“Ganesh Housing Corporation Limited

Q1 FY2023 Earnings Conference Call”

July 19, 2022

ANALYST: MR. RAJAT GUPTA - GO INDIA ADVISORS

MANAGEMENT: MR. RAJENDRA SHAH – CHIEF FINANCIAL OFFICER -

GANESH HOUSING CORPORATION LIMITED
MR. NEERAJ KALAWATIA – VICE PRESIDENT FINANCE -
GANESH HOUSING CORPORATION LIMITED
MR. RAVI – CORPORATE AND FINANCIAL ADVISORS -
GANESH HOUSING CORPORATION LIMITED

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 Ganesh Housing Corporation Limited
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Moderator: Ladies and gentlemen, good day and welcome to Ganesh Housing Corporation Limited Q1
FY2023 Earnings Conference Call, hosted by Go India Advisors. As a reminder, all
participant lines will be in the listen-only mode, and there will be an opportunity for you to
ask questions after the presentation concludes. Should you need assistance during the
conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr.
Rajat Gupta from Go India Advisors. Thank you, and over to you, Sir.

Rajat Gupta: Thank you Michelle. Good afternoon, everybody, and welcome to Ganesh Housing
Corporation Limited Earnings Call to discuss the Q1 FY2023 results. We have on the call
with us today, Mr. Rajendra Shah, Chief Financial Officer; Mr. Neeraj Kalawatia, Vice
President, Finance; and Mr. Ravi, Corporate and Financial Advisor.

We must remind you that the discussion on today’s call may include certain forward-
looking statements and must be therefore viewed in conjunction with the risks that the
company faces.

We now request Mr. Rajendra Shah to take us through the company’s business outlook and
financial highlights, subsequent to which we will open the flow for Q&A. Thank you and
over to you, Sir.

Rajendra Shah: Thank you Rajat. Good afternoon, ladies, and gentlemen. We thank you all for joining us on
this call today to discuss our Q1 financial year 2022-2023 results. We are happy to
announce another quarter of robust performance amidst the ongoing macroeconomic
challenges. Quarter one of financial year 2022-2023 so a cumulative 90 bps of repo rate
hike by RBI, we decrease the home purchase affordability however Ahmedabad market
remains largely affordable with the positive change in sentiment towards home ownership,
which kept the housing demand intact.

On the operational front, we have registered a sale of Rs.99 million. We have not launched
any new projects this quarter and the last two launch projects have not yet been completed.
As a result, we could not book any additional sales on these projects as per accounting
standards. Hence our sales have been slightly lower than Q 1 of financial year 2021-2022.
As of June 2022, we have no inventory in ongoing projects also ending June 2022. We have
unsold completed inventory of 0.09 million square feet, which we value at Rs.450 million.

In Malabar 3 project, we have received RERA approval and permission to commence

construction in February 2021. During 16 odd months of actual construction post-these
approvals, we have managed to complete 80% of the construction in this project across six

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towers. In Malabar Exotica Project, we have received RERA approval and permission to
commence construction in July-August 2021. During this 11 odd month period, we have
been progressing ahead of schedule. In both these projects Malabar 3 and Malabar Exotica,
we have booked 100% units in both these projects. We are using precast technology of
construction, which is cost effective and helps us to achieve faster and better-quality
execution. We expect to complete this project ahead of schedule.

I will now briefly touch upon our financial performance during the quarter and year gone
by. Our revenue came in at Rs.427 million for quarter one of financial year 2022-2023
versus Rs.793 million in same quarter last year. Our EBITDA grew at 20% year-on-year
and came in at Rs.251 million for quarter one of financial year 2022-2023 versus Rs.210
million in quarter one of financial year 2021-2022.

Led by operational efficiencies, our margins have improved significantly at 58.5% for
quarter one of financial year 2022-2023 versus 26.5% for period ending quarter one of
financial year 2021-2022.

Our PAT for quarter one of financial year 2022-2023 came in at Rs.131 million versus
Rs.54 million for period ending quarter one of financial year 2021-2022 registering a
growth of 143% year-on-year.

