What's the use of so much cash that you are generating? So if Badal can provide us in the next 3 years, how much cash are we expecting from DP business? And then if anyone else can tell us where will we use this cash? Because my calculation of dividend growth is not enough to use all the cash. And second question on Mumbai project - when should I expect or investors expect you to announce another project in Mumbai, if ever?
Hi Praveen, if you look at, I think our overall cash balance is around circa INR 10,500 crores, of which almost INR 8,000 crores is sitting in the RERA account, which cannot be taken out, per se, and it's not free for use. INR 2,500 crores is sitting as cash balance right now, where there is a significant order of dividend payout, which is going to happen in the month of August itself. So while technically at this particular time, I don't think so we have significant surplus cash. But yes, the way the projects have been kind of envisaged and the way it's planned, over a period of time, yes, the company is going to generate a fair amount of cash. But you'll have to appreciate that a significant amount of that portion will always be locked into the RERA account until the time this is completed. So I think for the next 1-1.5 years or so, it may be premature for us to kind of think of extreme surplus cash available for any other alternate use as an organization. Ashok Tyagi: Praveen, really, it will only be, I'd say, about 24 months from now when Arbour sort of hopefully hits completion, that this entire cycle of the inflated RERA balances will start significantly moderating. And that's where the book cash will actually become sort of actual usable cash. And that's where, frankly -- so we'll have like about 24 months to figure out what to truly do with the real big quantums of cash that could be available from then on in that sense. So Mumbai, look, the Phase 1 is done. For the Phase 2, we are commencing the slum rehab construction now. And I think hopefully in the next 12-odd months, we should have the approval level for the next phase of 1.2-odd million square feet to be made available to, Aakash. And so this will keep on chugging along at the rate, hopefully, of a million-odd square feet every 15 months or so. We are -- to your second question that, would there be a second project in Mumbai? And if ever, I think I mean, clearly, we are open to a second project in Mumbai. We just have to figure out the right project and everything.
Aakash, a couple of questions on the residential side. So on Dahlias, I understand earlier plan was to open the experience center in third quarter. So is it March, April now? Is there some reason for that? Or we're just taking some time for the product itself?
No, it's too grand a product and the experience center itself is going to be quite an experience. So always, especially when you have foreign consultants, you have equipment coming from all over the world, certain design-related issues keep going back and forth. So that is what it is. But as I mentioned some time back, sales, we are not going to stop sales. Sales, we will continue. We've got, as you know, 50% of Dahlias is sold. And therefore, and with super luxury, it's always a valuation game. So every sale, and also please understand that in the entire Golf Links complex, we have nothing. If somebody wants to actually now buy, we don't have stock. So retrade is something that we are concentrating on. We're trying to make sure that values are even further strengthened for all our customers, not even the Dahlias, but Aralias, Magnolias, and Camellias.
On the launches for the year, from the premium bucket, can we expect something in FY '26?
Yes, but we've got some of these things that are coming out is more luxury. So I think right now, at this point in time, I think, we'll be concentrating on this and some risk here and there. But I think that is what we'll be concentrating on for the next two quarters.
Just on the cash utilization side, right? You did mention that there's a lot of completion coming in the next few years and that will unlock a lot of cash, which is sitting in the RERA accounts. At what level of cash levels would you be compelled or, for that matter, like you would look at deploying that cash into growth capital vis-a-vis like keeping it in banks?
No, no. So please understand the preferred utilization of free cash is growth or shareholder return, honestly. Obviously, if we have cash more than what those two can absorb, then it goes into earning financial income. And there also, I think over time, as those quantum, we'll have to figure out more efficient uses of improving the financial income. But clearly, there's no threshold as such that on top of that we will begin hunting. Like we purchased, we did one deal last year. If there are opportunistic transactions that come our way, we'll be more than happy to look at. I mean, in the last two years or so, we did about INR 1,000, INR 1,100-odd crores in that Sector 61 transaction. We have spent a few INR100 crores in the Mumbai investment. So clearly, we continue to invest. In fact, even in the North heighted land acquisitions through the year, I think it's a number which almost puts us INR800 crores to INR1,000 crores through the year. So I think we are keeping our machinery busy. But yes, if you're looking at a big bang land acquisition, I think, (a) it will depend on one that is available to our risk appetite and our risk appetite in all fairness might be lower than what some of our competitors may have. And (b) I think obviously, the cash is there even today. I mean, access to cash is the least of our problems right now, frankly.
