KOLTE-PATIL DEVELOPERS LTD (KOLTEPATIL) Q4 FY22 Earnings Concall Transcript

KOLTE-PATIL DEVELOPERS LTD  (NSE:KOLTEPATIL) Q4 FY22 Earnings Concall dated May. 26, 2022

Corporate Participants:

Shiv Muttoo — Investor Relations Practice

Rahul Talele — Group Chief Executive Officer

Vikram Rajput — Head of Investor Relations and Corporate Finance

Pawan Lohiya — Assistant Vice President and Head of Finance

Analysts:

Prithvi Raj — Unifi Capital — Analyst

Pritesh Sheth — Motilal Oswal — Analyst

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Manoj Dua — Geometric — Analyst

Rohit Balakrishnan — ithoughtpms — Analyst

Himanshu Upadhyay — O3 Capital — Analyst

Darshan Zaverix — Crown Capital — Analyst

Bajrang Bafna — Sunidhi Securities — Analyst

Parikshit Kandpal — HDFC Securities — Analyst

Manish Shah — Vajani Securities — Analyst

Anuj Sharma — M3 Investment — Analyst

Faisal Hawa — HG Hawa and Cooperation — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Kolte-Patil Limited Q4 FY ’22 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Shiv Muttoo from Adfactors. Thank you, and over to you, sir.

Shiv Muttoo — Investor Relations Practice

Good afternoon, everyone and thank you for joining us on the Q2 [Phonetic] FY ’22 results conference call of Kolte-Patil Developers Limited. We have with us today, Rahul Talele, Group CEO; Vikram Rajput, Head, Investor Relations and Corporate Finance; and Pawan Lohiya, Head, Finance.

Before we begin, I would like to state that some of the statements in today’s discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available on the Q4 FY ’22 results presentation that has been sent out to you earlier.

I would now like to invite Mr. Rahul Talele to begin the proceedings of the call. Over to you, Rahul.

Rahul Talele — Group Chief Executive Officer

Thank you, Shiv. Good afternoon, everyone. A very warm welcome to everyone present on this call, and thank you for joining us today to discuss the operating and financial performance of Kolte-Patil Developers Limited for the fourth quarter and financial year ’22.

I would like to begin by discussing the real estate environment, our strategies and broad highlights of the quarter. Vikram will take you through the key financial highlights. We then look forward to taking your questions and suggestions. To start with, just to share our views on some macro perspective with you, coming into the current financial year, we see India following up on previous year’s global outperformance with continuing strong growth within the framework of item inflationary environment, supply chain disruption and geopolitical rates that are reality at present.

We expect the policy environment to remain dynamic with government stance on progressive reform continuing into this year as well. Ultimately [Phonetic], we set example of government’s proactive stance was a reduction on import of some raw materials used by steel industry as well as levy on export duty on some steel items. This is expected to moderate steel prices in near term. The real estate sector is likely beneficiary of push towards infrastructure development and industrial growth. So within this framework, we are seeing demand transitioning to large real estate brands with strong execution capability and strong balance sheets. This is already visible in the recent trend. FY ’22 marks a year of demand revival for the real estate sector and for Kolte-Patil Developers. Even as intermittent disruptions in the operating environment, we have seen almost throughout the period.

With sales volume of 2.71 million square feet, we closed the year in line with our stated guidance. Sales volume saw a significant uptick, up 30% year-on-year compared to 2.08 million square feet in FY ’21. Further from sales value perspective, we recorded our best ever year in the industry of company, up 45% year-on-year to INR1,739 crores. We have now entered FY ’23 on back of the strong momentum achieved in the second half of FY ’22.

Q4 FY ’22 was the second consecutive quarter with sales value of over INR500 crores. Compared to H1, our H2 sales value is up by 57% to INR1,062 crores. H2 sales volume was also up by 53% to 1.64 million square feet. And H2 collections were up 41% to INR921 crores. These, we believe, are strong numbers that provide us the momentum and liquidity to pursue further progress in the business. In addition to growth, we are seeing greater diversification that has resulted in almost 32% of sales by value coming from Mumbai and Bangalore.

Our Mumbai portfolio has reported its best ever performance with sales value of INR450 crores in FY ’22, up by 150% year-on-year. Work and value have performed well and witnessed improved realization. The Mumbai portfolio is moving as per plan, and we will continue to scale in the coming years with increased launches and business development activity. Pursuing our objective of risk diversification in the business within the Pune portfolio as well, several projects are lined up for launches in the coming quarters. This is resulting in decreased reliance on specific location, even as Life Republic remained the top selling project in Pune during 2021. Further from a — further from a new business development perspective, we are focusing on newer micro markets in Pune.

[Indecipherable] improved by 11% year-on-year during FY ’22, driven by improved realization in project sales across Pune and Bengaluru market as well as 26% contribution to sales value from Mumbai. This is also indicative of our successful pass-through mechanism that allows us to maintain contribution margins from projects.

Collections were the highest ever in Kolte-Patil three-decade history for both Q4 FY ’22 and entire FY ’22, we clocked collections of INR1,574 crore in FY ’22. Up by 40% year-on-year and INR500 crores in Q4, which was up by 13% year-on-year. As discussed in previous interaction, we maintain a keen focus on sales, registration, construction and CRM that enables strong performance in collection. This is critical to driving execution efficiency, timely delivery and customer satisfaction, thereby enhancing the strength of our brand. We now look forward to expand on the platform of this achievement. Our objective would be to deliver 25% to 30% sales value growth in FY ’23. We have a solid balance sheet position and remain well placed to aggressively pursue business development in FY ’23 and expect to conclude this with cumulative topline of INR7,000 crores.

We have already signed seven non-binding term sheets in place. The focus is to simultaneously work on definitive agreement and the design and the launch aspects, which will enable the deployment of signing capex closer to [Technical Issues] hello.

Operator

Sir, you may go ahead.

Rahul Talele — Group Chief Executive Officer

This will enable deployment of signing capex closer to launch and enable better returns on the projects. Further, in FY ’23, we are looking to launch projects in pipeline that are — currently includes saleable area of 5.4 million square feet with aggregate topline potential of INR4,600 crores.

