Q Earnings Call - Ansal Properties and Infra

Transcription

1 Q Earnings Call - Ansal Properties and Infra Dt-12 Aug 11 Operator Good morning. Thank you for standing by, and welcome to the Ansal Properties and Infrastructure Limited Q1 FY12 Earnings Conference Call, hosted by Macquarie Capital Securities. At this time, all participants are in a listen-only mode. There will be presentation, followed by a question-and-answer session. Please be advised that this conference is being recorded today. I would like to hand the conference over to Mr. Unmesh Sharma. Over to you, sir. Unmesh Sharma Thank you very much. Welcome to the first quarter results call for Ansal Properties. We have with us Mr. Pranav Ansal, Vice Chairman and MD; Mr. Anil Kumar, Joint MD and CEO; Mr. Lalit Rustagi, CFO, Ansal Properties; Mr. Dinesh Gupta, EVP, Investor Relations. They will represent Ansal Properties. I would like to invite Mr. Ansal for initial comments before the Q&A session. Thanks and over to you, sir. Pranav Ansal, Executive Director, Vice Chairman and Managing Director Good afternoon, everybody. I would just like to talk a bit about what has been happening in the last two, three quarters and then we can come to more specific Q&A about the results. After witnessing the cheer in the business environment for almost four to six quarters and increasing activity all across, we have seen that the economy is in a correction mode. The overall scenario in the past few months after the execution of different projects and investments all across has been witnessing sluggishness. On the background of certain policy decision and post-analysis by the public auditors, general business confidence has been shaken, and uncertainties have started to prevail in the general business environment. Despite these aspects some basic needs in the society have to be met and are being met. Housing has been one of this and barring certain asset classes in certain cities, overall business operations in the residential real-estate segment have been positive, which is the sector where we are... where 90% of our business is. We have many peer groups follow a low capital, intensive model and tap the existing demand for residential properties as against playing a waiting game. Clearly, the need of hour has been liquidity and would remain liquidity for some time-to-come. The message to the industry was clear that deleveraging the balance sheet and selling of the finish inventory and even hiring of certain core and non-core assets to raise cash is the most important step that needs to be taken. With particularly no relief from the Central Bank in easing interest rates on the background of high inflation, it is even more challenging to manage the operations and yet maintain margins. The good period between 2010 and early 2011, the number of companies managed to redefine their business and adjust according to the new rules. We, on the hands, move further strongly on the business plan that has been put in place with some corrections and stepped on accelerator to sell faster and down on more cash on the balance sheet to execute faster, and in turn move the collection cycle on the existing scales, and thereby seeing that cash reserves which are ultimately being used for debt reduction. I am sure that shareholders and analyst friends would agree that in the process to free-up cash reserves, sometimes margins have to be compromised in the long run. Opportunities will be available to catch-up on these loss margins and the company shall need cash upon them at the right time. The company is pleased to state that during the first quarter of this fiscal, the company reduced the gross debt of 57 crores and during the month of July a further gross debt reduction of Rs. 35 crores has been achieved. This step of the company has been the result of its resolved to streamline the operations and lighten the balance sheet are increasing operational cash flows. Continuing on the good run rate of sales last fiscal, the company opened a year on a positive notes and managed to sell close to 8.5 million square feet of various asset classes for a sale value close to 1,000 crores. And the operational performance seems to be inline with the guidance which have been provided by us. Year-on-year there has been a growth of approximately 148% on the sales volume and a 100% increase in the sales value during the last period, which is a very, very important point. This could be achieved by following the right strategies at the right time and managing the right first movable advantage on many occasions, also having the right product at the right value at the right place. As shared with you on the last call, we intend to increase our foothold in the MCR, Gurgaon and NH1 belt in Haryana and NH24 belt in UP, while expanding the existing townships in Gurgaon, Sonipat, Panipat and Gaziabad where the markets are very robust and realizations are much better. Also this confusion and this chaos of lands in Noida, Greater Noida has actually increased the value of

