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Puravankara Ltd (PURVA) Q1 FY23 Earnings Concall Transcript

PURVA Earnings Call - Final Transcript

Puravankara Ltd  (NSE:PURVA) Q1 FY23 Earnings Concall dated Aug. 12, 2022

Corporate Participants:

Neeraj GautamExecutive Vice President, Finance

Abhishek KapoorExecutive Director and Chief Executive Officer

Analysts:

Aryan Sharma — Infinity Capital — Analyst

Samar Sarda — Axis Capital Limited — Analyst

Nikita GuptaLKP Securities — Analyst

Dikshit MittalLIC Mutual Fund — Analyst

Ashutosh MittalAxis Capital Limited — Analyst

Pritesh ShethMotilal Oswal — Analyst

Niraj MansingkaWhite Pine Investments — Analyst

Akshay GattaniUBS Group — Analyst

Ronald SiyoniSharekhan — Analyst

Raj ShahRS Investments — Analyst

Mihir DesaiDesai Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Puravankara Limited Q1 FY ’23 Earnings Conference Call, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Samar Sarda from Axis Capital Limited. Thank you, and over to you, Mr. Sarda.

Samar SardaAxis Capital Limited — Analyst

Thanks, Nirav. Welcome again for the results call for Puravankara Limited. Thanks for taking the time out.

From the management, we have Mr. Abhishek Kapoor, the ED and the CEO of the Company. We also have Vishnu Moorthi, who is heading Risk and Control, and Neeraj Gautam, Executive Vice President of Finance.

Can I request Neeraj to start with his initial comments, post which we can open the floor for Q&A.

Neeraj GautamExecutive Vice President, Finance

Thank you, Samar. Good afternoon, everybody. Thank you for joining us at Puravankara Limited’s first quarter of FY 2023 earnings conference call. My name is Neeraj Gautham, I’m the Executive Vice President, Finance of Puravankara Limited.

The presentation and financial results for the quarter ended June 30, 2022 have been uploaded on the stock exchanges. I presume you have all had a chance to go through it — through the results and detailed presentation designated by us. I would like to take you all through the key highlights for the quarter. Following that, my colleagues and I will be happy to answer any questions you may have, while listening to feedback and suggestions from you.

We believe real estate will continue to witness sustained growth this year and coming years for — in our country. The latest increase in home loan interest rate and global economic environment will have very a little impact on housing demand in our country. We have started the financial year on a very good note. We are delighted to say that the Company has achieved its highest ever sales in the first quarter of any financial year. And this is remarkable as it has been achieved in this environment without any new launches.

We have registered the highest ever first quarter sales this quarter, reinforcing the team’s dedication backed by sound leadership and the pillars of quality, trust and customer experience that Puravankara brings to the table. The quarter sales touched INR513 crores, riding on the favorable market sentiment and rising homeownership aspirations. The intact sales were achieved from booking of inventory on ongoing projects. The sales volume during Q1 FY ’23 stood at 0.69 million square feet, up by 64% year-on-year basis. As a result, sales value during Q1 FY ’23 jumped by 63% to INR513 crores, compared to INR314 crores in the first quarter of the previous financial year.

Coming to the profit and loss account for the quarter. Our consolidated revenue for Q1 FY ’23 was INR297 crores. EBITDA for the quarter was in INR139 crores, implying an EBITDA margin of 47%. During the quarter, we achieved a profit after tax of INR35 crore, implying a PAT margin of 12%.

We have continued to maintain sustainable levels of debt in the quarter. Our net debt was INR1,889 crores. We have maintained similar debt levels for the last one year, ensuring that we are optimally leveraged to fast track our growth while keeping our feet on the ground. As on 30th June 2022, our average cost of debt was 10.6%.

Coming to the cash flow management for the quarter. Our operating inflows for the quarter Q1 FY ’23 was INR667 crores, up by 16% from INR575 crores in Q4 FY 2022. As on June 2022, the balance collection from sold units in all launched project stood at INR2,550 crores; the balance cost to be incurred stood at INR2,849 crores, combined with the unsold receivables of INR4,394 crores from launched projects; the projected operating surplus of INR4,095 crores on the launched portfolio compares very favorably against the current outstanding net debt of INR1,089 [Phonetic] crores. Besides this, we have also not open for sale inventory from which we have estimated surplus of INR2,036 crores.

The Indian economy is showing stability and resilience, and we are bullish on it. The government’s focus on infrastructure, including airports, roads and rail networks will give impetus to the growth of — in our country and create employment, and that will result in further demand of home in our country. We are upbeat about our new launches, and we’ll continue to focus on scaling our operations, while maintaining a healthy balance sheet. As a customer-centric entity, our primary focus will be to offer our customers high-quality products and seamless home buying experience. Our budget and expenses control measure have put up with a solid position to optimize by own sentiments. We remain confident in creating sustained value for our core shareholders by delivering growth and margin expansion through optimal capital utilization.

With this, I conclude my remarks. Thank you for joining the conference call. Now, we are open for questions that you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Aryan Sharma from Infinity Capital. Please go ahead.

Aryan SharmaInfinity Capital — Analyst

Yeah, good afternoon, sir, and congratulations on the good results. My question is regarding the land parcels. We already have a good presence in South India. Are you also looking towards some more land parcels in other parts of the country, or will you focus on these areas? And if yes, by when it will happen and what could be the size of these land parcels?

Abhishek KapoorExecutive Director and Chief Executive Officer

Hi, Aryan, thank you for the question. So, while we have the current land bank of almost about 54 million square foot, which is spread across South and West, our growth is — further growth, which is increased acquisition activities happening in majorly five markets, which is Bangalore, Chennai, Hyderabad, Mumbai and Pune, and this is — these are the markets where we want to go deeper. For the rest of the market, it is more opportunistic, because we have been in these markets, which are like Kochi, Coimbatore, Goa, Mangalore. These are markets that we’ve always been present in, and we look at it more opportunistically if there is — because we have a strength and we understand the local environment, we have delivered multiple projects. So that enables us, gives us that confidence to continue in these markets, but growth will come from these markets — the other markets.

From the size of the land parcel, see, our strategy is quite clear in terms of the acquisition plan. Now that is largely spread between Puravankara Commercial, Residential, Provident and Purva Land. Purva Land typical size of transactions would be anywhere between 50 to 100 acres, because that’s the kind of plotted development we look at. Wherein, we need because the kind of volumes we are able to do and sales that we are able to achieve in the plotted development gives us that flexibility and comfort.

