The Phoenix Mills Ltd. — Call Transcript 2022

Jul 2, 2022

Corp. Office: Shree Laxmi Woolen Mills Estate, 2nd Floor, R.R. Hosiery, Off Dr. E. Moses Rd. Mahalaxmi, Mumbai - 400 011 Tel: (022) 3001 6600 Fax : (022) 3001 6601 CIN No. : L17100MH1905PLC000200

July 02, 2022

To,

BSE Limited

Phiroze Jeejeebhoy Towers Dalal Street, Fort, Mumbai- 400 001

National Stock Exchange of India Limited

Exchange Plaza, Bandra-Kurla Complex, Bandra East, Mumbai- 400051

Security code: 503100 Symbol: PHOENIXLTD

Dear Sir/Madam,

Sub: Transcript of Investor Interaction

This is further to our letter dated June 30, 2022, wherein we had informed the exchange about the conclusion of our Investor Interaction at India Real Estate Forum organized by Kotak Securities on said date, please find attached herewith the Transcript of the said interaction.

The enclosed Transcript is also available on the Company’s website and can be accessed at https://www.thephoenixmills.com/investors

You are requested to take the same on record.

Yours faithfully,

For The Phoenix Mills Limited

Digitally signed by GAJENDRA MEWARA DN: c=IN, o=PERSONAL, title=8111, GAJENDRA pseudonym=c42d4d0db269bd9fbd3456ea9ace42f82ff80f2bde400c4844b971c2fccf4d38, postalCode=400103, st=Maharashtra, serialNumber=49378de56da0d80fb5c142ce8 99a699091a435361972864adc8efef4f782311 MEWARA f, cn=GAJENDRA MEWARA Date: 2022.07.02 14:02:51 +05'30'

Gajendra Mewara Company Secretary

Encl.: As enclosed

Regd. Office : The Phoenix Mills Ltd., 462 Senapati Bapat Marg, Lower Parel, Mumbai 400 013. Tel : (022) 2496 4307 / 8 / 9 Fax : (022) 2493 8388 E-mail : info@thephoenixmills.com Ÿ www.thephoenixmills.com

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The Phoenix Mills Limited Interaction at Kotak Real Estate Forum hosted by Kotak Securities June 30[th] , 2022

Murtuza Arsiwalla:

Hello everyone and welcome to the final day of our real estate forum. As most of you know, I am Murtuza Arsiwalla your host and moderator for this event. I'm backed by my colleague Pratik Barsagade. Before I introduce our opening speaker this afternoon a quick word on the format - delegates please ensure that your display name includes your first name, surname and your company name, else this system will shut your access. I will be happy to take your questions and invite you to post them in our chat box or raise your hand over the next 40 minutes. I will try and take as many as I can. The Phoenix Mills story is one that I know all of you are familiar with and are keen to know more about, so I am delighted to introduce to you Anuraag Srivastava, CFO of Phoenix Mills. Anuraag has over 25 years of experience in various sectors and geographies and at Phoenix Mills he is responsible for driving the company’s overall financial strategy, deployment of capital, unlocking shareholder value, deciding future fundraise strategies, mergers and acquisitions, and digital transformation. Anuraag, welcome to our forum today. I would offer you the floor to put out certain opening remarks on Phoenix Mills in particular and the retail landscape in general before we get on to further questions, over to you Anuraag.

Anuraag Srivastava:

Thank you Murtuza. It's a great pleasure to be here and interacting with the forum. I think retail is back with the bang and we are seeing phenomenal growth in all our formats i.e. our retail outlets as well as hotels, commercial offices, leasing space, etc. So clearly India has put Covid in the back burner and all of them are now trying to get back to the normal way of living and some amount of wealth which is accumulated over the past 24 months of staying at home or working from home is now available for spending or for getting back on track with the light. So we are quite hopeful that this will continue as a trend and we are in a good space to monetize that.

Murtuza Arsiwalla:

Thank you Anuraag, I understand you've joined Phoenix Mills more recently, but if you could share the experiences of the organization at large coming out of the last two years of the pandemic. What have been the key learnings from these past two years and what gives you confidence that the retail business is here for the long haul.