2 properties here and there is suddenly more demand and confidence in these areas. An important step that the company has taken during this quarter is that it has started preparing and achieved the first step of transferring the main trunk assets developed and being developed for the under our Mega Lucknow township to a wholly-owned subsidiary AAPIIL, whereby all future maintenance and facility maintenance related activities would be carried out under this banner, as we are mandated to maintain this common facilities going forward by the UP government. Since deliveries have also started in Lucknow and people are living in the township, this action of the company is expected to benefit the shareholders of the company in the short-run and long-run. Further steps will be taken to streamline the operations of AAPIIL and make it a extremely profitable venture going forward. As further steps are taken in these aspect, we shall keep you posted on the progress. From hereon I would like to hand it over to Dinesh to take you through the other operational details and results. Thank you. Yes. This is Dinesh and I have the all of the colleagues with me. Since a general macroeconomic scenario has been given by the Mr. Pranav Ansal I would not take much of a time and probably move directly to certain important aspects. First being the operational aspects in terms of sales and the value of the sales as Mr. Pranav Ansal said 8.5 million square feet has been sold during the quarter across various asset classes for a value of close to about 1,000 crores, registering a growth of about 148% in terms of volume and about a 100% in terms of value. This actually is showing a clear sign of higher realizations across our townships and products which are primarily in the NCR and the Lucknow region. In addition to that, I would also like to state that the company launched several projects in Lucknow, Mohali, Gurgoan, Greater Noida and Karnal for a total of 9 million square feet, and area released during the quarter for sale was about 8 million square feet of which 3.24 million square feet has been sold during the quarter itself, showing a robust demand and the majority of these products at the time of the launch of these asset classes. In addition to that it is also important to state that asset class wise we have seen a move from just a horizontal development through a vertical development. If I may state that during the quarter, 32% of the total sales has come from vertical developments and accounting for about 57% of the total sale value, which actually shows a shift from just the horizontal development to a vertical development which we have been reiterating for the last two or three quarters and clear time has been showing on the increasing side on the vertical sales. Not to say that horizontal development or sales do not form a part of our business plan, they still hold a major portion. And as a strategy to liquidate and garner cash flows in a very short time, plot sales and precise sales would remain as an important factor. Even today about 68% of the sale volume comes from the plotted and exercise team, primarily again in Lucknow and other townships which are being developed on our master development mode. On the sale value of the plots, I may give you a small comparison, the absolute sale value of plots on a year-on-year basis has increased by 27% and on a quarter-on-quarter it has increased by 63%, which shows the average realization going up and in terms of value and volume growth. For the low rise built-up which we typically term as single family units or villas or even floors, the normal terminology in North India. We are seeing a year-on-year growth of about 59% and a quarter-on-quarter of 6%. This is quite evident again because we are comparing year-on-year with April 2010, where the sentiments in the real-estate market had just begun and probably started picking up. So, 60% jump is quite evident and quite natural. A major number to note is in high rise built-ups, the year-on-year sale, absolute sale value growth is about 200% and on a quarter-on-quarter is about 300%, clearly showing again the movement towards the vertical price along with the horizontal sale. And going forward, the sales and the horizontal as well as vertical are expected to gross up and give us a better gross profit margin and EBITDA margins as accounted par on a rapid execution stage. The time lag between the sales and execution is shortening in most of these townships. And for the ease of understanding, we have also included a slide in the presentation to show a typical accounting dynamics for a project and how the cash flows and the profitability moves. So, which could be used and understood in a better manner. In terms of realizations I would add that from Rs. 1,066 per square foot for the full year FY11, during the quarter we have registered our average realization of about 1,166, which is not above the full year which is about, close to about 14%. Not to mention, I mean, sorry, my apologies, but not to forget that during the last two months which is May and June, the average realization of the company stood at about Rs. 1,400 a square foot against the full year average realization of Rs. 11,000, which was a probably 40% jump on a month-on-month basis. This time is a purchase time because the average realizations on the built-ups increases and more and more volumes are being achieved in these sales. I would also probably give a quick number on the minimum and maximum, because average realizations are sometimes confused by a lot of people. On the plotted sales depending upon the township and city, the minimum realizations stood at about Rs. 263 a square foot and

