Ashiana Housing Ltd (ASHIANA) Q1 FY23 Earnings Concall Transcript

Ashiana Housing Limited (NSE:ASHIANA) Q1 FY23 Earnings Concall dated Aug. 12, 2022

Corporate Participants:

Vikash Dugar — Chief Financial Officer

Varun Gupta — Whole-Time Director

Analysts:

Binay Sarda — Ernst & Young LLP — Analyst

Piyush Goyal — India Capital — Analyst

Rohith P. — Marshmallow Capital — Analyst

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Harsh Beria — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Ashiana Housing Limited Q1 FY ’23 Earnings Conference Call. At this moment, all participants are in the listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Binay Sarda from Ernst & Young. Thank you, and over to you, sir.

Binay Sarda — Ernst & Young LLP — Analyst

Thank you, Inba [phonetic]. Welcome to the Q1 FY ’23 earnings call of Ashiana Housing Limited. Please note that this webinar is being recorded, and the transcript of the webinar will be made available in a week’s time from the call. The results and investor presentation have been mailed to you, and it is also available on the stock exchanges. In case anyone does not have a copy of the same, please do write us — write to us and we’ll be happy to send it over to you.

Before we begin, I would like to remind you that our discussion today might contain forward-looking statements. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinion only as on the date of this presentation.

Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

To take us through the results of this quarter and answer your questions, we have today with us Mr. Varun Gupta, Whole-Time Director of the company; and Mr. Vikash Dugar, CFO. Mr. Vikash will make his opening remarks, and will — and then we’ll move to the Q&A. During the course of opening remarks, all investors will be in listen-only mode, and there will be an opportunity to ask questions once the opening remark concludes.

With that said, I’ll now hand over the floor to Mr. Vikash. Over to you, sir.

Vikash Dugar — Chief Financial Officer

Thank you, Binay. Good afternoon, everyone. Hope all of you and your families are keeping healthy. I welcome you to discuss the performance of the first quarter of FY ’23 for Ashiana Housing Limited. Thank you for joining the call today.

The year started with promising numbers. Area book recorded in Q1 FY ’23 was 3.34 lakh square foot as compared to 1.51 lakh square foot in Q1 FY ’22. Value of area booked also went up to INR152.14 crores in the quarter gone by, vis-a-vis INR52.2 crores in quarter one of the last year. Average realization went up to INR4,557 per square foot in the quarter gone by as compared to INR3,460 per square feet in quarter one last year, driven by increasing prices across projects and changing mix towards higher-priced projects.

Villas were launched in Ashiana Tarang, Bhiwadi during the quarter and also shops were opened up for sale in Ashiana Amantran in Jaipur. We handed over 2.11 lakh square feet in Q1 FY ’23, out of which 43,000 square foot was delivered in partnerships. This was against a delivery of 81,000 lakh — 81,000 square foot in Q1 FY ’22. Total revenue increased to INR81.22 crores in the quarter gone by vis-a-vis INR78.28 crores in quarter four of FY ’22. The higher revenue was attributable to higher deliveries in AHL, which was 1.68 lakh square feet versus 1.14 lakh square foot.

Total comprehensive income also improved to positive INR10.29 crores in Q1 FY ’23 vis-a-vis positive INR9.22 crores in Q4 FY ’22. Pre-tax operating cash flows was recorded at INR27.72 crores — positive INR27.72 crores in Q1 FY ’23 vis-a-vis INR27.48 crores, again, positive in Q4 FY ’22. Equivalent area constructed was at 3.85 lakh square foot in Q1 FY ’23 versus 5.07 lakh square feet in Q4 FY ’22, and 2.89 lakh square foot in Q1 FY ’22.

We bought one new land parcel in Bhankrota, Jaipur of 8.08 acres in the quarter gone by. Total potential sellable area in this parcel will be around 6.5 lakh square foot. There might be delays in deliveries by a quarter vis-a-vis expected customer handover date in eight projects, which we have also shared in the presentation. And in one of the projects, there might be a delivery in one quarter prior to what we have promised to the customers.

On this note, I would like to conclude my remarks. We will now be happy to discuss any questions or suggestions that you may have.

