Walk us through the highlights of your Q4, what were the key projects that underwent revenue recognition in the quarter gone by?
It has been a good quarter and a good financial year for the company. We had sales of over Rs 1000 crore, in terms of booking value, for the fourth consecutive quarter.
For the first time in the companys history, every quarter in the financial year has seen sales in excess of Rs 1,000 crore. We had a very strong launch of a new project in the NCR market called Godrej Nature Plus where we sold about 250 apartments during the quarter with a booking value of about Rs 245 crore.
One of the highlights for both the quarter and the financial year has actually been the sales performance from existing inventory where we saw a tripling of our run rate of sales from existing inventory in FY18 over FY17. We actually had a higher number of sales from existing inventory than we did from new launches during the financial year.
That allowed a greater percentage of collection from each sale which in turn led to our best ever collections performance and helped generate about Rs 1800 crore of operating cash flow during the year. That allowed us to reduce our net debt by about Rs 650 crore while simultaneously increasing the companys development portfolio through 12 new project additions during the financial year.
What were the projects that came on stream in FY18?
Probably most gratifying event of FY18 is the performance the team which has been able to deliver in terms of scaling the business, in terms of sales achieved during the year. The real estate sector has actually had a tough year. The overall sector has declined by about 20% during the year. The introduction of the Real Estate Regulatory Act (RERA), GST and a weak property market all contributed to that.
Despite some of those headwinds, Godrej Property sales performance has been exceptionally strong. Our sales grew 150% during the year to over Rs 5,000 crore. As I mentioned, we had very strong distribution of those sales between each of the four quarters. We also had very strong distribution amongst different geographies.
One of our stated goals for the company is to be amongst the leading players as measured by value of real estate sold in each of the top four real estate markets in India, which are Mumbai, NCR, Bangalore and Pune.
During the financial year 2018, we were able to achieve a strong outcome in each of those four markets. So, in each market, we sold more than 1.25 million square feet of real estate with a booking value in excess of Rs 800 crore. In NCR and Pune, we were likely the largest developer by value of real estate sold.
In Mumbai, we are the second largest and in Bangalore likely the third largest, although we are waiting for the final data from peers in the sector. That was clearly the highlight that in a tough year for the sector, we saw a dramatic increase in the scale of our own sales and a very strong geographic distribution and quarterly distribution in those sales.
The other key highlight was the performance of sales from the existing inventory as opposed to new launches. We have historically had a strong track record of new launches but this year, we wanted to focus disproportionately on more sales from existing inventory and as I mentioned that was a key area of success as well.
You are looking to raise about Rs 1000 crore though equity fund or through the equity fund raising exercise. What is the reason and why are you looking at raising capital right now?
Yes, we are quite happy to announce that the board today approved an agreement to raise on a preferential allotment basis Rs 1,000 crore from an entity. There is a company that is managed by GIC at Singapore and the rationale for the fund raising is new business development. The current weakness in the real estate sector presents a tremendous opportunity to a company like us to add new projects to our portfolio and that is the single-most important operating deliverable during the current financial year. This infusion of equity capital will give us additional resources to make sure that we are able to fully capitalise on the business development opportunity we currently see in the market.
In Q4, there has been a loss despite a higher contribution from the Godrej projects. Why is that?
You know, actually there were a few exceptional items during the quarter but the operating EBITDA has been very positive. The exceptional items were both on the plus side, we sold a stake in commercial project here in Vikhroli called Godrej Two through which we generated a fair amount of profit.
But during the quarter, we had also taken some write-downs on the remaining inventory in some of our older commercial projects in Kolkata and Chandigarh. Doing that will enable us to more quickly monetise those projects. So if you exclude all of those exceptional items the operating EBITDA was quite positive.