DLF Limited (DLF) Earnings Call Transcript & Summary

Hi, good afternoon. Welcome to all of you. I mean -- a lot of familiar faces, some new ones. I hope you had a good intensive first half and a decent lunch. And some of you got to interact with the Chairman Anushka, Savitri the leadership team. The way we want to run this is that we'll have a presentation, which has now posted trading, has also been uploaded on the tax changes. And hopefully, the transition will run for about 35 to 40 minutes. Obviously, if there's a pressing issue, you are more than welcome to ask the question during the presentation as well. But post the presentation, we'll open up for Q&A and invite the Chairman also on stage at that time. I think really 2 or 3, I'll say, disclaimer, I'll put A, most of the data that we have here is data that's already been disclosed as a part of our quarterly, be it in terms of our presentations or in terms of our analyst calls. What we have done is we have slightly fleshed out the data more, made it slightly more specific, but that's one thing. But there's no new or chattering data that you'll necessarily get here, but hopefully, you'll get in a form and shape, which will -- which makes it slightly easier to understand. B, I mean, this is forward-looking data in the sense comparable to what is there in the analyst reports. So obviously, it is subject to the same sets of uncertainties that any forward-looking data would be -- which is the usual safe harbor disclosures. The third point is wherever we have used areas here, the areas referred to the salable area and the gross visible area and not the carpet area. Obviously, as and when those products are launched, they are launched in the form of carpet area, square meters. So this is right now the metric here used is salable area/leasable area in square feet in that sense, but obviously, eventually, when the documents get signed, it is carpet area in square meters in that sense. The fourth point, which I think hopefully you would appreciate as you go through the presentation is that, by and large, it's simply our business is divided into DLF and DCCDL. But that is not the way we actually run the business. The business is run really as Devco and annuity business. And most of the data that we have tried to capture is with that distribution in mind that the Devco and then the annuity business. And the annuity business includes the DCCDL as it's called, the Atrium Place, which is our JV with Hines. The rental projects that are housed on the DLF side of the equation and our hospitality business, which also is an annuity business, where and which is increasingly growing and an important business in our ecosystem. So what we'll do is we'll get Badal to start the pitching of this. Badal as all of you have met in the morning is our new G CFO, and he'll -- he will hopefully use all his experience to fit out. And then as and when we come to specific sections, we'll request the concern business leaders to join us on stage. And at the end of it all, then we request the Chairman his friends [indiscernible] join us on stage and then open it up for Q&A. Come Badal, all yours.

Okay. I thought I'll be very serious, but I thought I'll start with a slightly lighter note on 107 days of experience in real estate sector. Hopefully, I'm due justice to the I would say, outstanding journey, which this group, this company has created and I think is in the path of creation. So with that caveat, and a few of the caveats which -- okay, a few of the standard caveats possibly -- I'll again repeat. We have structured the business the way we would want you to see the data. It's not an accounting representation of information like DCCDL and DLF is like a business segment of management estimates. So that's the way we would want you to see this data. And okay, first, to begin with 8-plus decades of strong presence. I think not many companies can boast of -- it has an impeccable record of generating customer value, having customer-centric focus on the quality of development. It's just not about developing that property, but kind of ecosystem around it. Extremely high standards of corporate governance and compliance. I can say this with my 5 or 6 different experiences, since I have, I think the level of corporate governance and compliance is absolutely top notch. And I have worked with some reasonable companies in my life. And this to my mind, has resulted in an extremely strong brand, which DLF is kind of, like I said, in Hindi [Foreign Language]. So I think it stands for itself. It stands for product expense for quality, it stands for best of output, it stands for customer first. As we said that we have 2 distinct businesses, which we run. One is our development business and the second one is the annuity business, and we are going to cover both. Our development business has been kind of performing exceedingly well. It has been a strong growth driver for the last 5 years. And as we say internally, annuity business is extremely steady and strong compounder, where we have significantly invested over the last 4 to 5 years. This gives us, to my mind, it's a uniquely positioned organization where we have got a balance of development business and rental business, which gives a balanced portfolio, which I think we are one of the few players or maybe the only player at least in the country to have such kind of a balanced portfolio, a diversified portfolio supported by hospitality and the services businesses. Past few years, and we'll kind of run through numbers, you are already aware of it has been really, really strong for DLF as a group. And as we go through the slides, we'll realize that we have laid an absolutely strong foundation for the next level of growth for DLF. As we say again repeat, focus always remains on prioritizing customer needs, creating customer value with the customer. You would have heard Aakash say at least 4 times during the Privana presentation, we look at customer first, we look at customer value creation. Okay. Again, repeating the same thing, customer centric, compliance, safety, governance and sustainability. The five key pillars which are of no compromise whatsoever in the way we think and the way we execute and the way we operate. These numbers, which we are referring is to give you a sense of scale and size of DLF as a group. So again, we have represented the 100% value of all the entities which we have. So we have disregarded or rather we have not considered the accounting definition of JVs, et cetera. So this is 100% level. So DLF as a group had over almost INR 13,000 crores of revenue and over INR 7,000 crores of EBITDA last year. It's an extremely strong performance, and we have been kind of growing steadily rapidly over the last 5 years or so. We have been consistently paying dividends for almost 17 years. And for the last few years, at this is the performance, we have actually taken care of shareholder returns in the same way and grown our dividend payout to the shareholders as well. Net debt or cash is absolutely one of the critical points which in almost every discussion comes into play. We have had our focus of reducing our net debt position to almost INR 24,000-odd crores. We are at INR 14,000-odd crores net debt position in the last 5 years, almost a reduction of INR 9,500 crores. And with a strong operating performance measured in EBITDA in this particular case, our net debt to EBITDA has actually come down approximately 2.6 levels as of December end. Not repeat the same 2 lines of businesses. We will now dwell into the 2 businesses separately. We'll talk about it on what has been the performance and what possibly our priorities are the way we think about these 2 businesses in the future.

Can I request Devender Ji and Aakash to come for the developments of business investment. Aakash.