Anuraag Srivastava:

Yes, a good question. You rightly said that I have been on board for about seven months, but there was a continuous interaction with both Atul and Shishir and some members of the management team over the last almost six or seven months before joining and this was my main question that we are in a consumer facing business and the business has literally stopped right now; so what is Phoenix doing as well as, my own observations of coming on board. I

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think “trying 24 months” is putting it very lightly. I think we went through situations which nobody had envisaged. There were no precedents, there was no playbook to what to do in these sort of situations. There was a lot of noise on what to do, what not to do, the government coming up with regular updates, circulars, and as you know with some of the states where we have a large presence, the government itself was very slow in opening of the malls. But I think the company and the management team decided to do what we know how to do well, which is looking for heads down. We look at things which we control rather than the external factors, and then get on with our business. I think we evaluated the entire business model. We had a significant retail construction portfolio underway and substantial office expansion that was planned pre Covid. We were clear that this part of portfolio should continue and we will see to it that it goes undisturbed. So this was what was internal. Externally, we looked at opening trends in the other parts of the world specifically what was happening in China etc. and realized that this is not the end of humanity as we call it. Things may not even change that drastically; this is a temporary blip, and we strongly believe that, sure, some parts of consumption will disappear, some part will go online for the time being, but that's a natural progression of business, and it happens over a passage of time in any case. The other thing is that as compared to some of the other developed nations, organized retail in India is very low penetrated even as we speak. This is a clear opportunity for companies like Phoenix Mills. This is the thing to go ahead with; organized retail and modern retail is going to catch up, and this opportunity was evident for us; and we decided to capitalize on the opportunity. In fact, we decided that we'll double down our model of creating the malls. As you know, our malls; whichever mall which we look at, are the center of the town where a lot of activity takes place. We have seen it across all our developments, but quickly, sort of recapitulating the key characteristics of this model- we believe in creating large destination malls in city center location. Each of our malls has great connectivity to multiple public transports and that gives us an inherent advantage. The retailer mix in our malls -straddles convenience, luxury and bridge to luxury. On top of that, there is a huge space is allocated to entertainment and experiences etc. We look at places where the market is unpenetrated, where there is limited or no competition or alternatives to a mall coming up at that size and scale. We take pride in managing our assets well, which reduces operational headache for retailers. They just need to open their place of business and do business. A dense, relevant and rich catchment surrounded by premium luxury residential projects grade A offices; I think if we put all this together, this is another incentive for people to come and open places of business in our malls. As you know we strongly believe in multi-use, mixed use, development of a project site. So I think that densification further increases consumption, so these are few of the items which are part of our strategy and we said we are going to develop further on that. Just on the malls itself, I think we decided that we are going to push our boundaries and since we are creating city centers, we said, why not make them grander or larger. If we create a place like that, people will come to shop, people will come to open their businesses. We also look at as I said earlier, that our mall in the future will not only be a shopping haven or a shopping destination. It will have concerts, performance theaters, spectacular events, a variety of F&B offerings and even places like ice rinks. The focus would also be on architectural splendor or architectural marvel. I mean,

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as you and most of the audience knows, malls in India are not just shopping places as in West or in other parts of the world. They are an outing for the family over the weekend or generally a go to place for everybody. So we believe that an integrated offering of retail F&B and other such experiences would drive footfalls, and that's what we drew as a strategy. Coming back to the business performance and you mentioned that are we confident that the retail is back etc. So our malls have bounced back strongly, as I said in my opening remarks. We have seen that April and May 22, they are at about 30% or there are about from April and May 2019, which was the pre Covid period. So there's a strong comeback on the demand on April and May; June is seeing a strong growth trajectory and that trend should continue. Surprisingly we've also seen enhanced retailer interest in taking a space in our mall, while our malls were very large to start with, we found it increasingly difficult to accommodate everybody and hence the idea of making a grander or larger mall. While the FY22 Covid period was one of the toughest periods, during this last year itself we had gross retail leasing of 4 million square feet which is a fantastic achievement by our leasing team. About 1300 outlets were leased out. It is our constant endeavor to keep delighting our customers. I think the business is back and the customers are coming back to malls and we are committed to take this journey forward.

