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Good day, and welcome to Mahindra Lifespace Developers Limited Q4 and Full Year FY '23 Earnings Conference Call. On the call today, we have from the management, Mr. Arvind Subramanian, Managing Director and CEO; Mr. Amit Kumar Sinha, Non-Executive Director and Board member, Mahindra Lifespace, Mr. Agarwal, Chief Financial Officer; and Mr. Rabindra Basu, Head of Investor Relations. As a reminder, all participant lines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Arvind Subramanian. Thank you, and over to you, sir.
Thank you. Good morning, greetings, and welcome all to our Q4 and FY '23 earnings call. Before I get into my ruptures rambles, I must offer the perfunctory preamble. Do bear in mind our business resides in many parts, consolidating them financially will call upon all your smarts. So adding individual lines, you must resist an extrapolating recent past to distant future, certainly resist. This is my 12th and concluding opportunity to your notice to bring highlights of the business and our team's plans to same. Indulge me a few moments, I promised to make good time with the business on song, as you can see, in [indiscernible]. Many of you have been with us long, steadfast and true. Others have reposed faith in us more recently, some even recommitting a new. You have all been demanding yet we're always willing us on, allowing us to draw on all 3 faculties, heart, brain and grown. I'd like to tee off the highlights with our IC & IC business this time, whose voice has risen to a crescendo from Chennai. Jaipur led the way. Origins Chennai has come to the party too, winning coveted clients of every industry, country and huge. Awaking the sleeping giant was both your and my ask. In response, the team clocked INR 456 crores leasing, no mean task.Bringing our 2025 target forward by two full years, bringing in valuable cash deserving our applauses and cheers. Residential presales continues to motor along. Customers are new launches expectedly grown. Nestalgia, Eden and Citadel, new flags on our map, sustain sales advanced unabated as if on TAP. INR 1,812 crores presales, healthy price increases and added boon demonstrates our equity, our business is economic engine to tune with marketing, design and sales all kicking into new gears, INR 2,500 crores well in sight, 10,000 should evoke. INR 650 crores of operating cash is where the rubber hits the road. Ownership and tenacity, our construction teams showed, accelerating project schedules, enabling brisk billing, INR 1,165 crores collection followed customers were more than willing. Strong internal accruals provided fuel land acquisitions to pursue by INR 3,200 crores and another 850 this week, our GDP attrition Group. Society redevelopment and plotted new forays we pursued. Our BD and vehicle teams, a INR 5,500 crore deal pipeline have grew. The year gone by has been a defining one as we journey to find our rightful place in the sun. I now pass the baton to a new leader in line under whom I expect the business will further shine. I cherish with immense pride our teams all around. Indomitable has believed and a spirit of adventure amount. You make me proud, you make me look good putting shoulder to wheel. It's been an exceptional privilege, a fantasy. Let me hand over to Vimal for the financial summary.
Thank you, again, for such a wonderful start for the day and for the call. Good morning, everyone. Moving on to the key financial numbers for the quarter. The consolidated total income stood at INR 27.3 crores as against INR 155 crores in Q4 F '22. The consolidated EBITDA, including other income and share of profit from JVs stood at a profit of INR 10.4 crores as against a loss of 15.1% in Q4 F '22. The consolidated debt after noncontrolling interest stood INR 0.5 crores at against a profit of INR 136.8 crores in Q4 F '22. The company has debt of INR 265 crores at consolidated level as per India while cash in hand and bank, including surplus investment stands at INR 273.6 crores. Cost of debt was 8.2% and our consolidated free cash flow after land-and-elated payouts for Q4 F '23 stood at INR 142 crores as against INR 79 crores in Q4 F '22. I'll now request if you can open the floor for questions, please. Thank you.
Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We take our first question from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Hi team. Congratulations on a great year and quite great take the start to the call. So Arvind, I don't have any questions today. I just want to thank you for all you have done in this company in the last 3 years, taken into the new height and outperforming almost 2x in all the accounts. So I'll individually catch with Arvind later on, on strategy for the next phase of growth, but wish you all the best. I think possibly, I will miss you, but I wish you all the best, that's all I want to say. Thank you.
Thank you Parikshit.
Thank you. We'll take the next question from the line of Himanshu Upadhyay from o3 Capital. Please go ahead.
Yes. Hi Arvind, I agree with what Parikshit said that the company has done pretty well over a period of time. And you have given a new ambition to the company. I hope the company delivers on that. But I will have queries, okay, because that is my job. See, this is...
Please go ahead.
Yes. So this is on slide 11, okay. We did consolidate it part of INR 101 crores, okay? But the net worth has grown only by INR 17 crores, okay? Both are after noncontrolling interest, has there been any adjustments made in the net worth of the company on the control level? And what was that for?
So fundamentally, the key event which had happened in quarter 3 was merger of entities in the South to give [indiscernible] as well as ensure seamless upstreaming of cash. And that's one accounting which changed. Earlier, we used to show, I think, about INR 37 crores or something as a minority -- as an interest in one of that entity, and there was a goodwill which was there. So it's largely the changes which you are seeing is largely coming off of the accounting which we did, which we did in quarter 3.
Okay. And the next question was on this IC business, okay? We had a pretty strong Q4 FY '22, okay? But the gross margin seems to have dipped quite materially, any specific reason for that, that gross margins have come off in the IC business because more volume going up, our expectation was margins would have been higher or better in Q4.