3 the highest stood at about Rs. 4,500 a square foot and we don't get this Rs. 4, those are the options. On the single time unit or low rise, the minimum average realization was about 1,289 during the quarter and the maximum of Rs. 4,547 a square foot. On the commercial including the FSI and sales, 667 was the lowest which is probably the commercial FSI and 11,296 was the highest average realization cost to effort in the commercials. In group housing minimum was 972 and the highest was 4,430. So it just gives you a broad spectrum of the various townships and various asset classes we operate on. And sometimes these questions are being asked. So we thought that it should be important for us to mention this number. Mr. Ansal also mentioned about the interest rate worries and the general interest rate scenario and the economy and everybody is aware that the way interest rates are tightening up, things are not looking good but at the same time the ability of the company to sell and collect cash flows on a month-on-month basis at a run rate of about 150 to 160 crores and the expectation for the next nine months also remains the same as for the guidance that we had given in the beginning. We are on the path of reducing the debt and as Mr. Ansal mentioned during the first four months, a gross debt of about 92 crores has already been paid. And continuing on this trend, we will keep on reducing gross debt, thereby reducing the interest costs which goes out of our cash flows. At an average cost of about 14.5% per annum, we expect that by the end the year about 3 to 350 crores was gross debt coming down, would save to close to about 40 Rs. 42 crore on an annual basis for the company. So, we would like to share this number on a month-on-month basis, but sometimes it's difficult to give the correct numbers because of the overlapping effect. So, we will try and see how we can communicate further and better in order to make sure that the numbers are communicated to you. It's a known commodity costs there also shown a mixed reactions, some of them are up and some of them are down. And the mixture of this has been reflected in the results as well. The cost of construction has gone by almost 33% during the quarter, even though the rise in the top-line has not been that robust. So, going forward I think these new launches that we have done and the new sales that we have achieved in the last six to nine months, which will transfer to the revenue accounts in the coming quarters would have a better absorption capacity and yield a better gross profit margin, and in turn increasing EBITDA as well. Last time we mentioned three strategy... three point strategy which was consolidate, liquidate and mitigate. It will take great pleasure in stating that one of the townships in Bhatinda, we have agreed with our joint venture partner that we will be surrendering our rights and we would be taking you over the entire development. Though we have seen the initial term sheet and final terms of the payments and valuations are been negotiated which should be probably done in the next 15 to 20 days time, and I am sure that we would be able to foot into the public domain and the news should come to you very soon. That's actually the notes are consolidated strategies reduce the number of cities and reduce our operational expenses as well. On the liquidation side, we mentioned though we would not be able to share much of details right now, but two projects of the company are in the advanced stages of final negotiations for hiring of, where the company expects the cash flows to come in the next six to nine months in the balance sheet and the management has resolved these cash flows primarily to reduce the debt. Could be a part of the 350 crore that we are mentioning or even if the operational cash flows are sufficient enough and the operations don't get hampered we could even grow further to reduce the debt. As far as the case may be there will be no income from this, it will only be a reversal of the cash flows and the investment that we have made as the partners or the third parties who are willing to takeover these project, to take as in various basis. But these further details can be shared with you in the next 45 to 60 days, when we have a clear understanding and not bound by the confidentiality terms of the term fees. I mentioned last time that two joint ventures, joint development projects Bahadur Khera and Bahadurgarh where the company had development interest on group housing got surrendered and negligible effect on the profitability had taken place. I think we had taken as dip of about Rs. 40 lakh on one of the projects and about Rs. 20 lakh on the other, those have been squared-off and the land banks and land reserve had been reduced to that extent. You are aware that we are also having Bangalore and Gujarat which have been put on block, and we have seen some interest coming from various parties. Though tax structuring, liabilities and other considerations are being taken into account, it should take some time before we close five of these assets, but the resolve is that we build high hope in assets because that's not our core competency or core business model. Mitigate since, mitigate the risks as we mentioned that we would like to only get into JP Morgans and go into further expansion of the existing township. As Mr. Ansal just mentioned the NH1 belt and the NH24 belt, where company has major operations. We are expanding our townships in Kundli, Panipat, Kurukshatra. And -- where the company has already delivered and develop substantial portion and the land is available to the company on a historical basis and by adding further land banks on a JV basis or on a low cost