So some of our key launches in Q4 have been pushed by a quarter. At Baner, which is in the western part of Pune, seems to have positive demand environment and the response we are receiving across all projects. We have decided to upgrade it to 24K project. Hence, the design specification has been changed, and we expect to soft launch towards end of Q1 FY ’23.

At Sukh Niwas and Golden Pebbles, vacation process is underway. So we expect to launch both of these projects in the next few months. We see a strong drive on the deliveries front. And based on current visibility, we are targeting 3 million square feet plus customer handles during FY ’23. To sum up, we are geared up to capitalize on the industry consolidation and create newer growth records in the coming years, while maintaining our financial discipline.

With that, I now hand over the proceedings of this call to Vikram to provide a financial overview.

Vikram Rajput — Head of Investor Relations and Corporate Finance

Thank you, Rahul. Good afternoon, everyone. I will now briefly take you through our financial performance for the quarter and year ended 31st March, 2022. Based on CCM-based accounting, in Q4, we reported revenues of INR376 crores, up 27% Y-o-Y and in FY ’22, we reported revenues of INR1,118 crores, up 62% on a year-over-year basis. EBITDA for Q4 stood at INR40.5 crores compared to an EBITDA of INR38.9 crores in Q4 of FY ’21. EBITDA was recorded at INR186.2 crores in FY ’22 versus INR62.4 crore in FY ’21. Our net profit after tax post minority interest came in at INR26.7 crore compared to INR20.9 crore in Q4 FY ’21. Net profit was INR84.8 crore in FY ’22 as compared to a loss of INR4.8 crore in FY ’21.

Here, we would like to remind you that the recognition of revenue and profits are dependent on the timing of project competition — project completion based on statutory accounting guidelines. As Rahul mentioned, we see a strong drive on delivery front in FY ’23. Link to project completion and deliveries would be higher revenue recognition in the ensuing period.

The liquidity in our business operation remained strong, resulting in further reduction of INR41 crore in net debt in Q4. We have reduced our net debt by INR179 crore during FY ’22. This is the third consecutive year of net debt reduction. And overall, it is down by INR386 crore over the last three years. Our net debt to equity stands at 0.14 as on March 31, 2022. Further, the operating cash flow for the quarter stood at INR166 crore and at INR508 crore for FY ’22. We have reported best ever numbers across parameters to end the year on a strong note and look forward to creating bigger milestones in FY ’23. Our focus will remain on maintaining sales performance, timely execution and cash flows, as indicated by Rahul earlier, which will continue to drive P&L performance over time.

On that note, I conclude my opening remarks and would like to ask the moderator to open the line for Q&A session.

Questions and Answers:

Operator

Thank you so much. We will now begin the question-and-answer session. [Operator Instructions] We take the first question from the line of Prithvi Raj from Unifi Capital. Please go ahead.

Prithvi Raj — Unifi Capital — Analyst

Hi Rahul, just a couple of questions from my side. So the first one on the inflation. So what kind of price hikes have you taken across the projects and geographies to manage the inflation? And then, for the projects where clients have booked few months back, where the price is locked, how are we managing on the inflation front?

Rahul Talele — Group Chief Executive Officer

Okay. See, basically, we have — wherever we got the opportunity of price rise, we have taken that price rise. If you see our portfolio, Pune portfolio at Life Republic, our price has jumped almost by 14%, 15%. There are multiple reasons behind it. Not only that, we have improved the price. At the same time, see, we pushed our — some of the retail inventory also over there. And so it is a combination of various efforts. At the same time, the same product, at some other locations, we have improved the price in the range of 5% to 7%, 8% in terms of the Pune locality and the same is the case for Mumbai and Bangalore as well.

In terms of your second part of the question, so regarding the inflation fee, we accept that there is a cost to increase in the range of INR100 to INR300. So we are working on multiple fronts to again this time frame. So basically, it depends on the stage of construction, height of the building and the geographies where that particular construction is happening. So depending on that, so it is in the range of INR100 to INR300. So there are multiple things. I mean, see, by passing on this increased price to the customer through better realizations in APR is the one way that we have already done in the last entire financial year, wherever we got the opportunity, and we’ll continue to do so wherever we’ll get the opportunity in future as well. But at the same time, we decided to sit again on the drawing boards, how better we can come up with an efficient product, how we can come up with a better health engineered product and the alternative materials. So we are working on that front also. So I believe this will address the concern of inflation. And at the same time, there is a good amount of possibility of price — costs getting settled down further.

Prithvi Raj — Unifi Capital — Analyst

Okay. And my second question on your new launches. So obviously, last couple of quarters, we have seen certain delays because of approvals and all. So what kind of numbers, say, are we looking for new launches in this financial year? Is it positive for you to give a ballpark number on the new launches?

Rahul Talele — Group Chief Executive Officer

So basically, this year, certainly, we are confident of launches of more than INR4,000 crores.

Prithvi Raj — Unifi Capital — Analyst

And what was the same number in this financial year, say FY ’22?

Rahul Talele — Group Chief Executive Officer

So around close to INR1,000 crores.

Prithvi Raj — Unifi Capital — Analyst

Okay. So as against INR1,000 crores, you will launch INR4,000 crores. Got it. That’s it Rahul. Thanks for your time for my questions.

Rahul Talele — Group Chief Executive Officer

Thank you.

Operator

Thank you. We take the next question from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.

Pritesh Sheth — Motilal Oswal — Analyst

Hello. Am I audible?

Operator

Yes, go ahead.

Pritesh Sheth — Motilal Oswal — Analyst

Yeah. Thanks for the opportunity and congratulations on good set of numbers. My first question is on the business development front. We have stated a very strong target of INR7,000 crore [Phonetic] relatively for business development in FY ’22. Can you highlight which markets we are in? Is it Pune or local markets?

Rahul Talele — Group Chief Executive Officer

Your voice is a bit muffled. If you can speak a bit clearly.

Pritesh Sheth — Motilal Oswal — Analyst

Hello.

Rahul Talele — Group Chief Executive Officer

Please go ahead.

Pritesh Sheth — Motilal Oswal — Analyst

Is it clear now?

