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Ladies and gentlemen, good day, and welcome to the Q4 and FY '22 Earnings Conference Call of DLF Limited. We have with us today on the call, Mr. Ashok Kumar Tyagi, CEO, DLF Limited; Mr. Vivek Anand, Group CFO; Mr. Sriram Khattar, MD, Rental Business; and Mr. Aakash Ohri, Chief Business Officer and Group Executive Director. The conference is now being recorded. [Operator Instructions]. I now hand the conference over to Mr. Vivek Anand. Thank you, and over to you, sir.
Yes. Thank you, Steven. A very good evening, and welcome to DLF Limited Quarter 4 and Financial Year '22 Earnings Webcast. I would like to thank all of you for joining us today. Hope you and your family are keeping healthy and safe. Our business exhibited a strong performance during the fiscal, strong delivery in line with our guidance across all parameters. We remain committed to achieve consistent delivery of our business goals. With this, I'll start with the financial highlights for quarter 4 financial year '22 DLF Limited consolidated results.
Consolidated revenue stood at INR 1,652 crores, which is down by 13% year-on-year, primarily due to lower position letters issued during the fiscal. EBITDA stood at INR 472 crores, reflecting a year-on-year bump of 27% due to higher operating expenses and lower other income as compared to the corresponding period. Net profit at INR 414 crores, reflecting year-on-year drop of 13%.
I'll now move on to the financial highlights for financial year '22 DLF Limited consolidated. Consolidated revenue stood at INR 6,138 crores, reflecting a year-on-year growth of 3%. EBITDA stood at INR 2,163 crores, reflecting year-on-year increase of 11%, largely explained by margin improvement of 200 basis points due to better product mix. Net profit at INR 1,513 crores, reflecting year-on-year growth of 38%, primarily driven by better product mix, lower finance cost and lower effective tax rate.
I'm also happy to share that the Board has recommended a dividend of INR 3 per share for the approval of the shareholder, which is 150% as compared to last year.
Housing demand continues to exhibit structural upswing across segments and geographies. Residential business exhibited a record performance in the fiscal and the new sales booking of INR 7,273 crores, reflecting a year-on-year growth of 136%. We witnessed strong growth across all our segments and luxury segment leading the trend. Our super luxury offerings, the Camellias, continues to put in strong customer interest and delivered healthy sales booking of INR 2,550 crores during the fiscal.
Our new product launches across New Delhi, Gurugram and Chennai continues to receive encouraging response from the market, indicating demand for quality products [indiscernible]. The continued momentum further demonstrate rising customer preference towards larger and credible brands with proven track record. New product sales bookings stood at INR 4,683 crores during the fiscal.
We continue to place enhanced focus on surplus cash generation from our operations, strong collections along with sales ramp-up led to one of the highest levels of surplus cash generation of INR 2,205 crores during the fiscal. In line with our business goal of derisking our balance sheet, we continue to deleverage. And consequently, our net debt at the end of fiscal stood at INR 2,680 crores, which is the lowest ever, a 46% year-on-year reduction.
Sustained momentum and strong tailwinds are expected to support the structural upswing in housing demand over the medium term, and we continue to strive in scaling up our new product offerings across segments and geographies.
I'll now move on to the rental business. The financial highlights for financial year 2022, DLF Cyber City Developers Limited consolidated results. The rental business continues its steady part 2 recovery. Office occupancy is gradually recovering and stood at 88% at the fiscal end. Retail business continued a strong rebound during the fiscal. Rental income grew 10% year-on-year, supported by 67% rebound in retail income. Consolidated revenue at INR 4,533 crores, as compared to INR 4,385 crores last year, reflecting a 3% year-on-year growth.
EBITDA stood at INR 3,488 crores, as compared to INR 3,417 crores last year, a year-on-year growth of 2%. Net profit at INR 1,002 crores, reflecting a year-on-year growth of 10%. The office business delivered strong collections at 100%. We continue to witness a gradual ramp-up in return of occupiers to their workplace and expect these trends to further improve in the next few months. The development of our next-generation workspaces, which is DLF Downtown at Gurugram and Chennai, and Data Center at Noida remains on track. The retail business exhibited strong rebound despite temporary dislocations due to the pandemic in the fourth quarter, especially in the month of Jan, Feb. Footfalls and consumption trends continue to support the healthy growth in this segment. Consequently, we have initiated development plans to build our new retail destinations across certain geographies.
Inflationary pressure and reversal of interest rate cycle may pose a marginal risk to the momentum in the industry. However, our strong balance sheet, well-diversified portfolio and a strong pipeline of new product offerings with differentiated experience should withstand such dislocations. We are comfortably poised to deliver consistent and profitable growth backed by strong brand equity, robust operating model and healthy cash flows.
With this, I end my brief results update. Before we open the floor for Q&A session, we want to clarify that questions pertaining to financial year '23 with regard to sales guidance, new launches and future outlook will be addressed during the event that we are housing next week. We would request you to defer your questions on these topics. Today, we shall focus on the reported numbers and any queries that you may have related to the business performance, right? Thank you very much. We can now open the floor for Q&A session.
