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Indiabulls Real Estate Ltd.

BSE: 532832 Sector: Infrastructure
NSE: IBREALEST ISIN Code: INE069I01010
BSE LIVE 15:42 | 17 Nov 217.00 7.05
(3.36%)
OPEN

215.00

HIGH

223.20

LOW

213.20

NSE 15:57 | 17 Nov 216.75 6.90
(3.29%)
OPEN

214.45

HIGH

223.40

LOW

213.35

OPEN 215.00
PREVIOUS CLOSE 209.95
VOLUME 1752795
52-Week high 269.50
52-Week low 57.05
P/E 586.49
Mkt Cap.(Rs cr) 10,300
Buy Price 0.00
Buy Qty 0.00
Sell Price 215.45
Sell Qty 1232.00
OPEN 215.00
CLOSE 209.95
VOLUME 1752795
52-Week high 269.50
52-Week low 57.05
P/E 586.49
Mkt Cap.(Rs cr) 10,300
Buy Price 0.00
Buy Qty 0.00
Sell Price 215.45
Sell Qty 1232.00

Indiabulls Real Estate Ltd. (IBREALEST) - Chairman Speech

Company chairman speech

Dear Shareholders

India continues to hold its position as the world's fastest growing G-20 economy onthe back of improved investor confidence and better policy reforms. It looks set to be abumper year for India in 2017 when it comes to real estate and the economy as a whole. Thenation has shot to the top of the list of preferred destinations for real-estateinvestment in the eyes of major institutional investors. It is also the fastest-growingmajor economy set for growth of 7.0% next year after this year's projected 7.2%according to estimates available. That's ahead of China's 6.7% growth by almost a fullpercentage. And it is greater domestic consumption that is driving India's improvementimplying a growing middle class desiring to own a house of their own consistent withtheir financial status and aspirational life style. The growth of real estate sector iswell complemented by the growth of the corporate environment and the demand for officespace as well as urban and semi-urban accommodations.

Regulatory framework - key reforms

GST: Last year in my speech I had alluded to the fact that Goods andServices Tax (GST) which was in the works at that time was expected to benefit the realestate industry though the impact will depend on the final GST rate. I must confess thatat 12% the GST rate is a bit of a dampener for the real estate sector. However it'sexpected to significantly benefit the low cost housing as developers would see lesserburden of tax on input items like cement and steel as tax credits would be available forset off at various stages. This can lead to lower construction costs for developers acrossall asset classes which could likely be passed on to property buyers.

Demonetization: The recent demonetization initiative to renderhigher-valuation notes worthless is designed to drive cash from the "greyeconomy" into the mainstream. That is likely to slow down the growth temporarily butin the long run driving "black money" into the real economy is likely anotherlong-run driver of growth.

RERA: Throughout 2017 the number of new residential project launches waslower than units sold. With all states staring at the approaching deadline to implementtheir versions of the Real Estate Regulation & Development Act (RERA) most of themwill definitely fall in line. This landmark law will enforce hitherto unprecedentedtransparency and accountability requirements for developers into the system and do a lotto increase consumer confidence.

Outlook

Thanks to changes in its regulatory framework India is now way more attractive to bothglobal and Indian investors. Increased consolidation and transparency - and the launch ofREITs (Real Estate Investment Trusts) this year - will further whet their appetites forgetting a piece of the Indian real estate pie. Keeping in mind the factors like risingincome level of people people of all age group interested in Real Estate as aninvestment predicted growth in the manufacturing and the service sectors affordablehousing taking pace etc. we at Indiabulls believe that the year of 2018 will revive thelost confidence and have a positive impact on the business environment of Real Estate.With the lowering down of the rentals and the increased foreign investments in India weare already witnessing a hike in interest in commercial spaces in 2017.

With the government taking initiatives to re-build the trust in the consumers' mind andensuring that their investments are not misused the Real Estate (Regulation &Development) Act will ensure that the developers avoid delays in the completion of theprojects and may focus on the completion of the on-going projects before launching newones. We can also expect to see a shift in the Real Estate sector on the backdrop oftechnological advancement. Technology is pushing change in space use locations and demandlevels at an accelerated pace. But it is now the norm to anticipate strategize andrespond to new technologies before they are in mainstream. I am happy today that yourCompany is ahead of the curve in embracing in new technology.

Performance overview

Given the overall slowdown in the sector for the last couple of years your company toohas not remained totally insulated from the current sentiment in the real estate marketbut still braving the indifference surrounding the sector and unnerved by the slowdownwe are aiming high with a perfect blend of caution diligence and evaluation of all thepotential opportunities. We have maintained our focus on speedy execution maintaining amoderate level of debt and keeping costs under control.

Key highlights: sustaining growth

The current economic environment is extremely challenging; competitive intensityremains high and is likely to increase.

