(Aman Goklani) #432

You are right, the details in the AR haven’t been updated. Some of these pointers are outdated.

  • The company at the AGM last year mentioned the cost of all redevelopment (IT park, NBEC etc.) will be Rs.2400 crores (revised upwards from Rs.1500 crores)

  • Last year they also mentioned that the kitchen is ready and setup to produce 15k meals in 1 shift and 30k meals in 2 shifts

(Gary) #433

@amangoklani My apologies … I seem to have mixed up the years. The 109 exhibitions were in FY17 , FY18 is 125 and FY16 was 156. So, there is a drop from FY16 to to FY17 and slight pick up FY18.

@gardner - I was coming from an asset utilization perspective (# and not revenue) since there would always be some growth in revenue through price appreciation.

(rao13) #434


(PrinceVegeta) #435
  • Strong performance by BEC YoY with segment revenue growing 30% + and segment result growing 40% +
  • Significant Degrowth in IT park revenues due to vacation of large tenant as indicated previously in Nirmal Bang report in May 18. (In line with expected restructuring)
  • employee cost has almost doubled YoY. Is it due to NESCO foods? I’m guessing because Nesco Foods segment shows 7.1 Cr revenue and 1.5 cr profit for Q1.
  • I think FY19 would get over before the time Building 4 gets ready and revenue starts flowing. I hope management clarifies on this timeline soon.

Disclosure- invested and adding

(rao13) #436

Any reason why the BEC revenue has fallen by 12.6% qoq?

(Vivek Mashrani, CFA) #437

Anyone attended AGM today? If so, summary notes should be helpful. Thanks in advance.

(Harshit Goel) #438

Chairman’s Speech from the AGM was uploaded on BSE.

Key Points

  • Rs. 93 crores were spent during the year on capital expenditures for IT04; Rs.25 crores were spent to build a new hall in BEC; and Rs.23 crores were spent on our Food Division, totaling Rs.144 crores.
  • During the year we added one new hall admeasuring about 1,16,000 sq.ft.; spent Rs.25 crores for this new hall; and, spent Rs.25 crores for upgrading of other exhibition halls in earlier two years.
  • Construction of IT building 4, which is of about 17 lakhs sq.feet built-up area, is expected to be completed in Q3 of 2018-19. IT building is expected to cost Rs.560 crores, out of which we have already spent Rs.420 crores so far.
  • Now that IT04 is nearing Completion, we are considering which project or projects to take up next. Options include: i) New Bombay Exhibition Centre halls; ii) Next IT building IT05; and, iii) Commercial Tower, as our zone is likely to be declared as Commercial zone. Whichever project we take up, it will be financed from our own resources without raising any debt. We expect to take a decision in the next 2 or 3 months.


Disclosure: Invested

(Shiv Kumar) #439

Takeaways from the AGM:

On the day of the AGM, the Gem and jewellery Export Promotion Council

was holding its gem and jewellery exhibition and huge crowds were

thronging in. The AGM itself was on the other end of the premises at

IT Building 3.

Construction of the IT building is completed and installation of glass

facade is in progress. Work is also progressing on the interiors and

fit-outs would be ready by end of this FY.

Management has set an internal target for roping in several large

clients by December this year. They were hesitant about revealing the

rental per sq ft at which IT building 4 is being leased out. Built-up

area is 17 lakh sq ft and 12 lakh sq ft will be rented out. There is

no scope to increase the capacity of this building though the

government has announced higher FSI under the new Development Control

Rules for Mumbai.

The higher FSI will be utilized for newer projects coming up in the

complex, according to Sumant patel. The Exhibition Centre, he said,

will have an FSI of 4.

First full year of operations will see IT Building 4 generate revenues

of Rs 150-200 cr. Internal targets are set on the higher side and

agreements will have an escalation clause to raise rents regularly

from one to three years. (Going by past record, management will not

agree for very long tenancies. They even keep the premises vacant for

a while rather than go in for long leases. They had done this for IT

Building 3.)

The NESCO property has become even more attractive after the Ram

Mandir railway station opened more than a year ago. The station is

just a five-minute walk from the property. However the only access

from the station is very poor and one has to walk via a slum. The

second access leads to a dead-end where the Food Corporation of India

godown is located. By 2020-21 the metro line passing by the complex is

set to open and improve accessibility even more. Sumant Patel said an

access to the complex will be built from the metro so people won’t

have to step out on the road while accessing the NESCO complex. (This

is a very big positive on the lines of international exhibition


The metro station is to be named Mahanand Dairy after the facility on

the other side of the Western Express Highway where NESCO is located.

