ABREL — earnings call
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Prepared remarks
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP & PAPER DIVISION – CENTURY TEXTILES AND INDUSTRIES LIMITED MR. K.
T.
JITHENDRAN – CHIEF EXECUTIVE OFFICER, REAL ESTATES – CENTURY TEXTILES AND INDUSTRIES
LIMITED · MR. SNEHAL SHAH – CHIEF FINANCIAL OFFICER –
MR. SNEHAL SHAH – CHIEF FINANCIAL OFFICER – CENTURY TEXTILES AND INDUSTRIES LIMITED Century Textiles and Industries Limited January 31, 2023
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to the Century Textiles and Industries Limited Q3 FY2023 Conference Call hosted by Batlivala & Karani Securities India Private Limited.
As a reminder, all participant lines will be in the listen-only mode.
There will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference, please signal an operator by pressing “*” then “0” on your touchtone phones.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Srivastava from Batlivala & Karani Securities.
Thank you and over to you Sir!
Amit Srivastava
Thank you Roy.
Good afternoon, everyone.
On behalf of B&K Securities, I welcome you
Questions and answers
Moderator · Conference Operator
Thank you very much.
We will now begin with the question-and-answer session.
Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Biplab Debbarma from Antique Stock Broking.
Please go ahead.
Biplab Debbarma
Thank you and good afternoon to everyone.
Sir this is related to real estate.
In the past quarterly presentation, the land parcel at Worli was shown as 30 acres and in the latest presentation it is only showing 14 acres, so just trying to understand is this because there is some impediment in the remaining 16 acres?
KT Jithendran
Thanks for the question so I think it is the same, there is no change.
Birla Niyaara the three residential towers that we are developing is consisting of 14 acres, over and above that we have a commercial development coming next to Birla Niyaara which counts for the balance, so I did not get you were you saying 20 or 30?
Biplab Debbarma
30.
Sir earlier you used to show 30?
KT Jithendran
30 remains because on the Worli west side we have the worker’s colony that is 10 acres and this parcel is 20 acres so together it constitutes 30 acres.
I think somewhere you must have missed that saying Birla Niyaara which is the residential towers that is 30 which is actually 14 acres, so these three residential towers are 14 acres then we have a commercial thing which is coming next to it with a little bit of retail so together this part is 20 acres and the other part of the land which is the colony development which is 10 acres so together it remains 30 acres there is no change.
Century Textiles and Industries Limited January 31, 2023
Biplab Debbarma
There is no impediment?
KT Jithendran
No absolutely not.
Yes everything remains the same.
No change.
Biplab Debbarma
These 30 acres translated to more than?
KT Jithendran
Roughly around 5 million.
Biplab Debbarma
Thank you for this.
Second question is considering that there is no new project launches and all the sales booking is based on the sustenance sales you are doing excellently well so next focus will be on new projects so can you give us some color, some kind of insights on where are we in terms of the project execution besides Niyaara growth would come from new project launches so where are we on business development front Sir?
KT Jithendran
New launches comes from two places one is completely new project launch the other is a new phase launch in an existing project, so we are hoping to launch a new phase in our Birla Navya in Gurugram sometime in mid February or early March we are just waiting for the RERA clearance.We have not got it yet but we are expecting that to come sometime in mid Feb.
We are following vigorously so that should give an impetus for a new phase launch in our current projects.
As far as new project launches are concerned you know that we have finalized two projects in Bengaluru one is a profit-sharing joint venture in Devanahalli and another one in R R Nagar both these project launches are expected in the next financial year.
Biplab Debbarma
So, on business development front Sir?
KT Jithendran
On business development we are hopeful that in the next three to five months we will be announcing lot of new projects.
We are very hopeful.
We are in advanced stages of discussions in Mumbai, Bengaluru, Pune and NCR each of these regions but because of due diligence, etc., it is taking a bit of time.
Hopefully before the end of this quarter or early next quarter we will be able to make a few very encouraging announcements.
Biplab Debbarma
That is very, very assuring sir and this question is regarding paper sir what is the EBITDA margin you did in this quarter i and if I have to see that in Q4 or the next three quarters what will be the steady state EBITDA margin in paper that we should see?