Murtuza Arsiwalla:

Anuraag Srivastava:

And then at that a point that you kept mentioning in your discussion about making bigger, larger, grander malls, Phoenix Mills by far has amongst the larger malls in every city that you're present at if I may take on average 1 million square feet, right, we have seen some malls in India which are built of the 2 million square feet mark, and in my recent interactions with some of your peers, some of them have shown an interest of building a mall for almost about 3 million square feet. Any take on what would more grand really be. I mean the way I was thinking of it, and maybe it's my personal observation, a million square feet to cover in today’s time is also hard, 2 million square feet harder. I'm not sure whether we have the kind of retail interest or people for 3 million. Just sort of get your sense of what according to you is the right size of a mall or is it dependent on specific sort of micro markets in the West or in more developed markets you may have seen even larger sort of malls, but just getting a sense of how Phoenix Mills really thinks about the rightsizing of the mall asset.

I think from our perspective and our experience, as I said, if you look at our malls at many points of time, we found it difficult to accommodate even some of the marquee retailers. I mean there were people who were doing business and they were doing it really well, and even on an increased rent, they wanted to stay on. So that's one point of data for you. Second thing is I think when you talk about competition, I think it's just one player who is talking about it to 2 million or 3 million square feet mall. Most of the malls in the country which you see are less than a million square feet. I think only seven or eight malls which are above 1 million square feet, I maybe sort of here or there by one or two. But as I said, we create a mall not just for shopping, we also create a mall where it's an entertainment center, a good F&B place, a multiplex, there are concerts happening over there etc which drives footfalls, so I never said it's a shopping destination, I just said it's a destination center. I think that the right size mall in

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my view would be between about 1 million to 1.3 million square feet. And that should take care of most of the retailer interest and take care of no cannibalization among brands etc.

Murtuza Arsiwalla:

Anuraag Srivastava:

Murtuza Arsiwalla:

Palak Shah:

In the past I have post this question as well. I have seen Phoenix Mills acquire certain under construction malls. Indore and Lucknow being the case in point where you took over assets which are half way built and took upon the onus of completing those malls and we've already seen what you've been able to do with the Lucknow property. Would you be open to the idea of acquiring operational malls or even a chain of operational malls and what for you are the key considerations before you were sort of proceeded such acquisitions.

You're right, the two malls which we acquired in Lucknow and Indore were under construction malls. So I’ll just for the sake of a bit of repetition, but I'll just reiterate that we look at creating 1 million square feet plus malls which are city center destinations. We always strive to create value accretion of shareholders. So we look at projects in excess of a pretax XIRR of 20% plus. So that's one of the big consideration that if we're looking at a property, we're looking at creating something which should accrue value to our investors. The other important factor, if you consider for a mall is location i.e. prime location in metro cities, big cities, etc. We take a lot of feedback from the retailers on which are the upcoming shopping or which are the upcoming consumption cities in their view where they would like to be present, so it's a partnership it’s not just Phoenix going and creating a mall and then sort of scouting for tenants. So it is sort of a co-build plan of saying that ok, these five cities are of importance and let's go over there. What kind of surrounding catchment is there? Is it a premium catchment? Is it a place where a lot of people come or are likely to come. We have learned over a time to only go to places which have existing infrastructure, not future infrastructure. We tend to stay away from those because it's India and we don't know when the future infrastructure is getting delivered. So we tend to stay where there is an already existing infrastructure and what is the existing and upcoming future potential and intensity of the competition in the market. I think if we look at the current malls which are available, there are very few retail assets which meet this criteria, which are existing running retail assets, and even if there are, the owners of those assets are not in a sale mode at the moment. So we scan and we continuously look at deals to acquire but I don't think there's any significant portfolio available, but we'll be happy to evaluate the same if any good opportunity comes up by now.

Thank you Anuraag. I see Palak Shah having raised the hand from Infina. Palak please go ahead with your question.

