Why DLF is not 'perturbed' by its massive debt

Real estate major DLF plans to cut its Rs 23,000 crore debt to about Rs 17,000 crore in this fiscal and asserted that it was not unduly “perturbed” by the massive debt.

The firm hopes to sell at least two out of its three big-ticket non-core business by the year end to cut debt.

DLF has put its luxury hospitality chain Amanresorts, wind energy and a huge land holding in Mumbai on the block as part of its plans to exit from non-core ventures and focus only on

the property business.

“We are not unduly perturbed by the debt. We have annual rental income of Rs 1,800 crore from a leasing portfolio of 28 million square feet of office and retail space across the

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country,” said DLF Group Executive Director Rajeev Talwar.

The rental income, which is growing every year, roughly equals the interest payout on the company’s borrowings.

DLF expects to raise Rs 6,500 crore from sale of non-core assets this fiscal, of which Rs 5,000 crore would be utilised to repay debt and the rest will be used for capital expenditure, he added.

“The debt will come down to a level of about Rs 17,000 crore by end of this fiscal,” Talwar said. He said negotiations are at present on with potential buyers and deals to sell at least two out of the three non-core businesses could happen “any time”.

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Talwar, however, refused to divulge details. “All I can say is two deals may close by September or October.” Sources said DLF may realise around Rs 2,000 crore from sale of 21 properties under brand name Amanresorts, Rs 1,000 crore for wind energy business and another Rs 3,000 crore for Mumbai land that the company had bought from NTC for Rs 700

crore in 2005.

Talwar said DLF will not sell the Lodhi Road property of Amanresort in the heart of national capital as it wants to retain it for the land value. In the last couple of years, DLF has raised Rs 4,844 crore from sale of non-core assets, which included hotel plots and IT Park/SEZs.

Apart from divestment of non-core assets, the company is also targeting a 23 percent surge in its sales bookings at Rs 6,500 crore this fiscal from Rs 5,200 crore in 2011-12. The company had posted a net profit of Rs 1,200 crore in 2011-12 fiscal on a revenue of Rs 10,224 crore.

Of the expected sales bookings, DLF is targeting Rs 1,500 crore from a luxury project ‘Magnolia’ at Gurgaon that it will launch in the second half of this fiscal.

[caption id=“attachment_378361” align=“alignleft” width=“380”]  K.P. Singh, chairman of Indian property developer DLF Ltd[/caption]

Asked whether DLF has decided to focus only on NCR, Talwar said: “Our focus will always remain NCR. But we are developing projects in other parts of the country as well in cities like

Kochi, Chennai, Chandigarh, Indore, Lucknow, Bangalore, Hyderabad and Kolkata”.

The company is currently constructing 50 million square feet of area and of that 50 per cent is in NCR, he added.

As part of business strategy in FY 2013, DLF wants to conserve cash with moderate capex and land acquisition and protect margins through ‘cost escalation’ clauses.

Talwar said the company would continue to focus on high-margin projects such as luxury housing and plots development.

PTI