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Ladies and gentlemen, good day, and welcome to the Oberoi Realty Limited Q4 FY '20 and Q1 FY '21 Earnings Conference Call. We have Mr. Oberoi, the Chairman and Managing Director of the company; and Mr. Saumil Daru, Director of Finance of the company with us for the call. Please note that this call will be for 60 minutes. [Operator Instructions] And this conference is being recorded. The transcript of the same may be put on the website of the company. [Operator Instructions] Before I hand the conference over to the management, I'd like to remind you that certain statements made during the course of this call may be -- may not be based on the historical information or facts and may be forward-looking statements, including those relating to general business statements, plans, strategy of the company, the future financial condition and growth prospect. Forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements. [Technical Difficulty] Ladies and gentlemen, kindly stay connected. We have lost the line of Mr. Oberoi. We're connecting him back. Please stay connected.Thank you. So I would now like to hand the conference over to Mr. Oberoi, the Chairman and Managing Director of the company. Thank you, and over to you sir.
Good morning, good afternoon and good evening to everyone as per the time zone from which you have logged in, and welcome to the conference call Q4 FY 2020 and Q1 FY 2021 results and business updates. [Technical Difficulty]
Sir, I'm sorry to interrupt, we are not able to hear you well, Mr. Oberoi. Ladies and gentlemen, kindly stay connected. We seem to have lost the line of the management. Please stay connected. Thank you very much sir. So we are back in the call. You may please, sir.
Okay. Sorry.[Technical Difficulty]
Ladies and gentlemen, kindly stay connected. We're reconnecting the numbers. Thank you. Sir, we are back in the call. You may please go ahead. Thank you.
Good morning, good afternoon and good evening to all of you as per the time zone from which you have logged in, and welcome to the conference call of Q4 FY 2020 and Q1 FY 2021 results and business update. Thank you for taking time out and attending this call. I hope your family and you are doing well and keeping yourself safe. Before I begin, I would like to share a quick update. Most of you would have read in the paper that we have just concluded our deal with Morgan Stanley to lease 1.1 million square feet of office space. This is at our upcoming project, Commerz III. This is the third commercial building in Goregaon. This is also 1 of India's largest office-based transaction, and it's a meaningful step towards our annuity asset buildup. With this, we also want to let the world know that we want to be a serious office development player, and we will now be seriously looking at land and building such projects. With this, I will now hand over the call to Mr. Saumil Daru, our group CFO. He will take you through the numbers. Post that, both Saumil and I will answer your questions when the Q&A begins. Thank you. Over to you, Saumil.
Thank you, Mr. Oberoi. I guess most of you must have seen the presentation on the website, and this is -- we have also filed our results with the exchanges after the meeting. In terms of consolidated financials, we achieved consolidated revenue of INR 625 crores for the last quarter as against INR 536 crores for Q3 FY '20 and INR 597 crores for Q4 FY '19. The consolidated PBT stood at INR 350 crores for Q4 FY '20 as against INR 209 crores for Q3 FY '20 and INR 220 crores for Q4 FY '19. And the consolidated PAT for the same -- for the last quarter was INR 250 crores as against 108 -- INR 148 crores for Q3 FY '20 and INR 155 crores for Q4 FY '19. The consolidated revenue for FY '20 stood at INR 2,285 crores as against INR 2,661 crores for FY '19. The PBT for FY '20 was INR 968 crores as against INR 1,177 crores for FY '19. And the PAT numbers were INR 689 crores for FY '20 as against INR 816 crores for FY '19. For Q1 FY '21, the consolidated revenue was at INR 126 crores with PBT at INR 39 crores and PAT at INR 28 crores. Oberoi Mall, which is the retail asset, contributed about INR 39 crores to the operating revenue for Q4 FY '20 as against INR 40 crores for Q3 FY '20 and INR 38 crores for Q4 FY '19. The operating revenue for the full year FY '20 was INR 160 crores as against INR 150 crores for FY '19. The EBITDA margins in this vertical stands at about 95%. Commerz, which is the office space asset, contributed about INR 4 crores to the operating revenue for Q4 FY '20 as against INR 6 crores for Q3 FY '20 and INR 10 crores for Q4 FY '19. The operating revenue for the full year was INR 31 crores as against INR 41 crores in FY '19 and the EBITDA margin in this asset is in excess of 85%.For Commerz II, which contributed INR 32 crores for Q4 FY '20 as against INR 31 crores for Q3 FY '20 and INR 25 crores for Q4 FY '19. The operating revenue for the full year was INR 123 crores as against INR 83 crores for FY '19. And the EBITDA margins in this vertical is in excess of 90%. The Westin Mumbai Garden City contributed INR 29 crores to the operating revenue for Q4 FY '20 as against INR 38 crores for Q3 FY '20 and INR 37 crores for Q4 FY '19. The operating revenue for FY '20 full year was INR 