Rahul Talele — Group Chief Executive Officer

Yes, yes, better.

Pritesh Sheth — Motilal Oswal — Analyst

Yeah. So I was talking about the business development front. We have a very strong target of signing new projects worth INR7,000 crores JDA. So I just wanted to understand which projects are then, which location this — will this project be located? And will this be outside purchase or JDA?

Rahul Talele — Group Chief Executive Officer

So basically, whole year, we have signed seven non-binding term sheets. These projects are located in Pune and Mumbai. And correctly, we are in — advanced level of discussion in Bangalore as well. So the diversification is there. But the major portion will come from Pune around 60% to 65% or 70% and around 30% of value — the JDA will come from Mumbai and Bangalore. And in terms of your second part of the question, so basically, it is a mix of JDA and the outright — structured outright transactions. So a couple of transactions are outright transaction and five transactions are JDA transaction.

Pritesh Sheth — Motilal Oswal — Analyst

Okay. Okay. Yeah. Understood. And my second question is on the interest rate hike. Like I know it’s too early to talk about it and the quantum is relatively low as of now. But then after this rate hike, like, are you seeing any change in terms of your conversation with your customers? Like are there any customers planning to prepone their purchase or planning to postpone it for a few months to get clarity on the trajectory of interest rates. Like is there any change in the conversation that you’re witnessing in the — with your customers?

Rahul Talele — Group Chief Executive Officer

Not actually, Pritesh. To be very honest, if you see four, five years back, the interest rates were double digit number. So there is a good amount of delta there in terms of the absorbing of that interest rate hike. But having said that, on the other side, there is a good amount of wage growth also across the industry. That is quite visible, particularly in the markets where we are currently working upon, the Pune, Bangalore market are more revised on the IT population. Where else the growth, the job I mean, the salary increase are very high. So considering that, I don’t think that will impact in the near future. But certainly, that it can get impacted if it crosses beyond 100 basis points.

And at the same time, if you see the affordability, still one of the lowest in last couple of decades. So there is a good amount of room left over there. And most of our customers are end users. So they — I mean these investors, they are not the investors, they are end users. So ultimately, they are keen to purchase the property. Yes, for a couple of percentage or 5%, 10% of target audience, they can hold their decisions if the interest rate goes beyond further increases. But certainly, they will save for that down payment, and they will come to us to maintain their EMI as it is.

Pritesh Sheth — Motilal Oswal — Analyst

Yeah, yeah. Right. Understood. Okay. That’s all from my side.

Rahul Talele — Group Chief Executive Officer

And if required, we can come up with some kind of little incentives, intermittent incentives also to customers in order to maintain our — the growth projections.

Pritesh Sheth — Motilal Oswal — Analyst

Okay. So it may happen, but hasn’t happened yet, right? No, in the incentive side…

Rahul Talele — Group Chief Executive Officer

In fact, we are increasing our prices, but I’m still maintaining the monthly run rate.

Pritesh Sheth — Motilal Oswal — Analyst

Okay, okay. Sure. Understood. Okay. Thank you. That’s all from my side. Thank you very much.

Rahul Talele — Group Chief Executive Officer

Thank you.

Operator

Thank you. We take the next question from the line of Alpesh Thacker from Antique Stock Broking Limited. Please go ahead.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Thank you for the opportunity and congratulations for a steady performance. Sir, my first question is on the Bangalore portfolio. So what exactly is happening there? So two, three years back, we had a target that we wanted to diversify into Pune and other markets like 25%, 75%, which has happened via MMR portfolio. But Bangalore portfolio has not picked up that well like compared to like MMR. So what exactly is happening? Is that we are not able to get deals over there? Or what exactly is happening? Can you throw some light?

Rahul Talele — Group Chief Executive Officer

Thank you, Alpesh. See, for Bangalore portfolio, we are serious for Bangalore portfolio as well. And that’s the reason we have moved one of our senior resource to take care of the Bangalore region. Currently, we are evaluating a three, days days, particularly in the northern part of the Bangalore and closer to airport. But at this moment of time, we have not closed any term sheet. But at the same time, see we are positive that we’ll see some positive news in coming quarters over there. So to answer your question, we are positive about the Bangalore market, like what we are doing currently in Mumbai. Maybe in this financial year, you will see a good amount of growth in Bangalore also.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. Okay. Got it. Thanks a lot. And my second question is, like as you mentioned in your opening remarks that you want to diversify into Pune market itself into different projects. We have a good dependence on Life Republic project, and now we are targeting other micro markets. So can you just give a ballpark whether like how was — how much was the dependence for, let’s say, three, five years on an average on the Life Republic? And how do you see it moving over next couple of years?

Rahul Talele — Group Chief Executive Officer

So last year, the Bangalore market — sorry, Life Republic dependency was close to 40%. This year, it got reduced to 31%, and we are confident that next year, it will be closer to 24%, 25%.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Okay. Okay. So last year, it was 40%, right?

Rahul Talele — Group Chief Executive Officer

Alpesh, this will not be because of the reason that we are going to sell less at the township. We are going to sell from the modern township portfolio. So in terms of percentage figure, we’ll go down. But at the same time, we are confident that we’ll continue to remain at the top in terms of the sales performance of township in the entire Pune market.

Alpesh Thacker — Antique Stock Broking Limited — Analyst

Got it. Got it. Okay. That’s it from my side. Thank you.

Operator

Thank you. We take the next question from the line of Mr. Manoj Dua from Geometric. Please go ahead.

Manoj Dua — Geometric — Analyst

Thank you for taking my question and congratulation for the Company for good results and many metrics, I think Company has performed. I have one question regarding…

Rahul Talele — Group Chief Executive Officer

Manoj, if you can speak a bit louder.

Manoj Dua — Geometric — Analyst

I have one question. Is Company looking at plotting as a sector, how is Company seeing at plotting as a projects, are we doing a — Company doing plotting and it is getting more and more favorable with waste [Phonetic] into the plotting?

