Puravankara Ltd (PURVA) Q4 FY23 Earnings Concall Transcript

Puravankara Ltd  ( NSE : PURVA) Q4 FY23 Earnings Concall dated May. 26, 2023

Corporate Participants:

Neeraj Gautam — Executive Vice President, Finance

Abhishek Kapoor — Executive Director & Chief Executive Officer

Analysts:

Samar Sarda — Axis Capital — Analyst

Srishti Tandon — NVS Brokerage — Analyst

Harish Shah — HS Investment — Analyst

Yashvi Jain — ICICI Direct — Analyst

Tirath Muchhala — Elusividya Capital — Analyst

Sukhum Mafti — Amin Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Puravankara Ltd Q4 FY ’23 Earnings Conference Call Hosted by Axis Capital Limited. [Operator Instructions]

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

Samar Sarda — Axis Capital — Analyst

Good evening, everyone, and thank you again for taking the time out. Let me start with congratulating the management on a great year of sales and collection, and also wishing them good luck for the next year ahead. As always, the senior management of the company is here with us today, led by Mr. Abhishek Kapoor, the ED and CEO; Vishnu Moorthi, Senior VP with Risks and Control; and Neeraj Gautam, Executive Vice President, Finance.

I’m handing it over to the management for the initial comments.

Neeraj Gautam — Executive Vice President – Finance

Thank you, Samar. Good evening, ladies and gentlemen. Welcome to Puravankara Ltd. earnings call for the fourth quarter FY ’23 and fiscal year 2023. I’m Neeraj Gautam, the Executive Vice President, Finance at Puravankara Ltd. Thank you for joining us today. We are delighted to present our financial results for the quarter ending March 31, 2023, and the full fiscal year 2023. The results, along with a comprehensive presentation, have already been uploaded to the stock exchanges for your review.

Today, we will provide insight into our outlook and key initiatives. Before we delve into our financial performance, I would like to highlight the promising prospects of Indian economy and the real estate sector present for the investors. Backed by initiatives of the government and a vigilant central bank, the Indian economy has demonstrated robust growth, controlled inflation, and enhanced current account balances, posting a stable and favorable economic environment. Simultaneously, the real estate sector in India is experiencing an upward trajectory fueled by sectors such as expanding Internet penetration, e-commerce advancements, increased infrastructure investments, and modernized supply chains. The real estate market is projected to grow at a remarkable compounded annual growth rate of 7% to 8% during 2023 to 2025. The sector’s resilience is evident in strengthened developer balance sheet and a surge of equity investment reflecting a strong investor confidence. Additionally, housing sales have witnessed significant growth across cities, creating [Phonetic] sustained demand and lucrative opportunity for investments.

Now let’s dive into our operating performance for FY ’23 which showcase significant achievements. Our sales reached an all-time high with the total value of INR3,107 crores, a substantial increase of 29% compared to the previous fiscal year. Moreover, our customer collection from the real estate business experienced a remarkable jump of 57% totaling INR2,258 crores in FY ’23, the average price realization also displayed a strong growth rising by 14% to INR7,768 per square feet during the fiscal year. These outstanding results reflect the growing demand for housing and demonstrates our ability to meet aspirations of end users.

For quarter four FY ’23, we achieved the highest-ever sales value of INR, 1,007 crores, representing a significant 21% increase compared to Q4 FY ’22’s INR831 crores. This outstanding performance was supported by sales volume of 1.21 million square feet, underscoring our strong market presence. Furthermore, our customer collection amounted to INR661 crores, reflecting a remarkable 48% year-on-year increase and indicating improved operating efficiency. Our average realization for the quarter was INR8,321 per square feet. In terms of business development, we are proud to announce that we acquired 100-acre land parcel in Chennai for product development in FY ’23. This strategic move strengthens our presence and provides a lucrative opportunity for future growth.

Throughout FY ’23, we successfully launched nine projects across three cities, covering a total area of 6.04 million square feet. Notably Bangalore and Chennai witnessed a majority of our launch area. Furthermore, we have an impressive launch pipeline of approximately 16 million square feet, ensuring a steady flow of new projects in the coming period. Non-Bangalore projects now account for 44% of the share of ongoing projects and 68% of launch pipeline. In addition to our residential offerings, we introduced Zentech Business Park, a commercial project, catering to the growing demand of office space. Moreover, construction commenced on the Purva Aerocity, a prominent 2 million square feet council [Phonetic] project, further expanding our portfolio.

