DLF to cut debt by Rs 4,000 cr in FY14 as targeted

This development has raised some concern whether DLF will be able to achieve its net debt reduction guidance of Rs 17,121

India's largest realty firm DLF will cut debt by about Rs 4,000 crore this fiscal as targeted even if the company is unable to close the $300 million deal to sell the luxury hotel chain Amanresorts.

 

Last months, DLF said that it has started discussion with other potential buyers of Amanresorts as well after the deal with founder and Indonesian hotelier Adrian Zecha could not be concluded within the June deadline.

 

This development has raised some concern in the market whether DLF would be able to achieve its net debt reduction guidance of Rs 17,121 crore by March next year from Rs 21,731 crore at the start of this fiscal.

 

Sources, however, said that the target would be achieved as DLF has already raised Rs 1,860 crore in May by selling shares through IPP and expects to garner about Rs 2,200 crore from sale of non-core business/assets, excluding Amanresorts, for which the agreements have already been signed.

 

DLF has entered into an agreement to sell wind energy projects and its 74% stake in life insurance JV for about Rs 800 crore and Rs 300 crore, respectively.

 

It would mop up Rs 900 crore from land sale in Hyderabad and Noida. Nearly Rs 200 crore is expected from sale of investment in listed firms and its stake in Star AluBuild Pvt Ltd, a curtain walling firm.

 

When contacted, DLF Executive Director Finance Saurabh Chawla said: "I cannot comment on the specifics but can say that we are fully committed and on target to achieve our net debt guidance for 2013-14 fiscal".

 

Sources further said that DLF expects to sell Amanresorts by September end and if that happen, the company could reduce its debt to Rs 16,000 crore level.

 

The company is in discussion with three potential buyers including some global private equity fund, to sell Amanresorts even though it has not scrapped the deal with Zecha.

 

The non-closure of the deal by June deadline may prove to be beneficial for DLF due to fall in rupee value against dollar, sources said.

 

When the $300 million deal was announced in December rupee was ruling at Rs 55 and now it is over Rs 60, which means that the company could gain Rs 150 crore if the deal is around same level in dollar term.

 

In its analyst presentation in May-end, DLF had spelled out its three-year strategy to reduce net debt to less than Rs 10,000 crore by FY'16  by which time its annual rental income could be touching Rs 2,800 crore.

 

DLF had an annual rental income of Rs 150 crore at the time of its initial public offer (IPO) in 2007 and that has touched to to Rs 1,850 crore in last fiscal.