Oberoi Realty Ltd
NSE:OBEROIRLTY
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Estee Lauder Companies Inc
NYSE:EL
|
Consumer products
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Church & Dwight Co Inc
NYSE:CHD
|
Consumer products
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
American Express Co
NYSE:AXP
|
Financial Services
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Target Corp
NYSE:TGT
|
Retail
|
|
US |
Walt Disney Co
NYSE:DIS
|
Media
|
|
US |
Mueller Industries Inc
NYSE:MLI
|
Machinery
|
|
US |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
1 285.15
2 032.25
|
Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Estee Lauder Companies Inc
NYSE:EL
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Church & Dwight Co Inc
NYSE:CHD
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
American Express Co
NYSE:AXP
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Target Corp
NYSE:TGT
|
US | |
Walt Disney Co
NYSE:DIS
|
US | |
Mueller Industries Inc
NYSE:MLI
|
US | |
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Good day, ladies and gentlemen, and a very warm welcome to the Oberoi Realty Q2 FY '20 Earnings Conference Call. We have with us today on the call, Mr. Oberoi, the Chairman and Managing Director of the company; and Mr. Saumil Daru, Director of Finance.Please note that this call will be for 60 minutes. [Operator Instructions] This conference call is being recorded and the transcript for the same may be put on the website of the company. [Operator Instructions]Before I hand the conference over to the management, I would like to remind you that certain statements made during the course of this call may not be based on historical information of facts and may be forward-looking statements, including those relating to general business statements, plans, strategy of the company and the future financial condition and growth prospect. The forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements.I'm now glad to hand the conference over to Mr. Oberoi, the Chairman and Managing Director of the company. Thank you, and over to you.
Good morning, good afternoon, and good evening to all of you as per the time zone from which you have logged in, and welcome to the conference call of Q2 FY 2020 results and business updates. Thank you for taking your time for attending this call.Before I begin, I'd like to share with you some quick updates. We are very happy to inform you that we have closed the entire land purchase of GSK that we were in for Thane property, and we have taken possession for the same as well. We have also received our approval prior to the August deadline. The transaction was closed at an average price of about INR 15 crores per acre, and it is way lower than the transaction that Raymond's did for INR 35 crores per acre, which is literally adjacent to our property.Our annuity business continues to do well. We have now fully leased Commerz II. We have started the construction for Commerz III as well.You are also aware that an IT search was carried out in the month of August. You are also aware that our company follows and implements the best practices of compliance with all applicable laws. We have -- we've clarified this to the stock exchange that we do not anticipate any material impact of this search on our company. The matter is sub judice, and we do not intend to take any questions during -- on this subject during the call, which I hope you will understand and appreciate. Business for us anyway continues to be as usual.With this, now I'll hand over the call to our group CFO, Saumil Daru, who will take you through the numbers. And I'm again, as usual, happy to be addressing all your individual questions, which we will go through after this. Thank you.
Thank you, Mr. Oberoi. I guess most of you would have gone through the presentation. If not, the same is also available on our website, along with the results, which have been filed with the exchanges. We'll keep things short as usual to help us allocate adequate time for the Q&A.In terms of consolidated financials, we achieved a total consolidated revenue of INR 505 crores for this quarter as against INR 618 crores for the previous quarter and INR 619 crores for the same quarter last year.The consolidated PBT was INR 192 crores for this quarter as against INR 216 crores for Q1 FY '20 and INR 307 crores for Q2 FY '19. And the consolidated PAT numbers was INR 138 crores for this quarter as against INR 152 crores for Q1 FY '20 and INR 213 crores for Q2 FY '19.Moving onto the asset level performances. The investment properties continued steady and strong performance. Oberoi Mall, which is our retail asset, contributed INR 40 crores to the top line in this quarter as against INR 39 crores for the last quarter and INR 37 crores for the same quarter last year. EBITDA margins through this vertical are in excess of 94%.Commerz, which is the office space asset, contributed about INR 10 crores to this -- to the top line this quarter as well as the same number for the last quarter and the same quarter last year. The EBITDA margins in this vertical continue again to be in excess of 94%.Commerz II Phase I contributed about INR 30 crores for this quarter as against INR 29 crores for Q1 FY '20 and INR 18 crores for Q2 FY '19.The Westin Mumbai Garden City contributed about INR 31 crores to the top line