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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to Godrej Properties Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [ Amit Shah ] from CDR India. Thank you, and over to you, sir.
Thank you. Good evening, everyone, and thank you for joining us on Godrej Properties' Q3 FY '22 Earnings Conference Call. We have with us: Mr. Pirojsha Godrej, Executive Chairman; Mr. Mohit Malhotra, Managing Director and CEO; and Mr. Rajendra Khetawat, CFO of the company. We would like to begin the call with a brief opening remarks from the management, following which we will open the forum for an interactive Q&A session. Before we begin, I'd like to point out that certain statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I'd like to invite Mr. Pirojsha Godrej to make his opening remarks. Thank you, and over to you, sir.
Good afternoon, everyone. Thank you for joining us for Godrej Properties' Third Quarter Financial Year 2022 Conference Call. I'll begin by discussing the highlights of the quarter and then look forward to taking your questions and suggestions. Firstly, I hope you and your families are staying safe and doing well. Just when the pandemic seemed to be coming under control, we've been hit by this Omicron wave, which has spread significantly faster than the earlier variant. Fortunately, most people have had relatively mild disease and the rapid spread is also resulting in lower duration for the wave. For these reasons, we believe the impact of the third wave on the economy and ongoing real estate recovery will be very limited. We believe the Union Budget presented earlier this week was very supportive of the long-term growth of the real estate sector in India through its focus on urban infrastructure and the digital economy. The government's sharply expanded CapEx target with planned growth of approximately 35% will create a backdrop of opportunity for the real estate sector. It is especially encouraging to have the Finance Ministers thinking on improved urban planning and improvements to the ease of doing business in the sector through announcing investments into expert committees for urban planning and through encouraging the states to adopt the Unique Land Parcel Identification Number, which could deliver structural change that will unlock the long-term potential of the sector. It was also encouraging to see that for financial year '23, INR 48,000 crores has been allotted under the PM Awas Yojana for affordable housing. After recording a strong sales performance in the second quarter of the financial year, GPL sales were moderate in the third quarter with growth of only 4% year-on-year to INR 1,541 crores. For the 9 months, we have sold 6.6 million square feet of real estate worth INR 4,613 crores, which represents a year-on-year growth in booking value of 13%. Several of our planned launches slipped into the fourth quarter due to delays in regulatory approval. With a strong launch pipeline for the current quarter, we expect a blockbuster quarter, which will allow us to deliver strong sales growth for the year. From a financial perspective, we saw year-on-year revenue growth of 30% to INR 399 crores; EBITDA growth of 42% to INR 115 crores; and net profit growth of 171% to INR 39 crores. More importantly, we delivered robust net operating cash flow of INR 385 crores, led by strong construction activity across all our sites. We expect project completions and therefore accounting revenue and profit to increase meaningfully in the quarters ahead. On the business development front, we added two new residential projects with a saleable area of approximately 1.6 million square feet in Bangalore and NCR. Our project in Sarjapur in Bangalore will offer approximately 1.5 million square feet of saleable area and will comprise of residential apartments and is a project where we own the land outright. Our project in Connaught Place in NCR is a joint venture, which is estimated to have a developable potential of approximately 130,000 square feet of saleable area, comprising of luxury residential apartments of various configurations. We also invested in a new commercial project in partnership with Godrej Fund Management, where GPL will have a 20% stake in a company that develops this project in Yerwada, Pune, which comprises of 800,000 square feet of leasable area. We exited a couple of our upcoming projects, Godrej Links in Mumbai and Bavdhan in Pune, due to the society and our joint venture partner, respectively, being unable to fulfill certain obligations. These projects have been in the portfolio for a long time. But as they have not been able to be launched, we've decided to exit them. Additionally, we have also chosen to withdraw from Godrej Anandam in Nagpur, and we'll not be pursuing the future phases of that project. I also want to quickly highlight a significant announcement we had today. The Board of Godrej Properties in its meeting today approved a potential investment into DB Realty Limited and also the setting-up of a special purpose vehicle, along with DB Realty to jointly undertake slum rehabilitation and MHADA redevelopment projects. Godrej Properties will subscribe to warrant convertible into equity shares aggregating to approximately 10% of the issued and paid-up capital of DB Realty for an aggregate amount of approximately INR 400 crores. Godrej Properties and DB Realty will each contribute an additional INR 300 crores towards the equity platform, focused on redevelopment opportunities in Mumbai. We believe this offers a lot of strategic advantages to the company. In Mumbai, as you all know, I think a lot of the best land parcels for the development are available only through redevelopment opportunities. And we believe this new SPV will be able to effectively use the complementary skills of each party to successfully scale up our presence in Mumbai. We believe this investment can lead to projects with a total booking value of approximately INR 15,000 crores and hope to launch the first project under this platform from FY '24 onwards. Our focus in the current quarter is to launch a large number of new projects, which we think will make this a very strong quarter for residential sales and also to add some exciting new projects to our portfolio. This combination will deliver a strong close to year and an ideal platform for financial year '23. On that note, I conclude my remarks and would like to thank you all for joining us on this call. We'd now be happy to discuss any questions, comments or suggestions that you may have.