Thank you for taking my question. So firstly, you mentioned that there’s been a recovery across the board or at least on the retail consumption side. So I just wanted to be wanted to ask whether this is a recovery specific to Phoenix, given that there's a limited visits to the start of this year, limited visits to the mall or it is more broad based across market?

So the question is, is it just pertaining to Phoenix malls as recovery or if there's a general uptake in the economy is that

Anuraag Srivastava:

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Palak Shah:

Anuraag Srivastava:

Palak Shah:

Anuraag Srivastava:

Palak Shah:

Yes sir

I think by conviction I can speak about my malls i.e. Phoenix Mills malls for that matter. But when we speak to retailers etc, I think there's a gradual increase in consumption itself. We publish consumption data very transparently and monthly consumption data on our website as well. So you'll see from the consumption and this is I think, reflective of how the retailers are performing or how the brands are performing. I think there is a general overall increase across our malls in terms of consumption and I tend to believe that this will be the case in same measures across their other outlets also, though I'm not sure.

So secondly, you mentioned about now adding more malls, so would this be more specific to a metro cities or you see Tier 2 and Tier 3 towns also seeing an increase demand for mall size of a million plus square feet.

Ok, so internally when we evaluate a city or when we evaluate an opportunity we don't distinguish between a Tier 1 and a Tier 2 city. We distinguish between a Tier 1 and a Tier 2 opportunity. For example, we consider Indore or Ahmedabad to be a Tier 1 opportunity, because there is very little competition and there is a huge requirement for this kind of a mall which can become a city center. So we evaluate it in that way and I've sort of covered on what factors we consider when we look at the malls. Our current malls if you see we have two malls which will get delivered shortly before Diwali that is Indore and Ahmedabad and two more malls coming up in Bangalore and Pune. I think over a period of time we are building malls in Calcutta, which is our first mall in Calcutta our first entry into Calcutta. We have acquired a parcel of land in Surat which we again think with the diamond bourses moving from Mumbai to Surat and Surat being a very nice commercial minded city, I think there's a lot of opportunity for retail over there. We continue to look at land parcels in seven or eight of identified cities and look at expansions over there. We are also expanding our Phoenix Palladium flagship store, so over a period of time, the retail area in Phoenix Palladium will develop. There is new area being created and of course the Project Rise which comes up also has retail presence over there. Just in numbers, I think 700 thousand square feet was the size of Phoenix Palladium before any expansion we have added about I think 200 thousand to 300 thousand; 200 thousand is already operational, another 200 thousand will become operational next 12 to 18 months’ time and another 300 will become operational once Project Rise is in place. So we constantly look at expanding our current malls. I think we will also look at expanding the Whitefield mall. We have a small expansion in Pune, Viman Nagar mall as well, so we continue to look at expansion of our current malls. There are about 9 or 10 cities identified which we think are very good centers as of now, out of which we have sort of tapped two or three of them. And this will be our growth journey going forward in terms of cities.

So just on the rental side we saw a bit of negotiations that happened in favor of the retailers, now with normalization of the trade, do we expect them to go back to the old terms and conditions, or we'll have a bit of a higher share on that rental side.

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Anuraag Srivastava:

Murtuza Arsiwalla:

Madhav Sangral:

Anuraag Srivastava:

So as of today, almost all the discounts which we had given have fallen off and most people have come back to their original MG plus revenue share model. There is a lot of renewal which is happening, which we had held back for the last two years and we are doing now. So, some of our malls are getting new tenants and some of the lease rentals are getting revised upwards. We had not done any lease renewals or renegotiations for last two years so that is coming up. There are some retailers who had gone back to an increased RS to compensate for the discount which we had given during the pandemic time. I think that the increased revenue share will remain for next maybe two or three quarters and it'll revert back to the normal rental at that point of time.

Thank you Palak. I also see Madhav Sangral from Millington having raise their hand. Madhav please go ahead with your questions.

