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DLF sells non-core assets to raise funds for reducing debt

DLF sells non-core assets to raise funds for reducing debt
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First Published: Wed, Jul 15 2009. 12 29 AM IST
Updated: Wed, Jul 15 2009. 12 29 AM IST
New Delhi: India’s largest developer by market value, DLF Ltd, has raised Rs1,000 crore through the sale of hotel plots and will raise another Rs1,900 crore by the end of this fiscal year through the sale of more such plots and its wind power business, a senior executive said.
The company has sold hotel plots in Vadodara, Mumbai and Gurgaon, said Rajiv Talwar, group executive director of DLF, on the sidelines of a conference organized by industry lobby Confederation of Indian Industry.
The realty developer has 40 hotel plots out of which 21 have been put up for sale and 19 plots will be used for development.
In a presentation to analysts after announcing its results for the fourth quarter of last fiscal year, DLF had said that it would raise Rs5,500 crore in 2009-10 through the sale of non-core assets, including its wind power business, exit from the Bidadi and Dankuni township and the Delhi Convention Centre project, and sell land earmarked for hotels.
“The Rs1,900 crore that we will raise will be through the sale of plots and wind power business alone,” Talwar, said.
DLF will use the funds raised to reduce the debt on its books.
The company has already reduced its outstanding debt to Rs12,000 crore from Rs14,000 crore at the beginning of this fiscal year in April, he added.
DLF is paying between Rs600-1,000 crore every month, raised through the sale of non-core assets, to halve its debt by the end of this fiscal year, Talwar said.
The company has also replaced all its short-term debt with long-term debt, he added.
As on 31 March, DLF had around Rs14,000 crore of debt on its books. The company’s net worth (equity plus reserves) on that date was Rs24,400 crore
Apart from the sale of non-core assets, Talwar said the company did not plan to raise any more funds through the equity route.
“We have just done the biggest block deal in the history of India (the recent sale of 9.9% stake of promoters in DLF for Rs3,860 crore, raising money to buy out hedge fund DE Shaw and Co. Lp.’s investment in its unit DLF Assets Ltd)... We have no plans right now,” he said.
An analyst was sceptical about DLF’s ability to sustain its strategy of selling assets to raise money. “It is not possible for DLF to sell a non-core asset every month,” Shailesh Kanani, an analyst with brokerage firm Angel Broking Ltd, said. “Selling non-core assets is not a recurring thing...”
“We need to wait and watch on how they reduce their debt,” he added.
Demand for homes has also started to improve and during the last quarter (March-June), there has been a 15-20% increase in demand, Talwar said.
He said that in the first quarter ended 30 June, DLF has sold 2,500 apartments across the country.
While some developers are looking to increase home prices with the rise in demand, Talwar said DLF is not looking at increasing or decreasing prices of its apartments.
“The market has bottomed out,” he added. “In Bangalore and Hyderabad, our apartments are priced at Rs1,850 per sq. ft...you can’t reduce prices beyond a point.”
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First Published: Wed, Jul 15 2009. 12 29 AM IST