Our debt has reduced significantly from Rs.3393 million. Ending financial year 2020-2021
to Rs.1060 million for the period ending quarter one financial year 2022-2023. As of this
board meeting bit, the debt has further reduced to a two-digit number in terms of rupees
Crores which is 71.8 Crores or 718 million through prepayment. This is a significant
achievement. Ongoing and upcoming projects in key location of Ahmedabad provides us
with great comfort and visibility of cash flows, which keeps us on track to deleverage
further, we have been diligently improving and delivering our balance sheet in over the past
few years. We have reduced our long-term debt by 84% in last three years and a quarter. On
the finance cost front, our cost of borrowing is stable at 13.8% as on quarter one of financial
year 2022-2023.

Coming to our future growth prospects and guidance, the sales of houses in Ahmedabad
witnessed a strong recovery registering a 95% growth in the first half of calendar year 2022.
The sales volume in the residential real estate market has almost reached level scenes in
pre-COVID 2019. Ahmedabad has traditionally been a price-sensitive market and
developers have been mindful not to raise the prices despite of increasing input cost for
items such as steel and cement compared to price increase across other metro cities.

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However, during the last quarter, the real estate developers have taken a conscious call to
increase prices by 5% to 10%.

As mentioned previously, we continue to have a strong and robust project pipeline of four
residential and two commercial projects. These projects are being launched in a phased
manner with two projects being launched in over next 6 to 12 months, three projects being
launched in next over 12 to 24 months and one project being launched in next 24 to 36
months. We continue to target developing 8 million square feet of infrastructure and special
projects like SEZ township etc., in next four years with total sales value of Rs.30000
million.

At this stage, I would like to reiterate the fact that over the last four decades of our existence
we have never had to lower our expected sales or pre-launch prices hence we are confident
that this will continue to create growth and prosperity for our end customers.

With this, I request proceedings to be handed over Rajat.

Rajat Gupta: Michelle you can open the floor for Q&A.

Moderator: Thank you very much. We will now begin the question-and-answer session. The first
question is from the line of Sourabh Gilda from Motilal Oswal Financial Services. Please
go ahead.

Sourabh Gilda: Sir just wanted to check like we do not have any inventory in Malabar County III right.

Rajendra Shah: Yes, everything is sold.

Sourabh Gilda: Any reason why we are going slow on launching the Exotica, first like you mentioned that
the launch will happen in next 6 to 12 months. Is there any trigger that you are waiting for
to launch the project or any other statutory reason behind that?

Rajendra Shah: See on the existing project both Malabar County III and Malabar Exotica, they are running
on a fast scale construction that is a one target area where we are pushing our construction
completion to preponed. Second is on the planning side of the two projects. There has been
some planning changes in the ongoing project, which is undergoing some changes as well
as some of the projects where the government intervention is needed there already our team
is in touch base with the government clearances where it is taking some sort of time, so
accordingly we have kept some buffer in terms of launching.

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Sourabh Gilda: Can we expect that in this year itself?

Rajendra Shah: Sorry.

Sourabh Gilda: Will it happen maybe in the second half of this year fair to assume that?

Rajendra Shah: Yes, that is our target.

Sourabh Gilda: Okay thank you so much. That is all from my side. All the best for the year ahead.

Moderator: Thank you. The next question is from the line of Naman Bhansali from Perpetuity Ventures
LLP. Please go ahead.

Naman Bhansali: I wanted to ask the first question on the revenue; it has declined this quarter, but what
would be the revenue guidance for this full year and what are the projects from which sales
will come given that we almost has a very minimal inventory?

Rajendra Shah: In terms of the revenue piece, see on a year-to-year basis, the revenue is looking on the
lower side because there were a sizable inventory was there from the completed projects
during last year, which contributed to the sales and corresponding year cost was also
allocated at that point of time, but as compared to that year and now in the current year this
quarter, on the revenue say it might be the season on compared to the lower but on the
EBITDA side and PAT side, we have improved our numbers as compared to the last year
because of that reason only.