Just the first one may be more strategic question. As we maybe look outside India globally there are a lot of difficult trends that in particular on the retail side malls are facing globally. So as you think about your business strategically, India I agree is at a very different position; but as you think, forward 5-10 years, whether it is more mixed use, including commercials with retail space, or it's being thinking about who that anchor tenant is for the mall; what strategic decisions or considerations are you taking into account as you look forward, maybe 5-10 years and you just think about the primacy of the mall in the city center location?

So strategically, you are right that India is probably a very different place as far as organized retail is concerned vis-à-vis with some of the other countries. If you look at Phoenix per se, I think the strategic imperatives are as below. One, we expand to the areas or the eight or nine cities that we have talked about, we have committed to deliver 1 to 2 million square feet of retail every year. When we analyze any retail project, we do it purely on basis of retail and what kind of returns the mall will throw back at us, but there is a clear drive to densify the area which we take up so you'll see that mall is the first entry point and beyond that there is a densification in terms of either commercial office tower or a hotel or a residential in rare cases, but maybe a residential is there. There is a lot of opportunity for us to densify our existing projects, so we have expansions coming in Bangalore, Whitefield in a big way, we have expansions coming in Pune, Wakad, which is a new mall and the expansions will happen along with that, we have a Grand Hyatt coming up in Bangalore along with the Whitefield mall and so the densification increases. I mean just to give you an idea, we have about 7 million square feet of retail with about one or two million square feet of offices. This 2 million of office space is going to go up to 5 million of office space and this is just on basis of the densification which I spoke about. So there is a sort of a rebalancing of the portfolio in terms of moving from retail focus, which continues to just chug along and create more value for the investors and add office space, hotel space, etc and this in a way I mean de-risks a little bit of our strategy. If the pandemic has taught us anything, it is that if you rely too much on one line of business, which is retail in this case, in a black swan event like Covid, that can come under sort of closure, but the offices will continue to run, the hotels will continue to run. So, I think diversification in summary, we continue building a strong retail portfolio leadership position, densify the space in terms of creating

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offices or hotels around that and a little bit of balance of our portfolio in terms of proportion of retail versus other assets. We can also look at adding more F&B etc, but those are smaller parts of the business.

Madhav Sangral:

Anuraag Srivastava:

Madhav Sangral:

Anuraag Srivastava:

Ok, and there was a previous question maybe if I could follow up on that. I think your point about your specific strategy within these 8 or 9 nine cities, but if you maybe look beyond some of the largest cities like just. Could you give us a sense you obviously done devaluation like when you look at some of that next 20 cities how does the economics work in terms of the lower cost of the land verses potentially the rank you're going to get and just the maybe the degree of interest from the range of retail locations and things like that, what is that next opportunity said is you do the business economics on that how does that look. And how does that compare to maybe 8 or 9 cities that you're focused on?

So, I think I covered this a bit in the second question. But, you are very right that the land prices are lower in maybe the smaller cities and so is the rental. As I said, we look at creating sort of a city center. So, for example, if you take the Lucknow mall, it comes in that category where the land rate is lower and maybe the rental should be lower as well. But if you look at Lucknow it is not only a Lucknow shopping destination, but it is becoming a sort of a UP centric shopping destination where people are coming, maybe even traveling 100-150 kilometers to shop over the weekend. Surprisingly, Lucknow is a mall, which was the fastest to reach that INR 100 crore EBITDA mark; some of our other earlier projects even in larger cities have taken maybe 3-4 years or maybe five years in some cases to reach that mark. Lucknow was able to do it in a year or 18 months’ time. Also, if we look at rentals in Lucknow they are at about INR 100. And if you look at it, Bangalore, it would be about 160. So it's clearly a potential to be tapped. The rentals are not so low and as I said, we clearly concentrate on delivering an XIRR, which is more than 20%. So all our financial modeling is around that. If you are able to deliver that, then definitely. Maybe a city like Ahmedabad if I can talk about our rentals are expected to be 150 plus, which is, I mean, Ahmedabad maybe sort of a B town or a Tier 2 city, but rentals are maybe as good as some of our other malls.

Just last question from me. If you could just please start telling us, just what trends you're seeing on the hospitality side. I think you've got assets in Agra and Mumbai as well. Like what are you seeing in terms of ADR? What are you seeing when it comes to occupancy and how does that compare to pre Covid levels, and I mean just give us a sense of where you think that business goes in the next two to three quarters.

