“Ashiana Housing Limited Q4-FY10 Earnings
Conference Call”
June 3, 2010
MANAGEMENT : MR. VISHAL GUPTA – MANAGING DIRECTOR
MR. VARUN GUPTA – DIRECTOR, FINANCE
MR. BHAGWAN KUMAR -- COMPANY SECRETARY
MODERATORS : MR. GAURAV SUD – KANAV CAPITAL
MS. ISHPREET BATRA – SUSHIL FINANCE
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Ashiana Housing Limited
June 3, 2010
Moderator Ladies and gentlemen good afternoon and welcome to the Ashiana Housing
Limited Q4FY10 results conference call. As a reminder, all participants' lines will be in a listen-only mode. There will be an opportunity for you to ask
questions at the end of today’s opening remarks. Should you need assistance
during this conference call please signal an operator by entering ‘*’ and then ‘0’ on your touchtone telephone. Please note that this conference is being recorded.
I would now like to hand the conference over to Ms. Ishpreet Batra of Sushil Finance. Thank you and over to you, Ms. Batra.
Ishpreet Batra This is Ishpreet here. It is my pleasure to welcome you all to the Ashiana
Housing Fourth quarter FY10 Investors Conference Call. This call is being held
to discuss the performance of Ashiana Housing for the fourth quarter and the
audited financial year. Ashiana Housing is a mid size real estate company with
operations across six cities that has built a successful track record delivering
over 8 million square feet of space to over 6,000 families. As a company, it is
aiming to build a niche for itself in the retirement housing space and has on
the last quarter launched a 2.3 million square feet project Ashiana Rangoli at Jaipur.
I hope that all of you have had a chance to go through the quarterly results and investor presentation that went out with the invite. Today, on the call from Ashiana Housing, we have Mr. Vishal Gupta – Managing Director, Mr.
Varun Gupta -- Director, Finance and Mr. Bhagwan Kumar -- Company
Secretary. I would now like to hand over to Mr. Varun Gupta, Director Finance of Ashiana Housing.
Varun Gupta Thank you everybody for joining us on the call. This quarter has been a very
important quarter for us as we launched 2.7 lakh square foot in Rangoli
Gardens, which is the largest project being taken up by Ashiana till now,
totaling near about 25 lakhs square feet. This was the quarter where we also
started handing over of the second phase of Ashiana Aangan and the first
phase of Ashiana Amarbagh. This quarter also saw continued improvement in
markets in bookings and we have clocked 2.51 lakhs square feet of booking
this quarter and we have also clocked a PAT of 15.32 Crores for the quarter.
We ended the year with a PAT of 36.67 Crores and we propose a dividend of
Rs. 1.50 per equity share. With that I would like to throw it open for questions. Thank you.
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Ashiana Housing Limited
June 3, 2010 Moderator Thank you very much. Ladies and gentlemen we will now begin the question
and answer session. At this time participants who would like to ask questions may please enter ‘*’ followed by ‘1’ on their touchtone telephone. If your
questions have been answered and you wish to withdraw a question from the
queue please enter ‘*’ followed by ‘2’. You are requested to please use your
handsets while asking a question. To ask a question please enter ‘*’ followed by ‘1’ now. Our first question is from the line of Virendra Verma of Global Holding Corporation. Please go ahead.
Virendra Verma Good evening, sir. Virendra Verma Looking at your past performance, very interestingly I mean following there
have been, for a real estate company, like almost for five years you have been
almost a debt free company. So just wanted to know how you are operating and what has been your philosophy towards this?
Vishal Gupta Mr. Verma, one of the strengths of the company has been strong deliverables
and because of that there has been a huge customer comfort in presales of
our projects. The large part of our financial closure has been coming from the
customer advances. Our own deployment of funds have been smaller because we have been working in suburban townships where cost of land has been smaller and we have also forged lots of partnerships or joint developments thereby reducing the need of large capital deployment towards land.
Virendra Verma Okay. Is it the philosophy for the company to follow only the Tier II or Tier III
cities rather than focus on metros? Vishal Gupta Mr. Verma, largely the focus of the company is to provide middle income
group housing. We felt that we have been able to create a niche for us in
this market which is largely starved for quality. Hence to service this market
the land cost needs to be cheap. So we have chosen suburbs of larger
townships like Delhi or we have chosen Tier II cities to be able to service this demand.
