NEW DELHI: Provident Housing, a 100% subsidiary of Puravankara, is looking to invest about Rs 600 crore to buy new land parcels and will be investing around Rs 750-1,000 crore in the financial year 2024-25 to develop these land parcels.
Provident is currently present across nine regions namely, Bengaluru, Kochi, Mumbai, Goa, Hyderabad, Mangalore, Chennai, Coimbatore, and Pune. It has about ~11.70 million sq ft of ongoing projects and land bank of ~5.61 million sq ft.
The company recently unveiled its second Environment, Social and Governance (ESG) report, according to which, conservation across all projects led to water savings of nearly 210 KL. The company’s waste management practices resulted in the re-purposing of 60 loads of construction and demolition waste for roadworks at project sites. On the governance front, the company has made significant strides in promoting gender diversity in its workforce. There has been a 41% increase in the hiring of female employees, contributing to an overall gender diversity ratio of 33%.
Mallanna Sasalu, chief executive officer in an exclusive conversation talked about company’s future plans. Edited excerpts:
How has been H1 FY24 for you? How many projects are you looking to launch in H2 FY24?
Last six months have been fantastic. We contributed about 34 per cent to the overall sales value of the group. The recorded sales value of Puravankara was Rs 2,725 crore during H1 FY 24, of which about Rs 931 crore was contributed by Provident.
In the beginning of this financial year, we announced that we wanted to launch five projects, of which two have already been launched, one we will launch in October-December 2023 quarter and two will be launched in January-March 2024 quarter. We have launched one project in this quarter (Q3 FY24) and we are trying to launch one more project within the quarter.
Overall we are looking to launch about five million sq ft in this financial year. It has about Rs 3,800-4,000 crore of revenue potential.
The two projects to be launched in Q4 FY24 will be in Chennai and Cochin. The Chennai project is being developed on 5.3 acres land parcel with development potential of about 800,000 sq ft having 676 units and revenue potential of Rs 500 crore.
In Cochin, we own 16 acres of land parcel of which 540 units were launched under phase-I in Q4 FY22. Phase-II of this project will now be launched having development potential of 1.6 million sq ft having revenue potential of Rs 1,400-1,500 crore.
How many projects are you looking to complete in FY24?
We are looking to complete about 600,000 to 700,000 sq ft in this financial year.
What is your average price realisation? How much it has increased from last financial year?
Price realisation ranges from Rs 5,400 per sq ft for old projects to Rs 8,000 per sq ft for new projects. Average price realisation has gone up by 7-11 per cent.
How much land parcel you currently are working on?
For the next year, I am working on about 126 acres of our own land parcels. Next year, three projects will come up on our own land parcels.
How much investment are you looking to make in the next financial year?
Like I said, we are going to launch three residential projects, so land parcels worth around Rs 250-280 crore we are bringing into the mix next year. Apart from this, we are looking to invest Rs 600 crore to buy new land parcels. We will be investing around Rs 750-1,000 crore in FY25 to develop these land parcels.
Do you have any targets for carbon carbon neutrality?
Carbon neutrality for real estate company is little bit far fetched in India at this point of time, simply because we are in a business where whether we like it or not, we are going to disturb the environment. What we are trying to do is to work on what is that we can replace while development. It will never be a carbon neutral development. However, that we can move towards carbon neutral development in the management and maintenance of the asset.
While Provident Housing is not independently listed, we have started the procedure for ESG reporting. This paves the way for not only good practices but also for future readiness.
What is your view on DGGI tax notices being sent to real estate companies?
I think it’s unfair. It’s something that is there because structurally what happens is that in a project based organisation such as real estate, we need to be funding them individually. We need to be looking at finances individually, and we want to be looking at their exits individually, when we are booking their profits and loss individually, which eventually means that it is going to be a SPV based business model. What GST fails to understand is that it is not a service that is being rendered by one company to another company. This is only the structuring for the purpose of the operations it’s been done.
When Provident Housing started, it was to cater to affordable housing, and now it has move to mid segment, why is that?
In 2006-2007, when Provident started, our chairman said that we wanted to cater to housing for all and offer affordable housing. Then in 2014, government came with its own definition of affordable housing which essentially was low-cost housing. We were never in the low-cost housing business. Rs 40 lakh to Rs 1 crore is where we want to be and we want to be building larger developments, which means anything more than one million sq ft and above. Our average property prices is around Rs 65-66 lakh.
