HDIL plans up to 6 million sq ft of housing in FY11

HDIL plans to launch four to six million square feet of residential projects in the current financial year to take advantage of the demand for mid-income projects in Mumbai.

The country’s third-largest real estate firm by market value is expecting around Rs 2,000 crore cash flows from existing projects, new launches and sale of transferable development projects this fiscal, according to a top company executive.

The company sold seven million square feet of residential and commercial space and 6.5 million square feet transferable development rights last financial year.

Transferable development rights (TDR) mean additional development rights developers get in lieu of resettlement or rehabilitation projects they undertake on behalf of the government. The land can either be used by the company or sold to other developers.

Besides being the main developer in the Mumbai International Airport slum rehabilitation project, HDIL is looking at undertaking two-three redevelopment projects in south Mumbai, where apartment projects are priced Rs 45,000 to Rs 65,000 a square feet.

Although the company has launched residential projects aggressively in FY10, TDR sales still comprise nearly 95 per cent of its revenues.

According to consultants, realty sales have come down by up to 30 per cent in the June quarter and property prices have witnessed a sharp rise in cities like Mumbai.

However, to generate fast growth, HDIL sells apartments at prices that are 10 per cent lower than the market prices. “We follow penetration pricing and do not increase prices every day,” said Hariprakash Pande, vice-president, finance, at a conference call with analysts on Friday.

HDIL has a debt of Rs 3,264 crore and a debt to equity ration of 0.45. The company raised Rs 1,688 crore in July 2009 through a qualified institutional placement (QIP) and plans for one shortly.

The company posted nearly three-fold growth in its net profit at Rs 177.8 crore in the fourth quarter of 2010, primarily aided by improved sale of TDRs and homes.