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He further added that given the current economic slowdown, the company's inventory is in the range of 10-12 million square feet. "At the time of execution, we had nearly 50-51 million square feet in progress with construction going on of 15 million square feet, which has definitely contracted over the last four-five years," he told CNBC-TV18 in an interview.
Meanwhile, he feels like the automobile sector, the government should give some incentive to promote housing and construction as well.
Below is the verbatim transcript of Rajeev Talwar's interview on CNBC-TV18
Q: Do you have substantial amount of inventory? How much are you sitting on and what is the mean inventory that you have?
A: Some kind of analysis that seems to have gone haywire because this has taken into account what is usually called 'work in progress' and you have a large number of projects going on all over India and therefore there will be stocks that are sold, that are under preparation, that are yet to be handed over.
Over the last 18 months and the next 18 months put together, over a period of three years, we are handing over 15,000 to 17,000 flats which are going into the market. So, this analysis is done by some particular newspaper that you have taken and I hope it isn't equally wrong about everyone else. There is an inventory, the positive side one will see, maybe, it is a great signal for a stimulus package also which has been planned as they brought it in the newspapers today.
There needs to be an incentive to promote housing and construction and maybe that also needs to be included like some other sectors that are being talked off like the automobile sector. But all that put together there is a reason that demand is there, demand is pent-up, do not try to curb demand, we have seen various economists and since they all speak of inflation control being paramount in focus, one is inclined to believe them.
Since you are following up this market and you have been following up the India story for the last four-five years, we have been saying it all along that do not curb demand, open supply lines and that is not happening.
Q: What is your inventory at this point and what is your average inventory up until FY13? What would it be normally? What was it up until last year and what is it now?
A: The average inventory is normally at much lower levels and you always take into account what is being worked upon, what is being constructed upon.
I think you are very well aware of the Indian real estate business that everyone makes a sale on launch and then it takes a considerable period of time which is the international norms, either internationally sales are made of about to be completed or completed apartment.
In India the story is that yes, funding, which is done at the time of launch because it takes you about four-five years from purchase of land to launching a project and preparing every part of the technical details. So, this analysis is mainly based on figures that account for largely on apartments or real estate products. It could be commercial, retail; it could be plotted development which is already work in progress. It is not what is lying completed and unsold. Fortunately that is not the model that we follow in India.
Q: I am asking you only on the same parameter of work in progress, what is the inventory now, is it around Rs 18,000 crore as the report indicated? On an average, what is the work in progress the same time last year, what would have been the inventory including work in progress? I am asking you to take the same standard for both years; today, how much is it and what was it last time?
A: I am giving you an equally clear reply that you are based mainly on the amount of crore worth of inventory; I would give it in work in progress, in million square feet.
At the peak of our execution we had projects of nearly 50-51 million square feet in progress with construction going on of 15 million square feet or so. This is certainly contracted over the last four-five years, keeping in view the economic slowdown and work in progress, it would be anywhere from 10-12 million square feet, sales are progressing along because we had a very successful Q1, where we sold 1.1 million square feet out of a total year target of 1.5. So, sales are looking up, people are investing but repo rate hike, not dilution of rates on equated monthly installments (EMIs) is making impact and I am sure they are true for everyone.
Q: Could you give us an update on Aman Resorts and the deal?
A: This has always been in speculation for the last year-year-and-a-half and a large amount of interest being shown into it after Adrian (Zecha) stepped of it. At the same time complex negotiations, complex valuations, better results coming in for the chain over the last one year, their debt being totally in dollar and therefore, not affected by the rupee slide.
We are hoping for the best and there is a full team looking after that, they are negotiating it. So, let them get on with various parties who are showing interest, at the moment upwards of more than half a dozen. So, we will have to wait rather than enter into a world of speculation.
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