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DB Realty profit falls 90% in Mar quarter

DB Realty profit falls 90% in Mar quarter
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First Published: Wed, Jun 08 2011. 11 57 PM IST
Updated: Wed, Jun 08 2011. 11 57 PM IST
Bangalore:DB Realty Ltd’s net profit dived to Rs11 crore in the March quarter from Rs109 crore in the preceding three months, ignoring a 43% jump in sales.
Revenue in the January-March period increased to Rs391 crore from Rs273 crore in the preceding quarter.
DB Realty did not break up numbers for the latest quarter; these were arrived at by Mint.
Annual net profit rose 11% to Rs302.1 crore on a 33% jump in revenue to Rs1,268.7 crore.
Analysts say DB Realty’s actual sales between January and March were less than robust because of the arrests of its promoters Shahid Balwa and Vinod Goenka in connection with the 2G spectrum scam.
They attributed the increase in quarterly sales to revenue realized or recognized from bookings made in previous months. Revenue from bookings depends on progress in a project’s construction.
DB Realty, however, has a robust development pipeline of 83 million sq. ft, including 33.5 million sq. ft in ongoing projects.
“Going forward, we expect the scenario to improve,” said N. Shridhar, group director-business strategy and finance, DB Realty. “We will raise capital for project-specific needs though we haven’t made any new acquisitions.”
In the March quarter, the company sold around 600,000 sq. ft of space, including 560,000 sq. ft from sales of additional development rights, known as transfer of development rights (TDR), at Rs2,600-2,800 a sq. ft.
Real estate companies get TDRs as an incentive for slum redevelopment or rehabilitation projects. These rights can be traded at a profit.
DB Realty has a TDR inventory of 1 million sq. ft generated from its slum redevelopment project in Mahul, a suburb in Mumbai.
In fiscal year 2011, the company sold 3.7 million sq. ft, including TDRs.
“An area of uncertainty for the developer is that the fate of a few of its projects is still dependant on the state government’s parking FSI policy, which is still not clear,” said an analyst who didn’t want to be named.
FSI, or floor space index for parking, is a government scheme wherein a developer gets extra construction rights on a plot of land in lieu of developing public parking space.
Another DB Realty project, Bandra Government Colony, is yet to take off because of delays by the government. Besides, the company has to pay nearly Rs800 crore once the development agreement is signed but it hasn’t raised fresh capital yet.
DB Realty has repaid a large part of its loan of Rs475 crore as on 31 March, and now has a debt of Rs256 crore.
Following the arrests of Balwa and Goenka, DB Realty reconstituted its board, appointing Goenka’s father, K.M. Goenka, as its chairman.
“We have initiated an active communication programme with our customers, through regular newsletters, site visits and talks with them,” said Shridhar.
On Wednesday, shares of DB Realty jumped 7% to Rs80.60 on the Bombay Stock Exchange, while the Sensex slipped 0.55% to end at 18,394.29 points. DB Realty’s stock has shed 59% this year, and the Sensex, 10%.
madhurima.n@livemint.com
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First Published: Wed, Jun 08 2011. 11 57 PM IST