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Ladies and gentlemen, good day, and welcome to the Oberoi Realty Q3 FY 2021 Earnings Conference Call. We have Mr. Oberoi, the Chairman and Managing Director of the company; and Mr. Saumil Daru, Director of Finance of the company, with us for the call.Please note that this call will be for 60 minutes. [Operator Instructions] And this conference call is being recorded, and the transcript for the same may be put on the website of the company. After the management discussion, there will be an opportunity for you to ask questions. [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 or facts and may be forward-looking statements, including those relating to general business statements, plans, strategy of the company, the future financial condition and growth prospects. The forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could be -- cause actual results, opportunities and growth potential to differ materially from those suggested by such statements.I now hand the conference over to Mr. Oberoi, the Chairman and Managing Director of the company. Thank you, and over to you, sir.
Thank 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 of Q3 FY 2021 results and business updates. Thank you all for taking time for attending this call. I hope your family and you are doing well and keeping yourself safe.Before I begin, I want to share a few quick updates with you. In Q3, we achieved our highest ever presales number for a non-launch quarter. The gross booking value stood in excess of INR 1,000 crores. As you would have all seen, the numbers were strongly supported by all our projects.Borivali continued to outperform with 100 units being blocked -- booked in this quarter. And Eternia crossed the INR 1,000 crore booking value milestone. We also completed the acquisition of the hotel property, the Ritz-Carlton Mumbai, from our JV partner and now are 100% owners of the hotel component of Three Sixty West.We also prepaid 50% of our first tranche worth INR 200 crores of the INR 700 crores NCD, 21 months ahead of the scheduled payment. This only goes to show how strong our collections have been from our customers despite everything happening around us.With this, I will now hand over the call to our group CFO, Mr. Saumil Daru, for details of the numbers. I'm here, and will be happy to address your individual questions once we begin our question-and-answer session. Thank you.
Thank you, Mr. Oberoi. I guess most of you -- most of you must have gone through the presentation, which is available on our website along with the results filed with the exchanges. We'll keep things short to help us allocate adequate time for Q&A.In terms of consolidated financials, we achieved a consolidated revenue of INR 837 crores this quarter as against INR 325 crores for Q2 FY '21 and INR 536 crores for Q3 FY '20. The consolidated profit before tax was INR 360 crores for this quarter as against INR 168 crores for Q2 FY '21 and INR 209 crores for Q3 FY '20. The consolidated PAT stood at INR 286 crores for this quarter as against INR 138 crores for Q2 FY '21 and INR 148 crores for Q3 FY '20.Moving on to the asset performances and beginning with the investment properties. Oberoi Mall, the top line this quarter was INR 49 crores as against INR 34 crores in Q2 FY '21, and revenue of INR 40 crores in Q3 FY '20. The EBITDA margins in this vertical is at about 97%.Commerz, which is the office space asset, contributed INR 6 crores to the operating revenue this quarter as against INR 5 crores in the preceding quarter and INR 6 crores in the same quarter last year. The EBITDA margins in this asset is at about -- in excess of 92%. Commerz II contributed about INR 33 crores for this quarter as against INR 32 crores for Q2 FY '21 and INR 31 crores for Q3 FY '20. The EBITDA margin in this asset is in excess of 98%.The Westin Mumbai Garden City, it contributed INR 11 crores to the operating revenue for this quarter as against INR 6 crores for Q2 FY '21 and about INR 38 crores for Q3 FY '20.Moving on to the development properties. For Exquisite, the total booking value in this quarter was INR 27 crores as against INR 67 crores in Q2 FY '21 and INR 35 crores for Q3 FY '20. The cumulative booking value till date in this project stands at close to INR 2,500 crores, and the total revenue recognized for this project in this quarter was INR 27 crores. And the entire cumulative revenue recognition till date stands at close to INR 2,500 crores on account of 100% project completion.For Esquire, during this quarter, we booked close to 107,000 square feet. Till date, we have booked close to about 87% of the inventory. Total booking value in this quarter is INR 234 crores as against INR 30 crores in Q2 FY '21 and INR 59 crores for Q3 FY '20. The cumulative booking value till date is about INR 3,100 crores. The total revenue recognized for this project in this quarter was INR 238 crores. And the cumulative revenue recognition till date again is about INR 3,100 crores on account of 100% project completion.Moving on to Maxima. Here, we booked close to about 36,700 square feet in this quarter. The total booking value for this quarter stands at INR 61 crores as against about INR 0.04 crores in Q2 FY '21 and INR 21 crores in Q3 FY '20. And the total booking value till date is INR 97 crores.Moving on to Mulund. We have booked close to 52,600 square feet this quarter in Eternia. The total booking value for this quarter was INR 76 crores as against INR 2 crores in Q2 FY '21 and INR 17 crores for Q3 FY '20. The cumulative booking value