Neeraj Kalawatia: As far as the guidance is concerned, we normally do not try to give any forward-looking
guidance, but I think the way things are going not just those the projects which were
launched last year would be completed this year itself, so we do expect sales to be booked
as soon as they are completed and handed over that will improve the revenue significantly
apart from the ongoing revenues, which have been happening. We do believe that the year-
on-year targets which were there for the last year versus FY2023 would be significantly
higher, the way things are going on in Q1 and the way we see the Q2 and Q3 coming forth
and especially the last quarter when these two projects would have been completed and a lot
of sales would have been booked on that, so we do believe that it can improve significantly
in the current year.

Naman Bhansali: Okay, understood. My next question is on the units that were sold during the quarter. How
much of the price appreciated for these units and as compared to what we were selling these
in previous quarter and I wanted to know that where the cost being optimized that led to

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significant operating margins expansion and how would this continue for next couple of
quarters?

Rajendra Shah: I am coming your question one-by-one. One is that you say in terms of the price increase in
our undergoing project, we have already increased the price to the extent of 10% to
accommodate the market engine because the market has also adapted this strategy to
increase the price on this part. Secondly in terms of the margin which you said about, we
see traditionally our margins have been higher on a year-over-year basis and largely this
was mainly the reason was a lower cost toward the land acquisition, which has been
traditionally in our book historically and last two years were typically the odd years where
there was a hangover of the inventory because of COVID and this IL&FS crisis and
because of that carry forward thing this impacted our overall margin in the book and that
issue get addressed from the current year itself. On now quarter quarter-on-quarter and
year-on-year basis, you will see again the margins being restated like the earlier years also.

Naman Bhansali: Okay thank you.

Moderator: Thank you. The next question is from the line of Amresh Kumar from Geosphere Capital.
Please go ahead.

Amresh Kumar: Thank you Sir. Just wanted to understand the debt trajectory of the company going forward
because your debt is down by 85%, 90% in the last few years and now you are going to
have a new launch cycle, so what do you think this time the debt that trajectory will be and
how it will differ or how it will be similar to the last time.

Neeraj Kalawatia: A few aspects on this, one is that their debt had been very high a couple of years back and
there has been a conscious call to bring it down quarter-on-quarter year-on-year and the
company has achieved that extremely well in the last quarter having come down to a mere
71, which is only 10% of the peak debt less than 10% of the peak that they had ever. The
debt yes as the new projects would come in and there are certain plans, which in the SEZ
and all wherein there could be a debt, which can come in but it does not appear that it will
ever go to those levels. There is a conscious call to ensure that the equity levels are always
below one and the way the cash flows are coming in from the existing project as well as the
new planned one, it does not appear that the debt will go down go up to those 794 levels
ever again. It may not be remaining at 61% and or 71% forever, but whenever there will be
any debt which comes in along with will come the profitability of the new project. It will be
planned in such a manner that will have a very good debt equity ratios and debt EBITDA
level.

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Amresh Kumar: Right now, the real estate cycle looks good but things can go bad, so what will you change
in case things are not as smooth as they are now. Can you elaborate what happened last
time, so that we can understand that it will not happen again, just a little bit of clarification
and an elaboration would help us.

Rajendra Shah: Largely what happened was that the debt accumulation happened because of two major
projects, which we launched early in 2015 where these two projects taken together was a 2
million square feet of construction and somehow this project got impacted because of first
is demonetization then subsequently there was a RERA implementation came and GST also
came into the picture in the one year in-between a two-year period of time, so this two year
period time had actually created a negative segment for sentiment for the real estate market,
but as per our philosophy we always stick to our targeted completion date, so irrespective of
even if there is a slower movement in the sales side during those periods, we have to borrow
from the institution to complete our construction within that timeline itself. Because the
high cost of construction for those two projects, the debt got accumulated, but post first
COVID wave, we are now very much free from that inventory also and we are substantially
now exiting from that project. Almost our debt level from that project is now zero. I think
that was a learning from us and that period was also impacted by the government regulatory
impact also. There are changes in the external environment, which were beyond our control
but we achieved our mission of completing those two projects within our given timeline and
the project did not get delayed.