Rahul Talele — Group Chief Executive Officer

So Manoj, we are evaluating a couple of plotting proposals as well in Pune at the advanced stage of discussion. So we are curious about plotting. So in fact, we have executed, we have delivered our first plotting project in township, we got a fantastic response. And we are planning to have one more sector in township, but we are still deliberating particularly for township. But certainly, we are looking for opportunity in the plotting space as well because over there the turnaround is very quick, we can complete the project in one year. So considering that and considering the positivity towards plotting, positivity to have the independent houses, so we are evaluating a couple of deals for that.

Manoj Dua — Geometric — Analyst

Okay. Anything more on the…

Rahul Talele — Group Chief Executive Officer

[Speech Overlap] of time.

Manoj Dua — Geometric — Analyst

Okay. Anything on the Planet deals, anything with that partner?

Rahul Talele — Group Chief Executive Officer

Sorry?

Manoj Dua — Geometric — Analyst

Any newer discussion on the deals with the Planet which you were — because in the last press release that you are looking for the more BDA with the Planet?

Rahul Talele — Group Chief Executive Officer

So we have calculated first deal that we did at township, and post that we have done the secondary transaction, we have given the exit to our private equity partner, and Planet has entered into that particular project. Now we are working on the third project. So very soon, that can be closed. So that is currently at the advanced stage of discussion with Planet.

Manoj Dua — Geometric — Analyst

Okay. Thank you and best of luck.

Rahul Talele — Group Chief Executive Officer

Thank you, Manoj.

Operator

Thank you. We take the next question from the line of Mr. Rohit Balakrishnan from ithoughtpms. Please go ahead.

Rohit Balakrishnan — ithoughtpms — Analyst

Hello. Am I audible, sir?

Rahul Talele — Group Chief Executive Officer

Yes. Hi, Rohit.

Rohit Balakrishnan — ithoughtpms — Analyst

Yeah. Hi, sir. Sir, just two clarifications, first of all, you’re saying this, here you’re targeting an annual of [Indecipherable].

Rahul Talele — Group Chief Executive Officer

Yes. Yes, this financial year. It will be 3 million square feet plus in the earnings for sure.

Rohit Balakrishnan — ithoughtpms — Analyst

Got it. Understood. Thank you for that. And sir, in terms of my first question was in terms of BD. So you said you have seven non-binding term sheets. So I mean — so I mean just from a layman perspective, these are like a bank deal or I mean what is that now? Which will…

Rahul Talele — Group Chief Executive Officer

So basically, see it is a done deal, half-done deal from the perspective of commercial. The due diligence and the other parts are ongoing, because I have mentioned that in our earlier interaction that Kolte-Patil follows a very exhaustive due diligence process. So we conclude the commercial discussions with the land owners, with the partners. And once that is done, we sign the non-binding term sheet and post that we work on the due diligence part. That does not mean see, half of the due diligence is completed already, and we are working on the design front as well as the launch front, and casually working on the definitive agreement. So to answer your question, see, we have gone far ahead in terms of the closure of the sales.

Rohit Balakrishnan — ithoughtpms — Analyst

Understood. So this — in terms of square footage, how much million square feet across the seven funds that you’re talking about roughly?

Rahul Talele — Group Chief Executive Officer

Roughly around 6.5 million to 7 million square feet.

Rohit Balakrishnan — ithoughtpms — Analyst

Okay. Got it. And sir, the other question that I had was in terms of, you said you’re launching close to INR4,000 crores of projects in FY ’23, it was more than — this would, again, what would this mean in terms of square foot?

Rahul Talele — Group Chief Executive Officer

That is close to 5 million square feet.

Rohit Balakrishnan — ithoughtpms — Analyst

Understood. Understood. And sir, last question. So this year was a phenomenal year for us in Bombay. It is almost, I mean, this is INR450 crores, what is the outlook for FY ’23 in Bombay, I mean how much of these 5 million square feet launches for — in terms of topline, because launching maybe lower in terms of square footage in Bombay. Would be from Bombay and what kind of number are you targeting? And sir, also if you can just maybe share some bit on the economics in terms of either margins or IRR in Bombay, if you can just share more on that. Given the cost are increasing, I mean given the new environment, if you can just share something on our — around the economics of society redevelopment in Bombay that you’ve been doing and the kind of margins that we expect on the projects that we have sold.

Rahul Talele — Group Chief Executive Officer

So Mumbai, this financial year, we are comfortably — we have taken a target of crossing INR650 crores in Mumbai. And in terms of the margin for the Mumbai project, see, basically, IRR is very good, because our first investment is post vacation or at the time of vacation of the society. So in terms of IRR, it is good and more than 25% of IRR, we generally — every part for the Mumbai portfolio, particularly a redevelopment portfolio.

Rohit Balakrishnan — ithoughtpms — Analyst

Okay. And sir, margins would be how much like EBITDA if I can ask?

Rahul Talele — Group Chief Executive Officer

Margin would be in the range of 20% to 25%.

Rohit Balakrishnan — ithoughtpms — Analyst

Okay. And sir, do you — I mean in terms of completion, where are — when do you expect, let’s say, last year, whatever you sold, when do you expect them to complete like handover and like booking in terms of our P&L?

Rahul Talele — Group Chief Executive Officer

Sorry, I didn’t get it. Can you please come again?

Rohit Balakrishnan — ithoughtpms — Analyst

Sorry. I was saying, sir, in terms of the projects, I’m just asking in terms of time line now. So for example, the projects that you sold last year in Bombay, when do you expect them to deliver in — deliver them and record them in the P&L? Like what is the time line, two years?

Rahul Talele — Group Chief Executive Officer

In next 18 months to 36 months.

Rohit Balakrishnan — ithoughtpms — Analyst

Okay. So between around 1.5 to 3 years?

Rahul Talele — Group Chief Executive Officer

Yes.

Rohit Balakrishnan — ithoughtpms — Analyst

Okay, sir. Okay, sir. And last final question — yeah, sorry, sir. Sorry.

Rahul Talele — Group Chief Executive Officer

See, just for a clarification. See, basically, when I’m talking about the seven non-binding term sheets, there can be a situation that one or two deals won’t happen considering there is any complications in the legal or something like that. But having said that, all commercial discussion is close for these seven deals.