till date stands at INR 1,052 crores. The total revenue recognized for this project in this quarter was INR 58 crores, and the cumulative revenue recognition till date has been INR 684 crores.Continuing with Mulund. In Enigma, this quarter, we booked close to nearly 103,700 square feet. Total booking value of which was about INR 157 crores as this is -- as against INR 40 crores in Q2 FY '21 and INR 9 crores in Q3 FY '20. The cumulative booking value till date is at about INR 883 crores in Enigma. The total revenue recognized in this quarter was INR 135 crores, and the cumulative revenue recognition till date is INR 556 crores.Thus for Mulund totally, we booked close to 156,300 square feet in this quarter, the total booking value of which was INR 233 crores. And the cumulative booking value of both Eternia and Enigma together stands at close to INR 1,935 crores.For Sky City, we booked close to about 175,000 square feet in this quarter, the total booking value of which was INR 293 crores as against INR 60 crores for Q2 FY '21 and INR 100 crores for Q3 FY '20. Till date, the booking value in this project is about INR 3,350 crores. And the total revenue recognized for this project in this quarter was INR 227 crores, and cumulative revenue recognition till date stands at about INR 2,367 crores.For Three Sixty West invoices, we booked about 24,600 square feet in this quarter. The total booking value was about INR 121 crores. Till date, the booking value is about INR 2,722 crores.Coming back to some key financial parameters. Our adjusted EBITDA margins for this quarter was 44%. The PAT margin was 34%. The EBITDA margins for Mall and Commerz are much higher than average, as I mentioned earlier. Excluding them, the margins for our pure play residential business is about 37% for this quarter.With this, the floor is now open to questions that you all may have. Thank you.
[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on amazing set of numbers. No one could have imagined that the numbers will go up 3x. But how are you -- going here, how are you seeing this trend now? So do you think -- is it because of pent-up demand? Or do you think the demand is going to sustain for the next couple of quarters? If you can just comment on the outlook for the demand on real estate side.
Parikshit, good afternoon. Thank you for your kind words. I feel that -- I think many things have been said, many things have been predicted in the past. I would only say that actual users are out there to buy. Pandemic has shown that money in the bank is of no use. People need decent sizes homes. We are very lucky, we are very uniquely placed.If you see, Esquire is ready for delivery and the numbers probably show that how people have lapped on it. Borivali, getting ready for completion. Mulund, getting ready for completion. Worli, getting ready for completion. So a lot of our inventory is either almost ready or getting ready to be delivered, and that really instills a lot of confidence in the buyer, and also the fact that our track record is good.So all this put together has really done really well for us. And I feel that this trend will continue to grow. I also very strongly feel that there will be a large amount of consolidation. And I feel it will be more of customer consolidation than developer consolidation because what you really get from our developers only is land. And -- so that we can continue to see happen. And I think this is how I will probably see that from my end. This is how things probably will look.
But as a portfolio, most of the projects have done well, so counterintuitively you would have thought that Three Sixty West would have also followed that trend. So what are you doing there to accelerate sales because whatever stimulus we got, the stamp duty cuts and all, so that is already there. But still, we are not seeing any acceleration in that project. So how do you see the pickup in that project?
I can only tell you Three Sixty West is the next project that will surprise everybody in the market, in the next quarter itself -- in the present quarter itself. So I have full confidence the product is good, people who come in love it. And you will see that we will really have similar results and similar reactions also when Three Sixty West joins the party.
Okay. Just the last question to Saumil. Saumil, this Oberoi Mall, if we compare like-to-like, so this quarter, and there is some impact of the revenues which you have not booked earlier has come in. But if I've to see like-to-like, how do you see the area which has been opened for operations? So if you compare Y-o-Y, is there any growth? Or what would be the consumption? If you can just give some sense on that.
Yes. So basically, in all fairness, we will have to wait for the entire financial year to get over before anything becomes meaningfully comparable because there are a whole bunch of accounting adjustments on straight-lining and everything, which you will be seeing.So all in all, if you look at the overall commercial deal, which we had even discussed with you all during our earlier calls, that as far as the retailers are concerned, we are saying that overall, they will pay us about 50% for the year. So I think that's where that number will finally come to from a pure -- I think you're asking from a cash flow perspective? [Foreign Language]
I'm talking about consumption. Consumption, how much has the consumption reached in that market? It was, say, 80% of the area is operational. If I compare to same area, so is it -- has it reached INR 100 Y-o-Y or is it like still at 70% -- 60%, 70%?
