Realty major DLF’s net debt rose by Rs 633 crore to reach nearly Rs 21,600 crore at the end of the April-June quarter but the company said it is looking to raise private equity funds at project level to reduce debt.
Country’s largest realty firm is exploring the possibility of partially monetising its rental assets, comprising about 30 million sq ft with Rs 2,400 crore annual rental income, for sharp reduction in debts.
According to a presentation to analysts, DLF’s net debt increased to Rs 21,598 crore as on June 30, 2015 from Rs 20,965 crore at the end of the March quarter.
Of the total debt, the company said that the net debt attributable to development business (DevCo) was Rs 7,598 crore while Rs 14,000 crore pertained to rental arm (RentCo).
On debt management, DLF said: “The company is fully committed to improving its quality of debt and also to reduce debt attributable to the DevCo”. It continues to tap banking or capital markets to access long tenor debt.
Earlier this week, DLF raised Rs 1,000 crore through non-convertible debentures.
“It is also in dialogue with a few marquee private equity investors at the project level which would reduce DevCo debt, thereby mitigating market risks whilst sharing financial returns,” the presentation said.
On rental business, DLF said its offices and retail business would continue to show decent growth.
“The company is exploring possibilities of partnering with large, long term investors in order to participate in this growth and create substantial shareholder value.
“The company has created a large platform of rent yielding commercial office and retail assets which is now ready to be partially monetised through sale of equity. This strategy shall allow the company to sharply reduce debt,” DLF said.
With the clarity emerging on the REITs (Real Estate Investment Trusts) code and tax applicability, DLF said the committee of independent directors would shortly provide the guidance for the growth of the rental business.
The committee report would also help resolve the issue of promoter’s CCPS (Compulsorily Convertible Preference Shares).
“The company is taking appropriate steps and initiatives to resolve the CCPS issue. We can expect a completion of the process in a short period of time,” it said.
In 2009, DLF had merged its subsidiary DLF Cyber City Developers Ltd (DCCDL) with promoter firm Caraf Builders & Constructions. DCCDL had then issued CCPS worth Rs 1,597 crore to promoters.
Yesterday, DLF reported 5 per cent decline in net profit to Rs 121.55 crore for the quarter ended June due to higher finance cost and rise in operational expenses. However, total income increased to Rs 2,345.62 crore in April-June quarter of 2015-16 from Rs 1,851.6 crore in the year-ago period.