Rohit Balakrishnan — ithoughtpms — Analyst

Fair enough, sir. I understand. I understand. And sir, last question, so in terms of this year as we sold — I mean our sales value, presales was around INR17 crores to INR40 crores, around 2.7 million square feet of presales, which one of the — which is probably the highest. So what is the kind of numbers you are looking at, you said 25%, 30%, I mean — so can we do close to 3, 3.2, 3.3 kind of numbers. Is that what we’re looking at? I mean, this is in the context of general expectation headwinds around slowdown, etc. So just wanted to get your view.

Rahul Talele — Group Chief Executive Officer

Yes, yes. So Rohit, basically, we are running for 2,200 to 5,200 2,300 numbers in the current financial year. If you translate that into the square footage, it will be anywhere in the range of 3.3 million to 3.4 million square feet.

Rohit Balakrishnan — ithoughtpms — Analyst

Right. And I mean, you don’t see any kind of like a slowdown or do you see the momentum continuing sir basically?

Rahul Talele — Group Chief Executive Officer

No, I don’t think there is a slowdown impact that we are envisaging in the near future. We are very bullish. That’s the reason now we are concentrating on our business development. And so Rohit, see let me put it in a completely different way. This year will be a year of BD closures. This year will be a year of launches, this year will be a year of delivery for us.

Rohit Balakrishnan — ithoughtpms — Analyst

Sure, sir. I wish you all the very best, sir. Thank you.

Rahul Talele — Group Chief Executive Officer

Thank you. Thank you, Rohit.

Operator

Thank you. We take the next question from the line of Himanshu Upadhyay from O3 Capital. Please go ahead.

Himanshu Upadhyay — O3 Capital — Analyst

Yeah. Hi. My first question was, what is the pending collection in sold inventory of launched projects and construction spend remaining and the value of pending inventory to be sold in the launched projects?

Rahul Talele — Group Chief Executive Officer

Pawan, would you like to answer this?

Pawan Lohiya — Assistant Vice President and Head of Finance

Yeah. So the pending inventory, the launch project would be around 1.8 million square feet, around 18 lakh square feet. The total receivables from sold would be around INR1,500 crores. And the balance construction spend would be around INR1,400 crores to INR1,500 crores.

Himanshu Upadhyay — O3 Capital — Analyst

And the value of this 1.8 million square feet of pending sales, inventory will be how much?

Pawan Lohiya — Assistant Vice President and Head of Finance

It will have an APR of approximately 6,000.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. Okay. And one thing. See, currently, based on the presentation, we have said that we want to grow by 30% — 25% to 30%, okay, on 2.7 million square feet of sales last year, okay? But the inventory currently we have is around 2 million square feet in the projects which have already launched, okay? Which are the big ticket items that you expect, which will help you get 25% growth? So we want to sell around 3.5 million square feet of this thing, okay? So out of the priority launches, two, three, where you think are the most important two, three projects, which we need to look at?

Rahul Talele — Group Chief Executive Officer

Himanshu, see, basically, we classify our inventory, the opening inventory in a quarterly basis. So that at the — we just need to have a 2x or 3x of the inventory at the beginning of quarter. So that is sufficient enough to close our numbers of that particular quarter. Having said that, so there are multiple launches lined up like Baner, which is at the advanced stages of approval at this moment. There are a couple of sectors at townships, Giga projects and two projects in Mumbai. So you will see launches in all these three projects in next two to three months.

At the same time, if you see the progress of the last financial year, so whatever the available inventory we had, we have sold 63% out of that. So that shows our capability to sales, the equal number from the limited inventory. So that is also good. And particularly, it helps in preserving — it helps in preserving the unnecessary cash flow getting locked in the operational activities. And maybe that is one of the reasons that our operating cash flow numbers are also promising.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. And can you expect the collections and construction spend will also increase in line with sales growth? Or you think that collections and construction spend will be growing at a slower pace than the sales growth, what you are expecting?

Rahul Talele — Group Chief Executive Officer

No. See, basically, it is a complete cycle. So you will see the significant jump in collection as well as the construction as well. So we are running to have around operating free cash flow of around INR700 crores in this financial year.

Himanshu Upadhyay — O3 Capital — Analyst

And one more thing. In between, we were doing a lot of development, DM contracts, okay. Are we still thinking of DM contracts or we are thinking about outright purchases also? And the revenue is generally very less and some amount of risk is already there. So what’s your thought on what you’re trying to do here?

Rahul Talele — Group Chief Executive Officer

Himanshu, we are — currently wherever we are working on DM, we are continuing with those projects. But as discussed in our earlier interaction, we are very selective to have a DM in our portfolio because we don’t want to carry with that kind of rate with a limited return. So we are very selective in that particular space. So our — you will see our BD activities, particularly in JDA, largely in JDA and then structured our price at last year DM.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. And one final thing. On the prices of land, okay, so outright purchases will be generally in Pune and Bangalore? And how has the prices behaved, because we are seeing significant — or some amount of price increase in the residential market. Are we seeing even price rises on the land side.

Operator

Sorry to interrupt, this is the operator. We request you to get back in the queue.

Himanshu Upadhyay — O3 Capital — Analyst

Last question. Last question.

Operator

One question, please.

Rahul Talele — Group Chief Executive Officer

Let me answer. Yeah, Himanshu, yes I do agree there is a price rise in last 1 year or 1.5 years. There are multiple results for that. See earlier, 1 acre was having a potential of x amount, but as now that same 1 acre is having a potential of almost 1.5x to 2x because of this unified DCR. So because of that, in terms of the fee, that also getting additional per square foot in terms of the land. At the same time, developer is getting the deal in terms of the saleable area potential at the — maybe at the same rate or the better rate impact. That’s a win-win for both.

Himanshu Upadhyay — O3 Capital — Analyst

Okay. Yeah. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Darshan Zaveri [Phonetic] from Crown Capital. Please go ahead.

Darshan Zaverix — Crown Capital — Analyst

Hello. Am I audible?

Operator

Yes, go ahead.

Darshan Zaverix — Crown Capital — Analyst

Yeah. Congratulations on a great set of numbers. I just wanted to ask how much revenue will we book in FY ’23? And what kind of EBITDA PAT margin can we expect from that as per CCM method or that way?