Obviously, it's not reached the entire amount of what was there pre-pandemic. But within this context, what you see is many of the retailers are way beyond 100% of what they were doing pre-pandemic, so -- including some people who are at close to 115% or 120% of where they were. Obviously, some of them are lower than that.So -- and this is becoming a kind of a month-on-month kind of a trend, and it is changing all the while. So we will -- we are also keenly following it. But in terms of we are looking at it, what it finally comes down to us. But what you are clearly seeing at a mall level is a very healthy recovery in consumption. And on an average, I think I'll just want to circle back with the mall guys, but it's a pretty healthy. I mean even I was there in the mall yesterday evening for that matter, and it was actually buzzing.So -- and most importantly, what you're seeing is the hardcore shoppers who are coming in, they are the serious shoppers. So that is converting into a fair amount of cash as far as the retailers is concerned.
Parikshit, I'll just add a line to this. In fact, I look at numbers of people who are on a revenue share with us. And you'll be surprised that there are some businesses that are backed 85%, and there are some businesses that are doing 110% of what they were doing last year. So on an average, I can only tell you that even though we still don't have a vaccine -- I mean we have a vaccine in place, but people haven't been vaccinated yet, the businesses are back to near 100% on an overall basis. Like I said, some are below 100% and some are even above 100%. So it's remarkable. It's driving us also. And we're very excited, very happy about it.
[Operator Instructions] The next question is from the line of Abhinav Sinha from Jefferies.
Congratulations, great numbers. Now just some bit of inventory, which has come down. Are we looking to get on to the next set of new launches anytime soon? Or do you think there's still a lot of momentum in the inventory that we have?
No, no. I mean -- see, here the good part is none of our projects compete with each other. So we are very clear that we are going to start the third phase of our Goregaon launch and our Thane, both within this quarter. And we are at a very advanced stage. It's just a little bit of minor tweaking here and there, some process which we need to follow with RERA. All these things are happening, and we are ready to launch.
Okay. And just one more, if I may. On the platform deal that we were considering last quarter, if you can update us on the progress? And if anything significant is outstanding for completing that?
When we go out to people and want to do the platform level deal, there is a gap between their expectation and our numbers. We are getting money really, really cheap, at times even like sub-9%. I mean actually, always sub-9%. At times, even lower than that. So we are really in 2 minds whether one should do a platform level deal or continue to build it and create a critical mass and do that because giving them a piece of our business is actually giving them almost a 15% return on their investment.So we are still contemplating whether one should do it or not, though we have a nonbinding term sheet done. But somehow, we are like having a rethought on that.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Excellent quarter. So quick question, Saumil, maybe it's for you. The operating cash flow that the company has generated, Slide #3, INR 187 crores versus, say, INR 287 crores in net profits. But as you sell more and more of finished goods, such as Esquire, I would have expected the operating cash flows to be far more stronger. Just your thoughts on that.
You're right, Sameer. So the only thing is that -- so when you also sell these things, you also give customers a period of anywhere between 30 days to 60 days to pay up the entire consideration in Esquire. So for bookings which would have happened, say, in October or early part of November, you would have seen the entire cash flow coming by end of December. But for bookings which would have happened, say, from 15th November onwards and, again, towards the end of December also, we saw a fair amount of conversions coming in. In those cases, the cash would come in over a period of 60 days, so which will spill over into the next quarter.And then when you look at other projects also, because this bottom line is across all projects. So when you will start looking at other projects also, for example, Mulund or Borivali, they're anywhere between 7 -- only about 70% to 80% of the consideration is due, and that also comes in again over a period of anywhere between 60 to 90 days.So that's where you will see a little bit of a mismatch. But give it a quarter or so, and you are actually coming off from a situation where a lot of working capital had got frozen during the first couple of quarters. So in usual circumstances, you don't see these gaps in operating cash flows. But give it a quarter or so and you should see this entire cash getting collected.
Sameer, I'll just add a bit. Most of our sales have -- the documents are registered, people have paid stamp duty. We would have received anywhere between 10% and 25% from the buyer. The remaining 75% is like -- what Saumil said, is committed between either Jan and February. We do -- we give 30 days, but a lot of these deals have happened in the third or the fourth week of December. And most people have been wanting to first pay stamp duty, get things done in terms of registration. Some of them have bank loans. So by the time we circle back to the bank and -- the quarter is gone. And that's why it is. But these are solid sales, and that's how it is.
Okay, great. And just on the Ritz-Carlton deal of -- doing this transaction at INR 1,040 crores, is this -- we have been tracking you, Vikas, for a very long period of time. And you're very stingy about how you do your capital deployment. So just what's the thought process behind this? And do you think you can get the same level of ROI that you do with transactions such as Thane transactions, et cetera?
