Embassy Developments Limited

Manish Agarwal

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Sachin Shah

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Manish Agarwal

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Sachin Shah

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Sachin Shah

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Sachin Shah

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Sachin Shah

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Sachin Shah

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Samar Sarda

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Samar Sarda

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I mean, I know you have a number in mind in terms of the pending construction costs, but do you see an upside risk to that?

— Sachin Shah

Q

Sachin, if you could please update us why the merger timelines have been delayed, if you could just explain it. Earlier we were expecting more of a June kind of a timeline.

Sachin Shah

Manish, as you know the merger process is driven as an NCLT process and given what India experienced again in January-February, the Courts have been slightly slower than expected. Having said that as I was saying, Bengaluru has finished the NCLT process, Chandigarh has finished the second hearing and that order is also in hand. We are just waiting now for what is the report from the ROC and the RD and the tax departments before the final hearing does take place. Post that the merger is completed. So, I would definitely say that we are now weeks away from a merger being completed as opposed to

Q

Sachin, I had a couple of questions. One is with respect to the launch of BLU. So, a) any new launches will happen only post the merger and the name change? Would that assumption be correct?

Sachin Shah

Samar, assumption is correct, not so much because the company's holding back, but I think as you look at any new launch, there is a lot of planning that needs to go behind that. There is MOEF approvals, there are RERA approvals that are required. And so, I think this naturally the timeframe is such that the new launches that we are looking at, be it Thane phase two, be it Sector 104 in the north or be it BLU Annex, they will naturally happen post kind of the merger being completed. But would you not want to launch it under the Embassy brand which you cannot do right now? Yes, of course, as a c

Q

Sachin if you can just give me one again. So, initially the debt was around Rs. 5,500, crores from the Embassy side and Rs. 1,000 crores from the Indiabulls side. So, it was Rs. 6500 crores. Now we have already got Rs. 850 crores from QIP, right?

Sachin Shah

Yes. So, that we adjusted, or we have not adjusted yet? We used some of it to pay down the debt. Okay? We are using that money towards construction. There are certain also liabilities such as customer refunds and RERA obligations that are being met through the debt. So, at the end of the day, and there's also always kind of proceeds coming in as we sell more units that is going down to pay down the debt as well. So, what I believe will happen is day one, when the two companies combine, we should have debt somewhere, let us say I mean, it is roughly, I am giving numbers of Rs. 6,500 crores beca

Q

My question is on the Indiabulls projects which are ongoing, which is on slide 24. We have mentioned that there is a surplus of about Rs. 5,400 crores odd. So, are these five projects under construction or the construction is not happening currently? Firstly, I wanted to know that.

Sachin Shah

While we say these are ongoing projects, as you can see, BLU Estate and Club is the fifth tower at the project BLU. That is in planning and design phase. So, that construction has not started, but we expect to start as I was saying, probably calendar year 2023 first quarter. Indiabulls Park Panvel is under construction. As you can see, it is already sold 3.7 million square feet. Unsold is 1.2. Thane also as you can see, it is already, the first phase is sold. And as I was mentioning, we are looking this year to launch phase two. The Gurgaon project that Sector 104, now what has happened out he

Q

My question is again on these commercial projects. In your January presentation, you had mentioned that the planned commercial projects have an annual rental potential of around Rs. 4,291 crores. Just wanted to understand by which year do you feel this potential would actually come, how many years would it take?

Sachin Shah

Look, what I was saying exactly, the same thing, because our commercial portfolio is quite large, it is 42.5 million square feet. There are two things that could happen, one is you look at developing this entire thing as commercial and you get to that kind of Rs. 4,000 odd crores of rental income. The second thing is that you might decide that you want to take some of that commercial and want to churn it quicker and move it into faster moving residential. Having said that maybe I will just walk you through the economics of what a million square feet of commercial development could look like. L

Q

I think one of the things about capital raise sometimes is, you might have the best intentions and wanting to do it at what might be the perfect time for you, but it is not necessarily supported by the macro markets. And we were out there considering raising equity and we felt there was a window of opportunity out there to raise the money. As you can see since then tides have done quite drastically. Yes, on one hand while I can understand that people feel that maybe this equity was not, why raise it now and why the dilution at these levels, but I think it's also important to keep in mind that

Management

Q

Sachin, one thing I want to understand, so we have created a platform with foreign funds as well. So, how are we going to use that platform? Can you elaborate on that?

