ABREL — earnings call
The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.
Prepared remarks
AND INDUSTRIES LIMITED · MR. SNEHAL SHAH - GROUP CFO, CENTURY
MR. R.
K.
DALMIA - SENIOR PRESIDENT AND WHOLE TIME DIRECTOR, CENTURY TEXTILES
MR. SNEHAL SHAH - GROUP CFO, CENTURY
TEXTILES AND INDUSTRIES LIMITED · MR. K. T. JITHENDRAN - CEO, BIRLA ESTATES,
MR. K.
T.
JITHENDRAN - CEO, BIRLA ESTATES, CENTURY TEXTILES AND INDUSTRIES LIMITED MR. VIJAY KAUL - CEO, PULP & PAPER DIVISION, CENTURY TEXTILES AND INDUSTRIES LIMITED MR. NILAY RATHI - SENIOR VICE PRESIDENT, COMMERCIAL,
CENTURY · TEXTILES
TEXTILES AND
Moderator · Conference Operator
MR. AMIT SRIVASTAVA - BATLIVALA & KARANI
SECURITIES INDIA PRIVATE LIMITED · Management
Century Textiles and Industries Limited July 26, 2022
Moderator · Conference Operator
Good morning, ladies, and gentlemen.
Welcome to the Century Textiles and Industries
Questions and answers
Moderator · Conference Operator
The first question is from the line of Biplab Debbarma from Antique Stock Broking.
Please go ahead.
Biplab Debbarma
So, sir, my first question is on the real estate.
So almost all of the projects in Gurgaon, Kalyan substantially sold out, but we didn't see any launch of new phases in these two projects.
So what's the company's thought process here?
Are you planning to launch new Century Textiles and Industries Limited July 26, 2022 phases here and in this, or you are planning in second half of this year, just trying to understand how you're going to go about it?
KT Jithendran
Hi, Biplab.
Thank you for your question.
Yes, so we were actually planning to launch new phase in Kalyan and a new phase in NCR for Birla Navya.
What happened was that because of the delay in approvals, etc, that got delayed.
However, we did launch Kalyan.
Now we have launched, the last phase of Kalyan, which is in the pre-launch stage right now, market warming is happening.
In Navya, we are still awaiting the RERA clearance, in NCR it takes huge amount of time.
So, we are quite confident that when it gets launched, we'll do very well.
We got part RERA for a small portion, the other portion we're expecting the RERA clearance to come any moment now.
As soon as we get this, we will be launching that phase fully.
So, I'm pretty confident that this quarter we will be launching the Navya phase and Kalyan also we will be showing some traction because of the launch of the last phase.
Biplab Debbarma
Okay.
Sir, so basically Kalyan you have done pre-launch, right?
Or you have formally launch?
KT Jithendran
Yes, premarket warming, this channel partner warming up, etc. That is started.
We have all the approvals we have started in full swing.
Biplab Debbarma
And just one more thing on this, on real estate.
Sir, have you finalize a contractor for Worli?
KT Jithendran
Yes.
We have finalized a contractor for Worli now.
We have given the contract to Leighton from Australia.
They're going to be the structural contractor.
Biplab Debbarma
Thank you, sir.
Now one question on paper.
So, we have seen demand improvement in terms of sales value, and the realization in overall paper business.
But if you compare the quarterly numbers, last three quarters with this quarter, the sales volume is down.
And so, anything to read into it, or am I reading it correctly?
The sales volume is down.
Your sales value is up, your realization up, your margins are also going up.
So how to read into it?
Snehal Shah
Basically, what has happened is from this financial year, we have changed the basis of sale from earlier when we used to do X factory, we have changed it to FOR basis.
So earlier when we used to record the sales as it happens, now we have to record the sales based on the receipt of material at the customer's site.
So therefore, just for this quarter, because of that difference, we have not been able to take cognizance of sales of roughly around INR 25 crore to INR 30 crore and on which our roughly margin would've been about INR 4 crore to INR 6 crore.
But then from next quarter onwards, it'll get regularized, because then it'll fall into a proper cycle.
So, since it is the first quarter, when we have made the change, there has been a little understatement of the sales because of that.
Biplab Debbarma
So basically, you're saying sales volume also increased?
Snehal Shah
Yes.
Sales volume has actually gone down, primarily because we had certain breakdowns, our production was a little lower, that is why, if you see, we have not been able to achieve the same capacity utilization that we did in the last quarter of previous financial year.