Questions and Answers:

Operator

Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We’ll take the first question from Piyush Goyal from India Capital. Please go ahead.

Piyush Goyal — India Capital — Analyst

Hi. Am I audible?

Operator

Yes, sir.

Vikash Dugar — Chief Financial Officer

Yes, you are Piyush. Please go ahead.

Piyush Goyal — India Capital — Analyst

Yeah, hi. Hi, guys. My question is that given Gurgaon Amarah project is kind of fairly substantial in scale for your plans next few years and given the past experience in Sohna, which is — has been kind of a mixed bag, can we spend a few minutes on what are some of the learnings from Sohna that you’re looking to kind of make sure that Amarah is a big success? That’s one part of the question.

And second is, what is going to be Ashiana Amarah’s competitive positioning versus the peers in that new Gurgaon Dwarka Expressway micro market versus the peers? Would like to hear your thoughts there. Thank you.

Varun Gupta — Whole-Time Director

I’ll take that, Piyush. Hi, Piyush. I’ve been quite involved actually personally in Ashiana Anmol and Ashiana Amarah now. I think two, three learnings from Ashiana Anmol. I think in Ashiana Anmol, we didn’t adopt our sales and marketing strategies as per the market as much, okay? That said, we didn’t want to copy everything blindly in the market, but I think some of the aspects of the market we did not adopt. The moment we got that sorted, I think if you’ll see quarter-on-quarter sales now in Ashiana Anmol, I think we sold nearly 1 lakh square foot last — in the last quarter. It’s been a significant change. And I think this quarter should be even better in Ashiana Anmol. We are launching Phase 3 of Ashiana Anmol as well. So I think some — one learning was that.

Second learning, I think, has been across locations I think it takes, what we understand is now, the gestation period for the Ashiana brand to get established is about five to six years. Here, also, we launched Ashiana Anmol in calendar year 2015, early part of calendar year 2015. And it took about till October 2020, when sales started really ramping up. But, once people have seen our product, once the brand is experienced, I think we stand out a little bit from the market in terms of the kind of quality of work we’re able to deliver.

Ashiana Amarah has three, four, clear positioning perspective that we have and it comes from a — largely, there is two, three, things. One, in Ashiana Anmol and here also both are Kid Centric homes, which are positioned as the best place to bring up your family — and with the right kind of amenities, the right kind of services.

The other also is the brand is positioned aspirationally. It’s something that you’re stretching yourself to buy in the consumer audience that we have. And then the — of the features of the project which support these two, three kind of positioning, there are three items that are there. One, child-centric amenities and services so that we have multiple over there.

It’s the first Kid Centric Homes that we have also done clean state design with. I think we got a master planner who’s specialist in child-friendly architecture, so she master planned the project, along with the right — we chose the architect, the master planner and the landscape consultant and gave them this kind of brief to work with. So some of the design features are also very unique around that.

Second part of it is that the spaces are lot more lavish. The flats are lavish. There is a deck. The park area is like, it’s, we have 6.7 acres of one single contiguous park, which is also not — it’s not very intimidating, but — and large at the same time the way it’s designed and put together.

Third is, thoughtful design. And little things have been thought through in the project. So I think when we put all those three kind of features put together, looking for an aspirational positioning along with a view that this is the best place to raise your family in the entire city.

And we have received RERA of Phase 1 of Ashiana Amarah. We’re launching in a couple of weeks. So we’ll also know how it goes from here.

Piyush Goyal — India Capital — Analyst

Understood. That’s quite helpful. And is there sort of any — I think you started using channel partners in Gurgaon, which you otherwise don’t use in most other cities. Is that going to be the strategy for Amarah as well?

Varun Gupta — Whole-Time Director

Yes, we are going to use channel partners. So when I said we didn’t adopt sales and marketing strategies, I think that one of the things that we did not adopt in Gurgaon was using a channel partner network and — which we learnt. And we started in November 2019 in Ashiana Anmol. And now we will continue to engage channel partners.

