Our debt equity now is a number which realistically by June end should be less than 0.1:1 which frankly is almost zero, said Ashok Tyagi, Group CFO, DLF, in an interview with ETNOW.
I have been tracking this company since your IPO nearly 12 years ago. The major overhang has been debt. After this QIP of Rs 3,200 crore, the second one, is DLF indeed debt free or by when will it be completely debt free?
In all fairness, the debt issue is really yesterdays story. On December 31,st our net debt was about Rs 7,000 odd crore which with the QIP and the residual promoters contribution will be a number which will almost be about 2000 odd crore. There will be some additional liabilities towards land.
Our debt equity now is a number which realistically by June end should be less than 0.1:1 which frankly is almost zero. From 0.1:1 to actual zero might be a story of another two or three quarters but honestly, those numbers have now become irrelevant on the debt side. The debt issue is frankly behind us. That overhang has gone and now with this light weight from a leverage and gearing standpoint, we will hopefully come back into a growth mode.
Now that you do not have this pressure of debt on your your balance sheet, tell me more about DLF 2.0. You have been holding back on launches, you still have Rs 13,000-crore unsold completed inventory. What can we expect from DLF in the new financial year?
We have made it pretty clear even during the interaction we had in the last couple of months with analysts, investors etc. Going forward we will launch projects. We will begin launching for construction but the launching for sale will only happen at a late stage which is on or close to the entire completion happening. Everybody believes that is on account of regulatory issues, but it is more on account of the fact that the customer, given the kind of experiences they have undergone with multiple developers across the country, deserve a zero risk when they are buying a product and that is what we want to be.
As the next round of construction has begun, the project should hit the ground running. Next is our Central Delhi project which is now in a JV with GIC. For the next three odd years, we have the existing inventory of about Rs 12,000 crore. We believe that the Rs 12,000-crore inventory should liquidate in a three-four year period, depending on the pace of sale.
By that time, the next generation of project should be available for bringing to the market which should be Capital Greens, our JV with Hines in Udyog Vihar, which is a commercial project. We are applying to launch another commercial project in New Gurgaon and at some stage, with Crest now almost over, we will launch the construction of the next phase V project after Crest.
Crest is in Gurgaon. It is a premium project by DLF and that is your guidance to investors. There will be sales about Rs 12000 crore in the next three to four years. In a nutshell, that is what you are saying.
That is absolutely correct. On the commercial leasing front, we continue to grow aggressively. We have a project in Delhi and a project in Chennai which is near commissioning this year. We have lined up the next round of projects and we believe that between Hyderabad, Chennai and Gurgaon, we should be doing about 10 odd million sq ft of projects in the next three to four years.
The other important development besides the DLF QIP in the quarter has been of Indias first REIT listing by Blackstone and Embassy. Does DLF have any plan of reaching out any of its commercial real estate projects?
So a) we are delighted with the fact that Indias first REIT has finally got off the ground and had a very successful launch. Frankly, the REIT and the DLF QIP which is almost Rs 8,000 crore of investments coming in barely within a 8-10 days of each other, again reinforces the trust that investors have in Indias real estate sector.
From a DLF standpoint, about a year back, we did the entire JV with GIC. In some sense, it is like a private REIT. We believe that at some stage, GIC and us will decide to do a part REIT within that portfolio. But that may not happen at least in the immediate foreseeable future of about two to three years.
So for two to three years, we may not see a REIT listing?
About seven-eight years ago, there was an enforcement by the company to be in the affordable housing space. Is that a space that DLF would once again look at?
In all fairness, between 2009 and 2013, we did almost 30 odd million sq ft of across the country in mid range housing priced between Rs 2000 and Rs 3000 a sq ft. Frankly, given the construction cost escalations etc. we did not enjoy the margins that we made in those projects.
So yes, at some stage, is there a scope in our entire portfolio for doing a mid range housing? The answer is yes but we would have to look back at our tool box of execuRead More – Source