Phoenix Mills Ltd Q4 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Puneet J. Gulati - HSBC, Research Division - Analyst : I have 2 questions. Number one, on the commercial side, you mentioned that there is an 80% collection rate. Is it normal? Or is it less than normal in the current perspective?

Question: Puneet J. Gulati - HSBC, Research Division - Analyst : Okay. Okay. And what will be the update on the leasing pipeline for the new Fountainhead which is coming up?

Question: Puneet J. Gulati - HSBC, Research Division - Analyst : Okay. Okay. Secondly, on your CapEx plan, if you can give more color on what is the spend that you intend, both on the malls and office side and also on the residential side? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 30, 2020 / 6:30AM, PHOE.NS - Q4 2020 Phoenix Mills Ltd Earnings Call

Question: Puneet J. Gulati - HSBC, Research Division - Analyst : Each?

Question: Puneet J. Gulati - HSBC, Research Division - Analyst : Right. Right. So in all, we are looking at only INR 140-odd crore of CapEx?

Question: Abhishek Bhandari - Macquarie Research - Analyst : I have 2 questions. The first one is, if you look at the last 4 years of our mall performance, one of the reason was remitting it towards more social experience, where F&B, HSP and multiplexes helped up a lot. Now -- but as things stand without vaccines, probably these parts of economy will have more trouble in terms of paying rents and if the businesses are uncertain. So do you think from a medium-term perspective, you would want to reduce the exposure what you have with (inaudible)? And on related lines, has there been any movement on the preleasing for the new 5 malls which have come, where these kind of factors would have probably taken up maybe between 10% or 15% of the business?

Question: Abhishek Bhandari - Macquarie Research - Analyst : What about the contract with the multiplexes in the 5 new coming malls? Have they come up with you with some kind of renewed business plan asking you to push out, believing, et cetera or things stand as they were as 5 months, 3 months before?

Question: Abhishek Bhandari - Macquarie Research - Analyst : Sure. My second question is more around business model and LRD. So if you look at last (inaudible), one of the hallmark has been arriving minimum guarantee, which probably is now around 90%, 91% of revenues. That makes the income predictable and hence LRDs are available for a longer duration and a much higher number. Do you think with probably the revenue sharing increasing, making the revenue a little more volatile, the LRDs might be asked to topped up. And going forward, you would want to increase our equity, not only for operating assets but also for the under-construction assets? Pradumna Kanodia - The Phoenix Mills Limited - Group CFO, Head of Finance & Accounts, Director of Finance and Executive Director Pradumna here. So from a technical point of view, just the mathematics, what you spoke about is a fact which can happen, but I think reality is quite different. Banks are looking at the FY '21 as a period of really an uncertain period and abnormal period. So clearly, any decisions based on that would be not right. Having said that, I think most of our malls were -- anyway, when you look at the eligibility criteria, we had already repaid loans significantly downwards, so like example, Bangalore Mall, the loan was less than INR 400 crores when even -- in the current avatar, the EBITDA could be in excess of INR 100-odd crores, even for this financial year. So from that point of view, we have been discussing all our current situations with our bankers, and there is no such sort of a request that has come in from any banker. Second, as the RBI and Finance Ministry also is talking about onetime window of restructuring, so if there is that window that comes in and some banks feel that there would be some mismatch between the revenue for the current year, definitely, but not from the year FY '22 onwards. So then some bit of a restructuring around that may be necessitated, which we may evaluate on its merit. But from a group level perspective, I don't think so there is a need for us to -- and of course, the second point, which is important is the loan to cover. So the value of these each assets and the security cover that it provides to the bankers is tremendous. So any case which you take the security cover would always be greater than 2x, while the stipulation would be 1.5 or 1.6. But having offered the entire asset to the bank, the security covers are greater than 2x in most of the cases. Now coming to the fact that currently we have used the moratorium as extended by RBI and with the current cash flow that we have and the deferrals that are available at the bank, we don't foresee any such issue coming up from a banking side where extra equity may be required. And I don't even foresee that going forward because our ongoing construction side, if you were to look at, the construction finance, have not been -- there is no need for construction finance loan for 3 of our underdevelopment assets under the Canadian Pension and PML joint venture because equity is still available, and there is no cost over and that is happening there. Ahmedabad project is going as per schedule. The debt has been tied up, and the first disbursement has happened. Again, we don't foresee any change in our time lines on cost parameters for the bank to be worried about looking at any form of additional equity that may be required. So from that point of view, there is no need for us to worry about additional capital infusion in any of our projects given the fact that there may be some revenue dip for the FY 2021 period, which is normal in the current scenario. And to give you also a perspective of the other 2 verticals that we have, the commercial side, we spoke about how the collection from the commercials continue to be robust. And here we have not got impacted by the current lockdown and the fact that 2 more additional towers of -- Tower 2 will become almost ready for leasing towards August-September of this year, should add to our equity in terms of our commercial collection. So from Art Guild House at Kurla, from Centrium units at Kurla and Tower 1 and 2 at the Alliance at Pune, we should have a very robust cash flow, which has very limited debt on that. So that would come in good stead for us. And on the residential side, we had a outstanding of around INR 164 crores at the beginning of FY 2021. And this INR 164 crores largely will get collected in the current year, and that is going to be a good sign from a cash flow point of view, while our expenses on the CapEx would be limited since we are only doing Tower 7 right now. So from that extent, there is enough and more liquidity surplus that will be available. And also important to highlight that our completed OC received inventory between Kessaku and OBW at our Bangalore residential develop is in excess of INR 1,400 crore. So any additional sales that we do there would completely come down as a positive cash flow because there is no CapEx spending on those accounts. So the outstanding debtors as on day 1, the limited CapEx and the high value of inventory, which has no CapEx required, really gives us the great comfort that there will be surplus getting generated from our resi portfolio as well. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 30, 2020 / 6:30AM, PHOE.NS - Q4 2020 Phoenix Mills Ltd Earnings Call