As you're already aware, that we have a high-quality land bank available for development. We will do talk about the quality of land bank and how it's situated. So we are one of the, I would say, fortunate companies having possessing land bank accumulated at the right time, maybe, and which is ready for super great monetization possibly in the coming years. Our focus, as we say, is always customer centricity. I'm repeating this time and again because again, it's very close to heart. But along with that, we do focus on margin as a concept from a realization perspective. Our focus is on margin and cash. These are the 2 key levers, which we continue to focus on in almost every discussion in almost every aspect of business development when we talk about. If you talk about the -- one of the things, which we wanted to highlight that whatever we are doing today or whatever we have done yesterday is going to come into our financials only after 3, 4, 5 years or so. It's a conservative accounting policy, our accounting records do not reflect what has been done today. So we thought we'll just reiterate this while I'm sure you are aware of it, but it's important for us to reiterate this because this does not represent your current strength, the current potential of what is actually happening on the ground, if we were to just look at [ beer ] financial statements. And hence, we thought we will bring this point out specifically. You may be aware, but it's always important to reiterate this because this is not comparable. Okay. In sales booking, I think we have had a good year. We have almost hit INR 19,000 crores -- over INR 19,000 crores of sales in the in this financial year. Our launches, as you're already aware, have been well received, whether it was Privana South, Privana West, you've got some statistics from Aakash was significantly oversubscribed. We did, if I may use the word, rationalize we have to kind of prioritize whom we want to give, and that's always a good position to be in. We saw exactly the same situation when we launched Dahlias, which an uber-luxury, super-luxury product. And it definitely did exceed our expectation of how the sale is looking or how the customers responded to our product. So we feel confident of what possible we have done we feel confident of what the products have been, and we feel that our performance in sales has been fairly, if I may, is the word, stellar. In the last 1.5 to 2 years or so. But as I say, no discussion, at least for us, is complete if we do not talk of margin and cash. And hence, it's most important for me to bring this margin space along with the sales number, and we continue to generate healthy margins from whatever sales we are doing. Our growth in margins is higher or faster than our sales numbers. If I were to look at the same number in a very margin number in a very different manner. As on April 20, we had almost INR 10,000 crores of realized revenue margin, which was supposed to be recorded in our financial books of accounts. As I said, there's a lag in accounting. The same number we generated -- we accreted around INR 25,700 odd crores of margin from sales booking, which has been done. We consumed in our financial statement, almost INR 13,000-odd crores. We as on end of December, we had over INR 20,000 crores of margin, which is yet to be recognized in the P&L, which is going to get recognized over the next 2, 3, 4 years as and when the projects rectify. So these are for launch product sales done, INR 20,000 crores of margin sitting on our balance sheet, of course, subject to realization of cash. This strong margin, et cetera, has resulted in reasonable growth in profit after tax, and we have seen a steady growth on it. CapEx. Here, the CapEx, the way we have defined is land and approval cost. We continue to spend money on approvals in land wherever is required. The land acquisition will be whether to kind of improve contiguity or parcel, which give us -- can have accretive value to the product projects, which we are launching. And if there is an attractive parcel, which we feel can be extremely value -- value-accretive we would kind of go out and invest in those properties. And I think we stopped by the Dahlias product and the Dahlias land, which we have taken opposite to Grand Hyatt in Sector 61. So that's one of the examples, where we think that we have had a reasonable investment, and it's going to be very, very value accretive to the group as a whole. Despite spending money on the CapEx and approval cost, where the realization is going to happen in the future, we continue to generate operating cash post all expenses -- post all CapEx and approvals. We continue to generate cash for the group. Hence, as a result, one of the stated goals, which we had that we want to reduce our debt, which I covered earlier as well. We became net debt positive last year. We are -- and we are almost INR 4,500 crores net debt positive as we speak as of December end. We continue to be in this path. And again, INR 9,000 crores of cash of it INR 7,000 crores, INR 7,100 crores is line in the rare account itself. This is an interesting thing, and we saw several cuts. This is the cut which we are presenting, but when we looked at this data, we looked at data 15 years, 10 years from the product launch, et cetera, of various product. The point which being made out here is the return or value accretion to the customers on the product launched by DLF has had a reasonable return over a longer period of time, and it is comparable with any other asset class in the country. And as I said, we have taken this into various cards, various segments, luxury, super luxury, 10 years, 15 years. And I think the answer, by and large, remain the same. This is a chart which has been shown earlier is published on the launch pipeline. We have presented that we will have almost 37-odd product -- 37 million square feet of projects which will be launched in the medium term, effective yielding around INR 114,000 crores of revenue over a period of time has been sold. 35% of this value, INR 114,000 crore. 35% of value work projects have already been launched till date. Another 15% worth value will get launched in the coming fiscal year. So the pipeline, which has been talked about, 50% value worth of projects will get launched. And hence, all this is here and now and not something of the future. Again, we will kind of take this and peel this one by one and kind of go into the next level. On the INR 40,000 crores, just one previous page, one point, INR 40,000 crores of launch products. We have already sold INR 17,000 crores. So that a balanced inventory left for us to sell is approximately INR 25,000-odd crores from the products already launched. This is the number which will be required in this next slide and hence, I'm just highlighting this point. If you recall, I had said that INR 20,000 crores worth of margin has already been locked from sales done of project launched, sales done of all projects launched. The projects launched with unsold inventory, if you were to sell it just mere execute that, the gross margin potential could be another INR 17,000 crores. So total gross margin, which we'll be able to generate from projects already launched and will be sold will be almost worth INR 37,000 crores. So in a very defensive manner, if I were to say very differently, if I did nothing else for the next 5 years, INR 37,000 just executed what I had and sold what I had we'll generate INR 37,000 crores of margins. Then we have also talked about another INR 77,000-odd crores of pipeline, which is going to be launched over the next number of years, 3 to 5 years or so. And if you were to kind of take a ballpark number of what kinds of margin potential those have, that could be another INR 30,000-odd crores. And these are rounded off numbers, directional numbers, and that's the way possibly we should take these numbers. So overall potential of margin to be created from the projects to be projects already launched and will be launched, which are clearly defined in our thought process is almost around INR 67,000 crores. If you were to take this forward, this margin into cash, how does this margin generate cash, the reason we are harping because it's very important for us. Again, I'm repeating margin and cash are fundamental parameters or KPIs, we should like to monitor sales also is important, but these 2 are more important. We are sitting on INR 9,000 crores of cash as on December end. We talked about in the earlier slide. We have receivables of INR 30,000 crores. These are all published numbers. There's no new numbers on the INR 30,000 crores worth of receivables from sales already done. All the projects which are launched and we were to complete today, we will end up having INR 20,000-odd crores of cost. So if we did nothing, just executed our projects and realize what we have sold and the cash in hand, we will be left with INR 19,000 crores of cash before overrun expenses. If we were to just add the inventory, which we are sitting on of lost project, INR 25,000 crores. And we realized that money, INR 24,000 crores is net of brokerage, et cetera, et cetera, INR 24,000 crores is incremental money which we are going to realize. So from all the launched project till date, we will generate almost INR 43,000 crores of cash in the medium term. If we were to take this INR 43,000 crores cash and now take out all our CapEx, OpEx, taxes, net of financial income, which could be anywhere between INR 17,000 crores to INR 19,000 crores, a ballpark number over this median period of time. Our net cash generation post expenses, et cetera, could be approximately INR 25,000 crores from project already launched. On top of it, from our new pipeline in this defined period of time, net of operating costs, we could generate another INR 24,000 crores to INR 26,000 crores of cash depending on when we launch, how we launch, et cetera, et cetera. So within this period, we are looking at anywhere almost INR 50,000 crores of cash balance in a way because we started with INR 9,000 crores in the medium term. So again, to crudely put, if we did nothing and just sold what we add, INR 25,000 crores cash balance, if we did well, and we kind of kept on track and kind of market supported, it could be as high as INR 50,000 crores, maybe, god knows, it could be even more. So -- but it's a good foundation, a good position to be in is the point which possibly we wanted to highlight out here on this page. It's important to also tell us, we talked about land bank, which is there. We have been historically reporting that we have almost 192 million square feet of land off, which the development business potential was 169%. That's the first column. This is what we have been publishing, et cetera. We have reassessed our potential. This is the revised zoning regulations policies to you taking into contrition TOD, these are regulations, et cetera, et cetera. And also as I think, what we want to do where we feel that this 169 million square feet today on a reassessed basis, could be as high as 196 million square feet not as high as it could be approximately 196 million square feet. Of this 196 million square feet 23 million square feet is already under development. And another 29 million is the potential, where possibly in the pipeline will develop. If we did all of it by the end of this period will still be left with almost 144 million square feet of developable land bank, which, to my mind, will be good for us to execute in a steady-state basis for another 20-odd years or so. So we have a fairly potent land bank in prime area developable, which will help us in good stead for a good times to come. A couple of decades at least we think so. Again, it's important to kind of give a margin twist to it. And we are kind of broadly qualified that what kind of be the super luxury products, which area which we have, what is the kind of luxury which we have. But the highlight out here would be that the premium and commercial projects also, we are saying could be in the benchmark of around 30%, plus/minus 2%, 3% here and there, 30% kind of a realization on margin which, to my mind, also is a fairly good number. Overall, we are aspiring to have a 45% gross margin in the long term from our development business going forward. Just to summarize, we have got great quality of land bank. Our focus on cash is paramount. Even we did nothing, almost INR 25,000 crores of cash can be generated. We have almost INR 37,000 crores of margin potential from already launched inventory, which the new sales booking will be a steady state we are talking about. We are looking at a similar number for at least next fiscal year. And -- this should help us deliver almost a 2x growth of PAT and 2x plus growth in cash over the next -- in the medium term, I would say, 5 years -- in almost 5 years or so. Debt continues to be of importance. We have already done net debt zero. We have already been net debt positive. We want to do -- reach a gross debt zero benchmark and which will happen soon. And we will be judicious and cautious on capital allocation, whether it's a shareholder return or growth CapEx. So in summary, this is what we look -- we are looking forward from a development business perspective.