Yes. No, so absolutely valid observation. I just give some sort of color to the overall numbers here. I see we have got Tier 4 assets, for example, Jaipur city and Chennai city, apart from Chennai Origins and others. If you look at the total inventory, which we are right now holding that will be, I think, north of a 100 acres or so. The path are sort of distributed across India. And so is the gross margin. For example, Jaipur operates usually upwards of 65%, 70%. versus others, which may be a little different. On a weighted average basis, if you look at fourth quarter performance or maybe the quarter performance. Gross margins will be upwards of 55%, 60%. Within that you would always have instances and, say, Origins Chennai which has got a lower margin, which in quarter 4 adds up to most of the inventory. At an overall basis, I request and I'll ask you to actually go back and look at what we said 7, 8 quarters back, one of the key objectives was to monetize IC & IC, generate cash, use that cash to fuel residential business. And the key point is, Arvind talked about the cash surplus, and that's where we are, cash is getting generated. We are using it to reduce our borrowings in the IC business. We are putting that money to generate residential business, land acquisition, et cetera. On a weighted average basis, our gross margins in IC business are extremely strong.
And one question I have on this MWC Chennai, okay. So we are trying to buy more land outside the Mahindra World City, Chennai, okay? So the new land outside the MWC Chennai are in MWC Chennai or they are in Mahindra Lifespace's developer and limited needs?
I think this comment is more to do with again, I'll go back to the regions, had 2 phases. Origin Phase 1 is a collaboration with Sumitomo Corporation. And outside of that land parcel, we have got about 250 acres of land, which is -- which we are calling it out as Phase 2 is still in the development and sort of a strategy phase we are thinking through as to what is to be done. And that's the land, which is adjoining the Origins Chennai. I think the question you're asking about Origin, or you're asking about the whole city?
Asking about whole city, okay? Yes. So you mentioned Phase 2 land for Origins Chennai is in the books of whole city. That's right.
Okay. Okay. So -- and one last thing, Arvind, in terms of how do you look at the costs in the business, okay? And is there -- means how focused are we on going to the -- reducing the cost or managing the cost in the business because we have seen significant growth, okay. But margins are still work in progress, okay? And are we really running an efficient ship? Or you think there is something -- some more work on the cost sides can be done can be at the project level also and it can be at the corporate level also, can you give some idea on that?
So see, a couple of points here and the important one, which is, again, go back to, say, 1 or 2 years where we always talked about our focus on growing residential business. So 3 years back, we talked about INR 2,500 crores when we were appreciating it at about INR 86 INR 90 crores. And the whole objective was to get the right people in the right place so that we can really build this organization for many, many years to come. And therefore, investment on the people side is being done, they are to put together. Similarly, there are 2 more key hits. One is the marketing hit. If you look at our history 2 or 3 years, our marketing costs usually have been lower than industry sort of benchmark. One reason is that because our launches, et cetera, really are very robust. And therefore, we tend to invest less. However, the same thing, our desire to build a strong brand, which Mahindra is today. We want to continue to invest, and therefore, do not intend to hold back so far as marketing related spends are concerned, at least over the next 1 or 2 years. The third cost really is the overhead cost, which are usual ones. We again located as a percentage, not as a percentage of revenue, but as a percentage of presales. So if you were to look at F '23 numbers, our percentage to presales, LCs and IC put together will be best-in-class across all 4 cost lines, which is employee cost, admin cost, marketing cost and depreciation plus interest. So that's the sort of long and short of it, we'll continue to invest. You will see some costs -- fixed costs going up. But in terms of percentage, we'll continue to see decline.
Okay. Thanks, I'll be back for further queries.
Thank you. We'll take the next question from the line of Rohith Potti from Marshmallow Capital. Please go ahead. Mr. Rohith Potti your line has been unmuted. Please go and ask your question. If you have muted yourself on your device, please unmute yourself and ask your question. As we are not getting any response from Mr. Rohith side we move to next question. Next question is from the line of Pritesh Sheth from Motilal Oswal. Please go ahead.
Hi, good morning. Comment on great performance in FY '23 and all the best Arvind for your future endeavors. You have had a very successful tenure with Mahindra Lifespace. And thanks for the progress that we see right now in the company. My first question is, again, continuing on the margins which one participant has asked. I think right now, a few of the legacy projects are getting completed where probably we didn't had better margins. When should we expect that these margins should improve on the P&L front. I mean, last couple of years, we have had, I think, good launches with focus on profitability. So by when should we start seeing them in P&L?
Yes. So let me take this question. This is Amit Sinha. As I've been looking at the margin profile of the past projects. So I'd like to highlight 3 points. One is, as you've seen, we have had a huge successful set of launches in the last 4 quarters, for sure, as well as the year before. And those projects have been launched with, I would say, right pricing, right mark-to-market, right set of value proposition for customers. And most of the impact will start to happen in the next 4 to 8 quarters as most of these projects start to complete. And that is where that we'll start to see that our margin profile will start to improve, especially on the residential side. The second point is about the current launches that we are thinking in terms of delivering a product, which is outstanding, which meets the customer expectations in line with our brand, in line with the unique propositions we have on the sustainability, on the efficiency of design, in terms of technology. And we feel that all those things that we are able to bring to customers will have an improvement on the pricing aspect, which is extremely valuable when you are sourcing land from the market, when you are doing the cost of construction in the current environment. So we need to make sure we get the value reflected in the price, the brand, the design, the sustainability, the technology, all the unique value proposition. So that's the second piece I'll see. The impact will start to come over the next 8 quarters because those projects have just been launched or being launched. So you'll see the effect of those in the subsequent quarters. And the third part is how do we manage the velocity of sales versus the revenue recognition. I think as we have seen, the market is quite buoyant. We are able to see, hey, in certain projects, should we hold back for slightly better pricing? Or should we release that inventory. That's a very disciplined exercise that we have carried and started to do it really well in the last few months, but that is going to give us a slightly better improvement on pricing again. The way we manage our mix of sales versus inventory and will again reflect our margins. But to answer your question in a very short manner, the impact you'll see in the next 8 quarters because that's where the revenue condition will start to happen.
