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DLF Ltd
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Hi. Good afternoon, and welcome to our conference call for the quarter ending December. I do hope that many of you are also coming for our Analyst Day tomorrow, but we still felt that we should consume a little bit the conference call for both for addressing routine financial queries as well as potentially any other queries and for the benefit of some of those who will not be able to make it tomorrow. So, all-in-all, it's been a decent quarter. Our sales continue to be at the clip of over INR 563 crores to INR 600 crores. We've made an operating cash flow positive again and a slight cash flow positive even over the -- for both the CapExs. From the overall sales standpoint in NCR and in some of the other geographies, we are clearly seeing a slightly stronger bounce-back. I'd still not call this -- call it like a huge recovery but clearly, a slightly stronger bounce-back especially for sale of completed inventories. In fact, if you look at all the third-party data also that's coming, it's beginning to show a decline in the unsold company inventory data across the country, which is good. From a macro standpoint, obviously, interim budget had 2 very good guidelines for the real estate sector. One was for the consumer. We had a second-home ownership and the second-home renting both became more tax-friendly. And then this entire called thing of the notional rent on unsold inventory, which could have hit some of our projects in '19/'20, have gotten deferred by 1 more year now. There is this entire Ministerial Committee on GST rate rationalization. So that obviously -- we'll see what it comes out with. But hopefully, it should lead to a reduction in the GST rates as well. And while the HFC crisis has not necessarily hit us, it's clearly possibly impacted some of the mid-range players. And let's see how that plays out. For the 9-month cycle, we have done a sale of almost INR 1,800 crores, which hopefully should put us to -- on the path to exceed our modest guidance of INR 2,250 crores. I don't think there's a concern out there. And obviously, our net debt continues at the INR 7,200 crores number. And we have sufficient liquidity for the next few quarters of mandatory payments, which in any case, would be further bolstered by the capital actions that are also imminent across the next few quarters. So frankly, with the only other 2 pieces that I'd like to mention about is: a, as some of you would recall, we had taken a big land parcel opposite Cyber City under auction from the Haryana Government HSIIDC for INR 1,495 crores about, I think, in the earlier part of last year. We have signed a nonbinding term sheet with Hines for a JV partnership there. And hopefully, in the next few days, the final document should get concluded and the funding should have been here or within this quarter. And the last issue was of course, and I think we have more or less agreed on a large chunk of the assets that will be transferred between a DLF and DLF Cyber City as a significant settlement of the outstanding receivables. Thank you. The financials are hopefully self-explanatory. This time we are trying to slightly tweak with the way we make presentations to help it hopefully become slightly more user-friendly. And we'd be happy to take questions now.
[Operator Instructions] The first question is from the line of Saurabh Kumar from JPMorgan.
Sir, just 3 questions. One is on your cash flow slide on Slide 14. So two things there: one is your collection seem to be slightly lower quarter-over-quarter, so I was wondering if presales are stable. And you're anyway handing over those apartments. Why should the collection run rate come down? And secondly is the finance cost too, which has gone up. Is that just explainable due to just the interest rate hikes some of these banks would have taken during the quarter? Or is there something else? And there is this land chart refund of INR 111 crores. Is that, that Kokapet divestment?
So all the three. It's sort of -- the first point, Saurabh, was that the -- I mean, it does not reflect any -- I guess, it's not a reflection on the sales. In the previous quarter, we had the final payments of, I think, 5 separate blocks of Horizon Center Two, each of which was like INR 40-odd crores, right? So I think we had about INR 180 crores of Horizon Center collections. Because in Horizon Center as you might know, the minimum size is 15,000 square feet. So now we have -- we still have about 18,000 square feet unsold, but most of it got sold in the last quarter. So that was like a onetime blip last time. You were right on the land charges that actually, the land charges continue to be more or less on the same line as last quarter. But there was I think a INR 250 crores received on account of Kokapet. In fact, I would like to guide the, I mean, the audience on the call: that actually be it horizon last time, Kokapet this time, something else. Every quarter, there would -- there could be INR 150 crores, INR 125 crores sort of this ticket in, into an account of either a big-ticket sale or -- which either gets booked in the sales line or in the recovery line. And hence, I think, that's -- other than the normal CapEx with land charges broadly continue that INR 125-odd crores a quarter. Your third question was on the finance costs. So there are 2 pieces to it. I'll retranslate it. One is, of course, the fact that you might have seen, we have built some additional cash buffer honestly for no other reason except that I mean, it's unfortunate point to say but given this segment trends in the last quarter, I think clearly, one wants to ensure that in the event any of the lenders tomorrow is in a situation where they are unable to step in for a sudden requirement of funds, you have the cash cushion with you. And the second point is there was a slight increase in interest rates. Our assessment is the DevCo interest rates may increase by about between 25 to 50 basis points, obviously, on the new lendings. But even the older ones did go up by about 25 basis points. And see, I think is the right -- I think there was a final agreement of balances between DLF and Cyber City of the outstanding loans as of September 30, including the accrued interest thereof. And so that became the new principal on which the interest has been accrued of this. So I think those are the 3 points, which might have led to the increase in finance cost. On finance costs, obviously, I think it's important to reiterate that as far as the third-party finance cost is concerned and I'll not speculate on the quantum, but with the KIP INR 17 crore shares as well as the promoter infusion of INR 2,250 crores, I mean, a significant amount of the principal would stand paid out, say, definitely by end of June, which will lead to us -- a very significant drop there. And also as a very large chunk of the INR 9,000 crores settlement with Cyber City gets settled into asset transfers. We expect that this entire finance cost net line, hopefully, by the end of June should be a very different number than what is right now.
