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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 the Q1 FY '23 Earnings Conference Call of Mahindra Lifespace Developers Limited. [Operator Instructions] Please note that this conference has been recorded.
I now hand the conference over to Mr. Arvind Subramanian, Managing Director; and Chief Executive Officer of Mahindra Lifespace Developers Limited. Thank you, and over to you, sir.
Thank you, Jacob. Good morning, and welcome to all of you to our Q1 F '23 earnings call. As you all know, many of our key operating entities from the residential business like Mahindra Homes and Mahindra Happinest as well as from our IC & IC business, which is Mahindra World City Developers and Mahindra World City Jaipur and Mahindra Integrated Parks, none of them are consolidated on a line-by-line basis.
It's customary to start with a little bit of a macro view on the economy and the sector, but I'm going to dispense with that because -- many of you are deeper and more expert on the macro than I am. And in fact, I will use some of the Q&A time to ask you some questions for a change on that.
Let me share some of the key highlights of our performance in the first quarter of the year. On the residential business, we achieved sales of INR 602 crores versus INR 145 crores in the same quarter last year, which is over a 3x increase. Sequential quarter wise also, we have grown by about 80-plus percent. That, as all of you know, is contrary to what the typical trends in this market are Q4 tends to be strong. Q1 tends to be a bit softer. But we've been able to grow very strong on the back of sustenance sales across our portfolio as well as two very strong launches in Bengaluru and Gurgaon.
Mahindra Eden in Bangalore was India's first net-zero energy project. It sets us on course to our pledge that by 2030, we will -- all new projects that we will launch will be net-zero. And Luminare in Gurgaon, which, all of you are very familiar with, we launched the third tower there, which is the final tower, again, had a great response to that.
In addition to these two, we also launched a new phase that Happinest which has again done quite well. Over the next several months, we expect to launch quite a few new phases as well as new projects. In -- earlier this month, we've already launched Mahindra Nostalgia in Pimpri, Pune.
This was the land parcel that we acquired last year from M&M. And that is received, that is Puna's first inspired homes, again, has received a great response. 250 units launched more than 50% of that sold within a month.
We expect to launch two new phases of existing projects in Mahindra World City Chennai in the coming months and are also looking to launch the larger Pimpri land, which we acquired in April as well as the Kandivali project in the second half of this year.
From a land acquisition perspective, in April, we announced the acquisition of 11.5 acres in Pimpri. This has a total development potential of about 2.1 million square feet and a gross development value of about INR 1,700 crores. We are seeing a continued strong pipeline in BD. Roughly INR 5,000 crores worth of deals in various stages of the pipeline, interesting spaces that have opened up significantly since we last spoke is one society redevelopment where we are seeing a lot of action in Mumbai.
Ever since we've announced our intent to do society redevelopment, we are getting several interesting inquiries, some small, some big and we are in advanced process in a few of them. As you know, society redevelopment does take some time to fructify it requires consent of all the members and various processes to be followed, but we are very hopeful that within this year, we will make our first forays into society redevelopment.
Collections has also been extremely strong. INR 271 crores of collection during the quarter continues to be an area where our internal cash accruals are extremely strong and require -- and are providing us enough cushion to fund future land investments.
Completions were very few in this quarter, and that reflects in the revenues that you will see in the P&L. So there was only a little bit -- a small phase in Happinest that got completed. On the IC & IC business continues to be an area of great momentum. We had ended last year with about INR 297 crores of leasing. We started this year in the first quarter itself with INR 118 crores of industrial leasing. This is a business, as I have mentioned in the past, where we have strong forward visibility given the long sales cycles. And we are quite confident and hopeful that this year will be a very strong year for the IC & IC business.
Let me request Vimal to update you on the financial performance.
Thank you, Arvind. I'll move on to the financial performance for the quarter. The consolidated total income stood at INR 117.3 crores as against INR 154.2 crores in Q1 F '22.