As far as Provident is concerned, we look at least 1 million square foot of saleable area to start with. So, if you look at my realization, a topline of at least INR650 crores, INR700 crores would definitely be something that will be required because that is the attention we need to pay to the project, and it should be worthwhile the time of the management. So, that’s the minimum size. Of course, we have done 2 million, 3 million, 6 million square foot larger projects in Provident, and because it also requires a certain scale of operations to drive efficiencies being affordable housing.

As far as Puravankara is concerned, again, we look at a minimum topline of, say, INR700 crores to INR1,000 crore and that could range in different markets from anywhere between 500,000 square foot going up to 1.5 million square foot or even larger, depending again on the location in the market. So that’s a general tendency, but our — most of our acquisition is in the sweet spot of, say, about 1 million square foot to 2.5 million square foot, which gives us a lot of comfort and visibility on financial closure of these projects within a timeframe of five to six years. So, that’s generally the area of focus, and that’s how we go about our acquisition.

Aryan SharmaInfinity Capital — Analyst

Okay. Got it. Sir, my next question is regarding the Starworth Infrastructure and Construction Limited, that is the SICL. Can you throw some light on what kind of revenue we are clocking over there? And what were the margins? And also what sort of market we are targeting and the growth, say, in the next three to five years?

Abhishek KapoorExecutive Director and Chief Executive Officer

Right. So, Starworth is an organization which we have recently done some additions in the leadership team. Let me just introduce that a little bit for you. So, on the management, we’ve added a COO from Katerra and — who specializes in precast. We added Satyanarayan from Tata Projects. He was ex-CEO for Tata Projects. He’s handled a very large book.

The business per se is really focused on two key areas. One is, of course, precast; and two is buildings; and special projects, this is the third one. So, in buildings when we say we count commercial, we count data centers, we count residential. That is the general setup. And third, of course, as I mentioned, is special projects, which is — because it is an EPC business, and we are building the entire EPC strength over there, we already have it actually, so let me give you an example of the kind of projects that we’re looking at.

So, for example, we are executing the Bangalore Metro stations, about 23 metro stations. We are executing Taj at the Bangalore International Airport. We have taken just recently another contract with Taj GVK. We are doing a very interesting — one of the largest pores ever we have done or we are now going to do, which is in blast furnace we are doing for Jindal Steel. So, special projects like Jindal Steel or Metro, etc. ITC is another client that we have recently added to our portfolio.

So, the idea is to look at Grade A clients and add — so today, for example, a larger portion, almost 60%, 65% of the business comes from Puravankara and about 35% is outside. We want to exactly reverse it. In fact, we want 80% to 90% of the business to come from outside, and that’s where the entire focus is for Starworth, because we believe that there is an opportunity for a midsized player in the contracting space.

Coming to your question on margins, you’re typically looking at a margin of — a net margin of somewhere between 8% to 10% for a contracting company, and that’s what we work towards net of overheads. So, that’s the plan. From the growth point of view, last year, we did very well, but it was on a very small base that the business grew. This year, again, we are targeting an aggressive number — a growth number…

Neeraj GautamExecutive Vice President, Finance

INR500 crore kind of turnover from that company.

Abhishek KapoorExecutive Director and Chief Executive Officer

Yeah. So, that’s the target. Let us see how that pans out, but the billing looks good. The business is looking good. Acquisition pipeline is looking healthy. So, we’re quite optimistic about where we’re headed with this business.

Aryan SharmaInfinity Capital — Analyst

So, what is the number?

Neeraj GautamExecutive Vice President, Finance

This quarter, we recognized INR89 crore revenue in that company. SICL’s turnover for the quarter was INR89 crore, and profit was about INR2 crore, net PAT for the quarter. So — and yearly, as Mr. Abhishek mentioned, we are targeting sort of INR500 crore revenue from that company in this entire financial year.

Aryan SharmaInfinity Capital — Analyst

Okay. Thank you for the detailed answer. And lastly, coming to the order book, like we are seeing the order book is more than INR1,000 crores for quite some time now. So, what is the current size? And what would be the year-over-year growth in the orders?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, as we mentioned, because we just strengthened the team, and it’s been in the last four, five months, six months, in fact, the focus first has been to strengthen the systems, processes, internal, the organization itself and start — speed up our current execution, which is why you’re seeing the existing revenue booking. At the same time, you’re looking at new acquisitions. So, I think by the end of this year, I think the order book will improve. With the way the pipeline is looking, we’ll have to wait and watch and see where we land up with it, but our goals are quite aggressive, excuse me.

Aryan SharmaInfinity Capital — Analyst

Noted. Thank you. That’s all from my side, and all the best.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ashutosh Mittal from Axis Capital. Please go ahead. Ashutosh, may I request to unmute your line from your side and go ahead with your question, please. Ashutosh, we are unable to hear you. May I request you to unmute you line from your side and go ahead with your question, please. Due to no response, we move on to the next participant.

The next question is from the line of Nikita Gupta from LKP Securities. Please go ahead.

Nikita GuptaLKP Securities — Analyst

Good afternoon, sir. Thank you so much for the opportunity. I just had a couple of questions on the Purva asset management plan. Just wanted to know, like since you’ve launched your first AIF fund in April, have you been able to raise some money as of now? And when do we expect to do take some mark INR750 crores, assuming the greenshoe option is exercised? First on that. And how is the revenue-sharing agreement going to work? Can you throw some light on that as well?

Abhishek KapoorExecutive Director and Chief Executive Officer

Right. Thanks, Nikita, for the question. So, the answer is yes, we have been able to do the first close, which was targeted at about a little over INR200 crores. That has already been done. Now we are in the process of additional further capital, which is also lining up, and we will hear soon about the next round of closure.

The second piece is on how do we see the revenue share with the fund. So, basically, the way we look at this entire structure — the fund structure is that the fund potentially is participating in the land, which is where maximum value is, and the acquisition is happening from the capital from the fund. And the development is done by Puravankara. So, therefore, the revenue share has to be in a manner which is targeted to achieve a mid-20%-s — early to mid-20%-s kind of return for the investors in the fund.