Okay. Okay. Yes. So we can open up on Q&A on the development business for the questions that come to your mind.

This is Praveen Choudhary from Morgan Stanley. My question is about capital allocation. I think Badal convinced us. I think we were earlier convinced but he's convinced us that you're going to generate a lot of cash. So the question is, how do you use that cash. And I see one line discipline and opportunistic capital allocation. But if it's possible to dig deeper into it, the dividend growth has been good in the last 3, 4 years. But as a percentage of earnings, as a percentage of the stock price, it's very small. Can it be dramatically increased? Is that the focus? And the second one is obviously investing in areas, where the returns are very high. And if you can delve into what are those areas potentially can be considering the INR 500 billion that you're going to generate over the last -- over the next 5 years?

So on the capital allocation, to fair, we have maintained that we want to be broadly I mean, distributing 50% of the PAT that we generate over the medium term. Right now, we are slightly south of it. But I think in the next couple of years, we should hopefully hit that level. But you are right, we will have cash that will be generated over and above that also, with step 1 is to get gross debt zero, which should hopefully happen in the relatively short term. B, we will build a cash cushion for sure, which would be available to us for any opportunistic acquisitions that come to us. And frankly, also generating, hopefully, a very strong stream of financial income that could also fall -- I mean, become like a third major stream of income over the years. But obviously, the intent stays that as and when we are -- we get something very interesting, like the parcel that we did last year, we will be open to do it, but it can't be completely a little like a pie in the sky sort of a thing. [ Jim? ]

Yes, I think I agree with Ashok. See the main point basically here is that, as mentioned earlier, these are projections, okay. So we have to be careful that we don't go and spend what we don't have right now. So when we have that money, then you can ask this question again, maybe the answer will be different. Okay, that's the first point. Look, I think message what we're trying to give is because this question is raised many times by everybody. Frankly, it's raised in our own mind also. Are we doing enough? Should we do more? Should we look for certain things. I think the message which I want to kind of give to everybody is. Over the last 8 decades, we have done a lot, maybe some mistakes, maybe some good things we've done a lot. We now kind of feel that we are at that mature point where really we don't need to do more unless it makes sense to do more. Our numbers are healthy. Our cash generation will be healthy. Hopefully, customer appreciation will be healthy. Return to shareholders will be healthy. Even after that, we will have an opportunity to reevaluate the next steps here, okay? Nothing, I think, is off the table. Right now, we don't have anything on mind because we remain totally focused on what we are doing. We are not compelled to do anything fortunately. But what we are leaving out there is that we will have that kind of firepower available to us to do things within our business or for shareholder return as the case would be. But I think we have a few years to get to that point. The importance of this message here is that our journey is rewarding enough and we need to remain focused on it rather than try to seek new journeys, try to seek new projects, try to seek new pastures. There will be bad days and maybe sometimes better on those bad days to sit on the sideline and catch your breath and re -- sort of invigorate yourself rather than trying to run in all directions. I'm well aware that in our industry, many people are aggressive and far more sort of, I'd say, optimistic. And fair enough, we were like that too here. There's a certain stage of growth in a certain stage of evolution where you need to be like that. Luckily, we've crossed that point. We've got all the buffers already built up. We are not sort of feeling that we need to go down that journey and be in risk-taking stage at this point of our journey. That is part of a slide. They can just refer to that slide, and so you can put it back on here. Just said, what you want to ask them, we put that slide on it.

This is Parikshit from HDFC. So I think one slide you had shown the returns of different asset classes. So I just wanted to pick the brain of the Devco team. So within your client profile, I mean, we see a very super luxury ticket size of INR 10 crores and upwards in NCR. So what kind of percentage of the net worth -- I mean across the asset classes do you think will be real estate? And on a more sustainable basis in NCR on a base of INR 20,000 crores, which you are sitting right now. So I asked this question earlier to Rajiv Singh will answer in the question -- Q&A. So on a sustainable basis, what kind of strategy on the side Devco side do you think that what could be sustainable growth from here on the presales given that we already are sitting on a very high base. And given different asset classes, what I understand that most of these people are not funding homes through debt. So they are buying it on their personal balance sheet. So what kind of allocation in the personal portfolio real estate would be?

So at certain points you're asking are actually outside of remit. So maybe we'll have to answer those questions from guys like you. But I think the core message here is that firstly, our pipeline we've defined. That number is INR 100,000-odd crores plus. We've done almost INR 20,000-odd crores out of it. It kind of -- they have defined the medium term. Sometimes these are not hard and fast numbers, but you need something to go by. We've defined it to be a 5-year period. So any back of the envelope calculation means you kind of try to continue at the present pace of say INR 200-odd crores, a good year, slightly better and a bad year, slightly less. What I want to point out to you is we're not really pressed for looking for ways to sharply increase it. I'm not saying that we will not have an opportunity to do so or we won't do so. But the financial reasons to do so are not compelling. Okay. So that is the first reason. So we will keep our sales levels almost at what we have achieved. And if markets, allow us an opportunity after a few years, we can consider taking them up. But right now, it's just executing the plan which will give us this average. Coming to the question of the customers and what they have and as I told you, look, we try very hard. I'm not saying that we are always successful. But there are 3 things we want to classify our customers as it. First is a genuine user, we love that guy, whoever that person is okay. And we do believe that, that person will buy things in a reasonably prudent manner. To the extent his or her income supports it to the extent financial institution decides to support them by giving them a loan. That assessment of the capability, we leave to the financial institution to make the advice judgment. We kind of try our best not to do multiple bookings here, okay? That is where we feel the risk will multiply here. Second is there's a person who is an investor. Investors also always required in the business. They take a chance. They create a rental income. They come in at a reasonable time they exit at a reasonable time. They are generally well-financed people who -- what you want to indicate from here, would as part of a larger portfolio, enjoy returns comparable over time to other asset opportunities they may have here. The third person is the person we are worried about, and we try our best to stay away from is the speculator. The speculator is the guy we all need to be careful about because that person is the guy who overtrades here. We'll take advantage of the installment payment schemes, which are available and try to make bookings, which at the end of the day cannot be funded unless somebody else is found to take them off his hand. That is the person who will suffer in poor economic cycle. So as a company, I'm not saying we've not had our fair of speculators. We've seen how it all ends. I think I explained to you at lunch time also that with the project cycles today, the only way to really make big money is to go high rise and only a time thing to go high rise is it takes you 5 to 6 years to actually do a project here. So by the time you start a project and you accept bookings through the time you deliver the project and collect the rest of your money, world has changed. So -- and we have to be very, very careful that so-called speculator through that period will certainly not stay the course. And there will be a bad time. There'll be a good time. That person who speculates with us is not necessarily speculating with us alone maybe my habit is or she's speculate all over the place, they could get in trouble somewhere else and so on and so forth. In the stock market world, it's like trading on margin future. It's great until it happens. So we are cautious on that point. I don't really think in the part of our portfolio, that number is significant. We try to keep it down. And we watch our receivables very, very closely and very, very carefully. So keeping that in mind, I think Aakash and his team do proactively reach out. And if somebody is experiencing even the slightest of distress. We don't want to be harsh with anybody. We generally don't like to exercise the contractual process, but we try to get them a profitable exit here. So we are all the time, I would say -- I know Aakash, can give me a better number. But even in a project, which is well sold in the first couple of years, Aakash, what percentage of people do you manage to kind of trade out by giving them a better option.

So almost can you hear me? So almost about 25% of the people kind of trade out and kind of get a better option. As we've spoken around Privana and the Arbour's prime also in the morning. We had -- we were subscribed and oversubscribed by about almost 4x in each of these businesses launches. As we are today, as we stand today in about 2 years, Arbour has an upside of almost about INR 8,000 a square foot, which is trading in second market. And Privana is upwards of INR 4,000. So that's the kind of trade up that people are also doing and getting the margins that they're getting today.

