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DLF Ltd
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Good evening, and a very warm welcome to DLF Limited Quarter 4 and full year earnings call. Thank you for joining us for our earnings call. We hope all of you are safe. Before we get into the results, I have important news to share with all of you. This was also -- this also came out in a press release yesterday. Dr. K.P. Singh, non-Executive Director, Chairman of the company, has been at the helm of affairs of the company and the DLF group for over 5 decades. As part of the succession planning, Dr. K.P. Singh filed letter dated 4 June 2020, tendered his resignation from the position of non-Executive Director, Chairman of the company. The DLF Board also approved the appointment of Mr. Rajiv Singh as the new Chairman of DLF Limited. Dr. K.P. Singh will nonetheless continue in a non-Executive role as Chairman, Emirates. With this, let me get back to our business. So our business exhibited a strong performance during this fiscal. We have demonstrated resilience and remain committed and confident in delivering our business goals. I'll start with the key highlights of the quarter first. So our consolidated revenue stands at INR 1,874 crores, an increase of 22% compared to quarter 3 financial year '20. Net profit at INR 323 crores before exceptional item and DTA reversal grew at 17%. I'll talk a bit about the exceptional item now, which we reported in quarter 4 In view of the COVID-19, after a thorough analysis and following a prudent approach, the company has undertaken certain provisions to reflect changes in the carrying value of some of its assets and investments. This has led to a onetime exceptional provision net of taxes of INR 272 crores. Further, there was a onetime DTA reversal of INR 1,916 crores on adoption of lower tax rate. As you know, there was an option to change from 35% to 25% tax rate and that the company has adopted starting 1st April '19. This will improve profit and reduce cash outflow in future years. After exceptional items and onetime DTA reversal, the company reported a loss of INR 1,865 crores for the quarter. Now I'm moving to the full year results of DLF Group consolidated. Consolidated revenue of INR 6,888 crores. Net profit of INR 1,323 crores, excluding onetime DTA reversal. As called out earlier, there is a onetime DTA reversal of INR 1,916 crores on adoption of lower tax rate. After considering the onetime DTA reversal, the company reported a loss of INR 594 crores for fiscal '20. The Board declared a final dividend of INR 0.80 per share for the fiscal, an interim dividend of INR 1.2 per share was announced in the previous quarter. This makes a total dividend of INR 2.0 per share, consistent with our previous periods. I'll now move on to the -- to the full year financial year '19 performance of DCCDL Group, which is the rental arm of DLF. Operating revenue stood at INR 4,435 crores, an increase of 12% from previous year. Net profit at INR 1,317 crores, Strong net operating cash flow INR 2,597 crores. This is before Capex. I'll just move on now to the industry outlook. COVID-19 and the consequent lockdown has impacted the global as well as Indian economy. This has created uncertainties, and we expect some near-term impact on the real estate sector, especially residential and retail segments. Office sector continues to demonstrate resilience. We expect demand to remain muted in short term as this pandemic appears to have impacted consumer sentiment and spending appetites. We believe that it is too early to gauge the full impact caused by this crisis. Hence, the industry will trade with caution in the near terms.
Hello, operator?
Yes.
We've been receiving some complaints that people are not able to log in. Can you please check?
Yes, sir. I'll have this checked.
And Mr. Tyagi also dropped off. Can you please patch him in?
Yes, we are dialing him also.
Yes. Sorry for the interruption.
So I'll just stop here and wait till the time we get everybody back.
Yes, sir. We have Mr. Tyagi reconnected. We are connecting the others as they call in.
Okay. I'll wait.
Participants, please stay connected while we wait for others to join in. Ladies and gentlemen, please continue to hold your lines while we wait for other participants to join the call.Ladies and gentlemen, thank you for patiently holding your lines. I now hand the conference over to the management. Over to you, sir.
Yes. Sorry for the -- this technical glitch. I don't know where I dropped, but in the interest of time, I'm not going to repeat the financial performance because that's already shared with all of you. Let me straightaway start with industry outlook. COVID-19 and the consequent lockdown has impacted the global as well as the Indian economy. This has created uncertainties, and we expect some near-term impact on the real estate sector, especially residential and retail segments. Office sector continues to demonstrate resilience. We expect demand to remain muted in the short term as this pandemic appears to have impacted consumer sentiment and spending appetite. We believe that it is too early to gauge the full impact caused by this crisis. Hence, the industry will tread with caution in the near terms. Interest rate reduction proactively affected by RBI has been well received by the industry. More specific -- more sector-specific relief in the short term is per demand will be welcomed. Lending institutions are expected to be risk averse, thereby accentuating funding challenging for stress developers and accelerating consolidation. The company retains a positive outlook for the long term on account of its healthy balance sheet, strong brand image and unwavering commitment to quality. The group has met all its stakeholders' commitment. The company has not availed any moratorium or deferment on its debt obligations. The company has sufficient liquidities to sail through the uncertain times. The crisis has presented an opportunity for DLF to undertake exercise in being leaner and more efficient in terms of its cost structure. Our heightened approach to cost optimization is expected to help ensure healthy margins in the times to come.DLF has observed sustained success in office rental collection. It has provided comprehensive business continuity support to all stakeholders and continues to receive positive feedback from its tenants. Going to the extended lockdown, malls across the country have not been operational, and this has led to some short-term pain for the tenants. We continue to maintain a connect with all our retail partners supporting them through these uncertain times. With opening of the malls expected in June, our focus remains safety, hygiene and well-being of our customers, tenants and teams.DLF has ensured that it remains in the unique position to recommence work as soon as lockdowns are lifted. Consequently, the company has not lost any time beyond the mandatory lockdown period in its project commitments. We anticipate that some semblance of normalcy may return from quarter 3 financial year 2021, whereby players with strong operational expertise and financial resilience will continue to gain foothold.While our liquidity, balance sheet, brand image and product quality inspire confidence to withstand these uncertain times and enable us to stay committed to our strategy. We remain resilient and agile to tackle any unforeseen challenges that may arise.With this, I'll end a brief update. Thank you for patiently listening to me. And we open the floor to questions now. Thank you.