Okay. And just one follow-up on Slide 19. So your rest of Gurgaon, you have INR 3,600 crore-odd inventory lying there. I'm guessing this is mostly completed. And again, sir, if you look at your new Gurgaon sales, that's like INR 35 crores in this quarter. I think even the year-to-date number is not that great. So I was wondering, is there anything you have to kind of increase the sales? I mean, are you -- what are your views on that inventory?
That's a good point. So a, the INR 3,650 crores includes the 1.3-odd million square feet of Ultima, for which the final OC has got -- been received and hence, we have not release it for sale. So that can be approximately INR 1,000 crores, Saurabh. About INR 1,000 crores of it is our historical inventory of the plot that we have in phases 1, 2 and 3 and 4. So that's also in there. But yet the point is valid that while we have starting seeing traction in the rest of India, we still haven't seen the traction required in the ROG portfolio. That basic point is well taken. And I think, clearly, that would be our focus. We are reinforcing the sales engine there as well. And we hope that as we'll relaunch the Ultima in the next 1 or 2 quarters, maybe that becomes the pivot to sort of reenergize that sector exactly as Crest has done on the Golf Course Road.
The next question is from the line of Kunal Lakhan from Axis Capital.
Sir, quickly on the intercompany payables. So this INR 4,000 crores of enterprise value were transferred to DCCDL. How much of a rental are we talking about?
Okay. So this has not been transferred. We -- I think we are very close to an -- to completing the interim-still agreement with GIC. And the entire documentation and diligences will take a few weeks to conclude. We expect that eventually, this should be about INR 350 crores of rental on your -- on a full year basis.
Okay. That would imply a...
Actually, if you look at '18 and '19, the rental will be more like INR 275 crores to INR 280 crores. But if you look at the full year -- the full quarter, full year basis, it'll be at INR 50 crores maybe from the fiscal year '20, '21 onwards.
'20, '21 onwards. Okay, that's very good. But again, like of -- the INR 4,000 crores is enterprise value, right? So what will be the equity value? Will there be some debt again with these assets until...
So as far the debt -- actually, also the debt is a part of INR 7,200 crores net debt that DLF has. So honestly, the debt, we will structure [ automated ] that we are able to idly unlock the complete inventory value of it. But that's something that we are doing. So the way I look at it frankly, Kunal, is that if I transfer it only at equity value with the existing debt, then okay. The Cyber City payable gets reduced by INR 1,500 crores less, but my net debt drops from INR 7,200 crores by INR 1,500 crores. So the overall payables will clearly come down by this number. The exact mechanics of how much debt is transferred and how much of it is settled before transfer are mechanics that frankly we are working with the banks, with GIC and hopefully, should get it sorted very soon.
Sure. That's helpful. And on the same point, the land parcels of INR 1,350 crores worth, what is the time line of these-- of development of these land parcels, say, in DCCDL whenever they plan it?
So one of them is contiguous. It's licensed and contiguous to the entire Mall of India, Gurgaon development. So hopefully -- so it's a part of the entire sort of Mall of India, Gurgaon. It's like 32 acres with the additional 3-odd acres, so that will be contiguous to that. So the Mall of India, Gurgaon planning is going on currently. And it sort of hits the execution stage, hopefully, in the next year or so. This will be a part of that. The second land parcel is a bigger land parcel with hopefully 5-odd million square feet development potential in Chennai. And, that, I think -- again, it's something that we are currently discussing some regulatory clearances that we need for that. Again, something which once everything is done, it could be launched by the later part of next fiscal.
Okay. Great. And one last one from my side. The overheads in this quarter were slightly on the higher side versus the last quarter. Anything particular that happened this quarter?
So the only thing peculiar and I'm not sure that that'll -- whether this sort of is the right answer but typically, in the October to December quarter, we pay the annual variable incentives to the entire staff right from the top management onwards. And though we always try to argue with our [ directors, in addition, we put it ] across the 4 quarters. But they typically do it on a cash basis. So the entire thing hits you when paid. So this is paid around Diwali. So typically, October, December quarterly is where that entire spike entails. And that's the primary reason. I'm sure there might be a INR 4 crores, INR 5 crores entry here and there for some else also, which I'm not sure. But basically, that I think is the basic driver.
The next question is from the line of Abhishek Bhandari from Macquarie securities.
Congrats on seeing the sales pick up again. Sir, I had 3 questions. I'll ask them one by one. The first one is on Slide #32. If I look at the other income what DCCDL is booking, which is basically the interest being accrued on the loans outstanding from DLF's side, is it -- when I look at it, it's INR 300 crores for this quarter, which effectively implies the interest being charged by them is 14%. Is that right?
Look, the interest being charged by them is 11.5%.