So probably FY '24 should still be like subdued in terms of profit margin recognition. But from '25 onwards, we can see that improvement. Is it fair to say?
Yes. That's what our current belief is. Sure.
And what should be -- what are the broad gross margins that you are seeing for the sales that you are doing right now because that would ideally drive the profit improvement in P&L as well.
Yes. So 2 points to this. One is the definition of gross margin itself. But frankly, when we talk about gross margin, it's an all-in cost to an extent, we do not sort of sort of keep the definition where the gross margin looks high. Usually, you can expect gross margins for us. And when I say gross margin, I'm including interest cost and overhead cost as well into the number. It should be closer to 18% to 20%.
Yes. Okay. Okay. And since we are now venturing into redevelopments as well, would the margin profile be similar or since those are projects which are largely in Mumbai, that margin profile should be a bit higher?
Yes. My sense is the new acquisitions which we are doing, including redevelopment, we should certainly see a favorable or accretive gross margin.
Got it. Fair enough. And lastly, on FY '24 in terms of how we look forward to. Just if you can broadly guide us through the launches that you expect this year, probably candidly, we have already started seeing some bit of marketing activities from maybe from the general partner brokers, but what are the launches expected in this year? And what should be the size?
So let me give -- so we have a bunch of launches planned in this year. I'll give you broad given we are waiting all the clearances. So I don't want to go into full details, but there are 9 launches that we have planned for this year going from Q1, Q2, Q3, Q4. And Kandivali, which is a key part of that launch. [indiscernible] Phase 2 is the key part of that launch. And then there are other 7 launches that we have. I must tell you that we are being thoughtful about bringing these launches to the market given each of them are in different mark-to-market different cities. So we are not only aligned with the approval process, but also how the market sentiments are likely to be at the time of the launch. Two of these 9 launches are from the recent acquisition. You heard about the Navy that the second redevelopment that we have won, that is also included. Our sales, we will be able to push it by Q4, but it's an early stage, you'll have to work really hard to do the approvals and all the design company that -- so total 9 launches front for the year. A couple of them are all a tight deadline, which we are working on.
Sure. So it includes for now both the redevelopment. But at least you expect any want to happen this year and probably second to spill over next year?
Yes. Yes, absolutely, yes. Yes.
Okay. And does it include the data as well?
Data, we are watching -- data is not included right now because there are certain approvals that are abated. We want to launch when all the approvals are in place.
Sure, sure. Perfect. That's it from my side, all the best.
Thank you. Take the next question from the line of Amit Dalal from Tata Investment Corporation.
Good afternoon, Arvind, good morning everybody. Congratulations on having achieved what you started out as your target over the last 3 years or 2.5 years that you have been with us, and good luck in whatever endeavor you have planned ahead. I have only one question, and this is for all real estate firms. All real estate firms are always in an investment phase. And that -- and now with this accounting, it has made it very difficult for real estate firms to distribute to the shareholders. As much as the cash flow from past projects is what the shareholders should finally get a distribution of some income. The future project investments are capital, both equity and debt, depending on what allocations are made by the company. So would you all consider small buyback?
So let me put my deal at right now from M&M as well as the MDL. I think the buyback, we are not contemplating at this time because we already have -- M&M has 51% plus stake into the internal. We have an increase in stake because of the buyback. It's a participating buyback of promoter and non-promoter. It's a tender buyback. Yes. So no plans as of now, but our scaler plan needs any kind of support, we will consider that. But as of now, no plans.
Please take it to the Board to consider 1% or 2% of the issued capital that we get some dividend yield at least here.
Yes, absolutely. Well taken up.
Thank you. We'll take the next question from the line of Colin from Gold Swiss Capital. Please go ahead.
Yeah, hi. Thanks a lot Arvind. An amazing stint at Mahindra Lifespace. So a couple of questions for you. I mean, in 2.5 years, you have been able to achieve a lot. And still, but there was an overall scheme of things, there is still a very long way to go for the company and it had all the right impediments to become one of the largest real estate companies in India. So what was it that -- and we have seen this growth, M&M group doing lots of things differently than what they were done in the past in terms of stepping into EV, right? So what was it that within the group, they were not able to meet our aspiration, right, and you had to look outside, right? Because I'm sure that from -- I mean, for the last 2.5 years has been very rewarding, but it would have been equally rewarding to probably take this company to INR 10,000 crores kind of a residential sales run rate. So what was it that was missing -- I mean, what was the difference of hoping and that you had with the management? Or could you give some color for your exit, the reason for the exit?
Since I started with poetry, let me stay with that team, Lewis Carol famous combos in the carpenter Time has come, they've always said to talk of many things, shoes and ships and sealing racks and caps and Kings. It's not the time to talk about is my departure or reason for departure. I think we should look forward and see kind of where we are. I believe the best days of the company are still ahead of us. I have always said consistently maintained that our aspiration is much larger. Even the goals that we articulated of INR 2,700 crores, et cetera, INR 500 crores on industrial were always intended to be just the first step in a journey. And I feel confident we are on that journey. There's a lot that this company can achieve the potential is.