But the thing that we really wanted to control in our resistance and I think we needed to find a solution which will — we wanted to give the consumer the right experience and the right information. We wanted to control exactly the information that was given. And with channel partners, we were a little fearful as to how much of that experience and information to the consumers will be controlled. So what we did was we made a strategy that the sales execution piece will be carried out by our team. So the channel partner brings in the customer. But the conduct of the visit of the project, the briefing of the project is carried out by our team, and that keeps control over the communication and engagement, and we also know our customer very well. So we found that solution, and we continue to do that.

Piyush Goyal — India Capital — Analyst

Understood. And my second question is around land acquisition. You had mentioned in the last call and in the last few calls that the prices have shot up a lot and you’re finding it hard to do deals that justify the prospective returns. And you said, especially in Jaipur you were finding hard. You announced a deal in Jaipur recently. So, is there any update on sort of any change in the environment for land? Are you — have you sort of reduced your hurdle rate while sort of saying, we — because pricing power is kicking in, maybe we can pay up for land a little bit? Or, any updates on sort of what’s happening in the land across your two or three big markets?

Varun Gupta — Whole-Time Director

Okay. So right now, I think the most activity is happening in Jaipur. We are evaluating more projects there. We signed up one. We have been working on that for about 10, 12 months already. And we are working on a few more. I think the key aspect that I would say and the land front in Jaipur is to, what I would say is find pockets where we believe Ashiana can create value.

So it’s — land prices are up, they haven’t fallen down. So that it makes our job that much harder. Like it’s like, if I come from an investor’s perspective, if the entire market has become expensive to buy and you find valuations rich, you have to work extra hard to find those pockets of value, if that’s the way to put it where we can buy and invest in.

And the same thing applies to us is that when the entire land prices have gone up, we have to find sort of those locations where we believe we can get a differential sales price, whether for a brand or where the product we’ll bring in or the location or a combination of a few things. And we have to rack our brains as to what to do. So, we put together a strategy to look at other parcels in Jaipur where we believe we can create value for the consumer, and also, therefore, charge a little bit of a higher price and therefore, makes sense of some land parcels. So we’ve been working on those thinking right now. So hopefully, we’ll do a couple of more transactions in Jaipur over the next, let’s say, six to 10 months.

Piyush Goyal — India Capital — Analyst

Understood. Thank you. That’s all from my side. Thank you, Varun. Thank you, Vikash.

Varun Gupta — Whole-Time Director

Yeah. Thank you, Piyush.

Operator

Thank you. We will take our next question from Rohit P. from Marshmallow Capital. Please go ahead.

Rohith P. — Marshmallow Capital — Analyst

Thank you for the opportunity. So, last one, two years have been very interesting in the sense that we have seen the sales go through the roof, which is very good for us. But at the same time, the construction costs have gone even more through the roof, I would say. So just curious, so in a way, we have been penalized for — is it a situation that we have been penalized for our good projects which are sold well, because maybe our margins will be compressed going forward for them, the price at which we have sold them? So could you speak about that? How do you look at the IRR and the margins for the projects that are under construction right now and where we’ve already sold?

Varun Gupta — Whole-Time Director

Rohith, I think I’ve spoken on this before. I think margins are more compressed where land deals were done 2013 to 2017. Even some of the projects might be coming up now. Let’s say, Ashiana Malhar is a project which is getting launched now, which we had done the deal in, I think, March of 2017 or September 2017, something like that. I’m not sure exactly, but somewhere in 2017.

As compared to, let’s say, when we have done transactions 2018 onwards, and though projects have been launched, let’s say, Ashiana Daksh is a project we launched, which was a transaction that closed in 2018. We will — even though we launched, we sold everything at launch and then construction costs have gone up, our returns on those projects are still good. I think the land prices played a more definitive role.

And in my view, when I said, inflation is a friend right now, I think overall sales price increases are higher than construction cost increases. You can see the sales price also changing for us and the quarterly sales. Some of it is because of mix, but a lot of it is also because of the — we’ve been able to increase prices substantially.