[Operator Instructions] We take the first question from the line of Abhishek Bhandari from Macquarie.
Tyagi, I have 2 questions. Your first one is on the rental business. First, on the office side, if we understand that the near-term demand has now gone away, and it's likely to come maybe after 6 months or so. But you could've shared, does it in any way alter your growth plans for DCCDL? And what kind of rental growth do you think can we [indiscernible] got that the company over the next 2 years' time on the office side? And similarly on the rental side, what kind of concessions are you giving to the tenants in retail mall? Are you giving some kind of [ rent ] waivers? Or also have you been able -- or have you changed some of the rental contracts from a base plus within guarantee to a higher [ within ] guarantee of each. Color on this will be helpful?
Thanks a lot, Abishek. On the offices side, and -- so first of all, I would like to paraphrase because today, you sit on TV, everything, there's tons of, if I may say so [Foreign Language] being given -- I mean, all of us are working [ without ] 8 or 10 weeks of actual data and trying to project medium-term trends on that. So that's the sort of disclosure I make. Look, April and May, our offices collection has both been 90% plus, April 90% plus. May I think you already done the early active and the balance pieces are coming, hopefully, in the first 2 days of June, so we'd again hit 90% plus. So how does it impact the medium term, honestly, is an open question right now. We had 2 capital projects that, actually 3, if you ask me, which were on the anvil. Cyber Park is complete, and the tenants who are doing the fitouts, continue to do their fitouts. And we hope that now with the lockdown on construction ending, the final completion detail should be done in the next few weeks. And tenants can begin moving in there in the next couple of months. With 2 new projects that we had launched was a downtown in Gurgaon, which is a eventually 11 million square feet project, but we had commenced construction on the first 2 million. And similarly, the downtown Chennai, which is again a 7.5 million square feet project, where, again, we had commenced construction on the first 2-odd million. So obviously, the last 2 months, construction was completely shut down because of the lockdown. But as the lockdown's been lifted. To some degree, the workmen -- the workmen are there. And construction is recommencing in both of those sites. I believe that in this entire disruption, we would have lost a few months to the construction schedule, maybe 4, 5 months. Let's see how much of -- and 3 months of actual lockdown, maybe have months of for the construction teams to reassemble. But we continue -- I mean, so far, we continue to be committed to both of these projects. But maybe the phasing beyond these 2 million may be slightly more calibrated. But since our first pace was 2 million each in both capacities, in locations where we are completed run out of capacity. We continue to be confident on that. As far as the medium term, what should I say, demand outlook on the offices piece is concerned, I think it's a mockery of a variety of things clearly work from home, which is the -- which is biggest elephant in the room. Everybody is naturally talking about that. We believe that on some hand, it could have a margin impact on the demand. But [ all tenants ] also makes -- improve the quality of work-life balance and the flexibility of working. And we do play that to offset that. There will be demand driven by densification specifically. So the offices demands could be slightly more tempered in the next few month, but we don't foresee it going anywhere fundamentally. Also, India's fundamental strength as a destination for the knowledge-based services specifically. I think that isn't going to go anywhere, especially as the rest recover.On the retail side, there's the complete lockdown since March -- mid-March. So obviously, for the last 3 months, there's been a lockdown. Now as you know that some steps are being announced to reopen the retail mall. In the last 2 months, to be fair, we haven't collected from the malls so far from the retailer. And we have been in constant communication with them in terms of -- obviously, from their standpoint, they would want some concession. From our standpoint, the specific we have our own liabilities, et cetera, to look for. But I think all the big retailers are sort of working with the tenants. And we believe that once the malls open, hopefully, in the next few weeks, we should be able to arrive at some understanding of how to have handled specifically this quarter in terms of the rental adjustments, if any, that may need to be done for select retailers. Right now, it's still a work in process.