Virendra Verma What will be your average cost per flat, if you can just or maybe like rate like
as per square feet rate?
Vishal Gupta See, it fluctuates on a cost of construction, fluctuates with many other things.
Are you asking about the sale price….? Page 3 of 19
Ashiana Housing Limited
June 3, 2010 Virendra Verma Yes. Like say per flat cost is it 30 lakhs, 20 lakhs, 50 lakhs, in that kind of
range? Vishal Gupta Let us say 90% of our properties would be ranging from bracket of 12 lakhs to
35 lakhs with higher volumes in the 20 lakhs to 25 lakhs category. Virendra Verma And for the retirement resorts also, will the price be same especially and
can you give me some indication on the Lavasa resort? Vishal Gupta You see, in Lavasa, we have a price range of 28 lakhs to 80 lakhs. That is the
only place where our pricing strategy has been a little different because the cost of construction on the hill station is pretty high.
Virendra Verma Yeah. But is that project a JV with Lavasa or is it like a standalone project for
Ashiana? Vishal Gupta It is an outright purchase from Lavasa, but we are one of the anchor clients
because we brought in the concept of retirement community into the project and have benefited them by increasing the project size by 6.56 lakh sq ft.
Virendra Verma Okay. Thank you sir. Moderator Thank you Mr. Verma. Our next question is from the line of Neeraj Marathe of
HU Consultancy Pvt. Ltd. Please go ahead. Neeraj Marathe Good evening. Congratulations on a good set of numbers. Just two quick
questions from me. The first is about dividend. Nice to see that you are back to dividend this year. Just wanted to understand whether our company is
going to have a expressly defined dividend policy henceforth or it is going to be kind of adhoc.
Varun Gupta Neeraj, on the dividend, we are also glad that we are back to paying
dividends. We will continue to pay dividends at least endeavor to continue to
pay dividends. But we do not have a set policy as specific percentage of profits
or a specific percentage of equity that we will keep paying out. It will depend
on A) Our performance during that year B) our outlook for the future and C)
outlook on the market. Depending on those things we may continue to make
decisions year-on-year. But we will continue to pay dividend. The quantum is more which will be decided as and when we go ahead.
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Ashiana Housing Limited
June 3, 2010 Neeraj Marathe Okay. Fair enough. The second question was about the rights issue which was
scrapped recently. I mean to be frank with a decently strong balance sheet,
the necessity for dilution, I could not understand any of that beside the point.
Just wanted to understand that after now that the rights issue has been
scrapped, are you looking at possible dilution in anyway in the near future?
Vishal Gupta We do not have any dilution plans. Neeraj Marathe No plans as such?
Vishal Gupta No.
Neeraj Marathe Okay. That would be fine. Thanks a lot. Moderator Thank you Mr. Marathe. Our next question is from the line of Raghvendra
Reddy of Ambit Capital. Please go ahead. Raghvendra Reddy Good afternoon. Thanks for taking my question. Congratulations on a very
good set of results. We wanted to know what is the debt at the end of the financial year on the balance sheet?
Varun Gupta On the consolidated basis, we have 7.8 Crores of debt which excludes
partnership firms which together have about 1.9 Crores of debt. So total
debt is 9.7 Crores. Raghvendra Reddy Okay. Last year how much actual delivery did you do in terms of square feet
and what is the same number for FY11 and FY12 which you have planned? Varun Gupta We look in square footage. In construction we look at a term called equivalent
area constructed instead of looking at deliverables because they make it look too bulky in some quarters. Like if you have a project and you do it over two years but you deliver it in one quarter, then that quarter becomes bulkier in terms of construction. So for internal tracking of production, we
have a term what we call is equivalent area constructed. This is the percentage
of projects that is constructed in that period multiplied by the total project size.
So let us say 10 lakhs square feet project and we did 20% of the construction
in a particular year then we did 2 lakhs square foot construction in that
year. This year we did 10.22 lakhs square feet of equivalent area and we
are looking to take that to 14 lakh square feet in '10-11 and 17 lakh square feet in '11-12.
