facility that you have, you will be drawing that down for the data center business? You may–towards that?

Amit Sarin — Managing Director

Cash flows we are today sitting on, we may not have to, but that is a backup.

Amanjeet Singh — Excalibur Advisors — Analyst

Understood. — just coming to a final bit on data centers. So, you are almost ready, you said with three megawatts, right? So how do you plan to fund the balance three megawatts? And how confident are you that can come up by September?

Amit Sarin — Managing Director

Definitely, we are all set. These three we have done on our own, and we know exactly what comes in from where the orders for the balance we have already been placed. The strengthening of the building is already complete. So this three is definitely on track for September. And once this three is on track, the income from data centers is going to kick in from this month itself. So, we have the option of discounting this at much lower rates of interest and moving on further, plus the cation of the Gorgon project is already happening. So, we have two sources of liquidity. And between these two, we feel that we’ll be able to fund this on our own.

Amanjeet Singh — Excalibur Advisors — Analyst

Got it. So, you’re saying the six megawatt you said by September, and you gave a 50 megawatt target for two years. So, what about the — if I say, the 21 megawatts, which is kind of the first approval that you’ve got in place, by when do you expect 21 megawatts to kick in fully?

Amit Sarin — Managing Director

One year, sir one year.

Amanjeet Singh — Excalibur Advisors — Analyst

One year. Okay. Great, sir, I’ll get back in the line. Thank you so much, and all the very best.

Amit Sarin — Managing Director

Thank you. Thanks, everyone.

Operator

Thank you, sir. The next question is from the line of Jitendra Gupta from Systematics.

Jitendra Gupta — Systematics — Analyst

Good afternoon. So, continuing with the previous analyst, I just wanted to understand the time lines for the data center capacity. We already are sitting on three megawatts, and by September would be six. So can you please help me with the first

Pankaj Kumar Gupta — Chief Financial Officer

One year, we income is kicking in from 21. So the whole idea is to do this without taking on debt. Are you going down in the company. clear that we do not want to do this by taking debt — if we do get the cash flow — so one year, we do 21. It’s a very robust demand for this ’21. The income will start to come in from this 21, and then we start unlocking the rest.

Jitendra Gupta — Systematics — Analyst

Okay. And can you please help me with the kind of clientele we have? Or have you had any tie-up with the tenants? What’s the scenario in terms of tying up with the clients?

Pankaj Kumar Gupta — Chief Financial Officer

We have two tie-ups. While on the call, we explained that the Indian government is making a law that Indian data should not be going outside India. I’m sure you must have also read about it. This has given a huge demand to data centers within India. We also have two tie-ups, one with rail and one with PCI, both are government of India undertakings to help us get clients. So clientele as of data centers is not an issue at all. It is just how much capacity one is able to create.

Jitendra Gupta — Systematics — Analyst

Okay, okay. And what kind of rentals we can expect from here, like paras — is it per square feet basis how it goes?

Pankaj Kumar Gupta — Chief Financial Officer

The rental here goes per megawatt, and it is anything between INR85 crore to INR90 lakhs per month, per megawatt. [Speech Overlap]

Jitendra Gupta — Systematics — Analyst

Sorry, sorry, go ahead,

Pankaj Kumar Gupta — Chief Financial Officer

The expense which you incur is about 25% of that. The balance is premium.

Jitendra Gupta — Systematics — Analyst

So balances, I didn’t get you?

Pankaj Kumar Gupta — Chief Financial Officer

Fully cash flow.

Jitendra Gupta — Systematics — Analyst

Fully cash flow. Okay. Okay. So this 25% would be on a monthly basis outflow for us. And — and you’re doing it in your existing commercial assets. So what kind of capex is required to upgrade it to make it like data center compliant?

Pankaj Kumar Gupta — Chief Financial Officer

This is the best edge which we have Today, we convert 1 megawatt in the — in our building, we need an investment of about INR25 crores per me. And whereas — and because the land and building for the company is already invested. — we are saving time because the land and building is already there. We are saving money and we are able to do it much faster. So this is the biggest thing which we have, and that’s how we are taking it forward.