The consolidated EBITDA, including other income and share of profit from JVs stood at INR 53.7 crores as against a loss of INR 16.8 crores in Q1 F '22. The consolidated PAT after noncontrolling interest stood at INR 75.4 crores as against a loss of INR 13.9 crores in Q1 F '21.
The company has debt of INR 327 crores at consolidated NDS level while cash in hand and bank balance is INR 402 crores. Our cost of debt stood at 6.79% on a consolidated basis, while stand-alone cost of debt per MLDL stood at 6.3%.
I'll request if the floor can be open for questions now. Thank you.
[Operator Instructions] The first question is from the line of Parikshit Kandpal from HDFC Securities.
Congratulations on an outstanding performance. I really don't have many questions, you delivered on all the accounts. But just if I annualize the current quarter momentum on sales and the leasing. So you seem to be 2 years ahead of your FY '25 guidance of INR 2,500 crores and INR 500 crores of these things. So where do you go from here?
I mean are you upgrading your guidance now? Are you preponing it? So how are you looking at this number now these two numbers?
Parikshit, I fully expected you to annualize one quarter. Okay. It's been a great quarter. We are extremely delighted with the kind of response we got with -- let's not get ahead of ourselves.
But, as I mentioned, a lot of that is two new launches, which we did. So the key focus is to create that balance in the system where we bring enough new opportunities continue to drive sustenance sales, that entire balance in the system is very important. We are still at early stages of that journey, so we need to fill the top of that funnel.
I mean you have two major launches coming up, one in Pune and Kandivali in second half. So all possibility looks like this is going to be a record year So it is like still we're waiting for more clarity on these two launches time line then you will increase your guidance not able to understand complete...
Lesson I've learned in this business is it never happened until it happens. So yes, let's wait for it. Fingers crossed, we should have a good year.
Secondly, on the BD pipeline. So we have seen the cost save from brokers that we had to in Gurgaon Bangalore, we had opened up the -- so I just wanted to understand, we've been primarily focusing on Pune and Mumbai MMR. So how do you see these two since you have present focal presence in these geographies? Are going to go deeper in both these geographies as give some sense on the BD pipeline in these two segments out of the INR 5,000 crores which you have highlighted?
Bangalore, certainly, as we had mentioned in the last call as well, that is the third market that we've committed to opening up. I'm sure, at some stage, we will recommit to NCR as well. It's just we want to do it in a planned and kind of methodical manner. Every new city that we open up, we must make sure that we have the right team on the ground, the right partners in place in terms of distribution, contractors, suppliers, all of that.
And therefore, spreading ourselves into too many cities too quickly I think, is premature for that. So three cities, at least for the next couple of years, and we'll take it from there.
Okay. Just on the BD pipeline, you said that INR 5,000 crores is what looks like. So it has been pretty much there in last quarter also he has got added here. So if you can give some sense, a little more granularity here, if you can give a breakup of MMR, Bengaluru and Pune here. And the probability wise, if we can say, are these like really high conversion could happen here like 60%, 70% because last time you did mention 50% of this can get converted. So if we can -- if you're seeing the roiling leasing here on the conversion side.
Yes. So, not fully right to say nothing has changed because obviously, we've done the INR 1,700 crores of the Pimpri conversion from that earlier INR 5,000 crores that I mentioned. So it were back it. So it's minus INR 1,700 crores and then back at INR 5,000 crores. So in that sense, there have been additions to the pipeline.
Look, roughly, I would say, I'm just doing the numbers as we speak. About Bangalore is still early days. So Bangalore is a smaller component of it, probably 20% of it is Bangalore, 40%-40% between Mumbai and Pune. And there's different nature of transactions, there's outright, there's JDAs, as I mentioned, society redevelopment as well as some distressed assets that we're looking at.
From a stage of pipeline perspective, I'd say a couple of conversations that are probably adding up to about INR 1,000 crores that are in advanced stages. Hope for it to close them in towards the end of this quarter or the next quarter.
And the balance INR 4,000 crores are still like high probability conversion kind of target, so which may be more towards...