So — and I would not like to comment on each and every project. But, at this — as I said earlier, at this point of time, the goal for the company is to get to a 15% return on equity number. Given where we are, it is still a tough ask, sustainable 15% ROE. But, I think as I’ve been telling earlier, double-digit now ROEs seem very much reasonable and likely. We are putting energies and effort to get to a 15% return on equity.

Rohith P. — Marshmallow Capital — Analyst

This is very — that was very good to know. So in general, we’ve been hearing that the recent construction cost is making some of the existing projects not so profitable as initially envisaged. And it’s good to know that we are not going through that issue. In general — yes, sorry.

Varun Gupta — Whole-Time Director

Rohit, I think, one of the key things is if you construct quickly after launch, you’ll face less of those challenges. So we have gone ahead and constructed so we are — we have a lesser of a challenge over there.

Rohith P. — Marshmallow Capital — Analyst

Perfect. That’s helpful. And how does the supply look in all our major markets? Is it increasing materially because you’ve been talking about how inflation is a friend, and we are seeing higher price increases as compared to construction cost increase? Is the supply also increasing in terms of new launches by competition, et cetera?

Varun Gupta — Whole-Time Director

Right now, I think supply is still constrained. It’s not increasing. If I see most — more and more supply is still coming in the plotted layout spaces in Jaipur and Gurgaon, I think, which are going to be our two largest markets in terms of group housing Kid Centric Homes, Premium Homes in that category as of today it seems. These two markets have seen more layout launches and less built-up unit launches. So, I think built-up area — apartment supply still remains to be constrained.

The other markets where I think now increasingly for us Senior Living is a more important space, whether it’s Bhiwadi, where Senior Living has become a larger part of revenues, Chennai, where Senior Living is driving [phonetic]. And Jamshedpur as a market is anyway supply constrained, because of the land title issues and therefore, creating supply is difficult. Right now, I don’t see supply side challenges for us.

Pune, [Speech Overlap] also will take some time for us for it to become a large market for us. So, Pune is somewhere where I hear some launches have come in, where oversupply can become an issue maybe going forward in about 24, 36 months.

Rohith P. — Marshmallow Capital — Analyst

Okay, okay. Okay. So that’s interesting to know. Could you share the launch pipeline for this year? So you mentioned Amarah will be launching in the next couple of weeks. What about other locations like Pune and others?

Varun Gupta — Whole-Time Director

I will share three particular projects where we have RERA, and we are looking to launch two more. Vikash can give exact numbers of what we plan to launch in various phases in different. So we have RERA received for Ashiana Amarah Phase 1, Ashiana Advik Phase 1. Ashiana Advik is the Senior Living project in Bhiwadi. And we have RERA received for Malhar in Pune. And Malhar is already launched for expression of interest as of today. So those three projects are definitely Phase 1s are getting launched. Other than that, I think Vikash can give a little bit more detailed sense of what we’re launching.

Vikash Dugar — Chief Financial Officer

Yeah. So I think if I recall correctly, during the last earnings call also, we had shared that we have a launch pipeline of around 25 lakh — roughly 25 lakh set of the number. And that includes both new projects, that is existing projects. And also the future phases of that presently is ongoing projects. Now that is the kind of number that we are targeting.

And if we talk about the new greenfield project then Amarah, you talked about Malhar, Amarah, of course, are the nearest one, then Advik, it’s a Senior Living project in Bhiwadi that is planned.

Then another Senior Living project in Pune also is planned. Then there is one project in Jaipur that we are planning, Ashiana Ekaansh somewhere around December or Jan, Q3 or early Q4 is what we are planning. Then, there is also a project in Jaipur, which is 1 lakh-odd square foot kind of plan which is there Ashiana Greenwood. It is a part of the earlier launch project called Ashiana Greenwood.

And then there are two projects in Chennai also that we are planning. So these are the kind of plans that we have. Chennai, of course, is — both of them are Senior Living projects. So all-in-all, this number in my sense should be somewhere around, in terms of square foot, is roughly maybe 12 to 13, 14 lakh kind of a number, ballpark, square foot.

Varun Gupta — Whole-Time Director

Vikash, and — so these are Phase 1s of planned launches, not the whole projects. Like Ashiana Amarah itself is 21 lakh square foot. The phases that we plan to — of the new launches is 12 lakh to 13 lakh. You would also put together phase data of existing projects as well, right?