So, sir, then 300 -- I mean, then on INR 8,700 crore of -- at 11% roughly, the annual interest cost would be around INR 1,000-odd crores, so INR 250 crores. So like what's the difference between this INR 250 crores and INR 300 crores? What is being shown in that P&L?
So 2 pieces: a, Cyber City also has good cash balances, which are kept in that piece and all. So they also get those interests. And then I think -- I don't know if they might be [ INR 25 crores ] as well. [ Naveen ], do you have some break-out on this?
[indiscernible] [ INR 15 crores, INR 16 crores ] on account of [indiscernible]
Okay. So basically, this could be in a couple of cases like if from one particular tenant, we received INR 5-odd crores of...
Yes...
Of dealer interest payment because they hadn't been up to speed on their rentals last year. Similarly, there were some minor disposals. So I think it's a combo of those things. But you're right. The bulk of it is the interest recoverable from DLF.
Okay. So the related question to this is that till we settle out this INR 8,700 crore from DLF's side, the interest will keep getting accrued. So is it fair to assume that this INR 8,700 crore could go up till the time it is settle, which is September '19 as per your presentation?
What we've agreed is that we have -- because not -- we fix that number. We don't want to increase it. So effective the October to December quarter onward, for the next -- I mean, hopefully, it's only a 2-quarter story -- we have agreed to settle the interest in cash every quarter.
Every quarter. Okay. Sir, my second question is going to your slide on 22. I think it was asked earlier also. So if you -- you have mentioned that you've identified certain assets with EV of INR 4,000 crore. Could you help us understand? Because if I look at your Slide 24, the main assets, which could actually be funding that kind of money, would be the retail assets. So it is fair to assume that the retail assets are more under consideration for transfer?
[indiscernible] on those statutory [indiscernible] there are commercial assets...
So the INR 4,000 crores, you are right, is the 2 retail malls. I think it'll -- there's no [ reduced head ] frankly, [indiscernible] positive because there are some regulatory issue that still need to be handled. We have a name, but you are right. That's what our hope is. That's what the agreement -- our agreement is. In fact, I think on the previous call, Kunal, I think Saurabh (sic) [ Kunal ] had also asked the question of what is the rental loss to DLF and that we've said that for this particular year, it's about INR 275-odd crores. And on a full year, 2021, this is about INR 50 crores, the full rentals of these two assets. So even from a Cyber City standpoint -- because this point also has been discussed. I think it's very transparent and you should know that since Cyber City gets some odd -- this INR 900-odd crores of interest income right now from DLF. So, a, from the DLF-consolidated standpoint what happens is we book INR 900 crores in expense and book INR 600 crores of income toward the 67% Cyber City route. But from a Cyber City standpoint, again, once the entire debt is settled, they'll obviously get this INR 60 crores plus the additional [ dial ] assets which are being also transferred as a matter of contract. So I think they'll clearly get to about where we were, between INR 400 crores to INR 450 crores of additional rental income. Plus they'll get the development potential of some assets, which hopefully, they'll begin working out pretty aggressively to build out. And each of these is obviously on [ SMB ] because the counterparty in this case to negotiate the pricing, in all fairness, is GIC. So these are all completely arm's length transactions.
There's a question which comes to my mind is, sir, why don't we transfer all the rental assets to the DCCDL, which is purely a rental company and we just focus on the residential? Is there any logic of keeping any commercial or rental asset on our books?
Okay. So if you want, I'm happy to take you asset-by-asset. So look, there are 3 assets, which are the best because we are the concessionaires to NDMC. And those assets cannot be transferred. So they consist the agreement. There's one particular SEZ in Kolkata, which again cannot be transferred because I see that land again cannot be transferred if -- you can get the core developer, development still but not at a developed stage. The...
[indiscernible]
I'm actually going to mention with the NDMC. There is one asset, which is a rental asset which is integral to our Phase 5 development, which will, at some stage, be up for redevelopment. And hence, we will not be transferring that. And the only asset really, which technically there's no business or regulatory hurdle of transfer but we are choosing to retain it in DLF is our corporate headquarters at DLF Center, which we believe should stay all in DLF.
Right, sir. Right. Sir, my last question is on your Slide #19. Good to see that we have a very high amount of ready inventory. So is there any thought process in our mind to accelerate our presales, given that typically, customers will be happy to buy something which is ready and given the way the prices have not moved anywhere for last 2 -- like these last 3 years? The sales velocity should ideally pick up. So is there any targeted marketing campaign or payment plan or something which is being thought about to help us liquidate? Because this is a key part of us going down from INR 7,500 crore debt to 0 over next 1 year's time.