Yes, so we are quite bullish on hospitality and the reasons for being bullish on hospitality is, I think there's a lot of potential to building new hotels and realizing the kind of hotel room rates as some of the well-established cities in the world command. Specifically on the performance, I think if you look at our flagship property which is St. Regis, I think in the period once we came out of the Omicron variant, which was January end I suppose or early parts of February, we had next three or four months of 90%+ of occupancy. The hotel is doing a business of about, I think 30% more from the pre COVID periods, and this is when there are two floors in the hotel

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which are under renovation where we are building a fantastic consumer experience. We are coming up with two or three concept restaurants over there and we are also creating a unique banquet or a drawing room sort of a place for people to hold their get-togethers. So that is under construction; even without that we delivered, about 30% over the pre Covid period. The RevPARs and the room rates are amongst the highest. I think during these three months we touched about INR 10,000 to 12,000 in terms of RevPARs. A business hotel like St. Regis sees lesser traffic once the summer vacation starts because a lot of overseas travel drives up and people are going away on the vacation, etc. But even if you look at June, the current month itself is about on an average between 70% to 75% of occupancy and great revenues as well. Agra is a tourist destination hotel. Again, similar numbers were not as sort of bullish as St. Regis but higher levels of occupancy more than pre-Covid and higher levels of activity over there. So overall, we're quite bullish over hotels, our hotels specifically. We are building a Grand Hyatt in Whitefield, Bangalore and that's a convention-centric hotel. So, we thought in Whitefield with the kind of surrounding catchment areas of IT companies etc., there will be lot of convention-centers and demand for a nice hotel, so we will be building a hotel over there. So overall we're quite bullish on hotels and the hotels are doing well.

Madhav Sangral:

Anuraag Srivastava:

Murtuza Arsiwalla:

Anuraag Srivastava:

One quick follow up for St. Regis, can you just give us a sense of to what extent international travelers have come back. I don't know if we can get that in percentage terms or just any kind of any sense of that, and that's it. Thank you very much.

Yes, so about 30% is the foreign travel at the moment, so there's a lot of scope to increase because if you see pre Covid period the percentage used to be about 50% and more. So about 30% has come back. We are seeing a lot of investors and a lot of companies holding their conferences etc. where overseas guests are there. We were quite proud to hold some of the top management teams coming and visiting from marquee investors who decided to stay in our hotel. So we're seeing it coming back. It is still 30%. And that's one of the reasons for our bullishness as well, because with 30% of foreign travel and two floors, still to go live,post the Covid refurbishment, we're still about 30% higher than pre Covid, so I think it's quite a bullish scenario.

Thank you Madhav, Anuraag I'm going to take some questions which have come in the chat box. Deepak Gupta put these questions forward. What are the level of negotiations in terms of revenue share versus fixed rentals and what would be the proportion of revenue share in the company's portfolio? That's his first question. The second question is, given multiplexes play a large role in bringing in footfalls, would consolidation of two national chains impact the company's negotiation ability?

Ok, I think I mentioned it a bit while ago, we are back to pre Covid rental contracts so we charge a higher of minimum guarantee or a revenue share. Revenue share varies in terms of the percentages over categories; minimum being about 7%-8% and highest being about 25% plus. It depends on the category. The proportion of revenue shared to our rental is about, I think 10% of revenue share and 90% of minimum guarantee. So, we see upside in terms of

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consumption increases, because once the retailer crosses over the minimum guarantee, any increase in consumption, sort of flows to us as well. The second question was on consolidation of multiplexes, so not much impact at all. I think the two big multiplexes are consolidating but most of our business was with PVR. We had few Inox theatres in our place but up till now we're not seeing a sort of any impact whatsoever either negotiations or on new malls, occupancy etc.

