- Who invests the capital which is required for the construction ? It is invested from AIL’s books ? – Most of the construction cost is borne from sale proceeds and some initial approvals cost and JD payment is borne from balance sheet. which as per their interviews all their projects have become cashflow positive.
- In 6/12 projects under development are 100% AIL owned (no JD), so we need to have some understanding on Q1. Who will invest the money for construction, who owns the land currently, is it owned by AIL ? – In all the projects taken by Arvind on JD, construction cost is to be borne by Arvind and major cost will be funded from sales (verified in a call with company)
- In the other 6/12 AIL’s share is also north of 50%. Who will invest the money for such projects ? – Major from sales and initial approvals cost from balance sheet
- Arvind probably is a good brand in Gujarat. But at all India level, I doubt it has any of the quality factor’s associated with it, like Godrej brand. – Arvind as a brand is mostly famous for denim and textile – they are slowly launching “Arvind” as an individual brand which will be than used for many of its products including real estate like what godrej has done for all of its products
- Next few years companies fortunes are tightly tied to upland properties fortunes as 50% of projected revenues are tied to it. Feels risky.- Yes that’s true
- Perception that “Beyond Five” project is only residential plotting and very little needs to be done probably isn’t correct. Check our their plans – checked with company – its a plotting project wherein company on its website has given some model designs of bungalows or row houses which they can build for u if u r ready to pay for it http://www.arvindinfrastructure.com/about_beyond_five.php#horizontalTab22
Also fact that their proportion in the project is 45% probably means, they will realize a revenue of 45%*600 cr = 270 cr. and have to spend on all the amenities listed above from that. Probably the land owner get’s the 330 cr. as cost of land and no more expenditure form his side. That’s how most JD works. – All the figures of sales written in the presentation are of company’s share and not total – so 600cr revenue means 45% of total and hence approx 1300 cr is total revenue - In Godrej properties case, the group land is owned by Godrej Boyce (Group company). Cost of the project development is also to be borne by Godrej Boyce. GP get’s a 10% share of revenue mainly for marketing activities, hence providing higher visibility of earnings without putting to much at stake. So we need to understand what’s the equation for AIL on these parameters. – In arvind’s case apart from the given info its nt known what structure they will do for their other land parcels. The intention of management is to separate real estate business into other entity and let a professional team focus on it and they focusing on their core business. Its written in the management discussion part of 2015 annual report.
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