(The Patels appear to be too miserable to sponsor a change in name of

the station to NESCO!)

Management continues to remain conservative and said it will continue

future development of the property from internal accruals without

recourse to debt.

A question was asked about how the proposed Reliance Exhibition and

Convention Centre at BKC will impact NESCO. Sumant Patel said that

facility will have serviced apartments, residences, etc in addition to

an exhibition centre. So only a few exhibitions may shift, he felt.

The BKC Exhibition Centre is also expected to be smaller with an area

of 5000 sq mtrs (I am not sure if I heard this correctly.)

Sumant Patel also added that the management was working to improve

utilization of the Exhibition Centre.

Replying to another query, he said company was planning a helipad on

the premises so that VIPs could reach the complex without disrupting

traffic on the highway.

If I have missed out any points, others who attended the meet may

kindly add to this.


(gardner) #440

Notes from AGM

The venue was Building No. 3, 4th Floor, in a hall overlooking the western express highway. The AGM was short and to the point. Total time 1 hrs 15 minutes. Initially after some formalities, audience starting voicing questions, one by one, some went on with a long list; in fact, a good long 25 minutes of posing questions. At first, I thought the management was indifferent to questions, especially looking at their seeming indifferent faces; but it’s only later I realized that Mr. Sumant Patel had scribbled all questions and went to answer each of then one by one. He replied for a good 35 minutes!! It was very reassuring to see him so forthcoming and responding to all questions in a reasonable level of detail. He was aware of all nuances of his business, occasionally turning to his associates for some data points. Overall it went very well. My fellow attendees too felt the same. I was in the company of esteemed fellow investors @ayushmit , @nooreshtech @amangoklani and @Shivkumar

This was my first ever attending an AGM. And I came back content (in the sense that the information was aplenty. Analysis to each his own).

Disclaimer: Not invested, but considering!

. . . various questions and answers, mostly in chronological order.

PS: I have tried to be as verbatim as possible, adding context where necessary. And ‘GS’ represents my personal perspectives.

1. On why the company is conservative in is strategies for deploying cash in its books. Why only debt funds? Why not equity funds or even direct equity investments for better returns?
We want to be very careful. At the end of day shareholders money. we don’t want to play with it. Equity funds prone to volatility. And even if we want to do then its entirely a diff business of managing equity investments. It’s a diff skill and is prone to risks. Even now we have a very big team to manage only debt investments. The investment management team sits out of Mahalakshmi office. We have done a good job in selecting debt funds. We have maintained 7-8% return. FMP have given good results, Up to 10-11%. Now returns are slightly lesser even in FMP, also as they have changed in tax benefits. Further under new accounting norms of INDAS requires them to record debt fund values at market prices which may be lower, even though actual cash flows are higher (GS: I guess it is something to do with Mark to market. Experts can explain better). Having considered all, we will continue to stay in Debt Funds only.

2. On why NESCO complex doesn’t have Helipad, considering so many dignitaries arrive (GS: it seemed a really amusing question, especially the querist went on and on about needing a Helipad)?
Mr. Sumant recognized it as a genuine issue (GS: to my surprise) and stated how CM too had echoed it. NESCO has decided to have a helipad in its next development; be it atop of building 5 or Building 1 (GS: implying it will be brought down and the new one will be constructed at some time in near future). They will let us know when the decision is made.

3. On capacity utilization of BEC?
Nowhere in the world exhibition centers operate on full capacity. They usually operate on 40-50% occupancy at best. We are satisfied with our performance. Our business is of hosting exhibitions that come from outside (GS: meaning organizers come to our venue). Last year, we haven’t lost even a single exhibition last year. (GS: meaning all events were repeated again this year OR not that any event went to any other venue). Anyhow to increase occupancy, we are preparing some strategies. We don’t know how high efficiency we can increase; may not be 70-80%, but better than now. We are preparing two new proposition and We will let you know about it next time when we meet. (GS: damp squib!! It appeared they have some surface level thoughts, but nothing concrete. my guess is he meant some new properties/events that they would curate on their own, which would increase the occupancy levels of BEC. Anyhow, Mr. Sumant is not so expressive/excited personality. Thus, one can’t say how deep is the so-called strategy. Did we guys expect Food Business coming out from nowhere and that too in such big numbers so quickly?? They are already doing 10000 meals a day and aiming 40 Cr from this biz this year; more about it later. . . So, let’s not under-estimate their prowess). On asking if any area reduced in BEC, he replied if anything we have only added the new area and have added 1 new hall of more than 1 lac sq ft. Exhibitions are booked on the advance basis with cancellation fee component.