So Sameer, firstly, we -- ORL's arm itself has purchased this asset. So that's point one. In this, we have basically only taken our monies out and our partners have almost also only taken the monies that they had spent on the project out. Per se, there is no profit here.So we have not like done -- barring the money that we paid our partner, we have not done any fresh capital deployment. This is our own money, which was invested and spent on the project that has come back, and it was their money that has come back. So really, whether if it were to be line in the EOP or whether it comes into us, per se, it's not changed much.So we've just kind of crystallized our ownership. We were 50-50. There is always an issue of running -- the residential component is self-extinguishing. Every time we sell a flat, money is coming, it gets distributed. This is the agreement, and we are done with it. Once all flats are sold, the EOP doesn't exist. But our hotel partnership would continue to exist. So this actually has been a very elegant way of parting ways with the existing partner.And like I said, that there is no major fresh capital deployment. There is really no way in which I can look at the ROI as such. But to your point, we've always maintained that we would not go out and buy a hotel. If it's a part of the development, we build it. But -- and it's always complementing our development around what we do, not -- as a business, we are never attracted to it, and we maintain that.
Your partner gets INR 1,040 crores or the partner gets INR 520 crores?
No, no, no. Partner spend was much lesser, some INR 200 crores, INR 300 crores is what we got. And the rest was only a book entry, which was our spending, we gave it to the JV and the JV gave it back to us. Very simple. I mean hardly any money spend -- like I said, both parties simply took their cost off the table. And in a time like this, there wasn't any -- that's how it is. I mean that's what we really did actually.
The next question is from the line of Saurabh from JPMorgan.
Sir, 2 questions. One is, after the stamp duty cut rationalizes in the fourth quarter of fiscal '22, would you expect the demand to go down because the pent-up would have got some -- extinguished between the last quarter and this quarter?And the second is, essentially, Saumil, if you can update us that -- what will be the current expectation of the completion dates of your major commercial projects which are under construction? I'm just trying to see whether our INR 1,400 crore guidance for rent for fiscal '24 will still be intact.
So firstly, the stamp duty cut continues till March. So we basically know that that's how it is. It's very difficult to predict whether there will be a drop in demand or no. One can't say that. But certainly, this is working out both for the government and for us because government has never been able to collect this kind of stamp duty even when the rates were 5%. So I think government also has made a note and would like to keep it attractive. Having said that, there is also -- sorry, can you hear me?
Yes, yes.
There is enough momentum in the market also, which will -- which looks like it will continue. Two, there is a huge reduction in supply. There are 2 things. Post COVID, not many developers have been able to get up and running. Their projects have not been able to up and running -- are not being -- not up and running as well. We've been lucky. Despite the world believing that there's shortage of labor, we were -- we have enough and more labor at site. And this also is because not many people have been able to start their work.So I feel that we are very strongly moving towards the supply constraint. And I read somewhere, I can dare to resonate or agree with that person, that the prices are likely to go up. You can see commodity prices having gone up. Many things in the real estate industry are going to cost more than what it did when we build it. So there is enough for people to believe that the prices could go up. So people who don't buy today will end up buying something expensive later.Of course, government is giving all the benefits. There's a reduction in premium. There is a reduction in stamp duty. So all this is there. But I don't think it's enough for -- to pull a lot of developers who are already in the grid. So these are multiple factors one has to consider before we kind of decide how the next quarter is going to look like.
Got it. And Saumil, on the completion dates?
Yes. So -- as far as Commerz III is concerned, Saurabh, we are looking at a staggered delivery between -- some part completing in March '22, but everything completing by March '23. So that is one bit. Then as far as the Sky City Mall is concerned, we are looking at completion by about anywhere between March '22 to about June '22. And as far as the GSK I is concerned, with the way things stand, that could be anywhere around September '23.
Okay. Okay. So basically by fiscal '24, everything is done right by max?
Yes, exactly.
The next question is from the line of Abhishek Bhandari from Macquarie.
Congrats, Vikas and Saumil, for an excellent start to the year. I have 2 questions pertaining to your residential business. So Vikas, if I heard you correctly, you said that the premium cut and the stamp duty cut won't be enough to reduce the prices. So could you just run us through some basic math, when we keep reading and hearing that the premium cut might bring in about 5% to 7% fall in the property prices? Do you think it's otherwise that there should be no reduction in property price?