So this message here, which I want to just give Aakash, give the right number, 25%. So the point is that we can step in and take those somebody is but from that person. That person could have been my customer directly. I can choose to step in and go to that customer directly offer him Arbour 2, Privana 8 or whatever I want to do and get that booking in. But then I leave that pestering 25%, which gives pestering and over time, will become a bad debt or a speculative debt in my thing. We very aggressively first say or before we go and sell let our customers sell if that is their need or their desire. And very honestly, we go out to facilitate their sale. We do not distinguish if at all, Aakash prioritizes the sale on behalf of an existing customer, even at the cost of a residual stock left over in the hand of the company. So it's a constant thing. As I said, with all the care, as he's mentioned, 25% of customers do tend to trade out as time comes through, some for economic reasons, some for making some other opportunities or making some money. We are conscious of it and our projections take that into account. So I think -- I hope in industry people remain conscious and don't chase sales bookings. It's a metric which is quite a dangerous metric because at some point of time, you start kind of looking for new customers and ignoring your old customers, that is where a problem starts off. So we are careful that I'm not going to say there will be no accidents. But overall, I think we are now far more cautious of the health of our receivables.

Mohit from IIFL. Sir, while you have shared the pipeline for the next 5 years in terms of your development pipeline, as a business leader, if you look on the next 5 years and how do you we see the geographical spread of [indiscernible] so right now it looks like it is predominantly going to be gone for next 5 years. Of long vision [indiscernible] yes. Sorry, I'm just going to repeat. So do you see after 5 years, DLF being meaningfully present in markets like even if I consider NCR to be 3 markets right now, let's say in Delhi, which may possibly open up with the change in the government. You currently just have 1 project. So do you see our presence meaningfully increasing in Noida, in Delhi, in Mumbai. So some thoughts in your long-term vision on that.

Yes. I'll be with you that -- as we mentioned that even after we've completed our immediate launch pipeline, we've got about 150-odd million square feet of so-called development potential left over. Willing the lead through passage of time, some part of that potential will get enhanced because something or the other will be bought, some will also get reduced but something will be sold. But net-net, we believe that, that number will remain on slightly on the positive side. So look, the important point, which is that we're not compared to do anything. This geography, although our mix of geographies will give us the upside we continue to seek. That said and done. Whether we move -- NCR, I can safely say we will try our best to take advantage of all opportunities. We really don't look at Gurgaon or something. We look at NCR generally as a market. For various reasons, Delhi had its very tough sort of development environment, which hopefully will ease. And the Noida market for historical reasons, we were not present. We do look for opportunities to be present. So NCR will be a good market for us. North India more around Chandigarh will continue to be there. Mumbai, we are dipping our toes in the water. Let's hope the results are encouraging. So I think these will be principally the markets we will remain focused on. And our rental businesses, it will be more widespread, but I'm not really feeling the need to do the development business as of right now in new geographies. I think these geographies will keep us quite busy and actually quite engaged here. Another important point of our company, it may be considered downside that we are over focused. I keep hearing and reading sometimes that myopic in our vision. We are not diversified. We are not this, we are not that. But I'll be very frank with you. That's why we are sitting here. That's our strength. We every day, keep thinking about the same damn thing all day long. And everything we do has a lock on effect on the next thing. So imagine if I go to say Mumbai and I go to Thane, I pick up a 10, 15-acre parcel I built it. I'll go there. I'll make my money, I'll leave from there. Nobody will miss me and it's at end of it. Here, what happens is. I built my parcel. Because of that, the kids need a school, I built a school. Because of that, the effectiveness goes up, somebody better people come there offices come there and so on and so forth. So this whole cycle, this virtuous cycle we'll be able to create is really the reason why actually we are sitting here. If you go to Mumbai also, go anywhere else, I'll tell you guys, the guys who are creating larger communities, who are remaining deeply invested in those communities at times looking stupidly so are the guys, who actually are succeeding and, in my opinion, to succeed. I don't really quote names, but it doesn't matter. I mean, I'm not saying anything negative about anybody. But so let's look at overall reality. They have created that project in Mumbai, remained with that project, continue to create that project. That's his gold mine. That's his name, that's his reputation. That's so on and so forth. You can do 20 buildings in 20 different locations. But it will never have that impact. So anybody who has maybe [ Lodha ] is doing with [ Palabas ], takes a sizable chunk, remains deeply invested. It starts thinking 20, 30, 40 years lives through it, takes the good times, the bad times, stands with the customer. That is where the real reputation comes. That's where the real financial upside comes. So I think don't take it as a negative. I think it's a strong positive that companies are actually deeply focused on what they're doing versus kind of spreading their bets. All over the place. Ideally, you should have many communities in many places, that's a pipe dream. If we get a chance to do larger communities somewhere else, it certainly will consider. Small, small things in random locations. They make money arithmetically, but that's not part of our thinking now.

And sir, just one question. We met about 3 years back, we had a similar -- and this question was asked then also about you entering the mid-income. So you have clarified at that time that you look mid-income and affordable separately I understand affordable may not be your area of interest. But on the mid income, because there is one perception today. There are a lot of launches that have happened in Gurgaon have been all INR 5 crore, INR 6 crores, INR 7 crores plus and there is a dearth of maybe a segment, which caters to INR 2 crore, INR 3 crores, INR 4 crores kind of ticket size. So our thoughts around you kind of trying to plug that gap, if at all, that exists, yes?

Basic point [Foreign Language] firstly your memory is good of 3 years back. [Foreign Language] but anyway. The fact of the matter is that we are fortunate that we've got land parcels, which allow us to operate in the better segments. Surely, you will not expect us to take those land parcels and underprice them and put something which is inappropriate, okay. The real question, therefore, comes up is do we have land parcels, which are possibly in the premium segment? I think Badal did indicate we've got premium segments, and we have the land parcels, okay? And we remain committed to that business. We enjoy that business. I mean the so-called middle class customer is actually our bread and butter. The company has been built by then, hopefully, growing through a growth journey of improving their life and their incomes and hopefully buying different properties from us at points of time. That's our business. They also are the backbone of our office business because the office business is predicated on good, strong salary talent, educated talent. So we always take steps to encourage that talent. We today got a couple of projects. Maybe if you do have some time or you want to anyone if you want to come back separately, please, you're most welcome to. We've struggled with one point that how do you make something which is affordable for a certain income segment remains viable for the developer. Most importantly, remains operational of a certain quality and safety later on. Okay. So anybody can make a 40 floor building. But if it's not maintained the lifts are bad, God help us, we are worried. So we have done a project recently. It's almost getting delivered now, which is called Garden City Enclave, Devinder has done it. It's a bunch of low-rise houses, 4 floors, very, very sort of carefully and consciously planned within a price point, which we sold, correct me if it was INR 1 crores or something was the price point. So INR 1.4 crores, INR 1.5 crores, we sold it at, not too far back, about a couple of years back, I would say, okay? These are units of about 1,600 square feet. But we worked very hard in 1,600 square feet. They get a 3-bedroom, they get car parking, they get all the amenities they need, they'll be an nice community center and so on and so forth, et cetera, et cetera their quality of life, in my opinion, do quite nice. Today, that unit, again, because it's a nice unit has escalated in value. Maybe today, I don't know what's the number for that unit. So 2.4%, 2.5%. So now we offered at 1.5%, the market has priced it at 2.5%. But we are in that segment. The point on that segment basically mean that would we like to repeat that? Would we like to go and buy more land to do it and so on and so forth? Again, that's where the question comes in is, I think, since you've talked about 3 years back, I'm going to repeat what I said 3 years back, I still say it today. Our constraint is our ability to successfully execute, okay. The ecosystem around us of execution, unfortunately is not keeping pace with the needs of our industry, maybe other industries. And therefore, what we need to be careful about is that while all these dreams are predicated on my ability to turn it around with lower margins, somebody behind me has to back me up to accept my sort of proposition and deliver and construct the product. That is, to be honest with you, a problem today at large scale. So when you are again confined to a few good contractors, a few people who follow certain quality and safe practices, then you have to ask yourself a question that where would you like to put those people here. Okay, would you like to put them to build your office buildings or would you like to put them to build certain residential projects? Or can you spare them for the so-called tighter and tightly priced projects? So this is the problem we are facing. If the construction industry here kind of opens up that the delivery problems start going away from your mind, possibly companies like us can look at doing this. But right now, you have to keep your fingers crossed. It's a risky play. So we are, in the immediate future, going to utilize our lands, what we have. I don't think we'll go looking for new opportunities in that sector.