[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on a good set of numbers. So my first question is on some of your projects. If you can just update us on the Bandra, Worli, Ashok Vihar and the Wadala projects in terms of launchability and approval status. That's my first question.
Thanks, Parikshit. I think, of those four projects, the two that are most imminent from a launch perspective are Ashok Vihar and Wadala, both of which we expect to launch either by the end of this quarter or early in the next financial year. I think, Worli, we also expect to launch within the next financial year but probably towards the later part of the financial year. Bandra, the visibility is somewhat lower at the moment. I think the site clearance activities need to pick up before us having more clarity on the timeline for that, but -- so two of them, I think, over the next 2 to 6 months, and Worli later in the financial year and the Bandra one, probably FY '24.
Okay. The second question is on the last call, you had highlighted that you are looking to ramp up your premium segment in the Mumbai market. So obviously, this ties up with DB Realty [indiscernible] to start. So if you can just give some more clarity on the strategy and then why you can't do it yourself, why do you need a partner like DB Realty on the redevelopment of the opportunity in MMR? I mean, you've been a very old player traditionally in the segment. So what's the strategy intent of tying up with DB Realty for this and setting up a special purpose vehicle for [indiscernible] your premium segment plans there?
Yes. Thanks. I think, first of all, of course, we will have a strong independent plans for growth in Mumbai, including through open land opportunities, direct joint ventures, certain type for redevelopment, which we are comfortable doing on our own. So I don't think this is, by any means, our exclusive vehicle for development for premium projects in Mumbai. That said, I think, in specifically the slum redevelopment space, we do think that there are complementary skills that DB Realty and we bring to the table and that a partnership will be more effective than us trying to manage the site-level issues that are involved with slum redevelopment directly. We don't feel we have the capabilities to handle that nor do we intend to try to build those capabilities. So this partnership is intended to leverage the abilities that both parties bring to the table and scale up in a much more rapid fashion than would be possible, were we try to do this by ourselves.
Okay. So just last question for Rajendra. So why is the employee costs coming down every quarter. And in this quarter, it's at about INR 19 crores. So what is the reason why employee cost has decreased?
Sorry, I was on mute. So the employee cost, it's a matter how the employee cost gets allocated across projects because we have this allocation methodology like as the projects get added, there are new employee costs which gets allocated to the project. And also, it also has certain amount of provision for year-end bonuses. That's also on quarter-on-quarter, that keeps changing. So broadly, these are the two reasons because of which you will see slight changes into the quarter-on-quarter employee cost.
Okay. Just lastly, just to clarify on the special purpose vehicle, what will be the marketing of this project? So [indiscernible] launching [indiscernible] GDV of INR 15,000 crores. So what will be the marketing fund for this new project?
Godrej Properties.
The next question is from the line of Adhidev Chattopadhyay from ICICI Securities.
Just again, a follow-up question on this platform we are setting with DB Realty. Just wanted to understand what is the exclusivity clause with DB Realty. Because I think our listed and unlisted peers also have tie-ups in specific projects in this area of Mumbai. So what's the story on that, please? That's my first question.
Thanks, Adhidev. The understanding is that we would have a right of first refusal for all projects until the platform investment is consumed. Thereafter, if both sides are happy with the outcome, we can, of course, continue to scale it. But DB is also free thereafter to work with other partners.
So just to clarify, so there is an existing project split across multiple phases. And let's say, just one phase have been launched or whatever. For the balance, also this right of first refusal lies with you or that is something which is outside the domain of this agreement?
No. I think there'll be many projects. But of course, we're not trying to get into projects that have already been partnered with another developer. I think the opportunities are quite significant in the number of projects available and the structure, we also think, is quite significant. So I think in all likelihood there's another developer already done a particular phase, we might continue with them, though I think we would, of course, evaluate on a project-by-project basis.
Sure. And you mentioned that the platform is looking at a INR 15,000 crores of potential booking value. If you could help us understand what is the sort of margin profile and IR or whatever, other hurdle rates, you are looking at when you are going to be taking up these projects.
Yes. I think, again, obviously, each project will have its own nuances. But I think overall, given the fact that these projects will be in Mumbai and often in very prime areas of Mumbai and given that the land cost is typically lower as you enter in these structures and if you're buying land outright, we do think that these will be very margin-accretive projects as they get developed. But I think there's a wide range of potential price points and margins that projects could deliver.
If I may add, Pirojsha?
Yes, please go ahead.
If you take a look at our Bandra and Worli projects as a representative case, and in case you are quite similar projects through this SPV, the margin profile could be somewhere between 45% to 50%-plus in slum redevelopment opportunities. So we're getting land at cost in this SPV.