And of course, the process is there. There is a process of evaluation and objectives validation of — third-party validation of the numbers, so that there is complete transparency. There’s an advisory board in place for the guidance. So, the whole idea is to keep it objective and ensure. In fact, this is something that we believe personally that will be a significant line of capital going forward from an equity point of view, which will give us great amount of strength. So, we want to really ensure that the deployment of capital is done in a manner which ensures not just the security of capital, but the return that we have — which we have promised in the front. So, we’re quite optimistic with this, and we will start hearing soon about the deployment of the capital, which is already raised.

Nikita GuptaLKP Securities — Analyst

All right. Thank you so much. That’s all from my side. I’ll join the queue for more. Thank you so much.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Next question is from the line of Dikshit Mittal from LIC Mutual Fund. Please go ahead.

Dikshit MittalLIC Mutual Fund — Analyst

Hi, good afternoon, sir. So, my question is on new launches. So, though you have maintained the pipeline of around 50 million, 60 million square feet, but during this quarter, there was no new launching. Particular reason for that?

Abhishek KapoorExecutive Director and Chief Executive Officer

No, really there is no reason except that we are in the final leg of — some of them are in RERA registration, some are at the final leg of approvals, and so that is the only thing. There is no other reason for per se. So, we are pretty much on track. We are pushing hard on these launches. So, I think you’ll start hearing it from this quarter itself.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. Because, sir. In your last presentation, you had mentioned a 1 million to be lost in first quarter itself. So that’s why all we’re asking is there any approval related delays or anything like that.

Abhishek KapoorExecutive Director and Chief Executive Officer

Yeah. So, there is marginal delay, because these were expected anyways towards the end of the first quarter, which has spilled over. So, I think in the second quarter you will see these launches.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. So, sir, for full year, what is the kind of number that you’re looking at in terms of new launches?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, in the next 12 months timeframe, we are looking at total, as I mentioned earlier, the target is actually by the March of this financial year to launch 16 million square foot. As I mentioned, Puravankara is about 6 million; Provident is another 6 million; and then 4 is Purva Land.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. And, sir, in terms of target completion for this year, how — what is the target?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, this year, in fact, we have set ourselves up to deliver about 3,000 homes. And a lot of that delivery also — so if you look at our numbers, operating cash flows have also gone up, cash outflows, which is basically our burn has gone up significantly. It’s gone up by about 77%. So, we are obviously really focused. So, that’s really picked up very well. Today we have over 5,200 labors on our sites, and it’s only increasing by the day. So, there is a lot of delivery planned in this year, 3,000 units minimum we should be able to achieve, that’s the target we have set for ourselves. But most of it will possibly start coming from the third and the fourth quarters.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. So, to the square foot, can you give some — any guidance?

Abhishek KapoorExecutive Director and Chief Executive Officer

I’m sorry. I missed that.

Dikshit MittalLIC Mutual Fund — Analyst

In terms of 1 million square foot, how many million square foot would be delivered or maybe completed this year?

Abhishek KapoorExecutive Director and Chief Executive Officer

You can safely assume about 3 million square foot. I mean, typically about 1,000 square foot average you can assume, and we should deliver about 3 million square foot this year.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. Particularly back ended, right? Because first quarter, it’s only 0.1…

Abhishek KapoorExecutive Director and Chief Executive Officer

I mean, it’s all under construction, because at the time when we hit the COVID and then the delays and all of that, so a lot of spillover happened, and last year also there was some extent of disruption. So I think now that is all streamlined. We should start seeing delivery in the third and fourth quarter.

Dikshit MittalLIC Mutual Fund — Analyst

Sir, lastly, what are the collection figure for the first quarter?

Abhishek KapoorExecutive Director and Chief Executive Officer

Total operating cash flows were…

Neeraj GautamExecutive Vice President, Finance

INR686 crores.

Dikshit MittalLIC Mutual Fund — Analyst

INR686 crores, okay.

Neeraj GautamExecutive Vice President, Finance

If you look at our presentation on Slide 15, INR667 crore to be precise, the total operating inflow for the quarter. That includes — to just for clarification, that includes about INR450 crore from projects; for other businesses, about INR100 crore; and the remaining from small other income.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. And sir, lastly, what is the component of other income in the total — that is reported in total sales of INR82 crores of other income?

Neeraj GautamExecutive Vice President, Finance

So, other income is — see, in our business, other income is also related to — these are other operating income. It’s not other income from investment or interest or these — interest or transfer charges, very small, about INR10 crores. The rest of our income is from business operations, either from sale of the project or exit from one of the assets here and there. During the last quarter, entire income, barring INR10 crore, is the transfer charges, interest, and those transfer charges also related to operating itself. If somebody is — or we charge late interest fee from one of the customers, all that includes in other income. During the quarter, beside the project collections, we have also collected about INR112 crore from one of the commercial property estate.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. And, sir, lastly, for the full year in terms of presales, is there any target that you are working with?

Neeraj GautamExecutive Vice President, Finance

Sorry?

Dikshit MittalLIC Mutual Fund — Analyst

Sir, for the full year in terms of presales, any target that you have in mind for FY ’23?

Abhishek KapoorExecutive Director and Chief Executive Officer

No, we don’t really give any forward-looking statements. But yes, I mean, we have given you a certain set of area and new launches, and you can compare with what we have done in the last year; area sold was about 3.5 million square foot. And we believe that — and INR2,400 crores. Now, if you look at our number in the first quarter itself versus the INR300-odd crores, we are already at INR513 crores, right? So, you can do the math. But yes, it’s looking good so far. And this is only from sustenance without adding new launches. So, I think we’ll have to wait and watch and see how the company performs. But yes, we — internally, we have fairly aggressive targets.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. Because the last three quarters, you are maintaining a run rate of 1 million square feet on an average. So, in this quarter, we have seen additions on that front. So that’s why I was asking, can we go back to 1 million square foot, 1.2 million square foot average, for the — for the full year, 4 million square foot to 5 million square foot?

Abhishek KapoorExecutive Director and Chief Executive Officer

See, let me answer it the other way around. Last year, in the same quarter — see, this is normally April, May, June is our weakest quarter every year, and that’s across the industry more or less, generally, unless you add new launches. But all of the sales has come from sustenance. And within sustenance, we have been able to do — increase our square footage, and we’ve gone to almost 0.7 lakh square foot, which is 0.7 million square foot. So, I think we see that trend only going forward with the addition of new launches going up.