Okay. So my second question is on the residential business. While in great year that we have not sought any moratorium from the banks on the loans. But how are your cash collection starting from the customers? The reason for asking this is that would give us some understanding of how much percentage of the customers might be using bank loans and are still probably paying you and are not seeking any kind of moratorium from you as a company? And a related question on that, do you think the -- if your construction is going to remain on track for these 2 quarters, and there could be [ sites leakage ] on collection. The rent number might rise beyond the INR 1,300 crores [ that is to refinance ]?
So our collection outflow on the projects that are active right now and I'm not counting the new projects that we are commencing like Midtown and all, which have separate construction financing lines of credit available. But on the existing projects, whatever residual cost to completion is and Vivek can chime in. I think it's a number of not more than -- outflow of not more than INR 500 crores to INR 600 crores for the fiscal 2021 in terms of construction outflow of the development project. So frankly, we believe that I think while obviously, April collections were clearly, they were very poor, and I think that's not surprising. By the later part of it collections have begun strengthening. We still believe -- I mean stand by what we wrote that Q1 would be pretty weak on collections. Q2, we expect things to begin returning. And by Q3, we expect to be of normalcy to come. I think that is true for the sector as a whole also. But again, these are very extremely limited construction outflow commitments. We don't foresee that to dramatically impact our overall cash situation for the -- I mean -- in a very fervor part of a way, while the collections were weak, attractive for the last few months. The construction outflow was almost near 0, again, because construction was shut down as well.
Sir, I just want to add to this, Abhishek. See, in quarter 1, starting April, I think the company took a conscious call on the residential side, not to raise any demand on the customers because like all of us are going through tough times, so are the customers. And therefore, there was a conscious call not to raise any demand for April and May. And therefore, our collections have got impacted. But it's not going away anywhere. It's just going to really come in June, July. So having said that, we've raised the demand now. And the collections have started coming in from second half of May into June. So that's one. So of course, this quarter, the way I see it collections have got impacted. But when you really look at the total liquidity position of this organization, especially on the residential business. And I can explain the rental arm later, we've started with a very healthy cash in hand of INR 2,500 crores, and we have a debt obligation between debt repayment and interest of less than INR 2,000 crores. So I'm really fully covered there. And if I really look at my receivable and new sales. And my rental business, which is sitting in the DevCo side, that is good enough to cover my operating expenses for the full year basis. So therefore with a healthy opening cash in hand and what is really likely to flow in. We are very confident that we will be able to meet all our obligations, be it operational, be it financials on a full year basis. Yes, quarter 1, there is a slow start as far as the collections are concerned.
The next question is from the line of Saurabh Kumar from JPMorgan.
So basically, 3 questions. One is, you have spoken about conserving cash and liquidity. So in that context, I just wanted to ask that this dividend payment that you're doing, right? I mean, you said INR 500 crores, I mean, INR 2 in F '20, and you still announce the INR 0.80. The point is that DCCDL dividend can actually used at DLF level so -- and kind of improve the balance sheet out there. So I would just wanted to know that in fiscal '21, you expect to still pay the dividend? Or would you expect it to start? And my broader context is if you look at broader set of companies, most of them are guiding to very substantial dividend cuts? So that's first. Secondly, on this cost, I mean, it's good to see that you've reduced it this quarter. But what is now the target which you are effectively running at in the company? And the third is essentially on this DTA reversal, sir. Effectively, I thought we were not doing it because we had a lot of [ mass ] credits. So that INR 4,000 crores of deferred tax asset that we had, does that still remain? Or -- I mean, my issue is that should we see the cash also on account of tax still be lower? I mean kind of low levels to sustain or will those credits go away? So these are the ones.
Okay. So I'll address the last one first, Saurabh. I have to make a comment, Saurabh. And that is to place on record my disappointment that you cheated the opening slot to Abhishek, this time. But that's fine. On DTA reversal prerequisite, we have historical tax losses because of which we do not need to pay any taxes for the next many years in DLF Limited and as well as in [indiscernible]. That situation does not change. So far, if losses were at 35% DTA. Now they will be DTA at 25%. However, when we done the India's transition, there was a 5-year period for [ Mac ] adjustment that was given, which is expiring on 01/04/21. So beyond 01/04/21, even if I had no taxes to pay, I would have been subject to [ MAT ] on the entire set of profit that was made in the DevCo. So as an example if the DevCo made a profit [indiscernible] INR 1,000 crores about a couple of INR 100 crores per year of MAT would definitely have gone out. As you know, the MAT tenant can be adjusted only for the difference between the normal tax outflow and demand. We would not have any normal tax of Q-to-date, but only MAT. So the outstanding credit of the INR 200-odd crores would not have been adjusted in our assessment for the next 7 to 8 years. So basically, the advantage of sitting to the lower tax rate was twofold: A, to clearly improve the profitability by 10% a year; and b, to ensure that there is no MAT outflow for the next 5 to 6 years at least. In the case of Cyber City and DLF Assets Limited the RentCo, there the net rates are far higher and the ability to [ utilize ] them, obviously, is also stronger. So we have not embraced lower tax rates on the RentCo side. We have only embraced them on the DevCo side. That's part a.Part b, on the dividend fee. So let's make it, the dividend of this -- whatever, the INR 0.80 dividend now is being paid for fiscal '19, '20. And frankly, fiscal '19, '20, I mean -- even if we were the most unsettled wasn't any worse than '18, '19. So we felt that the shareholder dividend should be maintained. This dividend, as we have always maintained, will be met by Cyber City, which will now, this year give a reduced dividend. But even there enough to sort of do the INR 0.80 dividend that DLF's liability is. On the dividend of 2021, which is to be paid next year, honestly, frankly, is a function of Cyber's profitability next year, DLF profitability next year. And how the entire cash flow and the situation bounces back frankly [ less than ] [indiscernible]. Right now, it will be very speculative for us to come in tone the dividend payable for the fiscal 2021. That's -- on cost, Vivek, actually is the expert. So I'd request Vivek to take questions on the cost piece.
