DLF may sell Rs.5,000 cr non-core assets by March

Proceeds from possible sale of Aman Resorts, wind energy business, other assets, to be used to repay debt
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First Published: Wed, Nov 14 2012. 07 54 PM IST
DLF, whose net debt stood at `23,220 crore as on 30 September, has said it will reduce debt to `18,500 crore by 31 March. Photo: Priyanka Parashar/Mint
DLF, whose net debt stood at Rs.23,220 crore as on 30 September, has said it will reduce debt to Rs.18,500 crore by 31 March. Photo: Priyanka Parashar/Mint
Updated: Wed, Nov 14 2012. 11 41 PM IST
Bangalore: DLF Ltd, India’s largest property developer by market value, expects to sell Rs.5,000 crore of non-core assets by March, having already sold Rs.3,129 crore’s worth.
The firm is in advanced talks to sell its Aman Resorts project, it said in an investor presentation. The firm’s other major transaction, to sell its wind energy business, has the approval of shareholders, and will be closed by March along with some other sale of assets worth Rs.500 crore, it said.
The Gurgaon-based developer, which announced September quarter results on Monday, posted a 62.9% annual drop in net profit to Rs.139 crore. Revenue fell 19.5% to Rs.2,039 crore.
In the September quarter, DLF closed a significant deal with Mumbai-based Lodha Developers Ltd, selling a prime defunct textile mill land for Rs.2,727 crore. The land was bought by DLF’s subsidiary Jwala Real Estate Pvt. Ltd in a 2005 auction by National Textile Corp. Ltd.
The sale of the hospitality business at Aman Resorts and the wind energy business will together bring in Rs.2,600-2,700 crore. The proceeds from the sale of the non-core assets will be used primarily to repay debt.
DLF’s net debt stood at Rs.23,220 crore on 30 September. The realtor said it will achieve the target of reducing its debt to Rs.18,500 crore by 31 March.
DLF’s divestment plan is of great importance to the company to reduce debt, said Param Desai, senior research analyst at Nirmal Bang Securities Ltd, a brokerage. “However, this also has to be complemented by launching more projects,” Desai said.
Summing up how much the company has achieved by changing its strategy since the global downturn of 2008-09, DLF said in the investor presentation that it has managed to revise its business model, consolidate businesses and operations, and outsource certain key operations to domain experts.
On returning to its core business and selling non-core assets and re-designing of balance sheet and reducing net debt, it is proceeding as per plan, the company said.
Property analysts said DLF’s project launches are typically skewed towards the latter half of the year.
After a rather slow spate of launches this year, DLF plans to launch 9-10 million sq. ft of projects in the next six months.
The projects are spread across price segments, including 8.5 million sq. ft of premium housing in Gurgaon and 1 million sq. ft each of group housing in Bangalore and sale of plots in Lucknow.
In an earnings call with analysts, DLF’s management indicated a positive guidance on sales, expecting to garner around Rs.3,500 crore from the new projects to be launched in Gurgaon alone, real estate experts said.
DLF bars the media from participating in the earnings call.
“We are bullish about DLF’s guidance, and if what is being promised is delivered, then the company would be operationally strong,” said Sandipan Pal, associate vice-president at brokerage Motilal Oswal Securities Ltd.
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First Published: Wed, Nov 14 2012. 07 54 PM IST
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