[Operator Instructions] The first question is a chat question from the line of Parikshit Kandpal from HDFC Securities. The question is: first, what are the key product launches during FY '23 as we have new launches contributing majorly to the FY '22 presale? Second question. Please share the new mall retail pipeline over next 2, 3 years. And what is likely incremental rental from the same? And the third question is, what are likely plotted launches during FY '23.
Yes. Parikshit, let me take the first question with regard to the key product launches in the financial year '23. As I said that we'll be happy to take on this question next week when we are meeting face-to-face. But just let me just give you a headline. I think that -- so let me start by saying that while we entered this financial year, we have entered with the total complete -- total inventory of INR 7,500 crores, which includes INR 2,500 of unsold inventory of One Midtown, right? So that's the start at which we've entered the financial year. And next year, just to give you a headline, we are really looking at launching 7 million square feet, right? Which will be primarily residential developments across different markets of Gurgaon, New Gurgaon, DLF 5, Chennai and Goa, right? That's broadly the plan. And in North, Panchkula, the Tricity. So that's broadly the plan. And you will hear more of it when we meet next week.
Yes. The question on retail in terms of the pipeline for development, I preface by saying that the comeback of demand for retail after the 2, 3 waves of COVID that have been there is strong, and we continue to believe that organized retail will continue to grow faster than the growth of retail. We have programmed to do about 5 million-odd square feet of retail developments. The biggest of this will be Mall of India, Gurgaon, which I would say would not happen in the next 3 years, but it will take a longer period because of the sheer size and the intricacy of planning that goes into it. The details of this, as Vivek said, will share it in the next week meeting. Suffice to say that it will more than double our size today over the next 5-, 6-year period.
The next question is from the line of Saurabh Kumar from JPMorgan.
Sir, a few questions. The first is your other expenses in this quarter have gone up quite sharply. So could you just explain why that is, this INR 320 crores versus last quarter was INR 202 crores? And the question related to that is, sir, basically, we still have a lot of recognition coming from Camellias, yet the margin is not moving to that, to the 35%, 36%, at least on a quarterly basis, what we're used to. So that's the first one.
The second is essentially on the interest cost. So you are showing an INR 130-odd crore interest cost on your cash flow, your gross is INR 4,700 crores at 7%. So it should be lower. So why is this interest cost, both on the P&L and cash flow higher?
And the third, sir, is essentially on the rental -- on this retail income. What is the run rate right now? So we had Omicron, which may be impacted in Q4, but should we think about this INR 160 crores as a number? So what I'm really trying to get to is what is the run rate, where DCCDL is on your rental income.
So Saurabh, the retail run rate is about INR 170 crores to INR 175 crores, but that's the run rate -- exit run rate. I think in Q3, Q4, we should -- if there is no further COVID, we should do better than that.
So sir, the DCCDL would have now gone to basically INR 740 crores plus INR 170 crores, that's INR 910 crores office -- I mean rental run rate.
At INR 170 crores, if you sort of multiply it by 4, you are at INR 680 crores, INR 690 crores, we should cross INR 700 crores.
Okay. Understood.
Okay, Saurabh, So you have asked me 3 questions. Let me start with the margins first. So if you -- I'll come to the quarter clarification later on, but I first want to really talk about how is my full year margin looking like? And let me start by talking about the product margin first. So this full year financial year '22, our product margin stand at 52%, which is an improvement of 460 basis points compared to last year. So the first message to you is our margins are improving, and they are improving year-on-year, right? So that's #1.
Now if you compare -- and within the quarters, also, if I really look at my quarter 4 margin exit is 51.5%, so which is very much in line with the yearly average. When you compare my margin quarter 4 versus quarter 3, there is a slight drop of 100 basis points, which is because of product mix. So broadly, yes, within the quarters, there will be some variation. But overall, if you really look at, we are moving in that direction of consistently maintaining and improving our margins upwards of 50%. So that's the first message I want to give you.
The second thing you asked me about, other expenses. Like again, I'll start if you really look at our other expenses on an annualized basis, they are -- they have grown by 5%, right? I'll say that's largely because of 2 reasons. One is other expenses has a significant part of scaling up expenses when your business scales up, right? We end up paying more brokerage and marketing expenses, right? So compared to last year, our business has more than doubled. So therefore, there is an impact of that. Plus, there is a small impact of inflation. So on an overall full year basis, our other expenses have grown by 5%. But you are absolutely right, when you compare quarter 4 to quarter 3, that is showing an increase of 58%. And that's largely because of 2 reasons. One is the scale-up cost, and one is some year-end provisions which we make every year.
So when you compare my quarter 4 with quarter 4 of last year, you will see that the numbers are almost in line. Even the last year quarter 4 was high at INR 302 crores, right? But what I want to give you a comfort is that on a full year basis, I think that the costs are very much within control and have grown by 5% despite business growing by more than 100%.