Dikshit MittalLIC Mutual Fund — Analyst

Okay. Thank you, sir.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Ashutosh Mittal from Axis Capital Limited. Please go ahead.

Ashutosh MittalAxis Capital Limited — Analyst

Good afternoon, everyone. So, now that you are present in six big markets, what is the medium-term sales per market that you are targeting, if you can quantify the same?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, over time — let me break it down first business wise. So, we’re looking at about 35% of our business from Puravankara; 35% from Provident; about 20% coming from Purva Land; about 10% from Commercial. That’s the general breakup of the categories we are present in and the brands.

Now, if you look at geography, today, a majority of our business comes from the South, and a very large portion of this is coming from Bangalore. For some more time because of our land banking and because of our current availability of lands, which are already in the portfolio and paid for, is from the same region, and of course, the largest portion of the south is in Bangalore, which is good news for us.

Having said that, I think going forward, there is clearly a target that West is going to grow quite a bit. And while South will continue to do the square footage that it is doing and add to it, West will add disproportionate square footage because we’ve entered that market, and we believe that there is a huge opportunity for us over the next five years.

So, as we go around, I think in terms of value terms, if I look at two to three years’ timeframe, in next three years, we would expect sales of at least 25%, 30% from the West and then take it possibly even up to 40% to 50% at some point in time in terms of value. In terms of square footage, we will always continue to see South as being very, very dominant, because values are lower compared to the — specifically Mumbai market.

Ashutosh MittalAxis Capital Limited — Analyst

Okay. So, talking about Mumbai specifically, so you have hired senior industry resources for expansion there. So, what does the BD pipeline in Mumbai look like currently, if you can put some light on it?

Abhishek KapoorExecutive Director and Chief Executive Officer

No, BD pipeline looks fantastic across the board, not just where it stands out. We’re really, really focusing on it. A lot of term sheets, MOUs are in process right now, due diligence and documentation is being discussed. So, obviously, as I mentioned, there will be a lot more value expected from the Western market. So, therefore, you will see this proportionate kind of acquisition happening from the Western market.

Ashutosh MittalAxis Capital Limited — Analyst

And there would be more of outright or JDA agreements?

Abhishek KapoorExecutive Director and Chief Executive Officer

A mix of both. It’s a healthy mix of both. Obviously, outright purchases has its own advantage in terms of value and the margins and then JD, of course, allows you to do volumes. And it’s an asset-light model. So, it will be a mix of both.

Ashutosh MittalAxis Capital Limited — Analyst

Okay. And is there any specific amount that has been set aside or decided for new project tie-ups in West as well as in South, if you can quantify that number?

Abhishek KapoorExecutive Director and Chief Executive Officer

See, if you look at it from acquisition point of view, over the next few years, the kind of capital raise we are talking about, we are talking about INR750 crores coming from the AIF itself. And then, we are in discussions for multiple platforms for our residential commercial space, right? And in fact, IFC is also on board on the affordable housing side. So, between all of this, we would estimate that we will be able to raise and deploy about — our target is about anywhere between INR2,500 crores to INR3,000 crores over next two to three years’ timeframe.

Ashutosh MittalAxis Capital Limited — Analyst

Got it. And the last question from my end. So, gross and net debt have been relatively stable over the period. So, with number of projects and sales increasing, how will it trend over the next 18 months or 24 months?

Abhishek KapoorExecutive Director and Chief Executive Officer

Look, I think a lot of our business, and I’m sure — I mean you understand this, possibly even better you work across industries as well. Your overhead and multiple fixed costs get only reduced as you do the volumes, right? So it is, for us, very, very important that we have the bandwidth. We’ve, in fact, added the bandwidth to be able to do more and more volumes. So, overall basis, I think we will definitely maintain or improve our margins as we go along and we do more number of projects and more number of launches.

Neeraj GautamExecutive Vice President, Finance

And as far as debt is concerned, we maintain this kind of debt for last one year. However, kindly note that we are in growth phase and we have leverage to take opportunity in the market.

Abhishek KapoorExecutive Director and Chief Executive Officer

I think what we should look at from the debt point of view — sorry, I missed that question maybe, is that we look at it from a per square foot basis, so how much square footage do you have on the floor? And I think there is a healthy way of looking at it. And is your debt backed by project cash flows? Is it CF? What are you looking at with the debt piece? How is that debt going to help you unlock your equity, which is there in this 50 million square foot? So, we look at it in that context. I think we are in a very healthy position. We’ve maintained the current levels. On a per square foot basis, as we go about with the launches, I think overall, you will see the reduction in the debt on per square foot. In absolute number, I think that is dependent on the quantum of business that we put out on the floor.

Ashutosh MittalAxis Capital Limited — Analyst

Yeah, thank you. That was it from my end.

Operator

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

Pritesh ShethMotilal Oswal — Analyst

Hi, thanks for taking my questions. Sorry, I joined a bit late. So, one question on the cash flows. I see a reversal around — in the investment by IFC. If you can explain what is that?

Neeraj GautamExecutive Vice President, Finance

Good that you have asked this question. It’s not a reversal. We have repaid IFC investment of INR68 crore from the project collections. Rather, we have paid INR100 crore, INR68 crore of principal repayment to IFC. As you are aware, as we updated to the — all the shareholders and the analyst community that IFC had invested in the — two of our projects. In one project, we have repaid them about INR100 crore during the quarter from the project receivables, and we have fully repaid them in the month of July.

Pritesh ShethMotilal Oswal — Analyst

Okay. And so, what is the balance amount? I mean, in terms of what — how much you’ve paid in July additionally?

Neeraj GautamExecutive Vice President, Finance

We have paid about INR200 crore, INR200 crores when complete exit to them from the project. They invested about INR157 crore in that project, and we have given a full exit for INR200 crore.

Pritesh ShethMotilal Oswal — Analyst

Awesome. And what was the timeframe when they entered into this project and…

Neeraj GautamExecutive Vice President, Finance

They entered into December 2020, the first investment, and the final investment in March 2021, and we have given full exit in July 2022.

Pritesh ShethMotilal Oswal — Analyst

Awesome. Great. And secondly, while we are — in the last question you answered about your internal capability being increased. Firstly, I missed that slide where you generally give your details about pertain — I mean, currently the ongoing project, what’s the size? So, maybe if you can add it next time, that’s very helpful for us to understand how the business is scaling up.

