RUSTOMJEE was incorporated on 6th November 1995. It is one of the prominent real estate developers (in terms of absorption in number of units) in the micro market that they are present in. As of June 2022, the company has completed 32 projects, has 12 ongoing projects and 21 forthcoming projects across the Mumbai Metropolitan Region (MMR) and has developed 20.22 million square feet of high value and affordable residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects, all under the Rustomjee brand.

ABOUT THE COMPANY – RUSTOMJEE

As of 30th June 2022, the company had developed 20+ million sq feet, 14,000+ homes, 280+ buildings , 2 mega townships and has 34+ million sq feet in pipeline.
Some of the notable projects include Rustomjee Elements, a large gated community in Upper Juhu, Mumbai; Rustomjee Paramount, a signature complex in Khar, Mumbai; Rustomjee Seasons, a 3.82 acres gated community in Bandra Annexe, Mumbai; Rustomjee Crown, a 5.75 acres land parcel for high-end development at Prabhadevi, South Mumbai, consisting of three high-rise towers.
As of 30th June,2022, the company had 1,542 channel partners who represent the Rustomjee portfolio to their customers and drive customers traffic to the company’s projects. In addition to the in-house competencies, the company also leverages the expertise of external 189 specialists to match wide range of operations, such as architects, interior designers, landscaping experts, engineers and building services consultants for the development and management of projects.
The company commands a market share of 12% in Khar, 8% market in Juhu, 11% in Bandra East, 6% in Thane and 10% in Bhandup in terms of supply (in units) from 2017 to 2021 (Source: Anarock Report). Whereas Keystone commands a market share of 28% in Khar, 23% market in Juhu, 11% in Bandra East, 14% in Virar, 3% in Thane and 5% in Bhandup in terms of absorption (in units) from 2017 to 2021.
In the past, the average time period required for the company for its Completed Projects, i.e., the date of the commencement certificate/ taking over of the project, whichever is later, to the date of the completion certificate/ occupancy certificate, was five years and four months.

The company enters into joint development agreements, joint venture agreements and redevelopment agreements with landowners, developers or residential societies as a part of its business model. The company has entered into 57 such agreements till June 30, 2022.The completed (20.22 million sq feet) and ongoing projects (9.26 million sq feet) constitute ~90%+ from JDA/JV/ Redevelopment. For forthcoming projects of (26.37 million sq feet) of projects the contribution from the same is ~77%.
The company categorizes residential developments into affordable, mid and mass, aspirational, premium and super premium categories based on price at which the units are sold to the customers. Below is the mentioned category and price range across which the company operates.
Super Premium:₹15 crore + , Premium: ₹7-₹15 crore, Aspirational:₹3-₹7 crore , Mid and Mass: ₹1-₹3 crore & Affordable: less than ₹ 1 crore.

KEY OPERATIONAL INDICATORS

*Pre-Sales for any period refers to the value of all units sold (net of any cancellations) during such period, for which the booking amount has been received.

*Collections refers to gross collections from sale / lease of units excluding indirect taxes and facility management charges net of cancellations.

SECTOR OUTLOOK

Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021. By 2025, it will contribute 13% to country’s GDP. Emergence of nuclear families, rapid urbanization and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. (Source : IBEF)
With improvements in socio-economic parameters, India’s per capita gross national income (‘GNI’) has increased at a CAGR of 8% over fiscal 2013-2014 to 2021-2022, which in turn is expected to drive demand for real estate development.
As per the census figures and the Ministry of Housing and Urban Affairs, number of households have increased from 191.96 million in 2001 to 246.69 million in 2011 which shows a 28.51% increase in number of households. Out of these households, home ownership, i.e., owned houses has increased from 166.35 million in 2001 to 213.53 million in 2011 which shows an overall increase of 28.36%.

