Dhaval Ajmera, Director, Ajmera Realty & Infra (I) Ltd., talks about Q1FY22 numbers, ongoing projects and the projects in the pipeline, secured loans on the projects, the value of sales and demerger plans among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: Congratulations on an outstanding set of numbers. Highlights of the quarter and what led to this growth and is it sustainable?

A: The kind of growth that has been seen at present, as mentioned earlier, that after the pandemic there is a boom in the real estate market and there has been a demand. Because of the demand, the sales have been good in the projects which had ready-to-move inventory or the projects which were under construction and had a good brand value or were from good brands. We are lucky that we are one amongst them and due to these reasons, we saw that in the last one-and-a-half year, the overall demand for the real estate has been good and its results were seen over the year, as well as in the last quarter and this quarter. 

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Q: Value of sales has increased effectively and efficiently. How will you maintain this sales trajectory in the future? Also, update us on the product pipeline?

A: Just to provide a brief, our projects are divided into three parts:

(i) Ready to move inventory: The ready to move inventory has been completed. 

(ii) At January-end last year, three projects were launched.

(iii) Upcoming projects. 

If I will provide a small bifurcation of the three then our ready to move inventory, where our stock is ready has a value of around Rs 295-300 crore at present. Probably, we will realize is towards this year-end. The project that has been launched has a value of around Rs 700 crore and its revenue recognition will be achieved in the next three years because those projects have already reached an advanced stage of construction. Because of the lockdown has been in place in recent past and due to the lockdown at least as the government has granted onsite construction permission due to which their development of the construction happened has happened at a good speed. So, we will recognize it in the next two to three years. Thirdly, we have plans to launch at least three to four projects this year and they will be valued at around Rs 3,000 crore and it will also be realized in the next three to four years. So, if you have a look at our pipeline towards the sales over the next three to four years, it is very strong as compared to what we have done over the last one or two years. 

Q: You position is dominating in the southern and western region. Do you have any diversification and geographical expansion plans? Also, you have talked about three-four big projects. Can you provide some details about it and the areas where these projects will come up and what can be the ticket size for those?

A: When it comes to our business plans, then today our projects are widely spread across Mumbai, Pune, Bangalore and Ahmedabad in India. Our projects are also running in London. These are the cities where we are going to focus and we will expand in these four to five cities. As far as our new projects are concerned, as I informed you about the four upcoming projects, two will be in Mumbai and one will be in Bangalore and Pune, each. The ticket size and range of all these projects varies from city to city and area to area but as far as Mumbai is concerned than the project that will come up in Wadala will range between Rs 2-3 crore per flat. In the case of Pune, then it will be launched in an uppish high-end market and it will also range between Rs 1.50-2 crore and in Bangalore, it will range under Rs 65-70 lakhs. So, these are the three different ranges in which our projects are going to be launched. 

Q: Total secured loans on the projects has been reduced by Rs 46 crore in Q1 FY22 to Rs 699 crore. How are you managing it and how do you plan to reduce it further?

A: If you have look at the peak of the last year then our project loans stood around Rs 1,000 crore, which has been reduced to Rs 700 crore, almost Rs 695 crore now in this quarter. Going forward, our projection is that the loan will be taken down to zero in the next two to three years. But at the same time, the new projects that are being launched, construction funding will be required or the working capital required will be there. We are in real estate where we are supposed to pay the premiums of the government comes together and we need funding to pay those. It is matched up through internal accrual, cash flow and sales. So, the cycle will continue but our ultimate aim is to be loan free and debt-free in this market. If you will have a look then we have reduced our debt-equity ratio from last year’s 1.5 last year to almost 1. We have a target to reduce it further but definitely as the project cycle will grow or new projects will be launched the construction funding will go up. So, the cycle will continue but we will always maintain strong positive cash flows and this is going to be our aim. 

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Q: What are the updates on the demerger plans and what is the approval status at present?

A: As informed last time, the NCLAT order is awaited. Marginal processes are on, obviously, it has slowed a bit due to the lockdowns of the last two months. But approvals and processes are on, we are hoping that result will be out in this quarter and by early next year or this year-end, we should start to find some partner with whom we are making active discussions and could take it ahead.