Yes, So Saurabh, on the cost, fixed cost, which is cash-based fixed cost, which is sitting in other expenses, this year is close to INR 500 crores. And we have -- we are running a target of really bringing it down to half. And I must just talk about the kind of things we have done. I think for the first time, we've done a zero-based approach. Very clearly, we've identified the nonessential costs which have been driven or we've been carrying them because of legacy. And we've taken some hard calls in terms of really cutting those costs. So we started this exercise in the beginning of the year. And actually COVID helped us to really expedite it. So we have started seeing the results starting April itself.
Okay. So I mean, the point is, if I look at this quarter, annualized, it's about INR 600 crores. So should we -- I mean, what should we think about this for fiscal '21?
So in the entire fiscal '19, '20, our overhead, which you will, were in the range of about INR 800 crores for the entire fiscal. And frankly for us, we are looking at least, hopefully, a 40% cut on that, if not more. Vivek [ has done the target were actually more aggressive, ] but 40% is clearly something we're very comfortable to speak with you about.
You're right, Ashok. You're right. Just wanted to add that this 600-plus number what Saurabh you're seeing, has 2 components to it. One is the fixed cost. And there is also some marketing and brokerage cost, which is sitting here. Which is more of a variable cost linked to the sale. So that piece is linked to sale. So since it's variable, I will not comment on that. But the fixed piece, as I talked about, we are really looking at bringing it down to half.
Okay. Got it. And just, sir, one follow-up thing. If DCCDL's EBITDA, if I just add Cyber Park, we should broadly touch INR 3,600 crores and whatever discount you then give on the rental piece -- I'm sorry, the retail piece, right? Is that the way to think about DCCDL?
Yes, that's right.
The next question is from the line of [ Nikunj Mehta ] from HSBC Asset Management.
Just had a few questions on the residential piece. So starting with Camellias. So what was the -- in terms of number of units. What were the cancellation for this quarter? And so far in the last 2 quarters, what would be the cancellation numbers? That's one. And second, do you think that because of the COVID and some of the buyers might decide to cancel flats in Camellias, if there is a possibility of that? That's the second question. And the third one is on our development pipeline for the residential business. Last quarter, we mentioned about the 7 million-odd square feet of new development in terms of independent floors. So what does -- how do you look at this post the current situation? Is there any deferment or you are sticking with the timeline of launching it in second half?
Okay. Let me take this one. So on Camellias, if you see the difference between the gross sale and the net sale for this quarter, as we indicated in the analyst presentation, is largely because of the sales cancellation we have within DLF 5. But I don't have the exact number, but I think in terms of cancellation, it will be sub 20. What we are really talking about and this is -- in fact, this is -- the reason why this cancellation happened because these are the set of customers who are not able to start the fit-outs. So therefore, we had to really cancel it as we indicated in the previous analyst call. So this is not something -- yes, so we made sure that this quarter, we cleaned up the entire thing. Now your question is, are there more expected in future? The answer is no. This is behind us.
And the reason for that also is that off the, whatever, 245-odd customers who are now the active Camellias customers, I think more than 200-plus are already in a advanced stage of their fitout work. So they're already going to invest in their own INR 3 crores to INR 4 crores. So to fitout -- [ till the ] cancellation story, unfortunate as it was looks to me behind us on the Camellias piece.
And also just to add, I think during the lockdown itself when there was hardly any activity, we also had some few Camellias being sold during that period as well. So I think we also expect our club to be operational in second half of this fiscal. So therefore, with [indiscernible] coming in second half as people complete their fit-out and with club getting operational, we expect the velocity, sale velocity of Camellias to improve in second half.Yes? Now on the new development you talked about on the independent floor. So I think we still remain committed to our strategy. That's the first thing I'll say. I think we've made good progress in the last 3 months in terms of really getting the design approved, getting all the approvals in place. And we had almost started the construction work but because of the lock down, we had to really suspend that. So in terms of our plans, at this point in time, we will -- we are just waiting for things to clear up. And of course, we will have to really look at the right time. But we remain committed in terms of really launching this in second half of this year.
