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Oberoi Realty, one of the leading real estate development company in Mumbai market has registered 95% growth in its consolidated revenue to Rs 592.11 crore for the quarter ended Sep 2018. But with operating profit margin (OPM) contract by sharp 400 bps to 50%, the growth at operating profit was restricted at 81% to Rs 295.84 crore. Spurred further by higher other income, lower depreciation, higher share of profit from associates and lower taxation, the PAT more than doubled (up 105%) to Rs 213.83 crore. The other comprehensive income was lower by 44% to Rs 0.22 crore and thus the total comprehensive income was up by 104% to Rs 214.05 crore. But for higher interest cost and lower other comprehensive income, the growth at bottom-line, would have been much higher than reported.
The Company has opted to apply the modified retrospective approach as per the new accounting standard i.e. Ind AS 115 [Revenue from Contracts with Customers] that become effective from 1st April 2018, and in respect of the contracts not complete as of April I, 2018 (being the transition date), has made adjustments to retained earnings, recognizing revenue of Rs 493.24 crore, only to the extent of costs incurred, as the relevant projects were in early stages of development. Consequently, there is no impact on retained earnings as at the transition date. While recognizing revenue, the cost of land has been allocated in proportion to the construction cost incurred as compared to the accounting treatment hitherto of recognizing revenue in proportion to the actual cost incurred (including land cost). Consequently in respect of the quarter ended Sep 30, 2018, revenue is lower by Rs 111.91 crore, total expenses is lower by Rs 100.82 crore, tax expense is lower by Rs 3.23 crore and profit after tax lower by Rs 7.86 crore. Under modified retrospective approach, the comparatives for the previous period figures are not required to be restated and hence are not comparable.
Half yearly performance
Sale for the period was leaped by 162% to Rs 1480.37 crore. But with OPM contract by 180 bps to 51.2%, the operating profit was up by 153% to Rs 757.55 crore. After accounting for higher OI, higher interest cost, lower depreciation, higher share of profit from JVs and lower taxation, the PAT was up by 167% to Rs 523.25 crore.
Impact on account of the company adopt ‘Revenue from Contracts with Customers' of Ind AS 115, for the half year ended Sep 30, 2018, are : revenue is lower by Rs 1240.11 crore, total expenses is lower by Rs 1051.95 crore, tax expense is lower by Rs 54.79 crore and profit after tax lower by Rs 133.37 crore. Under modified retrospective approach, the comparatives for the previous period figures are not required to be restated and hence are not comparable.
Management Comment
Commenting on the results, Vikas Oberoi, Chairman & Managing Director, Oberoi Realty said "The real estate industry continues to undergo major transformations owing to the systemic reforms not only in the real estate sector but also the macro economy. We believe that this economic environment will continue to favour developers like us with financial prudence and a strong track record of on time delivery. This coupled with the state government's efforts to build world class infrastructure for Mumbai has increased consumer confidence thereby positively impacting the overall growth of not just the sector but the overall economy as well. At Oberoi Realty, we continue to remain focused on customer centricity by delivering best in class projects that enhance the quality of lifestyle of our customers".
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