for this quarter as against INR 32 crores for Q1 FY '20 and INR 32 crores for Q2 FY '19. The EBITDA margin in this vertical are in excess of 32%.We now move to our development properties. For Esquire, we booked close to about 19,000 square feet in this quarter; till date, about 16.74 lakh square feet, which is about 79% of the inventory. Total booking value for this quarter was INR 41 crores as against INR 124 crores in the preceding quarter and INR 110 crores for Q2 FY '19. The cumulative booking value till date is about INR 2,719 crores. The total revenue recognized for this project in this quarter is INR 46 crores, and the cumulative revenue recognition till date is INR 2,719 crores on account of 100% project completion.For Prisma, of the total project -- out of the total project, we have booked about close to 9,200 square feet. Till date, we have booked 2.49 lakh square feet, which is about 93% of the inventory in this project. The total booking value this quarter was INR 19 crores as against INR 16 crores for Q1 FY '20 and INR 17 crores for Q2 FY '19. Cumulative booking value till date is about INR 443 crores, and this entire -- and out of this, the cumulative revenue recognition till date is about INR 438 crores on account of 100% of project completion.For Mulund, Eternia, in this quarter, we booked close to about 18,500 square feet; till date, 6.34 lakh square feet. Total booking value in this quarter was INR 23 crores as against INR 27 crores in Q1 FY '20 and INR 34 crores for the same quarter last year. Cumulative booking value till date is INR 922 crores, and the total revenue recognized for this project in this quarter is INR 49 crores, and the cumulative revenue recognition till date is about INR 478 crores.For Enigma, in this quarter, we booked close to about 12,000 square feet, till date 4.43 lakh square feet. Total booking value this quarter was INR 15 crores as against INR 34 crores for Q1 FY '20 and INR 10 crores for the same quarter last year. The cumulative booking value till date stands at INR 651 crores.For Sky City, this quarter was close to -- the booking this quarter was close to 45,100 square feet and till date about 17.68 lakh square feet. Total booking value for Q2 FY '20 was INR 72 crores as against INR 187 crores for the last quarter and INR 130 crores for the same quarter last year. And till date, booking value is INR 2,820 crores. The total revenue recognized for this project in this quarter stands at about INR 220 crores, and cumulative revenue recognition till date is about 1,682 crores.For Three Sixty West, Oasis, we booked again close to about 36,100 square feet in this quarter. The total booking value for this quarter was INR 150 crores, and till date, the booking value is about INR 2,402 crores.Coming back to some key financial parameters. Our adjusted EBITDA margin for this quarter was 46%, PAT margin was at about 28%, and the EBITDA margins for the Mall and the Commerz businesses are much higher than the average, as mentioned before. Excluding these, the margins for our pure residential business stands at about 37% for Q2 FY'20. Thank you, and this -- with this, we are now happy to take any questions that you all have. Thank you.
[Operator Instructions] The first question is from the line of Tanuj Mukhija from Bank of America.
My first question is on the recent launch, Oberoi Maxima in Andheri. I just wanted to confirm 2 things. Can you describe or discuss about the response to Oberoi Maxima? And secondly, I could see advertisement saying that the subvention scheme is available for Oberoi Maxima. So are subvention schemes back at Oberoi Realty projects in full way?
So we got a very good response for Maxima. And to answer whether subvention schemes are back, so subvention scheme was never taken away. The banks are still continuing to support that, and they are selective about the customers. So we are good to go with them as well.
Okay. Understood. My second follow-up question is actually on your units booked in second quarter FY '20. The run rate -- or the units booked at Sky City and Esquire are clearly below your run rate for the previous quarters. And given subvention scheme was on in full swing across projects, so what would you attribute this slowdown in sales at Sky City and your Goregaon project?
This was -- Tanuj, this was a slow quarter for all industries across all sectors. I don't think we are any different. We are not bigger than the Indian economy. We are not bigger than our sector. So having said that, I guess, it's just one of those quarters where everything seems to be slow, but this is again, I would say, a passing phase. We were discussing the other day that what are you really left with? What are the options with people who have money? They are scared of keeping that money in the bank. They -- most of the, what you call, NBFCs and all of these are also in iffy. So I think real estate is the only -- amongst the safest play where they can really put that money back. I feel not only would original demand come back, but I also see that investors will come back into real estate. And with very few developers left who have the credibility, I think we stand a great chance. So I mean, I'm not really unduly worried about one quarter. We continue to commit ourselves, back ourselves, build as much as we can and be ready. So that is where we are.