Okay. 45% to 50% is the thought guidance. And just one last question is on -- this is, I guess, for Rajendra to answer. We have exited a few projects, again which were highlighted in the presentation. Could you just share with us the total investment in these projects? And how much will you recover. If you can share it, [indiscernible]
So there was one project at Pune, Bavdhan. We have recovered our entire investment along with interest. MMR was something where we have just incurred on the approval cost and others because the redevelopment project didn't kick off with the change of UDCR. This was not feasible. So there was not much of an investment in MMR. Anandam, Nagpur, what has been done is there is -- we have given over the development responsibility, handed over that to the JV partner. The investment front is something which we will be recovering from the project.
Okay. And just one last, if I may, just I forgot to ask, what would -- in this DB Realty to be a 50-50 JV for all projects or it could vary?
Yes, 50-50.
50%.
The next question is from the line of Abhinav Sinha from Jefferies India.
Just wanted to check on the launch pipeline for the fourth quarter. So I mean, we have a very large sort of a calendar out there based on the project list. But I mean, is it fair to believe that 3 million, 4 million square feet is likely from this? Or you would look at a different number?
No, I think we've updated the sheet with what we think is the most realistic thing. I think that, as in any time, typically a couple of projects drop out due to some approval delays. So I would expect to see that, given that now we only have 2 months left. At the same time, there are one or two that are not in the sheet that we're hoping to bring forward. So I think it's going to be a busy quarter for us. We've already, I don't know, launched during the month, 4 projects across the country. And we have -- we hope to do about 10 launches during the quarter. So I think it should be a very good quarter for us from a launch perspective. And of course, that should flow to bookings as well as -- and I think we expect this quarter to be our best-ever quarter for bookings.
We already have three launches already underway in Pune as we speak. And we have got good visibility of sales in them. There's one project, which is under launch in Bangalore. There are two projects under launch in NCR, which are already there. So unlike other quarters, we have already started because a lot of it was spillover of Q3. So three projects in NCR have already launched. And we have a good amount of sales in them, three in Pune, one in Kolkata. So we have a strong sales already in place and a couple of launches, which we are expecting the approvals to come in post 15th of Feb. They will -- we will focus on them in the second half of the quarter. So we're pretty optimistic about the Q4 number.
Okay. And the third wave hasn't had much of an impact on either operations, construction-wise or sales as such, you would say?
Yes, Rajendra, do you want to take that?
No impact at all.
Okay. And last question, can you talk a bit about how pricing has been? We have seen some of your competitors report a very high pricing, for example, in NCR recently. I was wondering what's your take in different markets here.
Yes. We have taken price hikes already across projects and in most of the geographies. Most of these price hikes were taken to hedge the cost inflation, which has already happened. There was a very large cost inflation which happened last year. So we have mitigated it completely through price hikes across projects. Now different projects have had different price hikes. But we see a strong price hike. So like if I give you an example, in Pune project, we launched a project in Q3. We have another project next door, like exactly next door to that project in Q4. And there's a significant price hike, which we have taken. Similarly across portfolio, [indiscernible] projects we have taken price hikes. So we see good visibility on price hikes going forward.
The next question is from the line of Mohit Agrawal from IIFL.
My first question is going back to the DB Realty platform. Could you explain the rationale behind investing INR 400 crores in DB Realty? Like does it give you -- is it that because of their ROFO that you want to invest in that? Or what advantage does it give you to invest directly in the company?
We thought this combined structure offered a couple of advantages. One, I think the partnership with DB has now created both with us and with Prestige are quite going to be, we think, quite value-accretive for DB. So we do see some value creation happening at the entity level based on the projects we ourselves will be executing. So in a way, this was a way for Godrej Properties to participate in that upside that it is bringing through this platform. Additionally, I think, given DB's other commitments, this creates the funding for their investment into the platform. So I think those were a couple of the reasons for this structure.
Okay. Understood. And sir, could you give a sense of how -- you've given INR 15,000 crores GDV, how many projects could these be? And probably if you could give some sense on the locations within Mumbai, that will be? Like I'm assuming will it be towards the south of Mumbai?
I think it's a little premature for that. Honestly, I think today was the conclusion of sort of the strategic intent. The projects, while there are certainly projects already under discussion, I don't think that we have identified the clear number and exact location of all the projects. Some of the projects will still have to be added. And of course, the number of projects will depend on the scale, right? So you can have one project very large or more smaller projects. So I think the focus will be to do maybe four or five projects of the type we have in Worli and Bandra, which is 1 million to 1.5 million square feet approximately. So that's what we think can be done. And of course, if we do smaller projects, the number would increase and perhaps decrease a bit if we do one or two larger projects.