4 basis, substantial revenues can be earned for the company. But the model has been put into place as aggressive working has been there on the ground. So, we should see the reduction of the land reserve as well as increase in the revenues from these land reserves which have been sitting idle for quite sometime. So, we have always been mentioning that we are primarily a residential developer and commercial is only an incidental aspect of the townships. We still maintain that the way economy and the industry are going right now, commercial need some more time before it could be taken up as an aggressive model. So, we maintain our strategy to hold that execution of certain commercial projects, not to deploy capital and look for some more time before we could take a further decision. Even during this time the company has been selling commercial FSI in Lucknow and even Gurgaon were we don't intend to develop or construct long-term business assets in the next two to three years. I would now put our focus to some cash flows and collections, which has been the talk for quite sometime. I will just give you some quick numbers. Though we have been sending the monthly update and I am sure most of you must be receiving it, but for the quarter let me give you a quick number that we had a gross, I am sorry net realizations from collections of about 435 crores. And the application of those 435 crores are as follows. Major portion of the collection going into construction are indicating again that execution is the key challenge and we want to execute projects, and the speed of the collections and revenue recognitions. Close to about 38% of the total collections has gone into construction and sanctioned cost. About 7% of the total collections during the quarter have been applied to interest payments, which was about 30 crores. About 13% of the total collections have gone into other administration expenses including marketing, sales, employee cost, other administration expenses close to about 58 crores. Then we had 4% allocation towards the direct tax and dividends to be paid. About 22 crores have been applied towards buyback of equity in some joint venture partners in our Gurgaon project, where we wish to consolidate our position and seek more cash flows from the existing developments. Even in the coming quarters there will be some application of such cash flows, but at the same time further cash flows from the operations are coming into support just kind of a buyback. Then we had about 1% going into margin money and FDRs with the banks. We had about 20 crores collection coming in from other sources which could be rents, windmills and other operational incomes, and a net reduction of about 57 crores on the debt has been put out of the operational cash flows. We spend about 77 crores on land during the quarter, primarily it has been spent in Lucknow, Greater Noida and I think Gurgaon. So these are three main territories where land costs have gone, though the allocation towards the land cost out of the total cash flows is not more than 18%. Similar numbers are there for quarter four and quarter three which we could discuss if required on a one-on-one basis, and I would probably take some more time on giving you a total value of the sales done till quarter one FY12, close to about 8,600 crores worth of sales have been carried out and we had collected close to about 5,000 crores from these sales in the past, which state that we have about 3,600 crores worth of pending collections from new as well as existing sales, which will be... which probably we expect in the next three and a half years over the three and a half years to come into the balance sheet. As the development happens, construction happens and progress takes place. To give a small number which again has been asked by most of the people. During the quarter, out of the collections we have made, 281 crores has been collected from sales which were done prior to quarter one FY12 and about 181 crores have been collected from sales conducted during the quarter one FY12. Both these numbers are significant and important if we compare it to the last quarter, quarter four FY11 against the 281 crores, 167 crores was collected from sales which were conducted prior to quarter four FY11, which states that since you know customer collections are a function of execution and development on-site, the faster we develop and execute, the faster we can collect. So, this has shown the progress on-site which is also in sinc with the construction expenses that we have made. The 181 crores collected from new sales is also a significant numbers which show that exercise sales and other sales which are fast liquidating and fast collection generating have been carried out during the quarter. We would probably now move to the last and the most important section of the results and a quick analysis of the results. Before that I would like to take five minutes of yours to explain what Mr. Pranav has just mentioned about the transfer of the trunk assets in one of our township in Lucknow who have wholly-owned subsidiary by the name of Ansal API Infrastructure Limited. The Ansal API Infrastructure Limited is a company floated by Ansal API is a 100% subsidiary for carrying out infrastructure activities within the townships where we are developing and are mandated to maintain and operate the infrastructure common to the townships, for perpetuity. Thereby meaning that any front facilities which include the roads, parks, sewage lines, water lines, gas pipelines or any other such facility which are existing in the township would be transferred to this company. And see income generation from these assets by any nomenclature let's say maintenance charge or even interest free maintenance deposit or even house taxes as maybe mandated by the UP government or water collection or water distribution charge or gas distribution charge will be attributable to the company going forward as and when the operation start. So, during this quarter the company took the step and assist the unrecognized value of the front infrastructure in the Lucknow township, which represents the WIP for these assets sitting in our balance sheet to be recognized as cost in future.

5 I have the exact numbers and I may have shared with you. The company have spent close to about 170 crores till March 11 on such services. And about 77 crores have already been charged to the profit and loss account in the past year, thereby remaining 91 crores were yet to be charge-off to the revenue accounts going forward. So the company has now capitalized this 91 crores was of expenditure sitting in the WIP as capital working progress in the books of Ansal API and a fair market value accessed by the independent valuer has been transferred to the Ansal API Infrastructure Limited. The transfer of such facilities has resulted in a gain of close to about 41.7 crore, which has been recognized in the books of APIL, which you can see as a revenue item below the total sales number. Now, there are number of treatments to be taken into account the PS21, the section 45(2) of the Income Tax Act and the section 47(4) of the Income Tax Act, which deal with such transactions whereby the transfer of these trend facilities to a wholly-owned subsidiary is not yet transferred and therefore no taxes accrued on this, first part. Second, because this profit is unrealized, the PS21 mandates as to lockup the transaction on the consolidation and therefore on the consolidation of the consolidated PAT and the consolidated top-lines have reduced by this number. This effect is entity I can explain in more detail, but I just wanted to give you a background of the transaction and give a more clarity on what has been going on in this quarter. So, if you look at the top-line on the consolidated basis, the company have a top-line of 297 crores, which is a 16% jump on a year-on-year basis though on a quarter-on-quarter basis there has been a dip of about 10%, primarily because of the revenue recognitions and certain projects in UP or in Rajasthan and Punjab where certain costs, where certain projects which were accounted or sold in early 2008 and '09 at a lower value, has now come into the revenue recognition stream. If you see the next number, cost of steel which represents the stock change and the cost of construction on the cost, they have gone up by 36% on a year-on-year basis, though on a quarter-on-quarter basis there has been dip of about 22%, clearly showing the cost of construction going up and the execution cost going up. This has resulted in a gross profit of 108 crores and the gross profit margin from a 45% in quarter one FY11 has dropped to 36.64%. Primarily, this has been the main result for the dip in the profitability on a consolidated basis. If you look at the employee cost and other costs, obviously they are inline with the industry trends. But at the same time you will appreciate that the ramping up of operations in the last six to nine months and even 12 months require a lot of manpower and lot of force and administration to be able to sell more than 30 million square feet in the last 15 months. Therefore, it is inevitable that employee cost would increase, employee retention policies and reward policies have been initiated in the company to make sure that the operations are going smoothly. Other cost which represents sales, marketing and advertisement costs primarily are a direct function of the sales conducted during the quarter and not a function of the revenues recognized during the quarter. So, there is the direct link of the sales and the collections that have been made, and as a percentage of those if you look at it these are well within the range of about 3 to 4%. Resultant of those is the drop in the EBITDA to 154 crores, and after taking the depreciation and other income and tax, the resultant tax came to about 21 crores. I would also mention a very good fact that because of the nature of this transaction on this 41 crores of the income recognized, has that not been the case the total gross profit of the company on a consolidated basis would have been about 64 crores, and without eliminating the common transactions between the subsidiary and the JV companies which are basically operating other projects, the profit would have been close to about 27 crores which has been discrete expectation. So, I just wanted to put that point in right perspective though the profits are in front and I think that's enough from my side. And I would probably open the house for questions if any. Over to you, Unmesh. Unmesh Sharma Let's start the Q&A session. Questions And Answers Operator Yes, sir. [Operator Instructions]. We have a question from Anand Aggarwal. You may go ahead, sir.