Rahul Talele — Group Chief Executive Officer

So during our opening remarks, we have mentioned that the deliveries will be more than 3 million square feet. If you — it’s a simple mathematics. If you multiply that by our average realization of close to 6,000, so the revenue numbers will be close to 1,800 plus. And EBITDA, considering the PAT, there is a good amount of timing mismatch of revenue recognition and overhead. Considering the additional revenue recognition, the EBITDA margins will be very good. It will be close to 25%.

Darshan Zaverix — Crown Capital — Analyst

Okay. That’s — that’s very good to know. And just another question. What do we see as a long-term vision in maybe three years is something we are launching, targeting INR7,000 crores sales or something? Could just some ballpark figure of what you are expecting by FY ’25 or ’26 in three years is some guidance you could give from that.

Rahul Talele — Group Chief Executive Officer

So basically, we call it a 3 million, 4 million, 5 million, 3.3 million this year, maybe 4 million and post that 5 million.

Darshan Zaverix — Crown Capital — Analyst

Okay. Okay. That’s a lot of beneficial. All the best. Thank you.

Rahul Talele — Group Chief Executive Officer

Thank you.

Operator

Thank you. We take the next question from the line of Bajrang Bafna from Sunidhi Securities. Please go ahead.

Bajrang Bafna — Sunidhi Securities — Analyst

Congratulations for a very good performance and especially on the presales side. Sir, my question pertains to — on the execution side, we were operating at, let’s say, 2 million to 2.5 million square feet for last, say, last four, five years. Now we have moved to 2.7 million, and we are planning to go to almost 4 million to — maybe 5 million square feet over the next two to three years. So what sort of execution thresholds that we are putting in terms of hiring or in terms of adding the workforce to execute multiple projects. Because right now, we might be executing 14 or 15 projects. But when we move towards that doubling the rate what we are currently, how we are going to take care of that execution risk or the execution part. Thank you, sir.

Rahul Talele — Group Chief Executive Officer

Bajrang, in this regard, if you see our current under-construction projects are around 8 million to 10 million square feet. So that itself shows our operational capabilities. This year and next year, we are going to deliver more than 3 million square feet that again shows our operational capabilities. Beyond that, see we treat every project independently. So we have a separate team at the project and the central team who gives all kind of support to those teams. So we have already strengthened our centralized procurement contract, the technical team and wherever required, we hired a team further to the share of those specific projects.

So I don’t think that we are going to face any kind of problem. In fact, we are very well pledged as compared to the two scaleups. So and in terms of the general business controls, we have now classified this Company into type SBOs. That also curtailed down the bureaucracy in the Company. So there are type two SBOs in Mumbai, two SBOs are in Pune, one in Bangalore. So all key say, out of 10 key decisions, seven key decisions can happen at the SBO level itself. So dependency on the group in terms of the decision is curtailed down and the decision making is getting quicker and quicker. And in terms of see, we have hired multiple people from the good brands of peers and people are willing to join us. So across the industry, we are getting a good response. So people are willing to join with us. So that trend is — I can see that trend is getting continued for the next year.

Bajrang Bafna — Sunidhi Securities — Analyst

Got it. Sir, my — I just wanted to get for the benefit of me and maybe for others also, if I’m not wrong, we have already created positions like CMO or COO in the Company, and those positions have been filled up and new team has been hired under them. So if you could just say what sort of workforce that has been recruited over the last maybe 6 to 12 months, in the last 6 to 12 months, that number will be really helpful, sir.

Rahul Talele — Group Chief Executive Officer

Okay. So basically, we have filled the position of COO. At the same time, there are the sales head, city sales heads are also in place. At the same time, we are now still building the strategy team. So that is five higher people are working in the strategy team. I mean, some of premium lead school team who have a good real estate exposure with the peers are with us. Apart from that, we have this five SBO [Phonetic] guys. So these are, again, the business people. So they understand the business very well. So a couple of — I mean, three people out of these five are with us since last seven, eight years. So we have hired the multiple mid-level to senior level team in the recent time. And at the same time, we are trying to align everybody’s interest towards one common goal and through our innovative incentive policies and that kind of the employee retention program. So that more than — that may be one of the reasons that more people from the industry are willing to join us at better terms.

Bajrang Bafna — Sunidhi Securities — Analyst

Got it. Got it. So just to summarize this, executing 30 or 40 projects even at a given point of time is no more a constraint for Kolte and doing it internally or maybe through outsourcing model, both will be deployed to get to those numbers, right?

Rahul Talele — Group Chief Executive Officer

Yes, yes. Completely agree. So basically, we believe in the outsourcing model also. So we have the array of contractors available who are working with us from last couple of decades. So I mean, so scale-up is not an issue particularly from the construction point of view and the sales side, we are already delivering very good numbers over there. So I don’t think that is a challenge at all for us.

Bajrang Bafna — Sunidhi Securities — Analyst

Thank you and all the very best, sir.

Rahul Talele — Group Chief Executive Officer

Thank you.

Operator

Thank you. We take the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Hello. Hello.

Operator

You may go ahead, sir. The line for him has dropped. We’ll move on to the next question. We have the next question from the line of Manish Shah from Vajani Securities. Please go ahead.

Manish Shah — Vajani Securities — Analyst

Sir, I have a — question is regarding booking. Previously, a lot of booking is to happen at the time when the project used to be launched. But post now, because of the mistrust [Phonetic] in the booking business and all, now the bookings is usually when at the post you get the OC. So what is the trend at Kolte-Patil for that? How much happens on booking? How much happens on launch — from when I say booking on launching of the project? How much happens in the interim and how much happens at the ready-to-move stage?

Rahul Talele — Group Chief Executive Officer

It depends on the product mix, and it depends on the what category we are working upon. If we see the affordable category, at the time of launch, when I’m saying launch, the first six months of the launch, generally, we try to cross 50% of the sales for that. And before we complete the RCC, we try to finish the entire sales for those projects. And we have delivered on these similar guidelines in the past, and we are confident that we are going to deliver on similar lines in the future also. At the same time, on — we will disclose [Phonetic] in a premium project, wherein at the first six months, you’ll see the velocity close to 30% to 40% odd. And maybe another 40% odd till the time you complete the RCC and 20% at the time of finishing. But very limited inventories left with us of RTMI inventory. But in fact, we are the — maybe — we have a very limited RTMI inventory if you compare ourselves with the peers.