The third part of your question was interest cost, P&L and cash. Yes, there is a gap, and that gap is largely to do with the in-base accounting standards. So there are some adjustments, which you see we have to make in P&L, which are not there in cash flow, and that's what is broadly the difference. Moving forward, we expect this interest cost, what you see in P&L, to be close to half, right? And so I think despite the rate increase, we have committed to really bringing it down to less than half for next year.
The next question is from the line of Kunal Lakhan from CLSA.
Sir, my first question is on our free cash flow. So if you look at last 3 quarters, we have been generating free cash flows of INR 500 crores to INR 700 crores a quarter. I mean going by our current debt levels, and we should be debt-free in the next few quarters. Just on a broader sense and over a midterm, like how would you look at utilizing this cash? Would we look at land acquisitions, particularly outside of NCR market? Or any thoughts there?
So you're absolutely right. I think we had a good year when it comes to generation of free cash flow. So -- and we are confident of sustaining this performance as we get into '22, '23. Now while our collections are likely to improve this year, at the same time, I'll say our construction outflow, which is coming both from the launch projects and the CapEx plans we have, we are expecting a significant increase in our construction outflow during the current financial year. So a large part of the cash will get utilized there. And that's something which is very, very important. Because the more you spend, the faster you construct, the earlier you are able to realize. Because all our new product launches, the collections are linked to the construction time plans. So that's one.
Secondly, there is a lot of cash we'll be putting in terms of getting the approvals for the projects which we are going to launch in the current year and also getting ready for the next year. So there will be a significant outflow for that, right?
In terms of are we really looking at deploying capital for buying land at this point in time, right? We -- I think we have enough land bank to really manage our product pipeline for the next 5 years, right? But yes, there could be some capital deployment to buy small portions of land, right, to make the existing land bank more contiguous, which will be used for our launches, right? So I think that's broadly what we are really looking at in terms of broad utilization of our cash. And of course, as you know, we've also really this time, the Board has recommended to the shareholders for an increase in dividend, and that will also result in some outflow -- additional outflow in '22, '23.
Sure. That's helpful. And my second question was on -- again, on the new launches. So if I look at your launch pipeline, you have about 7.5 million square feet planned for the next year. But beyond this, would you look at like new launches in the luxury segment in Gurgaon? Besides the Independent Floors project. Because you've been doing that, but besides Independent Floors project, would you look at, like, say, crest category kind of project, particularly in Phase 5? Just any thoughts there?
Yes, Kunal. Aakash here. So we'll be looking at launches in the luxury category. We'll be looking at launches in the premium. As Vivek mentioned, that some of this, hopefully, we'll be able to discuss when we see you all next week in person. But for sure, DLF 5 has got a lot of, I'd say, right now, square footage to monetize. We've got -- the whole story of DLF 5 today is now hovering around -- Camellias hovering around INR 50,000 a square foot. Crest is hovering around INR 25,000 a square foot. And these are second sales I'm talking about. So they've been further ratified, validated and not one in Crest have been, I'd say, I can safely tell you there've been almost 100-odd transactions now in price points nearing what I just mentioned to you.
So yes, obviously, how DLF 5 was conceived earlier, and how it has built -- and the kind of infrastructure, both the point of view, hard infrastructure and social that we've kind of worked hard to put together, now is the time to monetize. So you will see a lot of that happening. Plus, as Vivek mentioned, Pan India, there's going to be developments all across in Goa and elsewhere. So those are also luxury -- they will fall under the luxury pipeline. So right now, we're going to be embarking on a reasonably aggressive launch plan this year. And of course, yes, whatever residual that we have, we'll sell that, too.
My last question is to Mr. Khattar. I mean, if we look at the occupancy levels, they've clearly improved this quarter, so that's great. But how should we look -- firstly, like what's the physical occupancy in your parks? And what's the outlook there, say, where do you -- where do you see it going in the first half or second half of FY '23? And again, your comments on physical occupancy outlook going ahead.
So first of all, we don't have a park. We are blessed with a number of parks. So let me go one by one. Cyber City, the occupancy is now -- the physical occupancy is around 35%, 36%, and we are seeing a growth in this week on week. I believe this being our largest IT Park, by Q2, the occupancy level should exceed above 70%, 75%, which would be more near normal. Because at no time is that 100% occupancy with people falling sick, and people traveling, et cetera, et cetera. That's one.
Chennai has been a very pleasant surprise where the occupancy is in excess of 80% today. It has picked up in the last 2, 2.5 months, and it is coming to -- it is now normal there. And it is coming to pre-COVID levels very, very quickly. And I think it should be another few weeks before it comes to that level. Hyderabad, unfortunately, the occupancy is still at around 20-odd percent. And so is in Calcutta between 20% and 25%. I believe it has more to do with the industries in the U.S. and their coming back to office, which for some odd reason, has a little bit of a rub-off effect on those companies in India also. But by Q2, I believe that occupancies will be fairly healthy to normal.