6 Yeah, good afternoon everyone. Yes. I have few questions, I mean first of all I just wanted to check with you, is there any plans to give quarterly balance sheet because most other real estate companies has started giving that. I mean and it's helpful to see how the other working capital and all... I mean the sundry debtors and customers advances and all that have moved so? Yes. I remember you had asked this question I think six months back on one of the conference calls and we had stated that we would resort to that. In fact, we had done internal discussion, and going forward company would be releasing though this quarter we could not and next quarter, of course, half yearly it has to be as a mandate, and quarter three we will be releasing the balance sheet. Okay. And going forward, quarterly balance sheets will be released. Okay. My second question, I mean I didn't understand I mean, is the trunk transaction and not happened. Why would the consolidated PAT be higher? I mean, if you were from what I understand, you were expensing these infrastructure services or the expenses towards that which you have now capitalized. So, if anything I think I mean the expenses should be lower this quarter than it would have been otherwise? Yes, it's is not just one quarter, but if you remember I mentioned that figure is about 91 crores. Correct. And the 91 crores would have been charged-of to profit and loss account in the next two to three years on account of recognition in the Lucknow project. Correct. Those products will now not be pass through revenue account and it has been capitalized because the company would enjoy long-term benefits and income generation on these assets. So going forward, what we see that there will be a better GP ratios and EBITDA ratios from Lucknow as certain expenses on these accounts will be capitalized, and even further expenses if any would be capitalized and not pass through the revenue accounts.

7 Okay. Has this happened after the end of the quarter? Sorry? No. Has that happened in the first quarter or will it happen from now onwards, because I mean -- It has happened. We have taken partial effect of these transaction in this first quarter and valuation as and when the valuation is keep on happening for the separate trunk services, we will keep on capitalizing these in the next couple of quarters. Okay. I mean, the next question is basically pertaining to your collection. I mean that was a very useful data that you gave at about 281 crores were collected from prior sales and 181 crores from sales in this quarter. Now, you are targeting about 2,000 crores of collections I mean, two things I mean, one, do you expect the collections on prior sales to significantly accelerate? And, second if there is a slowdown in new volumes, I mean going forward, I mean does that mean that this 2,000 crores of collections could be at risk? Yeah. See as far as the old phase are concerned you will appreciate that most of the people have locked in their transactions, agreements had been done and people have taken mortgages. I am just taking a very broad example. And, the only thing remaining in that project was the execution and delivery. You have seen that we have started ramping up our execution and we have started to spend more on the execution. We expect that as and when we spend more and we start... we... actually deliver more the collections from the existing phase will keep on increasing. In fact during the year, out of the 1,800 crores was the operational collection and 200 crores was the private equity intrusion that we had already closed. So out of the 1,800 crore we were expecting close to about 1,300 crores to come from the old sales, and close to about 500 crores were expected from the new sales during the year. If you remember we had talked about 2,200 crores worth of sales for the year and taking close to about 20 to 25% average collection spreading out for the whole year. So that goes our target. So, I think we are actually moving quite right on that track. Okay. And just a couple of more questions I mean, what is your status on this the inflow, just 192 crore that you were supposed to get on the private equity transaction, what is the timing on that? Yes, in fact because this presentation is all over the quarter in the month of July, 100 crores are already been received, 25 crores from ICICI and 75 crore on Red Fort. So out of the 192 crores, 100 crores have already come into the system, because this presentation is only for the quarter, that's why we did not include it. Okay. And the debt reduction in July, the 35 crore is net-off this receipt?