Operator

Thank you. We take the next question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.

Parikshit Kandpal — HDFC Securities — Analyst

Congratulations on a strong sales for the year and the robust guidance. My first question is on FY ’22 sales of INR1,700 crores odd. If you can break it in terms of how much of the fiscal sales and how much was the new launches?

Rahul Talele — Group Chief Executive Officer

So, Pavan [Phonetic], we have this data really at year-end. Parikshit, we’ll get back to you on this. See mostly out of this a ballpark number I can give. See, out of this INR1,739 crores mostly [Indecipherable] sales. So that is what I mentioned few minutes back. Whatever the inventory we had, so we could sale 63% of that inventory during the last quarter into this financial year.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. My question is that, you had said that early in the call that INR1,000 crores of new launches happened in FY ’22 and this year you’re thinking to launch projects worth 4,000 crores. So that will be new launches. So, there will be a major contribution coming in from these launches. So, even if we sell — so the first one — second question is out of this INR4,000 crores new launches, is it like entirely hitting the market or is in phase like how much of that will actually come into market in the FY ’23. This INR4,000 crores looks to be very big number.

Rahul Talele — Group Chief Executive Officer

So, INR4,000 crores is the launch potential. So certainly, if we try to go in the market with the multiple phases in the project. For example, [Indecipherable] project is having a potential of 1.5 million square feet. So, at the first go, we will launch 0.6 million square feet out of that. So, on a ballpark number, you can consider that half of that will get launched and depending on the outcome of those launch, we generally try to segregate our RERA into multiple registration certificates.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. The next question is on the INR7,000 crores of newly addition business development, seven deals at non-binding level, you are lowering financial commercials have been closed, that is INR7,000 crores all these deal happens, you said about two will be outright and I think five will be JDA. How much will be the total outgo on land on which you deal or if you can just break up these seven deals into Pune and Mumbai? Like how many of these are Pune in terms of value in Pune, Mumbai and Bangalore, that will be great. And also on the land, how much is the outgo on the outright?

Rahul Talele — Group Chief Executive Officer

Just for a clarity, Parikshit see INR7,000 crores is the target that we have taken for a bidding in this financial year. Out of that, whatever the deals that I have just mentioned, the seven deals, it is having a GDV of around INR5,000 crores odd. For that, our investment — the upfront investment requirement is in the range of INR300 crores to INR325 crores odd.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. And these are in which locations? If you can break up this like out of this in terms of value, how much will be Mumbai out of this INR5,000 crores, and how much Pune and maybe how much in Bangalore?

Rahul Talele — Group Chief Executive Officer

So out of this INR5,000 crores, around INR3,700 crores will be Pune and around INR1,300 crores is from Mumbai.

Parikshit Kandpal — HDFC Securities — Analyst

And these are not the redeveloping? Mumbai INR1,300 crores is it redevelopment or is it like [Indecipherable]?

Rahul Talele — Group Chief Executive Officer

One deal of redevelopment and one deal of JDA.

Parikshit Kandpal — HDFC Securities — Analyst

And in Pune, the INR3,700 crores in all JDAs right on a revenue share basis?

Rahul Talele — Group Chief Executive Officer

In Pune, two outright and two JDA.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, great. And I wish you all the best. I think the pipeline looks to be quite strong, but you are able to deliver, I think above that 20% number. Looking at the number, the potential launches which you have now. And just lastly, if I may squeeze in. On these old [Indecipherable], which we have Pune, so like on other lands, so any plans of bringing them — upfronting them for development in this financial year?

Rahul Talele — Group Chief Executive Officer

So [Indecipherable] was the real project for us and as a strategic cause, we have decided not to pursue that particular project.

Parikshit Kandpal — HDFC Securities — Analyst

Any reason why?

Rahul Talele — Group Chief Executive Officer

It was DM project.

Parikshit Kandpal — HDFC Securities — Analyst

Okay. I’m talking about, we have about a million square feet of land right [Indecipherable] and then the Goregaon Park area, we had some land parts which you were looking to explore commercial or mixed use kind of development planning to do?

Rahul Talele — Group Chief Executive Officer

Okay. So all this still we are deliberating. There are certain things that we are addressing, at the ground, but we have not considered the launch of our project in this financial year. As a sale for the other internal inventory. So particularly when it comes to our premium inventory, like a [Indecipherable] we are deliberating because there is — it’s at a very strategic location. So, considering, we wanted to have the commercial startup development over there. So, considering the retail slowdown in the commercial space, we are still deliberating. And if we get a positive signals from the market. So, planning and everything is ready with us. It is just, we need to submit the plans to the corporation.

Parikshit Kandpal — HDFC Securities — Analyst

And what will be the ready to move in inventories right now RTMI?

Rahul Talele — Group Chief Executive Officer

So, RTMI currently would be less than INR100 crores at entire portfolio.

Parikshit Kandpal — HDFC Securities — Analyst

Okay, thank you, sir. Those are my questions. Thank you and all the best.

Rahul Talele — Group Chief Executive Officer

Thank you.

Operator

Thank you. We take the next question from the line of Anuj Sharma from M3 Investment. Please go ahead.

Anuj Sharma — M3 Investment — Analyst

Yeah. Thank you. One quick question. Based on your demand assessment, what is the price rise we can have in all three cities without affecting the volumes in FY ’23 and FY ’24. Just some estimates into how buoyant location in terms of pricing?

Rahul Talele — Group Chief Executive Officer

Anuj, comfortably, we are envisaging price rise of 3% to 7%, 8%; on average you can consider 5% price hike.

Anuj Sharma — M3 Investment — Analyst

Okay. And the situation is same in all three cities, which you are present right, three to seven?

Rahul Talele — Group Chief Executive Officer

Yeah. That’s correct.

Anuj Sharma — M3 Investment — Analyst

And just one, one question on…

Rahul Talele — Group Chief Executive Officer

Anuj, with the improved price, we could sell the inventory of one of our Mumbai project, the target of quarterly it completed in just one month.

