DLF hopes to reduce debt to Rs 10,000 cr in two years

The country's largest realty firm DLF expects to pare its debt burden of over Rs 22,500 crore to less than half in the next two years.

As part of the strategy to bring down its total debt to about Rs 10,000 crore by 2013, the firm is closing in on a few deals of to sell non-core assets, including Amanresorts .

"The plans are in place to reduce the debt by Rs 6,000 crore-Rs 7,000 crore in the next 18 months by selling non-core assets," a source said.

In the recent years, DLF has been selling its non-core assets to bring down its gradually mounting debt.

Along with sale of non-core assets, the company is also banking on increased revenues to help cut the debt.

"If the cash flows remain good and sales continue at a comfortable rate, the debt of the company will come down to around Rs 10,000 crore level in the next two years," the source said.

When asked about its debt reduction plans, DLF Vice Chairman Rajiv Singh had last week said: "Our plans are on track. We are in the process of closing a couple of deals to sell our non-core assets. I am sure, our efforts will pay off very soon."

According to the source, DLF is likely to generate Rs 1,800 crore-Rs 2,000 crore revenue in 2011-12 from rentals business that is growing 15% every year.

The company's net debt rose by nearly Rs 1,000 crore in the quarter ended September 30 to Rs 22,519 crore from Rs 21,524 crore as on June 30, 2011. It went up mainly due to delay in receipt of payments from non-core asset sales.

Earlier, the company had said it was targeting to bring the borrowings down to about Rs 19,000 crore by March 2012.

The company expects to raise about Rs 3,000 crore by March 2012 through sale of non-core assets such as IT Park in Noida, IT SEZ at Pune and hospitality business Amanresorts.

On selling its hospitality venture Amanresorts, Singh had said: "We are likely to close the deal by next quarter. We have got bids from many players and all of them are international firms."

He did not comment on the valuation of the deal that would include 29 properties of the hospitality chain that DLF had acquired in in 2007 for USD 400 million. Sources, however, had said the company is expecting about Rs 2,000 crore-Rs 2,500 crore from the deal.

It is also understood that DLF will retain the Delhi property of the Amanresorts.

DLF has been selling its non-core assets such as hotels and plots in the last few years to cut debt.

So far, the company had raised Rs 3,480 crore from sale of non-core assets. Earlier this year, DLF had announced plans to raise Rs 7,000 crore in the next 2-3 years.