Okay, sure. And you had mentioned our -- you had mentioned our intention to do more than INR 10,000 crores of presales for next year. So firstly, is it on track? And secondly, if you could give some update on Vikhroli projects? Probably in the next year, are we going to see some launches there as well? That's all from my side.
Yes. I think the INR 10,000 crores is on track. Of course, we're still a while to go, and we're hoping to add quite a few projects to the portfolio this quarter, which would add to our next year number. But yes, I think we are still targeting a INR 10,000 crore-plus booking value for next year. And we'd certainly like to see a new phase in Vikhroli, we thought of that.
The next question is from the line of Pritesh Sheth from Motilal Oswal.
So first question is, I mean, a follow-up on DB. So our total investment from Godrej would be INR 400 crores for the preferential -- I mean, these warrants and INR 300 crores into the JV, so total, INR 700 crores.
That's correct.
Okay. And in terms of...
Sorry, just to add on, out of that INR 400 crores, INR 300 crores will go back to the JV, so [indiscernible]
Yes. Understood that. Yes. And my second question, so are the projects already there with DB in terms of tenders or land? Or you jointly would be sourcing the projects?
Mohit, do you want to take that?
Sorry, if you don't mind, can you repeat it? There was a bit of noise.
Yes. So my question was is the -- are the projects already there with DB in terms of tenders or land? Or you both are jointly going to source the projects and then develop?
We have already identified a couple of projects, which are at early stages with DB. We are also looking at new opportunities, which are at early stages with DB. So I think the idea for this platform is to either pick up something which is already with DB or look at externally what opportunities are there and then pick up what is best for the joint venture partnership. So as of now, [indiscernible], there are a couple of opportunities, but we haven't finalized which one we would eventually take up. That is something we will try to do over the next couple of days.
The next question is from the line of Biplab Debbarma from Antique Stockbroking.
Sir, my -- as a follow-up question on the platform, I'm just trying to understand, sir, what would be the contribution of Godrej, it's just the funds and sales and -- marketing and sales? Or you're also be involved in cleaning up these projects and business development in this -- in the platform? What would be your main role in the platform?
Yes, sure. I think the main role for respective partners will be, on the DB Realty side, largely around business development and preparing the site from an approvals perspective and from a vacation perspective to be ready for launch, and for Godrej Properties to do everything after that, which is do the entire project as we do in all of our projects. So I think from the actual marketing, sales, construction of the development, we will play a lead role whereas from the business development and preparedness of the site, DB will play the main role.
And sir, just a clarification, so all these projects that you have identified and you are evaluating from this platform, these are all our SRA projects, all our SRA projects or MHADA redevelopment projects? Are you, I mean...
Yes. I think that, that is certainly the focus of the platform. We may do other things in partnership with DB. But the focus of this platform is around slum rehabilitation projects and MHADA redevelopment.
And a final question on this is, I mean, all the identified projects that you have, are these -- I mean, are there works to be done to clean this up or there may be a few that can then clean up land...
No, no, no, ready to go. So that all of these will require work, which, as I said, we don't expect this to contribute to our launch pipeline for next financial year or -- and of course, not for this quarter.
The next question is from the line of Kunal Lakhan from CLSA.
Just again, on the platform, so we want to subscribe to 10% of the paid-up capital through warrants for about INR 400 crores-odd. Just wanted to understand the details on the valuations there. Because current market cap of DB Realty is about INR 2,300 crores. So [indiscernible] on this?
Right. There will be additional infusion from the DB promoters and from the Prestige promoters. And that is why the numbers are what they are. But our entry valuation is just under INR 80 per share. Rajendra, anything you want to add?
No, that's right, Pirojsha. So Kunal, it is a steady determined price. So it is a 10 days' average. So it will be -- as Pirojsha said, it will be just under INR 80 per share.
Just to follow up on that, so what will be the infusion by DB promoters and Prestige promoters?
So there would be -- I think they would be subscribing to sum, in total, around 8 lakh share. I can give you the detail -- I think that would be there. Exact detail, Kunal, I can share it with you offline or exactly how much DB is infusing and how much Prestige promoters are infusing.
Approximately, they're infusing around INR 600-odd crores.
INR 600 crores, yes.
Give and take, few crores here and there.
Both the promoters combined?
Yes. So INR 600 crores plus INR 600 crores, which is around INR 1,200, approximately what they're contributing, approximately.
Okay, fair enough. That helps. Secondly, on the -- from our side, from Godrej's side, will there be any Board representation on DB Realty?
No.
The next question is from the line of Swagato Ghosh from Franklin Templeton.
Question to Pirojsha. So one of your earlier comments, what I understood is that the INR 400 crores investment into DB Realty is purely financial in nature and was not related to the strategic investment in the JV. Is that understanding right?