The only other point I'd like to add to what Vivek said, which is important, I think, development from our side is that given the entire disruption on account of COVID that's happened, the 3 or 4 months that we would have lost in the cycle. We have now also taken a decision that for both the independent [indiscernible] as well as for the mid-town project, which is our JV, GIC in Delhi. We will not wait for construction to complete before offering it for sale as was our philosophy and stated objective earlier. We would commence that the sales -- we would not delay the launch cycle disproportionately. And hopefully, plan to bring all of these projects to the market within this fiscal, which is Midtown. And if I must say so, the 3 transitions of the floors in Gurgaon, one is the floors in DLF City, then is this floors on our Gardencity and Alameda, which is in the New Gurgaon. And C is, we were also working out with the Haryana's Government's new scheme under the [indiscernible] and [ NILC ] to actually get extremely optimally priced floors to the market. So I think all of these segments would hopefully start seeing the launch pipeline towards the later part of this year.
Okay. So if I hear you correct, even the Midtown project of ours, you would see that you will be able to launch this fiscal?
Yes, absolutely.
Unless, of course, I mean, there's something catastrophe that happens on the demand front. But right now, the way things are, we are clearly looking to launch it towards the later part of this year.
Okay, okay. And just the last question from my side, if I can squeeze in. In terms of our cash flow ex DCCDL, so the questions are asked on the OpEx front. But on the CapEx side, if I look at the numbers, which is around INR 250-odd crores, which we used to do in the last 2 quarters. This quarter, it was around INR 291-odd crores. So what the kind of sense do you think on the CapEx side in terms of annualized FY '21? What kind of CapEx you are already looking at in DLF ex DCCDL?
So on the development business side, we have an estimate of close to INR 500 crores for financial year 2021. And on the rental business side, it's estimated to anything between INR 750 crores to INR 800 crores because our big projects are Cyber, Downtown Chennai and Gurugram. These are the 3 big projects, which are going to meet this level of Capex. But we are also really looking at doing construction funding for our 3 big projects in the rental business side. And depending on how fast normalcy comes in, in terms of construction activity being picked up. We may be able to expedite or spend more in case we are able to land funding in time.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
So just taking from the previous participant. You said CapEx for DLF, excluding DCCDL is INR 750 crores, INR 800 crores? That was a question.
So about INR 500 crores [indiscernible].
Yes. Yes, that's INR 500 crores.
And that's -- okay. Got it. Right. So INR 750 crores, INR 800 crores was only DCCDL. That's what you were talking about.
Yes. So INR 500 crores plus INR 750 crores, equal to INR 1,250 crores, total.
Okay, got it. So. Sir, just on the net-debt side, 2 questions. What's the outlook for this? I know it's pretty [indiscernible], but what's the outlook for this next 12, 15 months? How are you thinking about it? And there was a plan earlier to monetize certain land parcels. I think they were non-Gurgaon commercial land parcels. And also some TDR monetization. So where are we in this cycle?
So Sameer, these TDR policy still hasn't come out and the Haryana government still hasn't notified the TDR policy. So while the plans of this monetization are in place, they can't be acted upon till such time that their policy gets notified. It is because of the entire lockdown and all. But the net debt, there's -- the policy hasn't been notified yet. So that is clearly one thing. On the net debt, frankly, I mean, I would say that if it's okay for you. Only within this quarter with so many uncertainties, we would normally desist from giving any guidance either on net debt or sales. But our endeavor will be to ensure that the net debt clearly does not go up in any meaningful way. And hopefully, by the second half, once you're able to actually put these new launches into the market. We are able to show a decline of it as of March '21. But in all sense, I think Vivek and I'll be far more confident of giving you a trajectory in the July or the early August call than we are today. Frankly, on the monetization piece, the same thing, those assets are there, clearly. It's just that, I mean, today, frankly, as we speak, there are no key discussions happening, especially on the commercial fee. So while we are -- we remain open, and we will obviously at some stage once the things open up, come back to those discussions. We are also looking at ultimate plans of monetizing the -- monetizing some of those projects, including maybe in some cases at least build in sale of certain commercial pieces as well.
Okay. Great, sir. And the second one is on your 2 projects. Camellias, I mean, you gave us some color, but what would be the revenue recognition trajectory going forward? And for Cyber Park as well when does the cash starts to come in? And when would -- how would be the revenue -- the rental recognition for this one?
So for Camellias, we expect the position to start sometime in quarter 3. That's the December quarter. So that's the time when the habitation will start, and that's the time the revenue will start getting recognized.
Okay. And for Cyber...
And Cyber Park, we expect the revenue to start coming in from August.
Is that from August?
Yes, that's right.
Okay. That's great. And sir, final question from my side. If you can update us on 2 more pipeline projects. One is Hines commercial. And the second is new Phase 5?
