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Sobha Ltd
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Ladies and gentlemen, good day. And welcome to the Q3 FY '23 Earnings Conference Call of Sobha Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Adhidev Chattopadhyay from ICICI Securities. Thank you, and over to you, sir.
Good evening, everyone. On behalf of ICICI Securities, I'd like to welcome everyone on the Sobha Limited call today. So the management we have with us Mr. Jagadish Nangineni, the Managing Director; Mr. Yogesh Bansal, the Chief Financial Officer; Mr. Vighneshwar Bhat, the Company Secretary and Compliance Officer; and Mr. Ramesh Babu, the Senior VP of Finance.
I'd now like to hand over the call to the management for their opening remarks. Over to you. Thank you.
Good evening, everyone. And welcome to the Quarter 3 FY '23 Earnings Call. Apologies for a delay in the start of the call due to last-minute connectivity issues. Thank you, Adhidev, and your team for organizing this. My team and I are happy to interact with you post our third quarter results of this financial year. We have already shared the operational update of the company in early January 22. The investor presentation based on the audited financial results adopted by the Board can be downloaded from sobha.com.
In Q3, we built on good momentum created in the first 2 quarters of this financial year. All regions and businesses have contributed well towards better results in terms of sales, completion of projects, collections with real estate contracts, manufacturing and retail. This has led to record numbers in this quarter, highest ever sales and collections and also highest handovers in the recent years post-COVID. This, I believe, is achieved with high level of focus, coordination and alignment across the 3,300 plus team members across India.
This also showcases stability in demand through sustained consumer confidence, higher affordability, appeal for brand Sobha and aspiration for higher-quality homes and larger ones. Our geographical diversification with presence in multiple cities in the past decade, is slowly coming to Cochin which is witnessed in this quarter. While Bangalore continued to be consistent in the contribution to our sales, Gurgaon also has contributed very well this quarter.
With this quarter, we have achieved a sale value of about INR 3,700 crores in the first 9 months with other cities contributing about 30% of it. Our contracting and manufacturing to is witnessing improved activity and delivery of in-house -- improved activity for delivery of in-house and external clients. Given the run rate it looks like we will be able to reach closer to INR 5,000 crores sales in this financial year. We did not launch any new projects during the quarter, but release more towers from the ongoing projects, which contributed to the quarter sales.
We are making good progress on future launches which are part of our pipeline across locations. With forthcoming projects included, we currently have inventory of about 23 million square feet, about 11 million square feet of that in ongoing projects. This gives us good visibility of inventory, and we continue to pursue building new inventories as well.
With this brief commentary. I'd like to hand it over to Yogesh, our Chief Financial Officer, to give his quick comments on the quarterly performance before we take calls from all of you.
Thank you. Good evening, everyone. I would like to begin with sales. During this quarter, we have seen sales -- good [ returning ] sales and I see 1.48 million square feet in Pan India with value of INR 1,425 crores. Sobha's share of -- sales value had crossed milestone of INR 1,000 crores for first time in history. Key driver has been consistent performance in Bangalore, Kerala and GIFT City market its actually good quarter from NCR.
During this quarter, we have launched 4 tower -- new tower in Sobha City, Gurgaon close to 6 lakhs square feet. After redesigning in line with the post-COVID trend of -- preference of -- for larger firms. It has received well by the market reality in the core single-day sale in Sobha history. NCR has contributed 24% in volume and 35% in value terms to overall sales in the quarter. In Sobha City, we have 2 more towers, further more tower. With [indiscernible] of 350,000 square feet which is yet to be launched. For 9 months, we have sold total 4.17 million square feet with value of INR 3,734 crores. Now we quickly talk about some cash flow performance.
We have seen steady improvement in sales tax collection in close we have done INR 3,860 crores first 9-month. We have generated net cash flow of INR 120 crores in the quarter. And INR 568 crores in the last 9-month. We would like to maintain a balance of growth between deleveraging and growth-oriented capital investment going forward. Our gross debt as on 31st December is larger INR 2,007 crores and net debt at INR 1,769 crores. Our net debt to equity is reduced to 0.72.