This is Puneet here from HSBC. You talked about keeping your sales level to the levels that you achieved. Should we predicate this to the execution challenges or are there any other thoughts that you'd like to add?

No. I think largely, yes, you're right. Execution challenge is something. I think the important point, which was mentioned earlier was that we declared a launch pipeline a while back. We are not debating from the launch pipeline. I think it to our opinion, we've tested it that does it satisfy us? Does it satisfy our ambition? The answer is yes. The odd project could come in. I mean, I'm not ruling that out. But largely, we feel this is a fair balance of the execution capacities, our own ability to focus and our comfort level of the kind of customers we are seeking here. It may be slightly conservative, I hope so, and maybe a new contractor shows up, maybe a new opportunity shows up. I think in the next 5 years, there will be some changes, hopefully, positive, but nothing significant.

So one should assume that pace of launches would be largely what you delivered in the last 1 year, 2 year?

Pace of sales, yes. Pace of launches is lumpy. So what's going to happen is that as already mentioned, in the 5-year story, we're already kind of 35% in there, we'll be another 15% as per our estimation. So we are going to be slightly hopefully god-willing front-ended in our launches. Whether that result being front-ended in sales or not, time will tell. What we have told you right now is be prepared for a flattening of the sales curve. If it gets front-ended, good for everybody. Launches will tend to get a little bit front ended, 50% being done soon, and hopefully, the balance in the nearer future and not at the end of this period.

Understood. And secondly, real estate as an industry and your company also seen 2 cycles, '14 to '20, and then '20 to '25. Is there something that you think you would like to do differently so that you can insulate yourself from these kinds of cyclical impacts?

Basically, I think that's why we did the 10-year test, we did the longer test. To be honest with you, it all firstly depends on what period you measure what. But the good news is that over time, and I'd say this for real estate in general, certainly specifically for our product, which we measured. It stands at test of time, okay? It's not something which people go and say "I doubled my money." That's good news for a week or 2 weeks. It's also not that I've lost all my money. So if you prudently invest, you prudently invest, you are as good or as bad depending on the time of the day and the month in terms of any other asset class you invest in. So real estate, we believe, should be something which should give you safety, should give you comfort. But unlike many other asset classes, it gives you one big advantage, and that's what we hope the DLF difference is. Hopefully, you tend to enjoy your investment. You can live there, you can enjoy it, your family can enjoy it. At the same time, your money is safe and growing, okay? So that is what I think is the proposition we would like to give. That period of time you mentioned. What happens in period of time was, it was a period of excesses there. And excesses only get removed by extreme pain here. China is going through it as we speak today. This is the first time I think where India has been ahead of China. We've been through what they are going through now. It's just when people get carried away, things come down to earth here. Even if you ask me, I don't think it is an industry problem, okay? It's not a demand problem. If somebody else asked me earlier, cycles at this -- it's not a cycle. Consumer was ready to buy. Consumer was scared to buy. Consumer felt that if I go out and give money to anybody, in certain cases, including DLF. My money has gone down the tube. The customer confidence was completely destroyed, okay? Very well-known, very established name, which I'll be honest with you, even I recommended to many people. I knew them personally, and I said, yes, please go ahead. They're good guys. Time proved otherwise. So that is why I feel that it was a problem caused by the industry of its own making. We -- our intent on scoring self goals every 5 to 10 years, I can't say. But, otherwise, the consumer demand was only sort of staggered. And therefore, it came back a bit stronger when the industry post RERA became a little safer place to be. So like everything else, there will be periods of exuberance followed by some periods of correction. I don't really think we're going to go through that deeper correction because people have got a bit wiser now, yes.

Understood. Anything you would like to do differently in the next 3, 4 years versus what you did specifically in the last 3 years?

No. I think the message that we want to give through this presentation, boring as it may be, is we actually want to remain intensely focused on our netting. We actually, kind of we all spent half the day thinking about what else different can I do and we are wasting our time here, okay. I think we spend that time just doing what we should be doing, we'll be much better off here. So this industry doesn't have -- I was recently in Dubai, there's nothing path breaking out there. There's no product I can say, Oh My God! It's not that. Some nice things are there. I appreciate that, but that's about it. So it's just doing what we have to set out to do. Innovation levels are lower. Really, what we have bought as DLF to the table, which I think has been well appreciated by my customers, by hopefully the industry. I do also believe even global players have taken notice is not too much of a change on the hardware, but an intense focus on the software, whether it's customer focused during the process or the post-sales living experience here. And I think that's where we are really seeing the money as we are seeing, the profits we are seeing, the price premiums we are seeing. I really don't think we can really say it's because my concrete is better than his or my this thing. It's just that people enjoy living in our communities because of the soft services, our commitment towards them, and the prestige that has given them. So today, there is some prestige to being part of living and building A or B or developer A or C. And that comes from the community and the way we run it. So we'll spend more time on the software services and keep working hard to improve them more and more and more, sometimes even at a cost attributable to us. But that's something which we feel is going to be the difference, not really the hardware. So if you want to ask me what we're going to change in the next 3, 4 years, just do more and more for the consumers living or going to be living with us.

Also, if I may just add sir, to what your point is. So what I've seen over the year -- over the last 4 years, real estate, residential real estate post COVID has become a priority. And I'm seeing the younger generation in my bus, I was addressing some of you. Earlier, the average age of purchase was about 38. Right now, that has come drastically down to about -- it's between 28 to 30. This is a new set of Indians or a new set of people who are coming into buying residential real estate. So the base has increased. So the cyclical nature that you're talking about, obviously, Chairman clarified regulations stronger this. But I think what I'm seeing over the last 4 years is the residential real estate has become a priority to own bigger, better, and that's what people are aspiring to do. And the younger generation is now [indiscernible]. A priority is for -- even for them is to change that thing.

This is Kunal from CLSA. So I just wanted to clarify, you said that you're going to be focusing more on the execution and sales are expected to remain steady at these levels. Do you think -- is it because the industry may take a breather after a sharp run-up in the last few years? And also parallelly what are your view on the prices across micro markets of Gurgaon?

Look, I don't think we've taken a breather or we're doing anything else. As I'm saying it, our cash flow is going to come in sooner. But I want to qualify it. I think Badal put up that slide. He is brutally honest, but the hard fact which I think all of you must realize is, and that's a question I think you guys may ask us one day, hopefully not today, but one day, all the money which goes in, goes into the RERA account here. So [Foreign Language] goes into RERA account. I can throw my weight around and say it's mine, but actually, it's not here, okay. So unless you don't execute, you don't deliver, you don't get the cash flow. But yes, we start banking the cash flow, number one. Our profits will actually get recognized with a lag. So we've done the sales booking here, great. We started the project wonderfully. But the journey is not over here. [Foreign Language] Why do we look at our industry as something different than any other industry you guys cover or your colleagues cover. You make a cement factory. So there you go and lay the foundation stone and about the contract and do a little bit of digging. Do you immediately start thinking about the second cement factory, [Foreign Language]. So simple fact, the journey has to be completed here. The sales bookings and all these are just the start of the journey. And I think that is what I want to just say that it may look like we are actually costing. But actually, our hard work has just begun. And we want to finish that hard work. If we have time available, we certainly will take out newer adventures. So that's what I just want to say that profits are yet to be realized, profits are yet to be accounted and booked. Cash flow is being realized, but cash flow is yet to be freed up. And we're on our way, but by no means would I like to say the journey is over and therefore, we start thinking about what's next year. That's my answer to your question.