That's very helpful. And all the very best. I look forward to you next week.
We have the next question from the line of Manish Agrawal from JM Financial. The question is, first, what are our plans for DLF-Ph-V once Camellias sellout? Second, any particular reason why the area and rent per square feet has been restated for all DCCDL assets? Third, what would be the gross leasing number this quarter in DCCDL, reflecting the 2% PPD rise in occupancy to 88%?
So Phase 5 launches, we just covered that in the last question. And we will, as I said, the potential in Phase 5 is honestly infinite, and we have displayed a lot of strength in terms of realizing some values today, which I just mentioned in the previous question as well, in both luxury and super luxury. So there, you can be rest assured of what we are doing and how we are going to be planning those particular launches and monetizing the price points in DLF 5. So once Camellias is done, there will be both in the luxury and super luxury space, both you will have to watch this space, but there will be launches going forward. Rest, Khattar can take.
Yes. If you could please repeat your question. My apologies, I did not get it the first time.
Sir, the second question?
Yes, please.
Any particular reason why the area and rent per square foot has been restated for all DCCDL assets? And the third question is what would be the gross leasing number this quarter in DCCDL, reflecting the 2% PPD rise in occupancy to 88%?
So the first question first. About a year back, we did a market survey and found out and realized that the factor which you were doing on so-called the occupied area, the factors that we were using were far different from what the industry has moved on to. While we were the pioneers in starting at factor about 15, 20 years ago, but the industry had moved to factors, which were different. Just as an example, if we were doing a factor of 80%, the industry had moved to 70%, 72%. And what we were feeling is that, ultimately, when the market was trying to compare our rental rates with the other rental rates, we were at a handicap because we were doing it at a factor which is very different to which the industry was doing.
So then we spoke to the ITCs. We spoke to some of the large tenants. I must say, I spoke to some of our friends on this call today, and we decided to move to what the industry norms were. And we decided to start moving on it slowly. So what we did is that the new developments that we are having in our portfolio will be on the new factor norms, and the older ones as the tenancies keep terminating or the expiries keep coming, we keep moving to the new factors. We have done it quite successfully in the last about 6 to 8 months, and we have not had any issues with the tenants who have realized fairly well that the total outflow they have on -- of the rental remains the same. It is just that the factors have changed. And therefore, we believe that in the next, say, 12 to 18 months, we would have predominantly and substantially moved to the new factors that we have. And to 1st April onwards, our reporting will be on the new factors.
In terms of the new leasing that is there, by next week when we meet, I'll be happy to share with you what the plans for the next full year are. They are pretty ambitious and probably equal to or higher than what we have in the pre-COVID times because we have developments going on in Gurgaon. We have developments going on in Chennai. We have development going on in Noida. And each has a separate geographic market, which gives me a fair amount of mitigation in my geographic list on the portfolio. What it is for this quarter, this quarter will not be a total for the year divided by 4. Because typically, the first quarter is slower and then it starts picking up. And my experience is that the quarter 3 and 4 roughly are 60% to 65% of the total annual business [indiscernible]
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
Maybe just trying to come back to your earlier answer on capital allocation for fiscal '23. So it's good to see money going back into construction, into business, into growth. But will that leave any surplus cash -- free cash flow for deleveraging?
Sameer, yes, the answer is yes.
Yes, right. So we have -- we will have hopefully enough headroom to continue deleveraging.
May I intervene? So Sameer, I think Vivek's answer is correct. That obviously, the surplus cash flow will be used for deleveraging. But with due respect, INR 2,600 crores net debt, deleveraging questions almost seemed like yesterday's story.
While that may be true, but it's a low level of leverage. But to get to no leverage or cash positive is also a good thing. The idea behind asking this question is just how should we think about this balance sheet going forward. That was the whole idea. So Vivek, coming back. This fiscal '22 was quite phenomenal in terms of INR 22 billion odd sort of free cash. So is it going to be a meaningful number or a small number when we think of fiscal '23?
See, I'll not like to give any number, Sameer, but what I would like to tell you very clearly that our collections last year were 4,500. And as we scale up, my collection numbers are likely to improve, right? Quarter-on-quarter. So that's the first thing I would like to say. Secondly, if you really look at my cost base, I'm not expecting my fixed cost to really move significantly up. Yes, there will be some movement because we are scaling up plus inflation. But whereas if you really look at my interest cost, that's likely to significantly come down. So that's a bit on cost.
Third is my construction outflow, which is directly linked to scale-up. I have already talked about there will be a -- like this year, '22 financial year, our construction outflow was INR 600 crores, we expect that to double next year. So there will be a significant outflow there, which is again linked to scale-up, plus there will be an approval outflow because there will be approval costs incurred for getting ready for the current year and for the next year, plus there will be some outflow -- net outflow because of the dividend, what we have really proposed, right? So net-net, net-net, I think -- it's difficult for me to really, at this point in time to give you a number. But directionally, I think we are looking good is what I'll say.