Okay. So the Hines commercial, which is the JV with Hines, frankly. While we were progressing on the entire 3.8 million square feet development. Frankly, given all that's happening post-COVID in the commercial cycle. Both Hines and we are under extremely active discussion, almost a twice a week basis. So basically, I mean, evaluate options on does that project need to be tweaked in terms of the specific target projects that we were making as well as the phasing, frankly, of the same. So I think, again, Hines is a project which, again, both Hines and I as well as Hines' LP. Are they a stake firmly committed to. But I think we would, again, be maybe a couple of months away from actually being able to define for you that off that 3.8 million square feet. What is the Phase I of that Phase I? Is it 100% for lease? Is it part for lease? Part for sale? All of those are discussions that frankly are presently engaging both Hines and us.
Okay. And for Phase 5 new receipts or...
So Phase 5 new ready project, frankly, right now, what we will do, Sameer, for this year at least our focus is on the independent stores in the phases 1, 2, 3, 4, 5, including Phase 5, which also has a lot of independent floors potential inventory. So we would focus first on that. And the sort of the new Phase 5 premium luxury development. We clearly are not supposing this year because we don't want 2 projects in the same geography to be competing with each other. So the independent floors in the DLF city should definitely hit the market this year. I think the new KSI is something which may be in later stage. Because this year, we'll have a luxury project in Delhi, which is the Midtown and these independent floors in Gurgaon, in DLF City. The high-rise Phase 5 project may actually be deferred by a few -- by a couple of quarters.
The next question is from the line of Kunal Lakhan from CLSA.
Firstly, just wanted to understand how much would we have collected in Ultima so far in terms of percentage collections?
I think we'll just take this question and possibly share with you separately what is the actual collection till now. But I think you can go ahead with the question. In the meantime, we'll just give you the number, if we can.
Sure, sure, sure. Also, in terms of the cancellations pertaining to Camellias, right? So how are we treating these in terms of like are we giving a partial or a full refund to the customers? Or how are we treating them?
No. we have given a full refund because, frankly, Kunal, these were extremely extraordinary time. So frankly, we did not want to necessarily penalize anybody. So for this brief limited window of Jan to March, we actually allowed the customers to be able to exist without any -- without any hit short of any brokerage or anything like that sort of a thing. And clearly, going forward, I think we'll come back to our normal commercial discipline. But given the entire extraordinary pieces that were happening the last few months. Right now for Camellias, we allow people to go out.
So just to clarify. So the collections from sales that we have shown in the consolidated cash flow, that is net of any refund that would have given to customers?
Yes, sir.
So the balance sheet impact of these cash flows or this cancellation is already there in the [indiscernible] balance sheet. And there's no subsequent impact of these cancellations in the balance sheet, right?
I think there is a -- so Vivek, if I'm not mistaken, there would have been about INR 70 crores, INR 80 crores overflow into this quarter also.
Yes, sir that is around INR 80 crores is this quarter. Otherwise, the entire thing has been settled in the previous quarter.
And even if INR 80 crores has been completely settled as we speak. So as we speak, there's no overhang at all. But because are not the -- the cancellation that time meet the bank's NOC. So some of those customers were unwilling to -- or unable to conclude their transaction by March 31. So I think some of them over, I mean, flipped over in places.
Yes. So now as we speak, this is behind us. And Kunal, to your question on Ultima collection, I have the numbers. So out of INR 1,000 crores sales, we collected INR 300 crores.
Perfect. Just last one from my side. Can you just elaborate a little on the exceptional items of INR 330 crores? I mean, how have we arrived at this? And just wanted to understand the extent of impairment and provisions you have made? And is there any likelihood of its recurring in coming quarters?
So I think very clearly in view of COVID-19, after the management has done a thorough analysis and we actually followed a very prudent approach of really going through all our assets and investments. So -- and we really looked at all our assets and investments and critically. And as you know, we are into business of hospitality, and we have significant assets in that space, be it clubs, be it hotels. And you know that the retail side has been impacted because of the lockdown situation. And also the buildup is expected to be slow in the financial year. So that has impacted our cash flows. And therefore, that has caused the impairment of these assets. So I will say that a large part of this INR 330 crores is coming from the hospitality sector, which is basically our clubs and hotels. And we've also looked at the other investments and advances what we made for development. And we've really, also really taken a prudent approach in terms of really making provision where we felt that there is an exposure for DLF. In case you want details, we can separately -- off the call, we can share more details with you.
Sure, sure. That's helpful. Just one more, if I may. Just in the earlier presentation, you had shared the slides of rental ramp up to FY '22 of INR 2,700 crores. What in your best assessment, that number would be in the current environment?
Okay. So sir, with due respect, there is the reason that site is updating this [indiscernible]. Because -- and jokes apart in all, we want to only do 2 things. One is that what is the construction disruption that has happened? And so in that sense, that March '22, that will definitely move forward. But is it moving forward to like July 22 or September '22. We just want to know if it better escalate off there.Be in all [indiscernible] these are -- hopefully, by the end of Q1. We want to be a -- try to better estimate on how this so-called, this retail story is panning out. So clearly, it's our commitment that by the end of Q1 debt, that slide will be restored. It's just that given the uncertainty that's currently happening. We just wanted to take some time off to retweak this timeline on that slide correctly.[ To -- first look ] these projects that made up the INR 4,700 crores continues to stay on track.
