DLF Ltd, the largest real estate developer in the country, recently reported its quarterly results. Its net profit fell 5% to Rs 1940 crore.
DLF Ltd, the largest real estate developer in the country, recently reported its quarterly results. Its net profit fell 5% to Rs 1940 crore. DNA Money’s Vivek Seal caught up with Rajiv Singh, vice-chairman of the Delhi-based company after the results media briefing for a quick chat. Excerpts:
What was the reason for the drop in net profit this quarter?It is just because of the product mix — our mid-income housing has reached a large portion of our business, and it is a natural compression of margins, which was anticipated by us. Last year most of our revenue came from luxury and high value commercial properties. This year that portfolio has changed ... the mix is still delivering 50% margin.
What are your plans for DLF Assets (DAL)?DLF Assets has multiple options. It has an option for equity investment in anticipation of future listing in the Singapore market.
By end of this fiscal, we expect rentals in excess of Rs 600 crore net of taxes per annum would be created in DLF Assets. If you take that number and apply domestic financing options to it, that would unlock Rs 3,500 crore of cash. Receivables from DAL can be met by taking on debt in DAL against the income generated in it.
Right now, we are looking at equity investment first and debt later, but if market remains at current situation then we might reverse that order. If all goes well, we could expect to receive between debt and equity a sum in excess of Rs 5,000 crore from DAL this financial year. The mix would depend on markets — very tough to say now but it could be 60:40 equity-debt.
Your staff costs have gone down? Any layoffs in the quarter?Our staff strength is down about 10% and, let me reiterate, it is only through attrition, there has been no layoffs. As we mature, our hiring and training costs have gone down with better productivity — we have a headcount of around 3,500 now.
We continue to hire in areas like mall management, expat talents etc.
How steeply have borrowing costs gone up?Our latest borrowing was at 16% and the transaction was in September. Our average borrowing cost is under 12%, and total consolidated debt is about Rs 14,000 crore. Our debt equity ratio is 0.6 — we have reduced the debt-equity ratio even in the current scenario. About 4,000 crore debt is for our new initiates in hotels and power generation. We do not foresee any rollover of loans.
How can the demand for housing be revived from industry perspective?I think the government should give incentives for home loans. I think we would be able to maintain stable environment in medium-term scenario. Our homebuyers need sharp home loan rate corrections. The government must support the average first-home buyer.
How is buyback of shares going on?We will respect Sebi guidelines, which requires us to buy back shares consistently. We will not be greedy on the buyback scenario as we will first look at our operations, customer commitments and investors commitments.
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