Puravankara Ltd
NSE:PURVA
Puravankara Ltd
NSE:PURVA
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Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Puravankara Limited, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rupesh Sankhe from Elara Securities Private Limited. Thank you, and over to you, sir.
Yes. Good evening, everyone. I would like to welcome the management of Puravankara Limited, and thank them for this opportunity. I shall now hand over the call to Mr. Neeraj Gautam for the opening remarks. Over to you, sir.
Thank you, Rupesh. Good evening, and warm welcome to you all. I hope you and your family members are keeping well. Thank you for joining us at Puravankara Limited's fourth quarter and FY 2022 earnings conference call. My name is Neeraj Gautam. I'm the Executive Vice President, Finance of Puravankara Limited. The presentation and financial results for the quarter ended March 31, 2022 have been uploaded on the stock exchanges. I will start with a brief update on business and highlights for the quarter and for the year. Following that, my colleagues and I will be happy to answer any questions that you may have and solutions which you like to give us.
In the financial year 2021-'22, we as a company demonstrated immense resilience. I'm happy that our robust performance across key parameters met on our [ statements ]. Continued dedication by our team members and our renewed strategic business approach has helped us overcome hurdles presented by the pandemic, along with the challenges related to the global supply chain. In the region, we are making efforts to further professionalize our work pressure. In all this, we have brought in some of the best trends in this industry to oversee different functions of our business and fuel our growth in the coming years.
Coming to the performance for the year, we clocked the highest ever sales value for the company still inception. We sold 2,616 units, corresponding to a volume of 3.5 million square feet. The sale value grew to INR 2,407 crores, which is 9% higher on a year-on-year basis. The sale realized and improved to INR 6,838 per square feet from INR 6,420 per square feet a year ago, which is an improvement of 7% in price realization. Our operating inflows for the year were the highest since our inception and stood at INR 2,231 crores, up by 74% compared to INR 1,289 crores last year.
In terms of our financial performance for the year, our total revenue from operations stood at INR 1,381 crores compared to INR 1,054 crores for the similar period in the last financial year, implying a year-on-year growth of 31%. EBITDA stood at INR 3,638 crores compared to IAS INR 374 crores for the previous year, implying year-on-year growth of 20%. Total comprehensive income for the year stood at INR 146 crores compared to a total comprehensive loss of INR 6 crores during the last year.
During the year, we have launched 6 new projects, Tivoli Hills in Bangalore; South Bay in Chennai; Provident Palmvista in Mumbai; Sparkling Springs in Bangalore; Tree Haven in Bangalore; Provident Winworth in Kochi. The company continues with its focus on the launch pipeline. We have 18 projects with a development potential of over 15 million square feet in our launch pipeline for the next 3 to 4 quarters. All these projects are at various stages of approval process and are on the track for their launch timelines.
Turning to our quarterly performance. We witnessed a strong recovery and a significant jump in sales volume for the quarter, which stood at 1.19 million square feet, up by 20% year-on-year basis. Sale value during Q4 FY '22 jumped to 10% to INR 831 crores compared to INR 753 crores in Q4 FY '21.
Coming to the financial performance of the quarter. Our consolidated revenue for the quarter was INR 319 crores compared to INR 340 crores in the previous year's corresponding quarter. Our EBITDA for the quarter was INR 64 crores compared to a loss of INR 0.24 crores during the same period last year. The total comprehensive loss for the quarter was INR 22 crores compared to a total comprehensive income of INR 8 crores during the corresponding quarter in the last year. Loss for the quarter was due to operating expenses impact on new launches, revenue for this will be recognized only on completion of -- as per revenue recognition accounting standards.
Turning to our position of debt and cash flow. We have reduced our debt to INR 1,857 crores, down to 20% from INR 2.29 crores last year. Our net debt-to-equity ratio improved significantly from 1.20% a year before to 0.90%. The cost of debt stands at 10.56% as on 31st March 2022. Further to this, we have balanced collection of INR 2,528 crores from sold units as of March 31, 2022. And the value of our unsold inventory was INR 4,674 crores. We need INR 3,110 crores to complete this inventory. Basis this, we have an estimated operating surplus of INR 4,092 crores from the launch portfolio of projects, which compares favorably against the current outstanding net debt of INR 1,857 crores. Besides this, we have inventory not open for sale out of this, we have an estimated surplus of INR 2,024 crores.
