DLF’s net debt increases by 31% to ₹4,461 crore; get out of debt within a year
NEW DELHI : The net debt of real estate major DLF increased by 31% in July-September to reach ₹4,461 crores from the previous quarter, but the company expressed confidence that borrowing will fall to an “insignificant level” in the next year thanks to higher sales.
DLF net sales increased by 16% to reach ₹725 crore in the second quarter of this financial year against ₹625 crore in the period a year ago.
At the beginning of the financial year, DLF had given a sales forecast of ₹2,700 crore for the full fiscal year 2019-2020, the company said in a presentation.
Net debt amounts to ₹4,461 crores as of September 30, 2019, from ₹3,416 crore at the end of the first quarter of this fiscal year. The company borrowed more than ₹2,000 crores from July to September 2019.
“It will take about four quarters to reduce our level to an insignificant level,” DLF full-time director Ashok Tyagi said on an investor call.
In the presentation, DLF said it had leftover unsold inventory of ₹10,145 crore against the peak of around ₹15,000 crores.
On Thursday, DLF announced a 19% increase in its consolidated net profit to ₹445.85 crores for the second quarter of this fiscal year and announces the appointment of Vivek Anand as Group Chief Financial Officer (CFO).
The company’s net profit is ₹374.74 crore in the period a year ago.
However, total revenue fell to ₹1,940.05 crore in the July-September quarter 2019-20 compared to ₹2,304.9 crores in the corresponding period of the previous year.
During the second quarter, DLF’s tax expenditures fell to ₹74.21 crores of ₹139.31 crore a year ago as its operating expenses fell to ₹1,827.89 crore ₹2,031.39 crore.
The company made an exceptional profit of ₹143.56 crores in the July-September quarter.
In a press release, DLF specifies that its promoters have infused the last tranche of funds in the amount of ₹2,250 crores in the business in the second quarter.
With a total infusion of ₹11,250 crore is one of the biggest infusions by promoters in an Indian company. DLF has now successfully completed the entire process of transforming its balance sheet, he added.
The company said it will now focus on monetizing its completed inventory as well as building the future pipeline of projects to fuel growth.
“Our build and sell strategy has proven successful. Given the overhang due to many factors, markets should lean towards developments that are either completed or in advanced stages of completion and mitigate various risks perceived to be attached to projects under construction.
“Given this belief, the company has embarked on the development of new asset construction in select high-profile locations, in the residential and commercial segments, which will enable significant construction during the period in which existing inventory will be sold,” Tyagi said.
DLF said it plans to develop 17 million square feet of space in the commercial and residential segments. The company has started construction of Midtown, a project in central Delhi comprising 1.9 million square feet. The total development potential of the project is approximately 8 million square feet, which is expected to be developed over the next five to six years.
Regarding its commercial project in Gurugram in joint venture with Hines, the company said that the joint venture has now started the process of obtaining pre-construction approvals.
In the annuity business, commercial activity continued to show good growth. “Gross leases completed during the quarter amounted to 0.97 million square feet, of which 0.82 million square feet is attributable to his company JV DLF Cyber City Developers Ltd (DCDCL).
DLF has finalized its development plan for a branded mixed-use development near its existing DLF Cyber City business district.
The company has inaugurated the first phase of this development, of approximately 3 million square feet. The total potential of this development will be approximately 11 million square feet and will also house a state-of-the-art retail destination.
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