Brigadde Enterrprises Limiteed Q2 FY-17

F
E
Earning
gs
ference Call
Confe
Novem
mber 15
5, 2016

MANA
AGEMENT
T: MR. M.
M R. JAIISHANKAR
R CHAIR
RMAN AN
ND MANA
AGING
DIREC
CTOR, BR
RIGADE ENTERPRIISES LIMIITED
MR. SURESH KRIS EXECUTIVE
X
E DIRECT
TOR AND CHIEF
FINAN
NCIAL OF
FFICER, BRIGADE ENTERPR
RISES LIM
MITED
MR. OM AHUJJA CHIE
EF EXECU
UTIVE OF
FFICERRESID
DENTIAL, BRIGADE
E ENTERPRISES L IMITED

Pa
age 1 of 11

Brigade
de Enterprises Limited
November 15, 2016

Moderatoor:

Ladies an
nd gentlemen, ggood day and welcome
w
to the Q2 FY17 Earnnings Conferen
nce Call for
Brigade Enterprises
E
Lim
mited. We have with us on the
t call today Mr. M. R. Jaaishankar
Chairman
n and Managingg Director; Mr. Suresh Kris Executive
E
Direcctor and CFO an
nd Mr. Om
Ahuja CEO-Residentia
C
al. As a reminder, all participaants lines will bbe in the listen--only mode
and there will be an oppportunity for you
y to ask queestions after thee presentation concludes.
ou need assistan
ance during the conference calll, please signaal an operator by
b pressing
Should yo
* then 0
0 on your toucchtone phone. Please
P
note that this conferencee is being recorrded. I now
hand the conference
c
oveer to Mr. M. R. Jaishankar Chairman
C
and M
Managing Direcctor. Thank
you and over
o to you, sir.

M R Jaish
hankar:

Good afteernoon, ladies and gentlemen

n. Welcome yo
ou all to this an
analyst call sub
bsequent to
announcem
ment of our Q22 results. And I am happy to say the Q2 resul
ults as compared
d to Q1 the
previous quarter
q
are quitte healthy. The revenues has gone
g
up to Rs. 4459 crores as co
ompared to
Rs. 466 crrores previous quarter. I know
w there is a decrease of 2%, bbut the EBITDA
A has gone
up to Rs. 137 crores as ccompared to Rs. 124 crores thaat means an incrrease of 10%. The
T margin
oved slightly froom 26.7% to 30% Profit beforre tax has also improved significantly to
has impro
Rs. 46 cro
ores as compareed to Rs.34 cro
ores in the previious quarter andd profit after taax is Rs. 30
crores as compared
c
to Rss.22 crores in th
he previous quaarter, a significaant increase of 36%.
3
And of co
ourse if you com
mpare with six
x months of FY
Y 2016 there iss a decrease in results and
that of co
ourse our CFO
O will explain to
t you and eveerybody will bbe keen to kno
ow Brigade
Groups reaction on dem
monetization. Firstly, without hesitation
h
and vvehemently I wo
ould like to
onetization of Rs.
R 500 and Rss. 1000 currencies and the
say Brigade Group welccomes the demo
he economy
governmeents intention i s laudable and I am sure it willl have a positivve impact on th
in the timee to come.
Yes, theree will be definnitely some incconveniences to
o people and itt may even afffect certain
businessess, a lot is mentiioned in the meedia about its im
mpact on real esstate. I am not saying
s
no it
will, it maay happen and iit is likely to haappen and the sttock market hass also adversely
y reacted in
general an
nd real estate inn particular. Bu
ut I think these are all things w
which I think th
he industry
should tak
ke in its stride aand as Brigade Group will take in its stride annd this is I wou
uld say it is
a game ch
hanging decisioon by the goverrnment and in the
t long-term in
interest of the country.
c
So
though it may affect in ssome cases, we should not hesitate to welcom
me the move. But as far as
nges, legislativee changes like Real
R Estate
real estatee is concerned tthere are also otther major chan
Regulatorry Developmennt Act (RERA)) that also is a matter withinn once it is going to be
implemen
nted , and the exxpected date is 1st May 2017.
The Karn
nataka Governm
ment has alread
dy announced the rules and the discussion
ns with the
governmeent are in progreess. So it is a matter
m
of time beefore it becomees applicable. We
W are with
or withou
ut RERA by annd large we aree compliant to the
t requiremennts of RERA. We
W need to
gear up a little bit more and our team is definitely working towardss that. Then of course the
gislative changge of GST iss there that is
i also a veryy welcome move.
m
Like
major leg