No, I don't think that's totally right. As I said, there's a couple of things. One is, I think, there is the financial aspect to it, which is we do think that DB is structurally significantly improving its balance sheet through the investments DB themselves as well as Prestige are bringing in. So I think we're quite confident that the company will be on a stronger wicket going forward. This is also -- I mean, given some of the balance sheet stress we been under, this also allows them to create the capital for the platform. So I think this was helpful in pursuing the strategic platform itself. And most of the capital from this investment comes into the platform.
Okay. But they could have actually contributed in terms of their expertise and you could have contributed with the capital, right? That could have been our structure rather than using the money and then putting it in the platform.
Look, I think there are obviously a lot of different ways we could have structured this. But I think from our perspective, this overall is a very attractive structure. Almost all of the capital we're putting in does eventually end up in the strategic platform, which, as I said, we think, can be very supportive of our own strategy of growing across the key markets by allowing us to access land parcels in Mumbai that we normally wouldn't be able to individually get outside of this kind of platform. It also, as we said, allows us to participate in the upside that we think this platform creates for DB. So overall, we're quite happy with the combination of advantages this provides to both partners. I think ultimately, there was -- we do see strong complementary skills and an advantage of a significant nature for both partners in this structure, which is why we chose it. But as you rightly said, there could have been -- it could have been other alternatives.
Yes. I'm talking about the alternatives because it is slightly disconcerting that the partnership business with DB. And probably, the INR 300 crores can be a clear milestone-linked payment. But the INR 400 crores is done, it's invested. So probably, that -- if that was awarded, then that would have been probably better for a company of Godrej's standards.
No, I think the INR 400 crores investment is very clearly linked to the usage of that cash flow. So there's no -- it's not that one can happen without the other. The money invested of the INR 400 crores, INR 300 crores has to be put into the platform. That is -- we will, of course, ensure that, that is how the funds flow.
Just to add on, out of the INR 400 crores, as the Pirojsha said, INR 300 crores is going in the SPV, [indiscernible] INR 300 crores. And INR 600 crores, which is sitting in the SPV, will be -- the financial controls will be to ensure that it is rightly deployed between us and DB. So it's pretty safeguarded to ensure that the right things are done with the capital for both the parties.
No, sorry, so if there is any major problem that you figure out in, say, 1, 2 years and this capital is not deployed, you can actually take back your INR 300 crores. But what happens to the other INR 300 crores that you do not have any control over, right?
Yes. We -- can you just elaborate on that?
No. So I'm saying if there are, say, a few projects that you identified, but then obviously, if some problems crop up and the money is not invested for whatever reasons and you have to call off this JV, then what happens to the INR 300 crores that is coming via DB's share?
I don't think we're saying that there's 0 risk in any venture. Clearly, if things go horribly wrong, there is a way that some of this capital could be lost. But I think we're also saying that there is huge upside potential, both directly through the investment, given the [indiscernible], we think, is likely to unfold in DB, given some of the progress it's made on fixing its balance sheet and some of the progress that will be made with the additional funds that we'll see.And there's also a huge upside, as we mentioned, for us to be able to access strategic land parcels in Mumbai. So you're right, so in a worst-case scenario, we're cognizant this is not a risk-free structure. But I don't think most development investments are totally risk-free. But I think the risk-reward balance in this situation, we're quite comfortable with.
Sure. I'd love to understand offline just from what other structures are considered, but thanks for this. This clarifies it a bit.
The next question is from the line of Venkat Samala from Tata Asset Management.
Sir, I'm just trying to understand more on this particular investment into DB Realty. So supposing -- just further continuing the previous participant's question, supposing if things were to go wrong -- and this is again in the backdrop of one article I was just reading in the news that DB Realty has defaulted on payment of INR 700 crores just as recently as last month, right? So what kind of warranty checks have you done, which kind of gives you the confidence that DB Realty will be able to hold on its own? And I'm just not just talking about the INR 300 crore-odd investment, right, I'm just talking maybe from a medium- to longer-term perspective.
Sure. I think we've, of course, done some due diligence and we'll be doing more. But I think essentially, what we're saying is that we're quite aware of the portfolio of projects they already have signed up with a developer like Prestige. We're quite confident of the projects that we will be able to sign up with the operating cash flow that we'll generate for DB through the development from -- once the site is ready by developers like ourselves and Prestige. And we're also, of course, cognizant of this upfront investment that is going into DB from both ourselves as well as the DB promoters and the Prestige promoters. And we're confident that, that combination of improved operations due to these partnerships, combined with the upfront and significant capital infusion into the company, will strengthen its balance sheet. So I think one of the things that we liked about this structure is that it allows -- since Godrej Properties, we think, is playing a part in driving that structural improvement in DB's balance sheet, it is also participating in the potential upside that results from that.
Okay. And since you are making a lot of references to the Prestige promoter, I'm just trying to understand, did you also have a conversation with the Prestige promoter before infusing money into this? And do you also think that some of the projects in the platform, through some other means of structuring, they will also be able to participate, mainly public -- through the public-listed entity or its own private entity?