Coming to the debt management. Our net debt increased from INR1,846 crores in Q4 FY ’22 to INR2,208 in Q4 FY 2023. The primary cause of this increase was the rise in the number of projects launched and existing project execution. However, it is worth noting that our debt per square feet of building space declined from INR1,248 to INR1,106 per square feet in Q4 FY ’23, showcasing our efficient capital utilization. As of March 31, 2023, the balance receivable from sold units in all launched projects amounted to INR2,967 crores, which covers about 62% of remaining cost of under-construction projects. When combined with value of unsold inventory for all ongoing projects of worth INR11,232 crores from the ongoing project. The company is projected to have a total surplus of about INR10,118 crores. This projection is favorable when compared to current net debt of INR2,208 crores.

Now let’s move onto our financial performance. In FY ’23, our revenue from projects increased by 29% to INR1,236 crores compared to INR955 crores in FY ’22. Our EBITDA for FY ’23 was INR442 crores with a 31% EBITDA margin, down from the INR635 crores FY ’22. I would like to update that the previous year our EBITDA was inclusive of a one-time transaction. The PAT for FY ’23 was INR63 crores, while it was INR146 crores in FY ’22 with 4% PAT margin. In Q4 FY ’23, our revenues from projects grew by 32% year on year to INR389 crores. The EBITDA for the Q4 FY ’23 was INR117 crores, up by 90% from Q4 FY ’22, with a 26% EBITDA margin. The PAT of Q4 FY ’23 was INR28 crores, compared to INR21 crores loss in a single quarter previous financial year.

I would also like to highlight our dedicated arm for plotted land development, Purva Land. Currently, we have nine projects across three cities totaling approximately 7 million square feet. These projects are located in Bangalore, Chennai, and Coimbatore. Our recent addition is the launch of Purva Raagam in Chennai in Q1 FY ’24. With Purva Land, we aim to provide well-planned and flexible [Phonetic] plotted land options to meet customers’ desire for their dream homes or profitable investment.

Lastly, I want to mention our wholly-owned subsidiary, Starworth Infrastructure and Construction, they are focused on technology-enabled construction solution, with an order book over INR1,600 crores. Starworth undertakes residential, commercial, infrastructure, and industrial projects providing end-to-end services from design to handover, operating a fully-operational precast factory in Bangalore. They emphasize technology and offsite construction methods. Some of their marquee clients include BMRCL, ITC, Jindal Steel & Power, Park, Taj GVK, BIAL, HRC, Godrej Property, DAE, and AMPA. I’m pleased to inform that ICRA has reaffirmed our credit rating at A1 stable during the year.

In conclusion, Puravankara Ltd.’s financial performance Financial performance for FY ’23 has been exceptional, with record sales, strong customer collection, and promising growth indicators in the real estate sector, are establish [Phonetic] acquisition, successful project launches and debt management initiatives position us well for future successes. We remain committed to delivering value to our stakeholders while navigating the evolving market dynamics. Thank you for your attention, and now I’ll open the floor for questions. Thank you.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from the line of Srishti Tandon [Phonetic] from NVS Brokerage. Please go ahead.

Srishti Tandon — NVS Brokerage — Analyst

Hello. Thank you, sir, for the opportunity. How do you see margins picking up since PAT has been negative?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So PAT is a factor of two or three things. Yeah, go ahead.

Neeraj Gautam — Executive Vice President – Finance

No, please continue.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Okay. So basically PAT is a factor of two or three key parameters, right?

Neeraj Gautam — Executive Vice President – Finance

I understand, your question is related to the PAT.

Srishti Tandon — NVS Brokerage — Analyst

Yeah.

Neeraj Gautam — Executive Vice President – Finance

I thought it was the market. PAT was negative in the similar quarter previous financial year because similar quarter previous financial year, our revenue recognition were less and thereby we generated less gross profit and there was a loss for the quarter. However, for last year, for full financial year, we recorded a profit of INR146 crores and this year, for the quarter, we recorded a profit of INR28 crores as well as, as a full financial basis, we have reported a PAT of INR63 crores. So this financial year as a whole basis, we have recorded a profit and last year also as a financial year as a whole we recorded a profit only for that particular quarter. Because of the less revenue recognition, that quarter was resulted in the negative. But that was the Q4 of the last financial year. This Q4 and this financial year, we are profitable.