Vikash Dugar — Chief Financial Officer

Yeah. So existing project would be roughly this kind of a number, 13, 14 lakh square feet again, which would include Ashiana Shubham Senior Living project in Chennai. Anmol Phase 3, you already talked about, we are on the verge of launching. Then there is one phase of Jodhpur Dwarka project. And then couple of launches in Jaipur as well, Gulmohar Villas and Umang extension Phase 6. So roughly, I think 13, 14 lakh square feet is the kind of plan there as well. The future phases and the presently ongoing projects.

Rohith P. — Marshmallow Capital — Analyst

Perfect. So that’s — yeah.

Varun Gupta — Whole-Time Director

So we are looking to launch about 2.5 million-odd square foot this year across various phases.

Rohith P. — Marshmallow Capital — Analyst

Perfect. This is a very busy year then. My last question, again is on the construction costs. So how is it trending right now? I mean, with the steel prices coming down, are we seeing a respite there? Is it better?

Varun Gupta — Whole-Time Director

When something has gone up from INR50 — INR40 to INR80, INR85, it comes down to INR65, INR67, it does feel like a little bit of a respite. But that said, construction costs, what I would say are more stable right now, it’s not increasing. So there is — I wouldn’t say there is a respite. Because even though steel prices might have come off, other costs have not come off. And in, also like finishing items where the costings were more or less constant, some increase in pricing there is coming, where people are also passing their input cost further.

So — and labor costs are also revising upwards. There is an inflation, which is leading to wage inflation as well. So I would say it’s — has it become better than what it was three, four months ago? Yes, but it’s not like it’s dipping or it’s going to reduce any further.

Rohith P. — Marshmallow Capital — Analyst

Perfect. Thank you. I’ll get back in the queue. It was very helpful.

Operator

Thank you. [Operator Instructions] We will take our next question from the line of Sourabh Gilda from Motilal Oswal Financial Services. Please go ahead.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Hello. Am I audible?

Varun Gupta — Whole-Time Director

Yeah, yeah. You are audible, Sourabh. Please go ahead.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Yeah. Hi. I just have one question. Like we have — we had a sales of around INR154 crores in Q1, and you have laid out a very strong launch pipeline for the rest of the year. So just wanted to know like do we still stand by the guidance of INR1,100 crore sales that we guided during the last quarter for FY ’23?

And the related question to that would be like how do shares trajectory for over the next in medium-term, let’s say, two to three years done? How do you see the sales panning out?

Varun Gupta — Whole-Time Director

So, Sourabh, I — we continue to target INR1,100 crores of sales this year. Right now the launch pipeline also gives us confidence with RERA in three of those projects. As I said, the INR1,100 crores is dependent on launches. I think we need two to three more new projects to — particularly Jaipur and Jamshedpur need to come together as well, which are under approvals for that number to be met. As of now, it seems very likely that we should meet that.

Vikash Dugar — Chief Financial Officer

I think velocity should not be a concern. As you rightly mentioned — sorry, just to add. I think it is the timing of the launches which will be critical. I don’t see velocity being an issue. The momentum in terms of sales is very much there, just to add. Thank you, Vikash. Second bit was…

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

On the sales trajectory [Indecipherable].

Varun Gupta — Whole-Time Director

So, on the sales trajectory, right now, according to us, we have probably about a INR6,000-odd crore potential inventory for sale, whereby launches are likely approvals, which are not stuck. Some of the projects are stuck like Kolkata is stuck and Milakpur is stuck. Excluding those, roughly about INR6,000 crores of inventory is there. Right now, the intent is to maintain — to maintain a INR1,000 crores kind of a revenue run rate is to what we’re looking at.