Now coming to our other initiatives. Our first ESF report 2021 based on Global Reporting Initiative framework offers a comprehensive layout of our sustainability, commitment, social impact and progress and highlight our people-centric initiatives. This has enabled us to identify our core USB areas, climate protection and water, human rights and health safety, diversity and inclusion, ethics and integrity and customer engagement. Our ESG report underscores our commitment to protecting our planet and empowering people within and beyond our organization. While we celebrate the milestones we have achieved so far, we also recognize that we can also do better and will continue to do so.
We are encouraged and excited by the positive outlook of India's real estate sector as the demand looks healthy. We will continue to focus on profitable execution of our ongoing projects and leverage our risk lending and create a sustained growth trajectory to gain market share across key residential markets. We are reasonably confident of building on the current business momentum and committed to creation of sustainable results on our stakeholders.
With this, I conclude my remarks. Thank you for joining the conference call. We are now open for questions and suggestions that you may have. Thank you.
[Operator Instructions] The first question is from the line of Dhananjay Mishra from Sunidhi Securities and Financial Limited.
Sir, what is the delivery target for the next 2 years based on whatever ongoing projects we have? Like this year we have done about 1 million deliveries. So what is the delivery target for FY '23 and FY '24?
So total we are looking at delivery in this year -- in the current financial year of over 3,000 units. And that will again be in fact above previous -- pre-COVID levels deliveries, which we're talking about 2019. So it will be in excess of about 3 million square foot.
So, 3 million square feet and if we take INR 7,000 average realization, so can we do about INR 2,100 crore kind of revenue and P&L?
See, if you look at average realization, would not be INR 7,000, because it also includes Provident Housing, it also includes Purva Land project. So average realization would be lower. But I think somewhere in the range of INR 6,000 crores -- INR 6,000 per square foot will be Puravankara and about INR 5,800 to INR 6,000 will be Provident, and Purva Land would be somewhere in the range of about INR 4,500, INR 4,600 per square foot. So we will be delivering about 3 million square foot and then you can do the math. But the point is that we will be back in terms of delivery on pre-COVID levels, and we definitely see improvement there.
And most of the costs we have already provided for the ongoing projects, that is why we are having losses in P&L in this year. So, next year, EBITDA should be much better, right?
When we say most of the cost means that most of the costs related to sales and marketing and G&A has been provided. However, in terms of the balance construction cost, which will recognize -- cost will recognize, only then we'll recognize the revenues. There are balance cost to complete these projects, which is we are showing in our cash flow slide in our presentation.
What you are saying, you're right that a lot of these costs, which are new launch costs specifically related to sales, marketing and launch have been accounted for [indiscernible].
Right. And in terms of -- compared to Puravankara versus Provident, so in terms of sales, Puravankara sales has even muted compared to Provident. So any specific reason, we are having launch -- any specification in the segment? People are going more for affordable housing.
No, I will share with you. So if you look at the data point per se, you will see that our ready-to-move-in inventory, we exhausted in Puravankara. And if we look at new launches, there were no new launches done in Puravankara. All the new launches were done in Purva Land and Provident. And hence -- but the sustenance business did better, and that is how we covered for the reduced ready-to-move-in inventory sales. So, Puravankara on an overall basis, given that it had no new launches, it did quite well. Provident did very well because we had launches under Provident, which Neeraj mentioned a little while earlier. And therefore, we saw much healthier and much better numbers in thousands. But this year, we are looking at -- of the total new launch of about 16 million square foot, we are looking at new launches of about 6 million square foot in Puravankara. So I think this year sales numbers will look quite bigger.
And existing Provident sales also includes the projects which we launched during the period. As we said, we mentioned in our opening remarks, Tivoli Hills, which is a plotted development project, which is Provident Tivoli Hills and our sales of Provident includes that Tivoli Hills sales and hence Provident sales number is better than the Puravankara sales.
And lastly, on balance sheet side, what is your target for debt reduction next year?
Our net debt as on 31st March is INR 1,857 crores. And our scheduled repayment for the next financial year is about INR 450 crores. So beside scheduled repayment, we're also drawing some consultant finance for all our ongoing projects, but we will be in the same range of -- same level of the debt in the next financial year also.