Understood. And sir, last question from my end. If you could just give us more details about your Thane project launch, time line, project specifications, area of launch that you can share, given that you have now got land fully acquired.
So we are still on the drawing board. Actually, we have certain strategies, but we want to open them up closer to launch, which should ideally be in the fourth quarter. And so again, it's just kept very tightly because we don't want competition like any other sector has started reacting very quickly on what one is doing. So we want to wait and only announce when we announce for the market. So one thing I can tell you is that we are aiming at the last quarter of this financial year. And we have something very innovative coming up. Again, like I said that our purchase price for Thane has been so good that we can really play the volume game, the price game and go out aggressively.
And if I can just squeeze in one more question. We initially had plans to even launch exquisite Phase III in Goregaon. So just your thoughts on next phase of launch in Goregaon.
So for people who have visited our office would know that we have started work, and we are literally at fourth slab and the fifth slab of Phase III. It's just a matter of time, again. It could be either the last quarter or the first quarter of next year, depending on how things go, and we will do that as well. So as far as execution goes, we haven't -- we've already started that. It's only a matter of time. Again, like I said that last quarter was not something that we need to write home about. Hence, we just want to play it out and see how the market pans out. Like I said, we are optimistic, but we want to see that optimism on ground and then take a call.
The next question is from the line of Puneet from HSBC.
Just a couple of questions. Number one, can you give some sense of what is your plan for CapEx in terms of your commercial office spaces? How much you intend to spend this year and next year?
So we have started construction for Commerz III. I think this would be, what, 2.5 million? Yes, about 3 million -- sorry...
1.8 million square feet.
1.8 million square feet. Perfect.
It's leasable.
Leasable. So we have 1.8 million square feet leasable in our Phase III, which is a little over 2.5x of Commerz II, which is under construction, and we see this getting completed by 2022 of April -- March 2022, it gets completed. Work has already started, contract awarded. And yes, that's it.
I thought the original size was 2.3...
Puneet, I'm sorry to interrupt, we are getting background disturbance from your line. If you can move to a quieter place, we could hear you clearly.
Yes. Is it better?
Yes. Thank you.
Yes. So I thought the original plan was 2.3 million square feet. Has it been cut down to 1.8?
No, the original plan was always 1.8 million.
Okay. And can you also give some sense of what is the plan for the Glaxo land?
Thane or Worli?
No, sorry, Worli.
Sorry?
Worli.
Okay. So Worli, we are doing a mall, we are doing office, and we are doing a small hotel on top.
Any breakup of what the consideration would be?
So the mall is 800,000 square feet, office is 900,000 square feet and the hotel is about 150,000 square feet. 800,000 leasable, 900,000 leasable and 150,000 is a very small, like, 80-, 100-room hotel, just to kind of brand the building and stuff like that. And there again, work has started. As you all know, our property is connected to the metro station. And so we expect a huge footfall for our mall, accessibility for our office. You literally get out of the metro and walk into the office building or the mall. That's how connected because this is an underground metro, and we've got connectivity this way. So again, really happy with the way things have panned out for that project.
And time line for this?
Again, we are giving ourselves anywhere between 2.5 and 3 years to finish everything, and work has started here also.
Okay. That's great. Lastly, any benefit of tax that you guys expect. I still see 28% tax rate for this quarter.
Correct. So by the -- before the end of next quarter, before the end of December quarter, we will be through with our working. And we, obviously, see benefit in what the government has offered. We want to be prudent about how we can maximize and then move into the new regime. Of course, there is going to be a sizable amount of benefit because barring the MAT credit, we genuinely don't get any other benefit as such. So for the real estate industry, as a sector, I think this is a very good call.
Yes. Great. So third one, on the Enigma side, why there is a huge divergence between Enigma and Eternia's project completion? Can you help me understand it a little bit?
No, there is no diversion. I mean both time lines are the same. If you are talking about sales velocity or...
Yes, revenue recognition as well.
Revenue recognition is only based on the sales. Nothing other than that. Eternia happens to be smaller units and hence are selling slightly better than the Enigma units. And Enigma units will sell when they get ready because it's a larger ticket size. People want to sell their existing apartment and then move in. So the sales there are not keeping pace to what Eternia has, and that's why you see revenue recognition slower than...