The next question is from the line of Murtuza A from Kotak Securities.
Two questions I have. One is how much of your DCCDL portfolio is coming up for renewals in the current year? Number one. And on the 2 projects, which is Cyber Park and the Chennai project, how much is already been pre-leased on that front? And the second question that I have, which is more bookkeeping, if you could tell us what is the revenue recognition for the development business for the current quarter and full year FY '20 in the development company?
So coming to the question on the, like the area which is coming up for the term completion in DCCDL, that's roughly around 2.3 million square feet for the year. And on the pre-leasing on the downtown, and the -- in the downtown pre-leasing, which has already been achieved is 2.7 lakh square feet. And in downtown Chennai, since we have just launched the project in terms of like construction activities just started, we are actively marketing it. And we are in like advance discussions but no closer as yet.
Right. But sir, on Cyber Park and the other Chennai [indiscernible] project, which are just about being commissioned?
Right. So the Chennai, the ongoing 2 blocks, which is like Block 11 and 12, which is 8 lakh square feet. Of that, hardly, I think 1 lakh square feet is like unleased balance all is leased. On the Cyber Park, the complete office area, which is like 2.4 million square feet is completely leased. The retail area is also 60% leased. And that the balance we are like -- we'll be looking at a closer very soon.
And sir, on the question on residential revenues recognized in the quarter and for the year?
Yes. You can just note down. For the quarter, it is INR 1,500 crores. And for the full year, it's around INR 5,000 crores.
The next question is from the line of [ Milan Mehta ] from HSBC.
My question pertains to our receivables positions, which doesn't seem to be getting -- coming down quarter-by-quarter and it has been pretty stagnant. So can you give some timelines over which we expect the receivables to be clear and as they come out because we see there are no -- most of your sales have been done and the receivables aren't coming down. So any risk of any write-downs you need to take on them?
Okay. We have INR 2,500 crores of receivable as we get into this financial year. I think we've collected well in the last quarter. I can share the numbers with you, but I think our collection has been...
Sir, last December end, it was INR 2,850 crores. So only INR 300 crores have been collected, which I think so you mentioned as net debt to Ultima, that means your rest of your receivables, we have not done anything.
No, no, [ Milan ], INR 700 crores were collected because there was also a fair scale of INR 400 crores that happened. So the INR 2,800 crores come down to INR 2,500 crores because of INR 700 crores was collected, but INR 400 crores was [indiscernible].
Yes. That's right. That's right. So from the receivable, it's been...
Sir, despite that. Sir, like INR 2,500 crores of valuables cost today's 10%, 9% for you guys. It's a huge negative carry, which you're carrying. So I'm unable to understand why aren't we being more aggressive to get these receivables cleared. And if they're not getting cleared, why don't you write it off and clean up the balance sheet?
Okay. I think we can share some more data on this. But I think, first of all, I think we are confident of really recovering this INR 2,500 crores. And we have put strong clients, aggressive plans in recovery for this year, quarter-on-quarter.
So this is the answer [indiscernible]...
Also the entire [indiscernible] due in the year.
Sir, this is the answer [indiscernible]...
[ Milan, the entire 2,500 crore is not a past due... ]
So the INR 2,500 crores also includes the receivables, which will fall due in the coming quarters in that. But Vivek, why don't you do a detailed analysis of the receivables and then Monday, we could offer...
Because I don't see any sales -- if you see national DevCo receivables, they're all pretty stagnant like they are all in INR 100 crores range all the time. So I am not understanding where are the sales happening and where is the [indiscernible]...
Sir, share some numbers. I think let's focus on last quarter itself because that's something which is actual. So while we can talk about the [indiscernible]. So we started with INR 2,800 crores. Now I have the numbers in front of me, and we've actually collected INR 1,000 crores out of it. So that brings it down to INR 1,800 crores and we've added new sale of INR 700 crores. That makes it to INR 2,500 crores. So I think there is enough focus in terms of really making sure that we fully collect the receivables on time. Yes, there are certain receivables, which are overdue. All I want to assure you at this point in time is that as management, we are committed in recovering this during this next financial year.
The next question is from the line of Abhinav Sinha from Jefferies.
Sir, just [indiscernible] change in the residential strategy, you're saying that, a, there will be some net income launches this year? And b, you are willing to sell very close to launch. So what has prompted this change? And also, what do you mean by mid-income now?
So the mid-income, honestly, which is basically the new Gurgaon piece, could be stuff ballpark in the [ INR 25 ] lakhs to INR 1.25 crores range.
You said INR 75 lakhs, right?
INR 75 lakhs to INR 1.25 odd-crore range. In select pockets, it could be products which are [indiscernible] select pockets, which are priced slightly higher. But in the medium will be somewhere in that range.