Srishti Tandon — NVS Brokerage — Analyst

Okay, okay, sir. Sir, can you please tell your plans for commercial along with timelines, how many square feet overall are we planning to launch in FY ’24 and FY ’25?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So yeah, I’ll answer that commercial, but I’ll just add to the previous question. Basically revenue recognition and PAT is dependent on the quantum of possessions that you hand over in a particular quarter. That is one. And secondly, it’s also dependent on what expenses you book in the quarter, which could generate revenue in the future. For example, even if we do a launch in a quarter, there are expenses that we book as cost in the same quarter, but we can’t book those revenues. So those are the factors that typically influence the PAT and the revenue recognition number. So I just wanted to clarify on the previous point on what constitutes a revenue recognition for a particular quarter. And the moment you see higher possessions happening in a particular quarter, you’ll see more and more revenue recognition and higher PAT.

Coming to your commercial question, we currently have about 3 million square feet under construction. We intend to continue to execute these. These will come up for completion in 2025, including about 800,000 square feet, which is called Zentech, and about 2.1 million square foot of a project called Purva Aerocity, which is in north Bangalore. And these are both very unique projects in very unique markets, and we’re quite optimistic with these developments, and the development is going on at a full pace. At this point in time, we’re not intending to add any more commercial in terms of new launches for this financial year. But we are out there in the market looking at new opportunities as well.

Srishti Tandon — NVS Brokerage — Analyst

Okay. Also, it is the news that circle rate for Karnataka will increase. So what is the impact? Will it affect our demand?

Abhishek Kapoor — Executive Director & Chief Executive Officer

No, circle rates don’t necessarily impact the demand. Most of our — I mean, all our projects are priced in a way where the circle rate doesn’t really have an impact on the stamp duty calculation. The area where circle rate may have certain impact is on cost of approvals wherein certain premiums, etc., that are payable are dependent on the circle rate, but we don’t see any significant impact at all on the demand side at all.

Srishti Tandon — NVS Brokerage — Analyst

Okay, thank you. I will join back the queue.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Harish Shah [Phonetic] from HS Investment [Phonetic]. Please go ahead.

Harish Shah — HS Investment — Analyst

Thanks for the opportunity. So I have a couple of questions. So basically, recently the home interest rates have increased. So have they led to decline in footfalls or conversion rate? How do you see the current state of the state of end demand [Indecipherable] income and luxury segment considering impact of the hike?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So at this point in time, we have seen no impact of the increased interest rates on any of our demand. If you look at our last quarter numbers, and I can tell you some ground reality, as of date, we are seeing no impact even today in terms of impact due to interest rate calculations. Last quarter numbers, as Neeraj mentioned, has been a highest quarter, highest number, we’ve crossed 4 million square foot of sales last year. So we’re not seeing any impact on the demand or any footballs due to interest rate. However, having said that, I think what is very interesting for us and why we see the demand going up is we are entering a appraisal cycle for all the corporates. And even if we assume that it will not be as significant as the last year because upwards of 20% and somewhere in the mid-teens, we believe that will obviously give more headroom for a lot of people to make their buying decisions. So that is point number one.

Point number two this work-from-home concept and the hybrid is really helping in the per person demand of housing. So when people work from home at least two to three days a week, they need their own private spaces, which would normally be a working couple with kids. Therefore, we are seeing increased demand on per person basis for residential demand. And the other fact is that rentals have gone up across the board very, very significantly. So if you see with that kind of increased rentals, the arbitrage opportunity is so low that people would rather buy than to rent. And, of course, you’re seeing this happen with the decreased inventory levels in the market. Today we are talking about a little less than 12 months of inventory across India. In Bangalore, in fact, if you look at it, around eight months of inventory. So no indicator or no number can show that right now we have any resistance on the demand side.

Harish Shah — HS Investment — Analyst

Okay. Thanks for the detailed answer. And my second question is just linked to what you have just spoken now. So in that context, do we see the pricing getting on the higher side for your both existing and the upcoming projects?

Abhishek Kapoor — Executive Director & Chief Executive Officer

I think realization is a factor of multiple things. For us, it’s also a mix of inventory. Realization is a factor of the kind of products that you’re launching and the marketing you’re launching in and the demand-supply dynamics. So currently, the way the demand-supply dynamics is definitely supportive of the pricing and, of course, the projects that we’re launching and the value we bring as a brand on the project and in the markets we’re present in, we definitely bring a lot of value and therefore command a premium in all of those markets. So I think from a pricing point of view, we’re quite confident that we will see a positive uptick in the pricing.