Jitendra Gupta — Systematics — Analyst

Okay. And with regard to your real estate business, I just wanted to understand your township Anant Raj Estate. Can you just give me some breakup in terms of expected inflows from the group housing and the other businesses like [Indecipherable] and Birla Navya.

Amit Sarin — Managing Director

Birla Navya introduction thing. Birla Navya has already successfully launched two phases and done. And the third one is now getting launched. — Ashok Estates, we have sold 50% of our inventory as we launched to now, we have seen a wide price increase of almost 20%. And other transit is also experiencing the same price increase — and in Anant Raj Estates, we have also launched a new project in which we are doing fully furnished villas, and we see a very decent demand in all the three segments. — Ashok Estate.

We only sell plots, states is selling floors. And in Anant Raj Estates, we are doing Villas and floors both. And we are doing fully furnished Milano board. So we are seeing a good segment of demand. And you likely said, 70% of today’s demand is end user demand. is also are helping us sell faster.

Jitendra Gupta — Systematics — Analyst

Okay. So can you just quantify a few of the numbers for the next two years from overall real estate business? Would it be helpful

Amit Sarin — Managing Director

We can’t talk about future numbers like this. But today, at Alantra state, we are sitting on an inventory of close to INR1,700 crores. And this is something which we want to monetize very fast. And we are — we have almost all the permissions required for it.

Jitendra Gupta — Systematics — Analyst

Okay. Thanks a lot. I’ll join [Indecipherable]

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Avinash Gorakshakar from ProfitMart. Please go ahead, sir.

Avinash Gorakshakar — ProfitMart — Analyst

Amit and of all, congratulations for a very good set of numbers. In fact, ever since we visited early when we met you personally, I think numbers have got better and better every quarter. So this is very interesting and very, very positive from the investor community, and I wish you all the best for the coming year also. Just had one question on the real estate side. I mean if you could give us some color on what is the kind of price trends which are prevailing currently in the NCR market?

We don’t get this data point easily. But if you could share some broad idea as to how do you see the demand? How do you see inventories moving up? And overall, on ground, what is the kind of sense you get? Will real estate continue to generate steady cash flow even in FY ’24, considering the kind of strong performance we have done in FY ’23?

Amit Sarin — Managing Director

Yes, definitely. Sir, like we just discussed, the rest of India is doing well, of course, for the NCR is especially doing well. Now is doing exceptionally well because of the infrastructure and all other things happening including Gurugram and a lot of end-user demand coming into Gurugram. As you know, Gurugram is right next to the airport, all right next to Delhi — in fact, Gurugram is not dependent on areas such Gurugram itself is a full-fledged city sir. And with 70% end user demand, these prices are here to stay. — and we’ve seen almost a 60% increase or if you see in the last four years, we’ve seen a 60% increase in the prices, which have gone up.

Today, we are selling a floor from almost INR16,000 to INR18,000 square feet. — which is phenomenal when we started — in fact, when we started with villas, we were aiming our first launch was about 10,500. So these prices are here to stay, sir. And there is enough supply also coming in. In spite of that, the demand is there and it’s sustainable. Like when we were doing the introduction call one thing which we missed out, there have been three landmarks for companies like us. One in 2000 when banking recognized us then in 2003 when state was — when land ceiling was a wallet. And the third one was when REA came in 2016. So RERA has removed a lot of unhealthy competition from the market. and it is helping like us.

Avinash Gorakshakar — ProfitMart — Analyst

Amit, just one more question on the data center side. Please correct me if I’m wrong. I remember you having told us that the investment per megawatt for data center is roughly about INR1 crore. So is it right?

Amit Sarin — Managing Director

Per megawatt in INR25 crores, sir.

Avinash Gorakshakar — ProfitMart — Analyst

Okay, INR25 crores. So basically, Amit, I just wanted to understand that these 21 megawatts, what we are planning in the next 12 months. have we already done our cash flow planning for the investment because this will be a significant investment in data centers, which obviously give you very good margins? So will you be looking at some sort of funding either by equity or debt or you think the cash flows from the real estate business will be enough to fund this?

Amit Sarin — Managing Director

Avinash, 21 we are completely sorted. 91 roughly is an investment of about INR400 it, out of which we have already invested 140 — this is, of course, right now it is higher because the same thing in all has been done for the complete towers. — why it’s a little higher, but the average for this 21 will be within INR25 crores per megawatt. — and this income will start to kick in. So we are basically two options. The first option is we have enough money coming in from Ashok Estates and Anant Raj Estates and that is getting diverted here, and we are executing this.