8 Is net of? Is net of this money that's been received from the private equity transaction... of the fund right? 100 crore that we have No, no, no. I am talking of the gross net premiums to the banks and financial institutions. These are equity transactions and not a typical debt transaction. So, I think it will not be right to club these transaction today. We are only talking about the gross debts able to reap banks and financial institutions. These are equity transactions for the next three, four years. Okay, okay, sorry, I understood. And could you give me the sundry debtors number for this quarter and for end of March '11? And also in particular the... what you say I mean the debtors which have not yet been I mean, which have been taken to revenues but not due yet? You are talking about the -- Receivables, sorry... yeah. We'll have to excuse ourself for this, but we do not have the final balance sheet, we won't be able to give you a number. But I think may be in a weeks time we can share with you some numbers on the debtors. No, problem. Thank you. I think for the March end, FY11 you have the balance sheet. No, actually it's not yet out. Yeah, it's not yet out. Yeah, yeah, not yet out, so we will share the numbers with you later sir. Okay. Thanks a lot. Thanks a lot.

9 Operator Thank you. Next question we have from Sangmesh Pratik from QVT. You may go ahead. Hello. Yes, sir. Yeah hi. I have a couple of questions. My first question is basically addressed to Mr. Anil Kumar in an interview with Economic Times I believe the number quoted was that the company will do a turnover of 2,500 crores in FY12, could you please let us know as that's the right number because given current run rate which you are going that number doesn't seem achievable? Sandhesh, could you please repeat the question? I didn't get the question. I think the line was breaking up. Okay one SEC, one SEC. Is it better now? Yeah, much better. Yeah, okay. So, I am saying my first question is address to Mr. Anil Kumar. There was an article in Economic Times that was published which mentioned that the company will do turnover of about 2,500 crores in FY12. Given your current quarters sales or even looking at historical run rate, that number doesn't seeing achievable. Could you please throw some light on that? Just give us a minute, just give us a minute. Operator Is the question answered? No, not yet. Just wait for a minute. The article was dated 9th of June, 2011.

10 Could you please give us the next question first, we'll answer this. Yeah, okay. Sir, the second thing is there were the article out maybe yesterday or day before that Fitch has dropped ratings on your debt securities during non-availability of information. Why is that happening, are you not happy to share information with rating agencies? Pranav Ansal, Executive Director, Vice Chairman and Managing Director I will have Mr. SK Bansal answer that question. He takes care of it. Actually basically they are now downgraded the rating, in fact there are certain more information. Our rating should improve based on the financial results of this quarter and what we have done is during the last financial year. So, we have asked for more information. I think there are certain times maybe around back to three to four weeks time. For the time being they have started that won't have an effect. So, you are saying that you could not provide them the information they wanted that's why you are regularly not rated? Basically they wanted to upgrade the rating. So, for that basically they need some more information. They are in quarters just to comply with... to comply with these climates. So openly I think they are submit these information in next two to six weeks time and most likely I think we have taken this input. No, but if you see actually see what Fitch has mentioned that they have moved the ratings to not rated because they didn't get sufficient information from the company. Which is that's why, they haven't looked at the whole rating on your debt. If they are looking at improving it because I just said pending further information keeping our current rating on, will the company be issue a public clarification on this? We will give the clarification of that out. So practically as a whole for the entire real estate industries they have done like that. For most of the cases I think they have that considered this no boundary capacity. So, hopefully I think we are in the process of submit the information and maybe working with that one and half month time, probably we improve on it. Right, okay. We should, hopefully you should send out a clarification to the investors what to be schemed on this? We shall clarify these things. Right. Secondly, another question I have was on your pledged share. So I recall you'd mentioned in the beginning of the call that you paid out 57 crores of debt in the... in Q1 and another 37 odd crores. We have 92 crores in the first four months, but your pledged numbers still is there at about 95% if I am not mistaken?

11 Pranav Ansal, Executive Director, Vice Chairman and Managing Director Yes. That's correct. That you haven't come off. So, is it fair to assume that the company is picking up debt where shares are not pledged? It is actually right to assume that tax that is being paid off, is being paid off to banking institutions and they are generating on a quarterly basis. So, as far as this pledge is concerned, those loans are also getting liquidated but -- We have said Sandhesh, that also which is directly linked to those the kind of volunteers offer. But, since our prices has come down, so that will properly look to provide them the required securities over. We have not asked the reasonable shares practically. Pranav Ansal, Executive Director, Vice Chairman and Managing Director Plus -- I couldn't understand anything. See, we have paid certain tax to the institutions where we have pledged our shares. Right. Yeah, but since the prices of the shares have fallen down. So, just to keep in the sufficient security cover we have no task to the return of our shares is still with them. Sir, if you, if you take the debt then why would they keep your shares? No, no, we have -- Pranav Ansal, Executive Director, Vice Chairman and Managing Director We are not saying that. And, you just done your payment right now?