Moving to P&L. Total income generated during Q3 FY '23 was INR 898 crores and 9 months, INR 2,162 crores. Real estate revenue for the quarter was INR 674 crores and 9 months INR 1,568 crores. Our EBITDA for the quarter was INR 119 crores with margin of 13%. So we seem to continue to improve our quality process of operation and financial management.
Now I would like to thank you all our participation and now we can open the floor for the question-and-answer session.
[Operator Instructions] We have the first question from the line of Puneet from HSBC.
Congratulations on reporting good sales and company maintaining a great reduction as well. My first question is with respect to the margin. The margin, again, seem to be point and the worse even compared to the history and compared to the previous quarter also. Can you comment upon what's really happening there? And what will drive it up now?
Yes. On the margin front, I think we have mentioned in the earlier calls as well. While the margins of real estate continues to be very stable and on expected lines of what we desired in -- at the time of launches of the projects. The current quarter reduction in the margins have -- should largely be attributed to the some of the contractual projects, which we are completing during the course of the quarter.
And the higher costs that we [ bore ] during the COVID period and which we could not pass on to the customers. So hence, we take the increased expenses towards that is contributed. And I think with the closure of the projects in another quarter or so, largely, this should be done, and we should be back to much higher margins going forward.
Understood sir. 2 more quarters to go for the contractual it because it's visible in cash flows as well you have contractual expenses are higher than contractual collections. So you think 2 more quarters of this pain is what one should expect in it.
Maybe just one more quarter. Yogesh, you have any other comment?
Cash flow perspective, only critical. It should be neutral. We should not -- will not see any negative in cash flow, okay? But P&L might you'll see some hit in the next -- probably in the last quarter.
So negative cash flow ends this quarter itself and...
After fourth quarter, the P&L impact also goes away.
And secondly, on your project expenses also, that seems to have also cash the run rate of almost INR 500 crores a quarter. Is that a run rate one should be looking at?
That's right. Puneet, good observation. Yes, the increased project spend is purely is in line with the increased project completions so hence -- and the sales volume also has picked up, so we have started to increase delivery. And wherever we have completed sales we have accelerated our execution progress as well.
Okay. Cash flow also had a INR 744 million of payment which you received. Can you describe what that does -- what does it relate to?
So that's related to the land payments you're referring to?
Yes.
Yes. So that Puneet, is related to the new land investments that we have kickstarted again this quarter and corresponding to that, building new inventory pipeline beyond FY '25 is where we start investing and also contributing to the -- also to complete some of the payments which are pending for -- to bring the current inventory pipeline that we have into the line.
Understood. Got it. So now you've kickstarted this new land acquisition, so its less -- new more and less of old. Is that how one should be?
Sorry, Puneet can you repeat?
Does it relate more to new acquisitions or more to old payments?
So it's a combination of 3 things, Puneet. One is for -- there are certain commitments which we had from -- for the old lands that we had or partnerships that we had to complete in order to complete -- that is completion for that. Second is for the existing land banks where we are consolidating. And third is for new land position. It's a combination of all 3.
Possible to break it between the 3?
Break it. Largely, it will be about 50% would be for the new acquisitions and remaining 50-50 for the old and consolidation.
That's very helpful. And the last 1 is on -- is there any positive development on the ED case? And what is the status [ currently ], an update on that as well.
So during the quarter, Puneet, you have seen that we have released -- we have informed exchanges regarding the ED matter. They have -- there was a provisional attachment done by them, and the matter is now subdued while that has occurred, the original attachment we have noted in our information to the exchange, that it does -- it has not impacted any of our existing operations.
Yes. So no further -- and any expectation of when it gets sorted out at the division level, any time frame that you could potentially guide to...
So that's a matter of judicial process. We hope to conclude it as quickly as possible, but that's something that's very uncertain in terms of time line.
Next question is from the line of Pritesh Sheth from Motilal Oswal.
Congrats on record performance this quarter. Firstly is on sale. So we have historically, in the last couple of years, you have gradually increased your sales run rate. So should we consider INR 14 billion as a new floor now and probably you will look to maintain or grow on this number from here on?