Pa
age 2 of 11

Brigade
de Enterprises Limited
November 15, 2016
demonetizzation during tthe process of when it is introduced there is definitely liikely some
sectors maay get impactedd that is during
g the change perriod there will bbe lot of confusion, chaos
all those things cannot bee wished away.
And I thiink the best waay is to face it and gear up to the challengges all these th
hree major
initiativess of the governnment whether it is GST or RERA
R
or the deemonetization is going to
throw chaallenges. Acceppt the challeng
ges and work towards facingg those challen
nges is our
policy. An
nd towards thaat our team is fully geared up
p and we are cconfident of meeting
m
this
challenges in months aheead. So over to Sureshour CFO
O and also Om Ahuja CEO-R
Residential
t the best of oour abilities. An
nd one last
is here wee will all be haappy to answerr your queries to
thing, I would
w
like to sayy not to shy aw
way from real esstate stocks or rreal estate com
mpanies and
this is sheelter is the very basic need and
d it is a matter of
o time the induustry will bouncce back in a
much bigg
ger way. Thankk you.
Suresh Kris:

Before wee go and answeer to the questions it is my duty

d
to give expplanation on ou
ur Investor
presentation which we ggave. It is very
y general answeers before you ask us specificc questions
his may answerr some of the few
f questions you
y have in youur mind. Even though the
because th
total turno
over is around R
Rs. 925 crores versus
v
Rs. 915 crores half yeaar, because I wo
ould like to
answer fo
or half year to hhalf year compaarison instead of
o quarter to quuarter because there are so
many chaanges and thenn normally we cannot go and
d equate like a manufacturing
g company
where it is sale purchasse and trading of goods likee that. Here it is based on th
he revenue
on it may fluctuuate. So at leastt we can go and
d compare espeecially the full year
y
if it is
recognitio
not possib
ble then at leastt year-to-date. So
S for about six
x months it is m
more less equal may
m be 1%
higher thaan the last year and when you see the profit before
b
tax it is aabout Rs. 80 crrores vis-vis Rs. 10
04 crores.
As I mentioned in the m
morning interview I mean therre are certain ffew items whicch we have
taken a onetime
o
hit whiich is about Rs.. 32.7 crores for half year andd about Rs. 21.2
2 crores for
Q2. This are one-time hhit may be likee loss on sale of assets discar
arded assets, do
onation and
ost which has ccome for the hotel
h
and the co
ommercial projjects., I mean it
i has been
interest co
capitalized
d during last yyear and have been
b
charged to
o P&L during ccurrent year beecause they
are operattional now. So tthe depreciation
n is charged wh
hereas it was noot there earlier.
So this is about Rs. 32.77 crores for thiss six months. And
A then I meaan if you go an
nd calculate
t profit beforee tax would hav
ve been 8% hig
gher than the prrevious half yeaar. It would
this then the
be Rs. 112
2.9 crores and tthe profit after tax would havee been 15% higgher instead of 20% lower
than last year. And we hhave the total unrecognized
u
reevenue of aboutt Rs. 5,700 crorres which I
will explaain to you later.
And we are publishing thhe results in IN
ND AS, the efffect of joint dev
evelopment agreeements on
revenue iss is Rs. 102 crrores for six mo
onths and Rs. 41 crores for thee quarter. Otherrwise there
is no big difference betw
ween the profittability of IND--AS as well ass IGAAP anyway this has
been giveen in our presenntation. And I also mentioned
d that I mean th
there are certain
n expenses