And if I can add, Colin, Amit here. I think while Arvind might be leaving the organization, he's leaving a part of his legacy with us. He's done a lot. And it's our beauty and responsibility to build on the work, the build on the platform he's created. And most critically, what I feel very proud is that the team at MLDL has a huge amount of confidence that they can take on 5-K or 10-K as you. That confidence is extremely valuable in any organization. I think targets become less important if the team has confidence. And we'll continue to have those 3 things that I mentioned in our call when we had the last call. One is scale up built on the confidence that we have got in under Arvind's leadership, not only in the first level of leadership but across the organization. The second is customer centricity. I think this is a market where our brand, our differentiation will give us much better financial outcome. And third is always focus on the financial prudence, what are the right things from a financial point of view. Don't just scale for the sake of scale. Think about the financial outcomes for our investors, our employees, our organization. So all that is built on what Arvind you have set in motion and hopefully, we'll share periodic news about our progress along that path.
Thanks a lot Arvind and Amit for this answer. I have one more question for Arvind before I have a question for Amit. So Arvind, we all can see the scale and what all things that you have done, no doubt. And then as an organization where we have reached, but if you were to probably point out to the tier in your tenure, what would that be?
Look, I think on every dimension, while we've grown the business significantly, I would say there's still more that could have been done. Land acquisition has been a good story, but there is still that desire or that a little bit further strength we could have taken similarly with sales. I think it's a journey. And you never get all of it right. Overall, I'm extremely satisfied, extremely proud. I look back with an immense amount of satisfaction at what the team has achieved. And it's been -- like Amit pointed out, the standout for me has just been the self-belief and kind of conviction that the team has that there can be a much different future than the past.
Sure, sure, Arvind. So now I have a couple of questions for Amit. Amit, the first question would be that -- I mean, you have experience of working with this group, right, since 2020, if I'm not wrong. And so -- but I mean, you have that relevant experience of real estate, how do you bridge that gap, right? I mean, what are the 2, 3 things that you would like to keep in mind for the next couple of years to restart domain expertise, right? And in the same, let me ask the second question as well, right? If you look at the very long history of this group, right, I mean there has always been this transition of management, right, and sometimes, new CEO. And finally, we had found a stable leadership right in some time. So how do you all those fears as well that we are not getting back to the same track of what we were before Arvind?
Yes, fair question, I think I'm glad you raised it. I think this came up in the first call I had my personal experience, but I keep it short this time. I think at the end, it's a team sport this business. It's not about any one individual. And if you look at the leadership team that we have at Mahindra MLDL and the leadership team that supports them is outstanding. And I think that makes the -- if there a gap that we need to personally fill is made up by the team that is already there in existence with their supporting team of teams. So that's the first part. Personally, I think there are 2 areas which are very useful to append to the skills that are needed to be successful. One is the group understanding of how the group works, how the capital allocation works, how synergies can be fully extracted, how do you balance the sales momentum versus profitability. Many of these things are something that I've learned over the last 2. In fact, I to run the strategy and capital allocation. So a good understanding of how to work very closely and leverage the brand strength across multiple areas. And part 2 is about my personal experience prior to Mahindra, I was in consulting similar to Arvind, and I had the pleasure of working with many industrial companies. I'll put them into real estate developers, PCP companies, the largest construction companies, out of top 10 work with top 5. So the construction part is very well understood, especially the contracting part is very well understood to me. And then many infrastructure companies in the space. So all those learnings are going to be very useful as we look at the next phase of Mahindra Lifespace. And your second part about the transition very well understood. And I think this is a long-range industry, a product takes 5 years to come out. You need to make sure there's the continuity. And every effort will be being made to make sure the continuity at the leadership level at the senior most as well as the next level, the next level direct report to MD and CEO. So all those transitions are going to be, if at all, they happen, they're going to be well supported by other leaders. And more important over the last 3 years under Arvind's leadership, a lot of processes and systems that have been put in place. So that allows us to make sure that the capabilities, differences, differentiation is all institutional, it's not individual assembly. So if one person has to move on for personal or professional reasons, the others are able to build up based on their expertise, but also the institutional capability that exists. So those are the 2 quick answers to your 2 questions. Let me know if you need any double click on any one of them.
No, no, that's great. And it's good to know, and we will probably interact in the future call. But thanks a lot for this. And all the best Arvind for your future endeavors.
Thank you very much. Thank you.
Thank you. We take the next question from the line of Raj from [indiscernible] Partners. Please go ahead.
Yes, am I audible? Yes. So you said you have inventory of around 1,200 acres, right? So how much would be the sale value of it?
Sales value of debt will be about INR 5,000 crores.
INR 5,000 crores, can we expect right? And then how much time can we expect this to come into the books?
The inventory is actually upwards of about 1,400 acres and therefore, I said about INR 5,000 crores can be the expected value. Second one is a good question. We'll come back to you.
Sorry.
Second one, I'll say is a good question. I don't have a ready answer to that, I'd rather stay with the guidance which we have given.
All right, all right. And looking at the margin improvement, which you have said, though we expect the improvement will be from FY '25, right?