Thank you, Pritesh. The number, we are very happy with this new record sales that we have achieved. Now as we grow more the expectation for us also is definitely to do better than what we have already achieved. So while that's an endeavor, but that's going to be -- that's the new benchmark that we have set. So we'll surely work towards probably achieving better than this.
And obviously, to maintain that, you'll have to have good chunk of launches as well, and good amount of steady launches. So what's the pipeline looking like over the next 6 to 12 months? While you've highlighted your pipeline in the presentation. But in near term, including the phases that early you're going to launch, what's the launch that we can see over the next, let's say, 4 to 5 quarters.
So we have inventory -- I mean forthcoming inventory of about 12 million square feet as we have indicated in the presentation. So of that, about 1 million square feet should come in this quarter, Q4. In fact, we have already launched about 800,000 of that in the -- by this time and the remaining about 250,000 should come in the next couple of months.
The remaining -- so that's about 1 million square feet. And then next Q1, we should be able to do about 4.5 million square feet -- sorry, another 3.5 million square feet or so. And towards the end of next financial year, we should be able to do another 3 million square feet or so. And the remaining in the subsequent quarters. That's certainly the launch schedule that we aim to achieve.
Sure, sure. That's really helpful. Just lastly, on -- I can see one project. I mean, one commercial project, you have added in our pipeline that's in Gurgaon. If you can share some details on it. Is it the in sector 103? Or I guess it's the second parcel that you have, that's the location. But just if you can clarify on that.
That's right, Pritesh. This is part of the existing [ North ] project International city. It's in sector 106. The -- during the quarter, we have done a restructuring of the arrangement with the existing partners. And hence, this has come into the pipeline where this entire asset is owned by us now. So that's an additional asset, which we have put in the pipeline after the restructuring.
So that's a commercial projects meant for leaving or meant for sale.
That's something that we are still evaluating and we will take a call in the next month or so in the process of design and new planning for the next financial year.
The next question is from the line of Kunal Lakhan from CLSA.
My first question is on NCR market. I mean, actually, the big delta [indiscernible] sales essentially came from the NCR market. And that remains the most luxury product in our portfolio in terms of realization also. So firstly, what's happening over there in terms of luxury demand and luxury sales and second part of the question is when I look at your launch pipeline, I think only about 1.7 million, 1.8 million square feet of pipeline in NCR, considering that market is really doing well. Do we have any other projects? Is that all we have now in NCR left. If you can comment on that?
Yes, so Kunal, I'll take your first -- second question first. Which is on the remaining inventory that we have in NCR. So that 1.75 is the forthcoming launches. Other than that, in the existing projects, both Sobha City and International City, we have work put together close to about another 1.5 million square feet over that and in addition, we have added this commercial piece as well. So both put together, it should -- it is about more than 2 million square feet.
And plus this we have the forthcoming launch 1.75 million. So that all of them put together is about 3.75 million square feet at least, and we are working towards building up that pipeline as well so we think we have -- we should be very comfortable given the demand that has seen an uptick. We should be able to cater to that. So coming to -- so now coming to the first question, there is no doubt that there has been a big uptick in terms of demand in NCR and Gurgaon where we operate. So the -- and to cater to that demand, we have in the existing inventory also redesigned our remaining inventory and launched larger homes.
And that's where the -- we could attract the customers and to record sales. So that planning of redesign and getting to the new demand of the customer has daily worked well. Combined with it, since we have been present there for several -- more than a decade. There are projects which we have completed and there are lot of customers who have experienced our products that has really helped us drive this increased demand for our product.
Sure. And just a follow-up on an earlier question. The land reinvestment that we have kickstarted from Q3, with geographies have we -- are we looking at in terms of new land purchases?
So Kunal, there's the -- overall plan has been to increase our sales run rate sustainability over 6 to 7 million square feet in the medium term. And part of which is about coming to Bangalore, about 4 million or so. So the remaining has to come from the other geographies. And corresponding to that, we have started investing in both in Bangalore and in other locations too.
Okay. Okay. And my second question was on the revoking of the occupation certificate for Sobha. Can you just provide some insights on what has happened here? And what is the recent update on it.
