MOVING PAST FINANCIAL PERFORMANCE THE GOOD NEWS IS THAT WE HAVE FULLYCOMPLETED OUR MAPLE TREE PROJECT HAVING 1.9 MILLION SQ FT SALEABLE AREA. THE PROJECT HASRECEIVED APPROVAL FOR OCCUPANCY AND UNITS ARE READY FOR POSSESSION. THIS WILL OFFER THEADVANTAGE OF NOT ATTRACTING GST. THIS GIVES US IMPETUS TO LIQUIDATE OUR INVENTORY WHICHSTANDS AT ` 6463 MILLION AS ON MARCH 31 2019 AS WELL AS REDUCE DEBT.
We have been on a pursuit to make our business more sustainable overthe longer run during the last few years. What we recognise amidst this constantlyevolving regulatory regime and challenging market scenario is that there is no onestrategy that can deliver. We must be more agile and flexible to quickly respond.Therefore we centred our focus on introspection. We assessed where we stand today and theopportunities that lay ahead. We assessed what our stakeholders expect from us andexplored possibilities on how we can deliver on them.
Obviously this led us to relook at our industry positioning andstrategies. There were a few things that we did for a better future. We rediverted focusfrom premium projects to affordable housing projects understanding that they would be adrag with the ongoing liquidity crisis prevailing in the market. Instead we believed thatthe affordable housing segment would be the next growth driver triggered by theGovernment's ambitious housing for all programme.
Acting on this strategy we took the tactical decision of delayingprojects anticipating the Government to incentivise the affordable housing segment.Rightly so the segment has now been provided infrastructure status and is on toppriority. The GST rates for affordable houses have been reduced to 1% without input credittax. Tax incentives and subsidies are also being offered to financiers and buyers.
While this decision put us in good stead for the future it did have ashort-term hit on our FY 2018-19 performance. Our topline declined by 47% to ` 2672million and EBITDA by 62% to ` 770 million. This was primarily due to deferment of newproject launch resulting from constant regulatory amendments and adoption of IND AS 115i.e. revenue recognition. Our interest cost for the year declined from ` 1005 million to` 917 million. Further your Company has recommended a dividend of ` 0.50 per sharesubject to shareholders' approval. If approved this will be your Company's 15thconsecutive years of dividend payment to shareholders.
Moving past financial performance the good news is that we have fullycompleted our Maple Tree project having 1.9 million sq ft saleable area. The Project hasreceived approval for occupancy and units are ready for possession. This will offer theadvantage of not attracting GST. This gives us impetus to liquidate our inventory whichstands at ` 6463 million as on March 31 2019 as well as reduce debt.
We have continued with our strategy of exploring project developmentopportunities in Chharodi-Tragad and Godhavi regions of Ahmedabad which are upcoming areasand where most of the development is happening.
We are happy to announce that we have achieved financial closure forour upcoming Malabar County 3 and 4 projects in Tragad. We intend to soon commence itsconstruction. Malabar County being one of our most successful and time-tested series ofaffordable housing projects offering unmatched value for money proposition will havestrong market demand. In Godhavi we continue to negotiate with landowners and acquireland bank in patches targeted at developing an integrated township.
Weareoptimisticoftherecentamendment in the Gujarat Flat Ownership Actof 1973 which now allows society older than 25 years to undertake redevelopment with theconsent of 75% owners instead of 100% earlier. This opens another potential forredevelopment market. With around 700 housing societies in Ahmedabad older than 25 yearswe expect significant opportunities to come under way. In another landmark eventstringent FSI norm a key hurdle that barred fiat owners to take the redevelopment routewas relaxed. Redevelopment under old FSI norms entailed fiat owners losing out significantfloor space. However with the modified they are permitted to purchase additional FSI.With this a housing society that was initially allowed an FSI of 1.8 can now purchase anadditional 0.9 FSI. This meant they can actually increase their floor space. This will bea key motivating factor for fiat owners to go for redevelopment.
As we move forward we will continue to nurture the core values oftrust and transparency that this organisation has always been reputed for. Wealthcreation affordable housing and free cash flow generation will be three key agendas forus.
The Ganesh Group is holding land bank of approximately 620 acresas on March 31 2019. In the affordable housing we would be focussed on expeditingconstruction and launches. Our venture into this segment has made our business morerobust. It has enabled us to add a new layer of revenue and bring diversity to ourbusiness. From catering to one segment we have now broadened our base to cater lowermiddle and upper residential categories as well as commercial categories. We welcome thepositive move of GST Council to slash rates and its smart move of removing input credittax (ITC) from the new residential constructions. This will not only resolve the issuesbetween builders and buyers regarding benefits of ITC not being passed on but also makethe properties more attractive. For generating free cash flows we would work towardsfaster liquidation of inventory and using the funds to repay debts.
I thank all our stakeholders for their support. We are proud of what wehave accomplished until now. But I hope this report helps you understand that we are notsatisfied with our progress and that we are not standing still. I believe our recent moveswill make your Company more resilient and prepared to maximise value creation. I thank theefforts of our employees. I believe it is time for each one of us to bring in renewedpassion to work and accelerate our efforts.
|Dipakkumar G. Patel |