If you look at it, I think what's important, and I keep saying this is that, you should look at debt not as an absolute number but debt per square foot of construction area that you have on the floor, which is currently under operation. And that will scale up tremendously in the coming years. So, if you look at per square-foot debt, which is currently under construction, that will continue to reduce. An absolute number can hover around the same number, our margin will go up, but it doesn't matter given the volume that you're looking at. So you look at it relative to the business that you're doing, and if you look at it from your point of view, Puravankara as a business will scale up. And therefore, you would -- I think we'll be in a very comfortable position.
And this INR 2,200 crores figure is collection figure, not operating figure?
Operating all sort of inflow besides the project collection, sale of our project, we have -- operating inflow includes our entire group business inflow. Our construction has inflow, our interior business has inflow. So all put together, we have collected INR 2,000 crores during the financial year.
Sir, what is the pure collection on INR 2,600 crores sales value. So INR 2,400 crores sales value we have...
About INR 1,400 crores we have collected from the residential projects.
Okay. So, the entire year, maybe previous year collection and this year collection is INR 1,400 crores, right?
Yes.
Okay, sir. I hope next year P&L will look much better in terms of -- even in terms of cash flow. All the best.
The next question is from the line of [ Aditya Mehta ] from [ Dynamic Investment ].
So my first question would be on the debt profile. Debt profile has been consistently improving over the years. I would like to know what kind of debt-to-equity or debt-to-EBITDA ratio can we look for, maybe for short-term and long-term, let's say, 2 to 3 years down the line?
So, on the debt piece, I think we are currently in the range of about 0.9, and we will continue to maintain that level of 0.9. And as we obviously launched projects and our network goes up, the number will start looking better. But having said that, I think debt-to-EBITDA number at this 0.9 is an anomaly per se because revenue recognition happens on the quantum of delivery that you do. What one should look at really, again, I'll repeat myself in continuation with what I said earlier, if you need to look at what kind of sales volume are we doing, what kind of burn are we doing, and what is the square footage on the floor. On a per square foot basis, what debt do you have on your books. If you look at that number and that's how industry should be looked at because [indiscernible] that the new accounting standards stabilize on the business side of it, to understand how the debt is working for the group, and debt also works for the group as a part of the capital. So, therefore, I think we'll continue to maintain the current level.
I would like to add what Mr. Abhishek said. If you look at a debt repayment or debt-to-EBITDA ratio, essentially EBITDA is what areas [indiscernible] the interest to gross profit. In the case of real estate business, all our debts are essentially a working capital debt. It's not the debt which we were taken and funded by fixed assets or we are not servicing the debt out of net profit. All our debts are serviced out of the project cash flow, unlike any traditional business where debt is serviced out of the profit.
In this business, all our debts are working capital, which is serviced out of the cash flow of the project. And if you compare the debt visitors, the kind of project collection we are doing -- direct repayment we are doing, you should go by our cash flows like consistently we are making operating cash surplus quarter-on-quarter basis after servicing all our debt. And on top of it, reducing debt as well. And hence, the debt of real estate companies should be looked at from an operating cycle perspective, and these debts are largely in the working capital in nature, unlike the term loan debt.
Sir, my next question would be a bit of guidance related. So, your quarterly and your sales performance has been quite strong as far as I've seen. But the revenue that I mention is muted [indiscernible]. Sir, you also completed a project…
Sorry to interrupt you, Mr. Mehta, but your voice is breaking in between.
Am I audible now?
Yes, you are audible now.
So, my next question is related to the guidance. Your quarterly and yearly sales performance has been quite strong, but the revenue recognition is muted, and there has also been a lag in the delivery. Also, this year you completed one project, if I'm not wrong. Can you shed some light by...
First and foremost, we would like to say that essentially we do not give a guidance about the future. Having said that, we can explain why revenue was muted despite a very good sales and very good collections for the quarter as well as the year. If you look at the sales and collections, during the year, we have launched new projects, as I mentioned in my opening earmark. So part of this collections are coming out of the new sales. However, as you are aware that because of the accounting standard requirements, I'm able to recognize revenue from these new launches only when we complete these projects. During the quarter, the revenues which are recognized, recognized only from the old RTM projects where the revenue or the units which were left was sort of residual unit where margins were a little less. And hence, the revenue was muted for the quarter as well as the year. However, we are improving. If I compare with the previous financial year, our revenue -- total revenue recognized is up.