131 crores as against INR 137 crores in FY '19. The EBITDA margins for this asset continue to be in excess of 30%. In view of the lockdown enforced during the quarter ended June 30 due to the ongoing COVID-19 pandemic, the operations of Oberoi Mall and Westin Garden City were severely impacted. And however, the commercial leasing operations continued as usual. Moving on to the residential projects. For Esquire, of the total project size of 21.22 lakh square feet, we booked a little over 20,000 square feet in this quarter or rather Q4 FY '20. Till date, we have booked about 17.21 lakh square feet, which is about 81% of the total available inventory. The total booking value for Q4 FY '20 was INR 41 crores as against INR 59 crores in Q3 FY '20 and INR 97 crores in Q4 FY '19. The total revenue recognized for the project in the Q4 FY '20 is INR 26 crores on account of the 100% project completion. Similar numbers for Exquisite. We booked about close to 6,000 square feet in Q4 FY '20. Till date, we have booked about 14.49 lakh square feet. The total booking value for Q4 FY '20 was INR 13 crores, and the total revenue recognized was the same as INR 13 crores on account of 100% project completion. For Prisma, again, we have booked a little over 7,800 square feet in Q4 FY '20. Till date, we have booked about 2.59 lakh square feet. The total booking value for Q4 FY '20 is INR 15 crores. And the total revenue recognized for this project in Q4 FY '20 is, again, INR 15 crores on account of 100% project completion. For Maxima, of the total project of 4.1 lakh square feet, we have booked a little over 9,000 square feet in Q4 FY '20. Till date, we have booked a little over 22,000 square feet and the total booking value stands at INR 14 crores for Q4 FY '20, cumulative booking value till date is INR 36 crores. For Mulund, totally, we booked about close to 36,000 square feet in Q4 FY '20 within Eternia and Enigma. And till date, we have booked about 11.32 lakh square feet. The total booking value is INR 51 crores in Q4 FY '20. And the cumulative booking value in Mulund till date stands at INR 1,653 crores. For Sky City, we booked close to 46,500 square feet in Q4 FY '20. Till date, we have booked about 18.8 lakh square feet. The total booking value for Q4 FY '20 was INR 74 crores as against INR 100 crores for Q3 FY '20 and INR 83 crores for Q4 FY '19. And till date, the gross booking value is INR 2,995 crores. The total revenue recognized for this project in Q4 FY '20 was INR 145 crores, and cumulative revenue recognition till date is INR 2,036 crores. For Three Sixty West in Oasis, the cumulative booking value until date stands at about INR 2,474 crores. Again, due to the COVID pandemic, the operational activities for June 30 were impacted. And accordingly, I'm not getting into individual asset wise breakup of the bookings. The total area booked in Q1 FY '21 was about 12,300 square feet with booking value of INR 24 crores. And the total revenue recognition in this quarter stood at INR 57 crores. Coming back to some key financial parameters. Our adjusted EBITDA margins for Q4 FY '20 was 62%, and the PAT margins were at 40% for Q4 FY '20. The EBITDA margins in the Mall and Commerz businesses are much higher than average. Excluding them, the margins for our pure residential business is 59% for Q4 FY '20. For Q1 FY '21, our adjusted EBITDA stood at 52%. PAT margins were 22% for QY -- for the Q1 FY '21. And the EBITDA margins in this quarter, Q1 FY '21, for the residential business stands at 31%. With this, we would like to hand the floor back to the question-and-answer session. Happy to take those calls. Thank you.
[Operator Instructions] We have a first question from the line of Kunal Lakhan from CLSA.
So just quickly on the fundraising plan. You've taken the enabling resolution like you do every year. But you also mentioned in your opening comment that you are seriously looking at acquiring land. If you can give us some color on what kind of opportunities are you seeing in the market and how do you plan to capitalize on it? And what kind of capital outlay are you looking at, especially on the land front? Hello?
Yes, Kunal, I think we are -- Saumil here...
No, no, I can hear you. I can hear you. Sorry, Saumil, I can take that. So yes, this is an enabling resolution. And we continue to look at opportunities. In fact, given COVID, they'll come fast and thick. And we are evaluating. I think it's going to be long until this flow continues and so on. So we are going to wait and watch and see where it really eventually settles and only then we will venture into taking more land parcels or things like that.
Just a follow-up on that. Are we still looking at opportunities in and around Mumbai? Or we still have those plans of venturing out of Mumbai?
No. So we are looking at land across Mumbai and outside. In the external, we have very few geographies. We would like to look at NCR and probably Bangalore. But major focus will be on Mumbai and NCR.
Sure. Sure. My second question is on the news article, which is there last week, on the sale of 2 units in Three Sixty West. Just if you can confirm on that? And additionally, if you can give us some color on how the interest has been especially post easing of the lockdown, not just Three Sixty West, but even other projects?