And on the prices, sir?

Prices, we are enjoying good pricing. I think it's a respectable pricing. What this product slide we have shown you should tell you that there was a period where prices had got depressed because of the uncertainty conditions around the industry, as I mentioned. They came back stronger. But over time, they level out at a low teens type of price delta, maybe 10%, 15% here. So if the price points remain somewhere in the growth rate of, say, 10%, 12% generally, I think the industry is safe and we are comfortable and our margins will continue growing here. Rapid price increases beyond this point would be a little uncomfortable, somewhat unnecessary, any price increases which start stagnating also would be a cause for worry in the case of inflation. So far, so good. So we are feeling that all the new launches, which we shall be doing will reflect reasonable price increase in appreciation, but nothing untoward. At least from our end, we want to be a push to change pricing drastically.

Sure. And my second question was on incrementally our strategy, right, what we've seen in the areas that we sold certain significant amount, then we took a pause and now we'll restart the sales sometime in the future. For your incremental launches, especially in Privana and subsequent phases or even sector 63 would we adopt a strategy what we have been doing in the last 2 years where we'll sell out if the demand is there? Or would we take calibrated pricing hikes and do calibrated sales based on those pricing hikes? is there some strategic change there?

There's no strategic change. I think it depends how you look at issues, okay? If I had one product, I had one project, and I had 5 or 7 years ahead of me. I would certainly sort of make sure that I sell x percent at time of start, 20%, 15%, 20%, then I'll sell another 10%, 15% when I start construction and so on and so forth. I will play the cycle. I'll try to get maximize my realization. I'll try to time it to the need of my money, and I earn my money, hopefully, intelligently and smartly over, say, 5 years here. The difference what I want to point out to you guys is it's not a particular project. It's a type of segment we operate in. So when we look at Privana, we don't look at Privana West South. So if somebody says Privana is all sold out, the answer is no. Part of Privana is all sold out, but in totality, Privana is yet to be fully sold out. So -- what we're really looking at is these are all incremental blocks in the larger story. The larger story for us remains not Privana West or South, but remains Privana. So we know that we are intelligently mining Privana. Our price in South to West has changed. God willing price from West to something else will change. And over time, we'll keep improving the product. We'll keep adding value to it. And therefore, when you sit back and say, did Privana get sold in a period of time and in batches, the answer will be yes. And did you collect your due share of upside each time you went out to market? Answer again, hopefully will be, yes. So that is the difference, which I want to say that we look at something in larger chunks, just that offering itself 100% sold out is because that offering is a part of the larger chunk. If I had nothing else to do, I would not go out and sell more. Dahlias why we're kind of slightly sort of pausing for breath is because touchwood, the response was more enthusiastic than we expected. So we just kind of -- we don't have -- we don't want to pump that pipeline too much. So we're just kind of saying, we went a little bit ahead of ourselves. Let's just try to get some healthy balance. So that's why we've kind of eased up a bit. But the intent is to sell Dahlias also at the right point at the right time in a manner, which is as soon as practically possible.

Sure. And my last question was on -- if you go back to that slide on your development of land, the potential development of land, almost 85 million square feet is in the premium segment category. And when you try to tie that up with, say, the asset class wise returns that you have given that premium segment for DLF projects has actually given the least price CAGR in the last 10 years. So how should we look at monetization of this 85 million square feet? Like in terms of time lines, would you strategically push it further out so that, that 85 million square feet, that becomes more mature to launch it as luxury. How should we look at the time line of this 85 million square feet?

Very good question. I think the message, 2 points I want to tell you. Firstly, I think the point is that the revaluation of the TOD, TDR potential has resulted in significant delta and increase, almost 40 million, 50 million square feet even after accounting for prudency in certain areas. When I kind of put that into perspective, what I want to say is, last decade development potential has kind of come back by change in entitlement and norms here so, in a good way, I'm back to square one, okay? The second side is that, yes, today, we've accurately reflected that this is what it can fetch as it stands today, okay? But the journey will continue and our firm hope is that portions of this 85 million square feet do tend to become the luxury segments and maybe 1 or 2 of the luxury segments become the ultraluxury segments, okay? I think I was given an example earlier in the day, Privana, which you all have seen today. Till 4, 5 years back, we were sort of excited about. And I'll tell you a real-time case. So we were actually looking at Privana to become a plotted colony and launch it as a plotted colony, okay. We have got all the approvals, everything was done. In fact, some development also, we had done and all that it was done. This is not too far back. I think must be, Devinder correct me, 8, 9 years ago, not too far back, as a plotted colony. That time, our realization of this land as a plotted colony would have been net of costs incurred, et cetera, would have been maybe INR 7 crores, INR 8 crores, INR 9 crores would have been considered a home run, extremely excited. Markets after that changed, started going down. We felt the need can be on this, we'll have to do some construction to hold it to create the habitation. So we actually went ahead and made a building, we made a model, not sort of small model, life size model and actually said what will it require to build something like where people will buy, will get our margins, et cetera. And I'll tell you this is how life is interesting, on a foolish thing, but we wanted the rare gardens of those units to be contiguous, so people can enjoy not little little lawns, but sort of nice paths to walk around and enjoy in all that. The laws at that time did not permit it. We tried our best, we could not get permission for them to remove those boundary walls legally. And therefore, we were so convinced that, that was not going to be a good product from a customer living point of view. We abandoned that idea and abandoned that project. So about 5 years back, we were kind of slightly despondent [Foreign Language] whether we'll make INR 10 crores [indiscernible] or not. God knows, because our thoughts were not working out, regulations were not allowing us. Fast forward till today, that number has gone up by 10x, yes, okay. Now what was therefore in the lower parts of the premium category now is possibly in the mid parts of the luxury category, okay? So that is a matter of luck, a matter of right timing, a matter of right product. And therefore, long story short, part of the 85 million square feet will certainly go through an upsizing experience. We've also mentioned in the slides, which you will see more closely, written in small print, but when you see it, some part of this will also not work out. I'm not want everything works out. So part will also be outright disposed. We've kind of mentioned that 5%, 10% of our land inventory will -- after careful evaluation will not meet the bid. So we do hope 5%, 10% will get sold out, 20%, 30% will get upscaled. And the balance also to be almost 30% in the number given plus, 30%, 40% is -- today, we are all offline a little bit high, it's not a bad number at all. And I do believe that a few million square feet a year of this type of potential in towns like Chandigarh, in certain other areas will continue, and the company will continue to profit from it. So I'm not really worried about a 30% plus number. I don't think it represents anything which is something which the company should not be aggressively pursuing. But I know it's going to go up over time because of all the efforts we've put in here.

This is Rahul Jain from Elara Capital. So just one thing on the Gurugram market. I mean, over the last 3 years, what we have seen some new entrants in the market, a few channel partners turning developers. Are there any practices in your observation that you're seeing would be concerning or raising red flags?

Well, I don't want to comment on anybody else. I'm not very familiar, but look, everybody has to try very hard. It's a natural evolution cycle. Sometimes land buyers become developers, sometime contractors become developers, sometimes brokers become developers, sometimes developers become bankrupt. [Foreign Language] I think they're doing the right thing. They bring energy to the business. I mean, I'll be frank with you. Sometimes they may be dreaming a lot, but that dreams are required because -- so I welcome those guys. I don't want to take names, but I'm familiar with a few of them which you are talking about. I wish them well if they can put it together, the industry always needs some new blood coming in and if they can bring it and become good quality developers more than happy. They have been with us, some of them for a while. Hopefully, they've learned from our experiences and they want to do some foolish things, and deliver to the customer and keep the customer commitment higher. So that's all I can say. I mean, it's a welcome step. I'm not going to say it's anything negative about it.