Okay. So I'll answer the second part first. Actually, the INR 7,500 crores should go down to a significantly lower number again because I can't settle on the value of the DIP. I'm resisting. And honestly, it will end up becoming, if I may use the phrase, relatively irrelevant number. That's equity less than 0.1 is sort of what I think. So also inventory liquidation really has a very limited role to play in that piece. Although to your second point, which I think is a very important question, if you recall, if -- I think in October of last year when we sort of began the relaunch exercise, we had unsold inventory of about INR 15,000 crores. And even, frankly, while we had paused sales from May of '18, there are a couple of quarters, even before, that had witnessed very limited traction especially in Crest. What we saw after we relaunched sale [ walled ], that Camellias to some degree but Crest, specifically after it was completed and handed over, actually has witnessed an excellent clip in sales. And we believe that, frankly, each quarter sort of turns around at its distinct life cycle. What's good for us in the last, what, 2 quarters is the relative improvement we have seen in the resale -- in the sales cycle in National DevCo. So as an example in Q4, we got -- in Q3, we got a decent amount of sales on Lucknow from [ entire ] in Capital Green. So you know clearly, some pieces which will be sort of paused for long. We are hoping that ROG at some stage will turn around. Horizon, again, has reported very healthy sales almost to the extent that we are now down to the 18,000 square feet of unsold inventory. So whilst Camellias will continue to be the heavy-value anchor, hopefully, in the next few quarters, each of these geographies will have their own turnaround story. And we should be able to -- so in that sense, we are not retarding our sales. We're also not merely cutting prices to increase the velocity. Because we do believe that if it's a part-sold product and if you cut prices at the part-sold level, I think it's -- in some sense, you may choose to be very nice to yourself in the cash flow but you're being very, very, what should I say, unfair to your existing customers who have bought it at the price at which they would've bought it. See also, if you see in some pockets of New Gurgaon apart, the resale pricing has begun turning around now. So honestly, I think the price points that -- which we have are not that -- it's not this market but 20%. Our resale may -- we'll get the same thing for 30% lesser. So I think those days are gone. So we do believe that hopefully as the differentiation for the company inventory increases, people will keep on getting affected with resales. Some of these parcels will move slower. But some, hopefully, will move faster as well.
And the next question is from the line of Amit Goela from Rare Enterprises.
Sir, my question has been answered. It was revolving around the interest charges. That has been answered.
The next question is from the line Adhidev Chattopadhyay from ICICI Securities.
So just wanted to ask on an unsold inventory of the INR 12,300 crores. Apart from this, you also had receivables from what you had sold earlier. So would you share the number? What is the cash flow expected to come from those sales?
So I think we have the exact number on [indiscernible] often. But ballpark, of the total sales made till date, we have collectible receivables in excess of INR 3,000 crores. And we have the residual cost to complete, including some of the community CapExs in [ slum ] infrastructure that needs to prepare, made in the range of about INR 2,300-odd crores. So I think between INR 700 crores to INR 800 crores is the net -- plus of the outstanding receivables, less the pending commitments to conclude, including the -- not only on -- vis-à-vis those projects but including the allied infrastructure.
Sure. Sir, so just continuing on that, so sir, then logically, our collection should see a bump-up, right, from the fourth quarter onwards? Because if we are selling at least on the INR 500 crores, INR 600 crores of inventory, the ready inventory plus we'll have these collections coming in as welded. So we could walk to INR 800 crores to INR 900 crores run rate from now on?
So actually, if you see the last quarter, collection was INR 850 crores. And so you are right that I mean, INR 800 crores to INR 900 crores collections is not something which is unimaginable today. Are they exactly -- because now a lot of it will also depend on the final deliveries to be made in all of those things, so there could be intraquarters -- I mean, intraquarter spikes. But broadly, you are correct that these numbers should strengthen.
Okay. Sir, so my second question is on the DCCDL. Sir, now that we're almost -- a lot of -- most of the assets listed get operational [indiscernible] which are under construction plus we have renegotiation of the rentals, sir, any guidance you would like to give for FY '20? What would be the overall rental income that this DCCDL portfolio could generate?
So in all fairness, I'll give you the pointers. We will desist from giving a guidance because we haven't internally funded the guidance. But from a -- there are 3 pointers that I would definitely say. One is that year-on-year, there is typically about a -- that 15% acceleration every 3 years. So a part of the inventory does get reindexed to that piece. We -- as you've seen that there's, I don't know, over 5 million square feet or 6 million square feet of -- what was the difference [ in gross and net ]?
The [ gross and net ] is 6 million square feet [indiscernible]
So there's about 4-odd million square feet of area, which comes up for releasing to mark-to-market every year. And as you would see from the mark-to-market chart, there is a difference of about INR 15 to INR 20 in the Gurgaon market and maybe about INR 10 to INR 12 in the other markets. So that gets added. And the Cyber Park will be handed a higher part; and Chennai, the balance part, will be handed over for interiors. And we expect that both of them should come in for rent generation from about September. Cyber Park is 2.6 million square feet, with an average rental in the range of INR 115 to INR 120 a square foot.
Okay. Sir, so at least, 10% to 15% would be something, which is easily achievable on a year-on-year basis, something you'd say?
It is, for sure.
[indiscernible]
The next question is from the line of Puneet Gulati from HSBC.
Sir, I think I missed the statement. How much of area in Gurgaon is coming up for renewal next year and the year after?
[indiscernible] okay.
[indiscernible]
1.5 million square feet. And next, almost 1 million square feet. In Gurgaon, it would only be 1.5 million square feet next year; and the year after, it's 2.7 million square feet. This is data completing [indiscernible]
So an average...
