As I reflect on the events of the year gone by I have several reasons to be excited.Amidst all the enthusiasm challenges and positivenessunfoldedbyRERAandGSTwe continuedour operations centred around the core values that this organisation was formed with. Weremained transparent in all dealings committed to timely delivery and quality andfocussed on innovation and environment friendliness. These values continue to drive ourreputation and business performance. Besides the kind of trust bestowed upon us by thebuyers and other stakeholder truly humbles and motives us.
While the Government's attempt to achieve uniformity and transparency with RERA and GSTwill have positive impact in the long run it has created immediate disruptions. As thereal estate industry adjusts and consolidates in this new regime I believe that being aplayer with high standards and credibility we have the responsibility to lead the wayforward. And we will do so by setting new benchmarks of quality and execution.
Our total income for the year grew by 24% from Rs 4087.73 million in FY 2016-17 to Rs5082.45 million. However in terms of profitability there was a de-growth. EBITDA andPAT declined by 5% and 32% respectively to Rs 2030.79 million and Rs 507.99million in FY 2017-18. This was primarily because of lower sales in the premium projectsthat command higher margins along with an 8% increase in interest cost to Rs1005.20 million. Our earnings per share for the year declined to Rs 10.36 comparedto Rs 15.93 in the previous year. Irrespective of this the Board has recommended adividend of Rs 1.80 per share reflecting our strong drive to reward shareholders.
Coming to operational performance we have almost completed the Maple Tree Projectconstruction which is in the tune of approx. 1.9 million sq. ft.
A year dedicated to clarity commitment and consolidation
FY 2017-18 in many ways was an important year for your Company. Though our performancemay not have been what we wanted but we took a calculated recalibration and re-alignmentof strategies to ensure we continue delivering strong performances over the long run.
Being a proactive organisation we were quick to identify areas of concern. In thepast viewing a favourable industry outlook we got aggressive and resorted to debtfunding to scale operations. We would like to develop premium projects and acquired10.09 acres of land to undertake large scale developments and also include land forbuilding township. All was going well until the industry received the triple blowof RERA demonetisation and GST one after the other which was a temporary setbackfor the large formats of real estate and our premium properties witnessed a slowdown insales. Lower churning of old inventory impacted cash flows and in turn incapacitated us touse the land bank. Resultantly our ability to service debt declined and profitabilitytook a hit.
Having learnt an important lesson we now have a clear vision to get back on track tocapitalise on the ongoing industry scenario. And for this we believe theimmediate need is to bring down debt and cost of debt further even though today itstands at 13.50% we would further try reducing it to 12.00% reduceinventory and realign focus to the right customer and business segment. While we have611.57 acres of land bank in Ahmedabad we have strategically chosen to develop projectsonly in Chharodi-Tragad and Godhavi which are upcoming areas and witnessing significantdemand from middle income group (MIGs). For the rest of the land bank we willcontemplate ways to monetise at better valuation instead of blocking capital fordevelopment and some of it may be sold to achieve our debt reduction target. Wewill realign business focus by targeting mid and a_ordable housing projects instead ofpremium ones to ensure faster sales turnaround and cash flow cycle. These segmentsbeing the Government focus area and having the advantage of various incentives will havestrong demand facilitating us to expedite sales.
Execution will continue to be an important focus area as we target 1.5 msf of yearlydevelopment to ensure we have adequate inventory to achieve sales and generate cash flows.
I have strong reasons to believe that the worst is past us. We have one hard year forstability of market and new demand coming. The real estate sector after stabilising fromvarious shocks will be in for some positive movement. As home buyers steadily begin toexperience the positive aspects of RERA the lost faith in the industry will revive anddemand will increase. Mid and a_ordable housing segments is likely to become the next bigthing with the Government focussed on providing housing to all citizens by 2022. Under theHousing for All' the Government targets building 50 million houses and has alsostepped-up investments from Rs 11600 crore in FY 2015-16 to Rs 29043 crore for FY2017-18.
There were reasons why this segment didn't pick up earlier and why I believe it will doso now. Though named a_ordable houses were still una_ordable. For this the Governmenthas introduced incentives like providing a subsidy of 6.5% for the lowest rung facilityof crediting the entire subsidy of 20-year loan to the loan account of applicant andallowing individuals to withdraw up to 90% of the housing amount from EPFO. I am surethese developments will provide the much-needed boost in the coming years.
I thank all our stakeholders for their support. Your Company has the clarity in visionfor its future it is committed to improve balance sheet health and become stronger and itwill consolidate its position by developing right projects in right areas targeted toright segments. I appreciate the efforts put in by our employees and other developercommunities who have made Ganesh Housing a household name. We will continue to make thisorganisation geared for long-term while adequately creating value for all stakeholders.
Dipakkumar G. Patel