Pa
age 3 of 11

Brigade
de Enterprises Limited
November 15, 2016
which wiill go and aff
ffect

the segm
mental profitab
bility because earlier the in
nterests or

depreciatiion would not hhave been charg

ged in hospitaliity and lease reental business. Now
N
it has
been charrged hence the profitability off these two segm
ments would hhave come dow
wn, whereas
for the real estate projeccts would have been I would say slightly higgher because of
o the good
product mix
m which yieldss higher profitaability.
As far as the cash flow aand direct meth
hod is concerneed, we have thee net operating
g cash from
he total receipt is about Rs.
the activitties about I wouuld say surplus is about Rs. 107 crores and the
517 crores majority is fr
from real estatee it is Rs. 408 crores
c
and the lease rental ab
bout Rs. 76
crores and
d about Rs. 33 ccrores from hosspitality. So thiss is the main coontributor of thee cash flow
and our deebt-to-equity raatio on a consollidated basis is 0.92 comparedd to 0.98 last tim
me because
of loan reepayment and aagain availemen
nt at the lesser rate plus the pprofit contributtion for the
half year like that. And our average bo
orrowing rate iss 10.6% compaared to 10.7% last
l quarter
w
we comppare the same period
p
last yearr it is Septembeer 2015 it was 11.2% and
and then when
we enjoy the same ratingg that is A rating
g both from CR
RISIL as well ass from ICRA.
The sales performance iss around 1 million square feet for six monthhs. I think may
y be around
28% lesseer compared to the same perio
od last year wheereas the averagge realization has
h gone up
it is aroun
nd Rs. 5,700 coompared to abou
ut Rs. 5,500 lasst year. And wee have also giveen the total
project an
nalysis. We are developing aro
ound 19 million
n square feet, oout of which aro
ound 17.35
million is an ongoing prooject and about 1.3 million squ
uare feet is our commercial cap
pex project
n is hospitality
y project.
and balance 0.49 million
uare feet of
Then the total ongoing rresidential projject of our sharre is about 15..14 million squ
7
million sq
quare feet balaance to sell is about 7.25
which wee have sold cloose to around 7.89
million sq
quare feet. Thee total value of launch projectt is about Rs. 88,000 crores ou
ut of which
more than
n Rs. 4,000 croores has been allready sold outt I mean close tto Rs. 4,000 crrores at the
current vaalue is there ouut of which we have now colleected around R
Rs. 2,800 croress so far. So
balance to
o be collected on the launcheed project is around Rs. 5,2000 crores. Out of
o this sold
project wee have so far rrecognized arou
und Rs. 2,300 crores
c
as per thhe percentage completion.
c
So the ballance unrecogniized revenue ass of date is Rs. 5,700
5
crores ovver a period of three
t
years.
The grosss operating cashh flow is aroun
nd Rs. 2,800 cro
ores on the launnched project. This is our
total cash
h flow before thhe borrowing even
e
when you
u go and deducct it, then it is around Rs.
1,700 crorres pre-tax.
And out of
o the total leaased area of bo
oth 2.16 million
n square feet cclose to around
d 2 million
square feeet has been leassed out very feew are there to be leased. Bassed on the hosp
pitality side
we have good
g
occupancyy rate again botth from Grand Mercure
M
as welll as from Sheraaton Grand.
They are around 75% duuring this half year for Grand
d Mercure and 82% for Sheraaton Grand.
hird hotel Grannd Mercure Myssore it is in operation the assett has to also gett stabilized.
And our th
Maybe in Q4 onwards w
we will be able to have those daata to be sharedd.

