Tata Housing has been among the aggressive real estate players in the country and has also ventured abroad by launching a project in Maldives. In an interaction with Raghavendra Kamath, the company’s managing director and chief executive Brotin Banerjee outlined the company’s strategy and plans. Edited excerpts:
In the current financial year, you wanted to do four to five projects of 1.5 million sq ft. How far have you come?
In terms of land and project acquisition, we have done around 10 to 12 million sq ft. In terms of execution, out of four, we have launched two. We could not launch two others due to regulatory delay.
Tata Housing has grown over 100 per cent in the past couple of years. Do you think you will be able to achieve that in the financial year 2012, 2013 and 2014?
I do not think so. We would not be able to grow at that rate due to rising labour shortage, regulatory delays, increase in input costs and so on. But we will be able to grow much better than other players. We would still grow at 70-75 per cent.
What is your plan for the next financial year?
We would continue to expand and execute projects as per our strategy. We have been facing constraints such as shortage of labour, rising input costs and so on, but still, we would go ahead with our plans. I think it is good time to partner with land owners who want to monetise their assets.
What is the total debt and debt equity ratio of your company?
After the recent infusion of Rs 500 crore by our parent company, the debt to equity levels have come down to 1:1, which is a good level to have for any realty company.
How would you rate the sale of your projects?
Our affordable segment is doing well and sales are on schedule. However, sales are sluggish in premium segment for the last four to five months, which is true for the industry. Also, negative sentiment has built up in the industry. However, with RBI signaling rate cuts, I think it is incentive for prospective home buyers. I also hope the upcoming budget will further provide impetus for home sales. Even sales have declined in premium housing projects by 10 to 15 per cent, which is lower than our expectations.
There is a perception among buyers that by not adding Tata name to your projects, you are distancing your projects from the Tata brand. Comment.
We have Tata Housing as a name, which is a brand that is endorsing all the projects. As of now, it has not come in the way of sales. Smart Value Homes is a 100 per cent subsidiary of Tata Housing which builds value homes under Shubh Griha brand and affordable housing under New Heaven brand. But if buyers think like that, we will definitely look into it.
Although you bifurcated the company into two segments — Tata Housing will do premium housing and Smart Value Homes to do value and affordable housing, people still associate Tata Housing with low cost housing.
Shubh Griha was pioneer in value housing and it had stellar impact on the minds of people. That is why this perception. In our projects, under the brand names such as Primanti, Promont, Amantra, so many people have accepted it. We are the only real estate company which is focused on residential segment and deals with different asset classes.
What is your outlook on property sales and prices?
I was the first to say market will go down. Now, I believe market will go up. Sale prices will reach their lowest in the two to three months. Four to five months from now, coupled with low interest rates, sale prices will go up again. It is right time to buy houses in the two to three quarters. Prospective buyers can bargain and get good prices. Input costs have gone up so high that developers could not lower prices, though profits have come down every quarter.
What are you doing to push sales of homes in cities such as Mumbai and NCR, where decline in home sales have been sharper?
We have not done much. We believe we have good projects and pricing has been stable. We do not revise prices depending on the state of the economy. It depends on the project, which is the target consumer and his ability to pay, the price of inputs and so on.
What is the progress on your Maldives project?
It is a public private participation with the government there. We build 70 per cent and get 30 per cent free for sale area. Out of four projects, two are under construction, which is the government portion. So we are on track. We will launch our part in the next financial year. Hopefully, political situation will come back to normalcy and will time it accordingly.
Eighty per cent of Tata Housing’s portfolio was residential. Don’t you think given the current state of the property sales, it’s time for you to change that?
We had this ratio for the last three years and it has helped us both in good and bad times.
But people say there is a lot of demand from investors for ready to occupy office properties.
Tata Housing has not done strategies based on investor demand. For that matter, we have not done a single private equity deal so far. Our projects straddle across the luxury and value end of the market. We have differentiated the luxury projects in such a manner that we are able to sell it to consumers.