New Delhi: India’s second largest developer by market value, Unitech Ltd, has sold more homes than expected and raised more than Rs1,000 crore from asset sales this year, and has no immediate need to raise money through an additional share sale, managing director Sanjay Chandra said.
“We are not under pressure to raise equity capital,” Chandra said after a meeting of shareholders. “We have been able to sell more than expected and our asset sales have been good,” he said.
The company has sold 4,000 apartments, covering 4 million sq. ft, in the last two-and-a-half months as demand revives in a property market recovering from a downturn that left developers strapped for cash last year. Unitech had a target of raising Rs1,700 crore this year from a sale of assets such as hotels.
Unitech has rescheduled all of its outstanding debt of Rs7,800 crore and plans to reduce it by another Rs900 crore within this month, Chandra said.
Sales have also started to pick up. “The volume of sales that we are seeing now is more than what we saw in 2006,” Chandra said. “Home prices have come down by 25-30% on an average.”
Shareholders approved a resolution to allow the company to sell one billion equity shares through instruments such as a placement of shares with qualified institutional buyers or stock sales to overseas investors.
The company can raise more than Rs8,500 crore at current market prices, but hasn’t decided on the timing or the route of a share sale, Chandra said. In April, Unitech raised $325 million (Rs1,553.5 crore) through a placement of shares with institutional buyers to reduce debt.
The shareholders also approved a plan for the company to offer Rs1,150 crore of warrants to the promoters, including the Chandra family. Unitech will sell 227.5 million warrants at Rs50.75 a share to the promoters.
The promoters will have to pay 25% of the amount for the warrants, around Rs271 crore, within the next 15 days, Chandra said. With the issue of warrants, the promoters’ stake in the company is expected to rise from 51% to 61%, Chandra said.
Unitech expects to sell 20 million sq. ft of developable area in fiscal 2010. The company plans to launch homes in the Rs10-20 lakh range under its Uni Home brand in Gurgaon, Greater Noida and Chennai. In Greater Noida, Unitech recently launched an affordable housing project with 10,000 units and it has received 2,000 enquiries, Chandra said.
The company has also increased prices by 2% in two of its projects in Gurgaon, a suburb of Delhi. “We have increased the prices in our ongoing projects just two weeks ago. We will evaluate whether there is a need for raising the prices in other projects as well,” Chandra said.
Chandra also said that Unitech Wireless, the telecom unit of Unitech, will launch mobile services in the December quarter of this year.
Unitech Wireless, in which Telenor SA of Norway has a 67% stake, has already placed orders with network providers Alcatel-Lucent SA and Huawei Technologies Co. Ltd. The telecom unit will have a capital expenditure of Rs10,000 crore over the next three years, Chandra said.
Unitech’s share price rose 2.13% to close at Rs88.90 on the Bombay Stock Exchange. The benchmark Sensex was up around 0.5% and the BSE Realty Index gained 1.63%.