Over the last several years Real Estate sector has gone through transformationalchanges like RERA GST and the recent credit slowdown by the Non Banking FinancialCompany (NBFC) and Housing Finance Companies (HFC) has put a lot of stress in the sector.Despite the adverse environment your company had robust collections exceeding Rs 2600crores for the year. We also delivered 9.7 million sqft across various projects in Mumbaiand NCR. Just as One Indiabulls Centre created the benchmark for Office development inMumbai Blu Estate & Club has created a new benchmark for uber-luxury living in theheart of the city - Worli.
Commercial Real Estate is quite robust and your projects have 98% occupancy. Even onthe Residential side all indicators are pointing towards end of the down-cycle. Thetransformational changes in the sector (RERA GST) coupled with the recent credit slowdownhas constrained the available supply. At the same time affordability is at multi-yearhigh and home mortgage rates are at a multi-year low leading to higher demand. Thesechanges have polarized the industry and the organized/established players stand tobenefit with higher market share.
Government has embarked on an audacious mission to grow India into a $5 trillioneconomy by 2024 and Real Estate is expected to contribute 13% to the GDP. At the sametime Institutional investments in Real Estate has seen a quantum jump from Rs 46500crores in 2009-2013 to Rs 140000 crores in 2014-2018. The Government initiatives coupledwith huge Institutional capital inflows will provide a further impetus to the sector.
Company Business Overview
Your Company is one of the largest real estate companies in India with awell-diversified presence in both commercial and residential real estate development andhas projects across the price spectrum from mid-income premium to the super luxuryspace.
Zero Net Debt in FY20
Your Company has embarked on a clear and simple path to achieve Zero Net Debt in FY 20through the following steps -
Unlock the value of 'Commercial and Leasing' business by divesting these assetswith Third Party Investors/ internationally renowned Private Equity players. The expectedEquity Value would be ~ Rs 4400 Cr - Rs 4800 Cr.
In light of continuing Brexit related issues and uncertainty around it theLondon property market remains sluggish. Your company will divest the Hanover Squareproperty London and the sale would release an Enterprise Value of 200 million.
The above steps will generate over Rs 6000 Cr thereby reducing the Net Debt of yourCompany to Zero in FY 20 and leaving surplus cash for further growth of the Company.
Your Company will focus on its core markets - Mumbai Metropolitan Region & NationalCapital Region for sustainable growth and strengthening of its on-going businesses.
It will routinely sell the under construction office properties to Investorsand deploy those funds to acquire additional land parcels/unfinished projects for furtherdevelopment.
Your company will focus on asset light model through JV development with landowners/other developers without incurring significant upfront land acquisition cost.
Your company has an unexploited fully paid Land Bank of 1929 acres and isspread across Mumbai NCR Chennai and additional 1424 acres of Nashik SEZ. The landbank has the growth potential for Development & Rental portfolio worth atleast Rs5000 Cr on replacement value basis.
Execution of ongoing & planned projects would generate a Net Surplus of Rs12907 Cr. This excludes all the projects and assets that will be sold in FY 20.
Performance highlights: Sustaining growth momentum
In the year gone by your Company has continued a commendable financial and operationalperformance. It gives me immense pleasure to convey the performance highlights for 2018-19as follows:
Total Revenues Rs 5223 Crores
Profit after Tax (PAT) Rs 504 Crores
Your company employs best-in-class practices in Construction Technology (AluformJumpform) to provide superior quality and strength to the buildings. Our projectmanagement teams apply the standard practices across projects and in FY 19 we delivered9.7 million sqft across various projects - Blu Estate & Club (Worli) IndiabullsGreens (Panvel) Indiabulls Golf City (Savrolli) Centrum Park (Gurgaon) Enigma(Gurgaon) and Mega Mall (Jodhpur).
Each of our projects enjoy a distinct infrastructure advantage in the micro-market.They are benefitting from the Government push on the various infrastructure projects likeMumbai Metro Dwarka Expressway Trans-Harbour sea link Navi Mumbai InternationalAirport etc.
Our commitment and trust
We always pursue and attempt to do better for your Company. Despite the adverse marketconditions your company aims to get to Zero Net Debt in FY 20. Your Company also hasclear path of growth through its huge pipeline of Existing Projects Planned Projects andLand bank. It also aims to harness the lucrative development opportunities which are nowavailable for larger organized developers through the asset light JV development model.
Finally I express my gratitude to our employees for their consistent committed anddedicated efforts in achieving the objectives of the Company and for their engagement inour challenging journey. Also I am thankful to our valued shareholders bankers and allbusiness associates for their continuous faith and support for accompanying us in ourexciting journey.
Founder & Chairman