Pa
age 4 of 11

Brigade
de Enterprises Limited
November 15, 2016
And total CAPEX comm
mitment out of the
t total estimaated CAPEX off about Rs. 868
8 crores we
urred close to R
Rs. 485 crores. Balance
B
Rs. 38
83 crores has too be spent in ab
bout one to
have incu
one-and-aa-half years tim
me. As far as ou
ur land bank iss concerned, wee have about 54
41 acres of
land costing Rs. 1,785 crrores out of wh
hich Rs. 1,335 crores
c
has beenn paid out. So balance
b
Rs.
450 croress is there. Majoority of it is for the residential as
a well as comm
mercial sale purrpose close
to around
d 387 acres andd balance is forr commercial leease, retail andd hospitality pro
ojects. The
total developable area is about 50 millio
on square feet out
o of this 541 aacres out of it our
o share is
about 37 million and preedominantly ab
bout 26 million
n is for the reall estate sector. Out of this
predominaantly it is in Baangalore, next iss in Chennai.
We have plan to launch for about 4 miillion square feeet, out of whicch our share is around 2.5
quare feet whichh is for whatev
ver real estate project which iss meant for salee and about
million sq
2.69 million square feet of commercial projects out off which our shaare is 1.77 this is what we
have plan
nned. And thenn which may un
ndergo some ch
hanges due to the present con
ndition but
again pred
dominantly we will be able to launch maximu
um during this year. Again reg
garding the
demonetizzation whateverr total effect haas to be seen but
b as and wherre the industry as well as
Brigade is concerned evven Brigade is also one of th
he participant iinto this fratern
nity so we
a
effect woould also depends on the
cannot escape from our negative newss on this. But again
business model
m
in whichh the company
y operates. Obv
viously there iss no change even prior to
demonetizzation or after th
that for Brigadee Group becausee we are in to thhe same business model.
And again
n, price correcction may happ
pen only for thee finished invenntory of any un
norganized
market if any and againn this will also depend on the business modell. And the effecct could be
t land purchaase are for the second sales, not
n for the prim
mary sales of th
he amongst
there for the
the devellopers. And I think correctiion maybe fellt due to the high ticket I mean for
predominaantly when the stocks are on to those kinds of prices like R
Rs. 2 crores likee that. And
then I thin
nk there could bbe some kind of
o price correcttion but into thee midterm as well
w as long
term theree is a company who are a bit high
h
corporate governance
g
andd the company will
w be able
to flourish
h.
So I think
k with this I wannted to conclud
de my explanation on the finanncials and if yo
ou have any
other querries, you are freee to ask.
Moderatoor:

Thank you
u, sir. Ladies annd gentlemen, we
w will now beg
gin the questionn-and-answer session.
The first question is from
m the line of Adhidev
A
Chatto
opadhyay from
m Elara Capital.. Please go
ahead.

Adhidev C
Chattopadhyaay:

I have few
f
questions.. Firstly on your residential business. FFrom the ligh
ht of this
demonetizzation so wouldd you like to reevise your guidance value of th
the lower and upper
u
range
for the volumes you targeet for this year which was 3 million
m
square feeet I believe earrlier?

Pa
age 5 of 11

Brigade
de Enterprises Limited
November 15, 2016
M R Jaish
hankar:

I think it is too prematurre to see the im

mpact of the dem
monetization off course the meedia will as
w things out off proportion an
nd I think the best thing is beffore we either increase or
usual blow
decrease the
t guidance vaalue it is best ju
ust to wait and watch
w
for at leasst till 31st December if not
little bit more.
m
After 31stt December we will see the tru
ue impact of thee demonetizatio
on.

Adhidev C
Chattopadhyaay:

Okay but just to get an uunderstanding prior

p
to demoneetization cominng through so how
h has the
y seen an imp
provement overr last year or caan you just
festive seaason overall in terms of, did you
give us a sense
s
how the ooverall market mood
m
was priorr to this?

M. R. Jaiishankar:

See generrally I think eveen during the laast quarter anallyst calls also w
we mentioned, that from I
would say
y September, O
October of last year 2015 to now, the sentim
ments are not great. It is
while the business I woould say has drropped across real
r estate and particularly in Bangalore
% if not more ddepending on company
c
to
maybe to the extent of aanywhere betweeen 20% to 30%
we are talking about
a
residentiaal business. Annd the same thin
ng is likely
company and primarily w
n or continue fo
for the next threee to six month
hs but one thinng positive thin
ng we may
to happen
expect fro
om demonetizattion is once the government co
ollects whatever
er lakh crores whether
w
five
or six or seven
s
lakh crorees we will all co
ome to know on
nly after 31st Deecember.
The bankss will be flush with funds and
d it is in my opiinion within sixx months if nott earlier the
interest raates are likely too drop by at leaast 100 basis po
oints in which ccase it will havee a positive
impact on
n every industryy including real estate industry.