And secondly, since we have, over the last two years, invested a lot in terms of manpower, where the organization capabilities going ahead in the future? Like historically, we have built 20 million to 24 million square feet of ongoing projects at some point. Where do you see that increasing in future since we have invested in capabilities in the last two years?

Abhishek KapoorExecutive Director and Chief Executive Officer

So good question. I think from the way we are looking at using this leadership strength and the whole idea of the P&L structure is to really focus, and you’re right, on the delivery of the projects. Now, if we were to look at our portfolio of total land bank that’s available, which is in excess of 50 million square foot, and we are talking about 16 million square foot taking to market this year, then obviously, our expectation is that this, say, 3 million square foot to 3.5 million square foot should scale up minimum to 5 million square foot to 6 million square foot over the next few years, right? But from the time I launch to the time we start delivering, there is — the projects go under construction, but the delivery has to pick up only when the project completes, which is a life cycle, you can assume of anywhere between three to four years.

So, real deliveries you will start seeing in three to four years, in terms of delivery and revenue booking. But if you look at — I think what we should really watch for is our sales numbers annually and the cash flows I think and the burn rate. If you look at these three numbers, and that continues to remain in the growth direction, the way we are planning, I think that should give a lot of confidence. And more or less, your overheads gets — with this entire scale-up and strengthening that we have done, we should be able to bring in a lot of the efficiency there.

Pritesh ShethMotilal Oswal — Analyst

Right. I mean — but I mean, just a follow-up on that. So, the 23 million square feet, 24 million square feet of ongoing projects that we have been doing, that should obviously go to 30 million square feet, 35 million square feet to see continuous growth in sales numbers. Is it the right way to look at it?

Neeraj GautamExecutive Vice President, Finance

What Mr. Abhishek said, I just would like to add to it. See, right now, what we have been managing over the period of time, you can see 20 million, 22 million of square feet. By adding the leadership team, we also bifurcated the P&L in the businesses. Like you said, during the conversation, the PHL is another business vertical, Purva Land is another business vertical, and for Puravankara is another business vertical. All put together, if you can look at the project, which is currently doing, which is ongoing, plus the launch pipeline, so everything is about to come for the overall business volume for the Company. [Speech Overlap]. If you look at the current projects under operation, plus the pipeline of our launches, this entire pipeline plus the existing project fully managed by the entire leadership team.

Pritesh ShethMotilal Oswal — Analyst

Yes. Okay. Got it. And sorry, just a follow-up on that IFC repayment. So, we have done that from our existing cash balance or we have generated enough cash flow in July and we have paid out from there? Just checking because so as to ensure that…

Neeraj GautamExecutive Vice President, Finance

First INR100 crore we have paid out of the project cash flows, and the remaining INR100 crore we have paid — we have taken a commercial paper of INR100 crore, raised money from commercial paper, and then we repaid to the IFC.

Pritesh ShethMotilal Oswal — Analyst

Got it. And that commercial paper, I assume, would be for a short-term one-year, two-year timeframe?

Neeraj GautamExecutive Vice President, Finance

Yes, short-term, 30 days maturity period, which we are paying them in August.

Pritesh ShethMotilal Oswal — Analyst

Okay. So, yield must be around 5%, 5.5%?

Neeraj GautamExecutive Vice President, Finance

Yes.

Abhishek KapoorExecutive Director and Chief Executive Officer

See, this project has sold very well and collections have been extremely robust here. So, that really gives us the strength to be able to quickly pay back and negotiate a good exit.

Pritesh ShethMotilal Oswal — Analyst

Got it. Thanks. That’s it from my side, and all the best for full year ’23.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from the line of Niraj from White Pine Investments. Please go ahead.

Niraj MansingkaWhite Pine Investments — Analyst

Yes. I have a question on your launch pipeline. All the launches that you are planning in future will be launched in March 2023, is that the right statement?

Abhishek KapoorExecutive Director and Chief Executive Officer

Will be launched by?

Niraj MansingkaWhite Pine Investments — Analyst

March 2023. All the launch, which has taken place…

Abhishek KapoorExecutive Director and Chief Executive Officer

Yes, 16 million square foot, we are talking about launching it in phases starting from this current quarter to the next two quarters, yes.

Neeraj GautamExecutive Vice President, Finance

Q2, Q3 and Q4.

Abhishek KapoorExecutive Director and Chief Executive Officer

Q2, Q3 and Q4, correct.

Niraj MansingkaWhite Pine Investments — Analyst

Okay. The other thing is that you have a target to reach to 5 million to 6 million square feet as a potential run rate of presales over the period of three to four years, is that also right way to think?

Abhishek KapoorExecutive Director and Chief Executive Officer

Again, that is a question of the quantum of launches we do and how many phases we open up. But I think the previous question or the previous discussion was more on the delivery on how much volume you’re looking at in terms of delivery, which is why I answered and I said, look, over next three to four years, you would start seeing about 5 million square foot to 6 million square foot per year of delivery versus, say, about 2.5 million square foot, 3 million square foot that we have been doing traditionally. So, you would double it up in terms of delivery. But of course, from launch to delivery, there is a journey of about three to four years, and that’s the journey we need to cover over the next two, three years. In the meanwhile, I think we need to really watch the, as I said, earlier sales number and the cash flows.

Niraj MansingkaWhite Pine Investments — Analyst

Okay. So, how much land banking square feet do you require to go to that run rate of, say, assume let’s do a 6 million square feet of presales, how much land bank would you require on a run rate to achieve that presales?

Abhishek KapoorExecutive Director and Chief Executive Officer

So typically, whatever you open or what is your open for inventory sale in the year, you typically sell about 50% to 60% of that, and then it starts lagging because the choice of inventory comes down and then you add more inventory and then you sell again 50% to 60% in the year. So, that’s the general cycle that it works. So, whatever you open for sale of that 50 million square foot to 60 million square foot. So, for example, traditionally, when we have been doing about, say, 3 million square foot, traditionally, we have had about 5 million square foot open for sale at any point in time. So, that is how the numbers move up.

Niraj MansingkaWhite Pine Investments — Analyst

No, I got it. But I was asking something else. See, I was asking on a land bank that…

Neeraj GautamExecutive Vice President, Finance

Got it. You asked about land bank. Right now whatever we are going to launch about 18 million square feet that everything land is acquired and — by the company, and it’s a different stage of approval. And hence, to launch for next three quarters, since current quarter, next two quarters, in that land has been acquired and is in our position in various stages of approval.

