Page 35 - Kolte Patil AR 2019-20
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Sheet.  Besides, the cost of   available to the rest of the   critical mass, it bought out   will infuse 10% in the land;
            long-term debt declined by   sector.              the financial interests of   the partner will infuse 90%;
            160 bps to an average 10.5%                       its partners, resulting in a   after a minor coupon, profits
            during four years; net debt-  Partnerships        larger economic ownership   will be equally shared.
            to-equity ratio strengthened   The Company maximised   of projects, strengthening   This judicious approach
            from 0.53x to 0.35x during   value through the prudent   surplus visibility.
            this period.             utilisation of net worth                          made it possible for the
                                     and declining deployment   A high ~75% equity     Company to outperform
            Discipline               of debt. Instead of the   ownership of the promoters   returns available through
            Over the years, the Company   conventional approach   in the Company indicates a   competing asset classes and
            strengthened the integrity   of mobilising additional   high commitment that can   the best benchmarks within
            of its Balance Sheet     net worth through equity   make it possible to mobilise   those asset classes.
            through judicious capital   dilution, the Company   funds (equity or debt) should
            allocation in profit-accretive   inducted financial partners   a situation warrant.
            business development     for specific projects. This   Post-Balance Sheet
            and differentiated deal   approach helped accelerate   development
            structuring.             project construction and                          Big numbers
                                     completion on the one hand   The Company emerged as
            The Company focused on   while it enhanced value   the first Indian real estate
                                                              Company to enter into an
            asset-light development   on the Company’s Balance   agreement with a global  352
            where the land was       Sheet on the other – without
            provided by the real     equity dilution. Following   real estate developer during   C Crore, aggregate net
            estate partner; besides,   project completion, the   the coronavirus pandemic.
            the Company resisted the   profits were shared in a   The Company (through   worth enhanced in
            temptation to increase   prescribed ratio. This non-  its subsidiary Kolte-Patil   the five years ending
            proprietary ownership of   dilutive approach helped   I-Ven Townships (Pune)   FY20
            land banks, selecting to   the Company protect overall   Limited) entered into an
            focus on efficient property   shareholder interests while   agreement with Planet
            development instead. This   the accelerated project   Smart City, a UK-based   0.53x
            approach enhanced the    completion enhanced      real estate developer for
            efficiency of the Company’s   financial efficiency.  the land monetisation of a
            financial resources, kick-                        portion of Sector R10 in its   Gearing, FY17
            starting a virtuous cycle.  Over the years, the Company   Pune township project Life
                                     selected to partner global   Republic for C91 Crore.
            The Company focused on   and Indian financial
            addressing the growth                             R10 will be jointly developed  0.35x
                                                              The land parcel in Sector
            coming out of the fast-  institutions that provided
                                     the Company with an
            moving mid-priced real                            by KPIT and Planet Smart   Gearing, FY20
            estate segment, increasing   immediate (and prospective)   City with a profit-sharing
                                     capital pipeline. The
            sales velocity.                                   approach; the project is
                                     Company engaged financial   likely to be launched in
            The Company maintained   partners of the pedigree                           Perspective
            its credit rating at CRISIL   of Portman Holdings,   FY21. The agreement    “We have a protocol
                                                              will provide the Company
            A+/Stable (Outlook revised   JP Morgan, KKR, ICICI                          of maintaining our
            from ‘Positive’ and rating   Ventures, Motilal Oswal   with liquidity for land   debt-to-equity ratio at
                                                              monetisation; it will enable
            reaffirmed), arguably    and ASK, among others.
            one of the highest in the   These partners possess   the Company to engage   0.5 times. Currently
                                                              with a global partner who
            sector, making it possible   deep financial resources                       we are at 0.35 times,
            to mobilise debt at rates   and a knowledge network.    can enhance the Company’s   so we have a buffer in
                                                              process discipline, practices
            lower than what they were   As the Company enhanced                         hand equivalent to C125
                                                              and governance. Kolte-Patil   Crore. The result is that
                                                                                        we have a mindset of
            The coming together of culture and discipline                               managing our debt at
                                                                                        C100-125 Crore plus/
                                                                                        minus during the year
               Quick Sales      Low inventory   Low             High                    and that too within the
                                                gestation       collections             limits of our 0.5 times
                                                                                        debt-to-equity ratio,
                                                                                        which should protect
                                                                                        our competitiveness
                                                                                        across all market
               Quick execution   Stronger       Low leverage                            cycles.” – Gopal Sarda,
                                technology                                              Group CEO

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