So see, I'll just tell you that most developers have very heavily leveraged balance sheets. The number that you are talking about get covered in 6 months on their interest cost if they delay their project or anything like that. So I don't understand where the reduction will come in.Plus, look at how steel has ramped up, look at how commodity has gone up. I mean we're already facing so much heat from our contractors that they want to kind of find a way to get more money out of us because prices of commodity have gone up. Nobody kind of hedges here in India, at least not in our business, long enough for them to be ensured that they'll either get copper or steel or whatever -- or cement at that price.So these are variables that are further going to hit. So I don't feel -- I mean I'm very clear that even if one is selling at current prices, either you want to take the money off the table or you want the momentum to continue or something like that. But the minute this supply ends, I can clearly tell you the replacement cost of what people are buying and what we are selling will probably end up being a lot higher. So given that, I clearly see that at some point, market will look at a price increase.I know it doesn't sound correct in the given scenario, but please understand we are going towards a supply-constrained market and supply constrained due to many things. Developers, I mean how many developers are real -- actually building on site? How many are going to be able to deliver it and so on and so forth. So this is going to be a huge thing.
Okay. Got it. Vikas, second question is, if you could help us understand what portion of your sales are coming from subvention schemes? Because it seems that you're still running subvention schemes across all your projects. Maybe Worli doesn't have it, but everything else seems to have it.
So our subvention schemes are slightly different. Unlike a lot of people who come with 1-99, 5-99 -- 5-95, 10-90, ours are 25-75; 25% of the money comes to me, 75% of the money comes at completion, number one.Number two, almost all my sales are bank subvention. That means my buyer is kosher. He has the money or rather he is bankable enough to get a loan for this. All I have to do is complete it and sell -- complete it and deliver it to him and take money from the banks. That's about it.I would say that bank subvention and actual sales are different in different projects. But by and large, I would say they are about 50-50.
Okay. Vikas, if I can ask one last question with your permission. This is regarding your mall or the retail project, what's your…
Can I -- Abhishek, can I stand corrected. My team tells me that, in fact, we have got more non-subvention payment and more -- and less subvention. So it's not 50-50. It's more skewed towards down payment. So just stand corrected to that.
Sure. Sure. And Vikas, my last question is on the other land parcel at Worli, where we are still in 2 minds, whether to make a mall or an office. And I think in the last call, you did mention that also depends on the platform what you might be wanting to make. So given that it looks like probably we're putting the platform on a back burner. So any change in plan now there?And also, Vikas, you mentioned to one of the questions earlier that you like clean structures, which is good, that is the reason for buying out the hotel. So here also you still have that 50% stake in your personal capacity. So any plans to take it out, especially given that probably the valuation of the land at this stage might be lower compared to a development stage?
So Abhishek, firstly, I'll answer the last question first. In this case, I have an interested party directly. So all valuations are all are always an issue. Having said that, like I said, I'm very committed. I'll be judged by how I get out of this. I'm very mindful of that. And I'm going to find a very elegant way of getting out so that the company benefits. And everybody believes that the way we run our company, the transparency -- the way we run our company is like shown in the way we are going about doing this transaction. So I'm personally very committed, very invested in how this is done. Too much is at stake for us.What was your second question, sorry?
Yes. So any confirmation on the plan on what you want to do with that land, hotel, mall or office? Or you still would want to keep it on a slow process till you make up your mind firmly on the platform or not?
So Abhishek, I'll just tell you, the new DCR is out, and there are clarity to that new DCR that's coming. Then there is also -- this has been for a very long time. The Government of India had come up with a transit-oriented development policy for the -- at the center for all the states to adopt it.Finally, I think our state is waking up to the fact that there is money to be made. All the FSI that TODs sell, government gets a premium, and that actually helps them build the metros and stuff like that. There's a huge, I think, drive that this should now get activated or affected. So based on that, we probably will get FSI or more FSI.So we just want to be sure. Once we have a clear understanding of what FSI one can get when we build commercial, what FSI one can get one -- if we build residential or when we build mall or a mix of that, we will take that call. I think when we speak next -- in the next quarter call, I think we'll be very clear with that also.
The next question is from the line of Kunal Lakhan from CLSA.
Just one question to you, Vikas. You mentioned that most developers are heavily leveraged and some are already in the grave. So how are you looking at the opportunities in the market in terms of new acquisitions? And how are we approaching it?
So approaching it the way we always do, very cautious. We are clear that at the end of the day, we must make money. We must make money without a lot of complications and a lot of stress. Do a good job for the customer. So we have a set of criteria. If it fits in, we will go out there and buy that land, and we want to be very, very clear that it should fit in, only then we'll buy. We don't want to ideally take brownfield projects because they come with their legacy issues.There is this one stress in the market that also keeps the land prices at check, so we would either look at land purchase from the developer where they're clean or even like companies like Glaxo and X and Y, when they come out and sell their property in a market like this, they will get market price. They wouldn't get super, duper premium on return and stuff like that. So we prefer buying those, and we are continuing to look at good land parcels.