So, we had certain breakdowns, so there was a lower production and hence there was a little lower volumes.
But I think because of the higher NSR we could record almost closer to the sales figure.
Biplab Debbarma
Okay.
Sir, last final question on this, is it possible to go back to more than 20% EBITDA in paper in this financial year?
J. C. Laddha
Kaul sahab, you want to take that answer?
I will just take that.
I think for the current year, as the input costs are very high, definitely it'll be difficult, but will be around that little less than 20%.
So, we hope to catch up to almost 18% by this year end.
Century Textiles and Industries Limited July 26, 2022
Moderator · Conference Operator
The next question is from the line of Saurabh Dutta from Minerva India.
Please go ahead.
Saurabh Dutta
As of now, how much of Century's BCTMP sourcing is imported and how much of it is produced in-house?
J. C. Laddha
Kaul sahib, you want to take that?
Vijay Kaul
We do not make any BCTMP pulp in Century, so whatever we consume is 100% imported.
Moderator · Conference Operator
The next question is from the line of Raj Nahar from Mili Consultants.
Please go ahead.
Raj Nahar
My question is, how is the current market scenario of paper?
Because we seen that there is a two, three price increase in July already taken, but that can take care of cost increase.
Now coal cost is also coming down, caustic-soda price is also coming down.
So, if you can highlight what is our current export utilization?
Vijay Kaul
No at present, the coal cost will come down only after about a month or so, because they just announced something, but whatever stocks you have, you have to consume that, which at a higher price.
And the cost and all that, the reduction has been very minimal.
Not much.
But yes, I presume that in months to come, it may go down.
But as on today, the costs are there and the demand is okay, but cost pressure is still there.
So, I think after a month or two, it may ease out a little bit.
Raj Nahar
What is the current price, if it is possible to highlight the current price?
Vijay Kaul
Current price, we make different, different varieties, so there are different, different prices for different, different varieties.
So, I don't have all the prices with me here at present.
Moderator · Conference Operator
The next question is from the line of Ajit from Nirzar Securities.
Please go ahead.
Ajit Darda
Sir my question is, what is the power and fuel cost for the Paper segment?
Vijay Kaul
Yes.
Power and fuel cost is almost about 20%.
Ajit Darda
20% of what, sir?
Vijay Kaul
20% of the total price of the paper.
Ajit Darda
Total sales value of the paper.
Is it?
Vijay Kaul
Yes.
Ajit Darda
And what is the quantity of imported pulp, sir?
Vijay Kaul
That is about 15%, 20%, depending upon the type of pulp we use,
Ajit Darda
Sir, just wanted to confirm one thing, this power and fuel is 20% of the sale.
Vijay Kaul
Yes.
Moderator · Conference Operator
The next question is from the line of Pritesh Chheda from Lucky Investments.
Please go ahead.
Pritesh Chheda
Sir, to what extent is our paper unit integrated?
And how much reliance do we have on bought out pulp?
And second, your comments on the supply scenario in paper and your expectation on the pricing of paper?
Vijay Kaul
No, we produce 80% to 85% of pulp in-house.
And around 15% to 20%, depending upon the type of paper we make.
We import that.
And over a period of time, maybe within the next 6 months, this import may come down to around 15%, only.
So, 5% we will improve our efficiency in the pulp mill, so that we can get about on a consistent basis Century Textiles and Industries Limited July 26, 2022 about 85%.
So that would be our endeavor to do that.
Sorry, what is your second question?
Pritesh Chheda
Sir, my second question was the supply scenario in paper and your comments on the incremental pricing that you see in the paper market?
Vijay Kaul
No, you see, the incremental prices are due to the cost push.
It has nothing to do with anything else because we cannot absorb all the costs.
We have been absorbing, but we have to pass on certain costs to the customers.
And the scenario is okay at the moment, there is no problem of the demand, but the moment we go beyond a particular price limit, there would be pressure on the substitutions.
So, we have to keep that in mind while doing our pricing,
Pritesh Chheda
There were a lot of capacity closures globally.
So, they continue to be the same that you mentioned?
Vijay Kaul
Yes.
At present Europe is not in the right condition because lot of factories are closed and some factories have taken an annual shutdown keeping in view that they have a problem at present, so they may reopen maybe after September or so.
Pritesh Chheda
And when is our next capacity expansion lined up?