So Puneet, Saumil here. As far as Enigma is concerned, we have not yet hit the threshold of achieving 25% of the area sold. So if you would recollect last year when we moved over to Ind AS 115, we had said that for projects where we have not yet hit that 25% threshold, our revenue recognition will be only to the extent of cost. Once it crosses this 25% threshold, then even the profit recognition will begin. In fact, if you will look at it in this quarter for Sky City E also, that is what has happened. So now the profit recognition is coming as far as Borivali is concerned even from Sky City E. So that was the reason for the difference between how...
25%, right?
Yes. Sorry. So that is how Eternia and Enigma are moving slightly differently. That's all.
Okay. Fair enough. And sorry, the last one is on the Commerz I. The leasable area seems to have gone down a bit.
So some churn. I mean, it's only temporary, but -- so you have that...
The absolute area which used to be 318 is now 308.
Correct. Correct. Correct. So there's just some churn happening, somebody moving out, somebody moving in, you give rent free, all those issues. Nothing other than that.
We would have taken some bit of that office space for ourselves for our own requirement. That is why you would have seen that come off.
The next question is from the line of Atul Tiwari from Citigroup.
Yes. Sir, could you throw some more light on the Thane land transaction, so -- especially with respect to the cost, INR 15 crores per acre versus INR 35 crores that you mentioned? So why is your cost so low compared to the other transaction that you mentioned?
We got a good deal, [Foreign Language]. That's it. Nothing other than that.
It's too much of a difference, sir, INR 15 crores versus INR 35 crores.
Yes, I know. I mean if you all know that we had locked in almost 1 year, 1.5 years ago, and we had paid those monies also 1 year or 1.5 years ago. It took us a lot of time and patience in getting this deal done, but it's done today. And we are very happy, very lucky that it's worked out those at this price. And happy for Raymond to have sold it at that price because it also sets a benchmark for us.
Okay, sir. And sir, my final question is on -- any comment or color on the situation in the property space, especially given the backdrop of liquidity squeeze and everything that is going on? How is the stress level for other developers? Are you guys seeing some kind of deals being offered to you for rescuing some of the stressed projects? Are you interested or not interested at all? Any kind of color will be great.
So Atul, in fact, there is a huge amount of elimination of competition. The way things are going, there'll be very few developers left. Developers, who have good reputation, good track record have delivered projects in time, delivered quality and who customer trusts and put that money. So one is, your basic need for housing will be served by a few of us, number one. Number two, you have very little option with your cash to deploy anywhere. And the financial -- other products are also not that desirable and so on and so forth. People are skeptical about mutual fund and so on and so forth.So I would say that in a given scenario, real estate may not have appreciated as much, but it's never failed people as far as it holding onto the value is concerned. So a mix of future use, wanting to upgrade. People would want to use their money in buying homes. So I'm again saying that, like, I completely agree, your business is on a day-to-day, not even quarter-on-quarter. But I would say that one quarter really doesn't indicate anything. We see the slowness in the market, and it will be -- the market will bounce back, bounce back for people again with those conditions put through.To answer your next question, "do you get offers?" Of course, we get a lot of offers, but unlike any other factory in land, most of these developers have created third-party interest. Those third parties have either taken them to RERA or NCLT. So unlike our steel plant that goes into NCLT, where the incoming party gives money and takes over, here, even if you go through NCLT and its resolution, the buyer has a very powerful tool of going to RERA and digging things out. So you may take the liability of developing and finishing it, but you don't -- you're not excused from the liability that it was supposed to be delivered on so and so time and those penalties and put together. So all those guys will come much before you liquidate. So we are very skeptical. We want to see how this plays out, what sort of safeguards will the new developer get for these flat holders who have already booked. So these are things that we want certain clarities for, number one. Number two, and as of group, we have decided that we will not do any brownfield projects, almost not do any brownfield projects because what people come to us is for quality, how we build, how we design, how we utilize space. And if we take a brownfield project and try and brand that as our project and push it through, I don't think that will work. We are very committed to our design, and we do not want to take brownfield projects. But greenfield, if there is land and if it's -- it can -- it's only financial strain on the developer, then one can look at it, but most developers have created multiple rights in the property, and it comes with own set of legacies. And so long as I'm going to get property like Thane, which are cheaper, why would I want to chance my arm in doing these other things which could unnecessarily drag us down?
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Saumil, you've not started recognizing for Worli 36. I thought you had hit 25% now, no?
Hi, Sameer. So basically, what happens is, as far as the books are concerned, we move on the basis of the full potential. What we have announced to you all so far has only been that the area on the basis of 65 floors. We still feel that we will be able to go a little -- maybe there is a chance for a little bit over and above that to come in. So if we factor in that total potential, then we have not yet hit 25% at least as far as the accounting books are concerned. So once we have full clarity on that and that should be in a quarter or so, then we will be able to tell you exactly at what stage does revenue recognition commence.