In fact, that is how we’ve leased so far as of now. Income from the data center will also start coming in. We can always discount this. 21, we are completely sorted yes. But when we go beyond ’21, sir, these are options which we want to aggressively look at. And let’s see tomorrow how we go about it, whether we because this is as of now owned by Anderson owned subsea, which is called Anant Raj clouds. So let’s see tomorrow, if we are able to get a partner into Anant Raj cloud unlock the complete value, it’s going to be a great, great thing for the company, sir.

Avinash Gorakshakar — ProfitMart — Analyst

Just one more thing, which I wanted to just tell you guys, I mean, obviously, you must have also heard quota has come out with a data center fund. They are looking at possibly investments from their perspective. So would you be open for this kind of investment also provided you get the right valuation

Amit Sarin — Managing Director

Definitely, sir, we’ll go and we’ll have a look at it. Thanks for telling us, although maybe our team is already working on it, but thanks, we feed it up. Thanks.

Avinash Gorakshakar — ProfitMart — Analyst

Yes. Okay. Anyway, I think, Amit, thank you for the information and all the best to you and your team.

Amit Sarin — Managing Director

Thank you. Thank you.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead, sir.

Parvez Qazi — Nuvama Group — Analyst

Yeah, good afternoon and thanks for taking my question. Congratulations for a good set of numbers. So my question is apart from Ashoka estate, what are the future projects that we may look to or launch going ahead over the next one to two years?

Amit Sarin — Managing Director

So we said is one, then we are likely just discussed in the next six months, we will see one more big launch coming in by way of group housing. The name is yet to be finalized. So that we will start marketing on that very soon. That is about 1 million square feet. This is already approved, all permissions obtained, and we are all set to– we are, in fact, on the drawing board right now.

We’ll be finalizing these very soon and going forward with it. This is going to be a multi-story housing, 1 million square feet to sell. Other than this, we have another 1 million in the pipeline, which is the license is already — the permissions are already getting processed for that. And other than that, we are sitting on almost 97 acres in [Indecipherable] estates, which is going to be launched in phases. So there, we have the option and the flexibility of doing plots, doing floors, doing villas and doing fully furnished houses.

Parvez Qazi — Nuvama Group — Analyst

And the earlier two projects, both of them will be in Gulgan, 1 million square feet each?

Amit Sarin — Managing Director

Yes, both are in Gulgan. In fact, they are in the same sector. And that sector is pretty doing pretty well right now. It’s called sector 63 in Gulgan.

Parvez Qazi — Nuvama Group — Analyst

Okay. Great. Thanks and all the best you.

Amit Sarin — Managing Director

Thank you. Thank you.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Harsh Pathak from B&K Securities. Please go ahead, sir.

Harsh Pathak — B&K Securities — Analyst

Yes, sir. Hi and thanks for the opportunity. Sir, I wanted one clarification with respect to your partnership project with Villa estates, you mentioned the third phase is going to be launched now. But as far as we understand two phases were already launched and one more phase was launched in March.

Amit Sarin — Managing Director

Sorry, It’s launched, sir. Third is launched. Forth is yet to be launched. Third is launch, sir. I mean, launch [Indecipherable].

Harsh Pathak — B&K Securities — Analyst

Okay. Okay. And how is the response there at the third phase?

Amit Sarin — Managing Director

60% sold, sir. 60% sold.

Harsh Pathak — B&K Securities — Analyst

That’s great to know. So would you be exploring more partnerships with Villa estates or any other developers you are billing to explore partnerships?

Amit Sarin — Managing Director

We have a decent line now, so we feel that we should do it ourselves also. This was done in 2019 that was different than prior to the demerger and other things. But now we get the brand Anantara also has a fantastic value and we can do things ourselves also. And we’ve proven it. We’ve given delivery that today, people are living in our sector, and we are one of the best customer while we are one of the best customers in the industry now.

Harsh Pathak — B&K Securities — Analyst

All right, sir, right. Sure, sure. Sure and so all the best for the future endeavors. Thank you.