Yes, sure. That was a very unfortunate event for us. While we have complied with all the regulations, there has been -- we had to correct one of the compliances that we had obtained earlier, which we did and we are -- and correspondingly during the process, the subsequent permission that we had to receive from BBMP. We had already applied for it. And as part of the process, they had canceled the existing OC for which we have already obtained a stay order from Karnataka Appellate Tribunal. However, we would like to resolve the issue as quickly as possible, and we have been working with the authorities who have been very cooperative to close out the matter as quickly as possible.
Sorry, I didn't understand this right. So you said that you have applied for the relevant NOCs and clearances but these are the occupations or deficits which were received like over 2013 and '16 and so on and so forth, right? So should we be having these NOCs and clearances.
Yes, Kunal. If you -- this is a project which is -- where the project has been completed for about 6 years ago. And over a period of time, we have -- finally, we handed over in 2019. We had obtained occupancy certificate during that time. However, one of the compliances, particularly fire clearances that we have obtained during that time were going to be defective. And those defective fire clearances have been rectified and resubmitted to BBMP. Now BBMP taking the rectified documents are in the process of regularizing the old off and due certificates. So there's a rectification procedure that's going on, and we hope to complete that process very soon.
Okay. Essentially, actually, that's the bone of contention. I don't know how did these clearances or NOCs were -- inappropriate in the first place. So I think that was the...
Yes -- that's right. And that was -- that's something that we had to rectify Kunal.
The next question is from the line of Abhinav Sinha from Jefferies.
Congratulations on seeing the strong cash flow performance for the past 2 quarters. So the first question is that the gap between cash flow and P&L look -- whichever way we look at it, is very high and refusing to close, right, I mean for quite some time. So what is the target here? I mean is it like FY '24 will still be a big gap between the 2 and FY '25 is when it merges, or is it -- what are we looking at here?
Sorry, Abhinav, we could not hear the last part clearly. Can please repeat that?
Yes. So by when do you expect the gap between cash flows and P&L to reduce in terms of profitability, and is it like FY '24 or FY '25?
Abhinav, I heard most of your question now. So I do acknowledge your concern. Like we just mentioned earlier in the call, the main reason for the increased cost base for the revenue that we have recognized is largely to do with the higher spending that we had done in some of our contractual projects, which we think that mostly it is done as those projects are coming to an end. So hence, in a quarter or so, in -- for this financial year -- in this financial year itself, we should be able to close out most of these increased costs. And subsequent to it, I think we should be back to much better EBITDA margins.
On EBIT basis at least, what should be the margins on contractual that we should be looking at, with the new pipeline that you have created over the last couple of say, last 3, 4 quarters?
On a gross margin level or a PBT level, we typically aim about 8%. And unfortunately, that has -- some of those margins were eroded during the COVID period and increased costs, so which we could not pass on to the customers. So but going forward, that we will still go by that number in -- while choosing new contracts.
Okay. Second question on the balance sheet. So the gearing has come down quite significantly. And this quarter, we saw you putting like 40% of the cash flows into debt. Is that the right way to look at it? Earlier you used to talk about some debt reduction and some land banking. Are we -- have we reached that space today?
Yes. Abhinav, this is in continuation to our commentary for the past few quarters, where we were saying that the -- our debt reduction was our primary motive initially. And now I think we -- we think that we are reasonably comfortable with the gearing and post once we had a little bit of comfort now during the process, we start -- we were working on building up the new inventory pipeline. So which we have started using that cash flow, operational cash flow, to, to sort of build on those new opportunities. And like I said, those, the bank payments corresponding to the -- to -- in this quarter, is in 3 buckets. One is for the consolidation of the land. Second is in for the -- some of the pending payments for bringing the existing inventory into fruition. And third is for new pipeline.
Right. We also wanted to get some market sense from you on pricing. So in NCR, I think you're around selling INR 3 crore plus apartments and this is 15,000 market. I think your Hyderabad launch is 15,000. And the pricing in Bangalore is also tending towards 10,000. So I mean is this like an environment for even higher volumes from here on or sort of picking out on [indiscernible]?