4. On starting of revenue from IT Building no. 4?
Built space is 17 lakh sq ft. The Licensable space is 11 Lacs sq ft (GS: at another instance, he mentioned 11.5 lacs sq ft). The license fee rates are not yet decided. The overall revenue could be in the range of 150-200 Crores or maybe even more. We will let you know when we meet the next time (GS: did he mean next AGM. Was he in a way telling it is not getting leased until next AGM!! Lol. . . no no, I think he just said it casually.)

5. On why doesn’t the company take debt to fund growth?
Many years ago, we took debt and burnt our fingers. So, we want to be very careful. We are not completely close either. But as far as possible we want to be debt free. And neither its that our growth is hampered by lack of funds. We have enough cash on hand and keep generating more cas on an on ongoing basis. We always keep looking for next project development with own source of fund. So we are good here.

6. On the type of rental agreements?
Typically, are 5-year contracts with a renewal option at the hand of the tenant for another 5 years. Usually at 5% or 7% escalation (GS: meant on every year) or 10-15% if escalation is due every 3 years. There’s never any contract without any escalation. (GS: Later on, on the side-lines, I had additionally asked if they every invest in office interiors on demand of tenants, as I know it happens a lot in NCR market; to this, the MD replied as No, never. Which is good as investments of those nature are not healthy and depreciative.)

7. On issues of traffic caused by exhibitions and ongoing metro and other construction works?
A railway station (Mumbai local train) has come up just behind us. Our tenants are so very happy. Its become so convenient for them. It barely takes them 5 minutes to get off and be in their offices. The exhibitors too can easily reach. Earlier they used to get off a station before or after and them struggle their way to the office. (GS: he meant to highlight that we should take note of the other positive developments too, which would also reduce traffic issues, and also overall appeal for leasing. I think the new station bears well for tenancy preference of new clients for Building 4). Traffic is not just at front of us. Its everywhere, further down and much before too. its due to the ongoing construction of Metro, along with the Western Express highway. (GS: to be noted is that there’s a Metro Station under development, right at the gate of the NESCO. I could see it through the window. Which again bears very well for long term preference for this as a destination for exhibition and offices). Constantly the Traffic police and the Municipal authorities are I touch with us. We keep engaging on a daily basis and sort issues. We have 1500 c ar park arranged in the complex. !000 in in the Lodha building next door. Another 2000 in adjacent CRPF grounds (GS: not sure if he said CRPF). We are doing everything, but authorities too have to play their part. Its one-way road width and they are running two-way traffic. Allowing wrong parking to happen here and there. (GS: pls note that it was a big exhibition day – Gem & Jewellery – and one could notice many cops managing the traffic). I then asked, if there is any directive, past or current, that restricts them from holding events or curtailing them in any way – to this Mr. Sumant clearly replied a clear NO, not at all. There is no formal instruction or restriction of any kind, weekday or weekend. Whatever if any are mere ‘suggestions’ from police to if possible do it on weekends or such and such times etc, but no strictures at all. He also said Exhibitors are directly involved in such discussions and sometimes they agree for certain times, at other times they convince police. Anyhow, soon as an when Metro is completed all issues will come to rest (GS: essentially it was clear that its more of cooperation and handholding with authorities, and there no bounds. And to me, it appeared Metro could be up and running in 6-9 months. Mumbaities can tell better)

8. On Maintenance and upkeep of buildings and infrastructure?
A separate team takes care of all maintenance, security, repair, client servicing and operates by contracts with the third parties. There’s a big cost and details of it, if requested from the management shall be made available. (GS: basically, it seemed they have third part facility managers on cost plus basis. And all such expenses are anyways reflected in statements of accounts and are as per industry standards.)

9. Expanding business in other areas (geographically and other sectors)?
Yes, we are thinking actively about diversifications. We have constituted a new team called Group 2 to explore possibilities. (when asked which business) we will look at expanding in other geographies, may be, in construction segment, but not exhibition, likely be commercial or IT or residential. (when asked by not exhibition) exhibition business is almost always state funded. Large investments, low occupancies. Govt do it for creating trade and commerce. Every state does it on their own. We cannot replicate that in a private funded way. (GS: meaning they cannot get same advantage of having historical low-priced land as they have in Mumbai. Going out and buying land for exhibition sector is not viable). So we will stay in the business we have created, and expand non exhibition business. How much will we expand is matter of planning, time will tell.