Just a follow-up on that, having seen the kind of response that you got in Mumbai and the success that you received. Are you now going to start, will you look at other geographies also besides Mumbai, just to see how the brand is perceived and what kind of response you can get in these new markets?
I mean, honestly, outside NCR and the Chandigarh Tri-City where we have vast land potential, I think Mumbai is our only location where we are potentially looking to execute and hopefully, over time, invest because it is the country's biggest real estate market. We were not present for such a long time. This is our first very controlled entry experiment. And hopefully, if this clicks, and if this does well for us and for our customers, there could be growth opportunities there. Aakash Ohri: So Kunal, I'm respectfully, I just want to say that you send us, send me also on a wild goose chase. Now the point is that even the share value has to increase, right? Three years, we've been talking, press, you guys, everybody told us this. Now that resounding success, the day of the success, actually that morning, the shares dropped by 2%. So I don't know what the parameters or where the motivation lies actually, honestly, so we keep going around circles. But point is that, look, if you are talking about our ability to go to any place in the country and do whatever, and I'm saying this very humbly we have that. We've got land banks that we have to monetize here and elsewhere. And we will do that in good time.
And then on a couple of projects we had lined up even in DLF City, I suppose, in this fiscal. Would that also come in the second half? And lastly, on Goa launch, did you say FY '26 or '27?
Yes. No, they were not in this fiscal. They were always in the next fiscal, but there are some very exciting projects that are on the anvil, and you will see them. No. As soon as we get like all these new regions, whether it's Mumbai, Goa, they come with their own complexities and also their approval processes. I think Mumbai took whatever time it took and thankfully, all's well that ends well. But Goa will also it's in the last stages of approval. So I think as soon as that is done, we will be in the market.
What's your thought on the launch pipeline for the Goa project? When are we bringing the next phase of Dahlias? And what would be the size of that project? And when are we bringing the Phase 2 for the Bombay project? Second question is with respect to your collections - collections for this quarter were slightly on the flattish side, what's your thought on that?
Thank you. So Goa, as you've seen are -- when we mentioned and talked about Bombay, Goa, as and when the approvals come by, we will get down to Goa, which we're hoping they come by in the near future. So Goa, we'll work on that. With regard to the next phase of Mumbai, we've just about come out of the first phase. In fact, I was complaining right now that Mr. Tyagi has not even congratulated me. So at least let me take a breather here. So but Mumbai, we're excited. I think that we changed the discourse there and very grateful for the support we got in Mumbai. You all are aware that we did what we did in record time, and we were oversubscribed in our whole in the entire process. So hopefully, I think even if we prepone and do whatever, the next phase will take until next year, so because of the SRA regulations, as you are aware. Dahlias, the main launch in Dahlias is sometime in March, April, the main launch, with the experience center and everything. But that doesn't stop us from doing -- we are still in demand. As far as the collections are concerned, be rest assured, there was some delays in construction, and therefore I mean, because of actually weather conditions and all that. But let me just tell you, most of these demands or the monies are in the tune of almost about 80% to 90% received. So maybe just about 10-odd percent demands, which got withheld because of certain conditions, which are going in or are in the process of being sent right now.
DCCDL rental income was up by 15% in the quarter. I just wanted to know your thoughts what drove the DCCDL's rental income growth this quarter?
So the rental income growth, if you please allow me to explain to you on an annual basis, that will probably be a little easier. See, from the existing portfolio, the rental growth is between 7% to 8%, 8.5% or so. But we have put in a framework in place, where we want the growth to be in the mid-teens year after year. And for that, the balance growth from 7%, 8% to the mid-teens comes from the new assets that come into play. And the total growth will be, if you look at year-to-year, of about 15-odd percent. There will obviously be variances from quarter-to-quarter depending on which assets got completed and where the rentals commenced in a particular quarter. So this quarter, we had the benefit of, last quarter we had the occupancy certificate of Downtown 4 Gurgaon. And this quarter, we had the occupancy for Downtown 3 Chennai. But the rentals for both these will commence sometime from September - October.
My first question is with respect to the income recognition. Can you talk about what all projects were recognized in this quarter?
Yes, Puneet, the OMT project in Delhi and the Garden City Enclave in near Gurgaon, they were the two main projects, which we recognized in the current year.
And so primarily, the OMT is responsible for lower margin. Is that how one should look at it?
Yes, yes.