Snehal Shah
EBITDA margins for the nine months continue to be around 16% this quarter of course because of the reasons that Mr. Dalmia has already mentioned in his opening remarks there has been a little bit of a didip,ut I think we should be able to maintain 16 or may be in the next quarter at least in the next quarter achieve 18% odd.
Century Textiles and Industries Limited January 31, 2023
Biplab Debbarma
Okay thanks.
Thank you, Sir.
I will come back in the queue.
Moderator · Conference Operator
Thank you.
We have the next question from the line of Himanshu Jhaveri from DHRUV GEMS.
Please go ahead.
Himanshu Jhaveri
I just wanted to ask are not we little slow in the new business development deals because from what I see the new projects almost we do not have any much inventory except the Niyaara one so we should be a little aggressive in signing off new deals in the next growth phase of the company your views please?
KT Jithendran
Thank you for the question.
Yes, I take your feedback.
We have been very cautious.
There are lots of development happening as I said lot of talks and discussions happening and we are in advanced stages.
We are also mindful that because of the current inflationary stage prices of land has gone up, but we have also taken a very open view we are open to now even buying properties as against previously sticking only to JVs so we are having an open mind, but we are just being cautious of the various risks involved being a company which is establishing itself, strengthening its balance sheet, etc. Having said that we are very, very enthusiastic and aggressively looking at the right opportunities and as I mentioned to you, I am quite hopeful that in the next three to four months we should be signing quite a few good deals across all four regions.
Himanshu Jhaveri
Have we taken any price hikes in the Birla Niyaara project and when is the second phase going to launch over there?
KT Jithendran
Yes, so Himanshu we have taken a price hike, we took it sometime back, we have taken 7.5% hike, today we are selling in the region of about Rs.63000 per square foot on carpet so that is the stage of the Birla Niyaara.
As you have seen that we have sold more than Rs.1900 Crores of inventory here out of the Rs.3200 Crores possible.
We are now in the final stages of designing of Tower B we are bringing in some changes etc., depending on the current market situation.
We are quite hopeful that we will be able to bring this into the market by next financial year hopefully by Q3.
Himanshu Jhaveri
What is the carpet area construction cost in this Niyaara should be around Rs.20000 a foot, Rs.20000 to Rs.25000?
KT Jithendran
Overall cost including all escalations and contingencies across the five years of construction should be in the region of Rs.18,000 to Rs.19,000.
Himanshu Jhaveri
Rs.18,000 to Rs.19.000?
Century Textiles and Industries Limited January 31, 2023
KT Jithendran
Yes.
Himanshu Jhaveri
This is also carpet right?
KT Jithendran
Yes, that is right.
Himanshu Jhaveri
Okay so we are selling at around Rs.60,000 to Rs.63,000 right?
KT Jithendran
As of now right yes.
Himanshu Jhaveri
Before you were saying that when we sell of 50% to 60% of the project, we will immediately launch the second phase so is there any delay or we are just waiting it out for launching the second phase?
KT Jithendran
No, the delay is largely we want to understand the change dynamics in the Worli market, things have changed so we are just observing that of course and creating a new product in Tower B which will be very different from Tower A so that is the only reason for waiting till December because the entire approval process itself is going to take in Mumbai that much time.
Himanshu Jhaveri
Okay thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Biplab Debbarma from Antique Stock Broking.
Please go ahead.
Biplab Debbarma
Sir I am just trying to understand on the business development front.
Sir can you give us some color what kind of projects in terms of Gross Development Value or in terms of sales of these projects, are these big projects Rs.
5,000 Crores, Rs.10,000 Crores or Rs.2,000 Crores kind of projects that you are doing that you are in discussion?
KT Jithendran
Biplab it is difficult to answer that question right now.
We are, as I mentioned in all types of, we are looking at scale projects, we are looking at mid size projects, we are looking at brand projects which are of a smaller size, we are aggressively currently pursuing all these deals.
How many of them and which one of them will be finally fructified that will be too much of forward thinking so I do not want to speculate there that will be up to speculation so I will refrain from that.
Suffice to say that we are pretty good strong number of deals are there and we are very, very hopeful that to grow this business and the aspiration to grow this business at very huge scale over the coming years so the projects that we are pursuing is consistent with that goal.
I cannot reveal beyond this that will be open to speculation.