That's helpful. But do we have any urgency now, like, considering like Thane was the last land which we bought, like, which was a few years back now?
So Thane, we have to launch Thane. If everything goes well, it will be 15 million square feet of area to build and sell. So I'm just saying that there is enough on our plate. We have 3 towers in Borivali to build. We have 5 towers in Goregaon to build. There's so much in Mulund to build and sell. We've got Worli also happening.Again, I said that strategy is very clear. Let's not really psych ourselves that the last property I bought was 2 years ago. If I get great property in the next day, I'll go and buy. If I don't get something for the next few days or a few months or a year or few years, I'll wait for the right opportunity.
Sure, Vikas. That's helpful. My second question is to Saumil. Saumil, just a couple of bookkeeping questions. In our cash flow statement, there is an investing cash outflow of INR 505 crores odd. I'm presuming out of that, INR 200 crores to INR 250 crores was towards purchase of Ritz-Carlton stake, is that…
Correct.
And so the balance INR 300 crores would be?
Between Commerz III and the Borivali mall.
Okay. Okay. That's quite an outflow for 1 quarter.
So also -- because there is also some FSI which has been purchased and all of that in those cases.
TDRs.
TDRs basically.
Okay. Okay. Got it. And second one is on -- we repaid a fair bit of our NCDs. Was that in Q3 or was that in current quarter?
No, no, that was in Q3.
So the financing cash flow seems kind of flattish. So was it like more of a refinancing than repayment?
No, because on the one side where we were repaying, there were also some other lines where we were drawing down. So that's why it has remained, so to say, constant. But otherwise -- it's not refinancing.
The next question is from the line of Parvez Akhtar from Edelweiss Securities.
Congratulations for a great performance. Look, a couple of questions from my side. First is, I mean with regards to future launch of inventory in Borivali, what are our plans? And second, just wanted to get your thoughts on the recent premium cut by the Maharashtra government? I mean what are the kind of benefits that we see for ourselves?
So firstly, I think premium cuts is a great call. This was a recommendation by the Deepak Parekh committee. I think the government should engage with people like Deepak bhai more often to understand the real dynamics. I mean today, like the spike in stamp duty collection, the government of Maharashtra will see a huge spike in premium collections. For the last 1 year, they got nothing really. And now they will see this huge, like a hockey stick curve kind of collection. So it will be great for the government of Maharashtra. It will be great for the industry also. It is great for the industry.And as far as launches go, we have 3 towers in Borivali to launch. We will be doing it, as we speak, where -- we have 5 towers that we are building in Goregaon. You'll see that launch happening this quarter. You'll see another Thane launch in this quarter. So a lot of work will happen in this coming quarter.
Sure. Sir, just a follow-up with regards to -- I mean the next year, on -- which are the projects where we can get a benefit of the lower approval cost because of the premium cut?
All the projects. All my projects, I'm going to make sure that I get approval within the year, and I get the benefit of lower premiums. We will do that.
The next question is from the line of Alpesh Mehta from Motilal Oswal Financial Services.
Hello? Am I audible?
Yes, sir, you are. Please proceed.
Yes. So one of the follow-up question on the launches that we have. So can you quantify the total leasable area which would be launched in this quarter, like a ballpark figure [indiscernible]?
Leasable area. We are not…
Sorry, sorry, salable area. Sorry, that was a mistake, yes. So salable area for these 3 projects that we are going to launch?
See these 2 towers here in Goregaon will probably be about what -- each tower is about 9 lakh square feet, so 2 towers will be about 18 lakh square feet. And we have Borivali also, about another 24 lakh, 25 lakh square feet. We have Thane, again, if -- we probably might launch 1 million square feet there. So almost 50 lakhs odd square feet, all in all, we will launch -- between 40 lakh and 50 lakh square feet.
Okay. Got it. And second thing, sir, as you were mentioning that we are moving into a supply constrained kind of environment in Mumbai and now this premium cut has come. So do you think that this will kick in the supply for developers, probably maybe the grade A developers? And if this is so, then will it change our near-term strategy for next 2, 3 years from the business development perspective in an aggressive way?
So good part is, like, whatever we'll buy and try to build today will only be coming into the market as a supply after 3 years, and that is also if everything continues to be the same way. Just because premiums are down doesn't mean supply will increase because there's so much more that one needs to do. And I told you earlier that the benefit of interest premium can be lost in 6 months of interest costs if you are heavily leveraged. So this is something that one needs to be mindful of.
The next question is from the line of Manish Gandhi, an individual investor.
Congratulations on great sales achievement and it speaks about our brand in consumer mind. So my first question would be, I would love to know thought process behind our CST bid. And in future, do you see any such opportunities opening up as a mindset of the government is also changing towards asset monetization?
