Ashish Puravankara, Managing Director, Puravankara Projects Ltd explains the company’s debt reduction exercise and its foray into commercial real estate from predominantly residential project developments. Excerpts:

With many regulations seeing the light of the day in the real estate sector, how are the company’s sales?

There have been some great developments in Hyderabad in the last one-and-a-half years. The city has been very successful for us. Sales were so good that we combined Phases 1 & 2. We have done well in pricing and sales.

Focus today is clear — positively seeing the market developing. Our January sales are better than December; February better than January etc. We see movement in our ongoing projects. On the sales front, it is very positive and the brand is doing well. The silver lining is RERA – lot of opportunities from the existing developers in Bengaluru, Hyderabad, Pune, Mumbai and Chennai. Land owners and developers are offering projects to us.

Recently, the company sold a land parcel in Hyderabad and cleared a part of the company’s debt. How does this make the balance sheet stronger?

Yes, a portion of the sale proceeds was used for debt reduction. The debt stood at ₹2,227 crore (December 2016) and it got reduced after we sold the Hyderabad land for ₹450 crore and used it for debt reduction. Now, this will bring the debt equity down from 0.94 (at the end of December 2016) to 0.74. We will continue to do this going forward.

Is Puravankara selling land parcels to reduce debt a deliberate strategy?

Debt reduction need not be only from selling. Incoming cash flow through sales also aids this. Cash flow will enable debt reduction and we plan to balance this against the money we need for growth.

What has been Puravankara’s development footprint?

We currently have about 13 billion square feet under development in western and southern region (both Puravankara and Provident). Most are in the final stages of completion. Out of this, Provident is close to 10 billion square feet and the rest is Puravankara. As for the pricing, Provident operates in the bracket of ₹25-30 lakh, while Puravankara operates in the ₹75 lakh to ₹1.4 crore bracket.

In addition to residential projects, the company is exploring commercial development. What is the strategy?

Our commercial development strategy depends on the city and opportunity which comes our way. At present, we want to focus on Bengaluru, Hyderabad, Mumbai, and Pune.

Recently, we signed a term-sheet in Pune for a joint development project. We also have land parcels in our land bank which qualify for commercial development.

The company has so far completed about one million square feet. Among the ongoing projects is Purva Summit in Hyderabad. We are hoping for early sanctions to some projects and negotiations are on for few joint development projects.

Since Bengaluru leads the country in commercial realty, what plan do you have for this city?

In Bengaluru — in Kanakapura road, we have a land parcel and will be beginning with this. Currently, we are waiting for project sanction. The second will be on the Old Madras Road and it will be a standalone project.

On the commercial front, the company has a 20:20 strategy. Could you elaborate?

Commercial is the flavour of the season — we want to increase the mix of commercial and residential. Currently, residential is a little over 95 per cent. Next few years i.e., by 2020, we want to change the mix to 65:35. We already have enough residential land. Among new acquisitions, almost 30-40 per cent is for commercial.

The company is actively planning to bid for affordable housing tenders. Could you elaborate on it?

There are different types of tenders, contract and PPP model. We are pitching for both. We are currently in the process of applying for a contract based tender in Andhra Pradesh, Telangana and Maharastra.

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