DLF to make housing business debt free by March next year
Realty major DLF is working towards making its housing business debt free by March next year and the cash flow from sales of completed inventories worth around ₹14,000 crore would be utilized to fund new projects, chief executie officer (CEO) Rajeev Talwar said.
In an interview to Press Trust of India, he reiterated that the company would sell flats only after completion of the project and there would be no prelaunch sales.
“We are working towards that,” Talwar said when asked about the company’s target to become zero debt in housing business by March 2019.
The DLF CEO, who is set to take over as the new president of industry chamber PHDCCI next month, said the debt of housing business has already been reduced with infusion of funds in the company from promoters.
In December last year, the promoters sold their 40% stake in the rental arm DLF Cyber City Developers Ltd (DCCDL) for around ₹12,000 crore.
This deal included sale of 33.34% stake in DCCDL to GIC for about ₹9,000 crore and buyback of remaining shares worth about ₹3,000 crore by DCCDL.
DLF has 66.66% stake while
NEW DELHI:
Singapore’s sovereign wealth fund GIC has 33.34% shareholding in the DCCDL, which currently holds about 27 million sq. ft of rent-yielding commercial assets, largely in Gurugram, with annual rental income of about ₹2,400 crore. There are many leased commercial assets with the parent company as well.
“There are two parts of DLF, one is the development arm the other is the commercial arm, the leasing portion. The leasing portfolio we have got a good partner GIC. We have got a good rental income which is ₹3,000 crore plus so therefore it becomes very easy to reduce debt,” Talwar said.
The debt of the development or housing business would reduce further, he added.
“The surplus which we have of inventory which is really another ₹14,000-15,000 crore worth that will fund our future construction,” Talwar said.
At the end of first quarter of this fiscal, DLF’s debt stood at ₹7,120 crore.
The company plans to reduce this debt through further infusion of ₹2,250 crore from promoters in the next 18 months and proposed qualified institutional placement of shares of around ₹4,000 crore.
Moreover, the DLF-GIC JV had a net debt of ₹16,162 crore, of which ₹14,570 crore loans are through lease rental discounting (LRD) against its rental receipts from leased commercial properties, according to a company presentation.