Murtuza Arsiwalla:

Anuraag Srivastava:

Murtuza Arsiwalla:

Anuraag Srivastava:

Murtuza Arsiwalla:

Anuraag Srivastava:

If I were to supplement on that one, while we talked about the cinema houses, in general when I look at retailers in India they have two or three business houses which have a very chunky state as well as retail presence in India goes, be it the Reliance Retail group, or Tatas or even Birlas. Does that put a large concentration risk as far as your business goes.

We've been getting this question frequently now and there are few ways to answer this question. I think there are four or five big business houses which are consolidating in terms of retail and you named all of them in fact. They still represent about maybe 25% to 30% of our portfolio in a mall; still 75% is in line stores; 75% are the individual brand owners as we call them. That is one. Secondly, the space in which we play which is luxury, bridge to luxury and some of the upper market brands, I think these kinds of brands also need places like Phoenix to sell. So, as I said, it's a coexistence; you can't have let's say a Gucci without a Ted Baker or a Massimo or Michael Kors along with it. You cannot have just one single store surrounded by other stores which are not in the class. So, we create those marketplaces as well. Not all our business is luxury or bridge to luxury and there is a definite sizable chunk of the normal brands as well. So, I think it is co-existential, we have to build on each other’s strengths to grow the business and up till now the partnership is working well.

There is one question which is more of a follow up, so I'll take that quickly. In terms of the revenue mix where you talked about 10% being from the revenue share component, 90% from minimum guarantee, the question is how did that ratio look like on a pre Covid basis?

I think it's similar. As I said, we are back to that ratio only. It looked similar and no change from there.

I'm going to put another question at you, obviously High Street Phoenix is the flagship mall and a very important asset in your portfolio. There have been questions that we have been getting from investors about how competition from new malls being set up, including very close to our office in BKC, how does that change the dynamics for something like a High Street Phoenix going forward, you didn't have any competition, is new competition coming through and how does one think of that in terms of what the earnings contribution or the consumption patterns of High Street Phoenix look like?.

In numbers per se, we are not seeing any change. In fact what I talked about April and May were about 27% to 30% higher than pre-Covid period. Definitely a sizable presence of a competition mall in BKC, which is another, lot of BKC people would have traveled to let's

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say Phoenix Market City Kurla, which is just next door or maybe down to Palladium for that matter. May not happen, but I think the consumption growth doesn't talk about it. I think they have one more mall coming up in BKC, we have to keep our fingers crossed. As a company we are prepared to enhance our experience, look at more value and how can we add or give more value to our consumers etc. Currently we don't see any significant difference in our mall functioning, either in Kurla or in Phoenix mall.

Murtuza Arsiwalla:

Anuraag Srivastava:

Murtuza Arsiwalla:

Anuraag Srivastava:

I'm going to pull up two more questions from the chat box. So there was a question from Pawan Kumar at IFL, his question is, is consumption revival uniform across luxury; bridge to luxury versus normal brands over the last five months? So is there any differentiation and if I may supplement that question, is it different across various categories, so is there a revival happening across price points across categories, or is there any sort of differing trends that you're picking up?

Ok, so first, let me answer the category question. Across the categories which are doing well, I mean some are up almost 40% to 50%. I think fashion is doing well; electronics, jewelry; so all the lifestyle brands are doing well. I think the consumption struggle or the category where there is a lag is hypermarkets, largely because of a dominant player who is undergoing NCLT process, and they are not able to run these stores. While Reliance has taken over stores and we are not getting impact on our income per se because our rentals are being paid by them. But consumption wise, hypermarket is a category that is not doing well. Cinemas is another one where, the cinemas opened to the end part of the spectrum and secondly, if you look at it, there are no big content out like blockbusters as yet. I mean we had a few Hollywood blockbusters and maybe one or two Hindi movies, but largely there are two or three South Indian movies which are carrying the burden of getting the people to the movie theaters. But I think there's a lot of good content lined up; there are a few big blockbusters which are lined up so cinemas should come back pretty quickly. F&B is lagging behind, but it is catching up pretty quickly so F&B should come up pretty soon, it is just a lag I think people got used to ordering from home and they're sticking by it. But, I think F&B is just a matter of time. In case of multiplexes again with the content we'll see the people back. Hypermarket is something we should watch and see when they come back. In terms of luxury versus other, I don't have the exact data with me at the moment, but from what I see in various monthly reports, etc. I think it's universal and there's no difference between luxury and others.