Yes. Just to add to that to see what's happening is, and all have seen the journey on that front. Is the whole commodity price challenges with of industries or about, say, a year or 2 years back. That part is behind us. And so far as our current projects are running, including the recently launched ones are doing well. Having said that, there are projects which were launched in 2016, '17 sector, which has coming to closure SPP. And here, we will see some challenges. But from a trajectory point of view, year-on-year, you will continue to see improvement in margins for sure, F '25 certainly.
All right. And looking at properties, which you have launched, right? So how much was -- how much is the value of those things in FY '24, I think you have launched around 9 properties, right?
Yes, FY '23, we launched 9 either new projects or new phases of the existing project. Our launch inventory was 3.3 million, all of which -- not out of which, but our sales were about $2.3 million, including some sustains area.
All right, understood. And sir, you have given estimates for FY '25, but how can we look at FY '24, just a rough outlook on the operations side?
Yes. No. So as you can -- from the team itself, you can make out the trajectory is looking very strong and good. Amit talked about new launches, which are coming up, including into the redevelopment market. We continue to be extremely confident so far as the overall residential prospects are concerned, including F '24 and beyond.
All right. So at operating level, can we expect some bit of profit in FY '24.
For F '24, I'll not be able to give you a guidance. One key indicator I want to call out is the whole cash flow. It has really come out very well in the last 2 years, and I'll request that's one lead indicator, which means the things the way it's developing and panning out is very positive over the medium term. But no reaction to F '24 specifically.
Alright, thanks. All the best.
Thank you. We take the next question from the line of Adhidev Chattopadhyay from ICICI Securities. Please go ahead.
Good morning everyone. Am I audible?
You are, sir. Please go ahead.
Yes. First, congratulations, Arvind on what we have achieved. It has been very gratifying to see the company grow leaps and bounds during your tenure and wish you all the best in whatever on your personal and professional front in the future. So my question is mainly on the business development pipeline. Obviously, as we -- as you are just going out, but what is the overall pipeline looking like for the year? And in the launch? And just another follow-up question on line launches. Any indicative sale value or GDV of how much these 9 launches would carry -- these are my 2 questions, thank you.
Adhidev, this is Amit. Let me try to answer that, if it's okay, and Arvind can jump in if needed. I think we had a pipeline of around INR 5,500 crores GDV. We've converted almost in the last month, you've seen the Navy large announcement to that INR 850 crores. But in the meanwhile, we have replenished the pipeline, so we still have 5,500 plus/minus a little bit of the pipeline on the BD side, business development side. And our effort is to continue to convert but the right size and right kind of project, but also continue to have a stage process to bring more relevant projects in our pipeline. So the short answer is INR 5,500 crores, which was there continues to be healthy, someone has converted, but we have replanned the pipeline once again with similar size.
Okay. That's helpful. And just on the -- any indicative GDV value on the launch pipeline for this year? Overall. The 9 launches.
Let me, 20 to 50, right? Is the... Going to be... it should be closer to about 3,500 to 4,500 rough numbers. And the sales would be... Okay.
Yes. I just not asking sales guidance, just the overall -- what is the total. So around INR 500 cores to INR 4,000 crores right? This is the correct number, right? Indicative. Okay. Okay, that's it from my side yes. And again, Arvind I wish you all the best and also the team for the future. Thank you.
Thank you Adhidev. I appreciate your support.
Thank you. We take next question from the line of Rajesh from SBI Mutual Fund.
Hi. Can you hear me?
Yes, please go ahead.
I have 2 questions. First is on profit margin. Earlier you responded to a question saying that having the gross margins that are reported that actually includes overhead. So could you elaborate more on what those overheads are? And what would be the gross margin, excluding those overheads?
Yes. So I'll give you the overall response here. For example, any new business case if we evaluate, there's a particular amount or say, per 5 feet number, which we assume. The idea there is to ensure that once we reach a detail and scale, we're able to absorb all our overheads into that. When I say overhead and largely referring to the current costs. And within that, my sense is that the corporate overhead at an overall level will be closer to 60% or so vet the number which I mentioned high-level response. Do you need any detail.
Okay. But can you tell us at let at the project have what the gross margins are for the existing projects? Is it possible to give us a number.
At project level. In terms of overall, if you look at our segment level slide, quarter 4, the gross margin which we reported was about 13%. And that certainly is the lower end of our trajectory. You can expect that to improve as we progress over 24 end and 25.
Okay. Thanks. Second question is on debt. It's actually in 2 parts. So first question is on the IC & IC business despite good numbers in terms of collections and leasing. Why do you think that has increased despite the numbers?
That has increased, okay so far. So a couple of points. Idea of debt increase is to leverage the internal approvals towards land acquisition because that helps us optimize the cost of borrowing. And if you look at the India number, while our debt is about INR 240, our cash is about INR 273 crores roughly. And hopefully, that is a good indication of the things to come. At an overall level, our debt continues to hover around INR 800 crores, including IP. It has improved a little because it has gone down because of certain large transactions which have happened. Having said that, our balance sheet is allows us to take significant amount of debt without sort of stressing the balance sheet. And to that extent, we are like -- we are right now net debt positive from India's point of view. So a huge headroom we have available to borrow cash flow debt.
Okay. So One clarification. The land acquisitions for the IC business or the residential business. Okay. And the second the second part of that question, that question is that since many of our SPs don't get consolidated. What's the third-party external debt outstanding in all the SPs?