Right, right. And on the marketing expense for the quarter, I would love to know what is the marketing expense for the quarter in terms of percentage of sales? And do you think this would go up in the coming quarters?
So, if you look at it from a percentage of sales, we are normally within the range of 5%, but that is in terms of percentage of sale value. But if you look at the revenue recognition, it would be different because that will depend on -- that percentage will depend on what is the quantum that you have delivered. And we expect that to continue in the same range. I mean, as we scale up our operations and we deliver more and more in terms of sales numbers, I think possibly we'll find more efficiencies and it can come down, but it would be in that same range.
Okay. Yes, I understand.
However, in the revenue recognition, when you look at it in the financials, obviously you get front-loaded in the revenue recognition and then it [indiscernible] because of the new launches, because revenues are not getting recognized and they'll get recognized later.
And in expense side, just [indiscernible] expenses and marketing expenses will be there in coming 2 quarters also and it will be disproportionate considering the big launch pipeline we have. So it will be disproportionate to the revenue, which is going to recognize.
Okay. Understood. Then the launch pipeline of your company, we have good number of projects in the launch pipeline. Almost 18 of them are scheduled to be launched in next 12 months, if I'm not wrong. How confident are we in terms of approval, sir? Are we seeing any leeways in terms of getting the approval or how is it? How is the scenario there?
So in the previous year, we had some disruption because of the first 2 quarters, largely on account of COVID and disruptions caused by COVID. Currently, all the new launches which we had mentioned in the launch pipeline are already underway. So, these are projects which are at different stages of approvals, some at early, mid-stage which are coming in Q3, Q4 and some at an advanced stage which are expected to come in this and the next quarter. So, I mean, these are pretty much on track in terms of what we are projecting. And in fact, I would also say that some of these already have been applied for RERA. So we are expecting those RERA approvals and going ahead with those launches. So, it's a mixed bag of things, but we are pretty much -- we seem to be in good control on these new launches.
Okay. Sir, but then how -- what sort of sales are we looking at from these launches coming out in the next 2 to 3 years?
As I mentioned, we don't give guidance, but I think the quantum is pretty much shared with you in terms of which quarter we are looking at these launches.
I just want to add to what to Mr. Abhishek said. The expected launch dates we have already reported in our ICT, kindly refer to the Slide 18 of the slide deck. Kindly also note that the launch -- the total launch we are seeing, we're going to do 16.28 million square feet. However, the way we phase out our launches, we launch the project, but to open for sale only part of the inventory, which will be available for the customers.
Okay. Okay. I understand. And on the -- if I can squeeze in a few. I have a question on the last quarter launches. So, what is the sellable area of the projects that you have launched this quarter? And what is the kind of traction you're seeing over there in terms of, let's say, inquiries and bookings, especially in the Palmvista and Winworth?
If you go to our slide on -- inventory slide in our presentation, we are mentioning how much percentage we have sold already. If you look at Palmvista, we have already sold 45% as on 31st March, Palmvista. This does not include the sale which we have done in April and May. As on 31st March, we have sold 45% of the launch inventory as far as Palmvista is concerned. And rest of all the projects also, the numbers are there, with Winworth -- we launched Winworth, and Winworth we have sold 29% out of the open inventory as on 31st March. And this does not include the sales which we have done in April and May.
And there was one more project, which was 100% sold out in Chennai, which was South Bay.
South Bay, if you look at -- we launched, we have sold 99% of the inventory as on 31st March, which is in our slide, if you can refer Slide #28 in our presentation.
Okay. I understand. If you divide your ongoing projects on the basis of geographical location [Technical Difficulty], so do you see this number rising going down the line?
Sorry, we missed the -- you were breaking up in between. Can you come again, please?
Yes. So, on the segment side, sir, if we divide your ongoing projects on the basis of geographical location, and to my understanding, 49% of the share is coming from the non-Bangalore side. Do we see this number rising going down the line?