Okay. That's very helpful. And the second question is on DCCDL. We had the exit office rental at INR 744 crores odd. So what are the levers for growth for fiscal '23? And what could be the exit rental in office of DCCDL? And second part related to that is, how are you now thinking about your REIT plans for this entity?
Okay. There are a number of questions. Let me take them one by one. Our exit rentals, as we have guided earlier, and this is to be Saurabh's pet question, which he hasn't asked today, maybe he is convinced of it by now. Our exit rental for FY '22 are INR 3,900 crores. And our exit rentals for FY '23 will be INR 4,400 crores to INR 4,500 crores. The growth in rentals is going to come from 3 buckets. The first bucket will be the organic growth that takes place in the existing portfolio and offices. Two, from retail because retail, we believe, that if there is no virus, this will be a full year of income earning compared to the previous 2 years where the retail earnings were hindered because of the malls being closed. And the third bucket is the new assets, which will -- where the rent commencement dates would commence in FY '23, which is primarily Downtown Tower 2 and 3.
Yes. And on the REIT?
On the REIT, we have guided on the preparations. The preparations are in an advanced stage. There's been a fair amount of discussions with the bankers, tax advisers, et cetera. And our preparation should be ready in the next couple of months. Thereafter, it is for the shareholders to decide when they would like to do it. Ashok, would you like to add to that?
So I mean to Sriram's point, yes, you're right. Most of the key decisions in terms of downstream mergers and all have, I think, by and large in principle being frozen, the asset perimeter has been frozen. We will -- I think in some time in the next 4 weeks, have a Cyber City Board meeting, et cetera. So I think those issues are now hopefully behind us. I think we should be, to Sriram's point, in the next few months completely ready.
Then it's a question of frankly driven by a multiplicity of factors, including the interest rate [Indiscernible] the basic timing comfort of the 2 shareholders and the improving vacancy levels, which will drive the exact timing of the REIT. So there, I think, frankly, I would hate to conjecture on a speculative time line. But as far as readiness is concerned, I think we are hopefully making good progress there.
Okay. And with your permission, one final question, any update you can give us on the HSIIDC project, Udyog Vihar. How it's looking like, and what's the sort of completion time lines you're looking at?
Okay. So that project is now -- has a name ATM Place, it's called. Sriram has christened it ATM place. In fact, the company is also, I think, going to be changed now. So the construction contracts have been awarded. The principal contractor has been signed up. The financing is completely tied up. The building plans and all the electricity approvals, I think, have been obtained. The excavation is at advanced stage. I don't know, Sriram, but I think we are looking at a 3-year completion time line?
So Ashok, there are those 6 towers that are there. 4 towers will start getting completed over the next 36 months period.
Yes. Exactly.
The next question is from the line of Puneet Gulati from HSBC.
Sriram, my first question is on the area change, which you talked about on the DCCDL, owing to some factor changes. When you complete all those changes, what should be the area be, which has already increased from 36 to 37.9. What should it be post that?
So that area change, let me put it in 2 buckets, offices and retail. First of all, retail, there is no change. In offices, the -- what we have decided is that all the areas in the north and the IT park in South will be at a at a factor of 70%, whereas the IT SEZ in Chennai and Hyderabad and the IT SEZ Kolkata will be at 75%. This is just in keeping with the market norms. So that area of -- will go up, in my view, between 10% to 12%. Yes. And what has been reported this time in the presentation is that the new factor, which the area now is about 37 million.
And so it already captures the factors in which you have to get agree with the...
Yes, yes. So therefore, just to put it in perspective, if you see, say, the vacancy, the vacancy percentage will still be at 12%, but the volume of vacancy may look higher because the overall volume has gone up.
Right. And the rentals have also been revised downwards in some places, I guess.
Absolutely. So a tenant who was earlier paying INR 10 lakhs a month as rental will continue to pay INR 10 lakhs rental per month. But what we foresee is that as we go into the future, next 4, 5 years, our flexibility to get better rental realization will be higher because we've just taken down the rentals by 12%, 13%.
And this exercise is only for DCCDL, not for the DLF commercial assets?
It is for the entire portfolio. For example, DLF is making an IT Park in Noida that also will be at the same factor as an IT Park in DCCDL.
Okay. But the existing DLF Center, Gateway, the DLF 5 [Indiscernible] haven't changed.
Yes. The Gateway is a building which DLF has its good company. So it is neither here or there, one horizon center, which we had to chase was already at the 70% factor. So there was no need to change there.
Okay. Great. That's useful. My second question is on your sales for One Midtown. So obviously, there is some bit of rounding off it in -- So last quarter, you sold 0.6 million square feet for some INR 700-odd crores. This quarter, again you sold 0.6, but for INR 1,250 crores. So how should one think about realization for these products?
Could you repeat that? Realization for?