So the visits to sites have been very encouraging. I must say that I did not expect people to be coming out and visiting sites and visiting our experience center. But I was very pleasantly surprised. In Mulund alone probably, we would have done more than 200 visits since it opened. We have done some 40 visits in Worli and another 200 probably in Borivali. So the numbers are staggering. People really have come out and looked at it. Of course, there have been articles, misleading articles, I'd say that the real estate prices will drop by 20%, and this that and the other, which obviously is working on the mind of people. And some of them want to wait and watch, very few have like really gone ahead and concluded it. So -- but to answer your question, the response has been amazing. We have to yet see conversion, but they have come out and it's been a pleasant surprise.
And on your comments on the news article last week on those 2 apartments getting sold in Three Sixty West.
So yes, yes. I mean like I said, that Three Sixty West is very well received. Obviously, the document is registered and the newspaper article is simple reproduction of what they see in the registrar's office. And so there is a constant demand and constant sale happening in Worli. We're very happy. We would love for it to increase in terms of pace. But yes, it's got a very good client. It's got a very good subsection of society in that building.
Sure. That's helpful. And lastly, on our Thane project, just considering the oversupply situation there and the prices having already weakened in the last 6 months, how are we looking at that project in terms of positioning our products and sizing as well. And if you can even give us some indication on its launch time line for that project.
So firstly, let me answer that. I don't see there being a scenario where they will be oversupplied. And that takes me back to my earlier comment that I made that misleading articles with say 20% drop in prices. If you see most of the developers, their balance sheet are stretched at current basis. I don't know where will they get this 20% discount from and give it to the buyer. That is point one. For that, input cost has to come down. And I mean government is not really doing anything to bring that input cost down. We are almost paying 35% of our revenue goes to the government in the form of premiums and so many other heads. And we, as an industry, have made a representation to the government that this is too much, and you should really look at it. Otherwise, most people in the industry are dying. So having said that, if, let's say, that part is too, and if you feel that not many developers will survive this pandemic, then there is no question of supply or additional supply coming in play. So I feel we are very comfortably positioned. When we launched Thane, we will not really have major competition, and I'm not saying that -- but major competition will literally get decimated or wiped out because of the pandemic. Our land purchase has been very prudent, and we will come up with very attractive pricing and very attractive deals. And I think, for us, it will not be an issue at all. In fact, for a few of us, the market share is actually going to increase, irrespective of the actual market also reducing. And I see this happening.
So -- and then the launch time line?
So we continue to build our show apartment. We continue to build our experience center. And I think we should be ready around Diwali. We are looking at this entire thing, how it's playing out literally by the month. And we'll just see how this plays out. And basis that, we will probably take a call. We still haven't given hopes of Diwali launch or maybe later this year kind of launch for Thane. And we feel that we'll have to do many new things. We will probably do use a lot of technology and reach out to people in a very different way and market the entire thing in a very, very different way. Before we were the first ones to pioneer something like on a ready possession, we gave, what you call, a subvention scheme where people could pay only 25% and move into the actual apartment. So going forward, we have many such ideas. We as a company now have really focused that we're going to solve the customer's problem. Whatever be the customer's problem, we at ORL should be able to solve that problem and make sure that we're helping in buy that house. And that, in turn, of course, gives us business. So that's like really the mindset that we are coming up with. And we will do -- we will come up with many different schemes. It could be financial, it could be structural, many such things, which will probably propel us to. And these 3 months have really got us to think on those lines.
[Operator Instructions] We have next question from the line of Puneet Gulati from HSBC.
So if you don't mind me asking, I mean, I thought probably the best managed companies, why is it that you're reporting Q4 only now? If you can give some color there.
Firstly, there was no -- but then on the other hand, we are the first ones to even give you Q1 2021. So I think we deserve a pat there as well. No, having said that, actually, look at the lockdown, look at the kind of time we had to take to do these. And we actually thought that we will give both these results together. We were ready with Q4 probably 2 weeks earlier. But then we thought that we can bundle it together and finish it off. We have no shame in saying that Q1 has been a washout literally. So we just clubbed it together and put it through.
Okay. Okay. Secondly, can you give some color on what's the rentals on the Morgan Stanley deal is? What kind of fit-out periods are you guaranteeing them? And what is that...
No, we are under some sort of confidentiality with them. So it's a great deal. It's a win-win for both parties. We are able to provide them with a world-class campus. And they are able to consolidate all their operations throughout Mumbai and put in under 1 roof and ability to provide even better facilities and amenities to the people who are working with them. And for us, we get such a marquee anchor tenant, which will propel rest of the development. It's like really a win-win. It's pretty much in line with what we have done Commerz to add. So they're not very different from that number.
And when does it start flowing into revenue?
So we have to finish the project. We have to deliver it to them in 2022. They start their fit out, '23, they should be in and our rental start from then, March of 2023. So really, this is like the biggest silver line in this quarter.
Undoubtedly. Undoubtedly, especially in the sentiment where everybody is talking about work from home, it's interesting development.
