Parsvnath net up 24% on lower taxes

Parsvnath net up 24% on lower taxes

New Delhi: Realtor Parsvnath Developers Ltd on Monday reported a 24% jump in profit on lower taxes though sales declined.

Parsvnath posted a profit of 31.3 crore on sales of 224 crore that fell 26%.

“Sales fell because we didn’t launch any new project during the quarter. In a new project, one sells units initially at lower rate that leads to higher topline," chairman Pradeep Jain told reporters, adding the company would continue to focus on existing projects rather than launching new ones.

The company’s tax liability during the quarter was lower by about 11.5 crore compared with the year-ago period as it drew more revenue from tax-exempt housing projects, Jain said.

Property prices in major cities such as Mumbai and Delhi have risen sharply over the past 18 months, spurred by a booming economy, but sales volumes are down by a third from a year ago as high prices and rising borrowing costs deter buyers.

Central bank last month raised interest rates for the seventh time since March, to curb stubbornly high inflation.

The central bank had also tightened loan rules late last year by asking mortgage firms to limit loans to 80% of the asset value.

Parsvnath, however, sees no impact of rising interest rates on housing demand. “There is very good demand for housing and higher interest rates have had no impact so far," Jain said.

The New Delhi-based realtor, which has a total debt of 114.1 crore as at 31 December, plans to reduce it to 500-700 crore by March 2012 through internal accruals, Jain said.

The company also plans to sell land parcels in south India as the focus is firmly on executing projects in Delhi and North Indian towns, Jain said.

Jain, who along with his family, owns about 68% stake in Parsvnath and has about 57% pledged, said such a high level of pledged shares was “not a matter of concern as shares had been pledged along with real assets in the ordinary course of business."

Shares in Parsvnath, valued at 115 crore , rose 10% on Monday after losing half its market capitalisation in a month. Shares closed at 29 on Monday in a firm Mumbai market.