Century Textiles and Industries Limited January 31, 2023
Biplab Debbarma
That is alright and Sir regarding the Niyaara project that you have I guess sold more than 65% of the inventory and are you seeing any kind of change in footfalls because you have sold significant?
KT Jithendran
Early days now Biplab.
We have finished less than a year we have just started construction about April or May, and we have taken all the contingencies and escalation in our budget, so I do not see any change in input cost at this early stage.
Biplab Debbarma
Sir my question is on the footfalls in the sense of enquiries and conversion or footfalls to the project site and everything, do you see any change, or you see the momentum of sales that we have seen so far continuing in the Niyaara?
KT Jithendran
Yes, the position is very different.
As Dalmia Ji mentioned in his opening talk this has been the fastest selling project in Mumbai by more than a huge distance, so we have sold as Rs.1.900 Crores in the last calendar year so I do not think there is any.
The only problem now is that we do not have inventories, so we are now waiting for Tower B.
293 flats are sold out of the 413 or whatever and most of the small size inventories have gone.
What is left is the large size inventories now they are also finding traction even the large inventories are moving so the only challenge to me is now will be to increase prices and create more value.
I think our focus will be to just keep on because we do not want to sell off everything in the first year or second year.
We would like to wait it out and allow this to capture more value by selling it at the right time so that staggering of sales is what we are focusing on.
I think this is more than 70% - 293 out of 413 so I think we have sold enough, and we will wait for the traction.
Of course, the best inventory is the kind of traction we are having initially.
We cannot expect that to happen now is to sell 400 to 500 in the first few months now we are selling close to about Rs.
100 Crores every month because that is the inventory which is left so now and when Tower B gets launched, we will again get a surge hopefully during the launch time.
Biplab Debbarma
One final question is on the project delivery in Kalyan, Gurugram and Bengaluru, when are we expecting delivery of these ongoing projects?
KT Jithendran
So, the first phase of Kalyan, entire Birla Alokya in Bengaluru and the first phase of Birla Navya in Gurugram all are slated for delivery next year.
Biplab Debbarma
Next year by around?
KT Jithendran
Mostly in the later half of the year.
All of them come in the later half of the year yes ranging from August,September till March.
Century Textiles and Industries Limited January 31, 2023
Biplab Debbarma
Okay thank you.
That is all.
Moderator · Conference Operator
Thank you.
The next question is from the line of Smitesh Sheth from Raedan Securities.
Please go ahead.
Smitesh Sheth
Good evening, Sir.
Sir just now we have mentioned in the call Birla Niyaara phase 2 there are some new dynamics and new thinking going on so could you slightly elaborate on it what does it mean and what are we planning please?
KT Jithendran
Thank you Smitesh so what we are thinking is just creating more variety in the product mix.
We do not want to bring in the same product mix as we got in Birla Niyaara first tower, we are bringing more variety and different product mix that is all.
Smitesh Sheth
When is the expected launch date would be maybe by June and July this year for phase two pre Diwali?
KT Jithendran
Smitesh I think it will be post Diwali.
Smitesh Sheth
Okay Sir.
Thank you very much.
Moderator · Conference Operator
Thank you.
The next question is from the line of Giriraj Daga from K M Visaria Family Trust.
Please go ahead.
Giriraj Daga
I do not know whether you have actually spoken about this in the call so like we started with the year saying that we will be able do somewhere close to Rs.
2,000 Crores of presales in this year do you think we are on target to achieve that?
KT Jithendran
Giriraj I think we are well on target to achieve that as of now.
Giriraj Daga
When I have to look at let us say FY2024 what will be the number you will indicate for FY2024 on presales?
KT Jithendran
It is difficult to predict that now and look like some kind of forward thing so I think we will refrain from it now we will come back to you, but we are on a strong growth path it should be a better number in 2000 but Giriraj we will come back to you I do not want to speculate at this point of time.
Giriraj Daga
Last thing from my side on the paper side of it you mentioned the reason why it was soft during this quarter but how is the situation now like are we looking at normalization or some replacement of the fall in the margin what we saw in Q3 or like this is going to be the normal level stabilizing with the current level?
Century Textiles and Industries Limited January 31, 2023
Snehal Shah
Giriraj I think as far as the commissioning of all the plants that is being done, number two the small breakdown that we had in our fiber line which made us buy imported pulp at a higher cost so that shutdown has been taken care of, so all internal issues have been sorted out.