We had some capacity to be added, right?
So, when it's coming and what does it take your total capacity to?
Vijay Kaul
No, our total capacity as on today is around 0.5 million ton of all the varieties put together.
So gradually we are doing certain investments during this year.
And maybe by next year we would be another 25,000, 30,000 tons higher than what it is this year.
J. C. Laddha
Just to add to what Mr. Kaul said on the pricing.
If we see Q-on-Q, the price increase has been 14% as compared to the last quarter.
And if we see Y-o-Y, the price increase has been 33%.
So, for example, in quarter, 1 of FY'23, the average price of all our verticals, paperboard, tissue, pulp, etc, has been 77,358.
In the last year if you see Y-o-Y it was 58,255 only.
And even from the last quarter it has gone up from 68,131 to about 77,358, roughly.
So, this is helping us to cover the increase in the input cost to some extent, but yes, there's a limitation in the market.
And one has to really constantly watch and take a call.
Pritesh Chheda
Sir, you are able to take these pricing because of the fact that there is supply tightness as well, right?
So, until the supply tightness continues, your ability to take price hike would exist.
Is that a fair way to look at it?
J. C. Laddha
Partly you're right.
Partly depends on the input cost as well.
So, one has to see the market conditions and take a call.
Pritesh Chheda
So, when you're guiding for 18% margin towards the year-end, obviously you're assuming that if there is some reduction in the raw material cost, some of it will keep.
Some of it you'll keep through in your numbers for the margin to expand.
J. C. Laddha
Right.
Moderator · Conference Operator
The next question is from the line of Biplab Debbarma from Antique Stock Broking.
Please go ahead.
Biplab Debbarma
So, sir, one question is on the stabilizations of new tissue plant.
So, it has been ready for some time.
So, when do we expect it to be become operational?
And I just missed on the CapEx part in paper.
Just could you highlight on that also?
Vijay Kaul
Yes.
Regarding the tissue plant, it is already in operation, but, it has not achieved its 100% capacity because of the COVID they could not come till April this year because they had so many people who were under the COVID problem.
So now they have come, they have taken one trial, they have taken another trial also.
So, they will be coming for the third trial shortly.
And after that the capacity will go up, sir.
Biplab Debbarma
And by another 2, 3 months it'll be fully operational, sir?
Century Textiles and Industries Limited July 26, 2022
Vijay Kaul
Yes.
I think in this quarter, it will get sorted out and from next quarter that is October onwards.
We should be able to operate on a full capacity.
Biplab Debbarma
Okay.
And you had a plan for new CapEx.
I just missed what you state before.
So, when would you be adding more CapEx in this financial year in the Paper business?
Vijay Kaul
No, no. We already have certain CapExs which is being improved.
Our two paper lines, paper line number 3 and 4.
We are already improving that, and the capacity will sometime during the third quarter will increase by another 20,000 tons or so.
J. C. Laddha
So just to add, yes, I mean the CapEx for the year will be in the range of about INR 100 crore, INR 150 crore which is partly carry forward projects, which have to be completed and some amount for debottlenecking, etc. So, it'll be in that range.
Biplab Debbarma
And my second question is to KT.
KT I just missed it, so contractor for Worli you mentioned structural engineers.
So, is it the same with civil construction contractor?
J. C. Laddha
Yes, I think, Biplab you didn't hear me properly, it's not structural engineer.
I said the structural contract, contract for the structure, which means the core and shell, civil contract.
Biplab Debbarma
My bad.
The name of the contractor?
J. C. Laddha
Leighton is international company based out of Australia.
They're doing pretty good work in India.
They've done a lot of work for DLF and Reliance, etc. It's a very well-known company, so we have given the contract to them.
Moderator · Conference Operator
The next question is from the line of Parin Gala from SageOne.
Please go ahead.
Parin Gala
My question is to K.T. sir.
Sir in the earlier calls, you mentioned a couple of times that once we cross the 50% booking mark for Niyaara, we start preparing for our Phase 2.
So, sir now what is the thought process over there?
K. T. Jithendran
Thank you, Parin.
So, we have sold roughly about 60%, and now we are in the process of planning for Phase 2 or Tower B basically.
We have started based on customer feedback, etc, we are making some alterations on design, etc. So, I think, the entire process of design, then submission, then approvals, in the next fiscal, we should be ready to launch Tower B.
We're quite excited about that, I think fully in the planning stage.