Yes. These are all conversations where commercials have been discussed and various other terms are being discussed before we can get into a...
Great. And just lastly, if I may, this change in the Chairman, Mr. Nanda after having last [ stand ] here has been driving this business and up to this level.
So just want to know the new Chairman come in, so what's your thought process. So how is he looking at this business? Though he's been part of the independent director. So what kind of strength he brings in, given he's being the real [indiscernible] for a long time on the legal side. So if you -- so how does it add to the overall strategy over the next few years?
I think it's a great -- not addition in the sense he's been on the Board already for 5 years, but a change at the realm. Mr. Nanda has been our founding director and long-standing Chairman in many ways, deeply familiar and entrenched in the business and kind of was one of those entrepreneur founders.
He, at this stage of his life wants to spend more of his time on some of this foundation and the work he does in skilling and senior citizens and therefore, requested to be relieved from the Board and retired from our Board. Mr. Amit is, as you mentioned, one of the leading advocates in India for over 35 years has built a very strong practice known to be particularly in real estate, one of the leading law firms company that he [indiscernible] that he continues to be the managing partner of.
Therefore, brings deep domain knowledge, understands the business and given that he's already been on the Board for 5 years as an independent director understands the context of the business where we are headed and is completely in sync with what we are trying to achieve.
The next question is from the line of Adhidev Chattopadhyay from ICCI Securities.
First of all, congratulations to the team for an excellent performance and a great start to the year. I hope to see the sort of performance being sustained in the coming quarters as well.
Sir, I had some bookkeeping questions based on what your opening remarks. Sir, firstly, what is our planned spend on land cost and approvals for the entire year? And how much would we have spent in this first quarter?
In the first quarter, [indiscernible] roughly is about INR 40 crores. And I'm talking about our entire business in.
Sir, your voice is a little...
Sorry to interrupt. Sir, your voice is not clear.
In the quarter 1 we'd have spent roughly INR 240 crores on the IT side to acquire some of the smaller land parcels -- this is a set or your visibility is concerned, I request to stay with guidance, which Arvind mentioned in terms of visibility of land transaction. The nature of those transactions are the kind of transaction we happen or JD or any [indiscernible] or revenue. That is something that you'll imagine based on with our cash outflow.
So Adhidev I'm very comfortable from a funding of land acquisition perspective in end questions. You see the past year as well operational cash in.
Sir, there is a static noise that is coming. So I'll just disconnect and reconnect. Okay. The line for the management reconnected. Thank you, and over to you, sir.
[Technical Difficulty] Sorry for the technical glitch. Adhidev, you were asking about funding of land transaction? So...
Yes. Sir, the number is INR 40 crores or INR 240 crores, just before we proceed for this quarter, I couldn't get that.
INR 240 crores.
INR 240 crores. 2-4-0. Yes, please go ahead.
So very comfortable going forward as well. So as we have done INR 1,700 crores of activation in the first quarter and we will do a similar value in the rest of the year [indiscernible] would mean another similar amount or a design we purchase, and you are aware -- is this a payment structure in terms of cash funding perspective.
Okay. Yes. So to understand correctly, we have spent INR 240 crores and another INR 250 crores for the rest of the year, is the minimum spend. Based on...
Using an example, I think similar [indiscernible] with inquiries But again, as Vimal said, it depends a lot on whether the society redevelopment transaction, transaction upright. I'm thinking worst case scenario everything is outside, another INR 200 crores, INR 300 crores is very comfortable.
Okay. So around -- okay, so I'll just take it INR 500 crores is the bare minimum sort of spend, which we are doing.
Yes.
Yes. And sir, just for this quarter, what would be the GDV of the new launches we have done and there are two launches in Bangalore, Luminare and what is the GDV and how much of the quarter sales have come from these new launches you would share that breakup.
GDV is INR 1,000 crores between these three. But now in the sales, roughly 70% between [indiscernible].
No, sir, I'm saying out of this INR 600-odd crores for this quarter how much would be coming from these three new launches, just...