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June 3, 2010 Raghvendra Reddy Any new cities which you are entering apart from the once you have? I mean
you have operations in mainly Tier II and Tier III cities where there is an intended strategy of keeping the land cost low. Any new cities or a new
geography you are looking at in say, southern part of the country or any other new geography you are entering?
Vishal Gupta The company has two pronged approach on this. First and foremost we want
to strengthen our position in the area of operations that we are already there
so that the continuity is also maintained and we are also always able to get a
little better in the markets we have past track record. To just let u know,
Ashiana commands a premium in every market that Ashiana is operating
in its second project, we are definitely one of the highest paid
developers in that particular market segment. Apart from that we are looking
at suburbs of some of the metro cities for retirement development but we are more aggressive at the moment to strengthen our position at the existing location.
Raghvendra Reddy Okay any plans you want to share with us on your ancillary businesses like
service apartments or hotel properties or any other allied activities which you
are already doing, anything which you want to share in terms of tangible plans for the coming one year to two years?
Vishal Gupta We already have one 50-room hotel operational for last two and half years and
in the next two months we will be making an adjoining property to the existing
hotel of 50 rooms and a rental space of around 45,000 square foot, which is a
rent only model, where already three shops or four shops have opened. So we
are expecting and we have also signed up with Easy Day part of the Wal-Mart
Group. Apart from that we are also coming up with soon launching a hotel- cum-retail project in Jamshedpur which is going to be a 110 room property
and around 70,000 square foot to 75,000 square foot of retail space. So these
are our retail and hospitality forays in the near future. Apart from that
hospitality and retail we only like to take it up more as an opportunistic way,
we are doing a larger township, we are doing larger projects, so there is some
scope of retail or there is some scope of a hotel there. We are not really going out and getting lands for say a mall or a commercial space or a hotel.
Raghvendra Reddy I am sorry if you could please repeat the amount of square feet which is
available for rental in Jamshedpur? I missed that. Page 6 of 19
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June 3, 2010 Vishal Gupta The retail space in Jamshedpur we are looking at is around 75,000 square foot
of retail space and 110 room hotel in the same property, over and above the 75,000 square foot of retail space.
Raghvendra Reddy Okay. Anything which you would want to share on the service apartment
space, anything which you are coming up with? Vishal Gupta We do not have any immediate plans of serviced apartments. Raghvendra Reddy Okay. That is all from my side. Thanks for taking the questions and
wish you all the best for the coming two years to three years. Moderator Thank you Mr. Reddy. Our next question is from the line of Bhushan Mahajan
of Arthbodh Financial. Please go ahead. Bhushan Mahajan Sir, already your results have been very well appreciated. I have just one
concern. There was a news item particularly regarding your Lavasa project,
not your project, but Lavasa project. We heard that there were certain
environmental concerns like certain clearances were not taken before the
project itself got started. Whether it will have any implications on our working? And are you aware of such environmental problems?
Vishal Gupta As far as Lavasa is concerned it is one of the most environmentally conscious
projects. The amount of work that they are doing in the spectrum of
environmental management is commendable. We have been working in
multiple locations looking at multiple number of projects and environmental issues are of a great concern to our company as well. I do not foresee any
major issue on that even if there is, I mean, with larger projects like this there
are always going to be any, even if it is a minor issue it is made a news item.
Bhushan Mahajan There was a news item which London-based Sunday Times where there was a
case lodged and it was I read it particularly….
Vishal Gupta I honestly am not aware of the case with great particulars in details, but
like I said that I am aware of what Lavasa is doing on ground as far as
environmental requirements are concerned and they are doing a fantastic job.
Bhushan Mahajan Okay. Thank you. Moderator Thank you Mr. Mahajan. Our next question is from the line of Vidhya Sagar of
Mecklai Financial Services. Please go ahead. Page 7 of 19
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June 3, 2010 Vidhya Sagar Good evening Mr. Varun. Congrats on your better numbers. I just have one
question on the hotel projects coming up in Jamshedpur. I would like to
understand whether this is a joint venture assignment or it is a standalone?