If I look at the consolidated sales number for ONE Midtown, it seems to be a negative number. Is there a cancellation here? Because when you look at the cumulative gross sales last quarter, it was INR 4,112 crores. This quarter, it is INR 3,980 crores. So negative INR 132 crores.
See, ONE Midtown, what happens it's not cancellation. But what has happened in ONE Midtown is that people have upgraded from 2 bedrooms to 3 bedrooms and 3 bedrooms to 4 bedrooms. So that is the variance right now that you see is because of that. So what you do is generally when, let's say, couple of people, not couple, a lot of people had taken 2 apartments, and they have now upgraded to 1 large apartment. So the other one has come back to us, but that will be sold at the present premium, whereas at that point in time, these were 3 to 4, about almost 3 years back. So we've got a very healthy margin in each one of these. So they're not cancelled. They're upgrades. So what happens here is that because people had upgraded, we've given them the option, so area to area, they have the same value. It's only the additional area that they paid for, and this has been our practice since the Camellias times and all. Ashok Tyagi: So Puneet, I mean just to refurbish what Aakash is saying, people upgraded from -- they have taken 2, 3 bedrooms. They upgrade to, say, a 4-bedroom and in the process releasing. So I think about 25-odd apartments have gotten released. This is reflecting in the negative sales in this quarter in OMT. And this, I'm sure with the demand should be more or less done in the hopefully, the following quarter, if not latest, in the next quarters.
On the construction run rate. While you did talk about environmental-related issues, weather-related issues, what is the level of construction spend one should pencil it for DLF residential business?
So Puneet, we had almost INR 740 crores to INR 750-odd crores spend, which was almost same or slightly higher than what we possibly spend in the last quarter, which is always the peak. I think you can safely assume a number, which is this slightly going up over the next 2-3 quarters or so.
There is also some bit of Vivad Se Vishwas recognition. Is there more to go? Or is it just for....
No. It was the same one that was declared in the Q4 of last year. One particular form, by the time it was delivered to us, it was the first week of April. So it was actually the money was paid in the first week of April, even though all our applications have been done, I think, in January or whenever they were done. So it is the same family of Vivad Se Vishwas, which we have disclosed last quarter. Cash flow-wise, one cash flow overflew into the April.
On just DCCDL. When I look at cash flow statement, the finance cost has gone up while your net debt has gone down on a Q-on-Q basis.
So I think it's got to do with the capitalization of assets. So since Downtown 4 Gurgaon and Downtown 3 Chennai got capitalized one in March and one in April or early May, the interest then goes to the debit. But if you observe, one second, please, you please observe our net debt levels have gone down. Absolutely. And not only that, I must say that last quarter, we were graded AAA by ICRA. And if you may recall, we have already graded AAA by CRISIL. And we were able to bring down our borrowing cost on the portfolio, which at an exit level is at 7.7% now. And we plan to continuously keep improving upon it.
In terms of launch plans, any changes for our project launch planned in DLF City that is probably Hamilton Phase 2, IREO or all of these projects would largely be FY '27.
Yes. So right now we are working towards whatever guidance we've given you on. I think we're first working towards that. Launches take, as you know, in DLF, there's a lot of planning, especially on product. And I think that is what takes time. So I don't think we'd like to compromise or circumvent that procedure. As far as the projects that you mentioned, they are slated for FY '27. And I think we will stick to that unless something changes or things are done. But as per plan, right now, we've got whatever we have committed and Dahlias itself is, as you know, INR 40,000 crore turnover. So a lot of work and effort, and I think time is going into that. And of course, whatever I said that we've done, we've committed, we'll be finishing that for this year.
Congrats for a great response on the Mumbai launch. If you can highlight on the demand, which facets of the geography segment this demand came from? And how do you see this spanning out for the second on future phases? Any change in mix from what we saw in the first phase to second phase you envisage for our Mumbai launch?
Thanks, Pritesh. So yes, Mumbai, I think business came from all over. In fact, I was told that Mumbai doesn't even shift PIN codes, but we have business in South, we have business from all over. We had a massive, massive broker support in Mumbai, who kind of got in business from everywhere. The DLF brand prevailed. The product itself. I've done an analyst meeting there at site. So most of you have come there. You know how good the product is. You know 50,000 square feet is just the clubhouse. And DLF's track record of service and hospitality, most of the customers are thrilled to have a facility like this. So I think what prevailed there was definitely a very solid futuristic product, very thought after. People love the balconies. People loved every attribute of what we had to present there. With regard to how I mean, the other demographics are all CXOs, COOs, entrepreneurs. We've got 20% of our business has come from NRIs, which our regular trend in any of our launches that you may be tracking and seeing. And these are the Mumbai NRIs we're talking about. Also, some of the other brokers all across the country contributed, but they brought in people from Mumbai and around. So I think the Maharashtra business prevailed, so it was in 80:20.