Look, I think we don't need -- I don't think it's appropriate to get into sort of what discussions have happened in the background. But I think suffice it to say that we think there's a strategic opportunity for both companies to partner with DB Realty. I think Prestige has actually already done that and presumably seen results since they're investing additional capital. And we see an opportunity as well.
Okay, okay, okay. And my last question would be largely with respect to this SRA. I mean, whatever my limited memory serves, whatever projects have largely gone are in this particular avenue, most of the developers have kind of burned their hand, right, or the projects have not really produced the desired results. So how are you approaching it a little differently to ensure that the outcome is not the same?
So I think, often as we've analyzed, there often has been an issue with the capital structure with which these projects have been utilized. The combination of skills of both being able to get the land ready for development as well as the capabilities to develop the land effectively have often been missing. And there are, of course, some examples of very successful projects that have been done in this structure. So I think, obviously, both sides have significant experience over the last decade, respectively, in redevelopment clearances as well as in large-scale development. So hopefully, those will allow us to avoid some of the earlier mistakes that have happened.
The next question is from the line of Nilesh Parikh from Goldman Sachs.
Sir, I just feel just a little bit puzzled on this investment, right? So this is the financial investment that we are making, subscribing to warrants. And on the other side, you're saying that out of that, $3 billion would probably in SPV. So on the other side, I'm also seeing that the promoters are infusing -- promoters and Prestige promoters are infusing. So couldn't that they are seeing value in that they could have actually subscribed to that JV?
Yes. Again, there's obviously a lot of different ways this could have been structured. I think from our perspective, this, from a Godrej Properties' perspective, provided a couple of key advantages, which I tried to explain. Of course, we could have tried to structure this without the financial investment. We actually thought that the financial investment is going to unlock quite a bit of value for GPL, given what I explained is the turnaround, we think, DB is undergoing. So we thought this was the most appropriate structure. But no question, the new structure and there's [indiscernible]
It's just that, as shareholders, we obviously have options to invest directly into DB if we want to, right? So we don't need a Godrej vehicle to do that. So that's where we were actually just kind of just asking on that. Because it's -- from an operations perspective, the $3 billion that we put into the JV, that obviously makes sense in terms of the opportunity, what it offers. But as a financial investment, I'm just a bit puzzled on that. But fair enough.
So fair enough, I think we'll take the feedback. We, of course, debated this quite considerably before. And our sense again was that through our operational investment, we are creating value with the holdco, and that's why shouldn't therefore Godrej Properties' shareholders participate in that value creation. But of course, there are other ways of looking at it.
The next question is from the line of Manish Jain from GormalOne.
My questions, I had two strategic questions. First is on the power of leadership position that Godrej has acquired in Pune and NCR. We have seen the benefits of that leadership in your project launches, the kind of sales bookings and all. In light of that, in what time frame do you aspire to have leadership in Mumbai and Bangalore?
Thanks, Manish. It's a great question. I think, of course, there's no reason for us not to have that already. So I think we feel that we're a bit behind the pole in these cities from a scale perspective. I think we've been putting in place a lot of different pieces of the puzzle we see. So I think that scaleup will happen. I think, frankly, the gap today in Bangalore and Bombay with the top players from a scale perspective is considerable. So I would realistically think it would take a few years to close. But certainly, we think the kind of scaleup that has happened in Pune and NCR is very much underway in these two cities as well and would fully agree that they're both huge opportunities for us.
Excellent. And my second question was on business development across for all India. Do we remain on the same track? Or -- there's a very interesting innovation that you all have made in the DB platform. So what -- if there are any significant changes in BD that we see going ahead from operations perspective?
So I think it will be a mix of things. We do like to keep thinking through new opportunities and new ways to capture them. I think given our current scale, any partnership where we think significant growth with a single partner, we think, will be the case. In this instance or, for example, you referenced our growth in the Pune market, a lot of that actually occurred post us entering a strategic partnership with a developer there, where we partnered them for 6 projects for a total of 25 million square feet. That has actually what's allowed us to quite meaningfully scale up in Pune and become the largest developer there. So we are interested in structures of that nature. We think that this Bombay announcement today will over time lead to similar results and allow us in a single stroke to scale up quite a bit. But certainly, we will also be looking at project-by-project additions through various structures as we have been doing over the past few years.
And to Mohit and team, frankly, the best wishes for the large launches that you have lined up for the current quarter. It's really a delight to see you all launching 10 to 12 projects comfortably in a single quarter.
Thank you, Manish.
The next question is from the line of Prakash Kapadia from Anived Portfolio Managers.
Thanks, my questions have been answered.
[Operator Instructions] The next question is from the line of Swagato Ghosh from Franklin Templeton.