Correct. Correct. Correct.
My last is on the slightly technical thing. In your Q4, you recorded area booked for Three Sixty West, but there are no units booked. How is that flowing in?
Saumil, you can take over.
Yes, Puneet. Just some upgrade by some person, that's it.
We have next question from the line of Sameer Baisiwala from Morgan Stanley.
So Vikas, first question is on demand side. How do you see the recovery playing out? I know you talked about good footfalls, but just to get back to INR 200 crores, INR 300 crores sort of quarterly presales rate, excluding Three Sixty West, over what time period do you think business can normalize there?
Sameer, a great question. We have been thinking how do we really do that. Firstly, real estate is a big ticket purchase. And given what has happened to the world and people in their lives, so many people losing their jobs, there being uncertainty around their businesses. Obviously, people are a little worried about writing such a big check. Having said that, the only positive is that in the lockdown, people have realized the value of a good house. So that has got people really going out and looking for it. And they are serious about shopping. So when they -- when that happens, obviously, there is hope. We don't have a structured time line, but we also thought that there are 2 things that are going to happen. One, we will see thinning down of the offerings which people will have or what they will also want to go to. There will be a clear set of developers who will not last this pandemic, and there will be this set of developers who will probably come out stronger. People will want to go with people who are strong because they write -- this is the biggest check of their life that they write. So they want to be very sure about who they are dealing with. So at 1 end, we feel that the markets will thin down, they have already. There will be consolidation. And basis that, we will probably be able to increase our market share. So that is our first thing. Second, we have also already hired experts to look at how do we reach out to our customer. How do we make an Uber or a Amazon out of our product? How do we reach out to the customer? Today, we also feel that earlier when you wanted to buy a house, you would go and see 10 projects. Today, I want to only see 3. You will decide basis the material that is given to you probably through VR or through some walk-throughs and stuff like that. So we are hugely investing and upgrading on how you will visualize our project. Our first aim is to become 1 of the 3. Once you put your foot in our project, then the project will speak for itself. And our conversions, once people come in as like really high. So we hope that we'll be able to capture the market. Multiple things, like I said. We'll use technology, markets will support itself, there will be some elimination of developers, there'll be concentration of these customers. I feel these are the positives. We have to keep focusing on them and keep working on them. I wish I could give you a time line, but I always tell people when I want them -- I mean I always want people to stay positive, I always tell them that we are just a vaccine away, we're just a vaccine away. Once that happens, we are all back to normal. There will be pent-up demand. All of us want to go back to the rest, all of us want to travel. Trust me once that is found, you will not get a single room to holiday. You will not get a table to fit in a restaurant because we all are so frustrated. So that's going to really burst out. And then again, I jog my memory to 2009 when the Lehman crisis happened. People thought the world has ended. In the whole year, we were able to sell hardly 18, 20 apartments. And then the subsequent year, it just bounced back. Luckily, our product doesn't have a shelf life. It doesn't deteriorate as such. There is a carrying cost, but that's about it. So I just feel that this is a time, one needs to sit, focus and build. And once you can build that, the demand will always come back, and we'll be able to ride this through. In fact, I just want to add 1 thing, though it's not a part of your question, but kind of relates to that. What we have done is we've actually gone into individual projects and it numbers. Saumil just told you that we are close to INR 3,000 crores of sales in Borivali with 3 towers. We have collected a little over INR 2,100 plus crores. We have to spend anywhere between INR 600 crores, INR 700 crores, and be able to collect almost INR 900 crores. Even if I don't do a single apartment sale, I can finish Borivali absolutely and deliver it with some monies in my bank. The same thing goes from Mulund. We are pretty much even-steven on how much I need to spend and how much I need to collect. Worli is fully ready. So Worli is only going to give us cash. In fact, let's say, we have another INR 200 crores, INR 250 crores to go in spending, and we have to collect over INR 500 crores. So there is a surplus there also. So if you see all this we have been able to secure our projects. For us, safety first and then growth. And we are clearly focusing on that. And that is not only our DNA, but it's also our strategy. Because going forward, people are going to really test you on these and then decide whether I should be booking with this developer or not. And so we are 37 years old as a company, and we've never defaulted or delayed our possession. And we want to keep that track record going. We're ahead of schedule for all these projects as far as RERA dates go. So that's really our strategy. And I think we need to do our job well. The markets will do its job and probably reward us for what we do.
Vikas, very helpful. My second question is, what's the supply side situation, which is on the ground picture, on the site as far as the man and material movement is concerned?