Parin Gala
And sir, again, on a multiple occasion we've discussed about signing new JDAs or JDs and things like that.
Sir, we always say, we have a lot of deals.
So, are we looking at new geographies and what kind of deals are there on the table where we can see some conclusion happening?
K. T. Jithendran
Parin, I think the top-most on our agenda right now priority is on signing new deals.
I think the brand and the company has huge potential for growth in today's real estate scenario that has been demonstrated pretty well in all the markets that we have established our presence and we have launched our projects.
So, we are very keenly looking at projects in Mumbai, NCR, Bangalore, deepening our presence in each of these markets.
Lots of deals are currently in discussion.
Once it is concluded, we'll be very happy to disclose that.
We are also looking at expanding and building our footprint in Pune.
So, these are the major markets we are currently looking at.
Opportunistically, we can look at markets like Hyderabad, which has got potential, which has been doing well in the last one or two years has been a huge surge because of the back of commercial demand there.
So opportunistically, prime properties in that location also, we are sort of exploring.
But otherwise, largely the market will already present.
We are planning to deepen our presence and Pune, which is always a very established market.
So, these are the markets where we are very actively scouting for the right kind of projects.
Parin Gala
Great, sir.
And sir lastly from me, just couple of months back that mala fide, newspaper articles which came in, is it behind us or something is happening over there?
Or anything further has happened either from the other party or from our side, or is it now behind us?
Century Textiles and Industries Limited July 26, 2022
K. T. Jithendran
I would like to presume that's behind us, we have taken legal action against such things.
So, it has been quiet, of course, as we all know, it has been absolutely unreasonable and, you know, totally frivolous.
We have never tried to develop any of the part, which is under dispute, which is always stand, always we have made it very clear.
We have also given a very clear clarity on that to a newspaper ad.
Also, we have given them legal notice.
So, we haven't heard from that quite some time.
Luckily for us, it didn't create any damage.
The market had already known about it and therefore, the sales continues to be doing strong and I would like to believe that's behind us, but I don't know, they may again sort of try to, because this is so frivolous and so very unpredictable people.
So, I really can't say that we've seen the last of it, but for some time I think it has been totally quiet.
Moderator · Conference Operator
The next question is from the line of Ishrat Khatri from Omkara Capital.
Please go ahead.
Ishrat Khatri
Sir, I had a few questions on the Paper segment.
Just wanted to know how much are we exporting in papers, because I see the realization jump Q-on-Q for paper export is about 25%, 26%.
So, is it primarily because we exported more tissue, which has higher realizations or in general how's the export demand?
Vijay Kaul
No, the demand for export is reasonable, but around our total capacity of about 40,000 tons per month sale, around 10% to 15% maximum, in fact, minimum 10% and sometimes maximum 15% is our export.
We don't export more than that because we want to practically serve the domestic market.
Ishrat Khatri
And sir, this has been the trend?
I mean historically it was around this range or has it increased?
Vijay Kaul
No, no. It is more or less the same.
It has not increased.
Maybe as I told you in some months, maybe 1% or 2% higher than the 10% in some months, around 10% like that it is going on.
J. C. Laddha
So just to add, what Mr. Kaul has said that total exports, I'm talking about total, not only of tissue, for quarter 1 of FY'23 was over 12,000 metric tons.
And the previous quarter was higher in this around 18,335 metric tons.
If we talk about Y-o-Y, this was 22,552 in the quarter 1 of FY'22.
So, it all depends mainly based on realization, based on the demand in the export market and as we mentioned, our priorities to serve the domestic market.
Ishrat Khatri
Right.
So, sir, just wanted to understand how the realization increased very significantly.
Is the demand very good or is it just the pass on of the raw material prices?
Because there's been a significant jump in the realization for exports.
Vijay Kaul
Yes, that is basically, as I said, the input cost increases in all other, whether you take it all the raw materials, including the coal also for the power.
So, all the raw materials have gone up considerably.
So, the input cost increase is being passed on to the customers.
And there's always a time lag in that.
But we are still not able to pass on 100% to the customers and we have to price the product in a manner that it does not fall for any substitution of any other product by that.
So that's how it is.
Ishrat Khatri
Sir, my second question is on the margins that you all make in the paper business.
So, I understand that Century also is integrated to the extent of about 80% when it comes to raw materials.
And if I look at other integrated players, their margins are relatively much, much higher.