Niraj MansingkaWhite Pine Investments — Analyst

Yes. Got it. But the future land bank, apart from the new launches that include for 16 million square feet, we have as much as what I know is almost 65 million square feet of your interest — 44 million square feet.

Neeraj GautamExecutive Vice President, Finance

Yes. So the remaining land bank — I got your question. So, remaining — out of the total land bank of — which is we have land bank slide, we are proposing to launch about 18 million square feet over next three quarters. And remaining land bank also in different stage of clearances, approval, etc. And at the same time, like we informed in earlier calls that we are continuously exploring — working on the business development, exploring new opportunities, and we keep adding in our land bank developable, saleable area.

Abhishek KapoorExecutive Director and Chief Executive Officer

And I’ll just add parallelly to that, the balance area, which is available is also under work, right? So, we will see continuity of launches even in the next year, because as you rightly said, if there is over 50 million square foot of portfolio, that portfolio needs to be monetized. So, if 16 million square foot goes to market this year, of that, of course, in phases. Similarly, we are working on the next phase, which is going to come in the next year. And of course, the unopened phases of the current 16 million square foot will also come to the market in the next year. So, that continued — it will continue to grow on a cumulative basis.

Niraj MansingkaWhite Pine Investments — Analyst

So, you are — just on some numbers, like you have around 44 million square feet of land asset that you have given in the presentation. So, that 16 million square feet is included in this 44 million?

Neeraj GautamExecutive Vice President, Finance

Yes.

Abhishek KapoorExecutive Director and Chief Executive Officer

Yes, you are right. Perfect.

Neeraj GautamExecutive Vice President, Finance

This is a subset of the — our land bank slide.

Niraj MansingkaWhite Pine Investments — Analyst

So, you will have remaining 28 million square feet, which will be around four years of — four to five years of potential sales that you can do, right?

Neeraj GautamExecutive Vice President, Finance

Correct.

Abhishek KapoorExecutive Director and Chief Executive Officer

Plus you will add whatever you are adding now. We are already in the acquisition mode as the previous caller had asked. So, we will continue to add more and more inventory and land bank as we go along, which will also cumulatively add for, say, the year after next and then the year after that.

Niraj MansingkaWhite Pine Investments — Analyst

So, yes — so what I was coming to — then you also have a entity, which also is the AIF fund that you have started for buying land, which will feed to your development projects. So, you have so much of land bank left. You have an AIF fund which will buy up land, so then why do you say that you want to see a reduction in your absolute debt, because you already have five, six years of existing land bank in existing company, you have an AIF which can also do that, plus there are also operating cash flows for future projects coming, which can, say, partially feed to buy land. Then why do you — so I’m not able to understand why do you say that the absolute debt herein falls for the Company?

Abhishek KapoorExecutive Director and Chief Executive Officer

Okay. On an absolute number, I think one needs to look at it slightly differently. There are two or three things. One is, there is capital that is obviously churning constantly wherein the debt is getting repaid, but fresh debt gets drawn down depending on the quantum of square footage on the floor for, say for example, launches or, for example, construction funding, CF, etc. Plus more importantly, as we venture also in the commercial real estate piece, there will be debt drawn down for the commercial projects, which are going to go under construction.

For example, we’ve already undertaken about 8 lakh square foot of project, which is in South Bangalore, which has already gone under construction. We intend to take another 2.1 million square foot of North Bangalore project into under construction. So, it is a constant process of churning capital and churning debt on an overall basis. So, that’s what I say, when you look at it on a per square foot basis, obviously as you do more and more launches, the numbers will look very different. But as an absolute number, we have to continue to look at it from the basis of what is the quantum of the project that you’re bringing on the floor?

Niraj MansingkaWhite Pine Investments — Analyst

Okay. Got it. Last question would be, how much investment you have done in the commercial project till date?

Abhishek KapoorExecutive Director and Chief Executive Officer

Let me come back to you with that specific number on how much investment. I think we’ll respond to that offline.

Niraj MansingkaWhite Pine Investments — Analyst

And how much cash flow would it flow, say, when it starts?

Abhishek KapoorExecutive Director and Chief Executive Officer

I think over time — see, the total business we are looking at from the commercial business itself, as I mentioned earlier, is minimum — this year itself, for example, as I said, 2.7 million is going to go into construction. And if 2.7 million goes into construction, of course it’s all yield dependent and sale value dependent on what kind of numbers you’re looking at. But from within this number itself, you would easily assume that you would land up with at least a top line somewhere between INR2,500 crores to INR2,600 crores. So, as we go along and add more and more projects, I think the numbers will keep evolving.

Niraj MansingkaWhite Pine Investments — Analyst

Right. And have you thought of any early stage of taking some easy structure or it’s too early to think about it?

Abhishek KapoorExecutive Director and Chief Executive Officer

I’m sorry. There is no — I think it’s a little early to think about it. I think for us, what is important is to keep our heads down and build — continue to build this business. And over a period of time, that strategy will evolve. Of course, as I mentioned earlier, we’re looking at a partner, a platform-level transaction there for the commercial business. So, we intend to scale that business over time. But we will be patient. We will continue to put effort in that direction. I think what’s important is the longer-term vision as far as the commercial piece is concerned.

Niraj MansingkaWhite Pine Investments — Analyst

Got it. Thank you very much.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Akshay from UBS Group. Please go ahead.

Akshay GattaniUBS Group — Analyst

Hi, sir. Thank you for taking my question. So, sir, this quarter, presales is of INR513 crore. And in presentation, you also give projected cash flow where you give value of inventory open for sale. If I calculate difference of this versus last quarter, it’s INR280 crore, while the sales is of INR513 crore. So, what explains this difference, sir?

Neeraj GautamExecutive Vice President, Finance

I didn’t get your question. This INR513 crore, we have sold out of value of unsold inventory of the last quarter.

Akshay GattaniUBS Group — Analyst

Right. So, which was INR4,674 crore as per last presentation. And in this presentation, the value of inventory open for sale is INR4,400 crore. So, it’s a drop of INR280 crore. So, what explains this?

Abhishek KapoorExecutive Director and Chief Executive Officer

We added phases. [Speech Overlap] Yes, so what happens — your question is right. The observation is right. But what we do [Technical Issues]

Operator

Sir, sorry to interrupt you. Sir, before you go ahead, Akshay, can I request you to mute your line from your side, please?