However we remain committed to drive the business towards delivering consistentcompetitive profitable and responsible growth. I am happy to share some of the keyhighlights as follows:

• Profit after Tax (PAT) Rs 397 Crores in FY-17 vs. Rs 296 Crores in FY-16

• Earnings per share (EPS) increased to Rs 8.66 in FY-17 vs. EPS of Rs 7.26 inFY-16.

• Maintained Credit rating of AA- highest amongst its real estate developer peers

• Gross Development Value of ongoing and planned projects is Rs 34916 (last yearwas Rs 34566 Crores) at the end of FY-17.

With new project launches planned in the current year the outlook for the ensuing yearlooks much brighter.

Land Bank: key to future profitability

The Company through acquisitions and Government allotments has established a sizeableland bank in preferred locations at competitive prices. The Company has fully paid landbank of 1046 acres in key cities across India of which more than 95% of the Land Bank isin high value super-metro cities – Mumbai (MMR) National Capital Region (NCR) andChennai and which is sufficient for proposed development over the next 5-7 years. Inaddition to the said land bank of 1046 acres the Company also possesses 2588 acres ofSEZ land in Nashik Maharashtra.

Ongoing projects gained momentum

Undeterred by the current slowdown your company has been steadily expanding itspresence in Tier I and Tier II cities. Presently your company is developing bothresidential and commercial projects mainly concentrating in metros and Tier I cities.Company's ongoing projects have 39.2 million square feet saleable area with a grossdevelopment value of approximately Rs 34916 Cr. Each project bears a stamp of thoughtfulsolutions highest quality and an optimum mix of different categories and is a testimonyof Company's diversified portfolio across price segments.

During the year under review our various existing projects gained momentum while wedeferred any new launches given the tepid market conditions.

‘Sky' – Our first high end luxury housing development in theSouth central Mumbai (Lower Parel) has received Occupation certificate and its handoverhas been almost completed with customers starting to move in.

‘Panvel Greens' - first large-scale residential development to getOccupation Certificate from CIDCO-NAINA. Almost entire Phase 1 of our integrated housingproject at Panvel called ‘Indiabulls Greens' has been sold out with very littleinventory left out of the existing stock. Handover of first six towers has commenced.

‘Golf' Savroli' - positioned as a weekend second home for the lifestyle oriented is also generating enthusiastic response. With civil construction almostover for most buildings in phase 1 we have applied for partial OC for first 16 buildings.

‘Blu Estate & Club' - the most sought after project in Mumbaiis creating new benchmark in the city. A very high-end sales lounge and a show flat havebeen built at the site which reflect the experience buyers will enjoy on possession. Withthe acquisition of 1.93 acres land parcel next to the project the project has now gotdirect access from Dr E Moses road adjacent to Four Seasons hotel. With civilconstruction in nearing completiondelivery to begin from FY 18-19.

‘Chennai Greens'- our flagship project down south is an integratedtownship of over 50 acres. While Phase 1 of the project was delivered in May 2013 thelong awaited CMDA approval for 2.5 FSI was received last year. This would permit theCompany to construct the 19 story towers in Phase 2 of the project. We hope to startdelivery of Phase 2 from early next year and complete by 2019.

Gurugram projects - emphasis placed on execution during the previousfinancial year was continued this year also and we have applied for Part OccupationCertificate of completed towers of ‘Centrum Park' and ‘Enigma' projects.Construction of One Indiabulls (Retail & Office space) project in Sector 109 Gurugramand ‘Mint' project in Sector 104 Gurugram is proceeding on schedule. DwarkaExpressway having been designated 'National Highway' by NHAI will be an impetus for theGurugram projects.

Central London -Besides the above your Company also soft launched the22 Hanover Square London a unique luxury & residential project with total saleablearea of 0.10 million sqft with gross development value of approx. Rs 5200 Cr. The Companyhas already booked sales worth Rs 140 crore in the project in Q1 of 2017-18.

Our commitment and belief

It's testament to our commitment to your Company's long term future and my strongconviction in its intrinsic strength and growth story that your Company has through oneof its subsidiaries has acquired the entire stake in 'India Land and Properties Ltd' forRs 685 crore thereby owning a commercial complex of 3 towers with a total constructedarea of 2.67 million sqft and leasable area of about 2 million sqft spread over 8.84 acresin Chennai. This project designed in compliance with National Building Codes byinternationally acclaimed Ms Zaha Hadid UK will provide further heft to our commercialand leasing portfolio. This will provide a significant fillip to our 'Commercial andleasing' portfolio.

Before I conclude I wish to place on record the sincere dedication and hard work ofour employees which has enabled your Company to hold its head high even in thesechallenging times. I am also grateful to our bankers business associates and shareholdersfor their support and cooperation.

Thank you!

Sameer Gehlaut

Founder & Chairman