They make about 15% to 20% kind of margins and our margins have been historically lower than them as well in the last, at least, 2, 3 years.
And also, you mentioned that about 20% is the power and fuel cost.
And if I look at the power and fuel cost for players like JK or West Coast, it's somewhere in the range of about 10% to 13%.
So, is that the reason do we have captive power?
Just wanted to understand why is there a differential in the margins?
Century Textiles and Industries Limited July 26, 2022
Vijay Kaul
Yes, generally in the power cost, steam is very, very important factor.
And the steam generation generally has to be coming from the recovery section.
And our recovery section is not that high with the highest efficiencies, but we have taken a CapEx and we are now doing new recovery system, which will increase the efficiencies maybe from October, November onwards.
And our power cost will come down drastically after that.
Ishrat Khatri
Okay.
So, can I expect about 14%, 15% kind of number post that?
Vijay Kaul
Yes.
Approximately on that, yes.
We have to still further do some tweaking here and there, but yes, it will reduce our power cost substantially, yes.
Moderator · Conference Operator
The next question is from the line of Viraj Parekh from Carnelian Capital.
Please go ahead.
Viraj Parekh
I joined the call late, so pardon me just for repeating.
Just wanted to understand that you said that this year looking at close to INR 100 crore, INR 150 crore is CapEx, now that there are some structural changes in industry, like the single-use plastic ban and even a few years back China wastepaper import ban was there.
So how do we see the capacity 2 years from now, because I'm guessing by the end of this year or you can say H1 of FY'24 will be at peak capacity utilization.
So, post that, what is it, like, do you see the export market to be more lucrative?
Do you see the demand increasing?
Can you give me some guidance?
At What capacity or what kind of capacity expansion in 2 years, 3 years down the line?
R. K. Dalmia
Laddha ji, can you take that up?
J. C. Laddha
As of now our focus is basically to debottleneck and improve the capacity as Mr. Kaul mentioned earlier.
It is likely to go up by 20,000, 25,000 in the short term.
And of course, there has been a discussion to improve the capacity.
So, various factors have to be considered and once the numbers are crystallized and once we have the firm plan that can be shared.
Viraj Parekh
Okay, sir.
And second question is that, in terms of like, historically, India was a net exporter of paper in the past 2 years, we have become a net exporter.
So in the export market, what is your strategy and outlook for the coming years?
I mean, you mentioned that you're getting some competitive pricing from China and Indonesia, but as a percentage of total export sales, how big do you see that number going in the next 2, 3 years?
Vijay Kaul
No, actually, as I said earlier, our strategy is to supply majority of the material in the domestic market, but sometimes certain export markets become lucrative.
So, we want to keep our foot in that door, because you do not know, what happens at different places or what will happen in India for any kind of domestic demand and all that.
So, we want to keep that foot in the door.
That's why we are exporting about 10% to 15%, not more than that.
So, we will still keep on supplying to the domestic market only.
We don't want to go in the export market in a big way.
Viraj Parekh
So, we'll see that number maintain for the coming year when the range is 10% to 15 %?
Vijay Kaul
Yes.
It'll be around that number.
Moderator · Conference Operator
The next question is from the line of Nishith Shah from Aequitas Investments.
Please go ahead.
Nishith Shah
Sir, my question relates to our Packaging Board segment.
So, the production here was lower compared to last year.
So, is it because of the breakdown or because of the slowdown you indicated in June month?
Vijay Kaul
No. In this quarter we had taken, what do you call it, is a planned shut down because we had to do certain modifications in the board plant to increase its capacity from 180,000 to 200,000 tons.
So, we had to take certain planned shutdowns in order to change certain motors and gears and whatnot, which we have done partially.
We will be taking another shutdown sometime during the month of September to complete that process.
And from Century Textiles and Industries Limited July 26, 2022 October, November onwards, our capacity will be around 200,000 tons per year as compared to 180,000 tons as on today.
So that is the reason why the production is slightly lower.
J. C. Laddha
Mr. Kaul has said, the board production remains in the range of 40,000 to 45,000.
So, the current quarter had 40,300 versus last year of 46,000.
And if you see Q-Q, the number of the last quarter was 42,700.
So, then a slight reduction, not much.
So, it is in the range of 40,000 to 45,000 as of now.
Nishith Shah
Okay.
And so, you indicated there is a slowdown in June.