Sachin Shah

So, we have an AIF and Office Development platform with Ivanhoe Cambridge on the Embassy side. So, that will roll into the merged entity once this is complete. The idea is that it is an 80:20 platform for up to 500 million, yes between the two entities. And so while EDL would invest roughly 100 million into this, a scenario could happen where some of our land parcels get sold to this platform and then if EDL eventually the merged entity EDL would come into it for 20% of the equity and the idea really is, it's using someone else's balance sheet and to grow the business quicker, the return on eq

Q

Abhinav, what I would request is give me one more quarter to come back on that. It has been tough I mean, I know what IBREAL’s numbers are, but it is tough to kind of value the two, but one focus obviously is on, like I said, existing OC and near completed. For those projects, there is truly little spend that needs to be done between the two companies. My sense is it is roughly Rs. 900 odd crores for the next year or so in terms of construction cost. I think one key area where we will also have to look at is, certain loans, principal repayments will happen over the course of the next one year.

Sachin Shah

As we have obviously discussed this in the past, as you know that is being done by Embassy right now, but that's part of NAM Estates and that will roll into this entity. So, it will be part of what will be a combined EDL as we move forward. But the idea is that, look it is a fantastic site, 2.5 acres on Juhu beach on Juhu Tara Road. The Embassy is looking to launch that by Q4 FY23.

Q

A couple of questions and one clarification. If I see your presentation, you give the average selling price in the last presentation you have given. So, that was around Rs. 30,000 for a BLU. So, am I missing because everything is getting sold above Rs. 50,000?

Sachin Shah

You are looking at this is on saleable square feet, 50,000 is on RERA carpet. That is the difference. They work out to the same number. Okay. Now my two questions are firstly, on the Embassy side. So, whatever commercial properties Embassy have, currently do they have anything which is receiving the rent completed inventory? And also, whenever we construct in the Embassy, the commercial property, we always look to sell to some REIT, or we also have a thought process where we will continue to own it and earn the rent on it? Look, while again you are asking questions with respect to Embassy and

Q

It is a good question. I think what it is at least reflects of BLU has been some of the last remaining units, right. So, in a project you generally have price that kind of goes up until a certain level when you are left with basically the units that are not wanted, right. So, I think in BLU today, we have some seven units left to sell. It is basically our podium units in Tower D and so the price reflects some of that as well into consideration. Anirudh Agarwal: But for the new launch you expect the prices to hold at 30,000 and above?

Sachin Shah

Absolutely. In fact, hopefully even more so than that. Anirudh Agarwal: Right. In terms of cost escalation, how are you seeing that play out. I mean, I know you have a number in mind in terms of the pending construction costs, but do you see an upside risk to that? We actually have accounted for that in some of our numbers because at such late stage of completion we had to look at what is going on with respect to that. A lot of them also contracts are in place, it finishes more so than kind of a steal at this point. And what we have also seen is while there was a spike, it has settled down a l

Q

Just a clarification on the £60 million loan. Should we expect some part payments during the year, or it should we expect one bullet payment during the year as you said earlier?

Sachin Shah

Look, we have not had discussions on part payments. So, what we are expecting is the full payment to come in on or before December 31st this year. Understood. Okay. And then in terms of your ongoing projects, are there any projects that are likely to miss their RERA deadlines or are currently default of RERA deadlines? We do have certain past projects which have missed the RERA deadlines, such as Enigma and Centrum. And what we are doing is we have cleaned it up quite a bit in the last several months and we are looking to get those settlements done as we actively look to hand these projects ov

Q

My question is related to the near completed project that you have listed on slide 23. If I am not wrong both those projects the one at Savroli and Vizag are long overdue, right?

Sachin Shah

Yes. Savroli has distinct phases to it, but Vizag roughly has as you can see, pending cost of Rs. 48 crores. So that is definitely a project that we want to finish this year and hand it over.

Q

Thank you everyone for joining and listening to this call. It has been the first earnings call that Indiabulls has done to date. We expect to continue these as time goes by. As we are reaching a conclusion out here with respect to the merger, we hopefully in a larger platform want to bring about a lot of different changes. Some of these you can see already today in the company with respect to K. G. Krishnamurthy being on the Board or in terms of the reporting that has come out this quarter. But again, the goal is we want to move towards a plan where the combined entity meets all standards of c

Management