Are you executing this through a special purpose vehicle or on the main
company Ashiana? And please give me detail as to what is the cost of the hotel as to cost per room and other estimates?
Vishal Gupta The hotel is a standalone project, coming up in the holding company itself, the
same entity. We have 100% ownership stakes in it though it is a resold land from Tata Steel to us. So, the hotel will have 108 keys. We estimate
cost of construction to be between 20 lakhs to 30 lakhs probably approximately 25lakhs a key. Cost of retail space will be 1500 Rs a foot.
Vidhya Sagar I would like to confirm you said per room cost if 20 lakhs to 30 lakhs. Vishal Gupta Yes.
Vishal Gupta We are in the process of tie-ups with hotel management chains and hence the
rate is a much wider range that we are mentioning to you at the moment.
Vidhya Sagar Are you planning to launch any independent brand in hospitality under
Ashiana? Vishal Gupta No.
Vidhya Sagar You are consciously going big in hospitality I just like to understand whether
you want to launch any nationwide brand as to take up hospitality in a big way?
Vishal Gupta No, we are not looking at any company-owned brand. We do not want to
operate the hotel business directly.
Vidhya Sagar Can you give us a detail as to what is the class of the property? Whether it is a
four star or a five star? Vishal Gupta The one in Bhiwadi that is already operational although we have not got a
rating it would be closer to a four star property and in Jamshedpur what we
are going to be coming up again is going to be between a three star and a four star, depending on the branding that we are able to and hence the Rs. 20 lakhs to Rs. 30 lakhs per key
Vidhya Sagar Thank you.
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June 3, 2010 Moderator Thank you. Our next question is from the line of Theo of Unify Capital. Please
go ahead.
Theo Good evening. I have two questions. What is the estimated ARR in a city like
Jamshedpur just to understand the way you evaluate hotel opportunities? Secondly, can you help me understand how you distinguish between
retirement resorts and group housing, the business model how are they different?
Vishal Gupta We have done a research on the hotels on two platforms. One, through the
property consultant people and other from our existing hotel operators and
what we are made to understand is that ARR could range between Rs. 3500 to Rs.4000. As far as the distinction between group housing and retirement
communities is concerned, a retirement community is age-specific, it is a
residential project for catering to a certain age group wherein we have defined that only people of 55 years of age and above can be residents of such
projects. And the facilities of the project, internal design of the project, safety
security standards of the project, wheelchair accessibility, all has been defined and designed to the requirement of the elderly.
Theo Okay. So the group housing done is for sale and once you deliver you are out
of that project in the case of retirement resorts the Ashiana Housing has an
ongoing service commitment and a revenue stream where you can earn return?
Vishal Gupta Well, in both the projects, we are selling the projects out to the buyer. In both
the projects we have maintenance, commitments post-handing over. Since
1992 we are maintaining projects and today we are managing more than 3500 homes.
Theo Okay. But in the case of retirement resort is the service standard and the
service commitment different? Or is it….? Vishal Gupta Yes, of course. It is much higher and the retirement community project is a lot
about post handing-over services and that is also one of the key differentiators
of our project. In fact, one of the important things that we believe in
the company is retirement community business starts when we hand over the project.
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June 3, 2010 Theo Can you give us some sense of how the business model works? If I were to
buy a retirement home for say Rs. 2000 a square foot, what would be my outgo to you of services that I consume?
Vishal Gupta Today, we would ideally look at the people who would be able to enjoy
the services of our retirement communities would be families who would have
at least a minimum of Rs. 20,000 to Rs. 25,000 of spending money every month. Those are the families typically who would be living in these communities apart from the initial cost.
Theo That Rs. 25,000 they would pay Ashiana for what?
Vishal Gupta No, no. This Rs. 25,000 is not the outgo to Ashiana. This Rs. 25,000 should be
their overall living expenditure for a month at least. We have divided the
expenditure into regular monthly maintenance expenditure then there are certain pay-by-use facilities. There is a dining facility. If you dine then you pay, if you do not then you do not.