Neeraj Kalawatia: I would like to add to that just to give you the clear answers in terms of how the future
might look at, the way the land costs have been in the books and the way it is going to be
monetized in the future, it does not it appear that we will ever have those situations of losses
or having lower margins and all that. The land is the major ones in any other project site.
All the new project which are going to be announced now for which the land is already
acquired and sitting in the books at a cost which is very, very low and therefore the
profitability should be ensured in the coming days and moreover right now all the work,
which is going on in terms of the cost the way the cost structures are being built up and the
way the selling is happening especially as you see there is a Malabar 3 and 4 you already
have seen that and we do believe that this kind of a sales the way the projections are and the
reports market reports say the visibility of these housing projects and all that continue to be
robust as far as Ahmedabad and the Gujarat cycles are concerned. At least till the time we
finish off these projects which will definitely sell the way Malabar 3 and 4 are sold, it does
not appear that we will ever have such kind of a situation in the near future for sure.

Amresh Kumar: Got it Sir thank you for this. I just wanted to put my two pens observation here. When
things started looking good in real estate cycle then the land purchases come back and

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nobody minds them, but then it creates a problem for them forward. Every time this cycle
repeats again and again because this land purchases…

Neeraj Kalawatia: Currently what we are seeing is the cycle has got a absolutely upward trend and market is
pretty bullish because we are hardly seeing any inventory of the completed project in the
market. The demand side is pretty higher as compared to the supply which is happening in
the market. So far the current trend definitely it is looking good future is definitely
unpredictable which we cannot say when…

Amresh Kumar: Let me ask you a pointed question how much will you spend in land purchases over the
next few years?

Neeraj Kalawatia: This is an ongoing process. There is nothing like any amount is earmarked for how much
land is to be acquired. This land acquisition, land selling all are opportunity-based
decisions. Largely, we accumulate land in an area which remains outside the scope of
development at particular period. Our holding period and accumulation period ranges from
the five to ten years.

Amresh Kumar: Thank you so much.

Rajendra Shah: Just to add to what mirage has said last three years, three and a half years history, somebody
says we have hardly done any land acquisition however we are continuously assessing or
looking at proposals of land acquisition. We are active in that area but we are very selective
as far as any new land purchases are concerned.

Amresh Kumar: Got it Sir, thank you so much.

Moderator: Thank you. The next question is from the line of Ritu Panag from Growth Capital. Please
go ahead.

Ritu Panag: Thank you for taking my question. I wanted to know about the strategy on commercial
development and are we looking to develop a portfolio of rental properties?

Neeraj Kalawatia: We are targeted this 8 billion of the portfolios, which we will be building over next five
years there is a sizeable portion which will be coming from the commercial side also largely
this portion will be in our SEZ portfolio, which will command a good rental piece also. The
bigger advantage with us in terms of SEZ is that this particular project will be in the heart of
the city. On a competitive side also, there will be nothing who can lead us in terms of
competition.

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Ritu Panag: How was the demand from IT sector, are we seeing any inquiries which are related to them?

Neeraj Kalawatia: With the development in the gift city happening, these sizeable numbers of companies are
coming into gift city which are largely from the financial sectors and then their foreign
exchange points are there and exchanges are there which are setting up their unit in gift city,
which is creating a good boost for the other surrounding sectors and IT already the
company has started coming we are also exploring a lot of new alliances also which can
keep up our SEZ portfolio, so as things are under discussion still, we will be sharing those
information at the appropriate time.

Ritu Panag: My last question was about the kind of cliental we are expecting in the SEZ segment.

Rajendra Shah: Largely it will be the IT or ITES players, but what kind of cliental which kind of corporate
will be coming that will be difficult to say at this point of time. It will be too early to
comment on both things.

Ravi: I would still like to add, it is unknown frankly that there are many, many hundreds of IT
companies in Ahmedabad, Ahmedabad and Gujarat have not been known for IT as much
right, but little is known about so many very, very good companies already existing here
where they all want an infrastructure, which can really be helpful to them so we also believe
that while the new companies and the large companies will come over from outside, there
will be a lot of consolidation happening of all these companies in the IT SEZ that we look
at. We do see a robust growth. Yes, names are little difficult to say at this point in time but
we do believe all this will happen because with the kind of infrastructure that is being built
up there by Ganesh Housing, it has to attract all the players who are otherwise they are in
small, small pockets at different places all over Ahmedabad.