So last year, when you reported sales of One Midtown, it was around INR 700 crores for 0.6 million square feet. This time, you reported sales of some INR 1,250 crores, again for 0.6 million square feet. So has the realization gone up by 70-plus percent? Or is it some of rounding of them.
No, no. I think, Puneet, you have picked up some wrong numbers for the last quarter because the numbers you are talking yields INR 12,000 per square foot, and this was actually launched at INR 18,000 plus if I'm not taking mistaken, Aakash. So I think [Foreign Language] the numbers that we have for last quarter may need to be reconciled off-line with our team.
Yes. And last quarter should have been 0.4 and below. Yes, and not 0.7. And to what Mr. Tyagi just mentioned, we launched it in 18. We are about 21.5 right now. And so yes, that's where we are. We're happy to discuss it off-line with you or when you're here because we've arranged those business as well.
And lastly, you also shared this number of the money to be spent, right? Between your products which have been launched. Can you divide it between the products which are -- which are largely Camellias where you still have to do some bit of handing off, but are getting [Indiscernible] in the rating and the new products which are just launched?
Sorry. You will have to possibly repeat this question, please. Sorry for that.
No worries, sir. So there is an INR 2,077 crores of residual construction costs. Can you divide between new products and the older products?
Okay, okay. Yes, so out of INR 2,000 crores plus of construction cost, old projects will be INR 400 crores, all put together, and balance is all new projects.
Okay. Understood. So what used to be an INR 1,000 crore number 7, 8 quarters back is now only INR 400 crores?
Yes, yes. That's right. That's right. And that's -- we are mostly towards the last phase of the project. So these are all retentions and all which hopefully will get cleared in the next 6 to 12 months.
Got it. So my last question is on the land bank monetization. In your presentation, you talked about 20% of land bank monetization can be done through scale-up, which is almost, as I said, 30 million, 35 million square feet. So should one think that's what you can monetize beyond the existing 35 million in next 5 to 6 years?
I think, Puneet, I think it will be good we keep this forward-looking questions for the next week. I think we've given a guidance for the next 5 years. Of course, we can continue to monetize beyond 5 years. But I think we'll be able to share more details when we meet next week.
We have the next text question from the line of Saurabh Patwa from Quest Investment Advisors. The question is: How do we see the impact of rising interest rates on a commercial real estate business in the context of a rental yield expectation?
So if I may, the rising interest rate will have 2 implications. One, as Vivek's presentation has clearly shown, is the impact of the interest rate of DCCDL which has been -- if I'm not mistaken, Vivek mentioned about INR 150 crores to INR 170 crores on a post-tax basis as the worst-case scenario for that. I think the point that you are asking is more on the impact this will have on the yields which in terms of the amortization value of Cyber City. And there, I'll obviously defer to Sriram. But frankly, we have seen in the past also that interest rate increases and decreases don't necessarily translate in a linear fashion to the yields.
And that if you see the pricing of the 3 listed REITs before the 40 basis point increase and after the increase, actually, there hasn't been a dilution in their valuations. So yes, on a sustained basis, I'm sure there will be an impact. But I think it will be difficult to speculate, but that impact will be like if the interest rates go up by 200 basis points, does it mean that the cap rate moves from 8% to 10%? Maybe not. I mean that is something which obviously the market force will determine. But all I'll say is that it will not necessarily be a linear correspondence, Sriram.
What Ashok said was on the yield side. On the bank interest side, the experience has been that in any interest rate cycle, the banks do not necessarily pass on the increase in the CRR and other treasury rates on a 1-to-1 proportion to the borrowers. And to the good borrowers where we believe that the banking sector is a washed with money and quality credit is still limited. We neither got the benefit of the complete reduction in rates, and I don't think, going forward, we will be saddled with the increases as we go ahead.
So my personal feeling is that the total impact by proper negotiations and the relationships that we have with the lenders, our impact should not be in more than double digits.
The next question is from the line of Saurabh Kumar from JPMorgan.
Just 2 questions. One is what percentage of buyers would be taking a mortgage as a percentage of your last year's sales? The second is, in terms of like-to-like price increases, Aakash, what has been the like-for-like price increase in some of your key projects, including Midtown, Camellias, even the low-rise developments. So these are the 2 ones. And lastly, just as a follow-up to Sameer's question, point is that you have done INR 2,400 crores, all our costs are going up, but should not be seen other flash in the pan. The point is, can we generate an INR 2,000 crore odd run rate because your collections will also move up along with your outflows and everything? So do you think at INR 1,800 crores, INR 2,000 crores cash flow at DLF level is possible?
So Saurabh, the first one where you say like-to-like increase, what are you comparing that with?
So at this -- last year, at this time, what was like say, the price in Camellias versus where it is today? Or where you launch Midtown where it is today? Where you launched your plotted development versus where it was today? I just want to get a generalized sense of price appreciation because it seems that the price appreciation in your portfolio is far ahead of the market. So I just want to kind of get the reason why is that happening.