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Naitik Mody from OHM Portfolio. Please go ahead.

Naitik Mody — OHM Portfolio — Analyst

Yeah, hi. Thanks for the opportunity. Sir, you are targeting — Hi, how are you. You were targeting 21 megawatts in the data center business by this financial year-end. So over and above the six megawatts for which you already have customer tie-ups, for the balance 15 megawatts, what’s the situation now? I mean, where are we at?

Amit Sarin — Managing Director

Pretty sorted, sir. Pretty sorted. As of now, in fact, we are refusing demand. The way right now what is going on in the direction where we have to commit to them the dates as to when we’ll be able to deliver the megawatts. So right now, we do not see any challenge in the demo. I guess this is going to stay for the next three to four years. The capacities are yet to build up and the kind of edge we are sitting on our buildings are ready, our permissions are all there.

All we need to do is get the racks and other infrastructures in place, which takes about INR25 crores per megawatt. So we are going pretty slow and calibrated in this, we are not letting the debt go up. If we today allow the debt to go up, we can do this much faster and much bigger. But we want to be conservative in this approach because that is something which we are very averse to.

Naitik Mody — OHM Portfolio — Analyst

So what would be the profile of these customers apart from the PSUs that you already have on board?

Amit Sarin — Managing Director

We can’t disclose the profile right now, sir.

Naitik Mody — OHM Portfolio — Analyst

I mean, would they again be the same PSUs? Or would they be same MLC?

Amit Sarin — Managing Director

Some of them are PSUs because CPS also is a very big large market. And plus, of course, the big hyperscalers are already there. So it’s going to be a combination of all.

Naitik Mody — OHM Portfolio — Analyst

Okay, all right. Thank you, sir

Operator

Thank you, sir. [Operator Instructions] The next question is from the line of Ritu Kumar from Growth Capital. Please go ahead.

Ritu Kumar — Growth Capital — Analyst

Hi, sir. Thank you for taking my question. Just wanted to ask what the income that we’re generating from the existing commercial assets, and how much of the total constructive area actually lays out?

Amit Sarin — Managing Director

Ritu, right now, we have about 5 million square feet, which we have already constructed. Now a lot of this is going to be diverted towards data center. The income which we are already generating is about INR50 crores a year. And as of now, say about 1 million out of the $5 million, $1 million is leased up.

Ritu Kumar — Growth Capital — Analyst

Okay. Got it. Also, if you could provide how much income is coming from the two hotel projects, if any new update is there on that as well?

Amit Sarin — Managing Director

Hotels are — as you know, they are a — the companies use them out, and they are running on the — they are running these hotels. We get minimum income of how much — we’ll just have to check that because particularly, we didn’t put that on the thing.

Ritu Kumar — Growth Capital — Analyst

Okay.

Amit Sarin — Managing Director

INR40 crores [Indecipherable] it’s INR14 crores.

Ritu Kumar — Growth Capital — Analyst

Got it. Also, if you could let you know the plan for the data centers ramp up? And what is the capacity that we’re planning to eventually take up?

Amit Sarin — Managing Director

Like we discussed today between these three buildings, we can go up to a total capacity of 300, which is pretty huge in the country. That’s one. As of now, we have three, which is up and running, but the three will go to six by September. And balance to achieve 21 is another 15%, which we’ll do by the end of this financial year. And by that time, the income will start to kick in, and that’s when we’ll start unlocking going forward on this. Manesar alone, where we are doing all this work is eligible to go up to 50, 5-0. So let’s reach there first. And but the kind of demand we are seeing, and we are also in talks with some good companies outside India, we might even start embarking on dry very soon.

Ritu Kumar — Growth Capital — Analyst

Got it. Okay. Thank you, sir. That’s all from my end.

Amit Sarin — Managing Director

Thank you, Ritu.

Operator

Thank you, Ritu. This was the last question. I would now like to hand the conference over to the management for closing comments.

Amit Sarin — Managing Director

Thank you, everyone. We believe that we were able to answer all the questions, and brief an answers. And we’ll keep this as a regular feature. And thank you for all your time, and thank you for joining us. Thank you. Bye-bye. All the best, bye.

Operator

[Operator Closing Remarks]