Pritesh from Axis Capital. Just a couple of questions. So first, on the bandwidth part. Last 3 years, we have seen one major launch or last year, we had 2 major launches. That's how we want to optimally utilize our bandwidth or there is a scope for doing 3 to 4 launches in a year. I'm not seeing a couple of launches in Privana together in 1 year, but we have now good land parcels identified in the city, which we can go for launch. 61 is there. So will there be a time in the next couple of years, where we'll see 3 to 4 launches in a year or we are happy to do 1, 2 major launch and optimally utilize our bandwidth at risk?

I think, at some stage, we'll move on to the next part of the presentation also, which is our RentCo business. I think you'll see that we are quite active in that area also. So as far as I'm concerned, the launches are more than 2, 3 because we are also starting and initiating significant sized rental projects. So as a company, we are geared up to do certainly 4 or 5 of them. It just so happens right now. Fortunately, both parts of our business are equally attractive and consuming equal bandwidth. But if tomorrow it comes down that we have to do 3 or 4 launches in the residential sector, I think you will see that happening anyway next year, in my opinion, because some approvals have kind of seem to have got bunched off and delayed. I hope they come through soon. So I think that number of 2, 3 [Foreign Language], big and small will take place in the development business itself and 2, 3 starts in the so-called commercial business. So we're geared up for that much.

Sure. And second, on the Delhi part, which you highlighted. So what kind of opportunity we might look at? Because whatever we have heard until now, opportunities are there, but largely on the mid-income side of far out Delhi. So, anything on the premium luxury, which are our forte, which we can look at?

Delhi main point is that all the land of any significance in better locations belongs to the government. So government has to do 2 things. It has to first losen this policy and make the development business attractive. And then secondly, has to make sure that the land is offered to it. It's almost impossible in Delhi to somebody to go out and get large parcels of land, et cetera, et cetera. Most of the factories in Delhi were closed a while back. Those lands didn't get sold around. But there will be those kind of opportunities, but they won't be in Central Delhi. But peripheral parts of Delhi, like where we have a Capital Greens project, et cetera, et cetera, I think more opportunities will come up. That area will start transforming itself. So that's where I think the action will like. Central Delhi per se will be a few, bulk of the action, I think, will be around industrial areas and some areas which hopefully the government brings to the market by some disposal process, whatever they consider fair and appropriate. Outskirts [Foreign Language] infrastructure and everything else will take some time. So yes, you're right, it will remain a little bit challenging for the immediate near term. Should we move on to the next quarter presentation, if it's okay, and then we can give you still a chance to recap at the very end of it if something remains or if there is any last question or something, please feel free.

Okay, we move to the second block, which we have talked about, which is the Annuity Business. The way we define Annuity Business -- again, we have almost 44 million square feet of operation area, almost 39 plus in office space and close to 3.5% on retail. It's a good mix. We have a large portion in Chennai. We have reasonable size in Gurgaon. We have got portions in Hyderabad. So it's a kind of reasonably well spread out. Like we talked about developed business, we have extremely strategically located land bank. We have created large and scalable integrated facility, which is world-class and fairly consumer-centric, I would say. So that has been our forte and strength. We have had a steady compounding business over the last 5, 6 years, whether it is rents or profits, and we'll see some numbers out there, and we seem to be aggressively investing for growth in for future as well. So if you look at key -- some references, key numbers, again, just to define, if I were to look at Annuity business, Rental business is office and retail. Then, we have a hospitality business where we run a few hotels, various clubs. And then you also have our services business, which is very, very complementary to more Devco and Rental businesses. If you look at the overall revenue, which is rental plus services and hospitality business, it's a INR 7,000 crore business for us, of which rental portion for the last year will be almost INR 4,600 crores. We have also given for reference what is the split between DCCDL and DLF. But, for us, I think the more relevant is you look at the INR 7,000 crore number as an overall bucket rather than where it is getting accounted for. This has delivered -- the revenue growth has been single -- low double digit and it has an extremely healthy over 20% PAT return over the last 5 years or so. We continuously invest in CapEx. There are several projects. We visited one of them called downtown in the morning. We talked about Heinz, which was right across the road. We have got one coming out in Chennai. Many of them are in advanced stages and will get kind of commercially operational, if I would say, rental yielding in the next financial year itself. Cash, again, continues to be our focus area, whichever business we consider, and this business also generates reasonably healthy cash flows consistently year-over-year. Net debt to EBITDA, we have got almost INR 18,000-odd crores of debt in this business was all put together, whether it's Heinz and DCCDL. However, our financial performance has been reasonably good, very, very steady across the years, and our net debt-to-EBITDA ratio is approximately 2.6 as on December end -- 3.6 as on December end, which to my mind is well benchmarked, and we are fairly comfortable with this number. To give a sense, we talked about 39-odd million square feet of the office portfolio, we are looking at adding another 21 million square feet for projects which are already under pipeline or planned for. This portfolio itself will become 60 million square feet. And we'll see a fairly sharper growth in the retail portfolio as well from another 4 million we look at almost tripling this number to almost 12 million over the next 5 years or so. These are the list of the projects whereby we say almost 8 million is already in execution and several of them is in the last stages, which is going to get delivered in the next year itself. Overall, if I were to look at this 5 years and all our projects kind of come out on try, we are looking at almost INR 10,000 crores of rental revenue by FY '30, plus/minus 6 months, 1 year or whatever, but we are looking at doubling our portfolio of rental business in the next 5 years with the projects which are there in the pipeline. As we say, we continue to invest to order -- in order to make this portfolio viable, we will have to invest in CapEx. We are looking at almost investing INR 20,000 crores, INR 12,000 crores in the DCCDL portfolio and INR 8,000 crores across rental and hospitality business in the DLF portfolio as well. So INR 20,000-odd crores ballpark number over the next 5 years for identified projects. In terms of operational portfolio, we have talked about 44 million square feet. This will -- the balanced portfolio after having completed the projects which are either thought -- which are in pipeline or which have been kind of already kind of defined in our mind, we will still have almost 60-plus million square feet available for future development. So my existing base end of 5 years, could be approximately 73 million and another 62-odd million square feet available for future development, and hence, we have enough and more in terms of land bank and opportunity to continue to grow this business even going forward. Commitment to sustainability. I think Sriram articulated this very, very well in the morning, and I don't think so I will come even close to what the way he kind of passionately articulated it, so I'll skip this page. There are glimpses of the projects which possibly are under construction and are going to get launched almost, Downtown is what we saw in the morning. Downtown Chennai, the next building is going to be launched sometime in the next quarter, not launched. It's going to get operational in quarter 1. And we have Atrium place, which is 3 of the 4 buildings are almost ready, ready for occupation in the next 3 to 4 months or so and the fourth building by end of this year. One thing which I missed talking about is our occupancy level. We are at almost 93% on weighted average basis across retail and office. Our office portfolio is at 93%, short 93%, if I were to exclude the SEZ portfolio, it will be almost close to 97%. Retail is healthy at 98%. All our new projects are almost 95% preleased -- 95% pre-leased. So I think we are in a reasonable place for all the new projects which are going to come for occupation. Key takeaways. We have 44 million square feet -- billion square feet available. We are going to add -- it's going to go up to 70 million square feet in the near term. We continue to focus on cash. Our CapEx will be almost INR 20,000 in the next 5 years, so yielding a INR 10,000 crore rental return -- rental number by FY '30. Another aspect is the net debt to EBITDA. We continue to look at almost a ratio of 3% of net debt-to-EBITDA as a steady state, and that's what we kind of aspire to be at this point of time.

Can we take few questions? If there are any questions on RentCo business, you can take it right now.

This is Puneet from HSBC. So in the RentCo business, on Slide 39, for example, we saw Cyber City has a potential of 28, and we've built 15.5. Is there a risk that there could be disruption in the existing business as you unlock this potential by maybe tearing down some older buildings to build new ones? Should one think of it that way or is there land available on which you can build just new high-rises?