Theo Okay. So in future it looks like the company is focusing more on retirement
homes. Do you see the company evolving from pure construction into quasi hospitality?
Vishal Gupta One of the strengths of the company has the services post handing-over
because since 1992 when nobody had heard about facilities management, the
company took up facilities management of its projects and we are maintaining it. Our bend toward services has always been pretty high. We definitely feel that the future for retirement communities in the country is
humongous, but I do not think I would be in a position to comment as to how
we really see our company five years down the line. We are going to take it as it comes. But definitely we see a very-very bright future for the
retirement communities.
Theo Okay sir. Last question. I have been to Lavasa and I have seen the Lavasa
projects and I have also seen your project site. It appears that your offering is
significantly lower cost compared to what Lavasa themselves. Of course, their
M&Ts are much higher. I know that they are selling slowly. Sales are not that
quick, particularly, because most buyers seem to be looking at as weekend
homes or NRIs looking at as long-term potential use. Are you able to sell well in Lavasa?
Vishal Gupta Yes I would say that are as per expectations.
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June 3, 2010 Theo What proportion of your project is sold?
Vishal Gupta Of the 2.8 lakhs square foot that we have launched we have sold 1.2 lakhs
square foot.
Theo Okay. Sir, do you do your own construction or do you outsource to contractor? Vishal Gupta We are doing all the construction departmentally.
Theo Thank you very much. Moderator Thank you. Our next question is from the line of Amit Bagaria of Angel
Broking. Please go ahead. Amit Bagaria I have a couple of questions. I am referring to your presentation Slide #7
ongoing projects. Now, in the saleable area is 71.11 lakh square feet. I just want to understand what is the share of the JV in this 71 lakh?
Vishal Gupta JV projects of the 71 lakh is 36 lakh square feet.
Amit Bagaria Right.
Vishal Gupta 36 lakh projects are in JV. Amit Bagaria Right. Out of the JV what is the share of the other partners in JV roughly?
Vishal Gupta Different projects some around 50/50 and some around 65/35.
Amit Bagaria Okay sir. On average the 18 lakh to 19 lakh would be the total share of the JV
in this? Vishal Gupta I did that on a pure 50-50. If you see just for I just have rough calculation but
that will be closure to 16 maybe in that. Amit Bagaria Perfect. In one of the slides you have mentioned about your future projects. Vishal Gupta Yeah.
Amit Bagaria It is something in the Slide of #14. Varun Gupta Yeah, those projects are completely owned by the company, except for Ashiana
Amar Infrastructure Amit Bagaria** By when are we planning to start all these projects?
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June 3, 2010
Vishal Gupta In Ashiana Amar Infrastructure, 1 lakh square foot is to be launched within the next six months and the other projects we do not know
exactly the timelines for each project. We will keep updating every quarter if the projects is going to come alive.
Amit Bagaria Okay. That is fine.
Vishal Gupta We are yet to launch Marine Plaza. 1.7 lakh square foot retail and hotel in the
next couple of months. Probably three months. The group housing and retail
projects in Jodhpur in Ashiana Amar Infrastructure, 1 lakh square foot to be
launched within the next three months to six months as well. The other two projects we do not have any commitment right now.
Amit Bagaria Absolutely sir. On the ongoing projects where we have the saleable area of 71
lakh square feet, by when are we planning to exhaust this whole 71 lakh? Do we have a timeline set?
Vishal Gupta Except for Rangoli Gardens, which is a 25 lakh square foot project. Everything
else will be consumed by '12-13. Most of it between '11-12 and other in '12-
13, expected completion time of all projects have been given in the remarks
column on the right except for Rangoli Gardens which would take about six years from today.
Amit Bagaria So you are looking for a six year there? Okay.
Vishal Gupta Rangoli Gardens should be six years.
Amit Bagaria I am seeing that the promoters have been buying shares from the market
through creeping acquisition. Have you bought anything during this quarter?
Vishal Gupta We did buy in April. Amit Bagaria You would like to, if you can just quantify it? Vishal Gupta Like 1,80,000 shares approximately a percent. Amit Bagaria That is the only thing that we bought. Vishal Gupta Yeah.