Okay. So 2 pieces. The contracted renewals coming up next year are 1.5 million square feet and the year after 2.7 million square feet. But if you see our track record in the last 2 or 3 years, every year, there's also a number between 1 million square feet to 2 million square feet of tenants who live mid-contract because they want cheaper options. And those are also released. So our contracted exits are 1.5 million square feet and 2.7 million square feet, but the mark-to-market number will -- would possibly be higher.
So you're saying, 1 million square feet to 2 million square feet over and above the 1.5 million square feet to 2.7 million square feet could be the number.
If you look at the last 2 years, the difference in our gross leasing and our net leasing is in a summation of -- a, the contracted renewals; and b, some midterm renewals.
Okay. Okay. Secondly, in this presentation, the Taramani Offices also don't find any mention. What is the status on that now?
We would have found -- mentioned of those [indiscernible]
No, sir. Under the project pipeline, where you have now Hyderabad; SEZ taking place.
So the Taramani Offices is only because the Hyderabad, we believe, is an earlier one that should come in. Taramani also, as I mentioned earlier, should be commencing hopefully in the latter half of the next fiscal. Taramani launch should also -- I mean, Taramani did the entire planning start and should also be happening.
Okay. So it was there in the last presentation. So that still remains with you, right, when...
Yes, in the notes. So Taramani is one of the potential assets that we have listed for potential transfer to Cyber City.
Yes. Okay. Okay. And...
But not yet...
Sorry?
And hence, it was not in the dealers' -- on the DevCo side of the equation.
Yes. Fair enough. But similar was the case with SEZ also as well, right? Hyderabad SEZ, that will also be eventually transferred to DL?
But the only difference being is that Hyderabad SEZ because of the codevelopment agreement actually gets transferred through the sale line. So DLF bills it. DLF spends the money, bills the asset and then transfers it at a certain price to Cyber City. Here, the vacant side could be transferred to Cyber City, and then they will build and construct.
Okay, okay, okay. So that'll be a part of all the other assets that you have listed for sale?
Yes, it was a part of the entire settlement process. You're right.
Okay, okay, okay. Lastly, Slide 38, the Mall of India is 7.7 million square feet?
[indiscernible]
Just to clarify, this is mall of -- we have 2 sites. One is Mall of India in Noida, which is an operational asset. It is 2.2 million square feet, rental earning and fully leased out. Mall of India Gurgaon is a site, which is -- which will commence development pretty soon, and that's either, 7.7 million.
The Mall of India, Gurgaon is -- it would be a combination of offices and retail spaces. And the current plan from an [ appetite ] standpoint is actually higher than this number, but we believe this is the number that may eventually end up getting developed. If given the humungous size of it, this might be developed over 2 phases. But again, those are things still in the planning stage.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Sir, how are you thinking about monetizing the Phase 5 residential next phases?
So that's a good question, Sameer. Are you coming tomorrow?
Yes. Can't miss it for anything else.
Wonderful. So you should clearly ask this question of Mr. Singh as well. But clearly, I think it's obvious that with the Crest hitting completion and the Camellias also hitting about, whatever, 2/3 of the value being sold, that the time has come quite frankly for us to aggressively start thinking of the next Phase 5 project. And I think that's something that is -- we haven't put in here anything. Because obviously, look, we want to put in here only once everything is frozen. But clearly, the thinking on that piece has started.
Okay, great. And sir, the second question is for the inventory in rest of Gurgaon. If I back out Ultima, then how much are the plots that you mentioned?
The plots valued here are I think about INR 900 crores. So let's say about a INR 1,750 crores to up to INR 3,650 crores, broadly about INR 2,000 crores is Ultima in those older plots. But INR 1,650 crores is actually inventory across the various plotted/built-up colonies, most of them in New Gurgaon, given that sense. And New Gurgaon as a township, frankly, has come out pretty well. I think now maybe a couple of thousand families have already shifted to the DLF Gardencity as we call it; be it NTH, be it Primus, Regal or SkyCourt and the plotted colonies in Gardencity, a lot of relocation has begun happening. The infrastructure has begun coming up. And the reason why some of this continues to be slightly slow moving, as you know, is because that is the one pocket which has a very high overhang of finished inventory not only of us all but all the other developers as well. So I think, while in other zones, that problem is not there; but here, I think, clearly, there continues to be a slight challenge in terms of resale prices of some of the apartments still running lower than what the official rates of the suppliers are. We keep on -- we have seen some traction in SkyCourt and Regal in the last 2 quarters; but clearly, I mean, not enough for us to make a sizable dent in this. But you are right. That is like one spot where we would definitely like more of action to be taken.
Okay. And sir, for your Delhi midterm project, 1.9 million square feet Phase I, when do you expect this to get completed? And when do you start the phase?
So the construction has commenced, as you know. They are all under -- the entire FSI loan has been now fully met, and the building plans are approved. So we expect that the construction phase should maybe be done in the next 3 or 3.5 years. We are working in terms of what is the most opportune time for selling -- for launching its sale. I mean, you know that they, on account of various regulatory issues including RERA, we aren't very keen to launch something at a very early stage. But clearly, I think once a certain degree of structure progress takes place, it's a time for both the partners to sit in and decide on the launch piece. This is something on which both GIC and us are constantly tapping. But clearly, I don't think it's going to be launched in next 12 to 18 months. But at some stage, you're right, we are thinking of it. Ideally, we would like to sell everything post-OC as you have made clear. But I think, clearly, the way to say is that you'd like to sell something once the uncertainty on that project in terms of delivery has gone away. And that's something. But clearly, that would be -- maybe the next residential piece that we will launch from our portfolio would be that.