Yes. So see, third party, we don't have debt as in a firm commitment, whatever platform we have signed up for the investments we have got, and I'm saying say from any of our partners, including ISC World Bank, Sumitomo Corporation, HDFC. All of these investments are sort of risk revolved there is no firm debt commitment which we have on any of these.
There would at least be a principal amount outstanding, right?
It will be difficult to give you a number because it's an accounting thing. The numbers are very varied. For example, active member of homes, if you look to look at the balance sheet, there is actually 0 debt because it's all liquid.
Okay. I'm not sure if I've got my answer, but okay, I'll reach out to separately. Thank you and all the best to the entire.
Thank you.
Thank you. We'll take the next question from the line of Shreyans Mehta from Equirus Securities. Please go ahead.
Yeah, thanks for the opportunity. So just one clarification. When you talk about 9 launches. That does not include Panera?
No. No, not as of now.
Got it. Got it. So can you just highlight where at which stage are we in any and probably when can we know we see that coming into picture?
So I'll give a quick answer, and my colleagues can jump in. We are waiting on some policies that are -- that will help improve the value of the asset that we have. And it's prudent for us to wait and ensure that those policies are communicated so that we can plan our launch, which will help us maximize the value of the asset. So we're waiting for that policy to come through. It's been told to us it will come any time now, but being thoughtful about not jumping the gun. My sense is that this will go into the next financial year. But if there any positive development, we'll keep you updated.
Sure, sure. Secondly, in terms of our key launches like Kandivali and Citareli, can we expect them to be launched by first half of this year?
First half. Yes, absolutely, absolutely. So Short answer is yes.
Got it. Got it. Got it. Sure. Sir, and a couple of more questions. One in terms of BD pipeline. It continues to be sticky at INR 5,500 crores. So when do you foresee this scaling up to, say, around INR 7,000, INR 8,000 crores because the conversions are not happening as fast as possible. So in terms of that scaling up, is there a possibility?
No, I think we don't see -- my sense is that it's very easy for us to increase the BD pipeline, very easy. But I think we are very prudent about what qualifies for the right project for us in the focused micromarket focus sets that we have. So it's not a question of bulking up the number. It's a question of having the right number for us to work on. We have limited bandwidth to focus on and we really want to do a good job of converting those -- so we -- as a result, we focus on the right projects that will come in the right locations and then we start to -- we like to convert them. So that's the strategy we have followed. And it has given us good results. Our teams are very focused on converting them. Our teams are very focused on getting the approvals. Our teams are very focused on launching the right project in the right time frame. And I think that's a repeatable formula we want to have. I have the right BD pipeline and convert them as soon as we can rather than a large number.
Sure, sure, sure. And in terms of completion, what ideally will be a target for FY '24?
Completions. So there are a few projects which are in sort of advanced stages, you will have, for example, 2 phases will come up. Similarly, Napo Bloomdale project will be exiting. And apart from it, a couple of other projects which are coming up, but not a significant amount or the quantum we are expecting for completion, which will come up in corporates in H1. Sure. So in terms of numbers. I'll share that with you off-line. It's during the presentation, wherever the percentage completions are 20% or 18%, that's what will come up for completion.
Got it. Got it. Got it. Sure. And my last question is to Mr. Sinha. What comfort can you give to the speed that the current management will continue for at least 2 years because this has been a problem since last, I would say, 2 to 3 years, that every 2 years, the management changes, so what comfort can you give to that this won't continue or this is not going to be the case going forward?
So I can only say that I'm really work hard and make sure that you guys are happy and the team is happy and the customers are happy so that a happy ecosystem allows us to create value for all the stakeholders and more. So I have no -- I just joined Mahindra 2 years back. I have no desire to shift right now at this point of time. And my current appointment is for 5 years. So I hope to continue to do good work following Arvind footsteps and make sure that for this kind of a business, which is a long lead time business, we continue to provide transition and continuity. But I also mentioned that you can't control all the variables. There will be some departures, which are personal, professional, but the institutional capability, institutional support, M&M brand, M&M group support should ensure that there is no loss in transition. So I will say that to simply answer your question.
Got it, got it. Thank you and all the best.
Thank you. We take the next question from the line of V.P. Rajesh from Banyan Capital. Please go ahead.
Hi, thanks for the opportunity. And Arvind congratulations on the value that you have created for shareholders over the last 3 years. And I think as said, more importantly, the team you have put together does inspire confidence that this business can go up to INR 5,000 crores or maybe INR 10,000 crores of revenues in the coming years. So my first question was regarding the GDV of the 9 launches that you are doing this year. I wasn't sure if I got the number correctly, is it 1,000 crores or INR 4,000 crores, if you can just clarify that?
Yes, it will be closer to INR 4,000 crores. Yes.
INR 4,000. And typically, we are selling 30% to 40% at the launch, right? So is that a right assumption to make? Or should we refine that further.
Yes. Yes. So for -- we have assumed around 35% for 7 launches and 30% for 2 launches because some of the launches are in the quarter 4. And as I said, because we are working very tight deadlines, so there might be a little bit of slippage, but we are trying to risk manage that. But 35% is for 7 launch and 30% for 2 launches.
I understood. And my other question is regarding the long-term projection that we had discussed on the previous call, Dr. Sinha, you had mentioned this now that you guys will come back on that to the investors. So any time line on that?
Yes. So my sense is in the process of absorbing and getting up to speed and all the business has been quite deep engagement so far, almost 100% of employees, all the sites, except one. My sense is in the next 3 months or so, I'll have clarity on how we think about any change in direction if we need to any change in strategy that we need to. But currently, our strategy is very clear. Our focus is very clear. We'll continue to progress along those dimensions.