10. On additional FSI under new development norm?
For building no. 4 they have used the new increased FSI that was available then. They have used 1:2 FSI that is for 1 FSI they bought an additional 2 FSI from transferable/tradable rights, thus they used the opportunity to their advantage. Although, the FSI additional was very expensive. And any latest higher FSI available, as per latest norms, cannot now be added to building 4. It will only be considered in the next new building, as and when it comes. Going forward, they have spoken to CM and have already got approval for 4 FSI for exhibition business i.e. 1: 3 i.e. 3 FSI for every 1 available can be purchased. The policy is already approved, and the final draft is awaited. When I asked that 4 FSI will mean they will have to go vertical, multi-floor, in future exhibition buildings, Mr. Sumant said YES. Their next building sill be multi-floor (GS: I think this is good news. As per me it will combat the future threat of Reliance exhibition center, as I learned that its multi-floor in BKC. This way NESCO too could do such conferences that can be on any floor, like in a hotel conference hall, and not requiring ‘high-celling-ground-floor-only’ halls, which are typically required by exhibitors.)

11. On building 1?
Building 1 is empty as of now. Its parking is still used though. When I asked about last revenues from it, Mr. Sumant confirmed that lasts recorded earnings from it were in Dec 2017. For last 2 quarters, the revenue from it’s has been 0. When I later asked the MD about the value of revenue, he answered it to be 20 Cr for last calendar year it completed, before being discontinued and tenants made to vacate and relocated to Building 3. It eventually has to be broken down and the alternate plan to be developed, as per master plan that they have for entire development. The decision will be taken within the next few months. When asked about dripping revenue in IT, he confirmed its on account of only this building being discontinued. (GS: implying that the revenue from the new building are higher). He spoke about the quality of relationship with all tenants and how they all cooperated in migration to the new building.

12. On Building 2?
As of now is giving full revenue (unlike building 1 which is now 0 revenue). Approx 30 croes per annum.

13. On future of building 4?
Have appointed JLL (Jones Lang Lassalle) as a consultant for leasing out the building. He maintained that leasing will happen soon. And that building is complete. L&T who has down structural works is already unpacking. (GS: based on my experience, as I understand construction and projects, and after looking at current status of building no. 4 (pics posted below), I can confidently say that from completing the structure > to services > to finishes > to commissioning > to fit-outs by tenants > to OC > to start of rental inflow, even if all happens at best pace, we will only see first numbers coming in from new building in Q1 FY 2020 i.e. same time next year i.e. 12 months; irrespective of whatever management says). On being asked what’s the basis of rental, they answered its on ‘chargeable area’ i.e. covered area plus some %age to compensate for additional areas.

14. What next project?
In 2 - 3 months we will decide what to do? Either Exhibition or IT building no. 5. Next building will be bigger than what we had done so far (IT 3 was 8 lacs. UT 4 is 4 lacs). Or even commercial building. New norms allow commercial now. In totality long-term vision to have a total of 5 buildings (GS: now they have only two Buildings i.e no. 3 and 4) Building 1 is already defunct and will be demolished, say, after building 4 is totally leased. . Also, building 2 shall too be vacated in the future and demolished).

15. Future of capital goods division?
We will make this division also profitable (GS: didn’t sound convincing, seemed more of a passing thought). Its our focus area. We are a great brand in the segment we operate. Our original JV partner is over (GS: wasn’t clear when it was over). And we will focus on this business too. it will also be one of our profitable and growing business.

16. On increase in manpower cost?
It will soon start paying back. We have started to higher more senior and better calibre people across functions. Our log term goal is to see that increase in manpower cost should match with commensurate in generating additional returns and is fully justifiable. (GS: although not said explicitly, it seems the these could be higher cost on account of F&B business, the new Group 2 etc etc)

17. On the abrupt resigning of the CEO?
It’s part of everyday life. He decided to move on. No big issue. Just today in our board meeting we decided on management structure and we have good leaders for all business segments.

18. On the effect of GST?
We have had no effect on our business.

19. On Exhibition center coming up in BKC (Reliance)?
It’s a different type of project. Its integrated with commercial establishments, service apartments, and also exhibition space of of 25000 sq mtrs (i.e. 2.65 lacs sq ft). Some exhibitions may go there, some more will come where. We will wait and see. Ensure new entrants in our BEC and maintain our turnover.