12 Pranav Ansal, Executive Director, Vice Chairman and Managing Director Yeah. Part payment, we have made it here. Sir, we look at beginning of the quarter, I remember end of Q4 and the earnings call you mentioned that you paid off debt and your pledged shares from HDFC will get returned during this quarter? Pranav Ansal, Executive Director, Vice Chairman and Managing Director We are hopeful of getting that release in next 15 to 20 days. Sir that was what was mentioned at the Q4 call as well? Also, now that you are showing the stock price is correct, the stock price if you look at where it was and end of Q4 and now, it's gone down a decent amount from that level. So, would we actually see that 60% level that you mentioned for the year? Pranav Ansal, Executive Director, Vice Chairman and Managing Director Yeah, okay. Sandhesh, let me answer that question. There are two aspects one that we have been paying on a monthly basis as per the payment schedule to the institutions to say that being mortgaged, though just to make sure that the security covered is enough with them we are not hurrying into the release of the shares, that's one part. The other part that you mentioned is the release of the HDFC shares which I think is close to about 22%, am I right? Right. Pranav Ansal, Executive Director, Vice Chairman and Managing Director That one if we have already moved all the documents related to the valuation is another thing because that, this process of making sure that the security cover for the existing loans with them and other aspects are enough, they have to move through certain processes and you know the banking institutions have actually tighten their processes. So, it's only a matter of time and a compliance within the organization at their level, which is getting delayed. Hopefully in the next 15 to 20 days time as mentioned by our CEO, so we should be able to get those shares back which we are quite confident of, and just to mention that no loan is outstanding against this 22% this was only. Sorry, coudn't hear at the end? Pranav Ansal, Executive Director, Vice Chairman and Managing Director Sorry this was... these 22% shares were only kept as a collateral. There is no loan outstanding against this and therefore non-repayment of any loans is not a default or a situation where the shares won't come back to us. Pending creation of project security these shares were newer and the value is 2 million for VAT is under process, but that is complete being release that and the valuation of this year is independent of market price and all that. Okay, okay, that's right. So hopefully by next quarter we should see the pledge number coming now?

13 Before that. Okay. Before that. That's great. And I think, I also wanted to... if we look at your effective tax rate that's mean pretty fluctuates a lot. So, a total about 17% last quarter, it's about 36.4, there is some difference if we adjust for the exceptional item, it's about 50% odd. So, what's happening is the company doing any patch planning market? Can you just throw some light over there. But if you say standalone result, you will see the average tax rate of standalone result is only 20%, but as per accounting standard, you have to add the tax liability of all the constituents which are been consolidated in your main balance sheet, that is why it is 50%. If you see the mean, standalone it will be 40.5% or so. Okay. Your saying because of consolidation this is the impact given there. Yes, yes. Okay. Thank you so much. Thank you. Can we take the next question, operator? Operator Yes. Next question we have from Vishal Jethmalani from Ansal API. You may go ahead. Hello? Yes. Yeah, hi. I have a question, do you foresee FY increasing in their stake in the coming months in Ansal API? Sorry, do you?

14 Do you foresee FI increasing their stake in Ansal API? See, that's a very difficult question but even though if I see, looking at the value of the shares, the price at which it is being traded 0.4 X on the book value and for the three times the EPS. I think it's a value preposition. I am hopeful that FIS would take interest. Barring certain other factors I think it's a value bit for them, but looking at the overall economic scenario, the market scenarios I think their decision is best known to them. We can only convey our story and we can only convince them. Okay. And with regards to the last conference call and as of today, the share value of the Ansal API prices has come down drastically very down. So, in terms of pushing the investor confidence is Ansal is doing something for becoming more media savvy or promoting a brand equity or something? Yes, I think that's a very valid question. If you have track the company, I think in the last six to nine months the Investor Relation activities has been increased a lot. I think there is transparency on the company side has increased tremendously. As far as the media is concerned obviously as and when the need arises and as and when things need to be published in the public domain, we have the option of the media. Officers from our company keep meeting investors and analysts in Mumbai and offshore to make sure that the stories conveyed and people are aware. Again the top price for our share and for other company shares could be of because of numbers of reasons. But I think it cannot be generalized and probably I would refrain from giving any particular reason why the shares are fallen down. Okay. Thank you. Thank you. Operator Thank you. Next question we have from Vineet from IDFC Securities. You may go ahead. Yeah, hi. Just one question. I just wanted to know what is the update on the ILFS state try out in the NH1? Have you paid something to them and what is the balance sheet? Out of one... as of date out of the 150 crores that is to be paid to them about 85 crores has already been paid as of date, which also include the 22 crores which we have paid during the quarter that we just mentioned in the cash flow sheet. Okay. And the balance do we expect continues in the next quarter? By 50% in the next quarter.