Adhidev C
Chattopadhyaay:

Sure sir, fine.

f
The secondd question is on
n the rental busiiness we had doone around Rs. 124 crores
of top linee in for the firstt half. So will you expect simillar performancee in the second half or you
are seeing
g some uptick iin the rental inccome and from
m which propertties it would co
ome in that
case?

M. R. Jaiishankar:

I expect a slight uptick inn that primarily

y because the World
W
Trade Cennter, kochi also
o stabilized
rentals thaat will happen, though I may not have till th
he last square fo
foot correct info
o. And also
the Orion East Mall in B
Bangalore also will
w add some rental
r
and our oother two build
dings which
nd the Bhuwalkaa Icon they are also likely
are recenttly completed thhe Nalapad Brigade Center an
to contrib
bute to some aadditional rentaal. Overall I wo
ould say H2 w
will have impro
oved rental
business.

Adhidev C
Chattopadhyaay:

Sir, lastly
y on the hotel bbusiness just waanted to undersstand how shouuld we read thee cash flow
and the EBITDA
E
which we have reporrted for this firrst half comparred to last year and going
ahead for this year and nnext year how do
d you see the business shapinng up consideriing that we
will have three hotels up and running by
y in another 12 months yes?

M. R. Jaiishankar:

Suresh will
w give you figgures I am also
o happy to say that our fourthh hotel also will
w become
operationaal in Q4. We hhave received all the completion certificatees and other permissions
p
required so
s we are just ggearing up to offficially launch
h the hotel someetime in Januarry. But that
is the Holliday Inn Chennnai and it is caalled Holiday Inn
I OMR IT Exxpressway. I must
m clarify

Pa
age 6 of 11

Brigade
de Enterprises Limited
November 15, 2016
that there is a Holiday IInn Express on
n OMR which is about ten too fifteen kilomeeters away.
That Holiday Inn Expresss is a three-starr hotel, whereass our Holiday Innn is five-star hotel.
h
Adhidev C
Chattopadhyaay:

Okay just on the hotel, hhow we should read

r
EBITDA means
m
what onee offs were therre and how
do you seee it shaping up for next?

Suresh K
Kris:

Total EBIITDA for this ffirst six monthss is around Rs. 14 crores whiich also includees the nonperforman
nce during the same six mon
nths or three months
m
of GMM
M Mysore thaat is Grand
Mercure, Mysore whereaas last year it was
w around Rs. 40 crores to R
Rs. 50 crores laast year. So
017-18 or I thinnk in 2018-19 which
w
you are asking that tim
me we will be having
h
five
during 20
hotels. So
o the minimum
m EBITDA willl be close to around
a
Rs. 80 crores to Rs. 100 crores
during this period. This iis minimum.

Adhidev C
Chattopadhyaay:

So this is the reported EB

BITDA right, what
w we represen
nt in the presenntation on?

Suresh K
Kris:

Correct, otherwise
o
even with two hotells it could be arround Rs. 50 crrores to Rs. 60
0 crores per
annum an
nd then when w
we are now talk
king about 2017-18 or again 2018-19 for th
he full year
basis with
h all five hotelss which are in operation
o
with Mercure it willl be minimum of Rs. 100
crores.

Adhidev C
Chattopadhyaay:

Okay, sir then just to giive a sense on our Bangalore hotels operatioonal one, so ho
ow has the
ng season how is the pipeline??
third quarrter the start winnd and heading into the weddin

M. R. Jaiishankar:

Hotel?

Adhidev C
Chattopadhyaay:

Yes.

