Poor sales push DLF's net debt up by Rs 700 cr in Jan-Mar to Rs 25,096 cr

Debt may to rise further as costs on running projects mount, sales remain muted next few quarters

Realty major DLF's net debt has increased by nearly Rs 700 crore in January-March quarter of the last fiscal at Rs 25,096 crore as housing demand continued to be sluggish.

DLF's net debt is likely to rise further due to expenses on construction to complete ongoing projects even as sales are expected to be muted for the next few quarters.

According to an investors' presentation, DLF's net debt went up to Rs 25,096 crore as on March 31, 2017 from Rs 24,397 crore at the end of December quarter of last fiscal.

The real estate sector will continue to face significant over-supply and poor demand in the short run, the country's largest realty firm said.

"Low sales coupled with outflow due to project completion will cause stress in the operating cashflow. New sales shall continue to be muted for next few quarters. However, execution will continue at current pace.

"Postponement of sales and collections will lead to operating shortfall for next two to three quarters. Continued Capex and execution as forecasted. This shall result in temporary spike in net debt levels for which financing is already in place," the presentation said.

Yesterday, DLF reported a Rs 135.63-crore consolidated net profit for the March quarter of the last fiscal, mainly on account of lower tax outgo. It had in contrast posted a net loss of Rs 180.54 crore in the same period of 2015-16.

Total income fell by 8 per cent to Rs 2,511.37 crore in the fourth quarter of the last fiscal from Rs 2,732.76 crore in the year-ago period.

Tax expense fell to Rs 54 crore from Rs 164 crore while the company earned exceptional profit of Rs 94 crore during the period under review.

For the 2016-17 fiscal, the net profit more than doubled to Rs 694.17 crore from Rs 331.95 crore in the previous year. Total income, however, fell by 16 per cent to Rs 8,940.51 crore in 2016-17 from Rs 10,597.04 crore in the previous year.

Commenting on the result, DLF had said the company passed through a "turbulent year", but it is focusing on swift execution and timely completion of its projects. It completed 14.5 million sq ft in the last fiscal.

DLF would continue to create healthy pipeline of finished inventory and sell those units when demand bounces back.

"The impact of demonetisation has abated. Demand is returning back but it is weak. Coupled with the softness in demand, we anticipate that RERA and GST would lead to uncertainties in short term," the company had said.

With the implementation of the Real Estate Regulation Act (RERA) across states, DLF said the sector is on the brink of a huge structural change, although it might face some temporary headwinds.

The law would benefit the sector significantly over the medium term by restoring confidence amongst the consumers and bringing in transparency and accountability in the sector.

On the GST, DLF said it is gearing up to implement the same, some vendors may need some time to adapt to the changes. "There could be some temporary disruption before the entire process stabilises to the new regime," it added.