Piramal Capital to restructure some ongoing projects

Housing financier Piramal Capital is working on restructuring of some of the 200-odd residential projects it has invested in, as the lockdown has severely impacted the already sluggish realty market.

The ongoing coronavirus-driven lockdown has impacted almost all economic activities, especially the real estate sector, as construction activities along with sales and collections have come to a complete halt since March 25.

"Our realty market has gone through various tsunamis in the past three years beginning with demonetisation, RERA and the GST. But today's challenge is different. The government will have to offer some package for the sector and at the same time, as investors, even we need to see what can be done to ensure to complete the projects. In addition, the developers will also have to do their bit by providing additional security," Piramal Capital Managing Director Khushru Jijina told PTI.

Piramal Capital and Housing Finance has invested in over 200 residential projects and its wholesale residential realty disbursement was around Rs 24,085 crore as of December 2019.

He said the company has already started an exercise of evaluating these projects as it needs to understand the impact of the pandemic and also to come up with a solution to ensure their completion.

"We are evaluating the projects because we need to understand the impact of delayed construction, sales and collection due to the lockdown. Each project will require a different set of solutions -- some could be restructuring under the DCCO, for some it could be a top-up from the unutilised credit lines, among others. We are almost close to completing this exercise for each project," he explained.

DCCO or the date of commencement of commercial operations refers to the date when the project was initially envisaged to be completed.

The Reserve Bank of India has made a special provision for the real estate sector by allowing rescheduling project loans by a year by changing the DCCO.

Asked if he fears more drop in prices, as is being seen by many industry experts, and the resultant pains, he said project completion should be the priority and not prices.

While some developer associations expect a 10-15 per cent price drop, HDFC Chairman Deepak Parekh last week said he expected prices of unsold inventory to fall by nearly 20 per cent due to COVID-19.

"We are focused on project completion because unless they are completed other issues like whether interest rates will fall or prices should come down, are irrelevant," Jijina said.

He also pointed out that investors will have to handhold developers if they wanted to get their investments back.

"And again for that to happen, it is crucial that project is completed. As investors and stakeholders we are cognizant of the fact that the most important thing is that the projects are completed and we are working with our developers to ensure that," he said.

He also noted developers will also have to participate by providing additional security to ensure project completion.