Parsvnath sees 30-40% sales growth in H2FY09

Pradeep Jain, Chairman, Parsvnath Developers, said that going forward, the next half of this financial year is going to be stronger than the previous one, because in the previous one there were a lot of concerns related to the global economy
etc. "Also in this first half, the investor driven demand has entirely gone away and the talks about the prices going down also impacted end-user demands. But now, since the last two months, the end-user demand kept increasing as the prices are not going to come down and the sales keep going up. In the next half of this financial year I am expecting growth to the tune of about 30-40%."

Here is a verbatim transcript of the exclusive interview with Pradeep Jain on CNBC-TV18. Also watch the accompanying video.


Q: It’s been a disappointing and a tough first half for real estate sector and also punished by the market as well. But talking about future, you think the second half of this year is going to be as tough as the first half or do you think there is some scope for improvement there?



A: Going forward, the next half of this financial year is going to be stronger than the previous one, because in the previous one there were a lot of concerns related to the global economy etc. Also in this first half, the investor driven demand has entirely gone away and the media keeps talking about the prices going down and the end-user demands was also impacted because of that. But now from the last two months the end user demand kept increasing and the user is able to understand that the prices are not going to come down and the sales keep going up. In the next half of this financial year I am expecting growth to the tune of about 30-40%.



Q: Isn’t there a bit of disconnect here, in the second half you see demand going up, but a report said that the sales we have seen in October are the lowest we have seen in some time as far as real estate sector is concerned?



A: I don’t know which report you are quoting about but as compared to the month of September, the October month’s end user demand increased substantially.



Q: You are at the heart of the action where there was maximum price surge and channel checks have suggested that there has been some bit of a price correction, Gurgaon, Greater Noida and Delhi, going forward both on demand and on pricing front, how much of a correction do you expect?



A: The prices in Delhi are bound to go up because there is very limited quality land available and I don’t foresee any cool down in prices in adjacent to Gurgaon also, but in Greater Gurgaon the prices are bound to cool down because of non-infrastructure and the non-availability of the customer who wants to buy the property for the end use propose. Greater Gurgaon will take time to come up. Similarly in Noida, I don’t foresee any cool down but in the Greater Noida extension, there is a cool down in demand because the end users don’t want to take property into the futuristic location.



When the end user buys the property, he wants to understand the kind of the property he is buying and he wants to shift to the property in 2.5-3 years. The end user will look for that property be it in Noida, Greater Noida, Gurgaon etc where he can shift in 2.5-3 years.



Q: If you are saying that October sales were higher than September sales, can you give some hard numbers in Gurgaon, Noida, and the areas that you spoke about?



A: Related to our own projects in Gurgaon, Delhi, in Greater Noida and Sonipath, as compared to September, we have seen growth to the tune of 22-25% in the month of October.



Q: Was it at same prices or lower prices?



A: It’s a surprise for you that it was on higher prices. We are developing a project in the North of Delhi, in the month of September we were selling at Rs 8,000 per sq ft, and in the month of October we increased about 20% and now we are selling at Rs 10,000 per sq ft.



Q: A lot has been riding on your SEZ projects - out of the 211 million sq ft that you have currently and which were slated to be developed in the next 4-5 years, have you seen any pullback on account of higher liquidity constraints or high interest costs?



A: We haven’t seen any pullback in SEZ and we are getting all the sanctions from the regulators and local authorities. Our Indore, Dehradun, Gurgaon, Hyderabad and Cochin projects are on the track and we are going to start in the next couple of months and we don’t foresee any cool down in that. We are in talks with the private equity investors and we are on the way to close those transactions very soon.



Q: With RBI taking the steps, do you think it’s too little to late or going forward, your interest costs may come down just a wee bit?



A: The RBI and the government very aggressively cut the CRR, repo and the reverse and also the SLR. So one side though want to congratulate government on taking this step but on the other side I am really disappointed because related to real estate, the risk weightages and direct liquidity into the real estate is not there yet.



We are requesting from the association and the Chamber to the government to come forward and to give some liquidity into the real estate system. The money needs to come out on the street which is not happening.



Q: What is the current debt equity ratio that you are sitting at and what are the debt levels on your balance sheet?



A: Our net debt is in the tune of about Rs 1,640 crore and our cost of debt is 13.78% as of now and debt equity ratio is about 0.85.