Got it. And lastly, as you have looked at the business more in detail, any gaps in the management roles that you would like to fill or argument?
No, nothing as of now. I think we have a pretty solid team here. I think they are coming along well. It's not the intellectual capacity, but also the emotional connect that the team has is very strong. They work really well together, and I'm pretty excited to be working with them. No change anticipated of any kind in the short term.
Got it. Okay. Thank you so much and look forward to interacting with you more incoming calls.
Yes, absolutely. Thank you. Look forward too.
Thank you, Rajesh, for your support.
Thank you. We take the next question from the line of Rohith Potti from Marshmallow Capital. Please go ahead.
First, thank you, Arvind, for doing such a wonderful job. I've been an investor for 3 years, and your appointment was the primary reason I got invested in the company as well. And I look forward to continue being a shareholder for the longer term. So Mr. Sinha, it's very reassuring to see your position in the Mahindra Group and to see you take over Mahindra Lifespaces. But just one question because, I mean, I can be seen from the resume that you are currently on the Group Executive Board and you drive the strategy role at the broader Mahindra Group. In that context, Mahindra Lifespaces is a very small entity in the broader group context. So just curious how do you divide bandwidth when you become the MD and CEO here. As discussed in the call before, it is -- I mean this is a reasonably -- each project is 4, 5 years, it takes to compete, et cetera. So how do you divide bandwidth to this entity? And how do you ensure that the entity gets the time and direction to be for the longer term. So just a consider question I had.
Yes, yes. So thank you, Rohith. I think let me just answer in 2 parts. Part one is how important MLDL is for Mahindra as a group. And then I'll answer the personal bandwidth question that you posed, right? And I think you may have seen, as some of the analyst calls or some of the announcements about how we have 4 core businesses and 7 to 9 growth gems. And the growth gems, MLDL is one of the key growth gems. And the mandate for me as my current or previous role as Head of Strategy, Capital Allocation was or continues to be is how do you scale this asset faster than what we have done in the past. -- but do it in the right way. Don't lose sight of customer centricity, don't lose sight of financial prudence. I think that's been -- and they've been -- with our wins have been working closely on multiple areas -- but from a corporate point of view. So just want to -- first part of the answer is for Mahindra Group, this is a growth gem, and we will do anything and everything to scale this business in the right way. So that's the first part of the answer. Second part is my bandwidth, I'm in the process of transition, but fortunately, I've been able to do most of my responsibilities as on 7 boards. I've got an auto most to the Board as a corporate nominee. In fact, I'm able to spend 90% of my time on Mahindra Lifespaces. And after May 23, it will be 100% of my time. Whatever 10% of my time goes into my current role strategy will be backfilled by another individual who will be joining. So I will not be doing -- I'll not be double hatting after a few weeks. I'll be 100% focused on MLDL.
Okay. So this is very helpful, thank you. So just a follow-up here, Mr. Sinha, that -- I mean at least from my vantage point, it seems like being on the Group Executive Board with both strategy -- a group strategy role of heading the strategy role for the Mahindra Group. It's a much larger role than the CEO of Mahindra Lifespaces given -- I mean it's very heartening to hear the focus on growth in Mahindra Lifespace and Mahindra Lifespaces. But it does bring in the thought at least time a long-term shareholder and it just brings in a thought in our minds that, that is the role you might go back to, let's say, 2, 3 years along the line. And again, we have this change in the top in an industry which requires a relatively long-term leadership. I mean all the competition are run by the founder promoters or the family then serve and hence, there's a lot of continuity in those competition at least. So is this something -- is this the right way to think at all.
So it's a good thought, but let me say that right now, that's not the state of mind I am in. Right now, the mandate is very clear. The focus is clear that let's create more value built on what we have accomplished in the last few years. So next 3 years, 5 years, my current appointment is for 5 years. So -- and I think my focus would be how do you -- how can I live up to advance legacy and scale this to a different level altogether built on what we have accomplished. Going back to another business, et cetera, is not part of my thinking right now. And as you said, the previous role is very broad. This role is very deep. It's about -- I was in consulting for 18 years and then strategies have done enough of strategy work. The idea was how do I contribute to value creation for one of the growth gems in the Mahindra portfolio, and this is something I'm really excited about.
Yes, that is reassuring to hear Mr. Sinha. I mean, I remember one intervening with Mahindra said that the 3 businesses he's excited about for the next 10 years for Mahindra Group was logistics, real estate and the holiday business. So I really look forward to your journey with this company. And I mean you have my vote of confidence will be looking forward to the on for the next 3 to 5 years. Thank you so much.
Absolutely. Look forward to interacting more, thank you.
Thank you. We take next question from the line of Manan Patel from Capital.
Am I audible?
Yes, you are.
Yes. So thank you. And first of all, thanks, Mr. Arvind for bringing much needed energy to the organization and I have been part of this journey as long as you have been so it has been very rewarding. So thanks for that and hope in will also continue that energy for the company. So first question is regarding the IC business. So you mentioned in your form that Jaipur has been doing well. But if I look at the quarterly numbers, Q1 stated very well that it has been downhill. So how do we look at Jaipur, and in that context, I was under the impression that active deals will also have like part of Jaipur lands will be sold out for taxes as well. So we have not mentioned active at all in this call. So is that deal on back and your comments on the Jaipur?