On the SEZ occupancy, which is 87%, I think big opportunity for us to improve this going ahead and have a scale up in terms of our rental portfolio. So how we expect the trajectory to be in terms of the SEZ occupancy?
Okay. So let me first put the opportunity in perspective. You would have seen that we have an overall vacancy of about 6% in volume terms. But in value terms, the vacancy would contribute only to 4% of total income. So that's one part. Second part, in an SEZ, as you know that the SEZs are going through a transition at the moment, where the government has announced certain portion of the SEZs to be converted into non-processing areas and then leased out as normal commercial space as per the license allotted to that particular plot. So we are in the process of doing that. And we believe that this 13-odd percent will slowly come down. But I do not think it will come down in the next quarter or 2. It will take a few quarters for it to come down. The process itself with the government, where you have to get the approval from the unit area commissioner going right up to the Board of approvals and Ministry of Commerce is a 4 to 5 months affair. Having said that, we have seen one more trend that the non-processing areas, which are converted in North India, seem to be getting a better rentals from compared to the SEZ areas. But in the southern SEZs, we are not seeing that. The rentals typically remain the same for SEZ and non-SEZ areas.
Sriram, sir, just a follow-up. So I understand that straight lining for the Block 4 Gurgaon Downtown would have started last quarter. Did we start for Chennai this quarter? Or it is in Q2?
Yes. So the OC for Downtown 4 Gurgaon came in the month of February and the spaces were handed over to the tenants. I expect the rentals to commence from next month and then right up to November, December when the full 100% rentals will start coming. The OC for Downtown 3 in Chennai came on May 4th. However, we had worked out with the largest tenant there, which out of 1 million, had taken about 740,000 square feet to start the fit-outs after the Fire NOC came in November. And the good news is that the rental for that 740,000-odd will start from 5th of August, which happens to be today. The balance, 400,000-odd, the fit-outs are going on, and the rental for that should start sometime in November, December.
Also for Atrium, how do you look at this ramp up?
So Atrium Place, is nearly fully leased, I think about 150,000 square feet from 3.1 million is left. In fact, the entire amenities and retail area is also now going to be fully leased by the end of this month. We expect the OC for the first three blocks totalling to 2.1 million to come in later part of this month. Three tenants have already started the fit-outs, and the balance will start the fit-outs after that. So as we see today, the rentals will come in sometime in December, January.
Tyagi sir, maybe if you can help me with one, I mean, just wanted to understand how you're seeing the movement on approvals for, say, the next set of ONE Midtown. Are things better in Delhi on that front? Or it's still more than a year or two years out?
So ONE Midtown, I mean, not ONE Midtown, but basically that Midtown Project, the next phase, I think, in all fairness, is a couple of years down the line. So obviously, the approval processes and all have begun. The EWS will be constructed there. But I think by the time it is ready for launch you could be talking of two years. So, I mean, clearly, it should be fiscal 2027-28. I don't think it's going to happen in the fiscal 2026-27, the way things look right now. I'm honestly not as prudent into the minutia of the approval policies. But I think obviously, the Delhi, because the quantum of high-rises that come up for approval is far lower than a Gurgaon or a Mumbai or a Chennai. The process is slightly slower than what it is in these more, in these cities where this is almost down to our process.
If you could help us understand the embedded gross margins, which if I refer to Slide number 10, this quarter was around 39%. It is lower than FY '25, I understand that, but why this should be lower than fiscal '24? Because we've seen like a meaningful price increase for Privana over, I mean, the last two launches.
Right. So Girish, our embedded margin for the sales done for the quarter is coming at 40%. The margin for our projects, as you would appreciate that when we drop a project model, there's a fair amount of contingencies and escalations, which are built in the project line itself. And as an organization, we always continue to be slightly on the conservative side. So 40% margin for Privana North is, I would say, still fairly reasonable, okay? And this is in line with our guidance of almost on a product portfolio perspective, a weighted average margin of 45%. So the INR 4,500 crores over INR 1,100 crores kind of reflects a 40% margin from Privana standpoint. Ashok Tyagi: And it's the improvement on the margins of the previous two Privanas which are in the 36%-37% range.