Okay, great. Sir, one final question. And I know you would chose to answer that way you want to. For the QIP issue, how are you thinking about the timing considering 2 things: one, the current market conditions; and second, the upcoming elections?
So in all fairness, Sameer -- so you asked also a tough question and then you say you answer it the way you want to. I like that. Anyway, I mean, all of us know the -- everything. So we know the where market is. We know the election pieces. But the fact is that I think, clearly, we would like to get it done as soon as we realistically can, really. I mean, we know that we need to get it done within the specified time frame. So honestly, we will look at that sort of opportune micro window to be able to take it through, whenever in the next few months that micro window appears in all honesty.
You're next question is from the line of Ritwik Sheth from Deep Finance.
Just a couple of question. Sir, when do we expect the cancellation upgradation to start declining? Because you've been saying like INR 200 crores to INR 250 crores quarterly run rates in the last, say, 3, 4 quarters. So when do we expect that to at least start declining?
So the cancellation, I think, hopefully we should be at the fag end of it, maybe at a level of 1 or 2 quarters for the slow-moving projects. On the upgradation, my honest answer is hopefully, never. We would always love to be able to upgrade INR 150 crores to INR 200 crores a quarter, frankly: somebody moving from Ultima to Crest, somebody moving from Crest to Camellia. We had, I think, almost 15 cases to 20 cases of people who are at the Camellia simplex moving to a Camellia duplex, below. People with a Horizon, half, moving to a Horizon full floor. So cancellations, you are right. I think -- it does show that we did not want to carry unwilling passengers on board. And hence, you're very transparent if somebody wanted out. But the upgradation is something that is frankly -- I mean, leave alone trying to decline, we actually sometimes, actively try to encourage it if we can.
Okay. And is it possible to share the split between the cancellation and the upgrades?
I don't have it up-front. But I'm sure [ Rajiv ] and [ Kuldeep ] can share with you off-line. I'm sorry, I don't have it right now with me.
No problem. And sir, just on one of the slides in the balance sheet on Slide 13, what are the other current liabilities pertaining to -- have you seen a significant jump from March to December even September, some INR 3,000 crores to around INR 12,000 crores, INR 13,000 crores. So what is that pertaining to?
This has been largely on account of.
Ind AS 115.
Sorry?
So this is -- if you recall, in March '18, we had the entire new accounting standard change, which led to a reversal of revenue of about INR 40,000-odd crores. That was done on April 1, 2018. So what happened was -- that is a downstream accounting action, either a lot of money, which I have received from the customers, because I was no longer recognizing the revenue, certainly became advance received from the customer. So my current liability column -- so I mean in some sense, it's such an accounting-led change. But since we are booking for incomes now, this will keep on declining. But that would be the onetime flip that happened.
Yes, everything in the current liability? Yes.
So what we booked earlier currently, we started fitting into other current liabilities. This change was effective on 1st of April 2018 and, hence, you see a very large movement from March numbers to December numbers.
Right, right. Got it. Okay. And sir, last question. Sir, our reported inventory in the balance sheet is around INR 23,000 crores, and we have around INR 12,000 crores of ready inventory. So is it safe to assume that the balance, INR 11,000-odd crores, is for the land that we have historically accumulated?
[indiscernible]
So this, again, is the mirror image of the current liability, this question that you asked. So when that happened, all those sales, the money received from the customers came in certain -- at the current liability column. And all those sales made, the previously mentioned, [ 80% ] [indiscernible] has been recognized [ we've certainly gained 0 ]. So that other [indiscernible]. But there's nothing to blend. Our large profit is actually both on the other current liabilities...
[indiscernible]
And the inventories actually the contraentry of the AS 115. I'm sure there were some other components also, which the accounting team can flesh you with. But the single-biggest driver -- in fact, one of the biggest challenges that we and the accounting team I'm sure not only deal with, but most of the real estate companies, have been handling in the last 2 or 3 years is that there've been back-to-back 2 significant accounting standard changes. Frankly and honestly, while I know that some of our peers have chosen to sort of brazenly defy them, but I think most responsible corporates have ensured that they've switched to accounting methods of AS 115. And frankly, that's what we've done.
And also to clarify our ready inventories on our books are valued at cost. They're not valued at the market price.
The next question is from the line of Abhinav Sinha from CLSA.
On the cash flow slide, again, so I just had a couple of clarifications. So the construction output that you show of INR 232 crores, does this include the Delhi project?
No, it will not include. So the Delhi project today is anywhere north, a bigger amount. But just to recap, these detailed numbers we show will exclude all joint ventures. So it'll exclude Cyber City joint venture. It'll exclude the Delhi joint venture. Tomorrow, it'll exclude the Hines joint venture. In fact, I think with the analysts, we separately need to sit down and understand that a higher and a higher proportion of our business is run out of these joint ventures, which are not technically consolidated. What is the best method of capturing both the pluses and the outflows on those businesses to reflect like an overall DLF picture? But to your -- simple answer to that is no.