Is a very good question I think Manan. This is Amit. I'll take liberty answering this. I think I'll answer it in 2 parts. Part one is we see significant momentum in inbound businesses given China plus 1, the overall voice in the industrial sector. So we see a lot of activity, not only in Jaipur but all the other world cities and industrial clusters that we have. But it's a lumpy business, as you know. So we started off Q1 was pretty good, but the conversions do take time. And that's where I think you've seen a little bit of Q4, which doesn't have a lumpy closure as of now. But many discussions are underway, and we hope that next financial year of '24, you'll see some more action on overall world cities but also on the Jaipur front.
Okay. And any comments on the active.
Yes. So that's in progress, and it will have maybe next 2 quarters or at 2. We will have some more progress on that front and keep you an updated. But it's not Jaipur specific. I think it's broader. The actives. We have partnered with them. We are looking for the right -- the land parcel that could be part of BTS as our contribution. The discussions and negotiations are underway. There are certain free requirements and approval that we need that will allow us to make this platform, our contribution from one city point of view are successful. So the work is underway. Just to add to that first half service to set up the team. So the leadership team there is now largely in place. All the key positions have been filled the CEO of the Head of Acquisitions, CFO, et cetera. So -- and that team has now fully kind of got the hand into the business. And as pointed out, over the next 2 quarters, you'll start seeing operational announcements as well.
Okay. That's very helpful. Sir, second, again, one more question on the IC business. So is that understanding right that Mitsubishi electric deal is part is recognized in Q4?
Yes.
Yes. So sir, I just wanted to understand because if it was recognized in Q4, it would have been closed completely before 31st March, but the announcement was made through the exchanges on April 17. So why was there a big delay in that?
Yes. No. So the announcement was actually done on 5th of April post registration formalities, which were to be completed in this particular transition.
But is part of the recognized revenue in Q4? That's right.
Absolutely right. It's part of the revenue recognition in quarter 4, the money was received documents were signed. It was only the rate station and 2 more qualities which were left and therefore, being a conservative in terms of all these things, we thought it have to today to do the announcement once all those activities get completed.
Understood. That's very helpful. Sir, second question on the residential side. So as we have focused over a period of time, our contribution or pipeline in value on is coming down and seeing the housing is going up. And I'm assuming the society redevelopment projects are also under housing. So is that a conscious strategy of bringing down value home and focusing on.
Yes. So we are constantly evaluating this. The focus is on scale, the focused markets and what customers would welcome. And so we will come back with more details of which -- whether we'll be able to double down or not on affordable housing. But it depends on location of land, the customer, the catchment area of multiple things. So we are constantly balding those.
Understood. And sir, last question, if I can. So I just wanted to understand when you say society redevelopment project was of INR 50 crores. So is that the entire revenue that we can recognize. And if you people help me understand the revenue recognition and the cost in that business that will be.
So we expect it to be largely within the same range as any of the residential business right from the top line to the accounting to the bottom line.
Sir, how the land cost, I understand will be in? Is that factored in the INR 80 crores?
Yes. So look at it like a typical joint development agreement. Okay? And in which case, say, the land comes more as an equity or a contribution from the other party, you can then probably look at all other aspects in -- with a similar lens.
That's very helpful. And thank you for all the answers and wish you all hope the energy of the organization. Thank you.
Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd now like to turn the call over to Mr. Amit Kumar Sinha for closing comments. Over to you, sir.
Great. I'll keep it short. We are over a little bit of time. So thank you for all your questions and comments. I think it's very helpful for me personally to understand your views, your vantage point, your priorities. And we at MLDL will continue to address them in our business, but also hope keep the channel of communication open to make sure that we are able to course correct and refine our strategies and priorities continuously. So first of all, thank you to all of you. Second is, I thank you to Arvind for, as I mentioned earlier. He's leaving MLDL, but he's leaving a part of him behind and we'll build on what he has set up in motion, and we'll continue to address them. So that's my second quick comment. And third, I just want to summarize the 3 points that I have in mind as I think about our business. The first is about scale up is a big priority for all of us. As you've heard a lot from me as well as the colleagues here, the launches, the BDs, the process that we have put in place, the discipline, the pricing, the inventory, all those things are part of our scale-up strategy and we'll continue to put all our muscle and hustle behind that. The second is the customer centricity. This is a market where we feel that our brand can give us a lot more than what we have -- what we have -- we may have seen already. So how do we think about bringing the right product, leveraging our brand, leveraging our growth strength, addressing sustainability and technology parameters that create all we have seen with some of our products already. So how do we double down, triple down on customer centricity. And the third one is on the financial prudence. I think we are in the business for creating value for our shareholders. And I think all our efforts should culminate into the financial outcome that we get from these efforts. So those are 3 on the residential side. Some of them apply to industrial side also. But given the bone that we see on the MNCs interest in industrial cluster, we'll feel that there'll be a lot of action you'll see on the industrial side as well. And the team is geared up to convert that. And I've seen that firsthand with some of the closures we saw in March firsthand and quite impressed with the funnel that we have as well as the conversion and the effort that we have put into late. So those are the few messages from my side. Thanks to all of you for your feedback. Thanks to Arvind for setting things in motion. 3 priorities: first, on the residential side and one clear priority on the industrial side. So and I will continue to open the dialogue with you and look forward to your support and feedback.
Thank you very much, sir. Ladies and gentlemen, on behalf of Mahindra Lifespace Developers Limited, that concludes this conference. Thank you for joining with us, and you may now disconnect your lines.