Akshay GattaniUBS Group — Analyst

Sure.

Abhishek KapoorExecutive Director and Chief Executive Officer

Yes. That’s better. There was a lot of disturbance in the background. So, I’ll answer it again. What typically happens is you replace what you have sold by releasing more inventory from the not-open-for-sale inventory. So that is what will continue to show up. So, while my sales numbers will show up, I’ll keep opening a stock because I cannot, at any point in time, have lesser choices in my projects from the consumer’s point of view. So, it’s very important to continue to open not-open-for-sale inventory, which we don’t count as new launches, so I think that’s the difference.

Neeraj GautamExecutive Vice President, Finance

And we added one project itself during the quarter and sold it. We added one project during the quarter, Southbay. It was in…

Abhishek KapoorExecutive Director and Chief Executive Officer

That was in the Q3 — Q4 of the previous year. In the Q4 of the previous year is when we sold out Southbay. That was opened and closed in the same quarter.

Akshay GattaniUBS Group — Analyst

Okay. Understood, sir. So that explains the difference on launch pipeline also, which was 16.3 million last quarter and 15.3 million this quarter. Is this right?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, no — don’t take that. That is not right, no.

Neeraj GautamExecutive Vice President, Finance

No, not that. That difference is coming from the inventory, which is open — not-open-for-sale in the inventory slide. The difference in the launch pipeline is coming because of the one project, Kodigenahalli, which was there in the last slide. This slide it is not there, because Kodigenahalli land we wanted to develop earlier as a residential project. Now, because of the demand or the traction of the commercial property, because front end of that land is a commercial project, and hence, we have decided to develop that property also commercial project, which is under planning stage. We’ll put to on that slide once the plan — necessary plan approval will come.

Abhishek KapoorExecutive Director and Chief Executive Officer

So, Phase 1, which is what I was mentioning, where we are doing about 2.1 million square foot, this is in North Bangalore. The Phase 1 is going under construction now. This will be part of the Phase 2. So, we’ve moved this from residential to commercial and that’s the reason why we have removed it from the launch pipeline of residential.

Akshay GattaniUBS Group — Analyst

Okay. Understood, sir. And sir, I’m not sure if you have mentioned this before, I joined late. What was the sequential pricing growth?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, overall if you look at it, the sequential pricing growth was about between 6% to 8% on project-on-project basis, but average realization, I think, has not moved much because I think that more comes from the weighted average of the mix of inventory that gets sold. But on an overall basis, the prices went up between 6% and 8%.

Akshay GattaniUBS Group — Analyst

Right. So, is it fair to assume that value of inventory open for sale, this also goes for price adjustment which you have taken?

Abhishek KapoorExecutive Director and Chief Executive Officer

What is not open for sale and what is open for sale and unsold will go into this.

Akshay GattaniUBS Group — Analyst

Right. Understood. Okay, sir. Thank you. That’s all from side.

Operator

Thank you. The next question is from the line of Ronald from Sharekhan. Please go ahead.

Ronald SiyoniSharekhan — Analyst

Yes. Good afternoon, sir. I had just one question regarding deployment of capital through institutions like IFC. So, as our debt levels are at the levels and you do not want to increase the debt levels going ahead. So, we may see further investments coming from third-parties in, say, residential and commercial. And you also provide them IRRs in the range of 20% to 30%. So, my question is that how you are able to generate that? Because does that dilute your returns from the projects? Also AIF you are committing at mid-20% returns. So, not able to leverage the balance sheet and getting this fronts with a big kind of IRRs. So, are we able to kind of generate returns from this project?

Abhishek KapoorExecutive Director and Chief Executive Officer

I think let me answer this question in two parts. One is, it’s never close to 30%, it’s early 20%s. And it is not a fixed IRR, it is dependent on the performance of the project. That is point number one. Point number two, I think, is when we put in our — when we have to look at our capital, our capital is obviously far more expensive than the 20% kind of IRR that we’re looking at giving to these equity partners. The objective of diversifying your risk and taking equity instead of debt, I think, comes from the fact that we want to be very, very mindful of the market conditions that obviously continue to go into cycles as we go along in the economic cycle. Therefore, the need for equity versus taking debt. I mean, I think there are a whole lot of analysts on the same call who asked me, will you take more debt for acquisitions? So, that’s where this comes from.

As far as the debt per se is concerned, we don’t have a problem with increasing our debt, but our issue — our whole focus really is how much business justifies how much debt you’ve got. That’s how we look at it. So, if your quantum of business on the floor and the volumes you are doing is going to justify more debt because you need construction funding or launch or prelaunch expenses, etc., then that is, yes, there is no problem. That is justifiable and we will take it.

But if my, for example — I’ll give you another example. What happens is our equity, which is there today in these projects, the surpluses which is there, which is sitting in this 50 million square foot, which is our equity as an organization, I will leverage that equity to create add more equity to it, and therefore, it multiplies the ability to do business. So that’s how we look at multiplying our capital strength. And, of course, the kind of opportunities we are looking at is a mix of joint development as well as outright where the IRR numbers are fairly different. And when we factor in, in the BD, we factor in the cost of this capital before we look at our margins. And then we look at our multiples on our equity investors, and therefore, it looks much, much, much better, and therefore, we are able to do a lot more volume than what we do currently.

But, yes, would we want to do more business with our internal accruals? The answer is yes. And it will happen. And of course, a lot more of our internal accruals as they come along, we may prepay a lot of equity. Like, for example, we have done that prepayment right now, and that has saved us money. Correct. IFC has been paid back earlier than planned, way earlier from internal accruals. So, we’ll continue to engineer our capital to minimize our cost of capital. But at the same time, we will not compromise growth while we do this.

Neeraj GautamExecutive Vice President, Finance

And to add to it, if you look at where we deployed this equity money and even for AIF fund, we are planning to deploy this money to acquire the land. We are not planning to use this money for a construction finance. And hence, there is risk — the number one is the risk. Number two is the ability of capital for a particular activity today to acquire land, there’s no construction finance available. And hence, we are resorting to the equity funding as well as AIF funding. And we are not using this money for construction. As in wherever there is available — construction finance available, we will take construction finance for a cheaper cost. And thereby, it’s just kind of trade-off, where there’s a risk more, I’ll take equity funding, and where there is a pure construction finance, we’ll go for a bank and get a cheaper finance. And overall, we’ll achieve overall margin — the weighted average margin best for the shareholders and as well as the investors for the Company, right?