So we are very pleased to see that labor is coming back. What we all don't realize or did not realize then was that these people need jobs. They, of course, need the life and safety first. So they went back to the villages, thinking that, oh, this COVID is a rich man's disease. It comes from somewhere abroad, and we will get this thing in our villages. Everything is safe. Of course, it was because it had not reached the villages. They went to the villages, probably some of them carried it into villages. Got it. And now they realized that the infrastructure and the city is far better than what is there in the rural villages. That's 1, plus they need jobs. They are all coming back. Our staff strength, as in the labor strength had come down to 25%, has going back to 60%, It was at 40%, then it went to 25%, now it has gone back to 60%. We're at 60% capacity. And contractors have also become smarter. Earlier, we had more people than what we required. Now they are able to streamline things better, make it a little bit more efficient. So I feel the fact is going from all the verticals of businesses, whether it's production, whether it's management or anywhere. I feel that this will be back and we'll not have a problem with labor. Material, of course, is very easily available. There is, in fact, a problem of plenty, again, because very few developers are taking -- are buying material or paying for it. So elevator companies, steel, cement, it's like really and very easily available. So there's really no issue on that.
We have next question from the line of Pulkit Patni from Goldman Sachs.
My first question, Vikas, is since you spoke about this Morgan Stanley deal makes you quite positive about the commercial aspects. But if we just look at the retail part of the portfolio, and clearly, there is -- there are 2 malls that are part of our future plans, Borivali and Worli. Is there a change of thought on how we look at those assets now post-COVID, given the situation of malls, multiplexes, et cetera? Or we are going to go ahead with what was originally planned on those 2 assets?
So firstly, we have pushed the date for our early commercial building. We have pushed our date for that. For Borivali, we continue to go ahead as planned. In fact, we have a very large anchor tenant, literally, 10% of my mall is taken by Inox. I had a call with Siddharth and I asked him, I said Siddharth, you have 3 options. One is you can cancel. Second is you can downsize. And the third is you can actually go ahead with what you plan. He says, I'm very bullish. And again, I mean, he believes that we are just a vaccine away. Once this happens, people are going to come out, and they're going to -- this is the time to build and you get reminded of what people did in '09. A lot of people who are building commercial because of cash flows moved into resi and so there was a huge shortage of office supply in 2015. I clearly see that, that's what's going to happen within malls. We yet don't have literally 10%, 20% of the retail over the world, and we don't have enough space in good mall. So this is where we are, again, we believe in the business. And yes, maybe we will have a few quarters that are bad. But overall, going forward, I don't see the style or life of people changing once, like I said, that once you get the vaccine, you're different being all together. So what you are thinking, what I'm thinking today is relevant only in the absence of the vaccine. And the whole world can't go like this. And we are seeing, I mean, we are keeping track of the medical progress that the world is making. So you have to pivot your business decisions around all that. Already today, from a life threatening, it's become something which is manageable. And people are able to -- not many people are dying. Statistics say that this is the least lethal of anything that we've seen in the world in terms of numbers and stuff like that. So I just feel that this fear has to play out, it will take its own time. The cure will come, it will take its own time. And we'll all get back to our regular life with a vengeance. And then these assets can be built. So we are taking a very calculated risk. My mall at Borivali will truly get built out of the cash flows of my Sky City project. The 1 that we talked about is already fully paid for and done with. The same nervousness is there with retailers also. They don't know how things will pan out. But I think you have to be brave and cautious both. So either or cannot do if you're in business. So I think as far as those are concerned, we are on the right trajectory.
Fair point. My second question would be, is there any of our projects where we are looking at making some changes in the product offering just so as to make it more sort of today market friendly, say, in case of Mulund, since we've spoken in the past that, that's not a market where cash involvement typically tends to be higher. So post-COVID, any structural changes or any market positioning changes so that we are able to see faster sales? Or things go as is right now? And when we launched Thanes, when we rethink about how we need to position that post-COVID?
No, not really. Again, so I told you we are going to come up with different products. There will be financial products. They will be -- we will approach it very differently. We will understand people's problem, and we will build a deal solution around it, and we will work this through. So we are very confident. Multiple things has happened. One, our building will be ready. It's going to be the best building in the eastern suburbs. Then we will bring a financial product such that it will motivate people to buy. And like I said, that we will increase our reach, we'll use technology and we'll look at things differently. We continuously try things and make it happen. So it's not like we want to sit on how we did it, what we want to continue with. If something is not working, we want to rework it and represent it. We did that, like I said, last year with Esquire. We changed the product. We gave subvention post possession, and that really did very, very well. And where our run rate was 40 apartments a year, it shot up to 90 and 100, and we were able to do almost $100 million plus sales in that year for that product. So if we are able to create something like that, we'll be able to attract a lot of traction.
We have next question from the line of Saurabh Kumar from JPMorgan.
Sir, I have 2 questions, both on Worli. So first is, Saumil, after the 2 apartment sales, should Worli now come into revenue recognition next quarter? So that's first. And secondly, effectively, if I look at the company, right? So between the Goregaon and Worli developments, you have almost INR 3,000 crores of complete inventory. I mean that seems to be your share. I mean what are your thoughts on liquidating or just accelerating the sales because this is completed. At some price, it's -- so I just want to get your thoughts on how you are thinking about these 2 specific projects.