I just wanted to publicly suggest and request for one thing. If possible, can we put up this DB Realty investment up for minority shareholder voting? I understand it is not regulatorily required because of the amount threshold is -- like we do not need the threshold, it's lower. But as a good governance practice -- and there are precedents of this being done by major companies. So if that can be done, that could probably set aside all the concerns and you can have like appropriate conversations with your minority shareholders and then put it up for voting. I would just like to request this thing for the management to consider.
Sure. Thanks for your suggestion. We will take it into consideration.
The next question is from the line of Dhanesh Shah from Optimum Securities.
I just wanted to check on how we are planning to protect ourselves from any encumbered asset coming into this SPV?
Yes. I think we'll obviously do significant due diligence on the individual asset, only agree to move forward with them if we are comfortable they're suitable.
But beyond that also, once you are into the project and then in case that some asset gets encumbered for some other reason, what is the protection we are going to ensure in these projects? Because there will be also [indiscernible]
Sorry. There will be new projects in which we will identify. And there would be any [indiscernible]
[Operator Instructions] The next question is from the line of Manish Agrawal from JM Financial Service.
Firstly, on the cash flows, what kind of cash flows do you see in terms of collections and in terms of land and construction-related outflow for the next few quarters?
So the collections are very steady, Manish. So like you see, we have been doing a very steady collection. Over the 9 months, we have done operating cash inflow of around INR 5,000 crores. So we expect with these launches and with the progress, we expect these collections to improve in the coming quarter. That's how it -- as far as on the land outflows, obviously, like Mohit has mentioned, there are a lot of projects which we are looking into the pipeline. However, sometimes the due diligence takes some time. So it is very difficult to accurately give you a forecast again how much is going to be spent on the land cost. But definitely, the BD would be a very primary focus in the coming quarters.
Understood. And in terms of revenue recognition, this will be...
Yes, so revenue recognition, there are two main projects, which is a plotted development. One is in Faridabad, then another one is in Bangalore and one housing development again in Bangalore. These are the three projects we expect -- we are trying to get this into revenue recognition into this quarter. More or less, we should be getting those into the recognition in this quarter. You will see a substantial shift into the revenue once these projects get into the recognition.
The next question is from the line of Aman Vij from Astute Investment Management.
My question is you have talked about this INR 15,000 crores kind of realizable booking value over a period of time over this JV. So what is the time frame for realizing this value roughly? And also, you have talked about, say, FY '23, we won't see any revenues coming. But FY '24 onwards, so if you do rough math, you have talked about four projects that we'll be launching of 1 million square feet each roughly, so around INR 2,000 crores, INR 3,000 crores per year should we expect?
So the revenue recognition, again it's a cycle. Obviously, the projects, which we have launched 2, 3 years earlier, will come into the revenue recognition.
Are you asking about this platform?
Yes, my mistake. Yes, Mohit, go ahead.
Sorry. You are asking about the new platform we have with DB, right?
Yes. And on the sales, so by sales booking rather than revenue.
Got it. So basically, see, if you look at it, typically any slum project would take in approximately 2 years to clear it. Now one could expedite it. But I think, on an average, one should expect that. And so in a 2 years' time frame, one can start expecting the projects to come into the picture in terms of sales and revenues. I think once -- given our ability to sell, I don't think selling is a challenge. Once the sites are cleared, our ability to sell is very fast. But realistically, 2 years is when these are first set of launches would come in from this platform. So I think that's how we should look at it. After that, there will be kind of a consistent stream of slums getting cleared and once it's happening on a regular basis.
[Operator Instructions] The next question is from the line of Sri Karthik from Investec.
The warrants, which are classified as financial investments, is there any lock-in period before you could start liquidating it in the market?
So there is a 6-month -- as per the [ credit-prescribed ] guideline, there is a 6-month lock-in from the date of conversion of the borrowing.
And the reason you mentioned this a financial investment as you intend to liquidate it at some point of time, given the various nuances involved?
So this is the financial -- as per the accounting classification, this is the financial because it cannot be classified as an associate JV or a subsidiary. So it will be a financial, obviously. Since it's a financial, it will be fair valued and it can be liquidated after the lock-in period. Although we have not decided that we will have to liquidate since we are into a partnership, that call we will be taking at that point of time. But for us, it is more of a strategic platform than a financial investment.
Understood. That's clear. The second question is because there's another partner, a larger developer involved in this platform, when you mentioned about INR 150 billion of GDV and likewise, Prestige also have some such amount in mind, how has this been allocated in the overall between Prestige and DBL?
Yes, I think, first of all, our strategic platform is only between DB and GPL, Prestige promoter companies at the DB holdco level and not at the SPV level. So that's the first clarification. And whenever we are talking about the INR 15,000 crores and all of that, we are talking about our strategic partnership at the DB level. So Prestige has already signed up some large projects with DB. And I'm sure they will be independently working with them on those projects. And we intend to get more projects through this SPV into our accounting [indiscernible].