Yes. I think, look, no, none of this takes into account tearing down anything, okay. This is all well planned for and the land is available for it. So what I think the message, which I wanted to give to everybody here was that DevCo is very big, growing, exciting, but the huge, huge development potential sitting in our RentCo itself here. That's -- I know -- when you benchmark us to many other rental players, Delta today is that most REITs or most of other things have 80%, 90% of their portfolio is 9%, even by law in some cases, unfortunately, to be mature and about 10%, 15% to be developable. In our case, the important thing is crazy as it sounds, we are about 33% mature, and about 67% yet to be matured. So the growth outlook even in a steady business, like our rental business is actually enormous, and that's the message I think we want to do. I'd be frank with you when we started doing these numbers very carefully, we also saw them 4 or 5 times because they were a bit startling, okay. And that's the real message there that to your question earlier also that, as much as the development business offers us lots of opportunities, so does the rental business. And between embedded rental growth because of the quality of assets and time, the new additions will keep this business growing at a pretty strong clip. And as we are estimating, certainly, the rentals would definitely, hopefully, I mean, let's say, double in a shorter period of time and that kind of pace can be continued. Large portion of this land have been kind of, what large means the land has been paid for. So hopefully, the addition to the bottom line in cash and in terms of profits will be proportionately larger. This by itself is a very exciting business. The development business is sort of adds much more to it. So this is why we today actually took the opportunity to present our businesses in 2 different ways in which we look at it. And that's a deviation in a quarterly meeting. Unfortunately, we are so high bound by so many things, time included and dos and don'ts that you really can't get beyond just updating numbers. This time, I think the message we want to give you is we've taken some liberties to present the data not as strictly as accountants would want it, but as businessman would like to see it as investors hopefully would like to see it. And the important thing is that we've got 2 strong complementary businesses, both demanding our time, both giving back a fair degree of return. Collectively, between the two, I think we see good things happening. And that's why when somebody asked me questions on development business, I want to kind of measure it with this that both sides are keeping us busy for now. And hopefully, this trend will continue.

And between the two, which one do you think gives you a better return on your capital and time? And how do you allocate capital between the two?

It depends on time to date, 8:00 in the morning, RentCo looks good. By 12 in the afternoon, DevCo looks good, okay? Because there's 2 sides to the same coin, okay? It's like you guys all in the financial business. [Foreign Language]. So it all depends on what drives you and what measurement you want to adopt for that discussion, okay? So I can justify either one of the two, so can you. Collectively, it's a very nice mix to have. That development gives you the chance to generate the cash to actually fund the CapEx for this one. And then over time, this will give you the cash to go back and fund further development. Most important is we can create the communities, part of the Gurgaon story, part of other stories is wherever employment generation is taking place, residential business will do well. And wherever residential business does well, retail will do well. So this is going to be there and in Gurgaon questions keep getting last. But the quantum of employment generation and quality employment generation, which is taking place, God-willing is quite high, and that's how the demand for apartments and other services is taking place. So both things are very strong, and this has its own sort of path. And therefore, as I said, one time I had mentioned earlier, last time, maybe 3 years back. I was looking at about 10 million square feet as being our kind of steady-state number from a comfort capacity happiness point of view. I think between the 2 businesses, we are nudging ahead of that number now. We are happy to do so. But this itself is a 4 million, 5 million square feet per year delivery kind of thing. So that energy could have been devoted to DevCo if this opportunity wasn't there between the two. It's a very good opportunity. And a lot of this land gives us reasonably good paybacks.

And do you worry that this 4 million to 5 million square feet that gets delivered, the city has the potential to absorb it over a foreseeable period of time? Or would others have to vacate to fill up in your place?

That is true. Some people will have to vacate. Hopefully, they vacate for better times and better things. Some people will also move on. So that's the way things are. But so far, I think we are cautious that as Badal mentioned, that we do watch our pre-releasing very carefully. So far, the output is backed up by good pre-leasing commitments. And hopefully, that will continue. If it doesn't, I'll be honest with you, we will slow down. So, this projection, which we are giving you is based on a comfort factor that these things will tend to happen. Beyond that, what pace will be adopted will depend on various factors. But I think this overall pace should be maintained.

This is Parikshit from HDFC. So just on the CapEx, you have highlighted INR 20,000 crores of CapEx will give you incremental rental of about INR 5,000 crores, which is a 25% cost to -- yield to cost. So is it the right number? I mean, it looks to be very high?

Yes, the CapEx or the yield?

Yield to CapEx. Yield to CapEx of 25%?

So I think, to be honest with you, I think this is a run rate. The actual numbers on a steady-state basis will be slightly better. So we are -- I mean those benchmarks are what we start with, but hopefully, we'll be slightly better in terms of return to cost. But remember, in our case, we are fortunate right now to ignore land. So if you ignore land on construction, we certainly feel that money we spend, we should get back, hopefully, in 3 years, in some cases, it becomes 4 years.

Second question, I think morning when discussing with Mr. Khattar. So he said that the concentration of the clients now, I think the tower 7, there were about 4 clients and looking to lease about 1.2 million. So one is the concentration risk seems to be increasing. Then we have this 40% coming from U.S. and then Europe over 40% and then balance India and then the trade war going all around. So do you think that there was a period when there was a pent-up demand, which is not getting absorbed and then there will be again a pause and the way the trade war pans out. So there could be a significant slowdown hitting in. And with high concentration, if some of these clients move out and again, we look at a very kind of a model which was earlier, most stable where we have more diversified clients and then we have built a concentration and then this thing comes out, so that could bring in a big disruption?

No, the first point, I don't think we are out to select clients, okay? So we take all clients as they come. We welcome small guys. We welcome big guys. If it just turns out to be 4 of them, great. If it turns out to be 12 of them, wonderful. We are not doing anything here. Our only focus slightly is that, we don't want to overexpose ourselves to the shared office space industry. So we kind of keep that number a little bit in mind. But beyond that, as long as we're dealing with corporates, corporates who also would be significantly investing. Interesting data, now I'll tell you, I was visiting some of our clients the other day. Their spend on their office interiors is actually slightly more than my spend on the building, okay, slightly more much more. So are they deeply invested or am I deeply invested in the question mark, okay? So look, if some disaster takes place, nobody can say anything about it. But otherwise, I think it looks good. And we are catering to all kind of clients, big or small. And it's just that many of our smaller clients have become big. Today, I don't think anybody is kind of running away from anything. I don't think there is pent-up demand. In fact, if you want a statement from me, I think demand is accelerating and not kind of catching this thing. And last but not the least is that, look, at the end of the day, any question, anyone of you may have, we have the same question. What if this doesn't happen, what if that happens, what if this happens, what if that happens? The answer simply put is, have the financial strength to see through that period. You could do nothing about it, okay. What will happen tomorrow, I can't change, neither can you. But we must be able to be around day after that. So the fact is that's why a prudent financial policy will just put you in the worst-case situation to a period of in-force rest. That's about it. So some building may live empty and vacant for a year, 1.5 years, 2 years. If it is not killing you because your balance sheet can take it, that's about the worst that can happen here. My colleagues and competitors may not have that luxury. So finally, who will remain standing, time will tell. So I'm quite comfortable with the way things are going right now. The pace is good. And we also feel that retail as a sector in India still has a fair exploitation potential, and anything in offices will more than get made up by, #1 is retail. And I think the Indian office scenario also should not be ignored. If the economy comes to anything, what everybody talks about, we will start needing our own GCCs or our own offices, #2. And thirdly, I think I'd say the most important thing to all of you guys is for us, we have identified this is DevCo, and this is RentCo. That's our view. That's our thought on what we feel is the optimum utilization of space today. It's not mandated by anybody. We are very careful that we do not indulge in some things which are only this or that. We also are very careful that we don't go in locations where if somebody doesn't go and open up a pharma lab in that place, you're doomed because nothing else can happen, okay? No, we don't do that. So worse comes to worst, one fine day. Worst comes to worst will be that you convert them to residential opportunities, okay? It may happen sometime, markets may take a turn for this thing. If it so happens, we are okay with it. So that's why I'm trying to say that all our lands below our office or retail buildings are quality lands capable of any use. So we've thought about the downsides quite a bit, conservative, but I don't think such pessimism is really necessary as of now.