So I'll answer your second question first, then Saumil can take the first one. I already told you that we are going to look at multiple ways of approaching the customer selling, and we'll do both very aggressively. And we feel that we will be in a position to do that. In fact, let me tell you that the fact that we have ready assets unlevered literally is a huge asset for our company. This is like clear visible cash, and 1 can take that and literally -- and again, you should add, by next year, we'll have Borivali and Mulund. So if you put all this together, the number will probably cross INR 10,000 crores of ready assets with us. Of course, we'll be selling them, but we'll be 1 of the few companies who have so much inventory, which is ready and whereas others would be struggling to either complete their projects and all that. I think this will give us a much bigger, what you call, bite into the customers. And that's what I feel will be actually a winning streak. Saumil, over to you.
Yes. So Saurabh, as far as Worli is concerned, we are also pretty close to getting the occupation certificate over there. So once we get the occupation certificate, it genuinely doesn't matter because any way, we will have to do the revenue recognition for everything. So irrespective, I think we would want to look at recognizing revenues now more in Worli on the basis of the occupation certificate rather than the percentage part.
And when is that growth will be coming from?
We expect it shortly.
In literally a matter of month or quarter, 2 or 3 months, yes.
We have next question from the line of Murtuza Arsiwalla from Kotak Securities.
On the commercial office in the mall space, can you just give us a sense on how much is the CapEx spend so far and what is the balance CapEx and time lines. Is there any shift in timelines for completion based on the months loss, number one? Also if you could give us some color on Oberoi Mall. I believe the revenue recognition is not being there during the quarter and where do things stand on that front?
Okay. So as far as the office and the mall go, we have started work at 2 ends. One is the Commerz III and the other 1 is our mall in Borivali. Commerz III is going to be almost 2.1 million square feet of carpet. So the leasable area will go to almost 2.8 million-odd square feet. There's an increase there. Borivali Mall continues to be as designed. And I'll let Saumil give you the expenditure a bit. Delivery of Commerz III will be, as I said, that we have to deliver in 2023, operational 2022 for fit out. So that is casting stone. As far as Borivali is concerned, obviously, we were not able to work for the last 3 months. And so there will be a delay basis that. And also maybe like going forward, like I said, that today, we are at 60% capacity. So we're able to do about 60% of the work. Or maybe 75% of the work. So there probably could be addition of a few more months. We are working a way to mitigate that. But if, let's say, your question is that probably might get pushed by 6 months or so today. And what was your other question? I'm sorry I missed that.
So on the Oberoi Mall, the operational Oberoi Mall.
On the Oberoi Mall, obviously, retailers haven't paid anybody. Some people have come up with a formula where they are doing part rental, part revenue share, some people have come up with waivers. So we are also waiting and watching. For us also, relationships are important. We want to make sure that we retain our relationship.
Yes. So would that mean that we've not recognized any revenue, but that doesn't mean that it's a no revenue quarter and maybe you recognize subsequently? Or how do we think of it?
Yes, Murtuza. Saumil here. I think we have lost Mr. Oberoi on the line. Okay. So answer your question on -- it's only a deferral of revenue in all fairness. So we are on -- basically, moment, there is certainty around this. So that's when you will actually see things coming back.
Okay. So probably in a subsequent quarter, once you've got clarity, you will recognize this quarter? So whatever the number is?
Yes, exactly, exactly. So we have only -- so to say, suspended the revenue recognition. We are not saying [Foreign Language], this is revenue, which is never going to come. Okay?
Okay. Fair enough.
And as far as the spends are concerned, I can at least tell you what the spends are. On Com III, so far, it has been close to about INR 300 crores. And on the Borivali Mall, it has been close to about INR 150 crores. As far as the construction costs are concerned, this will all range in the region of about INR 4,000 to INR 5,000 a square feet. And once we have a little more idea about where things are going, I think we will come back to you with the more formal numbers around all of this. There will also be certain FSI costs which will be incurred in addition to that. So I think those -- if there, I need to get into a little more of -- I'll need a little more color myself. So maybe if we can answer that to you separately once offline. Maybe Mayank and I can connect with you and we can have that discussion.
We have next question from the line of Swagato Ghosh from Franklin Templeton.
So I want to understand how much of our customers are NRI generally in a normal quarter. And we have heard some other developers that in the June quarter, the demand, whatever little has been there, has been mostly from NRI customers because of the rupee depreciation. So I want to get your comments on what you are seeing in terms of demand in that segment. And if there is any way we can also maybe incentivize our demand to their customers, NRI customers.
Swagato, I'll be very precise because we did this analysis and because we were seeing where our customers come from, what should we do to attract them and all that. So we have exact number. We have 7% of our buyers are non-listed and Indians. And most of them leave their apartments. And so this is where they are. We also have had an increase in inquiries in the early part of this quarter. And again, I must say that there has been no conversion. There has only been inquiries, and we have answered their queries, but waiting and watching as to what they will eventually do.