So from a pricing point of view, I think we are -- we have matured quite a bit. And if you consider last 1.5 years, so we have been continuously improving our price realizations. And that's not a goal as such, but that looks to be fairly mature now, Abhinav. And that we are witnessing even in the new tower launches or new launches that we are doing. We are doing -- we are pricing in the higher cost and we are pricing in the new demand at the latest pricing levels.
So and we are still seeing the good demand at these price levels also. So all the leading indicators look like they are -- the demand seems to be fairly stable.
Okay. And maybe 12 months from now, you will say sales mixture between volume and pricing is even, the sales growth? Or it will still be more pricing led?
I would say it depends on 2 things, Abhinav. One is on the inventory that's available. That, I think, whenever we have done good launches and also catering to the end customer in terms of the new requirement of broadly larger homes, it has worked well. And with the new pipeline that we have, which is in the next -- this quarter and the next quarter, we are fairly comfortable in terms of the volume to be similar or slightly better than what we are doing. But pricing, I think we should be -- also is not something that I'm aiming for a much better price -- higher mix in terms of pricing. But if the demand continues to drive it, then we would look at those price hikes.
But no letup in demand, right, because there were some media reports that Bangalore has seen some sort of negative reaction to higher prices in 1 or 2 cases of some discounting. I mean for you, it seems to be good going, but for the rest of the market -- that's my last question, sir.
Yes. We cannot discount the reaction to the new price. An increased price; second, increase in mortgage rates, we cannot discount that. However, what I was mentioning was it also depends on the kind of inventory that you have and the locations where we are present. So given that, we seem to be doing okay right now. So we'll have to wait and watch and see how we can continue to do the volumes in such a probably slightly mature market now.
[Operator Instructions] Next question is from the line of Mohit Agrawal from IIFL Securities.
So my first question is on a previous question on launches. So am I correct in understanding that between now and end of FY '24, you will be launching about 4 million, 4.5 million square feet?
Yes, Mohit. For this quarter, we are -- we plan to do about 1 million square feet. Like I mentioned, we have already about, about 700,000 square feet in -- until now. We have launched our Hyderabad project, which is of about 650,000 square feet in January and 1 more project in Bangalore, which is a low house project. So these 2 have been done, and we have 1 more project in the pipeline for this quarter. Subsequent to that, the next quarter, we hope to do about another 3.5 million square feet. And post that, in the later part of FY '24, we should be able to do another 2.5 million to 3 million square feet.
So sir, is that enough to kind of looking at INR 5,000 crores this year and then assuming you want to grow double digits, would that be sufficient to have decent double-digit growth over INR 5,000 crores?
Well, we have not guided for any kind of growth yet, but we would like to do better than what we are doing today, always. So given this pipeline of launches, I think we are -- with the current inventory and these launches, I think we are fairly there to, to capture the demand that we are already witnessing.
Okay. Understood. And sir, my second question is in the notes to account, there is a note that there was a termination notice by one of the contractual clients. So could you give some details around that? And if you can share any details on that -- on the name or what happened in this contract?
Well, this is a contract, which we signed about in 2012, wherein we -- there was an arrangement between us and APMC to develop their, part of their land and be building commercial assets. So that particular project, which -- or agreement that we signed is what the note refers to for now.
The next question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on a decent quarter. So my first question is on the contractual business. So given the margins which you have declared, so is it right to assume that like of losses of about INR 180 crores to INR 190 crores in the financial year on contractual. Can you hear me? Hello?
Hello, Parikshit? Yes, Parikshit.
So I was asking how much you -- would be the losses attributed to the contractual business in the financial year to date in the 9 months of FY '23?
So in the -- in this financial year, probably with the losses or, let's say, the reduced margin that we have, the higher cost that we have taken, that should be in the range of this quarter and for the 9 months, it should be around INR 50 crores to INR 60 crores. But this is a number that we can come back to you again, Parikshit, if that's okay.
Yes, yes, sure. So second question is the way forward for the contractual business now because this has been a pain point for us in this financial year. So how do you see the future of this business within Sobha's entire development portfolio?
