Struck with the liquidity crunch and slip in demand for its high-end and luxury projects, the developer has joined the league of real estate developers embarking upon the low-cost housing projects to generate more cash flows.
Its rival, the country's largest real estate developer, DLF, too posted a decline in its earnings in April with its net profit for the year fell by 41% at Rs 4,629 crore, from Rs 7,812 crore in 2007-08. Revenues also plummeted by 28% at Rs 10,541 crore as against Rs 14,684 crore during the previous year.
Sanjay Chandra, managing director of Unitech said, "During the quarter, while continuing to take measures to address the liquidity issues, the company successfully reoriented its product mix towards affordable housing. The company's new projects in the affordable housing segment received overwhelming response from customers".
However, the announcement that its immediate debt position was not under stress as it has managed to reschedule its repayments and good response to its low-cost, affordable housing projects saw the company's shares on the BSE closing up 5.19% at Rs 82.05.
Of its total reserves of over Rs 4,800 crore in the balance sheet, the company held Rs 644 crore as cash reserves. Also the company held debt to the tune of Rs 9,000 crore at the end of the financial year. The company also declared a dividend of 5% for the fiscal ended March 31, 2009.
The company had raised $550 million in the last two months through share and asset sales, and its debt position was comfortable after rescheduling most of its loan, Chandra had earlier stated.
The company, which is planning to become the largest residential real estate developer in the country, said: "Enthused by the overwhelming response for our new projects, we have set a target to launch 30 million sqft of space in the current fiscal. Of this, we expect to get bookings for about 20 million sqft."
The company said it was confident of generating sufficient cash flows from the sale of real estate products as well as non-core asset sales to meet its debt obligations and for the construction and other expenses for the current fiscal.
The earning per share for the year was Rs 7.37 on an equity base of Rs 324.68 crore. Total paid-up capital was represented by 162.34 crore equity shares of the face value of Rs 2 each.
Earlier this week, Unitech had informed the stock exchanges that the promoters had revoked over 5 crore shares pledged with lenders, bringing down the total pledged stake to 24.42%.
The promoters held a 64.52% stake in the company in March. The founders had pledged about 80.83 crore shares or 49.79% to lenders. Following the revocation, the total pledged stake of the promoters has come down to 24.42%, according to the company.