Yes. No, thanks for saying that. I hope the [Indiscernible] here, including Mr. Tyagi take note of that. So thanks, Saurabh, but I'll answer that question for you. So Camellias last year around the same time was hovering around INR 37,500 a square foot. In fact, I just announced yesterday, we have gone up in Camellias in just the BSP price by INR 5,000 a square foot. We've reduced special discounts, if you noticed, by another 5%, which is another INR 2,000, INR 2,500. And we've reduced the special rebates by another INR 2,500. So in less than a year, we have been able to take the Camellias price points up by almost INR 10,000 a square foot, if not more. And we have demonstrated sales every time that we have done that, including a second sale kind of a transaction, which I'm happy to report to you, where an understanding has been reached, but obviously, it will have to be transferred to us right now.
Camellias today has just transacted at INR 50,000 plus PLC, which is 20%, which is INR 60,000 a square foot, just 3 days back. So this is not a transaction that is done through us. So the market has validated this now. And of course, the new price points are for everybody to see. Similarly, in One Midtown, we launched at about INR 18,000, about that much, and we are about anything between INR 21,500 to INR 22,000 a square foot we are selling. The only thing is that there are times that we have to take these calls wherein there is some amount of velocity that is obviously compromised, but we have to show strength in the product and in the region. And unless we do that, nobody else will. So a lot of my competitors, I see how they price their products. It's a volume game. I don't know how they meet their margins.
I don't know what their business plans are, but I mean, obviously, that is for them to tell. As far as we are concerned, I think our hurdle rates, our margins take precedence over sales or the velocity of it. So whilst we have to continue to make sure that we sell, but we also have to sell well in terms of the margin and price points. So we've done that also.
In fact, there are 2 more things that I'll tell you in Floors. From last time this time, I'll give you an apple-to-apple comparison, there is a Phase 3, which we will take you to when you are here next week. We sold that just last year at INR 10,500 to INR 11,000 a square foot, the same launch that we did not see -- a similar launch in the same geography that we did on the 28th of February, we did it at INR 16,000. And again, we sold about almost -- we are almost about 70% sold in that project again. So there, I just came back from a New Chandigarh, and I just informed the Board yesterday about we launched 15 months or maybe 16 months back, there were some residual plots that we sold there. And when it came to me, we started to sell them at about INR 38,000 or max INR 40,000 a square yard.
Just about a month back or 1.5 months back, we exited that project of whatever residual stock that we had at INR 65,000 a square yard. So in Chennai, the plots that we just launched, we had budgeted at about INR 2,900. We -- when we got into the market, we projected it to be about INR 3,200 a square foot because Chennai sells plots also like that. But you'll all be happy to know that the price points that have been achieved are upwards of INR 3,750. So wherever one has seen opportunity, wherever one has seen how we can kind of increase it without disrupting the market, we have taken that punt.
And having said that, obviously, the situation has been when it increases, there is that fear of, I'd say, a little bit of a pushback, but that also we kind of circumvented by the brand name and the quality. So I think, overall, across price points, across product lines, we have demonstrated not only this year Saurabh, you've been tracking us for the last 3, 4 years, wherever even in residual stocks, we have gone ahead and sold at premiums and have not even discounted those projects which are -- which were delivered 5, 7 years back. So I think that is something that we take very seriously in this organization.
And then Saurabh on your point of mortgage, I think I'll give you some data points. You see in the segments and in the markets we operate, overall, if you really look at the percentage of buyers who take mortgage is less than 50%, right? I can just talk about One Midtown because that's what we very recently looked at, right? So if you really look at the profile of buyers who have bought apartments in One Midtown Delhi, they are, by and large businessmen or professionals, which is doctors, CAs, lawyers, right? There is very less percentage of customers who are salaried, right? And we've actually looked at the profile. They are normally in terms of how many of them have taken mortgage will be somewhere between 35% to 45%. That's broadly the range that -- that's the range people who have really gone for mortgage, right?
So -- but when it comes to super luxury, right, the numbers are insignificant, possibly. I don't have the numbers, but they will be less than 10%.
No, also, I'll just take -- give you one more data point here on One Midtown. If you've seen that area and you've seen the history of how that area has transacted business and bought real estate over decades, we've even gone and -- I'm not saying we are going to change things around like this, but we've attempted to do -- we've done a lot of clean business. They are not used to spending this kind of money, clean money on real estate. This particular thing to change that whole trend, change the way people are buying. All this is extremely critical for you all also to know because those price points that we have also achieved there are demonstrating that there is a certain way that we do our business. And again, it's the service and the quality is just not about the brick-and-mortar.
So to Vivek's point, when I met Citibank, they mentioned to me that 38% of their books come from West Delhi, and they kind of do all that. So a lot of bank interest, a lot of, I'd say, loans and everything organized, but their people kind of work mostly on internal approvals, and they kind of work around all that. So as far as One Midtown is also concerned, we are way ahead of that price curve there in terms of the numbers achieved also. So I think that is also something that we continue to, I'd say, fight on a daily basis.