Yes. So we have 2 legs there, which is one is the contractual business and second is the manufacturing and retail business. So the contracts specifically that we have taken in the last -- which we are executing in the last couple of years, were -- have been the probably -- got into a zone of lower margins, much lower margins than what we had anticipated. Given that we are, of course, being very choosy in terms of the new contract that we are signing and that we have started doing it since the beginning of this financial year after we have understood the cost escalations under impact. So considering that, we will continue to see how we can short-list and go after projects which are -- which fit into our requirement of margins and cash flow.
Okay. Just the last question, sir. Just Q4, you had launched Hyderabad and again in Bangalore and now RBI has again increased the rate by 25 basis points. Now we have kind of -- I think we've crossed 9% on home loans. So just your initial sense on the demand of the -- on these new launches? And given that the rates are plus 9%, so how do you think -- what's your take on the demand?
The Hyderabad launch has been fairly good for us until now. And corresponding to the increase in rates, home loan rates and the higher prices like we -- like I was mentioning previously in the call, the leading indicators still seem to be that demand is fairly stable but we cannot ignore the fact that the prices are higher now and the cost of acquisition of a home also has gone up in terms of mortgage rates.
So we'll have to wait and watch, but I believe in the long -- I don't know how it's going to play out in the near term, but what we believe is we have very strong brand acceptance and we have a strong, good pipeline in terms of products that -- which are aligned with the customer needs today. So given that, we should be able to do fairly well in the overall market, however, it is. If it's good, then definitely, we should be doing better. If it's stable, that's -- we are going to ride on that.
And just lastly, if I may, sir, this financial to date, what would be the new gross development value addition? I mean you have incurred some CapEx, about INR 37 crores this quarter, which you said was a new land acquisition. So but on a ballpark basis in 9 months and the third quarter, what would be broadly the new GDV addition outside your land banks?
So historically, we have not been mentioning any GDV or any such disclosures earlier. If that's a requirement or if that's something that we should do it, then we will consider it and do it in the future. But the typical land investment that we do, those are ones which, which contribute towards the land bank and come into the inventory pipeline as and when the right milestones are hit.
The next question is from the line of Deval Shah from RBSA Investment Manager.
Am I audible?
Yes, Deval.
So I think most of my questions have been answered. But I just have a particular -- just wanting more, slightly more color on the note to accounts, when 1 of the customers has, has canceled and asked for the compensation of INR 350 crores. Just wanted more info on that.
So that's -- we -- I think we have touched upon that earlier, Deval. It's a contract that we have signed with APMC in 2012, wherein we had to -- they were going to -- it's a development agreement wherein we had to build partly -- part of their land and we could build some commercial assets for ourselves. That's the land in which there is a disagreement between us and hence, the matter currently, it's in judicial forums.
Okay. And with regards to a project where our OC was canceled, so what could be the financial implication of that? Because as you mentioned earlier in the question that was the earlier project which was closed in 2019. So is it possible for us to estimate on the financial implication, if at all it falls on the company and what is the likelihood? So just wanted to understand that also.
Yes. Our current focus is to make sure that the compliance is complete, Deval. And we think that the financial implication is something that is -- can be part of the -- our routine expenses. So but we are still -- we'd like -- we will assess that and it's too soon to come up with a number right now. As and when it comes up, we'll make the right disclosures.
Okay. Nothing more question on that, but I hope the lapses we had or encountered earlier has now been filled with regards to the operation.
Absolutely.
The next question is from the line of Dhruvesh from Prospero Tree.
Congratulations on continuing good set of numbers. I have 2 questions. So when I see the story of Sobha, it started with management change, SEBI getting settled, then there was this [ ED ] thing which came across. And there is this APMC judicial thing, then there is OC-related judicial aspects. Continuous improvements on the other hand, continuous improvements on the operations side is what we keep hearing, the lower margin on the contractual cycle. Collectively, in the last 18 months, a lot of bad news. Can we say that the kind of plumbing issues that we may be facing are 70%, 80% done and you as the new manager or the CEO are in far better control of things so that we can probably look at a better jump in terms of growth and the mindset towards growth?