Harish Shah — HS Investment — Analyst

Okay. And is it possible to quantify To quantify that would be in the low digits or higher-double digit, something like that?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Look, last year we got an appreciation of mid-teens. If I’m not wrong, it was around 14% average increase YoY basis as a number, right? So I think what — see what happens in real estate, and I’ll just take a second to explain, is any project that you launch through its project lifecycle normally goes through an appreciation of anywhere between 50% and 70%. So as we go along selling our project, and that normally happens because people start seeing visibility of the development and it starts getting closer to the construction completion phase. And, of course, as you sell, you’ll have financial closure, and as people see the progress, they’re willing to pay a higher price, of course, subject to the fact that it’s a strong brand, good quality, all of those parameters, hygiene [Phonetic] I’m not counting into this. So we see that trend continuing for us in this financial year as well.

Harish Shah — HS Investment — Analyst

Okay. Last question from my side. How do you see your plotted development projects panning out, especially in Chennai. Considering that you have close to more than 3.7 million square feet saleable area? And how do you see the cash flow coming in from this project in this financial year?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So two parts. Why we are so excited about Chennai? We launched the project last year called South Bay. That got 100% sold out in three days. In this quarter, as we just mentioned, we have launched a project called Raagam. We’ve got a very positive response. We’ve just gone to market as we speak. And within the first two days, we have crossed 100 bookings, right. So we are seeing great traction there, and we are confident that with the launches we see and the quality of products that we are delivering across the brands, and in fact plotted people find it very interesting that we have really upped the quality of the brand and command a premium in any market that we go in. So when people are seeing, because we have delivered already a project over there, people are seeing what we are capable of developing as a plotted development and how it assures them of the value that they get out of the projects and appreciation they will get over the life of the development that they do at their home. And we are very, very confident that we’ll sell very well.

As far as the collection is concerned, typically, from the date of launch, within the first year, we typically look at anywhere between 50% to 60% collections of the sold realization. That’s the minimum we look at. So supposing we launch in — for example, Raagam we’ve launched now. You would anticipate in next nine months, because it’s nine months, I would say anywhere between 40% to 50% collections will happen in this financial year. And similarly depending on when we launch the next project, it will be the same way. Last quarter we launched a project called Oakshire in Bangalore. And it is almost, I think, 80% sold out as we speak. In the first two days, we sold about INR100 crores of inventory. So again, we’re looking at in this financial year itself from Oakshire collecting almost 60% to 70% of the sold value. So that’s the traction and that’s the turnaround we are able to see as far as cash flow is concerned across [Indecipherable].

Harish Shah — HS Investment — Analyst

Okay. Thank you so much for the detailed answers. If required, I’ll be back in the queue.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from the line of Yashvi Jain [Phonetic] from ICICI Direct. Please go ahead.

Yashvi Jain — ICICI Direct — Analyst

Hello. Thanks for the opportunity. Sir, my first question is about the Chennai project. As you told that you’re planning to launch, so when is the date you’re planning to launch and what you’re expecting the revenue from this project?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Sorry, are you talking about the Chennai plotted development? Is that the one you’re talking about?

Yashvi Jain — ICICI Direct — Analyst

Yes.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Okay. So there are two projects in Chennai, one is a project which we have just launched, which is about 700,000 square feet. In the 700,000 square feet, we are looking at as revenues in excess of INR200 crores. There is another project which we will launch within next two quarters which we will launch about 1 million square feet in the first phase. That would be — the total revenue potential there will be about another INR250 crores to INR275 crores. Of course, there are subsequent phases where we will add because that’s a 3 million square feet of development, so subsequent launches will also add value. So that’s the numbers we’re looking at for this year.

Yashvi Jain — ICICI Direct — Analyst

Sir, my next question is what are the plans for the debt reduction? Since the debt is increasing, how you’re planning to control your debt-equity ratio and reduce the debt?

Neeraj Gautam — Executive Vice President – Finance

If you refer our slide number 32 in our investor presentation, there we have given a detail of how our debt at the different segment of business has increased or decreased in the last quarter. If you look at the debt which we have taken for our residential business, there debt has come down. Beginning of the quarter, the gross debt was INR2,195 crores, and the end of the quarter it was INR2,122 crores. So we have reduced debt by INR22 crores. We had taken — debt of INR245 crores — taken outstanding debt of INR245 crores for land purchases. That debt also has come down. That is INR220 crores at the end of the quarter, so that was down by INR25 crores. However, if you look at the debt which we have taken for two commercial projects, which is backed by a full-fledged CF line and there we are developing a commercial projects. Their debt has gone up by INR33 crores. And as we progress the construction that we’ll have to draw down, and then construction — that we’ll use towards completing the project. And hence that debt has gone up during the quarter.