Understood. Because you mentioned there's a ROFO for a certain period of time. Does it mean that during [indiscernible] a Prestige would not be able to evaluate and find further SPV-level transactions?
We have a ROFO at DB that until that time our investment is fully committed and utilized, there will be -- we will not be showing this -- any of these redevelopment opportunities to any of the competitors. It also includes Prestige in this case. And I think the Prestige already has a very large portfolio with them. And they did also had an intent to grow it further. So I think it was a win-win for all the three parties. And that's why we have moved it. But our ROFO [indiscernible] complete on this.
The next question is from the line of Kunal Lakhan from CLSA India.
So just clarifying that you would not be considering any of the existing projects of DB Realty into this platform. You'll be looking at only incrementally newer projects to be included in this platform. Is that correct?
Yes, we won't be looking at...
Yes, we could look at both existing projects, that they are at an early stage or new projects. So most of those will be potential.
Okay, sure. My second question is on again on the GDV of INR 15,000 crores, right? I mean, so the total platform investment would be about INR 600 crores. How do you come at that estimate of GDV of INR 15,000 crores? Also a parallel question is on the success of slums we had in the past, like we have seen many developers like with the likes of Omkar, Ackruti or Hubtown, HDIL, Unitech, [indiscernible] faltering on these projects. These are long gestation projects, which has too many moving parts. And some of them get stuck for decades, if not years. How do you plan to do this differently? How does this platform plan to do this whole slum rehab differently?
Mohit, you want to go ahead?
Yes I'll answer your first question first. I'll give you a rough idea. We are working on Bandra and Worli and actually actively talking to our partners saying, "Is there a way we can help you clear the slums?" And we got an estimate that between INR 150-odd crores, one could clear these slums. And INR 150 crores could easily become INR 200 crores. So let's just take between INR 150 crores to INR 200-odd crores is the kind of investment one takes to clear a Bandra or a Worli kind of slum. Now if you look at either of the two, the booking value potential is upward of INR 5,000 crores-plus in each of these projects at a fairly conservative prices. So just INR 150 crores, if you just do two of them or three of them, would be spending between INR 450 to INR 500 crores, maybe INR 600-odd crores and getting a booking value potential of INR 15,000 crores-plus. Now if the markets change and inflation kicks in, obviously, that INR 15,000 crores can easily shoot up. But we're just kind of guiding it based on the current estimates, which we have for our projects in Bandra and Worli. So it's a very straightforward calculation. We can share with you more details if you want. On your second question, you're right, many people who have tried this in the past. I think there are two things which are very important for any of these partnerships -- in fact, three things. One is what is the capital structure for the entity that is trying to do it. We have consciously taken a call to do this through equity routes with DB. So because time is always an unknown variable in slum redevelopment business, equity is the right model. So that is one thing, which many people have taken a loan that's very high interest and then it created a lot of stress in them. And loans have a very fixed tenure. So it created a lot of negative cycle, which we have resolved to this structure. The second is we are pretty confident of DB's ability to do redevelopment of slum areas. And I think one can see they have already cleared the first slums for Prestige, [indiscernible] had also seen. So we remain quite confident in their ability to do it. We are also jointly controlling the cash flow on how these slums will be cleared and decide for deploying this capital, so we will be very strongly controlling that particular aspect while giving operations freedom to DB. And third is most of these partnerships again had failed because the people who are doing slum clearance are also trying to sell and market and do development, which is a very different business. So I think there's a very clear complementary skills we are building. We feel, given our ability to execute and do development, DB's ability to do, execute and do slum clearance and the right capital structure with right financial controls and execution controls, we should have a very good partnership. We remain very confident.
Sure, sure, sure. And then one last question is again on the infusion by the promoters. I mean, they wanted to infuse money in DB Realty, both promoters, DB as well as Prestige. What's like Godrej, infusing the money, what's like a contingency for that? Or because they could have done it and then you could have done -- you could easily have had a much cleaner structure by the promoters infusing DB Realty and then DB Realty doing the platform separately with Godrej without the intertwining of the structure. So just wanted to understand that, Godrej infusing the money in DB Realty was like a condition for the promoters, both DB Realty and Prestige, to infuse the capital.
No, I don't think there was any conditions. And for now, I think we've done our best to explain our rationale on what the logic was. I think we obviously had a lot of discussion around what the requirements with each partner was, what both sides hope to get out of it and what structure we thought best address the dual requirements. And we continue to think this structure down to that. I think what's everybody sort of position on the call, et cetera, perhaps is not appropriate to discuss.
I now hand the conference over to the management for closing comments.
Thanks, everyone, and hope we've been able to answer all of your questions. If you have anything further or would like any additional information, we'd be happy to be of assistance. On behalf of all of us, thank you again for taking the time to join us today.
Thank you very much. On behalf of Godrej Properties Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.