Unitech's profit plummets on losses in telecom business

Loss of Rs 1,000 cr from erstwhile telecom business impacts bottom line

Real estate firm Unitech has posted a 91 per cent decline in consolidated net profit to Rs 5.6 crore in the June quarter, on account of losses of about Rs 1,000 crore in its erstwhile telecom business. The net profit in the year-ago period was Rs 62.9 crore, Unitech said in a statement.

The total income from operations grew two-fold to Rs 1,522.1 crore in the April-June quarter against Rs 572.6 crore in corresponding quarter last year.

“During the quarter, an extraordinary loss of Rs 990.73 crore arising due to wireless business was booked. Net profit for the quarter, therefore, was Rs 5.56 crore,” Unitech said.

However, profit after tax from ordinary activities during the April-June quarter increased to Rs 991.5 crore, compared with Rs 57.3 crore in the same period of FY14.

Unitech’s consolidated net debt reduced by Rs 407 crore during the quarter to Rs 5,908 crore. The net debt to equity ratio as of June 30 was 0.54.

During the quarter under review, the company extinguished its liabilities and obligations related to wireless business to the tune of Rs 1,094.7 crore. “Going forward, the company shall have no liability in this regard.”

In October 2012, Unitech had announced exit from the telecom joint venture with Telenor by selling its entire 32.75 per cent stake to the Norwegian firm.

It achieved sales bookings for 660,000 sq ft and launched projects totalling an area of 640,000 sq ft during the first quarter. The sales bookings in the residential segment stood at 260,000 sq ft valued at Rs 144 crore, while non-residential sales bookings of 400,000 sq ft valued at Rs 195 crore. The total value of sales bookings is Rs 339 crore. It also delivered 1.07 million sq ft of completed area.

Unitech’s managing director Sanjay Chandra said: “There has been a significant (20 per cent) reduction in debt and other liabilities during the quarter due to the previously-announced transaction related to transfer of interest in four IT SEZs.

This transaction also boosted the income and profit for the quarter. The higher profit has got offset by the extraordinary loss on account of wireless business, booked during the quarter.”

In June, Unitech had sold its 40 per cent stake each in four IT SEZ projects for over Rs 1,300 crore to Canada’s Brookfield Asset Management.

Commenting on the sluggish demand for real estate, Chandra said: “In this environment, Unitech has been focusing on maximising sales bookings from its existing projects and delivery of completed product. We welcome certain sector-specific measures taken by the government recently. These measures may take some more time to have their effect on the market.”