See, firstly, CST is a very simple project as such. You have to build certain area for them. They have a land parcel which they want to monetize. So we look at it like any other land purchase really. And that's how we are looking at bidding for it and buying that.And there is really no -- but you're absolutely right also that there's a change in the mindset. And if the government comes up with projects which are so clean, I mean, we would be very happy to bid for it and buy them. Like -- it's almost like if MMRDA were to sell any of their Bandra -- BKC land. We will be -- we're very happy to bid there as well. And we are considering it like that.
Okay. Right. And second on Goregaon. You said that you're planning to launch 2 towers. And of course, there were a lot of rumors in the market from channel partners as we have 1 tower RERA already. Earlier, it was saying 1 tower, then 2, I don't know. Why not launch 3 towers because we are launching after 10 years and, of course, great demand. And I know so many people, they are ready to buy. So just was…
So Manish, you know we have started work at 4 of the 5 towers. We are at the 5, 6, 7 slab of that. And -- again, there's no real reason why we can't do 3 and why we can't do 2. So between, like I said -- we'll -- it's like we'll start with 1. We can always start with 2. We can move into 3. So from a sales point of view, there's nothing really holding us to start more sales. Like, work has already started. We can do that. But we prefer -- like making sure that we have enough sales done on 1 project because the way things are, you -- and we are identifying individual building as a project as far as RERA goes so that money within the project is also used in building it. RERA has its own set of conditions.So a little bit of thought on that has also gone in mind. Instead of scattering your sales in 3, 4 of them, I'd rather concentrate my sale in 1 building. And if I have to fund it, I can fund my own building as and when I want. But whatever is committed to the RERA, whatever is committed to the customer, will get build faster and better.We just want to be sure that -- it's a big commitment going forward. In the next 3 years, if I build these 5 buildings, we are looking at almost INR 2,500-odd crores of expenses to be done. So we need to be sure that the flow is correct. If I focus on 1 tower and I concentrate every customer in there, then the monies will help us build that also. That's the whole idea. It's clearly a prudent business call, nothing other than that.
Right. I just -- because I had a few channel partners, I was just talking to them, and they were saying that if we launch only 1 tower, there will be -- because a lot of interest from people, and there could be a disappointment. Because as you know, the views and vastu and all, of course, you know better.
True, true, true.
The last one is, since last many quarters, your commentary about commercials and your update about commercial. So is it fair to assume that we'll be having a lot of commercials in Thane and on that also? We have 2 adjoining plots in Thane, which are Blue Star and one other. Is there a possibility, because I just went there and if we have any possibility of buying that, then it makes a beautiful L shape plot.
Manish, we have 60 acres of land, and we have literally 15 million square feet. [Foreign Language] foot we have to work, build there. So it really whether -- again, Blue Star comes in or no, we have literally -- even if I'm going to sell 10 -- 1 million square feet a year in 15 years, I'll have to do it faster to consume that. Adding more land and -- is not -- it doesn't really do anything great for us. I'd rather take that money and buy land in a suburb where I don't have any supply. So that was my thing.What else did you ask me about Thane?
About your commentary…
Commercial, sorry, we are not doing any major commercial there. We are very happy doing residential. You've seen -- we are a residential centric developers. And residential really, really has been an outperformer and has been an outperformer for a longer time. We will continue to focus on commercial. But resi is our bread and butter, we want to do that more.
The next question is from the line of Girish Choudhary from Spark Capital.
Congrats on a very strong set of presales. My first question is on the Three Sixty West. If you can just highlight us, if there is any progress on the OC for the project?
Sorry, sorry, come again, what's your question?
In terms of the OC for the Three Sixty West project, is there any development there?
So for the hotel bid, we already have OC. We bought that bid occupation certificate. For the rest of the project also, it's like work in progress as usual. I mean all our buildings in the city have OC, whichever one we build and we are building always has it. It's only a matter of time. There are certain commitments from our partner to complete in terms of his SRA commitment and all that. But they are all usual stuff. It'll come absolutely. It's a matter of weeks, and that's it.
Okay. Sure, sir. And my second question is on the collections and specifically for the Sky City project. While we have seen a very strong presales close to around INR 300 crores for the quarter, but collections have lagged significantly to the tune of just INR 130 crores, and this is much below the quarterly run rate which we saw in FY '19 and '20. So if you could explain this on the Sky City project selection?