Okay. And what prompted the change in strategy selling on launch?
Oh no -- so we're not selling on launch. So we're not selling on brochures. Frankly, as some of our peers do clearly. We are just saying that we are no longer [indiscernible] necessary of selling post completion. Primarily, a, we have launched 4 or 5 months eventually in this year to COVID for construction. So if we were actually to be completely faithful to our whole strategy, many of these launches will actually overflow into the next year, which is something that we wouldn't like we wouldn't like. Partly, frankly, also given the uncertainty in the market, I think it is important to have a committed customer at a relatively middle stage of the cycle. What we're actually having to wait for completion and then go out for the customer. So I think it's both linked to the uncertainty that are prevailing right now. And frankly, to some degree, trying to fortify our customer base as we keep on completing these projects.
Okay. And sir, just one query here also on your Dehli project with GIC. I mean what shape will the building be roughly when you are launching it? Just to get an idea.
So clearly, we hope to be out of the basement.
Okay, okay, okay. And sir, just one last question. On -- you have given certain GAV calculation on DCCDL, can you share the assumptions behind them?
So we have not given any -- so it's not a subjective thing. Now as you are aware, that under the new accounting standard, every year on 31st March, you are supposed to get up [indiscernible] to value all of your investment property. So this is basically a reflection of the GAVs computed by those [ ITTs ] for Cyber City, which are a part of Cyber City's time balance sheet as of March '20. These are not based on how would we look compared to a REIT or how would we look if my cap rate was 5.5% or 4.5%. None of that. This is basically the way the [ ITTs ] have a certain method of valuing the investment assets. They have done those valuations as a part of the India regulations, we are supposed to mention the GAVs in the balance sheet and this is a reflection of that.
The next question is from the line of [indiscernible] from [indiscernible].
Most of my questions have been answered. Just one thing on the guidance of residential sales. So I know first half being difficult, you may not give any guidance. But just a thought process. Last year, you gave a guidance of INR 2,700 crores, and you finished the year just around INR 2,450 crores. What's the guidance for next 2 years? And how will you try and achieve it? Because in the presentation, you have spoken about mid-income housing, and you spoke about INR 70-ish lakhs to INR 1.25 crore. So then give us a rough guidance of maybe next 24 months, next 12 months will be difficult? And how will you -- which are the building blocks to that residential sales?
So the building blocks to the sales guidance are 3. One is obviously the existing inventory, including Camellias. These -- the Midtown gain with GIC in Delhi. And sees these independent flows in all the 3 locations, Gurgaon, New Gurgaon and the [ child city ] of Chandigarh. Those are 3 designate locations for launching the [indiscernible]. We are doing a quantification and we will be happy to share that certification with you. I think by the time the Q1 leading into the Q1 such as the title end. Right now, given the uncertainty, we have desisted from giving a sales guidance right now. What we are hoping if all goes well, is that by Q3, we should come back to at least a reasonable quarterly clip of sales. But again, I think for a quantification of how we see sales cycles from Q3 onwards. I think we would, in all fairness, it will be best if we sort of left this at least current phase of uncertainty to be slightly navigated, and we should hopefully come back to you by the end of Q1 to give you a broad view of how the current year is looking. Except that we to hope that by Q3, we should come back to a normal sales cycle.
Sure. So you're saying Delhi, Gurgaon and Chandigarh [indiscernible] case that you would look to capture.
Gurgaon -- the main Gurgaon city and the New Gurgaon.
Sure. So just the thought process when there are a lot of corporates in India trying to build up the real estate business. I'm talking about [indiscernible], [ Tata ], [ Gudla ]. You being the advantage in terms of land position, and this is a difficult time for most of the developers. Why [ haven't you ] been thinking about scaling up the business because we -- because actually we have the right to win and right to scale up now. And this is the time for you and your balance sheet [ if ] not stretched. Why aren't we thinking [ over those lands ]?
You're saying of buying over some stiff land parcels. Is that what you're saying?
No, I'm saying that we can scale up the business in a couple of most -- is where you are present, you can accelerate your sales...
[indiscernible] between mid-town and independent floors and a couple of other projects, which we are thinking about. I think we're already talking about 10 million square feet of residential launches. In this case, total pipeline is about 30 million plus, but in this case. And roughly about 3.5 million of the Hines project. So we would be having about almost 35 million square feet of sort of the launch pipeline in that sense ready. And I think, frankly, that's what our current appetite is. I will be --
That's strong. But I'm just saying that the city will be confined to Delhi and Gurgaon majorly. That is why you are thinking about. I'm just [ trying to build up]...
[indiscernible] the NCR and to some degree, Chandigarh our new developments are going to be. And we think that at least for now, commercially. For commercial developments, we are clearly a national player. But for residential development, we would still want to focus on the LTL market. Where I think there's still a huge debt in the NCR market because a lot of the so-called inventory overhang, we don't see it ever getting completed in all fairness. So really, I think much of that demand will eventually come back to projects where the customer has a line of sight to seeing those projects complete.