I don’t know how the next two years will pan out. We are working on what we see as potential, what launches we’ll get there and how we see doing that. But I think the current view of the company is to maintain that number and then ramp that up as we go along. So getting more projects and putting that together. But, let’s see. First, right now, our head is sort of — we’re keeping our head down and trying to get to the FY ’23 number more than anything else.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Right, right. Understood. And just to clarify, like, when you say you have inventory of INR6,000 crores, so does it include all the planned launches that you laid out, or…

Varun Gupta — Whole-Time Director

Yeah. Total land bank. Total land bank excluding some of the stuck assets.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Okay. Understood. Thank you. That’s all from my side. All the best for the…

Varun Gupta — Whole-Time Director

Thank you.

Binay Sarda — Ernst & Young LLP — Analyst

We have one question on the text box, it says going by some of our comments today as well as in previous con call, is it fair to say that we are looking at around INR1,000 to INR1,200 crore area book with net profit of around INR100 crores? Does that mean our profitability would be more constrained in the current up cycle compared to the previous one? This is from Rahul Bhansali.

Varun Gupta — Whole-Time Director

Hi, Rahul, I wouldn’t agree with that, that our profitability will be more constrained in this up cycle as compared to the previous up cycle. As I said, the newer projects will have better profits than some of the older projects as and more some of those newer projects get lined up for launches and they come up for approvals and launches, I think profitability and margins will expand.

I would refrain from commenting on exactly what that profitability will be at a revenue figure. We do — our annual report will be coming out, we’ll report again some of the percentage and per square foot margins we make, depending on delivery where you can — it will help you also to put together where you see our profitability to be. But I do believe that the up cycle should lead to margin expansion. I think that’s my belief because, again, I believe we can raise prices given the — where markets are, and price increases should be faster than increase in construction costs at this moment.

Operator

[Operator Instructions] Our next question is from the line of Harsh Beria, an Individual Investor. Please go ahead.

Harsh Beria — Individual Investor — Analyst

Hi. Am I audible right now?

Operator

Yes, sir.

Varun Gupta — Whole-Time Director

Yes, Harsh, you are.

Harsh Beria — Individual Investor — Analyst

Hi. Congrats for working on a very, very good pipeline, and it seems like INR1,000 crores run rate should be maintainable given all the work we are doing. So congrats for that. My question was on margins, but not on the gross margin, margin just excluding land cost. So in the current projects we are selling, what is the kind of margins we are making, excluding construction costs?

Varun Gupta — Whole-Time Director

That would be very hard to say, because a lot of the differential in the margin is driven by land cost. My opinion is at the — because land cost, let’s say, you sell something at INR5,000, okay? Your construction costs might be INR2,200, INR2,300. You bring that INR5,000 down to, let’s say, INR3,800. Your construction cost still remains INR1,900 a square foot, right? So that — so typically, construction cost can range anywhere between 40% to 55% of our sale price. So depending on where it is.

Harsh Beria — Individual Investor — Analyst

Okay. So on a ballpark basis, so we should be able to do 25% to 30% gross margins in the current sales which we are doing, assuming today’s inflation doesn’t go…

Varun Gupta — Whole-Time Director

Yes. So if you take sale value less construction costs, less land cost and less what we call project overheads, if you take those costs out, we should be operating between the 25% to 30% range on our current valuation. Some projects even better, like in this quarter, if you go back to our gross margins, those were in the mid-40s, if I remember correctly on a blended basis or early 40s, again because of one particular project where the land cost is very low, because it’s a 12 year-old land purchase that we have in Ashiana Nirmay. So — but outside of that, I think we’ll generally be operating in that 25% to 30% range.

Harsh Beria — Individual Investor — Analyst

That’s really good to hear. And on a reported basis in FY ’23, what is the kind of gross margins which we will report? So this may not reflect sales happening this quarter but the sales that happened a couple of years back.

Varun Gupta — Whole-Time Director

Around that 25% to 30% number, generally. So FY ’22, we will — you can — we’ll give a little bit more breakup and threshold where it’s easier to capture those numbers in the annual report. You can have a look at it. But 25% to 30% is where generally we’ll be trending depending on the project and the mix that we have.

Vikash Dugar — Chief Financial Officer

[Speech Overlap] So just to add, we shared this number in detail in our annual report. And our annual report is being drafted and this would get shared in next two weeks at the most. So you’ll get greater detail out there, and you can have a look.

