Net debt of India's largest realty firm DLF rose by Rs 900 crore during the September quarter to Rs 26,800 crore and the borrowing could rise further to meet construction cost of its ongoing projects amid a demand slowdown in the property market.
DLF expects to reduce its debt significantly from the proposed infusion of over Rs 13,000 crore into the company by the end of FY18, mainly from promoters' stake sale to GIC.
Net debt increased to Rs 26,799 crore as on September 30, 2017, from Rs 25,899 crore at the end of the previous quarter, DLF said during an investor presentation.
The company had a negative cash flow during the second quarter of the current financial year as it stopped sales bookings between May and October but there were no brakes put on the construction of its ongoing projects.
"Operating shortfall shall continue till new sales volume and collections pick up while at the same time construction spend shall continue. Continued capex in new office complexes and construction spend on residential (units) shall result in temporary negative cashflow and spike in net debt levels for which financing is already in place," the presentation said.
On sales bookings, the company said it had suspended sales in May 2017 taking a cautious, conservative approach to understand the rules and regulations under the real estate regulatory Act and GST. New sales booking have now been opened with effect from November 1.
The company said operating cash deficit of around Rs 750 crore per quarter will continue for the next two quarters.
DLF's CFO Ashok Tyagi had earlier said the company has an unsold inventory of around Rs 15,000 crore.
"Out of 15 million sq ft under construction in our residential business, 13 million sq ft will be completed by March next year. Around 8 million sq ft is ready to be handed over to customers shortly," Tyagi had said.
On the debt reduction, the company is banking on the infusion of funds from promoters.
In late August, the DLF promoters decided to sell their entire 40 per cent stake in the company's rental arm DLF Cyber City Developers Ltd (DCCDL) for Rs 11,900 crore.
This deal included the sale of 33.34 stake in DCCDL to Singapore's sovereign wealth fund GIC for Rs 8,900 crore and a buyback of the remaining shares worth Rs 3,000 crore by DCCDL. Post this deal, DLF will have 66.66 per cent stake in DCCDL.
On Saturday, DLF said it expects the sale of its promoters' stake to GIC to be concluded by December and infusion of proceeds into the company by February 2018.
DLF expects infusion of over Rs 13,000 crore into the firm, which will include Rs 10,500 crore from promoters and another Rs 3,000 crore from institutional investors to maintain the minimum public shareholding.
The deal has been approved by DLF's public shareholders as well as fair trade regulator CCI.
"We are hopeful of concluding this deal and subsequent infusion of funds into DLF within this fiscal," DLF's Senior Executive Director (Finance) Saurabh Chawla had said.
The promoters will receive the proceeds this calendar year and will infuse funds into DLF by February 2018, he added.