Amit Bagaria One last question like just correct me if I am wrong. Is our auditor also sitting
on our board of directors? Page 12 of 19
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June 3, 2010 Vishal Gupta They are not. They are different Chhawchharias.
Amit Bagaria Okay, they are on different side. Okay, great. Thank you and best of luck. Moderator Thank you Mr. Bagaria. Our next question is from the line of Ayush Mittal of
Mittal & Co. Please go ahead. Ayush Mittal In the Q4 numbers the margins were excellent they were way above the
historical averages. So was it from your two successful projects Lavasa and Aangan?
Varun Gupta We still have not recognized revenue for Lavasa as of yet. It should be
recognized in the April to June quarter. The volatility in margins in quarter and
quarter will be there, it is a part and parcel of the real estate business. So the
movement becomes that. The specific reason here was the cost of construction
of Ashiana Aangan Phase II which is completed, came in a lot lower than what
we had estimated. We do percentage expense in percentage completion
accounting as per estimated cost. In Aangan Phase II since they came in a lot
lower the all of like let us say six quarters of cost recognition that was higher
because estimates were higher had pulled in this quarter. So this volatility in
quarter-to-quarter numbers specifically because percentage completion
accounting also requires a use of lot of estimates and the volatility is in our
accounting per se in real estate anyways will have volatility in the quarter-to- quarter margins. It is the annual margins that I will look at more which we think should be sustainable for the next year or two at least.
Ayush Mittal Okay. So how much of the revenues have been recognized for the Aangan
project? Varun Gupta Aangan project, out of area that has been booked already and the revenue
that we have not recognized is about 17-odd Crores. 17 is what we have not recognized of only the area that has been booked. The square footage
which lies unbooked, 10.9 lakhs square foot would also translate into another 240 Crores of revenues.
Ayush Mittal That is pending to be recognized, like to be booked? Vishal Gupta 240 Crores plus 17 Crores, so around 257 Crores. Ayush Mittal This much of revenue might be booked later?
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June 3, 2010 Vishal Gupta It is not a question of IF but WHEN we will be booking. Yeah, they are not
booked yet. In the sense that the project that part of the area has not been
booked by customers but we expect the bookings to happen over '10-11, '11- 12.
Ayush Mittal Okay. There has been a lot of pressure on the real estate sector in the NCR
region. How is Bhiwadi holding out? Vishal Gupta We are able to get Rs. 2200 a square foot while there are areas in Noida
extension and Ghaziabad which are drawing Rs. 2000 a square foot. Ayush Mittal Okay. The demand is there like before?
Vishal Gupta We have been able to have a very consistent quantum of sales in Bhiwadi.
Ayush Mittal Okay. Another thing, of late the companies trying to scale to other territories
in India, apart from Bhiwadi. Last time we discussed you have taken the JV route. So how are things going in the JVs?
Vishal Gupta Mostly good, in fact, with Mangalam group after the first successful JV, we did
the second JV was at 25 lakh square foot. So I would say that most of our partnerships are doing well.
Ayush Mittal Okay. I was seeing in the accounting part. The company has been recognizing
only the profit from the partnerships, the JVs. Why do not we try to get in also the revenue booked in our profit and loss…?
Varun Gupta That is something that we are working on, if you know other companies who
are doing such things please do let us know. Ayush Mittal Yeah, because JV thing can be booked in our accounts. Varun Gupta We will look into it starting the year '10-11. We are looking it to a structure.
The structures of our JVs also are a little complicated to reflect the true nature of the commercial transaction. So we look into consolidating that. We are working on it. As and when it happens we will inform you.
Ayush Mittal Okay how is the progress at the Jaipur project especially? Vishal Gupta About the Jaipur projects, Ashiana Greenwood has done very well. We have
been able to command a very good premium. Ashiana Mangalam is a sold
out project. Utsav which is a retirement community is picking up. I would not Page 14 of 19
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June 3, 2010
say we are happy with the sale volume. Rangoli Gardens which is a new project
that we have launched has got a fantastic response. We are in fact doing the
Bhoomi Pujan on Monday.
Ayush Mittal Okay. Best of luck for your upcoming project. Thank you.