What has happened is that because our production was slow therefore the margins were low because the fixed cost had to be absorbed at a lower production that way.
So hopefully if the prices remain what they are today we should improve our margins in the coming quarter.
Giriraj Daga
what we are hearing from the market is that imports have started going up obviously in some certain segment in the paper side of it and certain price corrections have also happened so have we taken any price cut?
Vijay Kaul
No as the import things are coming in but at the same time the raw material prices are also coming down slightly so keeping in view of the raw material prices which have happened in the last three to four months we have to take the price correction to certain extent that is all what have done that too also in only segment.
In paper and tissue, we have not taken any price cut at all.
Giriraj Daga
Sure.
Thanks, from my side.
Moderator · Conference Operator
Thank you.
The next question is from the line of Harsh Pathak from B&K Securities.
Please go ahead.
Harsh Pathak
Good evening.
Sir my question is what kind of unsold inventories we are carrying right now in Birla Estates for the projects that have been already launched and what is the inventory that will get released at Birla Navya in February and March?
KT Jithendran
Harsh I do not have the full details but largely we have sold whatever we have launched almost 80% of the inventory across projects roughly about 80% and Birla Navya we will bring about Rs.400 Crores to Rs.450 Crores of new inventory as phase three of the project.
Phase one is 100% sold, phase two is about 90% sold so broadly that.
In Birla Vanya, Kalyan we have sold about more than 800 units of the 1200 so about 400 so that is two thirds.
Birla Alokya about 196 out of 218 is sold.
Birla Navya,Gurugram as I mentioned first phase is 100% sold, second phase is almost 90% sold, third phase we have launched which will be about Rs.400 Crores.
Birla Tisya again out of 392 units 293 is sold.
Birla Niyaara as I mentioned of 414 of the 287 is sold so that is the kind of situation.
Harsh Pathak
In that case with the bookings that we have clocked in now that is around Rs.1,300 odd Crores for the first nine months so would this inventory be enough to meet our Rs.2000 Crores target for this year?
Century Textiles and Industries Limited January 31, 2023
KT Jithendran
Yes, that much we have inventory largely from sales to as I mentioned it is important for us to launch phase three of Birla Navya we are waiting for the RERA clearance if that comes then I think easily we will be able to achieve this target.
Harsh Pathak
What kind of sales are we expecting upon launch for Navya projects since in NCR the demand looks quite strong so what kind of sales are we expecting internally?
KT Jithendran
I think at least about 50% of this inventory should be able to sell during the launch.
Harsh Pathak
What is the kind of demand we are seeing because we have been hearing that luxury is getting traction so how are we designing our projects, how are we applying our designs to the broader ground level demand trends, any light you can provide on that front?
KT Jithendran
Not very clear Harsh.
You are asking now how the luxury segment is shaping up is that what you are asking?
Harsh Pathak
No on the broader residential demand what we have been hearing is that the luxury segment is getting more traction whereas the affordable and mid premium is slightly impacted by the interest rate hikes and the broader inflation so what trends are we seeing and are we aligning our designs on those lines?
KT Jithendran
So Harsh you know that we are in the premium segment and most of our projects remain in the premium segment.
We are getting huge traction in Worli so far and as earlier mentioned in the now discussion that Tower B we are also tuning into that sort of a product mix.
Delhi NCR and Gurugram is again a larger product premium it is doing very well.
Tisya in Bengaluru is a premium one it is doing very well.
Kalyan of course it is in that mid segment where we are facing some bit of challenges in the kind of traction that we would like to have so largely you are right because of interest rates hikes and some impact of COVID among the lower strata or the mid strata, etc., there has been a slight impact but the segment which we are focusing on which is the upper segment selling above Rs.7000 in markets other than Mumbai and in Mumbai above Rs.15000 I think the demand continues to be very strong and we hope to capitalize on this completely.
Harsh Pathak
Sure perfect.
Recently we have been seeing there are lots of good developers buying land and going for their own land model also are we exploring any such thing within Birla Estates?
KT Jithendran
You mean to say outright purchase is that what you meant?
Harsh Pathak
Yes outright.
Century Textiles and Industries Limited January 31, 2023
KT Jithendran
We are open to outright purchase also.