Besides this, we have also taken a debt of INR115 crores to buy cash flow of the JV partner. JV partner [Indecipherable] 25% of the cash flow. We bought out for INR115 crores, and that INR115 crores that entire 25% cash flow is now available for the company while we can get back to the landowner. And besides that, I would just like to update you, this INR115 crores of the loan which was taken during the quarter, of which INR55 crores was repaid during the Q1 of FY ’24. So as of Q3, this INR115 crores debt also has been reduced by INR55 crores. And hence thereby, what we are trying to communicate is in terms of our debt taken for our residential project and the land is coming down. However, debt taken for our commercial project has gone up because of the [Indecipherable]. And we would like to give you further information. If you refer our slide number 33, there we have also worked out measured the debt vis-a-vis are the area under development, how many areas — what is the square feet we have under production today with the company and what is the debt against it. So if I plotted this number from the Q4 FY ’19, which was that point in time, debt per square feet was INR2,077 per square feet. Today as we are speaking today, the debt per square for development is INR1,106 crores. So it’s substantially down and it’s a decreasing trend. Immediate previous quarter it was INR1,291 crores. And hence this is reflecting — though the debt in absolute number has not come down substantially, however, while we added nine projects during the financial year and thereby these all nine projects have gone for production as well, and hence per square feet debt [Indecipherable] has come down.

Yashvi Jain — ICICI Direct — Analyst

Thank you, sir. Sir, my next question, are we planning any new project for in future, especially for pipeline sector?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, of course, total we are looking at launching 16 million square feet of developable area and a sellable area of 13.7 million square feet. This is on slide number 21 of the ICP. Of this, about 3.74 million square feet sellable area is in Puravankara, 6.22 million square feet in Provident, and 3.73 million square feet in Purva Land. And this is spread across the south and west of India.

Yashvi Jain — ICICI Direct — Analyst

Okay, sir. Thank you so much.

Operator

Thank you. Our next question is from the line of Tirath Muchhala from Elusividya Advisory. Please go ahead.

Tirath Muchhala — Elusividya Capital — Analyst

Hi, thanks for taking my question. Just coming to the cash flow statement. I wanted to understand that there is a significant increase in operating outflows for the year. So is it because of accelerated construction, or is it because of some other reason?

Neeraj Gautam — Executive Vice President – Finance

If you look at our operating — I would like to give you a comparison between operating inflow and outflow both. Our operating inflow has also increased

Abhishek Kapoor — Executive Director & Chief Executive Officer

Has also increased during the quarter and during the financial year. At the same time, operating outflow also reflect. So operating outflow has gone towards number eight for fasting the construction and the more construction progress we achieved, it’s resulted into more collection. That’s point number one.

Number two, we have launched nine projects during the financial year. And hence to launching these nine trips, we have initial working capital is required to launch expenses, approval expenses, etc. And that outflow also going towards launching these projects. Outflow or the collection of these projects will come in the coming quarter. Besides that, we have also spent about INR125 crores on this two commercial projects which we have mentioned, the Zentech and Aerocity. That is also included in our outflows. And hence, the outflow includes — the outflow has a steady characteristic, one is outflow related to the ongoing under construction project against which we have collected INR2,680 crores. Outflow, which is for new launches which is the initial working capital, inflow for this investment will come in the coming quarter. And third, outflow for the commercial development, again, by spending this money, we are developing a capital asset, and this outflow is fully backed by the CF line. Hope this clarifies your question related to increase in outflow vis-a-vis our inflow.

Tirath Muchhala — Elusividya Capital — Analyst

Yes. And coming to two particular matters, one is, 12 months ago we announced that we are aiming at 12 million square feet of launches for FY ’23, and we have done six million. And I think this — and now you guys are speaking of — I am mistaken, but is it 16 million that you’re targeting for the next 12 months?

Neeraj Gautam — Executive Vice President – Finance

16 million of developable area and about 14 million square feet of sellable area.