Okay. Fair. And second question I have is, for the June quarter, we have some reported numbers for the sector overall for the Amazon market. And also, we have a news that developers are offering some discounts. So I just want to understand, have we actually underperformed the market because we have offered any discounts whereas others have. And if that's the case, will that continue for some time?
I strongly believe that discounts don't seem to work. I mean it's never worked. The discounted price becomes the new price. It's not like -- and then they will want a discount on that price. I strongly feel that they don't work. We'll need to work around the needs and issues of the customer. And like I said, that we are coming up with overall in the whole, the entire marketing strategy of the company. And bring -- we brought in some real experts, which have not worked in the real estate sector as deeply as they are working with us now. So basis that, we'll come up with a marketing strategy and address it. We don't want to do and this is a major reaction of anybody to kind of circumvent lack of sales is just to kind of come in and discount the product. But I genuinely feel that it doesn't work. It creates more confusion in the minds of the customer.
Yes. No, I understand that, that is your stating strategy, but if others are reacting in that way, and if the situation, the crisis situation prolongs, then like how far can we actually maintain this strategy? That is what I want to understand.
So let me tell you that others with full price also, if you look at the balance sheet, they are stressed, they are actually literally on their way out. So I genuinely don't know with the discounted price, how will they look really. And if they're discounting, it's like almost saying that you will get high interest rate, but you'll never get your capital back. It's like that. You might get a cheap deal, but you'll never get the apartment. So I mean, I feel that customers are very smart. They will read through that. And they will not fall for anything like that, anything that cannot be built at a price cannot be built at all. I don't think these developers will put money out of their pocket and build it. So I feel it's a trap. And I'm sure customers also get it. It's not easy. Unless it's a ready apartment and people are willing -- ready to move in and all that. I don't see how these guys will be able to deliver.
We have next question from the line of Atul Tiwari from Citigroup.
Sir, what will be the current operational cash burn in the Westin hotel and the Oberoi Mall, say, on a monthly basis?
So I'll just tell you, we did this math also. And I called my GM and I told him, I said given the way things are, what do you see? We have to put in money or will you be able to manage by yourself? So he has promised, he says that I will not take a single rupee. Westin was always a hotel that we build and we were always worried that we'll probably have to put money to operate. But we've never had to -- from day 1, we've never put any money. And in fact, it goes through even today. You'll be surprised that Westin has been able to maintain almost 80% occupancy in the last month because we were able to sell rooms to essential services guys and were able to manage its operational costs. So very, very pleased with the way things are moving at Westin. And again, on the mall front, every cost is a pass-through. So we don't see that there will be any cash burn from the company. The lease is -- even if, let's say, things go into revenue, and there's a small portion of rent, it still is going to be a cash flow positive for us. And there'll be no cash burn, absolutely no cash burn, the way these are structured. And both of them, they have no debt on them. So there is no additional interest burden on these 2 projects. So they are clean.
Yes. And sir, my second 1 is on the Commerz I. In fourth quarter and first quarter, the occupancy seems to have dipped to, like, about 30% level from 77% in the second quarter of FY '20. So can you give some color on what is that?
So we had a large anchor tenant move out because we could not give them space. Major part of that has been leased, and we had given like 6 months for fit out. This question was asked the last quarter also. In coming quarters, you will see a rental again come back there, at least in case of these additional floors.
So after this, how much is the occupancy will be, about 70% or more?
We'll come back to our -- yes, in the original 70% number.
We have next question from the line of Manish Agrawal from JM Financial.
I was just looking at the time line for Worli Mall, Borivali Mall and the Worli Hotel. Are there any delays?
So Borivali Mall, I told you, we are probably looking at another 6 months delay. As far as Borivali -- Worli Mall is concerned, we haven't even started the mall. And as far as the Worli Hotel is concerned, we are trying to rejig the numbers. We might reduce the number of rooms in that hotel and probably relook at that asset and get some better use of that asset. So that part is being considered, and that's why I don't want to venture into saying anything. But we are looking at reconfiguring a small component of the hotel there. And then we look at the asset the Tower A of our Three Sixty West.
Okay. And on the Borivali Mall, has there any thoughts been regarding leasing momentum? I understand that anchor tenant is large, which you communicated, but apart from that?
No. So I mean, in the last 3 months, 1 could have not even gone anywhere. And obviously, retailers are struggling with existing stores that they have. So obviously, one cannot expect them to come on the table and start negotiating with us. They are busy negotiating their existing leases, both with other mall owners and ours and we are mindful of that. Again, like I said, that this is not -- this is being built for the future. And we are quite confident that the market will come back once the vaccine is out. And we all will, I think, see better deal.
We have next question from the line of Manish Gandhi, an investor.
Vikas, Saumil, I hope all are fine at your end. And congratulations on Morgan Stanley deal.
Manish, thank you. We are all doing well. I hope your family and you are doing great.