And similarly, the debt number will also not show that?
Yes.
In either DCCDL or DLF right now?
So like in DCCDL today, my revenue, EBITDA and this PBT, PAT columns don't show it. Only the final fact that they have, I think [ 60% ] of debt as a single-entry consolidation.
But the Delhi project will not show its debt anywhere right now?
We'll -- no, no. The Delhi project will not show any debt claim right now because Delhi project today does not have any revenue that is recognized, yes. What is that [indiscernible]? Any idea...
[indiscernible]
Okay. So -- but just for the record, there is approximately INR 150 crores.
Okay. And sir, secondly on refinance cost, also just below the net finance cost. This does not include the amount paid to -- or due to DCCDL, right?
No, no. The cash flow does not -- you're right. The cash not flow does not -- because as we mentioned that all the accrued interest up to September we agreed with GST and Cyber City became the outstanding principle, which has to be settled by asset transfers. And in fact, in January 1, we'll settle it in cash.
So from next quarter, we should see [ rules ] INR 200 crores sort of additional...
So I think for 2 to 3 quarters, you will see that cash outflow. I think we should be, overall, still okay in the overall cash flow standpoint. But you're right that assuming that this entire outflow will be extinguished later by September and hopefully substantially before that. But for the interim, 1 or 2 to 3 quarters, you could see that.
Right. And sir, secondly, the point you mentioned on possibly accelerating sales of the Midtown project. Now if -- suppose the GST rate were to fall to 5%, which the government is contemplating, will that help this decision? Or how do you see that?
Okay. So a, I did not say that acceleration. All we've said is that we'll -- once we have a higher degree of structural completion, we'll evaluate; b, honestly, the -- I mean, if I may say so, the 5% GST is -- there's a mix to it in that sense. Because while obviously, it's fine, but the fact is that the input tax -- the input construction costs are taxed at 18%. So even for, say, a luxury project, if your construction costs are running at, say, 40% of sales value, you are talking of 7%, 7.5% input taxes. So if the output is 5%, the 2.5% just adds on to the construction cost. If -- as is also being talked about in some of the media reports, the 5% is a part of the composition scheme, that means you pay 5% and you do not claim any input tax credit. It actually means that from a builder and a consumer standpoint, the total GST payable really becomes a 7-odd percent if you are paying on the input taxes, of which you'll no longer be claiming credit and the 5% on the output. So honestly, let's just [indiscernible]. Let's just wait for this final GST regime to come, and then let's understand. Today, what happens is I start at 12% GST. If my input taxes paid is 7.5%, I claim credit [ 12.5% ] is the net debt, is the net recoverable. So how does this regime changes? It's something that's -- see also, whether they continue with this current dispensation of building no GST chargeable on the post-OC project or not -- but honestly, these are all balls in the air right now, frankly.
Right but this theoretically have been 5% without ITC, it takes us back to the service tax regime, right, approximately?
No, it doesn't. I think you are right. It takes us back to the service tax regime of [indiscernible] 7% to 8% of...
Give or take 1% or 2%. Yes, give or take 1% or 2%.
You're right. You're right. You're right, yes.
The next question is from the line of Puneet Gulati from HSBC.
Yes. So just to clarify, currently, the payment that you've made on HSIIDC, that is the debt of -- on -- that still sits on your book, right?
So for our -- the payment they we made through December end, if there was a -- so there was no direct debt. I think what we had done was that we had -- from our own funds, we had transferred INR 375 crores to this SEB. So that INR 375 crores is still on our book. Hopefully, post we sign the JV and the JV takes any further debt, those debts are -- and just to make a disclosure, we'll no longer be consolidating our books. But like Cyber City, I think it's a good practice. And I think we should begin with Midtown also next quarter. We can disclose those separately. But those revenues, those construction costs, those government charges and those debts, all of those would be deconsolidated from a line-by-line consolidation. And we'll just keep on doing this bottom line consolidation.
Sir, so sorry, so currently, of the INR 1,495 crores, how much have you paid?
So currently, we have paid INR 375 crores up till December end, okay, which is here. And we have paid in one installment of INR 375 crores after Jan 1. So [ INR 950 crores ] is what we have paid. We hope that with the signing of the JV, our outflows should only reduce between now and March and not increase.
Okay. So your reported debt will be impacted to the extent of INR 375 crores as well, right?
It will depend on the status of the JV consolidation as of March 31. If all the documents are signed by then, the equity is funded by Hines, then it'll be deconsolidated. If not, then yes. Right now, we are -- by all accounts, it does look pretty certain that this will become a Hines deal -- JV before that date.
Okay. Sure. Secondly, you mentioned that the valuation of the ready inventory, which you claim you at INR 12,300 crore, is that cost not really at market price? Would there be a substantial difference?
No, no. So I would like to clarify that. The INR 12,300 crores is at our last [ full ] prices. So this is not [indiscernible] prices...
So the market price. Yes?
[indiscernible] market price. That INR 23,000 crore accounting inventory number, that with their -- the unsold inventory is being carried at cost. I think that was [indiscernible].