Ronald SiyoniSharekhan — Analyst

So, just one follow-up that, you are able to generate similar kind of returns you provide to the investors or a bit less or…

Abhishek KapoorExecutive Director and Chief Executive Officer

No. Our equity will be much higher. Our return on equity is obviously much higher than what the investor gets, clearly.

Ronald SiyoniSharekhan — Analyst

Thank you very much.

Operator

Thank you. The next question is from the line of Raj Shah from RS Investments. Please go ahead.

Raj ShahRS Investments — Analyst

Hello?

Operator

Go ahead, sir. You’re audible.

Raj ShahRS Investments — Analyst

Thanks for the opportunity. I have some questions. What will be your marketing expense for the quarter as a percentage of sales? And given that the sector is on an uptick, can we assume that the marketing cost would be extensively going up in the coming quarters? Hello?

Abhishek KapoorExecutive Director and Chief Executive Officer

Can you hear us? Hello?

Raj ShahRS Investments — Analyst

Yes, now it’s audible.

Abhishek KapoorExecutive Director and Chief Executive Officer

Sorry. So, typically our marketing expense is between 5% and 6% of the sales value. But during many quarters where you are incurring prelaunch expenses, wherein the sales are not shown, but to prepare for the launch you do marketing expenses, those show up in the same quarter wherein the revenues don’t show up or the sales numbers show up only in the next quarter. So, to that extent, yes, it may look higher in some cases, in some quarters. But then in the follow-through quarters on an annualized basis, if you look at it, it should range around 5% to 6%.

Raj ShahRS Investments — Analyst

Okay.

Abhishek KapoorExecutive Director and Chief Executive Officer

But that is different from what it is in terms of the revenue booking. So, again, you need to keep that — you need to be mindful of that.

Raj ShahRS Investments — Analyst

Got it. And just to follow up on your answer, we had a good quarterly sales numbers this time. However, our revenue recognition was not that strong and that is because being a lag in delivery. So, if you can just highlight when can we see this improvement?

Abhishek KapoorExecutive Director and Chief Executive Officer

I think in the third and fourth quarter, we will see a sizable improvement, because a lot of these projects are coming up for a possession in those two quarters. So, we’ll start seeing improvement in the third and the fourth quarter.

Raj ShahRS Investments — Analyst

Okay. Thank you. And just one last question. If you can just give your mix — revenue mix as in the revenues which are coming from Bangalore and outside Bangalore?

Abhishek KapoorExecutive Director and Chief Executive Officer

Would you want revenue or you want the sales number?

Raj ShahRS Investments — Analyst

Sales mix.

Abhishek KapoorExecutive Director and Chief Executive Officer

Sales mix. So, currently, over 50% of our sales is coming from the Bangalore market and the rest is distributed in the other markets, which is other regions, which include South and West. And in fact, more than 50%, almost 60% — close to 60% is coming from the Bangalore market. This trend will continue for now for some more time. We will — in fact we may see a larger contribution of the Bangalore market in times to come. Overall, South will also look at a much larger number compared to West for some time till we don’t start launching the project that we are acquiring in the West.

Raj ShahRS Investments — Analyst

Okay. Thank you for your detailed answer, and wish you all the best.

Operator

Thank you. The next question is from the line of Mihir Desai from Desai Investments. Please go ahead.

Mihir DesaiDesai Investments — Analyst

Thank you for taking my questions, sir. Sir, I just wanted to ask regarding the AIF. So where are we actually planning to deploy this fund, like in terms of category that is Puravankara, Provident, Purva Land? Or also if you can throw some light in terms of geographical locations where are you planning to deploy this fund?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, good question. This fund is planned for Purva Land and Provident. The idea is to turn the fund around as quickly as possible and return the capital, and we see both these businesses generating a faster return of capital. So that’s the answer. And the deployment in terms of geography, of course, South remains one of our favorite markets. So, yes, South will definitely be there, but we are adding projects in the West as well. So, we are looking at some projects in the West as well. So, it will be a mix of both South and West.

Mihir DesaiDesai Investments — Analyst

Okay. And sir, secondly, I just wanted to ask regarding the land bank. So, if we see that currently we have a land bank of — which is totaling 56 point — somewhere around 57 million square feet, wherein Puravankara Group interest will be somewhere around 44 million square feet. So, can you please throw some light on where it is located and how are we planning to monetize it in the coming quarters?

Abhishek KapoorExecutive Director and Chief Executive Officer

So, if you look at the numbers, it’s mentioned in Slide 8, almost 38 million square foot is in Bangalore, which is why I keep saying Bangalore will continue to be dominant for some time. Then Chennai is about 6.8 million square foot. We have Kochi and the West, which is mentioned in the Slide 8. So if you look at that, that will give you a breakup.

Mihir DesaiDesai Investments — Analyst

Correct. Okay. Sure, sir. And sir, lastly, I just wanted to ask that till last quarter, we had this Kodigenahalli project under Puravankara Bangalore schedule to be launched somewhere in quarter two FY ’23. Sir, if we see this quarter, it has been removed from the launch pipeline. So, is there any specific reason behind this?

Abhishek KapoorExecutive Director and Chief Executive Officer

Yes. I think you missed the — I think this question was answered in the previous question. What we have done is, we have shifted that piece from residential to commercial. Look, in the front portion, we are doing about 2.1 million square foot of commercial, this we are launching in the next quarter in terms of construction. So, the kind of demand we are seeing in that market and the RFPs that are coming, we realized that it will have — it has great potential as a commercial asset. And hence, we have moved it out of residential and decided to do it under commercial, and we have put those plans on hold, and therefore, you see the change.

Mihir DesaiDesai Investments — Analyst

Sure, sir. I think I’m done with my questions. Thank you for answering my questions.

Abhishek KapoorExecutive Director and Chief Executive Officer

Thank you.

Operator

Thank you very much. I now hand the conference over to the management for closing comments.

Neeraj GautamExecutive Vice President, Finance

Thank you once again, ladies and gentlemen, for your time and attention. I hope me and my colleagues were able to answer all your questions. However, if you require any further discussions, we are always available for the discussion during the coming weeks. Thank you, and wishing you a happy weekend, and a very happy Independence Day. Jai Hind.

Operator

[Operator Closing Remarks]

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