DLF presages operating surplus of Rs2,500 crore

DLF Ltd, the largest real estate developer in the country by market capitalisation, is looking to end the year with operating cash surplus of Rs2,500 crore, as it looks to raise Rs2,700 crore through non-core asset sales and healthy cash flows.

The developer is also looking at sales booking of 15-18 million square feet (msf) this fiscal as against 12.6 msf last fiscal. It will launch about 1-1.5 msf of the 4.5 msf luxury project at NTC mill in Mumbai around September, but necessary approvals are still awaited. 

The residential launches would be a mix of luxury, mid-income and affordable housing and would be primarily launched in the national capital region, Mumbai and Chennai. It recently sold 2 msf in Chandigarh.

DLF spokesperson was not immediately available to comment on the developments.

DLF had decided to raise Rs5,500 crore last fiscal via sale of non-core assets, but was able to raise only Rs1,800 crore. It will raise funds from land sale at Dwarka, Delhi, for Rs800 crore and Tidco in Tamil Nadu for Rs900 crore.

Chetan Majithia, analyst with Crisil, in a note to clients, said, “DLF had planned to divest its non-core assets and use the cash to lower its debt. The company expected divestments to generate cash of Rs5,500 crore in the fiscal 2010. However, the company was able to monetise only Rs1,800 crore during the year.

Less-than-expected divestment of non-core assets resulted in lower repayment of debt in fiscal 2010. This led to higher-than-expected interest costs.”

DLF is also looking to retire over Rs5,000 crore outstanding debt in 2010 by cash flows and asset sales. The realtor has a mandatory debt repayment of Rs2,600 crore in 2011.

The New Delhi-based company seeks to bring its debt equity ratio to 0.5 by 2011-end through debt retirement. It currently has gross debt of Rs21,700 crore and over .8 gross debt-equity ratio. It repaid about Rs5,600 crore last year against mandatory repayment of Rs3,549 crore.

The company is also seeing increased commercial leasing enquiries in Hyderabad, Chennai, Pune and Gurgaon, but actual transactions have not picked up at the same pace. Enquiries are coming in from sectors such as BFSI, IT, KPOs and BPOs.

The realtor leased 0.76 msf last year and is looking to lease out at least 1 msf per quarter. It earned rentals of Rs750 crore last year and is looking at rentals of Rs1,600 crore in 2011. The Singapore listing of its subsidiary DAL would materialise once the substantial portion of the portfolio is leased out which currently is at 6 msf out of the total 13 msf.