M. R. Jaiishankar:

No, I thin
nk Q3 receive w
whatever has beeen in our budg
get, when we aare doing abovee budget to
the extentt of 4% to 5% soo far and I think
k the hotel team
m will meet theiir budget as pro
ojected.

Moderatoor:

Thank you
u. The next queestion is from th
he line of Samaar Sarda from K
Kotak Securitiess. Please go
ahead.

Samar Saarda:

My first question
q
is on yoour land paymeents for this quaarter you paid aaround about Rss. 70 crores
for new laand or is this likke some existing land paymentts you have donne?

Suresh K
Kris:

We are alllotted 25 acress of by the Statte Government for an IT busiiness, office bu

usiness it is
towards th
hat this land payyment is given..

Samar Saarda:

So you have
h
not addedd any new lan
nd in this quarrter because thhe 5 acres wass added in
Bangaloree also if I com
mpare the land bank across first
f
quarter and
nd second quarter but the
payment you
y are referrinng to is more off the KIADB lan
nd which was aallotted to you?

Pa
age 7 of 11

Brigade
de Enterprises Limited
November 15, 2016
Suresh K
Kris:

That is 53
36 acres was theere in the last quarter
q
now it iss 541 acres andd then this abou
ut 5 acres is
the movem
ment in Brigadde Enterprises Limited and th
hen in the BCV
V Developers some
s
more
partially we
w have advannced. So again for that we have also paid thhose things and
d then there
could be some
s
kind of cconsumptions which
w
has happeen. But becausee there is no co
onsumption
during in this quarter theere from the lau
unches obviouslly there is no coonsumption. Th
hese are the
nts. These incluudes the cost off stamp duty off this Perungudi
di land that is Nerolac
N
and
movemen
Cornerstone Properties liike that.

Samar Saarda:

Alright, now
n we have noot had any launches or compleetions in the seccond quarter no
ow some of
your launches which waas like mentioneed got pushed to
t third quarterr and fourth quaarter. What
is the statu
us of the Chennnai launch like would
w
you laun
nch it after 15th of Jan ?

M. R. Jaiishankar:

See curren
ntly that is exaactly the date we
w have in mind
d 15th of Jan. I mean see the plans have
been apprroved but theree are subsequent approvals th
hat was a lot oof time was tak
ken due to
various ch
hanges in the aadministrative personnel
p
and I would say it got over those issues and
naturally we
w have been vvery keen to lau
unch the Chenn
nai project. It iss taken much, much
m
more
time than
n one would hhave wished an
nd also as you
u know in Chhennai the adm
ministrative
machines they have com
me to a standsttill in the last couple of monnths that also has
h had an
impact.
And two other
o
projects w
we have soft lau
unched you can say that is the Buena Vista in
n Bangalore
East it is a million squarre feet residenttial in the mid-iincome sector aand Brigade 7 Gardens is
dential of abou
ut 0.8 to 0.9 miillion of squaree feet. That
also in Baangalore Southh, it is also resid
also is sofft launched. I thhink we will go for a formal launch in Januaryy itself. The wo
ork of these
two projeccts has commennced already.

Samar Saarda:

I have heaard about Buenaa Vista also butt somehow it do

oes not show upp in your presen
ntation?

Suresh K
Kris:

Yes becau
use since it is not formally launched obvio
ously, it will nnot come into the online
projects.

Samar Saarda:

Okay and it is not in the ppipeline as welll?

M. R. Jaiishankar:

No, we will go and add innto the next qu

uarter.

Samar Saarda:

Okay and
d sir on the GS
ST impact, now
w see stamp duty
d
is a state subject I coulld not read
anywhere like is that gooing to be chaanged and again
n VAT at least
st in the Westeern and the
v
whereas in
i the Southernn markets it is separate
s
on
Northern markets is on tthe agreement value
constructiion, your constrruction agreemeent is separate. So from a buyeers perspectivee, once this
gets impleemented at leastt from the VAT
T side should I see
s a 3% increaase in cost?