And to your last question, Saurabh of on cash, I think my response is not going to be any different from what I have already shared. And Sameer asked the same question, right? So all I want to say is we are committed to improving our cash flows year-on-year.
The next question is a chat question from the line of Nikhil Kanodia from HDFC Securities Limited. The question is, what are the price hike taken at blended portfolio level, Camellias, One Midtown?
I think we just answered that. Twice already. I hope that's okay.
We take the next question from the line of Sameer Baisiwala from Morgan Stanley.
So a quick question. I mean, on your Slide #10, I think you had earlier mentioned that 50 units of Camellias you would like to retain for rental purposes and not for sale. But here in your finished inventory, I think you are showing 2,000, roughly 200 crores. So I just wanted to check whether you have excluded that from here or not. And are your plans to keep it for rental are intact?
So the rental plan, yes, once we saw the kind of demand and all that. So obviously, what we did was that we sold some rental leased transactions. What we did that is that I'm not sure how many of you know this, but Camellias today is today leasing at about INR 7 lakh a month, which is -- if I just do an ROI on that, it's about almost 3% on rental values at about 40,000, if I'm just averaging that number because a lot of people had bought it at much lesser price points. So there is a phenomenal return that this asset is giving people. What we are -- what you are seeing there is what we have done is while we'll continue to rent because that will be a very big, I'd say, advantage for the NRIs, and I'll just make one quick example there. But yes, we will continue to do these, the balance of this.
Maybe we'll split that into 2, but we will rent them and then we will monetize them soon. So we are not going to be holding the stock for a later date, but our process -- and this particular thing because our NRI transactions and sales kind of came to almost a halt because of COVID. And 15th of May onwards, we have just relaunched the NRI plan, which for products like Camellias entails a lot of tours and presentations. And therefore, this particular thing happens.
I'll give you one quick example of an NRI from Singapore who bought Camellias online, who we arranged for this particular -- for this gentleman, a turnkey arrangement. We don't do it, but we arranged a turnkey arrangement for construction and everything else. We did that online over the last 2.5 years, 2 years. And we arranged a rental also for him online. The gentleman who lives in Singapore is for the first time going to come into India, and actually see the Camellias for himself and kind of experience, but he's already -- with his investments that he has made, he's already started to make about INR 7 lakh plus on rentals sitting in Singapore. So to your point, this is a model that we will use and we will try and pitch this. We already have in excess of over 100 NRI interest across.
I think, Aakash, I got your point that you would rent it, but eventually, DLF is to sell them down. So a reason to keep them in the inventory numbers, right?
Yes, that's right.
Okay. Sir, one final, how do you -- how do we see the future of New Gurgaon in the sense, not for resi, for the commercial bit? Other than annex development that we're doing? Are you thinking anything big over there once Cyber City gets saturated? Can you make a Cyber City 2.0 over there? Your thoughts on this, please.
May I take that question -- so New Gurgaon is developing extremely well. And as we go forward, we do see a potential of creating a Cyber City in New Gurgaon. I won't say it will be in the very near future, but over the years, yes. Having said that, there are 2 very large occupiers like American Express who are talking to us to put up their campuses there. We are also looking at creating a high-speed shopping center there of roughly about 0.5 million square feet. This is on the commercial side. And once the momentum catches up, we will definitely look at that as the future growth, which will come. In the event that we have sort of saturated our land banks in Cyber City and in Downtown, we will also look at it independently as an independent price point compared to what we do the rental at Cyber City and what we will do in New Gurgaon, but it's definitely in our horizon and in our focus area.
Thank you. Ladies and gentlemen, we take that as a last question for today. I would now like to hand the conference over to Mr. Ashok Kumar Tyagi for closing comments. Over to you, sir.
Yes. So thank you once again for taking time off for attending our call. I think as Vivek and many of you mentioned, this has been a pretty robust year on sales front, on finance front, and frankly, the resilience that our commercial leasing business has shown. The market continues to be robust, and that's the reason we are scaling up and the pace of scale-up should hopefully only catch even more momentum. We should see a higher amount of sales. The free cash flow should continue at the broadly similar trajectory as it was in the last fiscal.
Having said that, both the commodity inflation and the interest inflation and the general sort of, I'd say, some headwinds that one can see in the Western markets and maybe in India also we should be slightly more cautious for at least the next 2 to 4 quarters. And while obviously I think there's no fundamental change and no fundamental shift, but I think one needs to be slightly more cautious. On the commercial leasing side, as I mentioned, frankly, our offices business, despite some extremely tough times demonstrated phenomenal resilience in collections and in ensuring that the customer stickiness and our CapEx build-out continues. And frankly, I think, hopefully, we'll all get in to discuss all of these points in far greater detail next week when we hope to see most of you physically in Gurgaon. Thank you so much.
Thank you, sir. Ladies and gentlemen, on behalf of DLF Limited, that concludes today's session. Thank you for your participation. You may now click on the exit meeting icon to disconnect. Thank you.
Thank you.