There's another question in the chat box from Summit Agarwal. His question is what is the kind of capex that you're looking at over the next three years and how are you looking to fund the same? How open are you with management of mall versus ownership? How do you think mix will change in the next five years?

I think we intend to spend about INR 1,700 to 2,000 crore of capex every year which is the malls which are coming up. I think we have four malls going live in next 12 to 18 months and then the cycle will keep on going in terms of office complexes and malls; so it will tend to about INR 1,700 to 2,000 crore of Capex every year. Then how do we fund it, I think most of these projects

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are already fully funded. We have a sort of an ideology of not fueling our growth through debt. We tend to rely on equity a lot in terms of growth capital, only when we have a line of sight of mall or an office complex going live and getting operational is the time where I mean say it's about two to three quarters away, that's where we tend to take small amount of construction finance and until then is funded by equity. This construction finance is very soon converted into an LRD or an operational mall loan. So, our theory on this is that we will borrow only against an asset which is operating and can fund the debt on its own operational cash flows rather than using it for growth capital. So, we tend to do that, and we are very well funded, we have marquee, very long-term patient capital partners who have partnered with us. We did a few of the equity raise in last 12 to 18 months so that has helped. We have sanctioned but undrawn bank lines of about INR 1,500 crores and about INR 1,300 crores is the cash which we have from infusion from our deals with CPP and GIC so we are very well funded overall to fuel this growth. Also, I think once the malls are complete and you draw down on LRD, it’s a virtuous equity cycle which comes back. So you can draw down on the debt once the asset is completed and the repayment of the equity can be brought back into fueling growth. So it's a virtuous cycle which we are trying to create in this business and with our four malls coming up, I think we'll see a lot of equity getting released further so that's on that I think maybe you'll have to recap the other parts of the question. It was a long question.

Murtuza Arsiwalla:

Anuraag Srivastava:

Murtuza Arsiwalla:

Anuraag Srivastava:

At the second part of the question was about how open are you to management of malls as opposed to overall ownership? And do you think there will be a change in mix between ownership and management of malls for Phoenix mills?

Yeah, so in Phoenix we love creating and opening our own malls. I think that's where we feel we can provide the maximum value to our shareholders and a fantastic experience to our customers and shoppers. While we are not closed to the idea of managing a mall, but I think it's not in, if I were to do a priority list in terms of strategic imperatives that will not feature, maybe in first few top items to diversify. But having said that, if there is a fantastic opportunity, we will look at it, but not actively or not intensively.

In the interest of time, I'm gonna put forward one last question to you. We've got another session to hop on to. You have two very large sort of private investors in various malls of yours, both in terms of CPP as well as GIC through various asset ownerships that they have. What is the plan for giving them an exit at some point in time so from both a timeline perspective as well as the form in which that exit will come on? Any thoughts on that?

Yes, so I think it is a bit early to talk about it, but let me sort of answer that question. See we are in build out phase at the moment and this build out cycle on both the platforms will continue for next three to four or five years. We are blessed with shareholders and investors who themselves believe in staying for long-term and creating a long-term value. So, there are no current discussions on what would be the exit and how we would go about it. For GIC, we have disclosed it publicly also, there will be an attempt to create a REIT, with no obligations on either side. In three to five years’ time, the contract says that both partners will look at creating

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a REIT. With CPP there are no defined exit paths or not even intentional exit paths in the documents, etc. So, as I said, currently both us and our partners’ focus is on expanding this portfolio and making these two very large and very profitable portfolios. As and when the time comes, at that point of time we will evaluate various exit options if required by our investors and then decide on the way forward.

Murtuza Arsiwalla:

Anuraag Srivastava:

Thank you, Anuraag, the Phoenix story is truly fascinating and I want to thank you for so generously sharing your knowledge and insights with us today. Delegates thank you for participation. See you in just a few minutes for our next session, which is all set to go live. Anuraag thank you once again for your time. Goodbye.

Thank you, thank you everybody.

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