Tirath Muchhala — Elusividya Capital — Analyst

Right. So we’ve had a history of not meeting these targets, if you look at all our presentations in the last five years. So how confident are you at meeting these targets?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Look, I think what’s positive — and I’ll always look at the optimistic side first. And I personally believe that we are in the right direction. We are working on actually the entire portfolio. Fortunately/unfortunately in real estate sector it takes time, and the timing can’t be fully in your control because of the external environment. Having said that, if you look at the new launch pipeline, it consists of the previous years’ pipeline, which is about 6 million square feet that we missed [Phonetic]. But having said that, we missed by a quarter or two. So what is happening is that they may be deferment. The value is not lost. In fact, value has really gone up because the prices have gone up fortunately for us. And hence, in fact, we have gained value. But having said that, our focus is really, really to launch it as quickly as possible.

All of these 14 million square feet today what we are talking about is in advanced stages of approval. So we are quite confident that this year we will get — we should meet the target or maybe we’ll get definitely very, very close to the target, if not cross it. So, yeah, what I can say for sure is that we’re working on the entire portfolio, and that’s unfortunately the nature of the business. Everything from the local environment to elections to everything impacts us. But having said that, I think we are very much on track as far as our new launches are concerned.

Tirath Muchhala — Elusividya Capital — Analyst

Okay, I wish the best for the team. Can I squeeze in one more question?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, please.

Tirath Muchhala — Elusividya Capital — Analyst

So just for deliveries, I think we’re missing the slide in this particular presentation. For FY ’23, how much have we completed or delivered to customers?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Give us a moment. We’ll confirm that number.

Tirath Muchhala — Elusividya Capital — Analyst

Sure. And for FY ’24, what’s the delivery number in mind that we should be able to hand over?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So we have delivered in excess of 1,600 units in the last financial year, and for the next financial year, our target is to double it and deliver in excess of 3,000 units. Total area that we have delivered in last year is 1.73 million square feet, and next year we are talking about delivering in excess of 3,000 units, so obviously, almost doubling the number.

Tirath Muchhala — Elusividya Capital — Analyst

So does that imply that revenue recognition might be almost double in the next year?

Abhishek Kapoor — Executive Director & Chief Executive Officer

That implication is for you to understand. But yeah, what I’m suggesting is that’s the kind of delivery that we’re working to achieve.

Neeraj Gautam — Executive Vice President – Finance

As revenue recognition is a function of delivery and hence your understanding is correct.

Tirath Muchhala — Elusividya Capital — Analyst

Wonderful. Thank you, sir and all the best.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Thank you.

Operator

Thank you. Our next question is from the line of Sukhum Mafti [Phonetic] from Amin Securities [Phonetic]. Please go ahead.

Sukhum Mafti — Amin Securities — Analyst

Hello, sir.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes.

Sukhum Mafti — Amin Securities — Analyst

Sir, my question is on the landbank front are we looking to do any acquisitions?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Of course, we are looking at actively pursuing transactions across south and west. We have a robust pipeline of acquisitions, and we are moving forward, but the process is quite painstaking because the funnel can be as large as you want, but it takes time to conclude. But yes, we are actively out there looking at new acquisitions for Puravankara, Provident, and Purva Land, with a special focus on the western region, especially in Mumbai and Pune.

Sukhum Mafti — Amin Securities — Analyst

Okay, sir. Sir, my next question is how much is the ready-to-move-in inventory left for your project just recently?

Abhishek Kapoor — Executive Director & Chief Executive Officer

As of now, we have only — recently, there’s nothing ready to move in for launch recently. Total ready-to-move-in inventory is down to 0.26 million or 2.60 lakh square feet approximately. And that’s pretty much insignificant because most of this inventory is in some of the newer projects, which we have just about completed, and we’re looking at selling and handing over.

Sukhum Mafti — Amin Securities — Analyst

Okay, sir. Sir, anything new on the ESG front?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes, definitely. So we are completely focused on ensuring that we are not only ESG compliant, but we are going to be ahead of the curve in next two to three-year timeframe. So there is a lot of work going on in the space all for environment, social, and governance, on all pieces. We should publish our ESG report in the coming quarters for the previous financial year.

Sukhum Mafti — Amin Securities — Analyst

Okay, sir. Sir, my last question is what is the launch date for your Goregaon project? What’s the category and ticket size?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So for the Goregaon project, that’s a Provident project. We are looking at s ticket size of about INR1 crore per square feet. And at this point in time, we are looking at it currently in this financial year for sure to take it to market.