15 Okay, okay. Thanks a lot. Any questions? No, that's it from my side. Thanks. Thank you. Operator Thank you. Next question we have again from Mr. Sangamesh from QVT. You may go ahead. Yeah, hi. Actually just wanted to follow-up on the question regarding the top-line number. If you could let me know, more clarity on that? Yeah, we had earlier mentioned the 2,500 crores I think within the -- I think because -- what share meant was we expect the cash flow between 2,000 to 2,500. I think news reporter took it turnover that was the -- Okay. That is fine. The company comes out and makes a lot of the statements in the press, is again that you are doing this PR activity. If there are certain numbers that have been misrepresented, for example, before this year -- It's protective of them all. Yes, a huge number came out which was wrong. If this top-line number is wrong, most of the companies is there is a article which is published wrong in the media, they actually send a notification or clarification about like this changes Could we expect that from the company going forward, because it does create a lot of confusion in the market? Thanks for the suggestion. We will follow it.

16 Okay. Thank you so much. Okay. Thank you, Sangamesh. Operator [Operator Instructions]. We have a question from --, Anand Rathi. You may go ahead. Yeah, hi. Good afternoon, all. First of all congratulations on good cash collections for this quarter. I had a few questions to and pardon me for asking this again on the transfer of infrastructure assets to one of your subsidiary. I just wanted to understand whether this would be like in WIP or would be shifted to gross plot and capital books? And why hasn't it been transferred at book value and the fair value? See, let me give you a very discursive answer for that. Let's understand that when the trunk is being laid down let's say 4 kilometers of road has been laid down in the township, cumulative and I am just taking a number for understanding purpose. And the 4 kilometer of roads, entail and expenditures of about 200 crores. In the past years if we have written-off 80 crores to the profit and loss account, doesn't mean that the roads have written off. Roads still remains at 4 kilometers and still holds the value as a gross plot. So when we transfer, the renaming WIP it has to be grossed up to a level which represents the true value of 4 kilometer of road which is being transferred, and that's where the fair market value is enhanced and the difference from between the WIP and the transfer value comes into play. Because the Ansal API infrastructure would take over four kilometer of road, not only 70% or 60% of a remaining WIP siting in the book. So, that is the reason why the fair market value, it is different from the WIP pending to the charge-off to revenue cost. And you said 170 crores is already spend. How much more is to be spend on infrastructure on Lucknow project? Another 430 crores for both the phases. Sorry, for one phase. Another 430 crores for the first phase, so in all roundabout 600 crores. Yes. And what would be the revenue stream for this, like any idea or any guidance on what would be the revenue generation you were talking about? For the infrastructure company?

17 Right. See, it's a very detailed calculation. I think the time would not be... this time is not right, but let me give a very quick example what kind of revenues will come into play. Any... when we sell a property we ask for a interest free maintenance security deposit, that come as a revenue generation of that deposit. The maintenance charge typically charge to flat buyers or property buyers in the townships will accrued to this Ansal API Infrastructure Limited. Since, we are responsible for distributing the water and electricity in the long run, we will be collecting charges and adding a margin as for the prescribed norms directly buying from the grid and supplying it internally. The gas pipelines and any other facilities that may be offered, even telephone towers, common areas could be leased out to other players, whereas the revenues and income would be optimal. So, there is a long-term annuity income plan which has been - Yeah. What I meant was like, would it be a substantial portion as a percentage contribution to your overall revenue per period? I think in the short run it would not be, but in the long-run, yes. It would, I think in the next three to four years it would start seeing greater revenue generation, because the generation in this company would also depend upon the occupation in the township, and the delivery in the township. Since we have already started delivery of products in the township in the next two years you'll see further delivery. The moment delivery happens, the maintenance charges and other charges to payable as maintenance start settling and their revenues will start going into this company. In the short run it would not be as significant, but in the long run, yes, when the township gets habitat and people starts moving it, it will increase a lot. And how much would be the same, like this infrastructure cost for the Dadri project? The, currently we are not looking at transferring this the term services of Dadri, because they are at a very nascent stage. So, I think it will take another two to three years before we take a decision and apply this same policy to the infrastructure facilities of Dadri as well. Yeah, and just to reconfirm like this, the cost which is transferred, that would now move on to your gross spots site, that would not be expensed out in the future? Absolutely, yes. Okay. And just to add upon just like for the last few years if you see the annual report you have quite a few auditor qualifications. And if you just compare that with like your peers who are in the same business still does not come up. Now even this transaction has come up as a qualification from the auditors. And if I could particularly point out point number four and point number six with regards to