That's what I said. About 70% to 75% will be coming.
[indiscernible] total INR 600 crores [indiscernible].
The line is a little muffled again. That is...
Yes. Do you want me to repeat?
Yes, the voice was muffled. That is why is not able to hear. Yes.
Of these INR 600 crores imposed during Q1 broadly 75% come from new launches Luminare and...
Okay. Okay. Okay. For the quarter.Yes.
On the balance from all the ongoing...
Okay. And the follow-up to that is for the rest of the whatever launches you have highlighted, right, the Pimpri, the new one we have done then Chennai, whatever the planning and Kandivali and Pimpri, so any ballpark balance, what would be the GDP of the launches we have planned? I know it will be in phases, but for whatever phases we have planned any indicative GDV number, indicative value we are planning for?
So I would say, let me just go through those. I think Pimpri is about INR 1,700 crores, likely about 1/3 of that is what we will launch, so let's say, about INR 450 crores, INR 500 crores. Kandivali is about INR 2,300 crores, Again, we will probably launch 1/4 of that, so INR 500 crores there. So added up to about INR 1,000 crores -- I say about INR 1,250 crores to INR 1,500 crores.
This is what something we are reasonably confident of launching definitely within this year. I know it depends on the approval, I know.
We are working quite hard. We are back to launch it in the second half, subject to any externalities we can't confer.
Okay. Okay. Sir, last question is on this construction costs. Obviously, last quarter, we saw, obviously, because of the global situation, the commodity prices going and they have cooled down a bid. Now how are you looking at the construction costs in this quarter? And what sort of price hikes you have taken? And what is the outlook going ahead? That is the last question, I'll come back in the queue.
In a lighter way, I'm looking at it very, very hard. And my gaze is constantly construction costs. It is -- it continues to be a challenge, while there is suddenly a softening in steel price, et cetera.
But it's not to the extent where we can feel that we are out of the woods yet. So cost is -- continues to be a strong area of focus for us. As I've mentioned in the past, we are using three broad levers to address the cost inflation. One is design efficiency and value engineering. The second is procurement and contracting and the third is pricing. And all these three are being actively pushed.
So in percentage numbers could you like just to what is sort of construction cost inflation, expecting for the year and we are sticking to our pricing discipline of raising prices at 1% to 1.5% every quarter. Is that the same template, which is being followed? Or is there any change to that?
No, it's absolutely the same template. What we've added to that is a bit more dynamism in the pricing where it's almost become like a yield-based pricing, as sales pick up, as velocity happens, as more inventory gets sold, we move the price up faster rather than doing this time-bound price increases.
And we've seen that, as Parikshit commented in Luminare as well as Mahindra Eden, where even during the launch, we've been able to take price up. So 1% to 1.5% is the bare minimum per quarter. We -- in many projects are able to overachieve that.
And any plans to incentivize homebuyers with whatever interest is expected to go up further, it may be pickup as after what has happened for me -- but any thoughts on subsidizing costs on the EMI front?
Nothing that [indiscernible] to me that is equivalent to a price discount. So this is a different structured way of giving a price discount. So not looking at that actively right now.
The next question is from the line of Pritesh Sheth from Motilal Oswal.
Many congratulations for a great set of performance. My first question is on launches. We have obviously spoken about I mean you have partly answered that in the last couple of questions. But if we can get exact clarity on what sort of launches can come this quarter, even 3 months plus minuses is okay. But what are the near-term launches that we are looking at?
So in Chennai, we are looking at launching two new phases in the next 2, 3 months of -- we launched one earlier this month, which was in Aqualily. The launching the next phase of Lakewoods and the next phase of the balance of Happinest MWC in the next 2, 3 months, which is sequencing it out so that we don't do all together. Those will be the imminent launches.
And given how good the response has been, are we looking at the second phase this year itself because we are almost like 75% sold out in that. So will we be launching that another phase this year or probably will cost low and launch it next year?