20. Share buyback?
(GS: shareholders in audience explained that rather than distributing the Dividend, which is tax inefficient, instead management should buy back shares equivalent to the dividend declared value. Thus, better use of reserves and tax efficient). Mr. Sumant said it’s a good idea and that they would consider.

21. On contribution in turnover of proprietary events such as Paddy fields, dandiya nights etc?
Its small, about 5 crores of BEC turnover. But they will watch and observe. After learning they would add 3rd property soon. Also, said we are diversifying by adding lots of marriages etc

22. On food Business?
50% of the business comes from exhibition business. 10000 meals a day. 50% focus on visitors to the exhibition. Supplying food to IT park employees is not of much focus; it’s a small ticket item. Now we are focusing of the food business to outside, and have already started. This year’s target is 40 crores turnover from the F&B business. Mr. Sumant accepted the suggestion of employing differently abled people in F&B business

23. On Hotel?
Its part of our plan. we know it will work immediately. We don’t want to do on our own and engage 500+ staff to run (its not our core competence). Instead, we will do a tie-up with some international brand (Marriot or Hyatt etc). we will build hotel under the suitable agreement (profit sharing or revenue sharing etc). but it’s not an immediate priority. when we build this is a matter of decision we shall take in due course.

thanks for patient reading!

(gardner) #443

some random posters pasted in the lobby area of the building no. 4 (that’s where they hosted tea and snacks for the AGM participants)

(Shiv Kumar) #444

good work by gardner.

a few points more:

Mr Sumant Patel is in his 80s and still very sharp.

A few years ago, he said the government would not allow a helipad because of residential areas close by. the lodha building next door is a residential tower and the people would not tolerate helicopters landing and taking off. A helipad atop Essar’s HQ near Mahalaxmi race course is lying unused for nearly a decade. So I think the helipad is unlikely at nesco.

One hall at the Exhibition centre is kept for the curated events like Paddyfields. Weddings are also becoming big. I think a New Year’s Eve party is also on the works.

MD had told investors two years ago that 12 lakh sq ft at IT Building 4 should be taken for the purpose of calculation of revenue. Going by what NESCO did during construction of IT Building 3, the first tenants will come only by the next AGM. Sumant Patel won’t agree to long leases. He walked out of negotiations with a big American company which wanted a ten or 15 year lease in IT Building 3. It took them several months to rent out 25 per cent of the property.

He also spoke of a commercial tower which may be developed in the area. The new rules will be announced soon. So new IT Building, Commercial Building, Exhibition Centre are the multiple options on the table.

(Shiv Kumar) #448

just want to point out that the Metro rail line outside NESCO will take at least two years to be completed.

shiv kumar

(gardner) #449

@Shivkumar Sure, sir? From what I saw, based on my experience, it may not take as long. The columns and station structures were up (the most time consuming sub soil work is over) and I had say that the segment in front of NESCO may get sorted and cleaned up much sooner. (though the overall metro line may take longer to start, and work may continue at other portions). With police and all stakeholders involved, the work at this junction may be done at a faster pace.

I rather feel that in 12 months major debottlenecking would have happened.

Just my thoughts

(jirohit) #451

hi Vivek and Tarun,
Based on feedback received from AGM, should you look to change following assumptions:

  1. reduce leasable area from 12mn sq ft to 11 mn
  2. remove rent from IT1 from FY19 which is around 16 cr per annum
  3. occupancy to start from FY20. if leasing start now, expecting 65% in FY 20 and 95% from FY 21onwards
  4. rent per sq ft to match mgmt expecation of rents from IT4 between 150-200 cr. so taking around 178 cr avg and assuming rent at 142 per sq ft in fy 21
  5. reducing hospitality expansion revenue to 40 cr for fy 19 as mentioned in AGM.
    Pls share your thoughts on above. i made some changes in vivek’s model based on above and higlighted the same in sheet1…NESCO_model_v3_08112018.xlsx (24.3 KB)

(jirohit) #452

@vivek_mashrani suggested some changes in your Nesco model above.

(Yash Sejpal) #453

I think we need to consider the value of the additional buildings which will be remade in the future. Although it will be tough to guesstimate the PBT accretion due to the same.

(Shiv Kumar) #454

the metro trains can run only when the overhead stations and the yards are constructed. there is a big legal battle on between the agency building the metro and environmental groups because the yard is planned in a green zone. so a lot of construction work is stuck. without the yard, they cannot park the trains for maintenance any where.