Our endeavor is definitely to increase our volumes outside of Bangalore, and especially in the West. In the next financial year, in fact, we are targeting almost 25% of our business coming from the West. But having said that, a large quantum of our current land banks like still continue to be in Bangalore, but our business plan and business growth is strategized around Chennai, Bangalore, Bombay -- Mumbai, Hyderabad and Pune, in these 5 markets. So we will continue to see increased volumes outside of Bangalore, other than whatever we have already got in Bangalore, and of course, we'll continue to acquire North.
Okay, sir. I understand.
The next question is from the line of Dikshit Mittal from LIC Mutual Fund.
Yes, sir. This is Dikshit from LIC. Sir, my question is, first, can you give the collections for the full year?
INR 2,231 crores. We mentioned in our slide number -- if you look at our Slide #24. We have collected INR 2,231 crores for the entire financial year. That includes all collections, collection from residential projects, collection from our strategic exit from commercial real estate, collection from our construction arm. All put together, we have collected INR 2,231 crores for the entire financial year.
Okay. But, sir, out of the presales, can you give the figure, how much have you collected?
About INR 1,400 crores.
INR 1,400 crores. And what was the figure last year, sir?
Last year was -- just give a minute, let me refer the slide -- it's about INR 1,200 crores.
Okay. And sir, in terms of lost pipeline, you have given fairly aggressive 12 million square feet for the year. So if I compare last 4, 5 years, I think you have not done more than 3 million square feet, 3.5 million square feet, right in terms of launches. So what gives you confidence in terms of huge pipeline for the next year?
So, I think, it's important to understand that while we had -- came down and towards the deliberate strategy to not tune up our launches because we had almost 2.4 million square foot of ready-to-move-in inventory, which was available with us. So our really focus was to bring that inventory down. That obviously also had a direct impact on reduction of our debt level significantly. So, our focus really was to bring down our ready-to-move-in inventory, which we have successfully achieved. Parallelly, over last 1.5 years, once we were realizing and that we are very near our goal, we needed to plan ahead, and we needed to start planning for new launches.
Other than COVID disruptions, if it was not for that, I think our launches would have been much higher. But having said that, I think now this year, it would be better. Last year, we did 6 launches. And obviously, you are seeing -- if you see the numbers and you look at it slightly more deeply, you'll see that our new launch and under construction business actually has grown last year by 51%. When my overall ready-to-move-in inventory sales have dropped by 67% because of nonavailability because we sold out. So, in an overall basis, we have already got the momentum of new launches, and we will continue to see the increased momentum of new launches and sales thereof.
Okay. Okay. But sir, over the full year, if I see, in terms of sales growth for the quarter, you have done well, 1.2 million. But for the full year, I think it's flattish as compared to last year. Like if I compare other Bangalore-based players or other real estate players, I think they have done much better, right, in terms of full year sales. Any particular reason for that?
So, I think, you need to again -- as I mentioned, you need to look at in the -- if you break this down, you would see that large quantum of our business was coming from ready-to-move-in inventory that we basically exhausted. We were completely dependent on new launches. And if you look at our new launches, our under construction in new launch business actually grew by 51%. So if you have to compare with the industry and the markets, you should compare that number of our growth of 51% with anybody else in the marketplace. So, the context is that all our new launches and under construction projects have grown and the sales have grown by 51%. That is the right context because on an overall basis, you may say, okay, yes, the business has grown by about 9%, 10%. But clearly, if you look at it slightly more deeply, you would see that the business has actually grown by over 50%.
Us Q1 was a little COVID impacted.
Yes, first quarter was also COVID impacted.
And new launch is what Abhishek mentioned. We did in Q3 and Q4, which is reflected in our yearly performance. If we look at Q3 also, our number was robust, Q4 also, number was robust because we are able to launch the new projects which we intended to launch.
Okay. And sir, now what is the on-ground demand strategy now, because now interest rates are again rising, and plus because of inflation and all. So, do you see any slackness in demand currently?
So, at this point in time, we are not seeing any slackness per se in demand. We are continuing to see sales numbers. And fortunately for us, a lot of our sales numbers will also continue to come from new launches. And that is anyways entering the market at a completely best price point. So, we see the market at this point in time as stable and growing, because also largely also on account of consolidation of the players and limited number of branded players launching projects.
Okay. So that means current sales velocity, 1.2, 1.3 can be sustained, right, at least in the foreseeable...