Okay. And how much would that be, if it's possible to know that number?
We'll need some digging [ boss ]. So tomorrow the analysts meet. So maybe on Monday, me or [ Rajiv] and [ Puneet ] can revert back to you on that.
The next question is from the line of Saurabh Kumar from JP Morgan.
Sir, 2 questions. So one is off the revenues that we revert, how much is yet to be recognized basically, from what have completed but not yet recognized? I mean, what is the revenue we have?
Give me a sec. So I mean, these numbers are slightly tentative because I don't have the final numbers right now, Saurabh. But the best thing for us is to reconfirm with you off-line. But ballpark as of today, I think of this INR 13,500 crores that we have reversed, it appears that we have recognized in the last 3 quarters about INR 3,800 crores. So that means about INR 9,600 crores, INR 9,700 crores is the unrecognized revenue on the amount reversed as of 1/4.
Yes.
But I'm sort of qualifying that since I haven't sort of gone through these numbers in detail with my controller, by Monday, we come back to you with that with the actual number. But ballpark, a number about, ballpark INR 9,700 crores to INR 10,000 crores is the number that I think is the continuing reversal to be reversed in the following quarters.
No, no. My question was what is the revenue order book today? Like you have sold also in the last 3 quarters, right? So...
Okay, so...
Based on what you have sold, what is what you need to recognize today? I mean, that's the simple question.
Okay. So that, we will have to come off-line because...
We will have to take it off-line, no? Okay, sir. The second is...
So that, we will take it off-line. Because honestly, what happens is the revenue -- the unrecognized revenue is a mix of what was reversed plus the new sales that happened in the last 9 months. So we just need to sometimes to segregate the [ 2 strings ]. That's all.
And secondly, sir, there is a disclosure of this 16 million square feet land bank in Delhi metropolitan region. So even if you exclude that 7 million square feet of GIC -- sorry, that Midtown development, what will be the 9 million square feet in Delhi? This is Page 23 of your presentation.
So 2 pieces. So this is the -- as I said, so a, this includes [indiscernible]. So we're working between [indiscernible] and Midtown, this is ballpark about 10 million square feet, 10.5 million square feet. The balance pieces are our lands in [ Nagarkar ], which currently have not been developed and are not in the development horizon. But as the government of Delhi keeps on saying that at some stage, they'll come with the land pooling policy. So that is a what -- the acreage that we have is, what, 4.5 million square feet to 5 million square feet on the normal [ 1.75 million square feet ] [indiscernible].
Okay. And sir, just one last question on this -- once you've transferred out these payables to GIC -- to DCCDL, sorry, so DLF's at the ParentCo level stops recognizing about INR 1,000 crores of interest on the P&L, right?
Absolutely.
And stops recognizing, let's just call it, INR 300 crores of interest. So at PBT level, there is a -- let's assume that the INR 700 crore of PBT inflation hopefully, once that thing happens. The question is essentially, since these things are transferred to DCCDL, does DCCDL -- does the complete contraentry happen at DCCDL's and -- as in there is a -- the interest cost at DCCDL goes up and the rental -- I mean.
Yes. So you are right, that theoretically, if DLF stops recognizing INR 1,000 crores of interest and sets INR 300 crores of rental income. So DLF's PBT goes down by INR 700 crores. Sorry, the PBT goes up by INR 700 crores. By a flip side, Cyber City's PBT goes down with INR 700 crores. Say their PAT goes down by INR 500 crores and, hence, DLF's PAT goes down by 2/3s. So basically, what'll happen is that the net benefit from the P&L standpoint of this will essentially be 1/3 of this number.
Okay. So DCCDL is not yet capitalizing interest on these under-construction properties as they [indiscernible]?
No, I'm sure under construction [indiscernible] basis. I'm just taking a complete transfer in one-to-one. Obviously, some of those accounting nuances will come into play, that some of the interest on the new build-outs and all will be capitalized there. So hopefully, the P&L charge there would be less than what it was on the DLF side. But I'm just thinking if it was a one-to-one transfer, then essentially, 1/3 is the DLF benefit. What benefits slightly more -- I mean, this doesn't have to be [indiscernible] benefit is that because all the benefits flow in into the DLF column and -- so I mean, the DLF numbers look better. And the delta is around the share of associates lines. But that's just a pure visual thing here and no substance.
Ladies and gentlemen, this was the last question for today. I now hand the conference over to Mr. Ashok Tyagi for his closing comments. Over to you, sir.
Okay. So thank you once again for an extremely enlightening and a very interesting call. Hopefully, as you mentioned, we answered some of your questions. Some of your questions, especially pertain to detailed accounting issues, by Monday, Rajeev and Puneet and Kuldeep will get off-line with you to ensure. And I think we are hopefully at an interesting phase in our journey when we believe that, except for the final lack of clarity, I think we have done most of the hard work. And now I think, we should be sort of pushing for a happier journey ahead. And we look forward to your -- frankly, all of you or at least most of you joining us tomorrow. And we promise you an extremely engaging couple of days here and look forward to seeing all of you tomorrow. Thank you.
Thank you very much, sir. Ladies and[Audio Gap]