Harsh Beria — Individual Investor — Analyst

Perfect. That’s really helpful. And I’m looking forward to reading the annual report as well. So on a reported basis, we should be able to do INR80 crores to INR100 crores of PAT this year.

Varun Gupta — Whole-Time Director

I think we will share that number in a couple of more months, we’ll give a guidance on it. So in the next call, we’ll have a guidance on the same.

Harsh Beria — Individual Investor — Analyst

Perfect. That’s it from my side, and good luck with the project launches and sales for this year.

Varun Gupta — Whole-Time Director

Thank you, Harsh.

Vikash Dugar — Chief Financial Officer

Can I just add to the previous question? Harsh must be in the queue that — so Harsh, what we do is that we share the delivery timelines in our quarterly presentation also. You can get a sense as to what is the kind of delivery which is lined up and you also get margin per square feet kind of a number, gross margin per square feet kind of a number in the annual report. You can try and have a look at those kind of numbers that will give you some kind of a sense. Yeah. Thank you.

Operator

Thank you. Our next question is a follow-up from the line of Sourabh Gilda from Motilal-Oswal Financial Services. Please go ahead.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Yeah. Hello. So, I just had a follow-up regarding the comments you made earlier. Like when you said margins are compressed on land deals, which were done in 2013 to ’17 period. So since then, like land prices would have actually gone up. So isn’t — like opposite should have happened like the margins must be accretive in parcels which were acquired in maybe ’13 to ’17 period?

Vikash Dugar — Chief Financial Officer

You’re on mute, Varun.

Varun Gupta — Whole-Time Director

Sorry, Vikash. Land prices, Sourabh, actually corrected between 2017 to 2020 — 2021. So those four years, whatever we did, land prices were softer than the areas before that, whether in actual outright purchases. Or in joint ventures, you have the percentage that you had to give the landlord reduced. So now like earlier projects, if it’s a revenue share, a higher percentage is locked in. So even if sale prices have gone up, they have not covered the same or your higher land cost was locked in. So those places, the things were constrained. So that’s where it is at.

Sourabh Gilda — Motilal Oswal Financial Services — Analyst

Okay. Yeah, got it. That’s helpful. Thank you. Thank you for the clarification.

Varun Gupta — Whole-Time Director

Thank you, Sourabh.

Binay Sarda — Ernst & Young LLP — Analyst

We have a question on the chat board again. So it reads, do you see any increase in competition in the Senior Living segment, maybe in the form of higher new launches or existing player pricing aggressively? This is from Arun — Arul Selvan [Phonetics].

Varun Gupta — Whole-Time Director

So on Senior Living, we don’t see a lot of challenge at this moment of time. Not too many players have entered the space. And the space is also growing itself. So at this point of time, even if more competition comes in, I think they will grow the market at least in the short-term as the market grows. So in terms of excess supply, excess competition driving down sales prices, that challenge is not something that we are seeing at this moment.

Operator

Thank you. [Operator Instructions] We have a next follow-up question from the line of Harsh Beria, an Individual Investor. Please go ahead.

Harsh Beria — Individual Investor — Analyst

Hi. So, I think this question was asked like maybe a year or year and a half back, as to I think an investor was asking if it’s better for him to buy a house in a Senior Living project of Ashiana or to buy Ashiana’s stock today? What’s your answer today?

Varun Gupta — Whole-Time Director

I have given the same answer on these decisions, listen to your spouse instead of making or listening to me on this decision. So we don’t have any views on the same way, I would be happy if you either bought both. But answer should have been that time also buy both. I wouldn’t give an opinion on the same, Harsh.

Harsh Beria — Individual Investor — Analyst

Thanks for the candid answer.

Varun Gupta — Whole-Time Director

Yeah.

Harsh Beria — Individual Investor — Analyst

Yeah. Another question is about like the capital intensity going forward. So I think last year we did like something like six or seven land deals. This year, we’re also going into a lot of land deals. We have like a credit line from IFC. So how much do you think are covered to pay upfront for these land costs to lock higher gross margins? And how should we see the debt positioning of the company going forward? Do you guys want to take it up as you’re doing a lot of land deals?