Sameer, our Worli project originally planned for 89 floors. We actually have approval up to 75, but we have civil aviation clearance only up to 65. And that is exactly the potential we've actually told you all. But like I -- like Saumil said that we have approvals for 75 floors in our hand. So that is the FSI potential we have. We are more or less, as these go by, very clear in getting sure that it won't go beyond 65, but we just want to wait it out for this quarter and then see and then finally take a call and move on.
And that is for the back tower or both the towers?
No, only for the back tower. The front tower is already topped out. There is no further potential. And even in the back tower, we are seeing whether we can get 3, 4 floors extra, or things like that.
Okay. Okay. That's clear. Second is on your Thane land. So I was a little surprised to see that the land cost is INR 550 crores, and I think you have put out INR 340 crores for regulatory charges. I have never seen regulatory charges to be 60% plus of the land cost. So anything specific going on here?
I would love to use your voice to go to the government and tell them that this is way too high. We've been protesting, but then they turn around and tell us that, "look, there are people who are buying." So it's a combination of ready reckoner and this and that and all that put together. So one couldn't help, but this is money gone to the government under various premiums and ULC and this one and that one. It hurts us, but that's the law, unfortunately.
So would you be required to now pay for TDR and FSI anymore? Or is everything...
Of course, one will require to pay TDR and FSI. But like I said that if I compare it on a per-acre basis, a similar line parcel has gone at INR 35 crores where we've paid INR 15 crores. So if that is of any consolation for us.
No, of course, you've got a good deal, but I'm just -- I didn't realize that it's so discretionary.
But I like what you said. I mean I really like what you said. And I genuinely personally also feel, why should the government be charging us so much money? But they do. It used to be 100% at one point. They have rationalized it to 40%, and that 40% is on the Ready Reckoner rate and the Ready Reckoner rates are higher and all that, all that put together works out to this much.
Okay. And I presume for Raymond land transaction also, the same would have applied...
So INR 35 crores is an all-inclusive price for the buyer and INR 15 crores is an all-inclusive price for us.
No. The spec, I mean to say. Or is anything specific for you?
No. No. No. The same thing, they've also paid similar monies.
Okay. Excellent. And Saumil, just on your balance sheet, there seems to be a big movement Q1 to Q2 on the asset side in inventory and in other current asset.
Correct. So basically, Thane, which was appearing as a -- what we can say as an advance has now moved into inventory. So that's your primary change.
Okay. Okay. Got it. And just final question. Vikas, is there any financing sort of limitation that your buyers are facing? Or there's no problem on that side?
Okay. So people in Mulund are facing some financial limitations. These are people who, I mean, either don't have enough income on record or whatever, but only that market is where we feel some bit of disconnect. Earlier, NBFCs used to really consider many other ways of evaluating and doing that. Now in their absence, these guys are a little handicapped when it comes to buying. So we do feel only that market, but Borivali, Goregaon and all that, these are not at all an issue. Now I guess, even they, I'm seeing very slowly, are conscious of that fact that they'll have to build it up or whatever. So I see a genuine effort from these guys.
Okay. With your permission, one more. So for Worli Glaxo land, I hear your split between the mall and the office. But given the acute shortage of space for office as I understand in this area now actually pretty much -- I would say, that much of length and breadth of Greater Mumbai, would you not want to increase more of office over here?
So we did that math. We kind of did a perfect balance between the 2. If I were to just simply run the numbers, BKC is at anywhere between INR 450 and INR 500 on carpet, I would say, whether it's 1 BKC or Maker Maxity. So it's between these numbers. We would get something similar for residential -- sorry, for offices in Worli. And if I were to compare what I get in Goregaon for my mall, I'm getting similar numbers or, in fact, from vanilla stores even better numbers than the numbers that I talked about. So I would say that if I -- I'm basically only hedging my bet by splitting office and retail. And retail gives me similar or, in fact, little better rental than what offices give me, and they both complement each other, and retail gets built faster. So I'm going to build the retail and start the mall much before the whole office building gets ready.So it's like a combination of multiple things, hedging our bet, number one; number two is, I can build this faster; three is revenue that I get out of both, the leased are similar -- if not mall being superior, the leased are similar. So that's the -- and like the biggest thing is that they complement each other. So that's why we kind of move to this. We had what you said in mind that what if we do a simple office building and just simply lease that out, that also was considered. But we have enough critical mass for the office also.