Yes. So my first question is on our 2 upcoming malls and its design, so with a fast-changing world, even before COVID, so how different or flexible our design with respect to, say, retail versus entertainment or say future of malls, like how Vanda has changed, transformed in last 5 years, or say, Westfield shopping destination of 2028. Anything -- I would love to have your thoughts on that.
So again, you're absolutely spot on. In the last 3 months, we've looked at how we can upgrade the mall and its experience. Today, of course, again, I'm saying that this will all be post-COVID. Today, malls are not merely spaces where people transact. They -- it's an entertainment hub. And if you really look at Mumbai, where, unfortunately, we hardly have any public spaces where 1 can. [Technical Difficulty]
Sir, please stay connected. We seem to have lost the line of the management. Please stay connected.
So this is where we are, like, again, we are trying to learn from the world. And in fact, the same architect who, the Westfields of the world and Vanda have used are our architects for this mall. So we are very lucky. We are not only getting the best practice. We're also getting the next practice. What people are doing. These architects actually discuss with us and actually tell us how do we bring in and engage our people for longer. It is coming to buy something you'll probably get in and go out. But I want him to spend 3, 4, 5 hours of his time there. So we are looking at multiple ways of engaging with him. Pre-COVID, it was even the WeWork kind of space that existed in malls, which actually got people to work there. But now of course, things are dynamic and changing. So we are also learning and building together, I would say. These are fantastic examples, great companies to learn from. Luckily, like I said, that we've already hired the same architect. So we're getting insights on how these companies have planned are planning for the future because these guys are doing more malls for them. So we are getting an insight, and we are very mindful and very good question at your end, how to keep ourselves current. That's the whole thing. And that goes with everything, why only malls. How we approach our customer, how we treat our customer. We'll have to get current with everybody. And we'll have to come up with ideas that will be more engaging for the customer, more innovative, more control in the hands of the customer. We are looking at new projects, we'll literally have you design your own house, pick the color that you like, pick the tile that you like and maybe some internal layout changes and so on and so forth. So literally, like a bespoke home directly from the developer. So a lot of technology use will come in play and all that. So that's what we are doing now.
Yes. Good to hear that. So my second question is how you're thinking say maybe, not change, but say in 1 or 2 deals, you must -- you were looking very closely, say, for example, a big rig development in a prime location. So how differently you think about those now?
Well, I'm open to everything. Businesses don't change. It's just the way you do your business will change. Like you said, the mall will always be there, but what kind of mall? And building will always be there, what kind of building? A deal will always be there, what kind of deal are you really looking at? So these things one needs to address. Because the basic premise of everything is going to remain the same. What Uber did, people still want to go from A to B. You still want our taxi, but how you approach it has changed? Am I solving the problem of a customer? That's my only question today in my head. And if I'm solving his problem, he's going to stick to me. And that's really and everything around my customer. So this is like a big drive in our company. We've made that into our motto. And we're going to solve people problems. And be it ability to buy or whatever that may be, we will make sure that we are solving problems.
Right. And just lastly, so what we have all learned in Mumbai and a pain point for Mumbai is the slums, and I shared 1 article also with you, it's very historical article about the Paris and Amsterdam, how the cities changed after pandemic in 17th century. So do you feel hopeful about in next 10 years, it can radically change? It's a win-win for all, including Oberoi because very few developers are capable of doing all those things? Or is it too much to expect from the authorities?
No, no, you are absolutely spot on. The authorities are very serious. And they have taken this upon themselves that they will resolve this. I must tell you, in the last 3 months, things have gotten so easy. We made an application to MMRDA for connecting the metro rail -- metro station to our project. And we got an online approval never heard of. So it's beautiful, I would say. So the mindset of even the officers are changing in municipal corporation. We -- I have got an approval for 1 of my -- I mean additional CC for my Mulund project, without going there because we were in a lockdown. And in 1 weeks’ time, the file moved through literally 1 box to the other box electronically on the computer and we got approval. So the department is very serious in doing this. There is a wake up call. I hope that the seriousness and the momentum continues even after the problem is solved. We don't go back to being normal. And this abnormal bit is nice. I mean the euphoria, the -- I think it's great. So we should keep some traits of being in trouble alive, even though the trouble has gone. It will actually help.
Ladies and gentlemen, due to time constraint, that was the last question. I'd now like to hand the conference over to Mr. Oberoi for closing comments. Over to you, sir. [Technical Difficulty] Sir, I'm sorry, we're not able to hear you.
One second. One second. One second. Sorry. So I firstly want to thank everybody for taking their time. I know these are trying and testing period for everybody. I hope you continue to join our conference and continue to advise us. Your questions are very relevant. They literally help us understand and go deeper into the business that we are in. And we really value them. So thank you again, and I wish you all good health and continue to stay safe and stay healthy. Thank you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Oberoi Realty, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.
Thank you.
Thank you, sir.