Anuj Sharma — M3 Investment — Analyst

All right. That’s great. And one question on earlier a gentleman asked about plotting. So since you are considering it, what were the challenges earlier and why are we finding this segment investing given that it’s quick turnaround?

Rahul Talele — Group Chief Executive Officer

So, earlier, branded developer was into plotting. So we — in fact, we started to plotting two and a half, three years back at our flagship project township. We have completed, we have delivered all those plot. And there is a good amount of demand also for the plotting within the township and considering that the earlier plotting was — people used to really — maybe it is a post COVID scenario. There is a good amount of demand particularly in a plotting. People want to have that kind of the plotted spaces, independent spaces. So we want to engage on this opportunity. Earlier, it wasn’t there.

Anuj Sharma — M3 Investment — Analyst

All right. Does it entail any change in strategy or in terms of your employees are, how business classified? Or it’s more or less similar in terms of how we go about it?

Rahul Talele — Group Chief Executive Officer

Sorry, I didn’t get it.

Anuj Sharma — M3 Investment — Analyst

So do you have to restructure your employee base or any change in strategy to acquire such projects for plotting and selling and marketing those?

Rahul Talele — Group Chief Executive Officer

Not at all. See, just imagine, so plotting is just you have to build the road, you have to build the club house, you have to build all those infrastructure. So, that is anyhow we are doing that for our regular project as well. So, it is in fact a subset of our regular capacity.

Anuj Sharma — M3 Investment — Analyst

Alright. Thank you so much.

Operator

Thank you. We take the next question from the line of Faisal Hawa from HG Hawa and Cooperation. Please go ahead.

Faisal Hawa — HG Hawa and Cooperation — Analyst

Yeah. Can you hear me, sir.

Rahul Talele — Group Chief Executive Officer

Yes.

Faisal Hawa — HG Hawa and Cooperation — Analyst

Sir, how do we feel that any project in Bombay could come up and what is your sense about the demand in the Mumbai market? And secondly, Pune, which micro areas you feel that could be a game changer for us? And how is this Republic project going? And if the sales, they are picking up?

Rahul Talele — Group Chief Executive Officer

So I’ll answer in a reverse way. So, regarding Life Republic, it is the highest-selling project of Pune in last calendar year and we are confident that it will be one of the top selling project of this financial year as well. In terms of the micro market, so wherever we have the presence in Pune as of now, we want to expand our base beyond that and particularly in those micro markets where we don’t have presence and the other peers have the presence. So, we always — we have — for all projects, wherein the competition has a presence, we could sell good in terms of numbers. So we are continuing with that kind of strategy. In fact, couple of deals I have mentioned is from those micro markets. We are very bullish, particularly about the Western and Eastern micro market, [Indecipherable]. That is our target area, micro market in Pune.

Faisal Hawa — HG Hawa and Cooperation — Analyst

And any thoughts about the Mumbai market and how we could really gain from it?

Rahul Talele — Group Chief Executive Officer

What was your question about Mumbai?

Faisal Hawa — HG Hawa and Cooperation — Analyst

How do you feel the Mumbai market is emerging sales wise and how we could benefit from it?

Rahul Talele — Group Chief Executive Officer

So for Mumbai, we want to be a niche player in Mumbai market and that is quite visible for deliveries. We are getting multiple inquiries of the nearby societies. So, they are ready — they are getting offers from other developers, but still want to go with us at a better terms for the developer. That itself shows there is a good amount of brand trust for us in Mumbai and we want to engage on that particular brand trust in Mumbai. And we don’t want to take that big exposure for one particular locality, we want to have that kind of diversification in Mumbai with a project topline potential of INR400 crores, INR500 crores to INR700 crores, INR700 crores, so that we can sale that in couple of years and we can construct that in three years.

Faisal Hawa — HG Hawa and Cooperation — Analyst

Do you feel that this real estate business requires a mix of promoters involvement as well as a lot of professional management due to it’s — some [Indecipherable] is there in the system. And how could we resume a growth beyond this because we have to — say the Godrej Properties there or even Mahindra Lifespace where we are much more professional and we are able to scale up the business and monetize most of our properties much earlier? And why are we not looking at REITs also as an option to raise cheaper funds?

Rahul Talele — Group Chief Executive Officer

So, I believe the right rate of professional and the promoter management is always beneficial for the company. Because promoters are in the system for the –right from the inception of the company and professionals can bring that type of capabilities and knowledge and new practices in the system, so a right balance is always beneficial for the company and that is what we are trying to do. It is a very good balance of professional standards, the second generation of promoters in the company. And what was your second question?

Faisal Hawa — HG Hawa and Cooperation — Analyst

About REITs also and whether we can — how can we scale up more? Even if we want to be in these two markets, how can we scale up more, so that the growth rate is much higher? Because finally we have most of the properties ready and the experience is huge.

Rahul Talele — Group Chief Executive Officer

So see our debt — if you see our debt numbers — debt to equity number is all time low for us. So, our net debt is hardly INR130 crores odd. So that is equivalent to my 20 days’ collection. So — and in terms of — and there is a good amount of headroom there to leverage again and that is an easy source of fundraising. So, in fact, couple of banks are ready to give us general purpose corporate loans and so. So, we’ll be having a complete flexibility. We can utilize those funding for the BD purposes as well. And at the same time, your suggestion in terms of the REIT, we have a very limited commercial portfolio and we, particularly operate in commercial segment from a startup perspective. We build limited commercial buildings with a small, small [Indecipherable] that we try to sale during the construction itself. So, we don’t have annuity assets with us.

Faisal Hawa — HG Hawa and Cooperation — Analyst

Okay. Understood.

Operator

Thank you. As there are no further questions from the participants, I now hand the conference to Mr. Rahul Talele for the closing comments. Over to you, sir.

Rahul Talele — Group Chief Executive Officer

Thank you once again for your interest and support. We will continue to stay engaged. Please be in touch with our Investor Relations team for any further details or discussions. Looking forward to interacting with you next quarter.

Operator

[Operator Closing Remarks]