Yes. It will depend on the number of launches you are able to do in the quarter other than sustenance business. But yes, sustenance business will continue to grow and, therefore, plus the new lanes. So as we add the new launches, we will continue to see high amounts.
Okay. And sir, lastly, this year, you were targeting 3 million kind of delivery, right, 3 million square feet?
Yes. That's the plan for 2022-'23, yes.
Okay. And sir, because last year you have reported INR 900 crores and delivery is around 1 million square feet, so just wanted to know in sales like what are the other items that you will go to. Because if I see, average...
Last year's delivery was lower largely on account of the fact that all the projects were delayed because of COVID. So that has taken us time to streamline, but if you see our burn rate that's gone up. Our investment in operations has gone up significantly. And therefore, the impact on both on collections and, of course, on sales as well. So, we believe that now the momentum of delivery has picked up, and we should deliver about 3 million square foot this year.
Okay. So that means 3 million will be booked in the P&L, right, this year?
Yes.
Okay.
The next question is from the line of Suraj Nawandhar from Sampada Investments.
Sir, if I remember correctly, you had given a guidance of 1 million square feet of sales, a big quarter. Is it correct if I'm -- am I remembering correctly?
We normally don't give guidance. But yes, last quarter, we did about 1.2 million square foot of sales. And the quarter before that, we did 0.99 million square foot of sales. You are right on that number.
So are you saying that this year you will do 3 million square foot of savings?
No, 3 million square of delivery. See, there are -- okay, let me just explain. I'll take a step back again. When we look at our accounting system, we book revenues on the basis of quantum of square footage delivered, which is handed over with OC to the customers. So therein, that is a separate number than the sales number. Sales number is what we sell, but delivery may happen in 1, 2, 3 years, 4 years, depending on when the project gets completed. So please separate the sales from the revenue recognition. Revenue recognition happens on how much we will deliver. So this year, we will deliver 3 million square foot. And on the sales side, obviously we will launch about 16 million square foot and then the rest of the math can be done on a basis of last year. Last year, we did a total of about 3.5 million square foot of sales, which was a year before that was at about 3.2 million square foot of sales.
So you expect to beat this number, right, 3.5 million of sales?
Of course, definitely.
The next question is from the line of Tirath Muchhala from Elusividya Advisory.
So, actually I have one comment about Slide 23, where we have the cash inflows mentioned of INR 2,200 crores. One of the things that I've seen that's happening in the presentation and the PR that we do is that there is a little bit of a confusion between, let's say, commercial land sales, like the deal we did in Chennai or with Godrej, and then how you present the information. So, just one humble request that if you can segregate information better for the analyst community, so we understand what the business inflow outflows are and what the one-time inflow outflows are?
Sure, sure. Absolutely. I think a good observation.
Please send us a mail, and we'll respond to you with the breakup.
But going forward, we take that feedback
The other question I have is with respect to Slide 32, where you've mentioned all the new heads of various businesses that we have. Any particular thinking behind this because I think this is something new that we are seeing in the company with so many senior level designations?
Right. So, as a strategy in the last year, I think we have strengthened 2 things. One is, we are professionalizing the management and strengthening the bandwidth of the management of the company. The objective is, as we scale up our operations, we want to be able to create more decentralized decision-making and far deeper control and effectiveness on project delivery with each region and each P&L. So with that goal in mind, we have expanded our bandwidth. And when we speak about selling more and delivering more, obviously you require that kind of management bandwidth. And in that process, in that direction, we have done this. So let me just share -- I mean, I'm sure you're seeing it on the slide and the details that the senior level hires are there.
For example, Satya has come in from Tata Projects to scale up our contracting EPC business. Sanjay has come in, of course, for the Western region, which is basically Bombay, Pune, Goa. Praveen has come in only to focus on Purva Land because we believe that Purva Land is going to be a significant growth asset for us in multiple markets. And of course, West being very important for us and a key market where we are scaling up our operations, Sanjay is going to contribute tremendously with his entire experience that we brings on the table. Malana, of course, comes with significant industry experience and brings a lot of value to Provident Housing and his endeavor will be to continue to scale up our affordable housing business.
So, with that leadership put together, we believe that we are poised for significant growth. I mean, if you look at our land bank, we are looking at over 50 million square foot of land today in our books already where we have already invested. These are the lands which are with us. So we want to speed up our monetization and churn the capital, bring our equity invested in these projects back and then churn the capital further and scale up our market share. So, this is in that direction that we are doing.
