Debt reduction continues to be the main focus of Delhi-based real estate firm DLF, which posted disappointing results during the September quarter with a 28% decline in consolidated profits and a 4% drop in sales. At the end of the quarter, the company?s net debt stood at R19,508 crore, against R20,369 crore in the preceding quarter The company remains committed to reduce its net debt to R17,500 crore by the end of the current fiscal. In an interview with Timsy Jaipuria, DLF group executive director Rajeev Talwar says that over the next three years the company?s net debt should come down to around R13,000 crore. Edited excerpts:
What is the current status of the non-core asset sale plans of the company? How hopeful are you about the sale of Aman Resorts?
We are on track for our non-core asset divestment plan. We keep reviewing our businesses to keep in perspective the various assets that can be divested to give us better returns. As far as Aman is concerned, we have been expanding the Aman portfolio and the business is doing well to garner good valuation for us. We are committed to $300 million as the sale price and are confident to achieve that figure, if not more. Talks are on with three-four international bidders, including a consortium led by Aman?s founder Adrian Zecha. Talks are at an advanced stage and when it happens is just a matter of time.
You also plan to sell your stake in the insurance business. What?s the progress there?
We have already signed a definitive agreement to sell our 74% stake in the insurance business to Dewan Housing Finance. However, the insurance sector is regulated by Irda and there are a lot of paper work and due processes that needs to be completed before the entire sale materialises. These processes takes time to complete but we are about to close the deal. I expect it to happen by the end of this month.
How are your commercial properties doing?
Commercial properties are doing well. Against a targeted leasing of 1-1.5 million square feet for three years, we have achieved leasing of 1 million square feet in H1 FY14 itself. Given the improvements in the infrastructure sector in Gurgaon, the leasing revenues will increase to about R2,700 crore in three years from now, up from R1,900-2,000 crore this fiscal.
Your target is to reduce net debt to R17,500 crore by the end of this fiscal. How hopeful are you of achieving that and going forward what are the targets the company has set for itself?
We should be able to reach the R17,500-crore debt figure with the sale of Aman and the insurance business. Further, we expect to reduce our net debt to around R12,500-13,000 crore over the next three years. To reach the figure of R12,000 crore would not be tough with operating cash flows and other non-core disposals.
We are well on track in terms of our sales targets. In addition, there will be one commercial launch in Gurgaon, while we continue to sell Camellias and unsold stock in other cities like Kochi, Hyderabad, Lucknow, Chennai, Chandigarh and Indore. In terms of leasing, we have already done 1 million square feet of net leasing in the first half against 1.2 million square feet last year.