Varun Gupta — Whole-Time Director

So I don’t think we’ll — I don’t — we are well capitalized. Even after doing so many transactions, we are sitting on a lot of cash, Harsh. I don’t see a challenge of — capital being a challenge in doing transactions. If we do joint ventures, we require little cash. Anyways, if you’re looking for outright purchases then we can. Right now, the IFC’s line is more or less exhausted. I think a little bit of capital is yet to come in, which is for the Chennai development. It’s going to come in a little bit of a stage very thin sliver. Otherwise, that line from IFC is completely sort of exhausted now.

So outside of that IFC line, our debt position is very little. We are net cash positive if I exclude IFC’s capital contribution into the company — into the projects. And capital does not seem to be a constraint. Though our preference will remain for joint venture transactions over outright purchases. But depending on the transaction, I think we have flexibility to do what we want to do today.

Vikash Dugar — Chief Financial Officer

Just wanted to add two things. One is that the IFC line is not exactly — not technically a credit line, It’s a platform that we have signed with them, wherein there is a capital contributed by them. And what happens is that it is in a payable variable structure as and when — only when the project generates the cash flows, we payout to them. So those kind of terms and conditions are there.

And we plan to deploy — a preferable mode would be JDA model only, a joint venture only. And if at all, outright is required, then we have our own funds to deploy. So generally, we borrow only in case — wherein we need to fund the project for working capital requirement there also the first preference is customer advances. If at all, there is any kind of bridge funding to be done depending in case there is — the velocity of the project is — sales velocity is slow and all, we do go for debt. So that’s our outlook on debt by and large. So those are the two bits I just wanted to add.

Harsh Beria — Individual Investor — Analyst

Yeah. And this is also reflected in the capital positioning of the company, how you guys have managed the balance sheet in this whole downturn. I was just thinking that like you’re trying to do 50 — you’re trying to reach 12% to 15% ROE. Can this not be a bit easier if we use debt more judicially? So, not to make the company bankrupt. That’s not what I’m saying. But just to use the equity in a more efficient way because having high ROICs in this sector is very hard. So for higher ROEs, we need a judicious amount of debt, that’s where I’m coming from.

Varun Gupta — Whole-Time Director

Harsh, point taken. Just — I think the capital structure is to suit the temperament of the management team. And I think it’s one thing on an excel sheet, I think capital structures also influence decision-making, which changes the ROIC on the project. I think one of the things that when we look at finance in classical finance sense, we take the project economics to be independent of the capital structure, whether — will the ROIC on the project change when the capital structure changes or not. Our view is that excessive debt changes the ROIC of a project itself in a negative manner.

And second bit also of the view is that the business is cyclical, I couldn’t call the last — the up cycle we are in, I couldn’t call the last down cycle that we are in. I don’t think any of us have an ability to call the cycles. And being — ability to survive the down cycle to thrive in the up cycle is a necessity of this business. So we tend to be conservative. I think we’ll be conservative.

I also — that is simple 2 by 2 derive chart drawn out where financial risk on one — on the x-axis and operational risk on the y-axis. And the only quadrant you really don’t want to be is where both those risks are high. Unfortunately, in the real estate development business is a very high — operationally high-risk business, so we tend to avoid financial risk in the business as much as we can. I think that’s where we come from. Let’s see, I think we can do 15% ROEs without much leverage and the support of financial leverage there. I think we can find ways for the same.

Harsh Beria — Individual Investor — Analyst

Perfect. Thanks for the clarification. That’s it from my side.

Varun Gupta — Whole-Time Director

Thank you, Harsh.

Operator

Thank you. [Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference back to the management for closing comments. Over to you, sir.

Vikash Dugar — Chief Financial Officer

We would like to thank all of you for being on this call and being so patient and with all the questions and answers. If we were unable to take any questions, please feel free to write to us directly or reach out to us directly. And with that, we would like to conclude the call.

A lot of material we have spoken about is posted on our website. And you can also e-mail your queries for any further clarifications. Thank you once again for taking the time out to join us on this call. Thank you.

Operator

[Operator Closing Remarks]