India has witnessed reduction in overall household size in the past few decades, primarily on account of an increase in nuclearization of families. With an increase in nuclearization of families, more households are being added, resulting in an increase in consumption and demand for housing.
The Mumbai Metropolitan Region (MMR), Pune, Bengaluru, Hyderabad, the National Capital Region (NCR), Chennai and Kolkata (“Top Seven Indian Markets”) recorded absorption of approximately 2.37 lakh units in 2021 as compared to 1.38 lakh units in 2020.
New launches have jumped by 185% from 127,959 units in 2020 to 236,693 units in 2021.The unsold inventory across the top 7 cities in India has remained stable on a yearly basis i.e., for 2021 (638,192 units) as compared to unsold inventory in 2020 (638,015 units).

Housing sales in Q3 2022 stood at 88,200 units across the top 7 cities against 84,900 units in Q2 2022 – a slight quarterly increase of 4%. This increase can be attributed to the healthy new supply in Q3 2022 across top 7 cities. Residential sales registered a 41% yearly growth compared to the home sales during the same quarter preceding year.
Available inventory in the top 7 cities stood at 6.30 Lakh units in Q3 2022 as against 6.25 Lakh units in the second quarter of 2022.
Mid segment homes priced between ₹40 Lakh – ₹80 Lakh comprised the highest share take-up in Q3 2022, accounting for a 36% share of the overall new launches.

COMPETITIVE LANDSCAPE

PROMOTER BACKGROUND AND SHAREHOLDING

Mr. Boman Rustom Irani is the Chairman and Managing Director of the company. He is the president of Confederation of Real Estate Developers’ Associations of India (CREDAI)-MCHI and the President Elect of the Confederation of Real Estate Developers’ Associations of India (CREDAI)- National. He has over 26 years of experience in the real estate industry. He has been a director on Board since 2005.

The promoters and promoter group of the company holds

96.71% stake in the company which includes:

Boman Rustom Irani – 46.91%
Percy Sorabji Chowdhry – 23.46%
Chandresh Dinesh Mehta – 23.46%

OBJECTS OF THE OFFER

The company proposes to utilize the Net Proceeds towards funding the following objects:

Repayment/ prepayment, in full or part, of certain borrowings availed by our company and/ or certain of the company’s subsidiaries
Funding acquisition of real estate projects and general corporate purposes.

RISK FACTORS

Its real estate development activities are geographically concentrated in the Mumbai Metropolitan Region (‘MMR’). The land for development within MMR is limited, expensive and subject to intense competition.
As on 30th June 2022, the completed and ongoing projects have 114 unsold units out of 13,062 units and 97 units refers to those units for which occupation certificate has been received and unit has been sold to the customer, but possession is not yet completed.
Significant increases in prices, including that relating to increase in taxes and levies, or shortage of disruption in supply of construction materials could adversely affect estimated construction cost and timelines and result in cost overruns for the company. There are no long-term agreements with construction materials suppliers and the same is purchased on the basis of purchase orders.
The company provides guarantee to lenders for financing provided to the subsidiaries, Joint Ventures, Group companies and any failure to repay such loans availed, will affect the business of the company. As of 30th June 2022, the company has provided guarantee worth ₹292.4 crore for repayment of their outstanding principal amount of indebtedness.
As of 30th June 2022, the company has contingent liability of ₹158.4 crore which majorly comprises of Income tax matters, Indirect tax matters, Other matter and stamp duty.

FUTURE ROADMAP

As of June 30, 2022, ongoing Projects had an aggregate Saleable Area of 6.26 million square feet and aggregate Developable Area of 9.26 msft, and the Forthcoming Projects had an aggregate estimated Saleable Area of 26.43 msft and estimated Developable Area of 26.36 msft. The below table is for Developable Area in million square feet.

STATEMENT OF PROFIT AND LOSS

STATEMENT OF ASSETS AND LIABILITIES

As a part of the growth strategy, the company intends to increase their focus on projects in the mid income and aspirational market category. And focus on redevelopment and slum rehabilitation projects, which requires lower upfront capital compared to direct acquisition of land parcels.
As on 15th October 2022 the company has secured and unsecured debt of ₹1,065.5 with an outstanding amount of ₹833.3 crore. Borrowings of the subsidiaries amount to ₹857.6 crore of which ₹688.5 crore is outstanding. Historically, the company has had negative net worth.

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RUSTOMJEE – IPO