I think Sameer asked us this question -- Sameer Baisiwala had asked us this question, and we told him that most of our sales are done in December. Monies of that come probably in Jan and Feb. All these are registered sales with very reasonable, anywhere between 10% and 25% already paid, the balance 75% to come in between Jan and March. So no such worry as such.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Saumil, a quick question on the other current assets and current liabilities. I can see that the other current assets have gone up by INR 240 crores and current liabilities have come down by INR 200 crores. So basically creating a INR 400 crores, INR 450 crores kind of cash deficits. So just your thoughts what's driving this?
Sameer, so when it goes up, it basically is a result of this revenue recognition. So what we just discussed, for example, in Borivali, when I sell, even though I have not collected the cash, as far as the work completion percentage is concerned and, let's say, for example, it is 70%, I end up recognizing revenue to the extent of 70%, though I have not collected it. Hence, it becomes billing in excess of revenues, and that's what drives that particular number up.When you see the current liabilities come down, it's essentially a matter of recognition. So wherever you have build out earlier and that amount is lying as unrecognized sale, corresponding to the recognition in this quarter, that's where it comes off. So this is essentially the percentage completion at work.
Okay. Got it. Very clear. And Vikas, just on the rental platform monetization, so is it what largely off the table? Because I thought the monies that you would have got would have been to acquire new land parcels to do more of these rental assets on that platform?
Sorry, again, Sameer, nothing has been ruled out. It's just that when you do the math, basically, they want us to bring in our existing portfolios, and they want to bring in something that we are building going forward. And I'll just tell you how -- what they are telling me is that they want to discount the under-construction portfolio by almost 15% to today's market value. And -- I mean why would I want to do that?I mean I'm very clear that I can build it. I'm very clear that I can get money at much lower price. So I think there is too much that one ends up leaving in terms of value for them. And -- I mean I'm sure they're getting many desperate deals in the market, whereas we are not desperate as such.And number one, our plan to build doesn't change. Our -- what basically they are also saying is that you take this money from us and go and buy more office lands. So we -- like -- and -- or cash out and do that. If you cash out, you end up paying taxes. So again, we know it's not a very efficient way. We thought that -- like Commerz II, we have to give possession from fit-out to one of our largest tenants next year. And then after that, 1 more year, we have to give it ready. And we are gearing up for that. I mean -- so we said, we don't really need anybody today for doing either or. And it doesn't even stop us from buying more land. And that's where we are.So we are very minutely studying all the pros and cons. There are tax issues. There are issues with regards to simply the way they want to value that. Of course, we still make money, it's not that we don't make money. But why would I want any of my projects getting discounted at these values?
Okay. And then final one, Vikas, you made a very interesting comment on the pricing in Mumbai. So 2 parts to that. One, are you actually thinking for your current projects which are sort of ongoing? And second is for the new launches, how are you -- I know you can't share the pricing, but what's the framework in your mind? Is it going to be time value adjusted for the comparable completed projects? Or how should we think about that?
Totally. So I just want to tell you that we want to be very attractive for the market, that is very, very clear. And pricing, we'll be keeping in mind the current values, keeping in mind the fact that people have to wait for the -- like for this to get completed. We will also have developer subvention and bank subvention schemes. We will create some sort of differentiation. And I can tell you this because it's a great platform for the world to know that as far as line subventions go, we might ask the buyer to pay us 10% and 15%, which is 25%, and 75% on possession.If you are coming to developer subvention, then you might have to pay 10 more percent. So we'll end up collecting 35% from this guy. And things like that and probably end up keeping the price similar because people don't like paying more money in terms of price, but they don't mind paying a more down payment. And our rationale here is that one is more bankable and the other one needs to, like, put that much in the. And I feel that these sort of collections will make sure that our construction cost is way easily covered with the percentage that we collect from them.So again, price terms, we want to make a massive success out of it. We love doing this, and we will really play to the gallery here.
The next question is from the line of Abhinav Sinha from Jefferies.
Saumil, just one question. We haven't seen much progress on a Q-o-Q basis on percentage completion for both Sky City and the Eternia projects, barely about 1%. So I thought the workers were back in full strength. So can you explain it?
So some of the work has been happening around one of the areas around that thing. The other thing is -- I think this has also a lot to do with the way things get rounded off. So actually the work done is in excess of 2%. But for the earlier quarter, it got rounded off higher and the next quarter it got rounded off lower or something. So that's the case. But again, with the way we are seeing the ramping up happening on the site, I think next quarter you should actually see the normal thing getting restored.
Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Vikas Oberoi for closing comments.
Thank you all for taking time to attend this call. We take back with us a lot of good feedback from these interactions, and we will continue to seek your input and help. Our team is always available to interact and speak with you all. If you have any further feedback, please feel free to share with us. Thank you once again, and have a great day ahead.
Thank you, guys.
And a happy Republic Day as well. Thank you.
Thank you. Ladies and gentlemen, on behalf of Oberoi Realty, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.