We are keeping our options open. So we will get our RERA and be ready to launch later this year. But I want to play it by year depending on how we are seeing the cost inflation as well.
Because locking in a price and then being faced with cost inflation is not something I would like to do. So selling it closer to when we actually need that sale to happen and the cash flow to happen would be a smarter strategy. So we'll wait and watch. And as I said, we are -- we will keep ourselves ready to launch the second phase, whether we launch it or not will depend a bit on the outlook on the cost side.
Okay. And both Dahisar and Kandivali should be this year or first quarter next year? Is that the time line we should look at?
Kandivali, certainly, second half of this year is what we are targeting. Dahisar might take a little bit longer. We are working through some approval related issues there so that may slip into first quarter next year?
Got it. So our beginning of the year guidance -- I mean a target of having 2.5 million, 3 million square feet launched this year. We have already done 1 million square feet. So it still looks reasonably visible, right?
Certainly. Certainly.
Okay. Okay. And another question on the IC & IC segment. So we had Jaipur fully contributing this quarter. What's the visibility on Ahmedabad and Pune? When will that contribute to our IC & IC segment?
Yes. So we have actually this quarter hoping to have some strong conversions in this quarter or next quarter in Chennai. So there's a good pipeline that's picked up there. Ahmedabad is still a little bit further away, as I mentioned in the last few calls, we want the right anchor customer there. So while we do have several inquiries for smaller plots, et cetera. It's very important to start with the right anchor because sets the tone and complexion of the project. So we are still looking for that breakthrough. And Puna is, I would say, 24 months away from a launch perspective. We are in land aggregation stage and then we'll get into master planning and approval. So I'd say, 24 months.
Got it. And lastly, on realizations in Bangalore, would that be -- would have been higher given how the project offering is overall -- I mean, right now, we are generating 7,000 on a sellable -- what's the pricing strategy there in Bangalore project?
We've given the strong response we've seen in the first phase, we certainly seem to take price up. And we've already taken it up during the launch, as I mentioned, and the velocity was very strong. So we had good volumes at the entry-level price that we launched at was quickly to get up after that and are continuing to see sales at a higher price as well.
So we will use the rest of the inventory in the first phase to test out the price elasticity in the market, which will also give us guidance for the second phase launch pricing and timing.
Okay. So if you can elaborate where we started and where we are right now?
I think we started at roughly 6,900 and something just under 7,000. We are currently selling at about 7,300, 7,400 somewhere between that.
The next question is from the line of Prem Khurana from Anand Rathi.
Congratulations on very good set numbers this quarter. So I think -- I mean, if you could share your thoughts on the recently proposed bill Desh which would come to replace how do you see it impacting our IC & IC vertical especially Jaipur -- because I mean as far as I understand the DTA part won't see any material change as because you don't get to have any tax benefits, but how about the SEZ part?
Would you be quite in -- I mean, if you are required kind of go for Desh, would you be required to kind of get it be notified or it will get automatically notified income under the new -- any initial thoughts? I understand it's still early days, but -- any thoughts would be helpful.
Prem, I'm glad you picked up Desh I think it can be a significant upside for us in Jaipur given we have a large SEZ there and SEZ demand has been muted over the last few years as some of those benefits have sunsetted. So I think Desh offers a wonderful window of opportunities to revitalize the SEZ area.
The rules are still not clear. The draft bill was out for review, but the rules are still being framed when we last check. So unclear whether existing SEZs automatically migrate to Desh whether it needs to be reregistered or de-notified in some form. But broadly, what it allows us to do is have -- industry is operating in SEZ also serve the domestic market.
And that gives you the best of both worlds. Because your export business, you get the export-oriented benefits and for the domestic business you have -- so it consolidates the operations is much more cost efficient for the client. So we actually think if that intent is fully delivered through the actual fine print of the act and the rules, the SEZ could become even more prime than the DTA.