The next question is from the line of Kunal Lakhan from Axis Capital.
Just quickly on Three Sixty West. What's the status of the OC here?
Well, we've applied for OC. And like -- and hoping that in another 3, 4 months, we should get it.
Okay. And we sold well in this quarter. So in, say, anticipation of OC, are we seeing like better footfalls, better traction there?
In fact, we've sold a lot more. I mean it's just that it's spilled into the next quarter, which probably we'll come to you. Yes, I see a lot of traction after having applied for OC. And for everyone's benefit, we've also started handing over -- we've started giving people access to do their interiors. So that itself has also worked out very well. Today, a lot of families are already doing their interior, and that message has also gone very well.
Sure. That's good to hear. Lastly, on the Mulund project, like, I mean, across both the projects, if you look at it, it's almost 70% of inventories unsold, and the project is expected to be completed over the next, say, 1.5, 2 years. So what's the strategy here? And could we -- I mean, most likely we could see a situation where we'll see a Borivali -- sorry, a Goregaon-like situation where we still have to probably give a deferred payment plan here as well. I mean I just wanted to know what's the thought process here to monetize this.
Again, we are continuing to watch how the market pans out. And like I said that this has been an unusual quarter, but Mulund started very, very well. And then you saw many other developers launching, a lot of them failing. So again, there is -- there are probably only 3 or 4 developers with reputation who are now building. A lot of them have fallen aside. So that also has worked in our favor. The building is now topping up. Again, that's working in our favor. The building is looking good, come out well. And so we'll have to just wait it out and see how this pans out. And then let -- we'll sell and we'll go by market process and do what it takes for us to clear our inventory.
The next question is from the line of Chintan Modi from Motilal Oswal.
I wanted to know like we have seen in case of Three Sixty West, Eternia and Enigma, the rate for -- the average rate for the quarter is approximately 8% to 10% lower compared to the whatever we have sold till date. What's your thoughts on that?
So Chintan, there are no discounts. Every quarter has sales from various levels of our project. If the flats are sold at a lower level, then you see a lower realization because our prices are indicative of the floor rise also. So if you take a lower floor, the per square foot yield is lower. If you take a higher floor, then the per square foot yield is higher, and that's where you see. From our end, there has been no price change at all.
Okay. Sure. And sir, one thing on the Thane land parcel, we will continue to get those ATIB benefits if we launch the part indeed.
Yes. I mean we will -- we have approvals prior to August, and we will get that benefit. Now with the new tax regime, the company wants to take a call whether we want to get into the ATIB benefit or we take a flat, the new tax rate...
22% tax rate.
22% tax rate. So we want to play that out because ORL has Goregaon, ORL has the rest of Thane to be built and so on and so forth. So we want to see how this plays out and then we'll take that benefit because this new tax benefit itself is a good incentive and a game-changer.Just before everyone leaves, I just want to wish everybody a very happy Diwali in advance because I see some people finish their question and leave. So I thought I'll take this opportunity to wish everybody and their families a very happy Diwali and a Happy New Year ahead.
The next question is from the line of Niraj Mansingka from Goldman Sachs.
Questions on some changes of area. Actually, if you see the presentation done on May 20, 2018, the area for the -- Worli was actually the -- if you look at I-Ven, Worli, it was 1 million square feet mall and hotel of 0.68 million square feet. And right now, the changes are like mall is 0.8, office is 0.9, hotel is 0.15. So -- and similarly, we also -- at Commerz II Phase 2, which is Commerz III, it was 2.3 million square feet then and now it's 1.8. So can you tell me some more changes that have happened during that period since then in terms of your area of each of the larger projects and more concerning about Commerz III, I-Ven and...
See, I-Ven, if you see, you stack up all of that, that is pretty much similar to what we've shown in the other one. And...
Commerz II -- Commerz III had a hotel component...
Okay. So Commerz III had a hotel component, which we have taken off in this presentation because we are not -- we are not sure whether we are going ahead with the hotel component.
But you still have an option to build that area, right, because of the...
We have...
It will rebalance.
It will rebalance. We have a lot of area to be built around Goregaon itself.
Okay. So whatever is 2.3 minus 1.8, it's 0.5 million square feet, that is...
Available in Goregaon for us to build anywhere within our area.
And in all probability, maybe as a part of Commerz III itself.