I think otherwise it will be too opportunistic to wait for JV so that is what I was trying to mention so we have now become much more aggressive in lookout for some outright opportunities also in the right segment with the right price and right location.
Harsh Pathak
Sure.
Thank you, Sir.
Those were my questions.
Thanks a lot.
Moderator · Conference Operator
Thank you.
We have the next question from the line of Abhinav Bhandari from Sohum Asset Managers Private Limited.
Please go-ahead Sir.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Thanks for the opportunity so three questions one is on the collection side for the quarter the number has been a little bit lower so just trying to understand that better and how are we looking at it from a full year perspective?
KT Jithendran
Abhinav I presume you are talking about real estate collection.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Yes.
KT Jithendran
So, collections I would not go by quarterly collections I would go rather by what is the in- year collections or till date year collections so I think we are doing pretty well because many things which were supposed to happen in the later year we have collected at the earlier quarter so as far as our collection schedule we are doing fine as per our billing schedule we are doing fine.
We are targeting collections in excess of Rs.800 Crores for the year and we are well on target for that.
We hope to exceed that target backed on strong sales of Niyaara and the Navya in NCR, etc., so no sweat there, no problems there.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Got that and for nine months how much would be construction spend that we have done so far?
KT Jithendran
I will have to come back to you I do not have that figure off hand.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
But from a full year perspective any number that we had earlier?
KT Jithendran
About Rs.700 Crores.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Got it so net net from a gap perspective collection versus spend there may not be too much of a gap as far as full year is concerned?
KT Jithendran
Yes absolutely.
Century Textiles and Industries Limited January 31, 2023
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Got it and just on the earlier data which you highlighted next year the projects which are up for launch are those two Bengaluru projects and the next phase of Niyaara so apart from that anything else which is lined up in the existing projects?
KT Jithendran
We are hoping to launch Tower B of Birla Niyaara and of course the sustenance sales of the other projects like Tisya, Birla Vanya, Kalyan and we are hoping that in the next few months we will be able to finalize a few projects and bring them to the launch stage in the next financial year itself.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Sure so just from that perspective wanted to understand that these two Bengaluru projects of Devanahalli and R R Nagar typically from the time that you got those projects to finally coming to a lunch date what is the gestation period just to understand in terms of taking approvals, getting the plan ready, so just to understand if any new business developments that you do in probably first half of FY2024 can the launch happen in FY2024 second half itself is what I am trying to understand?
KT Jithendran
Abhinav this totally depends on which location the project is and which region.
If it is Mumbai it is different, if it NCR it is different, Bengaluru it is different, Pune is different and depending on the size of the project also so yes it is quite challenging for us to expect that we will get into a new project and also launch in the same financial year it will take 12 to 15 months.
Bengaluru it takes about 15 months.
Mumbai it takes a little more, but we are just hoping and considering the kind of projects that we are pursuing today there are a few projects which are in an advanced stages of approval also.
We had a past approval ready so there is a good chance that some of these projects if we finalize it we will be able to bring it to the launch stage in the next financial itself so on that basis of confidence I am telling you this.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Got it perfect and just one last bit on the leasing side of the portfolio I think last quarter we discussed that there was some vacancy which had happened so has that got filled in?
KT Jithendran
It is all stabilized.
The leasing is fully stabilized.
It is fully leased out.
It is 100% leased out.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Got it perfect and hopefully we should have the escalations going on from next fiscal the annual 5% escalation?
KT Jithendran
In some of them, not all of them, some of them.
TEXTILES AND INDUSTRIES LIMITED · MR. VIJAY KAUL – CHIEF EXECUTIVE OFFICER, PULP
Perfect.
Got it.
That is all from my side.
Century Textiles and Industries Limited January 31, 2023
Moderator · Conference Operator
Thank you.
As there are no further questions, I would now hand the conference over to the management for closing comments.
Over to you Sir!
R. K. Dalmia
Thank you all for participating in this earnings concall.
If you have any further questions or would like to know more about the company reach out to our IR Managers at Valorem Advisors.
We are very thankful to all our investors who stood by us and had the confidence in the company’s growth plan and with this I wish everyone a great evening.
Thank you.
Moderator · Conference Operator
Thank you.
On behalf of Batlivala & Karani Securities that concludes this conference.
Thank you for joining us.
You may now disconnect your lines.