DLF sells Star AluBuild to Japan's Lixil

Hyderabad: DLF Ltd, India’s largest real estate developer, is selling its stake in unit Star AluBuild Pvt. Ltd to Japan’s Lixil Corp. as part of its strategy to pare debt by exiting non-core businesses.

add_main_imageDLF has also concluded an agreement with Violet Green Power Pvt. Ltd to sell a 33 megawatts (MW) capacity wind turbine business in Rajasthan for ₹ 67.44 crore on Tuesday as part of the strategy.

Lixil is purchasing a 70% stake in Star AluBuild through its Singapore subsidiary, Lixil Asean Pte. Ltd, in an all-cash transaction. The transaction values the company, which designs and installs glass façades and aluminium sash windows and doors for commercial and residential property, at an enterprise value of ₹ 79.8 crore. It earned revenue of ₹ 100.3 crore during 2012-13. NextMAds

DLF, burdened by ₹ 20,369 crore of debt as of 30 June, has been exiting businesses not considered essential to real estate development as part of a strategy to cut debt.

It agreed to sell its 74% stake in DLF Pramerica Life Insurance Co. Ltd,, its life insurance joint venture with Prudential International Insurance Holdings Ltd, to Dewan Housing Finance Corp. Ltd and its group entities for an undisclosed sum in July. Earlier, it sold its 150 MW wind turbine business in Gujarat to Bharat Light and Power Pvt. Ltd for ₹ 325.38 crore.

“About two years back, the board of DLF decided to concentrate on the core and divest its interests whether in non-core businesses or non-core assets and that’s what we have been undergoing for the last 2 years,” said Chawla.“…as we concentrate on our core, it is important that we divest our interest over here and they proceed ahead with entities that are more aligned in their space than we are aligned.”

While DLF is making efforts to get out of non-core business, money from some of the deals is coming in tranches and this will have little impact in reducing its debt, said an analyst who did not want to be named.

“The bigger money coming in from land sale (for deals that happened earlier) or wind power sales are yet to reflect on DLF books. As and when this comes, debt will come down to ₹ 17,000-18,000 crore levels, which will be a comfortable level for the company,” the Mumbai-based analyst said.

Lixil estimates the Indian aluminium sash and curtain wall façade market to be worth $2.5-2.8 billion, growing at 10-12% annually. Star AluBuild has less than 5% market share.sixthMAds

“The building market (in India) at this point in time is very depressed. Therefore it is a good time to enter,” Bill Crichton, chief operating officer of Lixil, said in an interview before the deal was made public.

DLF shares closed up 0.76% to ₹ 138.95 on a day the BSE’s benchmark Sensex rose 0.44% to 19,983.61 points. The announcement was made after market hours.