Got it. And sir, any pushback from clients are looking to kind of lease some space on SEZ side, but then they're waiting for some more clarity on Desh to kind of decide whether they want to go ahead with the transaction now or wait for the bill to come through and then decide. DTA, I understand, I mean doesn't make any difference, but on IC side because it's been a little slow, the SEZ area?
Yes. So there is a pickup in inquiries. It's still too early to call it. As I mentioned, the sales cycles tend to be long. So customers are starting to show interest in that I'm sure it's on the back of their own calculations of whether the Desh bill will come through and in what format you come through.
And so they're doing their crystal ball gazing and based on that, engaging in these conversations. But the expectation was that the bill will be introduced in the monsoon session. I don't know whether we are on track for that yet, but hopeful if that happens, then we will have clarity very soon.
Sure. And on our Jaipur SEZ even with Chennai, what I observed is, I mean, the gap between the number of customers onboarded and operational has been widening. I think initially, we used to have a strict time lines. So let's say, if I were to take space, now you used to give 1 or 1.5 year to be able to kind of start operating.
But for some reason, I mean, some of these tenants have been with us for a very long period of time, but the operations have not commenced as I mean, I mean, if I would look at Q1 number for Jaipur especially, we have 120-odd customers and only 69 are operational, and there's 50 odd customers, which are yet to kind of commission.
So does it mean that we will try extending more time kind of commission operations or -- how do you -- how would you explain this the gap that the widening gap between the operational number and the numbers, I mean, in terms of total customers that we have?
So one big factor to that is the strong sales we've done last year. these would be customers who have been added in the last year and would be in construction phase for setting up their operations. But it's something that I will need to break down in terms of how -- the aging of this gap between 121 and 169 a good point you make. I look at decent 25 to 30 Yes, almost 30 years in construction phase is what Vimal reminded.
Okay. Okay. Sure. And just 1 last from my side. So when I look at Kalyan Phase 2, the second Kalyan that we've launched and then compare the response, I mean, with the initial Kalyan, the Kalyan 1 that wheel, I mean we've seen significant success with the Kalyan 1, but for some reason, I think Kalyan 2 has been a little slow in terms of sales velocity.
So is it because, I mean, the competition has gone up in that area? Or is it because, I mean, we now already have some supply in the secondary market, which is active, which is why we would have seen some slow response to Kalyan 2?
Yes. So candidly, Kalyan 2 to has underperformed our expectations. We have gone into a very detailed postmortem of that launch and what works and what didn't. The good news is the product is very strong, and the feedback on the product is extremely strong. We tactically got a few things wrong in terms of our launch preparation, timing, the tactics of the launch, et cetera.
And as I said, we were gearing up for a much stronger launch performance. We've underperformed on that. But we know what we got wrong, and we will bring it back into market post monsoon and catch up.
And just one last from my side. I mean on Ghodbunder. So we used to have this biotech SEZ approval for this. So I think I mean, before you launch this, I mean -- I mean, as a residential project or a mixed-use development, you would be quite enough to get the notification. Has the process started? Or is it still waiting for some triggers to kind of go and approach the board of approval to going to get that be notified?
The process is actually very advanced already. That's what we've been working on over the past years. And there's been significant movement on that and it's in the last stages is what I would say.
The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.
Congratulations on very strong numbers. So first question, Arvind, on the launches, you said 75% got sold in this quarter, and that sounds quite high. So if you can just go a little bit more in detail as to whether that was by design or we ended up selling more because the demand was so good. Just wanted to get some more color on that. And is that sort of the rhythm you want to be on going forward?
So Rajesh, just to clarify, I think the point being made was 75% of our sales in the quarter. So out of the INR 600 crores, roughly 75% was contributed by the new launches and primarily Eden and Luminare and [indiscernible] is a smaller value in the overall scheme of things.
But yes, in fact, in Eden, we have sold more than 75% of the inventory and it is by design. We would like at every launch to sell -- maximize the sales, given our focus on cash flow and IRR much more than on accounting profit. It does very well for us if we sell strongly at launch.