So over here are we able to take on NSR hike or here also, we are lagging in terms of taking price hike compared to our input cost?
J. C. Laddha
Mr. Kaul?
Vijay Kaul
No. We have taken higher NSR, but as I said, NSR has got a limitation that so many people have started rather going to new kind of technology, like earlier, they were using a particular type of board.
Now they are using the recycled boards for certain applications.
So, we have to be very, very cautious in pricing as to it should not envisage to change the complete process of not having a board in their agenda.
So, we are little bit cautious about our pricing, but yes, we have increased quite a bit.
Nishith Shah
Okay.
And sir, lastly, are the margins for the board segment better than the consolidated margins?
J. C. Laddha
Yes, if you see, the board NSR, if you see the number, it is 40% higher Y-o-Y.
And if we compared with the last quarter, it is about 13.3% higher.
So as Mr. Kaul rightly mentioned, we have to keep various factors into mind and balance everything, including the increase in the input cost.
So as of now, it is in the range of 84,000, 85,000, and it is higher than Q-o-Q as well as last year.
Nishith Shah
Sir, my question was relating to margin.
So, are the margins better than consolidated?
J. C. Laddha
Kaul sahib, board margins?
Vijay Kaul
Yes, the board margins are definitely better than the paper margins, but over a period of time in the last, one or two quarters, even the paper margins have also gone up considerably.
Moderator · Conference Operator
The next question is from the line of Saurabh Dutta from Minerva India.
Please go ahead.
Saurabh Dutta
Just try to follow-up on the paperboard question.
With the way paperboard demand has been increasing.
Do you expect any BCTMP production in-house or will you still continue importing it?
Vijay Kaul
No, we will still continue importing it for the time being, because once we are increasing the capacity of our board plant, so we may think about it, but as on today we have no plans.
Saurabh Dutta
Okay.
And just to follow up on that, would there be some sort of a cost differential between in-house production and BCTMP imports and if you could quantify that cost difference being?
Vijay Kaul
No, you see when we are using BCTMP pulp in board production.
So, board production has got three, four components.
One is the BCTMP hardwood.
The other one is the BCTMP softwood.
And the third thing is the normal pulp which we are producing.
So today, the BCTMP pulp, whether it is hardwood or softwood, it is more or less I would say constant in the sense the percentage is constant, but the only thing what we can increase, or decrease is the pulp which we manufacture in-house, depending upon the quantity available with us.
So BCTMP will not increase to that an extent as compared to the in-house pulp.
Century Textiles and Industries Limited July 26, 2022
Saurabh Dutta
So, you're saying that in both cost of BCTMP and the in-house production would be similar?
Vijay Kaul
Yeah.
Moderator · Conference Operator
The next question is from the line of Abhinav Bhandari from Soham Asset Managers.
Please go ahead.
AND INDUSTRIES LIMITED · MR. SNEHAL SHAH - GROUP CFO, CENTURY
I have three questions on the real estate front.
So, one is apart from the subsequent phase of Kalyan and NCR as you pointed, is there anything else which is lined up for launch in this fiscal?
KT Jithendran
Thank you, Abhinav.
Yes, so largely the new phase launches, largely stated from these two only, no other project.
AND INDUSTRIES LIMITED · MR. SNEHAL SHAH - GROUP CFO, CENTURY
Sure.
Got that.
And on the Niyaara side that you have sold almost 60%, just trying to understand on where is the pricing, what says the launch?
So, I mean, have we taken any price hikes off late, how's this scenario now?
KT Jithendran
We haven't yet taken any price hike, but something is clearly in the offering.
I think very soon we'll revise the price.
AND INDUSTRIES LIMITED · MR. SNEHAL SHAH - GROUP CFO, CENTURY
Got it.
Finally on the lease rentals part, we have not seen an increase here since couple of years, understandably because of the COVID, but this year, is there a scope for increasing the lease rentals, number one?
And secondly, in our subsequent forays in the real estate, is there any plans for commercial also?
KT Jithendran
Yes.
So, Abhinav, I don't think there is any scope for increase in this year because this year we are at currently 90% and we have got 90% occupancy, but another 7% or 8% is balance, but we are in advanced talks to all of them.
And there is plenty of supply in the South Mumbai, Worli market.
So, there is a very little scope for increase this year, maybe in the coming year and as the demand picks up and occupant and the supplier reduces, I think we see a good scope for increase in place rentals.