Sukhum Mafti — Amin Securities — Analyst

Okay, sir. Thank you, sir. All the best for your coming quarters.

Operator

Our next question is from the line of Srishti Tandon [Phonetic] from NVS Brokerage. Please go ahead.

Srishti Tandon — NVS Brokerage — Analyst

Okay. Thank you, sir. Any [Indecipherable] in pipeline like there is lot of competition. So how are you planning to expand in MMR?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Well, so we have currently two projects ongoing. Our MMR strategy is really focused, as I mentioned earlier, in redevelopment as well as JDA and brownfield projects. We understand the market very, very well. The leadership team that has been put in place there and the leadership in Bangalore is very familiar with the landscape in the western markets. In fact, Puravankara comes with an advantage in the western region because we come with the strength of our past delivery of over 45 million square feet in the rest of southern markets. And the fact that we bring high quality of development, and we have demonstrated it in some of our projects on how we display and the kind of traction we are seeing, we are very, very confident that we’ll be able to be extremely competitive in the marketplace. Our footprint, of course, in NMR will range right from South Bombay going up to the MMR region wherein we are looking at projects to acquire and do under Provident brand and, of course, few project developments. So we will have a fairly spread-out footprint over next two to three years’ timeframe in MMR.

Srishti Tandon — NVS Brokerage — Analyst

Okay, sir. Sir, what is the closing time from start to the launching of project?

Abhishek Kapoor — Executive Director & Chief Executive Officer

From the day we deploy capital to launch, typically — depends on the market, but generally, we’ll be anywhere between 9 to 12 months outer limit. But our attempt obviously is to do it shorter than nine months, but between 9 to 12 months outer limit.

Srishti Tandon — NVS Brokerage — Analyst

towards residential construction would be around about INR1,650 crores, INR1,700 crores?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yes.

Srishti Tandon — NVS Brokerage — Analyst

How much is the jump like to like from FY ’22 on this number?

Neeraj Gautam — Executive Vice President – Finance

Samar, what we’ll do is, we’ll send these detailed comparison between — I understand your question. You want to understand the split of our cash flow which is for the residential, which is for establishment, and comparative numbers. We’ll work out the numbers and send you offline.

Srishti Tandon — NVS Brokerage — Analyst

Fair enough. The second question was the INR4,200 crores odd of surplus from area which is already lodged. What is the timeline for other than like what is left for sale, how much of these cash flows will come in over the next 2 years to Puravankara?

Neeraj Gautam — Executive Vice President – Finance

So the way we look at it is all this cash flow visibility which we are talking about, which is the full of INR6,550 crores, INR4,229 crores is definitely within next three years timeframe and the INR6,550 crores you would look at anywhere between four to five years outer limit. If you look at our run rate, from residential business itself, we collected INR2,248 crores from last financial year. If I maintain that rate, we will definitely grow by the new launches and the project work completion. But even at that rate also we can collect in two years INR5,000 crores definitely we’re going to collect.

Abhishek Kapoor — Executive Director & Chief Executive Officer

Yeah. INR5,000 crores we’ll definitely collect in two years, but he’s talking about the surplus, so the surplus, I would think, in total, including the new launches, which is going to be coming up, all of that surplus, you can take the number as maximum five years — four to five years from now, because I’m assuming this year when we are launching, maximum four years, 48 months for all the completion of all the projects. Some maybe earlier, because as I mentioned earlier, almost 4 million square foot is plotted development, and that should come around within a short span of time. That capital will come back anywhere between 18 to 24 months outer limit. So I think we should break that down into these 3 parts and you will see that the cash flows will continue to remain strong.

Srishti Tandon — NVS Brokerage — Analyst

Okay. The next question was on the inventory months. Most of us had become quite scientific with respect to tracking this number and so are you as the company. So we have the 16 million square feet which we have released for sale, of which we’ve sold 8 million square feet. The current run rate is 4 million square feet. God willing, it will go up. But even at 4 million square feet, we have two years of inventory and we’re planning to launch another 16 million square feet or release 16 million square feet for sale this year. So what is the inventory months of the company we are comfortable with because most of your peers are less than 12. Of course, some of your peers are between 30 and 35 also. For us, what is the comfortable number?