Of course, that is subject to getting the cost versus price equation right, which is where I said we would like to keep -- we would like to build that capability, and we've demonstrated that in these two launches where even during the launch, we are able to take price up and still maintain the velocity.
Yes. No, that's terrific. That's wonderful. My second question is on the land prices. As you talked about your pipeline and wherever you are looking for outright, what are you seeing on the land prices? Are they starting to stabilize or just still moving northwards?
Land prices are moving northwards. There is a lot more -- since everybody is talking up the demand cycle is being strong in residential real estate, landowners also read the same newspapers and kind of has heightened expectations for land valuation.
But it doesn't worry me too much because at the end of the day, land is anywhere between 10% to 20% of the top line. So even if it inflates another 2, 3 percentage points from a margin perspective. And there are many ways to recoup that from cost of construction from pricing, time -- so yes, there is more -- there is a hardening of land values, but I'm not unduly worried about it.
And I know you talked about the planned launch in this year, but I missed it. What is the total value of the plans also this year for the rest of the 3 quarters?
It's about INR 1,200 crores of GDV put together across all these.
Okay. Okay. So theoretically, we could be getting around 70%, 75% of that sales value this year?
Those are two different answers to different questions. We're not supposed to interpolate the two.
The next question is from the line of Himanshu Upadhyay from O3 Capital.
Congratulations. Yes, great set of results after a long time. It's a positive surprise. Really appreciate the numbers which have come up. My first question is on the Jaipur SEZ on the lease area which is happening, we see pretty let's say, a few years back, the traction was more generally on the Chennai side. Jaipur was slower, okay?
Now you've seen a significant improvement on the Jaipur site, but Chennai is slightly slower, okay? What leads to a faster absorption in a particular market? And will it be also in, let's say, the newer launches, which will be, let's say, in Ahmedabad and Pune and new things which will happen.
But once the area becomes popular or favorable, the traction on leasing will be much faster than it will fully taper down? Or just because of one vendor is there in a large -- OEM is there a lot of vendors unsure the traction happens. Can you elaborate on the velocity and what is leading to such a good traction on Jaipur right now?
Yes. So many factors go into that. I think first and foremost is the team on the ground. So I give a lot of credit to Rajaram and his team, Anuj, who leads the business development in Jaipur. They've really put their foot on the pedal and delivered a strong trajectory of leasing in Jaipur.
But yes, there is external factors as well, state policy, how attractive is this state for investment, what kind of industries are they quoting? And -- is there a momentum in that industry? So for example, right now, we are seeing a lot of inquiries in renewables and EV, electronics, those kinds of spaces. So there is a combination of our execution plus partnering with the state government and riding off their -- the momentum that the state is seeing.
There is certainly a kind of spiraling effect. And it's not just about principal OEM versus supply chain as is the case in -- for example, we have JCB as a large client in the Mahindra World City Jaipur and many of their vendors over time have also set up facilities there. That is one kind of model of spiraling.
But even without a principal supplier relationship, you do find that an initial momentum of leads and conversions leads to a lot more interest. There is -- I can call it a herd mentality or gravitation to these clusters, which is very perceptible in their life cycle.
And the one thing, in the Mahindra World City Chennai, we have 60 acres of land outside the boundary -- okay, MWC boundary. And we have stated that we want to do that outright sales. Is it -- that is also lease what we give because on the Slide 29, it is planned as land sell.
And others, what I understand in World City projects or in the commercial space is generally lease land. Why would there be a difference? Or I am going wrong somewhere.
Yes. So because this is outside the boundary and tend to be scattered land. There are a few continuous land parcels, but many of them are small scattered lands outside the boundary of the main SEZ and DTA areas.
We do go for a sell model because we have -- the whole point of -- we are not providing services there. So then doing leasehold makes no sense. There is no long-term value creation business.
Okay. Okay. And one more thing, in case of Jaipur, we see commercial activity has reached a scale. And -- but still, the residential and social health's not started picking up or what would be the stage when the residential and social starts picking up in a Jaipur type of Mahindra World City project. Can you...
