Demonetisation played spoilsport for realty major DLF, reporting a 46 per cent fall in profit to Rs 98 crore and a 30 per cent dip in net sales to Rs 2,058 crore in the quarter ended December, compared with the year-ago period.
DLF said sales would continue to be muted for some quarters. "Weak sales and collections will lead to operating shortfall of Rs 750-1,000 crore per quarter. This will result in a temporary spike in net debt levels, for which financing is already in place," went its presentation.
Terming currency demonetisation as good in the long term, DLF said the note ban had an adverse impact on market sentiment, especially secondary market transactions, which in turn had a "negative impact on primary sales".
"The consensus expectation is that normalcy shall return in the next few quarters. The primary market will improve when the secondary market stabilises," the presentation said. DLF will continue to focus on implementation.
"In its budgetary proposals, the government has proposed various initiatives for affordable housing, very positive for the real estate sector as a whole. Not only will it create new urban sectors but also positive momentum for the commercial sector," DLF said.
On its rental business, the company said leasing demand for office space remained stable. "In the long term, as banking and e-commerce transactions increase, demand for office space will continue to experience a positive momentum," it added.
On malls, "despite temporary disruption to retail sales in the past quarter, most retailers are experiencing a V-shaped recovery in their sales".
The company said it had taken an extension till March 2018 to complete the 40 per cent stake sale in its rental arm, DCCDL, for an estimated Rs 12,000-14,000 crore. It would, it said, soon announce a deal. It had announced in October 2015 that its promoters would sell their entire stake in DLF Cyber City Developers Ltd (DCCDL), which holds the bulk of the group's commercial assets.
Global investors Balackstone and GIC are in the race to acquire the 40 per cent stake of the promoters of DLF in DCCDL. DLF holds the remaining 60 per cent. The promoters would infuse a significant amount in
DLF to cut the net debt of Rs 24,000 crore. "We are in the final stage of discussion with the prospective investors," group finance head Ashok Tyagi said.
Saurabh Chawla, senior executive director, told analysts the transaction was in the "last leg" and would be soon presented to a committee of independent directors for evaluation.
To allay market concern over delay in the proposed deal, Chawla said the extension of deadline for conversion of the compulsorily convertible preference shares (CCPS) issued to the promoters in DCCDL by a year (it had announced this on Tuesday) did not mean the transaction had been delayed by a year. Progress had been slow, he said, due to the deal size and the complexities. The attempt would be to announce it in this financial year (before end-March).
DLF has about 30 million sq ft of commercial area, with annual rent of Rs 2,700 crore. Of that, DCCDL holds about 22 mn sq ft.