M. R. Jaiishankar:

See that is the big questtion mark we have

h
ourselves. Today no connsultant is in a position to
give you know clarificattion with 100%
% certainty. Seee the way it is as far as the co
onstruction

Pa
age 8 of 11

Brigade
de Enterprises Limited
November 15, 2016
cost I perssonally expect iit to drop the im
mpact of tax to drop by probabbly 3% to 4% I expect the
impact off construction coost to come down. But if the government as per the GST ru
ules if they
also add land value into for GST then th
here could be an
a increase in thhe impact to thee customer.
nk we will com
me to know only
y by maybe mo
onth end or subssequently. Currrently there
That I thin
is no certaainty.
Samar Saarda:

Okay and sir any clarity on the stamp du

uty?

M. R. Jaiishankar:

Stamp dutty is that will ccertainly contin

nue to the best of
o our knowleddge say 6.8% iss the stamp
duty incurrred and registrration charges in
n Karnataka thaat will continuee.

Samar Saarda:

And one final question is on your ann

nuity projects. By when coulld we see the Brookfield
property starting
s
construcction?

M. R. Jaiishankar:

We expecct Brookfield prroperty to start by

b middle of Jaanuary.

Samar Saarda:

And typiccally it is a bigg property for us

u would you usually
u
want too prelease like 25%, 30%
before staarting constructiion or would yo
ou start constru
uction and then like over the co
onstruction
period or nearing compleetion start leasin
ng it out?

M. R. Jaiishankar:

We will start
s
constructioon and lease it during the periiod of completiion. That is how we have
with few exceptions thaat is how we haave taken up all our annuity pprojects and we
w have not
n that scenario. And one thingg to be rememb
bered is the
regretted for taking up thhose projects in
d project is a SEZ project of
o about 3 million square feeet plus of SEZ
Z and plus
Brookfield
connected
d facilities likee maybe related offices or professionals and some neiighborhood
shopping and also servicced apartments to help the occcupants of Broookfield and neig
ghborhood.
or SEZ by Marcch 2020 our inttention and desire is to try
And sincee there is some set of clause fo
and complete it as early aas possible in by
b 2019 itself so
o that we will bbe in a position to meet the
demand th
hat comes up att that point of tiime.

Moderatoor:

Thank you
u. The next queestion is from th
he line of Ihab Dalwai
D
from IC
CICI Prudentiall. Please go
ahead.

Ihab Dalw
wai:

Sir, my qu
uestion pertainss to the finished
d inventory which is currentlyy valued at Rs. 410
4 crores.
So I just wanted a reallistic assumptio
on of how soo
on do you thinnk you can liq
quidate this
inventory in the current sscenario?

Om Ahujja:

So finisheed inventory whhat we are referrring to is primarily inventory in Bangalore city

c and we
have few of the inventorries which we are seeing goo
od momentum aand South Ban
ngalore is a
portion what
w
we are refeerring to. And that
t
is the inventory we see w
we have started selling we
have seen
n in this quarteer we have seeen good momentum. We aree targeting by 31 March
significan
nt portion of thhis inventory sh
hould be sold. I am referring to Brigade Gaardenia and

Pa
age 9 of 11

Brigade
de Enterprises Limited
November 15, 2016
Brigade Millennium
M
in thhe presentation
n what we shareed. And with reggard to Brigadee Meadows
and Brigaade Exotica agaiin we are seeing
g a good momeentum there.
Ihab Dalw
wai:

But this quarter we were able to sell onlly Rs. 33 croress worth of invenntory?

Om Ahujja:

Yes.

Ihab Dalw
wai:

And sir, my
m second quesstion relates to the
t leasing portfolio. The EBIT
TDA margin haas come off
for the co
onsole from 72%
% to 62%. Any
y particular reaason? Is it becaause of low occupancy in
Kochi or what
w was the reeason for that?

Suresh K
Kris:

See I have mentioned duuring my initial remarks that we have taken some one term
m hit so we
m side so whhich is at a last there
t
was a
have sold some of the asssets of the interriors from the mall
onetime sh
hift to which w
were taken that is
i why the EBIT
TDA margin is less.