Just reconfirming a few launch time lines. You did say that you'll open Dahlias for sales even during the festive season despite the formal launch in March and April 2026. So that will continue, right, from festive season?
Yes, yes. That we will have to continue because, thankfully, as I said, 50% of Dahlias are sold now. I'm under pressure from friends and family. But all that is going to come at an incremental value, I mean, valuation. So that I can assure you that whatever has been done has been done. The new sales or the new, not even, I'd say, if I can call this prelaunch, that was pre-pre-launch, now this is prelaunch, and then there will be launch. So even now, the valuations have kind of gone up in Dahlias.
My last question was to Mr. Khattar ji. Sir, one of your peers recently bought out stake from its partners, which was initiated by its partner in one of the rental platforms. Are you hearing anything from GIC in terms of like potential exits or anything of that sort?
So the answer is a very straight no. They have been invested in us from the later part of 2017. It's nearly 8 years now. They are very credible, and they are extremely -- it appears they are very quite happy with the way their investment and the progress that DCCDL is making. And between Ashok and me, we have not heard anything from them in terms of their wanting to exit. However, on the other hand, they are always looking at seeing how they can invest more with us.
A couple of housekeeping questions. Firstly, if you can guide us on the capex budgets, both DLF and DCCDL for FY'26 and FY'27? And in terms of any updates on the exit rentals at DCCDL for fiscal '26.
So I'll probably answer DCCDL and Rent Co assets, which are either in DLF, DCCDL or, say, the Atrium Place investment, we will be investing in the ballpark of INR 5,000 crores this year and INR 5,000 crores in FY'26 and FY'27. So I think the exit rentals for March '26 for DLF as a whole will be INR 6,700 crores, out of which INR 5,900-odd crores will be DCCDL and the balance INR 750 crores will be between DLF and Atrium Place. See, DLF is now going to get 3 new malls for 1.3 million in Moti Nagar, Summit Plaza in DLF Phase 5 and Goa. And it will have the benefit of one data center in Noida and the Atrium Place rentals kicking in. So whilst you will see that the rentals commenced this year, the actual full year benefit will come in FY'26, FY'27.
Just on the 1.3 million square feet of malls, which you just said, just wanted to know where are we in terms of leasing and completions for these assets? And just one number about gross leasing that we did in this quarter?
So I'll start with the three malls. The first is what we call a High Street Plaza, which is near the Midtown projects in Moti Nagar. That mall is now 85% leased. It got its OC about 3 months back. The tenant fit-out is commencing within the range. There was a little disruption, but it is commencing now. And we expect that by December, the rentals will start. Summit Plaza which is in DLF Phase 5. For that, the OC application is being submitted during the course of this week. It typically takes 60 to 75 days for the OC to come. And the fit-out start around the time of the OC with most players other than some of the anchors. And therefore, we believe that should also start generating the first round of rentals from Q4 FY '26. Promenade Goa, which is the biggest out of these three, the construction is delayed by about a quarter primarily because of the slowness in the labor markets in Goa. We expect the mall to be completed by January and the fit-outs to start thereafter. So I don't know. I mean, this year, our target gross leasing is like last year, between 8 to 9 million square feet in offices and between 1 to 1.4 million leasing, 1.5 million in the malls, in the retail space.
In FY '25, we did a presale of roughly INR 210 billion. And during the Investor Day, we were thinking that the presales for this year would be also at a similar level. Now the experience center for Dahlias we are bringing in March and April. Do you think there's a risk to this number for FY '26?
No, there is hopefully no risk to this number. I think if you see, we have already done 11.5 in the first quarter. Mumbai has already happened. So I think we will already be sitting at about 14. So I think that this number of 20 to 22 that we had said last time is completely secure. And then I think let's just see how the balance pieces fall into play. But I don't think we have a challenge on this on the sales guidance that we had given you. The second piece I'd like to -- which I thought was a part of my closing comment, but I'd put it here also is that, much as it will break your hearts, presales is not a metric that we track. We track margins and cash flows. And presales is a necessary fuel for that. But because we do INR 30,000 or INR 20,000 or INR 18,000 as long as I'm generating the same quantum of embedded margins and the same quantum of current and future cash flows. Those are the metrics that we are looking for.