Moderator Thank you Mr. Mittal. Our next question is from the line of Kushbeer Singh, an
individual investor. Please go ahead.
Kushbeer Singh Hi, Vishal.
Kushbeer Singh I just wanted to know how is current trend in the business now? How much we
have booked in the last April and May months?
Vishal Gupta April and May we have done closer to 1.65 lakh square foot.
Kushbeer Singh Month wise?
Vishal Gupta Month wise, we did around 1.1 in April and the rest in May.
Kushbeer Singh Okay. How is price realization? Is there any improvement in last six months in
our different projects, sir?
Vishal Gupta We see there is a marginally increased price. I do not think there is a major
price increase in any of our projects. I would say 3% to 4% odd.
Kushbeer Singh Okay.
Vishal Gupta But there has been significant improvement in the quantum of sales. So that is
something that the company realizes it needs to focus on. Like Varun said, we
were able to control cost, so our Phase II costs have come down below our
estimated cost which adds to the bottom line.
Kushbeer Singh Okay. That is all I just wanted to know. Thank you.
Moderator Thank you. Our next question is from the line of Dhruv Sabharwal of Tata
Securities. Please go ahead.
Dhruv Sabharwal Hi. I have two quick questions. Firstly, what is the average cost of
construction? And secondly, when you talk about Tier II and Tier III cities, are
you witnessing any competition from small builders who also envisaged I
mean taking advantage of the low land cost? Page 15 of 19
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June 3, 2010 Vishal Gupta Good question, Dhruv. The first part our construction cost on a variety of
products, low-rise, high-rise specifications vary from Rs. 800 square foot to
Rs. 1050 a square foot with Lavasa being an aberration because of the hilly
terrain, it is significantly higher. Your second question, are we facing
competition from local small players? In some locations, yes. But mostly, no.
We have been able to command a premium because of our quality and timely
deliverables in most locations.
Dhruv Sabharwal All right. Thank you.
Moderator Thank you. Our next question is from the line of Tanya Dialani of Oyster
Capital. Please go ahead.
Tanya Dialani Hello, sir. I have two questions. My first question is could you keep tell us
something more about if you have in facility management?
Varun Gupta 40.16 Tanya, like I had mentioned in the earlier question as well, the company took
position in facility management in 1992 and till date we are already
maintaining and managing 3500 dwelling units. The only thing is that the
company does not do facility management outside its own property developed
by it. So we are not pursuing facility management as a separate business
activity which we are doing for any and every project. It is only for the project
developed by Ashiana.
Tanya Dialani Sir, we are seeing increasing levels in booking quarter-over-quarter. So how
do you see a demand shaping out?
Vishal Gupta Things seem to be much, much better now. We would say that in between
while there were a lot of on-site visits with it, the conversion ratios are very
poor and people seemed as if they were holding back. That apprehension in
people’s mind seems to be fading away. Overall a general sense of
security specifically related to jobs and incomes is back into the system
thereby, people are taking decisions. So considering on-site visits, numbers
have only marginally improved, but bookings have significantly improved.
Tanya Dialani Okay. Thank you very much, sir.
Moderator Thank you. Our next question is from the line of Romil Singla, an individual
investor. Please go ahead.
Romil Singla Good evening, sir. Page 16 of 19
Ashiana Housing Limited
June 3, 2010 Romil Singla So far largely you have been focused on the residential side. Going forward do
we plan to enter the new areas like commercial or we want to be focused on
the residential side?
Vishal Gupta We want to be focused in the residential side. Like we said hotel and retail we
do more on an opportunistic basis so if we are doing a 100 or a 25 acre
township and then we do for 2000 homes it need some commercial
requirements. So we do commercial developments in that. But not as a
specific standalone. We are not focusing our energies on commercial
development.
Romil Singla What is our net taxation rate? Is it most approximately 16% to 17%.
Varun Gupta What is the question?
Varun Gupta Net taxation rate.
Varun Gupta Net taxation rate will be around 18%-odd. We have been expensing MAT. It
will be 17%. 15% plus 10% charge and 3% tax, so expense the MAT and on
top of that there is a little bit of deferred tax as well. So 17% to 18% is the
net of our taxation. But we also have a 15 Crores of MAT credit which is not
shown on the face of the balance sheet. That is shown as the notes in
accounts which can be utilized over a period of time right now.