Rajendra Shah: Just to add to what Ravi just said, the kind of infrastructure and kind of SEZ what we are
going to build, it will be world-class environment what we will be able to provide. Any IT
companies, which you or which anybody kind of reckons with, they will not be hesitating in
opening their offices in premises what we are going to offer to them. It will be a solution
which will be a world-class solution what we trying to provide.

Ritu Panag: Got it, thank you Sir thank you so much.

Moderator: Thank you. The next question is from the line of Seema Bajaj from R Consultant. Please go
ahead.

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Seema Bajaj: Thank you so much for taking up my question. I basically wanted to know your view on
real estate industry as a whole like now the new challenges are coming up like rising
interest rates and many other challenges are there, so I just want to know your views like
about for next three to five years on the real estate industry.

Rajendra Shah: The trend is now completely bullish. If you see post this first COVID wave, the demand is
on the upside because significantly in Ahmedabad market if you talk about the city specific,
the launches and the sales have doubled from the pre-COVID era to the post-COVID era
and in terms of the absorption also is the sizeable things are increasing. Now in terms of the
price rise all these things are happening, like we see the construction cost and something are
getting increased but they are being absorbed by the market also, yes, recently if you could
go through one of the top reality research firms, which published their report Ahmedabad
market has been the most resilient market in terms of absorption of the price and among the
top eight city in India, Ahmedabad commanded the highest price increase of around 14% on
year-to-year basis on reality, so that itself talks about the absorption power of the market
and the way the current trend is there. The supporting infrastructure is giving boost to the
overall housing demand in Ahmedabad like we say if we talk about the Ahmedabad City, it
is not only the top SME market of India but it is a major industrial and pharma hub and
major infrastructure development is happening gift city development is happening, metro is
coming in a big way across the city and more so two big sports enclaves are also coming up
in Ahmedabad, for which the Ahmedabad is going to bid for the future. So that is kind of
the plan which is happening in Ahmedabad all this supporting development will give a big
boost to the demand side and if you compare prices in Ahmedabad to any other equivalent
city or metro city, you will find always Gujarat being a cheaper market compared to these
cities, so way we do not see the demand cycle will get a U-turn even in the past also the
historical data also say whenever there is any sluggish in any of these metro cities, the
Gujarat market especially Ahmedabad market has remained stable in terms of the sales and
price.

Seema Bajaj: Thank you so much for such elaborate answer. As a follow-up, I would just want to know
about the luxury market in Gujarat and Ahmedabad space. Could you give some light on
that?

Rajendra Shah: In terms of the luxury market Ahmedabad is definitely is coming good way like we see
there is a good absorption power in the luxury segment in Gujarat. The one reason is
definitely, which I talked about earlier this being a major industrial and trade hub and the
SME market surrounded development whichever is happening that is actually giving a good
absorption power in the market. Second is that if you see the price wise, luxury prices in
Gujarat will be somewhere equivalent to mid affordable prices in a metro city like Bombay,

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so that way also the affordability is pretty better and also the holding power of the
developers in Gujarat is far better because they release the inventory in a phase manner
rather than releasing the entire inventory in one shot, so that also gives them a better
margin.

Ravi: Seema, that actually is a good question because it is so much is happening in that segment
in Ahmedabad and very quietly that too. Every other day we see new luxury flats being
announced, so now there is a concept of vertical bungalows like people do not want to
really go into those bundles, but people are really ready to believe ready to pay for 6, 7
Crores and beyond that also for apartment, which would never have thought about it just let
us say three years back. Yes, you touched upon a very important aspect it is not just those
affordable housing and the normal ones, but the luxury market also seems to be picking up
very well in Ahmedabad.

Seema Bajaj: Thank you so much that was all from my side. Thank you.

Moderator: Thank you. As there are no further questions, I would now like to hand the conference over
to management for closing comments.

Rajendra Shah: Participants, I am Rajendra Shah on behalf of Ganesh Housing Corporation Limited I thank
you all for showing interest and participating in conference call. See you again in next
quarter. Thank you so much.

Moderator: On behalf of GoIndia advisors that concludes this conference. Thank you for joining us and
you may now disconnect your lines.

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