Key takeaways of the conference call

There has been quite an improvement in volumes compared to 4 quarters earlier. But the volumes are yet to touch the level at the time of peak. There is an attitudinal shift in the buyers mind, the expectation of price decreasing has waned. This is good for the Realty industry.

Consolidated net profit for the quarter ended September 30, 2009 was up by 21% yoy to Rs 60.86 crore over an income of Rs 226.39 crore (up 62% yoy) for the quarter. The consolidated net profit for the half year ended September 30, 2009 was Rs 71.10 crore(down 37% yoy) on an income of Rs 282.36 crore (down 5% yoy).

Sales for the current quarter/half year includes sale of land amounting Rs 145 crore.

Area currently under development by the Puravankara Group is 19.13 million square feet (sft) and of which saleable area is 11.09 million sft. Of which about 12.91 million sft spread over 13 residential projects are developed by Puravankara Projects and about 5.69 million sft spread over 2 projects are developed by Provident Housing, the affordable housing SPV of the company. This makes total residential space under development to 18.60 million sft. Commercial development is to the tune of 0.53 million sft and spread over two projects. While the residential projects spread across Bangalore, Chennai, Hyderabad, Cochin and Kolkata, both the commercial projects under development are at Chennai.

The company's percentage of unsold stock is very less. Of the residential area under development the company has sold about 62% weighted average. Similarly about 69% of the space has been completed and completion percentage will reach 75% by end of the current quarter ending Dec 2009.

Wellworth City, an affordable housing project at Doddaballapur Road, Bangalore developed under Provident housing banner it has completed a sales of 30% of the launched/ saleable space of 1.55 million sft. Similarly about 67% of 1.10 million sft is sold at Cosmo City, the Chennai affordable housing project, where construction is on full swing.

Cost of land is Rs 100/ sft for Puravankara Projects stand alone excluding provident fund. Land cost for Provident Housing will be 150-165/sft.

Currently the residential: commercial mix is nearly one sided with 95% of the developable space is in residential and just 3% in commercial. In medium term the company expects the commercial share to increase to 20-25% of the overall with residential coming down to 75-80%.

The price range of homes at both the Provident Housing projects is between Rs 15 lakhs to Rs 20 lakhs. The sales at the two Provident Housing projects have been particularly encouraging with over 1200 apartments having already been sold.

Provident Housing's Bangalore project also includes over 0.2 million sft of retail space of the total 3.46 million sft township with 3360 apartments.

There is no revenue contribution from Provident Housing in Q2FY10/ H1FY10. The contribution from Provident housing to revenue and profitability will accrue in the coming quarters as construction in full swing.

The current land bank has been recently further augmented through land acquisitions in Coimbatore in Tamil Nadu and currently stands at 125.39 million sq. ft. of developable area. The company is also close to complete a land deal for about 51 acres in Mysore Road at Bangalore for Provident Housing. Major part of the payment is already made for the Mysore Road land.

Borrowings (net of cash & Cash equivalents) as end of Sep 2009 were Rs 805.02 crore, with debt equity ratio of 0.56. But the debt equity ratio has come down to 0.49 as of now.

At Provident Housing the land deals are largely through Joint Development only. Hence the cash flow is minimal as far as the Bangalore, Cochin, Hyderabad projects.

The company has not increased the price. Earlier when the realty prices in North and Western part of the country has corrected sharply, it has not happened in similar fashion in Southern cities especially in Bangalore. Over the quarters we have not decreased prices only promotional has been taken for. Hence there is no increase in price and will there be no increase in immediate future.

The company is not going to cut down price and push up sales on unsold inventories in a project. Having sold good part of the project the company will complete the projects using the proceeds from that part as well as the proceeds from recent sale of land. For instance in Swan Lake project at Chennai the company is not selling the unsold portion.

Currently the company's 13 projects have sizeable 80IB benefits and will get over in another 2-3 quarters. Once these projects completed the company will back to full tax rate.

Starworth Infrastructure & Construction - PPL's 100% infrastructure and construction subsidiary established in Aug 2009. The company also concentrates on construction contracts outside group. As of now it has qualified for 5 large construction projects outside the Group. In the next financial year there will be small contribution from this construction business.

Operating margin of Puravankara Projects (excluding PHL) is 35-40%.

Cash charge is 25-27% is on account of land sales as higher tax rate is 29%.

Sold land measures 8.23 acres out of 25 acres of land parcel the company hold at Cochin. The land parcel sold has overhead cables going over it. Total sales realization is around Rs 160 crore and the company is yet to recognize revenue of about Rs 18-20 crore due to pending of some clearance and delay in cash receipt on account of it. The gross margin of the land sale is just little below 50%. The company has recognized Rs 60 crore of profits in Q2FY10.

The company will recognize the additional money on realize of it which will happen when the clearances are obtained hence the time frame can not be put in.

Cash flow has improved considerably after the land sale.

The company has approximately 100 mln sft of free land bank, where development not underway and that will be developed in next 6 years.

In Provident Housing the company is to launch its next project at Bangalore in Mysore Road. Approvals are under progress for this project with 5.6 million sft of space. Similarly a project in Coimbaotore is also underway. The company expects about 12-15 million sft by end of next 12 months at Provident Housing. In next 6 years the target is about 64500 houses across 6-7 locations spread over 60 million sft at provident housing.

Land acquisition plans – the company targets 250 acres. About 70 acres of land parcel for Puravankara will be concluded by next quarter.