Okay. Okay. And can you also give a breakup of the Borivali site? What is the breakup that you have right now of the resi, mall, hotel, and commercial?
4.5 million square feet of resi. It's about 1.2 million square feet of mall, and it's about 0.2 million square feet of hotel -- 0.3.
And commercial?
Commercial is a separate thing. That's about 1 million square feet, but that is coming in from the next phase, which we'll be doing adjacent to the Borivali property.
Right. Right. Right. And what is the status of that particular land parcel of that commercial that you have?
So there, we've got approval. We are now looking at vacating the site and all that. We've got approval from the department.
Right. And just if I can ask a last question. What is -- on that particular site where the Borivali commercial is coming, what is the total carrying value right now in the balance sheet, the total cost?
Sorry, Niraj?
What is the total cost here carrying for that particular commercial land site for Borivali?
Right now there have been very small costs which have been incurred so far. The main costs will come in as we get into the redevelopment of that property. So right now it's a very small cost which is being carried in the books.
So Niraj, just let me clarify that the 1 million square feet next to Borivali that we are talking about is a slum redevelopment. And this is the first slum redevelopment of its kind where the slum developers -- slum owners have approached us because they saw our building getting built next door. All of them -- we've got 100% -- virtual 100% mandate from them to build the rehab component and utilize the free sale component. So that's how this 1 million square feet of office building has come about. And so what Saumil told you is that our cost will be the cost to build the rehab component, for which we will get the free sale ourselves. And that's why, very little cost has gone in right now, only some documentation, some premiums that we've paid for getting our approvals and all that.
Any rough guesstimate of how much will be the total cost of an equivalent per square feet for this commercial area?
Okay. So if you're saying guesstimated, it will probably be about INR 3,000 a square foot or maybe even less than that.
The next question is from the line of Tanuj Mukhija from Bank of America.
Thank you for taking my follow-up question. Just one question from my end. Oberoi Reality now plans or is constructing on multiple sites some multiple projects. For example, the Borivali mall, Worli mall, I-Ven, Exquisite III, Commerz Phase III. Could you just give an idea about what is your construction cost outflow for the next 2 years?
Can you take that off-line because you have asked us a question where we'll have to consolidate everything put together. So you can take that off-line with Saumil or Mayank? We'll be more than happy to give you. But you rightly said that, as a company, we are doing construction or building more than what we've ever built, and all projects are on. You can see we've actually topped up in Borivali. We are almost topping up in Mulund. And these 2 projects, the 5 buildings and this put together is probably 10 million-odd square feet of construction that we are doing. And as we speak, we have more than 20 million square feet under construction. So yes, very exciting phase for us, and we are all geared up. Saumil will give you all the future expenses that we've planned out, and you can take that off-line from him.
The next question is from the line of [ Manish Gandhi ], an individual investor.
So my question is more on a macro thing. So with 3 things happening simultaneously like never before seen the infrastructure changes in Mumbai. At the same time, the cycle in this fifth or seven year in the down cycle and the structural changes happened. So Vikas, you have many cycles' experience. So how do you think the Mumbai real estate market will play out in the next 10 years? And with this kind of infra, which are the new areas which can be opened up for the development?
