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Kolte Patil Developers Ltd.

BSE: 532924 Sector: Infrastructure
NSE: KOLTEPATIL ISIN Code: INE094I01018
BSE 00:00 | 01 Feb 278.25 -4.30
(-1.52%)
OPEN

283.40

HIGH

291.55

LOW

274.10

NSE 00:00 | 01 Feb 278.10 -3.95
(-1.40%)
OPEN

283.50

HIGH

292.00

LOW

274.20

OPEN 283.40
PREVIOUS CLOSE 282.55
VOLUME 22098
52-Week high 383.55
52-Week low 214.05
P/E
Mkt Cap.(Rs cr) 2,115
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 283.40
CLOSE 282.55
VOLUME 22098
52-Week high 383.55
52-Week low 214.05
P/E
Mkt Cap.(Rs cr) 2,115
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kolte Patil Developers Ltd. (KOLTEPATIL) - Chairman Speech

Company chairman speech

ONE PHASE IN THE EXISTENCE OF OUR COMPANY HAS ENDED.

ANOTHER HAS BEGUN.

Overview

Kolte-Patil Developers Limited has been in business for more than 30years. During this period the Company reported peak pre-sales of Rs1739 Crore during thelast financial year.

The principal message that I wish to communicate is that the Companyhas drawn out a business plan to achieve cumulatively Rs8000-9000 Crore pre-sales in thenext three years.

This means that what we achieved in 31 years of our existence weintend to replicate in a fraction of that time.

The big shift

The big question that I have been asked is whether this is indeedpossible. Before I answer this question permit me to explain the sectorial context thatwe face today.

During the last few years we have seen a tectonic shift inIndia?s real estate sector. The barriers on the supply side of our business havebecome higher. The introduction of RERA a few years ago separated the men from the boyswithin our business. The less organized companies went out of business or transformedtheir business models to become land aggregators for the more organized brands in thesector. The result of this shakeout has opened the way for large visible and sustainablecompanies.

On the demand side the India story has got increasingly optimistic.The country navigated its biggest challenge in living memory – the pandemic –with relative ease and quicker than most countries of its kind or size. The incomeimpairment for most individuals was modest which is not to say that it did not transpireat all. However as I see things from my perspective two realities have emerged in thelast two years: the consumer?s confidence in buying a home and the consumer?sdisposable income.

The interplay of the demand and supply sides indicate the start of anunprecedented curve: demand exceeding the supply of homes from organized developers abigger room to pass commodity cost increases to customers and the Indian real estatesector graduating into the next orbit. My understanding is that the better developerswithin India?s real estate sector will only get larger.

A new consumer

There is something more fundamental than policy reforms changes ininterest rates and government incentives driving the growth of India?s real estatesector. This new reality is that a new customer has emerged transforming the face of thesector not just today but well across the coming years.

This new customer has a completely different set of priorities from thecustomer of the last few decades. Today?s customer seeks a lifestyle and is willingto trade a large and comfortable home in a standalone building with a relatively smallerhome in a gated complex with lifestyle supports.

Today?s customer does not measure the size of the apartment as anindex of the superior value; she or he measures the size of the entire property and thetotal area of the amenities available as the index of superior value.

Today?s customer does not stop at counting the facilitiesavailable within the apartment; there is a greater propensity to count all the different‘escapes? that a property provides as the benchmark for whether it representssuperior value or not. Today?s customer is not content with the size of theapartments of the past; there is a need for larger apartments. What these newconsiderations have done is makes developers like us think different or take theirdifferentiation ahead through larger scale superior creature comforts and projectdifferentiation.

This new game in India?s real estate sector presents attractiveopportunities for the nimble and empowered.

The three words

In this evolving environment the three most critical words aroundwhich the business of a modern-day real estate company revolves are visibilitypredictability and sustainability.

There is a premium on each of these words in the modern competitivecontext. These words are embedded in Kolte-Patil?s governance; they are not somethingthat we have begun to address today; we possess an attractive track record in havingaddressed them for years.

At Kolte-Patil visibility is not just about promoting our brand sothat it is visible on the physical or social media inspiring customers to buy. In abusiness as deliberate non-impulsive and considered as real estate it is the intangibleconnotation of visibility that has worked more effectively. By this I mean that we haveenhanced our visibility through an embrace of cutting-edge features or practices. We wereamong the first within companies of our size within our sector to embrace SAP; we wereamong the first to engage in forward-looking practices; we were among the first withinIndia?s real estate sector to publish 360o annual reports or engageperiodically with analysts.

From a performance standpoint we now possess visibility to achievefresh cumulative pre-sales value of Rs8000-9000 Crore in the next three years. AtKolte-Patil we lived the predictability ethic from the time we went into business. Werecognized that in a business marked by hundreds of variables and varied operatinglocations what we needed was an assurance that what we intended would indeed materialize– whether this was in terms of what we had constructed or sales of what we put on themarket or the value-accretive initiatives we invested in. The result is a growingrecognition that while we may be engaged in property development the core of our businessis really about the structured minimization of extraneous variables and the enhancement ofconstants. In line with this we invested in structured risk-minimization investment inprocess and systems embrace of digitalization and an ongoing review system that made itpossible to correct deviations with speed. The new business development target of 10 msfin FY 2022-23 provides predictability from a growth perspective.

At Kolte-Patil we recognize that the glue that keeps the businesstogether is sustainability. The word refers to any positive outcome that can be sustainedand even grown resulting in a larger and stronger momentum. The result is that everythingthat we do is designed around sustainability; everything that we invest in must generate alarge long-term outcome; everything that we do must stand for the good of allstakeholders.

In today?s world the word is being increasingly associated withclean and green outcomes. This is also an important dimension of how sustainability isplaying out at our company. Over the last decade we have shifted our needle decisivelytowards the selection of environment-friendly materials moderated water and resourceconsumption and designed homes to moderate the use of finite resources. The result is thatwe are ‘greener? today than we ever were and will be even ‘greener? aswe go ahead.

There is an additional dimension of sustainability beyond environmentconsciousness that I must build on. There is a greater priority for growing our companiesaround relatively low on debt with high cash flows. Kolte-Patil has performed creditablyin this regard. During the last three years marked by a high degree of sectorialuncertainty the Company repaid Rs162 Crore (net) of debt and enhanced its net worth byRs119 Crore. The result of this decisive change is that the Company?s gearingdeclined from 0.62 to 0.14. A strong focus on business development project launches andnew sales ensure visibility predictability and sustainability.

Long runaway

The one word that we often use at Kolte-Patil is anti-fragile. Webelieve that we have built just such a company. We possess robust sales coming out of ourlongstanding leadership of the Pune market; our successful extension into Mumbai hasstrengthened our Balance Sheet; on the contrary we transformed our presence in a nicheinto leadership and we now possess a platform on which to grow our presence attractively.

There is only one way we can successfully capitalize on the realitiesthat appear before us: go for the jugular as is often termed. If we address this realitywith a ‘business as usual? commitment we will not do justice to theopportunity. On the other hand if we build faster and better (carving away market sharesof those who may have vacated the space) launch new projects faster we will becapitalizing on an opportunity that comes but rarely in the life of a sector.

I am optimistic that one phase in the existence of our company hasended. We are no longer a small real estate company; we have achieved medium size and weare well on our way to emerge as a large company cross the foreseeable future.

In terminology more suited to our business we have created thefoundation and the time has come to scale the super-structure with speed that makes usmore visible predictable and sustainable.

The time is now.

Rajesh Patil
Chairman

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