And added to that, of course, we are implementing SAP and we've done a business process engineering exercise for more effective work processes and controls with this kind of scale up of operations. So there are multiple strategic initiatives, and this is part of that.
Okay. Super. Just one last thing, if I may. I think over the last 2, 3 years, we've started having a lot of moving pieces with Purva Land, with AIF that we are raising, with the commercial project the international partners are trying to find for a platform. So, just -- if the Investor Relations team can work better, support with this information well, that will help a lot in getting people to understand what the business is, because the business has changed over the last 3 years?
Yes, yes. I mean, feedback taken. I think our engagement with the investors has increased, and we will continue to endeavor and communicate a lot more to the investor market.
The next question is from the line of Rakesh from Indsec Securities.
I have one question, sir. Sir, what is the status of your commercial projects, sir?
So on the commercial side, there are 2 projects we are launching this year. One is a little over 2 million square foot. We are getting the sanctions, which is in Bangalore, and the other one which we have just started construction is again in Bangalore, which is at about 800,000 square foot. So this year, we will definitely take about -- almost about 3 million square foot under construction.
The next question is from the line of [ Aryan Sharma ] from Infinity. Mr. Aryan Sharma have left the queue.
The next question is from the line of [ Aditya Mehta ] from Dynamic Investment.
Yes. So, I wanted to know your Q4 FY '22 sales was around INR 829 crores. Would it be right to assume that by the end of FY '23 we'll achieve an annual sales of INR 3,000 crores?
Look, again, as we mentioned earlier, we don't give guidance. But if you extrapolate, definitely the business will be higher than what we have done this year, which is over INR 2,400 crores. Definitely it will be higher than that.
Okay. Okay, sir. And one last question on the project development. Obviously you have entered into this project development business, so what's the kind of market that you are looking in terms of sites?
When you ask in terms of sites, are you asking generic market size or are you saying what business we are looking at going from this asset class?
So what business you are looking at?
So, from our point of view, we are definitely looking at any point of time doing a minimum of 25% to 30% of our business from this asset class. So that's the target we have set for ourselves. 25% of the overall business should come from project development.
The next question is from the line of [ Aryan Sharma ] from Infinity.
Yes. So my question was regarding the overall demand environment, like how is the initial response, was this 40 bps hike in interest rate? Are the customers a bit reluctant or haven't you seen any impact regarding this?
So far we haven't seen any impact on the sales numbers. I think the environment in general is in a mode where people have come back to take a buying decision. And that's on multiple reasons. I think one of them are clearly the COVID reason. And second has been the overall real estate environment per se, the demand/supply situation, you don't have the kind of supply you used to have earlier. And also the fact that, generally the salary levels have seen significant jump in the last 2 quarters. I mean, if you just read the papers, especially in IT sector, a lot employment has been generated, over 70,000 jobs have been created. And then, on an overall economy basis, with the government investing the kind of capital, they are investing in infrastructure, et cetera, there is a lot of movement in the economy. So on an overall basis, we are not seeing any significant impact on the demand side with these increased interest rate, but I think more than compensated with the increased salaries because it is just around the time when salaries have increased and a lot of people are in the market and new job opportunities are being created.
Now coming to the range of price hike that you have taken in the last quarter, so is this on an overall portfolio level or only for the new projects which are going to start?
No, no, it is on an overall portfolio level because these price hikes different prices are for different markets, different asset classes, different stages of construction and depending on demand/supply and type of market. So -- but it's on an overall basis that the prices have gone up.
Okay. Okay. And my last question, I don't know if I might have missed it, but what is the impact of the construction costs due to the commodity prices, I mean, the rise of prices globally?
So the way we have -- as you see, the price appreciation has pretty much compensated for any price increase as the commodity prices are concerned. So I think there we are very, very much protected as far as the price hikes are concerned.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Neeraj Gautam for closing comments.
Thank you, ladies and gentlemen. Hope me and my colleagues have been able to answer all your questions. We are always available to reply your questions if you reach out to me over the mail ID given in the investor presentation. Thank you once again, and wishing you all a happy weekend. Thank you.
Thank you. On behalf of Elara Securities Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.