(Shiv Kumar) #455

I was just reading my earlier AGM notes (posted here) from August 2015. It had taken some two years for IT Building 3 to be completely leased out. Like in the case of IT Building 3, Building 4 also took three years to complete. By these yardsticks, they will start the next project only after much of IT Building 4 is rented out and revenues start flowing in.

(Gary) #456

Thank you for updating the model. A few points to consider -

  1. Building 4 revenue will probably be more gradual since fit out also take time. I don’t think 65% is doable for next year.
  2. New BEC days are high. They have never achieved such high occupancy and there is no reason for it to go 180 days et al… In fact they did mention in one conference call that 60% occupancy is global benchmark.
  3. We probably can be bit aggressive with rates on IT buildings… 5% is too conservative.
  4. At some point building 5 will kick in… May be FY23 or so…

(Aman Goklani) #457

Source: Nirmal Bang Institutional reports (FYI, this report is publicly available hence it is being shared by me).

We had a meeting with the management of NESCO at the Institutional Equities Conference
hosted by us recently. We remain bullish on the company’s earnings growth post
restructuring of its IT Park, BEC (Bombay Exhibition Centre) and other businesses. Key
takeaways from the meeting are as follows: 1) Completion of IT Park 4 by December 2018. 2)
Demolition of IT Park 1 and 2 by mid-CY19. Although Building 1 has been vacated, Building
2 will remain occupied until June 2019. 3) Addition of 0.2mn sqft of BEC space to the
existing 0.54mn sqft by 2Q/3QFY20. 4) Post demolition of Building 2, planned development
of another 2mn sqft of IT Park (earlier planned to construct 1mn sqft of IT Park). 5) F&B
segment revenues expected to touch Rs350mn in FY19 compared to Rs200mn in FY18. 6)
Building 4 to have a lease rate between Rs120-125/sqft/month, higher than the average of
Rs105/sqft/month charged by NESCO IT Park. 7) NESCO IT Park Building 4 is expected to
touch 25%-30% occupancy rate by FY20.

IT Park 4 (1.2mn sqft) to be completed by December 2018: The management is optimistic about
receiving the occupation certificate (OC) for NESCO IT Park 4 by December 2018. NESCO IT Park
4 shall be available for lease by January 2019. There are no confirmed clients as of now and
therefore the management has been conservative and given occupancy rate guidance of 25%-30%
by FY20.
IT Park 4 expected to be leased at Rs 120-125/sqft/month: The average lease from IT Park is
~Rs 105/sqft/month. However, the management plans to launch Building 4 at a higher lease rate of

To begin demolition of IT Park 1 and 2 post June 2019: We expect the revenues from NESCO
IT Park to decline in the short-term because of clients vacating Building 1 (0.175mn sqft). However,
Building 2 (0.175mn sqft) clients will vacate in June 2019, thereby preventing an immediate fall in

Planned development of another 2mn sqft of IT Park: The management had earlier planned to
build a 1mn sqft IT Park after demolition of Building 2. However, during the recent meeting, the
management communicated that it plans to build 2mn sqft IT Park instead of 1mn sqft.

Addition of 0.2mn sqft in BEC: Currently, BEC has 0.54mn sqft rentable area, including addition
of 0.14mn sqft in FY18. The management plans to add another 0.2mn sqft of BEC space which
should be operational by 2Q/3QFY20. With the additional BEC space available, occupancy rate
could be capped at 35%. On a conservative basis, we can assume an average occupancy rate of
30% over the next few years.

Additional concerts at BEC will lead to better utilisation of vacant days: Concerts like DID
(Dance India Dance) Little Champs and also concerts organised by NESCO like ‘Paddy Fields’
have helped better utilisation of vacant days at BEC and generate additional revenues. These
events are currently generating ~5% of total BEC revenues and could increase further over the
next few years.

F&B segment revenues expected to touch Rs350mn: The F&B segment, which reported
revenues of Rs200mn in FY18, is expected to garner Rs350mn of revenues in FY19. Better
capacity utilisation and focus on using NESCO foods instead of booking outside caterers for BEC
will be the driving forces for F&B revenues.

Expected to remain deft-free despite executing planned expansion: NESCO will execute
planned expansion by using internal cash flow. NESCO has net cash and investment balance of
Rs5,080mn as of FY18-end. The company is capable of executing aggressive expansion by
liquidating some of its investments.

Disc: Invested