Abhishek Kapoor — Executive Director & Chief Executive Officer

So I’ll tell you how we manage our inventory. A project when we say we are taking it to market doesn’t necessarily mean that we open the entire inventory for sale, right? We open inventory basis the quantum of volumes we are selling at launch and in a particular year. Our optimal number to add any new inventory in a particular project, which is a subsequent phase is 70% of sales having done in the previous phase. So if you look at it at any point in time, our inventory which is available in the market is in a manner which is very, very comfortable for a financial closure of the project and then, of course, we’re looking at the surpluses. So we manage our inventory in a manner, at any point in time, never to overcommit on the construction cost for the project. So when we launched, typically, within the first year of the launch, if you would see most of our numbers, our sales will be anywhere between 40% to 50% of this inventory open for sale. In the next year, typically, it will go to almost 70% somewhere in the middle of the year, and then we’ll open another phase of that project and so on and so forth. So that guideline principle controls our commitment as far as the construction cost is concerned. And then you’re right, last year we moved 4 million square feet, but 4 million square feet at that rate will take two years to go and then another 16 million square feet we’re adding, but 16 million square feet not opening for sale at one go.

Let’s assume we’ll open another 6 million square feet — I’m not giving you the right number right now. I’m giving you an assumption. Please don’t take it as my indicated number. The number in reality will be very different, but I’m saying even if I open 6 million square feet and I sell 3 million square feet this year plus the 4 million square feet of last year, it goes to almost 7 million square feet. But what has happened is that my overall sales numbers have gone up. At any point in time, I have never overcommitted to the quantum of construction and committing myself, so that’s how we operate. That’s the principle with which we operate.

Srishti Tandon — NVS Brokerage — Analyst

But the 16.5 million square feet, excluding the convert commercial or even the convert commercial, which is the case, that’s already released for sale, right?

Abhishek Kapoor — Executive Director & Chief Executive Officer

Sorry, 16.5?

Srishti Tandon — NVS Brokerage — Analyst

On slide number 38, the 16.5 million square feet across the 30 projects that’s the entire area which is…

Neeraj Gautam — Executive Vice President – Finance

I’ll explain to you, Samar. Out of 15.53 million square feet, which is released for sale, 52% has already been sold. Today inventory, which is open for sale available is only 8.53 million square feet. Then the second-last column on the slide 38, 8.53 million square feet, which is inventory which is right now open and available for sale today. Beside that, we have about 7.12 million square feet which is the third column from the left, which is 7.12 million square feet which are inventory from the existing project which we have not opened for sale. So out of today, which are the projects which is under production today, 8.53 million square feet, which is available in the market for sale and 7.12 million square feet, though we have all the tools [Phonetic] in place, but we have not committed any construction costs, we have not started the construction, we have not opened for sale. Based on the requirement and how market performs, we’ll keep opening the towers out of existing project.

Srishti Tandon — NVS Brokerage — Analyst

Okay. And my last question was in the cost of debt, from a balance sheet perspective and even how liquid the promoters are, your absolute debt is comfortable, but if you compare the cost of borrowing for Puravankara versus some of the peers, you’re probably 250 to 300 basis points higher. So why is that so? And are we working to probably bring it down closer to some of the larger peers of Bangalore or Bombay?

Neeraj Gautam — Executive Vice President – Finance

Number one, we are working to bring it down, point number one. Point number two, if you look at last 1.5 years, interest rate has gone up, And if you look at the banking and financial institutions, they have increased the repo rate — RBI itself has increased repo rate by 250 basis points. However, if my interest rate raises concern, of course, where we are comparing to the market, it is on the higher side. But if I compare to my own performance, it was at 10.569% at the beginning of year, today it’s 11.31%. So though interest rate has gone up by 250 basis points, our interest has not gone up. However, as the right feedback you’ve given that we are continuously working on reducing this debt. Part interest rate cost is also a little higher because part of my debt is against the land loan and part of the debt is for the construction of commercial projects, and the comparison which you are making from some of the companies of the Bangalore which has substantial part of debt against the LRD and hence the interest rate is — LRD interest rates are lesser compared to the construction debt or the debt for buying the land.

Srishti Tandon — NVS Brokerage — Analyst

Fair enough, Neeraj. I’ll probably hand it over to you guys again for final comments.

Neeraj Gautam — Executive Vice President – Finance

Thank you, ladies and gentlemen, for joining us for our Q4 and annual conference call. And I’m wishing a happy weekend to all of you. I hope that me and my colleague has answered all your questions correctly. And after that we are also available for further questions. For any clarification, kindly reach out to us. We’ll provide you with the full response. Thank you very much.

Srishti Tandon — NVS Brokerage — Analyst

[Operator Closing Remarks]