DLF De­fers Dead­line for Sale of Pro­mot­ers’ 40% in Cy­ber City

Sale trans­ac­tion likely by March ’18; move to help pro­mot­ers con­tinue ne­go­ti­a­tions with shortlisted in­vestors

The Economic Times - - Companies: Pursuit Of Profit - Kailash.Babar@ times­group.com

Mum­bai: Realty de­vel­oper DLF has de­cided to ex­tend the dead­line for sale of 40% stake owned by its pro­mot­ers in its rental arm DLF Cy­ber City De­vel­op­ers (DCCDL) to March 2018.

Sep­a­rately, the de­vel­oper re­ported a 46% year-on-year drop in its net profit at ₹ 98.1 crore for the quar­ter ended De­cem­ber. In­come from op­er­a­tions de­clined 30% to ₹ 2,058 crore com­pared to ₹ 2,949.5 crore a year ago, the com­pany said in its reg­u­la­tory fil­ing.

“Since the con­clu­sion of CCPS (com­pul­so­rily con­vert­ible pref­er­ence shares) sale trans­ac­tion may not con­sum­mate by March 18, 2017 which be­ing the last date of con­ver­sion of CCPS, the CCPS Hold­ers have con­veyed to DCCDL and the com­pany that they are agree­able for ex­ten­sion in con­ver­sion of CCPS for one more year i.e., un­til March 18, 2018 at the ex­ist­ing div­i­dend rate (coupon rate) of 0.01% per an­num,” DLF told the Bom­bay Stock Ex­change in a reg­u­la­tory fil­ing. “Ac­cord­ingly, the board based on the rec­om­men­da­tions of the Au­dit Com­mit­tee, ac­corded its con­sent for the said ex­ten­sion be­ing the 100% eq­uity share­holder of DCCDL.”

In the cur­rent mar­ket sce­nario, with eas­ing in­ter­est rates and fall­ing cap­i­tal­i­sa­tion rates, com­mer­cial prop­er­ties are ex­pected to fetch higher val­u­a­tions. DLF’s pro­mot­ers may have kept this view while re­quest­ing for ex­ten­sion in con­ver­sion of their com­pul­so­rily con­vert­ible pref­er­ence shares to March 2018.

Ac­cord­ing to DLF, the dis­cus­sion with shortlisted in­vestors is at an ad­vanced stage in re­spect of DCCDL’s CCPS trans­ac­tion and will be pre­sented to Com­mit­tee of In­de­pen­dent Di­rec­tors for its eval­u­a­tion and fi­nal de­ci­sion. “In lieu of this, con­ver­sion pe­riod for CCPS is­sued to the pro­mot­ers in DCCDL has been ex­tended by one year at their re­quest to fa­cil­i­tate its sale,” DLF said.


In Oc­to­ber 2015, DLF had for the first time said that its pro­mot­ers would sell their 40% stake in the com­pany’s rental arm DLF Cy­ber City De­vel­op­ers (DCCDL) for an es­ti­mated amount of ₹ 12,000-14,000 crore. Of this, they would rein­vest a sub­stan­tial sum back into the com­pany af­ter pay­ing tax and other charges and this was aimed at re­duc­ing the de­vel­oper’s debt bur­den. DLF’s net debt stood at ₹ 23,530 crore as of Septem­ber end.

How­ever, in February 2016, in the back­drop of mar­ket con­di­tions, the com­pany ex­tended the dead­line by de­fer­ring con­ver­sion of the CCPS un­til March 18, 2017 on the same terms and con­di­tions.

DCCDL op­er­ates 26.8 mil­lion sq ft com­mer­cial prop­er­ties that are al­ready leased and earn­ing rent of around ₹ 2,300 crore as of Septem­ber 2016. It also has sig­nif­i­cant fu­ture de­vel­op­ment po­ten­tial.

The de­vel­oper’s fi­nance cost dur­ing the De­cem­ber quar­ter rose 13% to ₹ 758.6 crore against ₹ 670.6crore a year ago. To­tal ex­penses of the com­pany de­clined 35% to ₹ 1,242.13 crore dur­ing the quar­ter from ₹ 1,911.64 crore a year ago.

Ac­cord­ing to the com­pany, the per­for­mance in the last quar­ter was sub­dued, as the mar­ket ad­justed it­self to new paradigm ini­ti­ated by the de­mon­eti­sa­tion move. While de­mon­eti­sa­tion has been ex­tremely pos­i­tive for the com­pany and the in­dus­try, it has had short-term neg­a­tive im­pact on se­condary sales, which in turn has im­pacted pri­mary off­take. The com­pany ex­pects this pe­riod of ad­just­ment may con­tinue for the next few quar­ters till the time the se­condary mar­ket sta­bilises and cus­tomers start to pur­chase new prod­ucts. In the in­terim, the com­pany con­tin­ues to re­main fo­cused on ex­e­cu­tion and cre­ation of fin­ished in­ven­tory. With record de­liv­er­ies of 11 mil­lion sq ft in the first nine months of the fis­cal, the res­i­den­tial projects un­der con­struc­tion have come down to 19 mil­lion sq ft, DLF said in its earn­ings re­lease.

DLF said that its of­fice-leas­ing busi­ness con­tin­ues to wit­ness healthy trac­tion, backed by ex­pan­sion in the ser­vices sec­tor. The leas­ing rates ex­hib­ited growth in line with com­pany’s pro­jec­tions. Wit­ness­ing the de­mand in of­fice leas­ing, the com­pany is build­ing out two new of­fice com­plexes – Gur­gaon and Chen­nai. Re­tail sales at the malls, where the com­pany en­joys rev­enue share, did wit­ness some tem­po­rary fall­back. Al­most all of the re­tail­ers, with the ex­cep­tion of few, are now ex­pe­ri­enc­ing nor­mal sales mo­men­tum, the re­lease added.


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