So let me start with the infra bit. Typically, in India, infrastructure follows people and not the other way around. Typically, internationally, you will see that people -- governments build infrastructure. And once they build infrastructure, people start staying around it. In our case, people start saying they have issues of commuting, then the government puts in metro. If you see the metro on Western Express Highway, it's only catering to people who already exist and live. So quality of life for people will go up here, and hence, the real estate demand will increase here and maybe prices may go up here as well. So that's the little bit of the infrastructure bit.To answer your question, how the market will look 10 years ahead, I always get reminded of what Warren Buffet said that your rearview mirror is always clearer than the windshield. So I would like to answer this by looking at the rearview mirror. When the Lehman crisis happened in 2009, we had completely written off everything. And we thought that this is like doomsday and everyone predicted that nothing is going to happen. So I would say that the first thing one needs to do is get out of that thought. If you look at the rearview, you will want to get out of that thought. These are issues that have happened literally every decade or 2 decades. Some worse, some not as bad and then whatever, the Great Depression to what happened in Lehman crisis.So I'd say that, first, get out of that mindset; two, real estate is no different from any other business. And so I would say that keep to your basics, have low leverage, completely consider cash is king and liquidity or cash flow is more important than profit. You continue to make sure that you have your cash flows, your commitments to the external market, your bankers, again, very, very important because your reputation rides on this. And the most important thing is the customer writes the biggest check of his life when he buys an apartment. So respect that immensely. If one doesn't respect that, then you'll lose out on the customer, and he is the guy who's like really paying for your bills.And so all I'm trying to say is that buying a house or staying in a good apartment is not going to go out of fashion. That's one bit. Two, we are an aspirational society, an aspirational country. And many of us have seen wealth for the first time. So many of us are making more money than what our parents made in their entire lifetime, in a year is what we make. Think through that. And a huge change in mindset of this new India, which says that "I'm going to live by spending money and not by saving money." And so all that is happening, I would say.I personally feel that, like, real estate as a commodity will come back for investors because they will have very little. What does gold do to you? Gold just doesn't lose its sheen and value. And you feel that you feel safer when everything else around you is falling apart, be it banks, be it financial institutions, be it any sort of financial product. So real estate is one piece that over generations have been constant. People have passed on these values. So I'm a big believer of real estate, and I feel that this is going to bounce back as a big investment commodity. And we will -- again -- and this will only be good for people who have had a good reputation and go about doing that. I mean this is my 2 bit. Take this with a pinch of salt. You apply your own mind and take decisions accordingly. But I genuinely feel I'm putting my money where my mouth is, continue to build and believe that this is the best form of investment.
Right. And the second one, on the similar lines, so the kind of structural changes happened in the industry and the kind of consolidation we all see, so can you give any example world over something like this has happened in a city like Mumbai? It's a big city. And do you feel really that only 5 or 10 players can build this city for the decade or 2 decades or whatever if India has all the aspirations? Do you feel -- is it genuinely possible?
So I must tell you, to begin with, that India is the -- sorry, Mumbai is the -- or rather India is the only country where you see 100 developers. If you go to China, there are only 10 people building 90% of China. If you go to the U.S., you will see a handful of people building. This is a specialized industry. We started treating it as a mom-and-pop store. Everybody who thought -- who could spell real estate started getting into doing this business. It's a specialized business. Be it Hong Kong, be it Singapore, you'll -- you take it that there are only the 5, 6 people who actually have built the entire city. And that's why you see consistent quality. There is hardly any ghost building and all that. Look, I mean, this business is not easy for a layman. They don't understand the financial cyclicality of business. They don't understand cash flows. It's a classic case these developers have taken short-term loans in our project, which is a long-gestation project. And assuming that just because I have a plot, I'll be able to sell it, the minute you take away the equation of a buyer, these guys don't have anything. They don't have a reputation, they default in one thing. So I agree there is, like, a systematic failure, I would say, on part of these developers.And I see -- I don't want to sound like a sadist, but I see this like an opportunity for us. I completely see this as an opportunity. And why not? I mean if the whole world has literally 5 developers building their city, why should Mumbai be any different. I mean -- and you are free to take your bet on the 5 you think we'll be able to deliver.We certainly believe we are one of them. And we'll continue to do things that make you guys believe that we are one of them.
The next question is from the line of [ Shaban Nussi ] from SBICAP Securities.
Congratulations on the result. I have one question. So I see that for this quarter, the cash flow has been negative, which is minus INR 467 crores. Like is there any particular reason for that why the cash flow from operations went down?
The only reason is whenever we do a land acquisition. So for example, you would have seen that there was a large payout which was involved as far as Thane was concerned. So for us, any land acquisition or any FSI acquisition which we do always becomes a part of the operating cash flows. And hence, you would end up seeing that as a negative. Typically, if you look at the operations otherwise from -- if I were just to look stand-alone at Borivali, Mulund, XYZ put together, then those cash flows will always continue to be positive at an operating level.
The next question is from the line of Parvez Akhtar from Edelweiss.
Just one question. What are the expected launch time lines that we have now for the mall in Borivali and Worli and also for the Ritz-Carlton?
So the Borivali mall next year is when we finish our superstructure and hand over people to do their fit-outs. Worli will be probably 2021 and -- Worli mall will be 2021 and Ritz-Carlton is 2020, next year-end.
That was the last question. I now hand the conference over to Mr. Oberoi for closing comments.
Thank you for taking time out for this call. We really like your -- we really like receiving feedback from you all. And this only helps us think better, think harder. And please continue to share your thoughts. Even without this call, we are absolutely available. Both Mayank and Saumil are there for you to answer any of your queries. Thank you, again. Happy Diwali to you and your families. Thank you.