Romil Singla Largely we have been focused on the Tier II towns, right? Sometimes the
problems within the Tier II towns is that due to lack of economic activities
some time there is a pile up of inventory and what are the key criteria’s which
you look up before entering the particular projects?
Vishal Gupta I am so glad that you asked this question. The cities that we are working on,
for instance, Bhiwadi, is a suburb of Delhi, which is very, very heavy economic
development, including the likes of Honda cars and Honda scooters, both
putting up their establishments there. So although you might call it a Tier II,
the economic development is very large. Jamshedpur, TISCO, Telco ancillaries
is again a very stable and growing economy. We are marketing there. So we
continue to enjoy great benefits. Similarly, Jaipur, as an economy is doing
extremely well. Lavasa has a retirement community, serving Bombay, Pune,
which is again a flourishing economy. So I do not think that should be a large
challenge going forward.
Romil Singla That is all from my side.
Page 17 of 19
Ashiana Housing Limited
June 3, 2010 Moderator Thank you Mr. Singla. We have a follow-up question from the line of Neeraj
Marathe of HU Consultancy Pvt. Ltd. Please go ahead.
Neeraj Marathe Hi, Neeraj here again. There was a newspaper articles about Ashiana getting
into more cities, especially cities down south in Kerala and all for the
retirement resorts. Any concrete developments on that front?
Vishal Gupta Nothing. No concrete development as of now. Like I said in the initial part, our
primary focus is strengthening our operations in cities where we are already
worked and our second approach is to find land in suburbs of large cities. We
are in conversations with several people, but nothing concrete yet to be
disclosed.
Neeraj Marathe Okay, thanks sir.
Moderator Thank you. We have a question from the line of Ravindra Singh of ICICI Bank.
Please go ahead.
Ravindra Singh I would like to know the dividend percentage. It has been reduced?
Varun Gupta It has not been reduced, Ravindra, We have not paid more than 15% before. If
you recast earlier equities for issue of bonus share, this is the highest dividend
that the company has…..
Ravindra Singh But after having an increase of Rs. 20, do you not think you should be
increasing it?
Varun Gupta Again, increasing it, decreasing it, we take these decisions not as a
percentage of equity or a percentage of payout. Our decisions are also linked
to our future capital requirements, future outlook on growth, market
perception, and markets, and on our performance we make those decisions.
So it has not decreased. That is one thing. It has been stable and we will
continue to be stable.
Ravindra Singh Okay. Then take it just as a suggestion, yesterday, advertisement in Economic
Times, Ashiana Housing, sales, EBITDA, and your EPS.
Varun Gupta Yes.
Ravindra Singh Okay then ideally then dividend should be a part of the full table. Because that
gives a confidence to the investors also.
Page 18 of 19
Ashiana Housing Limited
June 3, 2010 Vishal Gupta Yes, thank you so much. ….
Varun Gupta We will incorporate that after giving this….
Ravindra Singh Definitely. Thanks so much.
Moderator Thank you Mr. Singh. Ladies and gentlemen that was the last question. I now
hand the conference over to the management to add closing comments. Vishal Gupta Thanks again to all of you. These questions that you all posed are we really
look forward to them because they not only hone our abilities to understand
our own business but it gives us insight into looking into things that we
probably missed out somewhere. So please keep sending in your queries. We
really appreciate and look forward for the same. We do hope to keep matching
up to your expectations and continue to perform better as a company. I must
also like to tell you that we are making special efforts to improve the
execution bandwidth within the company and we are putting in more and more
systems to improve communications, faster decision making abilities, better execution capabilities in the company through various methods and we are
very hopeful that coupled with the improving market conditions that Ashiana would continue to perform and deliver as per expectations. Thank you so much.
Moderator Thank you gentlemen on the management team. Ladies and gentlemen on
behalf of Ashiana Housing Limited, that concludes this afternoon conference
call. Thank you for joining us on the chorus call conferencing service and you may now disconnect your lines.
Page 19 of 19
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