Ihab Dalw
wai:

And sir, my
m last questionn is relating to the micro markeet where we opeerate. At what premium
p
is
our selling
g price to be reaady reckoner raate currently?

M. R. Jaiishankar:

Sorry?

Ihab Dalw
wai:

Sir, at wh
hat premium is our selling pricce to be ready reckoner
r
rate inn the micro maarket where
we operatte?

M. R. Jaiishankar:

See it is each
e
place it coould be differen
nt. There is no uniform, I wouuld say in some cases the
selling ratte may be evenn 50% minimum
m to the full gu
uideline here wee call it as guid
deline value
which is same
s
as the readdy reckoner ratte. So in some cases
c
it could bbe just 10%. So there is no
hard and fast
f rule on thaat. And in mostt cases all our projects
p
governm
nment has fixed
d a separate
ready reck
koner rate for pprojects for man
ny I would say recognized proj
ojects of many developers.
d
So if you take a particullar project like say Brigade Millennium the rready reckoner will give a
n
raates. Similarly for
f Brigade
rate for Brrigade Millenniium which is hiigher than the neighborhood
Gateway or
o for that matteer all our projeccts without exception.

Om Ahujja:

So it is a destination mixxture. To answeer you the ready

y reckoner has the Brigade prroject name
ue.
specificallly written as thee guideline valu

Moderatoor:

Thank you
u. The next queestion is from the
t line of Prem
m Khurana from
m Anand Rathi. Please go
ahead.

Prem Khu
urana:

Most of my
m questions haave already beeen answered. Ju
ust one questionn on the hospitaality assets.
So we aree planning to haave our hospitallity assets in to a separate entitty. So have you
u firmed up
the plans and
a when do w
we expect this to
o take place?

Pag
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Brigade
de Enterprises Limited
November 15, 2016
M. R. Jaiishankar:

You see th
he process is onn and whateverr formalities neeed to be done tthey are all being done. If
all goes well
w with if we receive the Hig
gh Court permiission, we havee not yet filed to
t the High
Court. On
nce we file and then we hope it will be effective from 31 M
March 2017 or say
s 1 April
2017 if alll goes well. Annd we think it will
w go well.

Prem Khu
urana:

And have you firmed up a plan I mean how

h do we inteend to go about and as we are planning
p
to
t bring in som
me private equity player or
listed as a separately listted entity or you would want to
an IPO?

M. R. Jaiishankar:

See the in
ntention is to bbring a private equity player at this point oof time. We do
o not intent
listing imm
mediately.

Moderatoor:

Thank you. As there aree no further queestions, I would

d like to hand tthe floor over to Mr. Om
Ahuja for closing commeents. Please go ahead.

Om Ahujja:

Thanks ev
verybody for paarticipating in the call today. Hope
H
we answeered all your qu
uestions. So
just share little bit of vieews on the mark
ket what we believe at this poiint of time it is little early
pen in demonettization. But wiith the sequence of events
to commeent upon what iis going to happ
lined up which
w
is demonnetization we will
w see RERA, we will see GSST lot of thing
gs will only
put organized players too benefit. I can see that lot off unorganized pplayers who weere into the
plotted deevelopment or who were intto a small developable areaa and stuff likee that they
basically who used to opperate in a very
y unorganized world
w
they wouuld be impacteed and with
this busin
ness. But the m
market share fo
or an organized
d or a brandedd player like uss will only
increase.
And that is the benefit w
we are referring
g to in the nearr term to short tterm and that is
i the thing
n industry. I hop
pe this is goingg to benefit the real estate
which we are looking foorward to as an
sector in a big way and w
we all hope thatt this first step of
o the governm
ment is going to benefit the
industry in
n a massive waay. Thank you very
v
much and look forward to participation in the next
call.

Moderatoor:

Thank you. Ladies and gentlemen, on behalf of Brig

gade Enterprisess Limited, thatt concludes
this conference. Thank yyou for joining us
u and you may
y now disconnecct your lines.

Pag
ge 11 of 11