DB Realty pins hopes on new launches to return to profit

Manisha Jha Mumbai | Updated on March 12, 2018

A strong launch pipeline, delivery of existing projects and a change in business strategy that will see hotel and commercial properties being converted into luxury residential projects are likely to help DB Realty make profits again after two quarters, says the Mumbai-based developer.

The properties being converted into residential projects include DB Orchid Heights, Mumbai, DB191/DB Residence, Pune, and Ascott Centre, near the international airport in Mumbai. The company expects its revenue to go up by Rs 7,000 crore in four years, riding on these three projects. “We decided to convert these projects into residential as the hotel industry is not doing well, and we need to generate cash flowand residential projects look more profitable to us than commercial ones now,” said Vipul Bansal, Chief Executive, DB Realty.

The company already launched DB Orchid Heights last week. The project, developed in a 50 per cent joint venture partnership with IL&FS, comprises 1.4 million sq ft construction area, where each residential unit will be priced between Rs 15 crore and Rs 24 crore.

After the new conversion plan, the company would undertake necessary amendments on the floor plan according to the new development control rules.

DB191/DB Residence Pune, which was originally envisioned as a hotel property, will now be a 17-storey luxury residential project spread across 7 lakh sq ft and priced at above Rs 2.5 crore. Similarly, the Ascott Centre project, which was proposed to be a commercial property, is being converted into another luxury residences priced at Rs 3 crore. Both these projects are expected to be launched around Diwali (November 3).

DB Realty’s India Tower project in Mumbai, also proposed as a hotel initially, would be launched as a residential project by mid-next year and be priced at Rs 50 crore for each apartment.

In addition, the company is planning two more launches next year. These are the 1.2-million-sq-ft DB Paradise project in Bandra East for the mid-income category and the 1.8-million-sq-ft DB Turf project in Mahalaxmi, which would comprise a combined inventory of about Rs 15,000 crore, according to Bansal.

DB Realty has seen annual net profit steadily dwindle after its promoter Shahid Balwa got embroiled in the 2G scam case to Rs 30 lakh in 2012-13 from Rs 63.20 crore in 2011-12 and Rs 255.69 crore the year before, according to the company’s stand-alone balance sheet. On a quarterly basis, the developer has been posting net losses for the past five quarters between March 2012 and June 2013 , barring the quarter ended September 2012, when it posted a net profit of Rs 1.75 crore.

However, Bansal is confident that the company’s balance sheet would be in a better shape after two quarters.

“The company is running good the way it is running. What is reflected in the numbers is typical to the real estate industry. Unless you reach a certain level of construction despite sales and cash flows, you will still be reporting a negative number because your revenue has not got recognised.”

“With the new change in development control rules now, some of our projects go full steam and cross the threshold of 25 per cent to 30 per cent of the construction cost incurred on the project. This is when the revenue will get recognised and numbers would shoot up. We expect that once our DB Crown project hits the revenue recognition phase by the end of the next two quarters, the numbers would begin to change,” he added.

DB Crown, located in Prabhadevi in Mumbai, has sold 44 per cent of its total saleable area of 1.83 million sq ft and is expected to be complete in three years.


Published on October 19, 2013

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