Page 24 - Kolte Patil AR 2019-20

Performance analysis
The CEO’s review Gopal Sarda, Group CEO, analyses the
Company’s FY20 performance and looks ahead
Q: Was the management pleased with the performance of the Company during the year under review?
A: The management was pleased: the year FY20
was the best in terms
of collections in three decades. We registered sales of 2.5 million sq. ft.,
in line with our guidance, when no launches were made. We delivered a sizable 1.86 million sq. ft.
to customers. We finished the year with C451 Crore
in pre-tax operating cash flows (excludes land-related payments) and 4.51 million sq. ft. of ongoing but unsold inventory. We expect to generate around C1,500 Crore in post-tax operating cash flows across 36 months, indicating attractive profit visibility.
The Company’s growth continued to be profitable: even as revenues from operations increased 2.6% (based on the Percentage
of Completion Method), net profit (post minority interest) rose 12.2% to C137.5 Crore.
Q: What was the standout feature of the Company’s performance during the year under review?
A: The year under
review was marked by
a liquidity challenge for
the country’s real estate sector. However, during this challenging phase, Kolte- Patil experienced improved liquidity. This translated into a reduction of C83 Crore in net debt; net debt-to- equity ratio declined from 0.47x in FY19 to 0.35x in FY20, despite investing resources to accelerate construction and paying
the second tranche of C70 Crore towards the buy-out of ICICI Venture’s 50% stake in the Life Republic township project in Pune. This enhanced liquidity
was reinforced through sustenance sales marked by controlled marketing costs. Besides, the second successive year when Life Republic sales were in excess of 1 msf enhanced our liquidity.
It would be relevant to indicate that judicious capital allocation for business development and maintaining low leverage resulted in a better P&L and ROCE performance. All
the Company’s business development transactions, including the ones with ICICI Ventures and Planet Smart City, were uniquely structured to maintain the integrity of the Balance Sheet while enhancing cash flows and profitability.
Q: What are the various realities that went into this development?
A: One of the things that
I must indicate is that our ZABARDUS campaign achieved outstanding numbers in the sustenance phase of a project in a single location. This validated our leadership position in Pune and our decision to buy the private equity partner’s share in Life Republic.
The Company focused
on making quality sales, selling only as much as
the market could bear without compromising payments (or realisations). The Company focused on liquidating sustenance apartment inventory, which usually comprised completed apartments, generating sizable inflows. The Company generated incremental cash flows from 2.5 msf of sales made coupled with the handover of 1601 apartments in FY20. The Company aggregated Pune, Mumbai and Bengaluru collection teams into one unit; the
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