Business Standard

Amid rising costs, realty firms spend less

Related News

Real estate firms claim rising input costs have hit them hard. However, this doesn’t reflect in their expenditure. In the results for the quarter ended June, realty companies recorded a significant drop in employee expenses, cost of construction and materials consumed, etc. Much of this can be attributed to the slowdown in construction.

In the past one year, inflation in input costs has been 10-15 per cent, say. However, their overall costs fell, owing to fiscal consolidation by firms, limited new launches, downsizing staff, the and a delay in deliveries.

India’s largest real estate company, DLF, saw its total expenditure fall 34 per cent to Rs 1,309 crore in the quarter ended June from Rs 1,982 crore in the year-ago period. The sequential fall in total expenditure stood at 13 per cent. The cost of land, plots and constructed properties dropped 50 per cent— from Rs 1,268 crore in the year-ago period to Rs 644 crore in the quarter ended June.



Housing Development and Infrastructure (HDIL)’s costs declined from Rs 233 crore in the year-ago period to (-) Rs 68.32 crore.

Unitech’s costs fell came 28 in the quarter to Rs 362.9 crore, compared with Rs 504 crore in the corresponding period last year. “A lot of emphasis is also being laid on improving various processes to drive efficiencies and reduce costs,” stated Ajay Chandra, managing director, Unitech.

Not just a fall in expenses, delays in deliveries and a slowdown in revenue also resulted in reduced costs for these firms, said Anubhav Gupta, analyst, Kim Eng Securities. did not launch any new project during the quarter. The company’s net sales fell 10 per cent to Rs 2,197 crore, compared with Rs 2,447 crore in the corresponding quarter last year. It recorded sales of 1.34 million sq ft in the quarter, compared with 2.3 million sq ft in the year-ago period. “A total of 20-30 per cent of the revenue for DLF comes from non-core asset sales, and the rest from property development. As property development business is declining, we saw revenues fall and eventually, that was reflected in the reduction in cost,” said an analyst.

Gupta said in the quarter ended June, deliveries fell 25 per cent year-on-year, as pre-sales declined 50 per cent on an annual basis, and 80 per cent quarter-on-quarter.

Unitech’s net sales stood at Rs 407.74 crore, the lowest in the recent past, against Rs 615.46 crore in the year-ago period and Rs 716.29 crore in the quarter ended March.

In a sharp decline in construction, of the 32 projects launched by before March 2009, 10 are yet to be completed or handed over, while 22 are in the last, or handing-over, phase. And, of the 66 projects launched after March 2009, only eight per cent are nearing completion, while eight are yet to start.

recorded a revenue drop of 60 per cent year-on-year in the June quarter---from Rs 514 crore to Rs 211 crore.

DLF’s employee benefit costs fell to Rs 140 crore in the quarter ended June from Rs 148 crore in the year-ago period. For HDIL, employee benefit expenses dropped 17.5 per cent---from Rs 10.7 crore in the corresponding quarter last year to Rs 8.8 crore.

“Since companies don’t have many projects, they are downsizing team sizes,” said an analyst, while another added companies might not fill vacancies, owing to the slowdown in the realty sector.

Read more on:   
|
|
|
|
|
|
|
|

Read More

Brass industry fears 25% dip in turnover

Jamnagar-based brass parts industry is fearing 25 per cent decline in the turnover for the current year as weak monsoon and dull economic conditions ...

Quick Links

Advertisement

Back to Top