We've had our plans for the social and residential zone kind of in our top grower for the last couple of years. We have been evaluating the market periodically to see what's the right time to launch that and are currently in the process of doing the same.
It's kind of striking the right timing between how much employment is there, and therefore -- and the profile of that employment and would they buy residential apartment, would they like to live in the same location with mid-market or value housing. So that's what we constantly monitor as well as developments in the neighboring areas how good is the quality of housing there. And therefore, the whole promise of the integrated city has to create the value over and above what is available in the neighborhood.
Okay. And one last question from my side. See, historically, in a few years, the JV was becoming much more popular. And again, we were also interested in that model. And again, society redevelopment, but today, the raw material and inflation is in a flux or I would say it is on the higher trend.
And the certainty on the price rise, how sustainable it's not so sure. So how do we assess the land share or revenue share or we would like to go for outright purchase of land, some thoughts of yours? And what risk mitigation efforts can be done once a land is -- or let's say, a JV is done -- society redevelopment is area share is made. And then the inflation goes up?
Yes. So those are constant calculations and scenarios that we keep creating and playing with. So you're absolutely right. It's very hard to be deterministic in an uncertain cost environment, cost as well as price environment. So we do our logical sensitivities and scenarios to understand what -- we are compensating mechanisms like I mentioned we are seeing a hardening of land prices, but we feel that we have enough elbow room on pricing and cost of construction to mitigate that.
So those are the typical levers we employ. From a type of transaction perspective, JDA versus outright, we don't have any barriers or preference to either we'll do what's right for that particular location in that particular transaction. In some cases, the land owner is very clear that he only wants a joint development for his own reasons of income and tax and various other things. In other cases, they are very clear they want outright. So it's often not choice about do you -- for a particular transaction, you don't have both choices on the table more often than not, it is 1 or the other.
The next question is from the line of Shaleen Seth from Seers Fund Management Limited.
Congratulations on these numbers. We are really happy to see this thoughtful aggression on the residential side. I have one small question. Most of my questions are already answered. So this is one small question on the origin Chennai apart.
I see it's been missing our sales for the past one whole year, financial '22 and the first quarter '23. So any strategic reason as to why are we not aggressive on the IT side in Chennai? Because going forward, we have close to 300 acres in this data and origins to also some then?
Shaleen, great question, and your observation is absolutely right. I'll only answer with the watch this space. As I mentioned, the pipeline is building up nicely in Chennai. We should be able to show some significant change in trajectory there in the next 2 quarters.
Okay. That sounds great. Secondly, on the [ agent ] side, the project, the whole idea seems extremely good. And going forward, are we adjusting on this side? Do we plan to launch more [ agents ] around that area in Bangalore, maybe MMR, et cetera?
Yes. So if you're referring to net-zero as a concept -- mentioned, we are committed by 2030 that all our projects will be net-zero. Every new project we do will be net-zero. This is a full 20 years ahead of the Paris Agreement, 10 years ahead of what the Mahindra Group is committed.
So we are aggressively moving down that path. The Eden was our first such project, but pieces of that have been done in earlier projects, obviously, Eden is a culmination of work that has been done across various projects before that. That was net zero energy. We still need to track net zero water and net-zero waste to make it entirely net zero. And you will see to have an increasing still towards that.
As there are no further questions, I would now like to hand the conference over to Mr. Arvind Subramanian for closing comments.
Thank you, Jacob. So thank you to all of you for participating in the call. As we discussed, we've had a very, very strong quarter. It sets us up extremely well for the year. Always when your first quarter is good, you walk forward with a lot of confidence.
On the residential side, we are seeing a good pipeline of both land acquisition as well as launches of land that has already been acquired. And on the industrial side, we do expect this to be an extremely strong year and matching or bettering the performance of the previous year. So fingers crossed. With your good wishes and blessings, looking forward to continued strong performance. Thank you very much.
Thank you. On behalf of Mahindra Lifespace Developers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.