Thank you, Dhruvesh. Like you mentioned, the -- there has been significant improvement and also building on what we have already done earlier in terms of operations, no doubt about it. So some of these issues have been legacy issues in terms of -- it's not that they are entirely new. But unfortunately, the -- some of them have -- new ones also have cropped up, but we have been fairly been able to manage those.
And if you -- if we think that this is diverting our attention and not focusing on growth, that's not something that I -- that's not something that is probably the right interpretation. While we are doing this, the other part towards the growth is completely on. That is a mature organization with a deep organizational strength. So hence, we should be able to manage these issues and also move forward towards our growth trajectory.
And one small other question. In terms of consolidation related to the Hoskote land, suppose if -- I mean it may take another 1 or 2 years for consolidation, as I can imagine from the comments. But suppose if this gets completed, the consolidation could be in the range of some INR 200 crores, INR 300 crores of extra land or no, it will not be such higher number?
You mean to say 200, 300 acres or crores?
No, do we have to spend INR 200 crores, INR 300 crores extra on acquiring the remaining Hoskote land to consolidate everything? Or is it a much smaller number? Just that it is legally time-consuming.
So on the Hoskote land, Dhruvesh, we don't intend to invest as much going forward. The current plan is to start building on whatever we have in terms of development. And in case we should -- we can consolidate in future, we will use the cash flow from that to fund the new acquisitions.
Okay. Okay. So no major requirement for at least Hoskote in terms of launching whenever the time comes, but it's not related to spending on future land related to Hoskote?
Yes. So it is not going to be a major land payments like you are mentioning. The quantum is not as much as what you have mentioned.
The next question is from the line of Vasudev from Nuvama Wealth Management.
Thank you for the opportunity, sir. My first question is on the debt front. You mentioned that we are comfortable with this gearing. So should we assume the net debt-to-equity remains in this range? Or do you have a target on net debt-to-equity?
Good evening, Vasudev. While we are comfortable with the current debt levels, our cash flow management, which we have been focusing on for the past more than 2.5 years, will surely continue. And we'd like to sort of keep that in control or reduce it further. But that's going to be balanced with our growth objectives, too. While that being said, so the absolute levels of debt probably will roughly remain the same and -- or we will aim to contain it and -- but the net debt-to-equity would probably reduce as the equity base will increase.
Sure, sir. That's helpful. And my second question is that we had about INR 75 crores of land payment in this quarter. So how should we see the land CapEx trajectory going ahead?
So this is -- like I said, this is for payments towards the -- some of the old agreements that we already have and some of the new land acquisitions and for some of -- some for the land consolidation that we have been doing for the past several years. So it's a combination of all these 3. The 75 number, how it might look like in subsequent quarters is -- is a function of the new business development that we would do and the opportunities that we would probably conclude in the next quarters.
But largely, the way we look at it, the management of the cash flow, is last financial year, we have generated a free cash flow of about [ INR 515 crores ]. This financial year, in the first 9 months, we have already done close to INR 560 crores, so which is -- or INR 568 crores, sorry, which is fairly significant. And this cash flow, we think that this is good enough or probably good enough to build the future pipeline to aim our growth. So it's -- our plan is to fund any of the new acquisitions through the operational cash flow.
Okay. Okay. Got it. That's it from my side, thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone. Thank you, everyone, for participating in the call and your questions and patient hearing. I hope we have answered your questions satisfactorily. We believe that our focus on operational excellence, coupled with strong consumer confidence in the brand are the pillars of our strength. So simultaneously helping achieve the customer satisfaction and business metrics. We think that we are uniquely positioned through our vertically integrated operating model and geographical diversification, which has paid dividends even in this quarter to capitalize on the opportunities in the residential real estate space.
And we continue to witness that the demand seems to be stable and hence, our disciplined growth mindset and investment in technology and people and process improvements should yield results and in accelerating our growth across our business segments. With an inventory pipeline of about 23 million square feet, improved financial structure after 9 consecutive quarters of debt reduction through internal accruals and with high visibility of future cash flows, we aim to deliver consistent long-term performance. Wish you all the best of the remaining quarter and truly appreciate your support. Thank you.
Thank you, sir. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.