As far as foray into commercial is concerned, we are actively looking at it.
I think we will start, we, of course have, Birla Niyaara itself, that Worli we have commercial opportunity of about a 1 million square feet.
Maybe we'll start exploring thinking about that maybe now, because the cash flow from the residential has been pretty strong.
So maybe that we also very actively now look at launching the commercial building.
We also looking at not today, but in the future, maybe in a couple of years or so, we'll start looking at exploring new projects in the commercial segment also.
Anyway right now, most of our projects spent, which is mixed used there also a commercial component in that.
Moderator · Conference Operator
The next question is from the line of Ashish from Infinity.
Please go ahead.
Ashish Kumar
Just wanted to check on this new projects, when do we expect to start booking revenues, especially on the Gurgaon project and the Kalyan project, which you have significantly advanced?
KT Jithendran
So, Ashish, the method that we follow on accounting is on completion of phase or get the occupation certificate.
So, starting next financial year onwards, we are expecting to give possession in every year.
Ashish Kumar
Sir, what would be really helpful, sir, if you can maybe also kind of give some sense as to what is the cost for completion of the phase as part of your investor deck, because that will kind of give a sense as to where we are headed.
Because what is happening is that we are collecting all the capital and cash and cost, but nothing is falling through the P&L.
So, what will be helpful in that case can kind of start kind of giving some indications to what is the remaining cost of construction?
KT Jithendran
We'll take a suggestion on Board and we'll study that.
Yes, we’ll consider that.
Century Textiles and Industries Limited July 26, 2022
Moderator · Conference Operator
The next question is from the line of Himanshu Zaveri from Dhruv Gems.
Please go ahead.
Himanshu Zaveri
My question was regarding, now since in the real estate sector, we've been doing good sales and we’re on cusp of like INR 4,000 crore to INR 5,000 crore per year.
So now is the right time to unlock the value and maybe demerge Birla Estates from Century Textiles?
Is there any plan regarding in the future?
Snehal Shah
No. Right now there is no such plan, primarily the reason being that we have substantial cash flow is coming in from our manufacturing business, which to a certain extent helps us enhance the real estate business.
So, till the time, real estate business has demonstrated by delivering a few projects on time and proper, etc, as well as when they become sort of self-sufficient in terms of cash flows, probably that would be the right time for us to give this a thought, but at the moment there is absolutely no plan.
Himanshu Zaveri
Okay.
And regarding the new deals, just seeing the real estate market and this, but don't you think that we are little bit slow in finding the new kind of deals and we are now in the top 4 cities also.
So, if you want to scale up meaningfully, then we need to sign a lot more new deals.
Your thoughts on that?
KT Jithendran
Yes.
Himanshu, thank you for your feedback.
We are very actively looking at the right sorts of projects in each of the cities that I earlier mentioned.
It's very true that we need to drastically increase our presence.
We are very actively looking at it.
Just being a little cautious, make sure that we don't kind of do any mistakes there.
The valuation is very critical as we know that land valuations are going up.
But it's a very interesting stage and we are in discussion.
So hopefully I think, I should be able to share some good news in the coming quarters of this fiscal.
Himanshu Zaveri
And the new project, which we signed, when is that expected to be launched?
KT Jithendran
That will most probably happen in the next fiscal.
Himanshu Zaveri
And the second phase of the Birla Niyaara also in the next fiscal?
KT Jithendran
That's right, Himanshu.
Moderator · Conference Operator
Thank you.
Ladies and gentlemen, that was the last question.
I now hand the conference over to Mr. Amit Srivastava for the closing comments.
Amit Srivastava
Yes.
Thank you very much, sir, for your valuable inputs and clarification, and that concludes this conference call for today.
Thank you, participants for joining the call.
Thank you, sir.
J. C. Laddha
Just a minute.
I would just have the closing statements.
Thank you for all participating in this earnings con call.
I hope we have been able to answer your question satisfactorily.
If you have any further questions or would like to know more about the company, please reach out to our IR managers at Valorem Advisors.
We are very thankful to all of our investors who stood by us and had the confidence in the company's growth plan.
And with this, I wish everyone a great day ahead.
Thank you.
Moderator · Conference Operator
Thank you.
Ladies and gentlemen, on behalf of Batlivala & Karani Securities, that concludes this conference call.
We thank you for joining us, and you may now disconnect your lines.
Thank you.