Parsvnath Developers, the Delhi-based developer, brought down its construction cost by 83.5% in the December quarter.
The secret behind the amazing efficiency?
It hardly built anything.
The cost, therefore, is a paltry Rs 47 crore compared with Rs 284 crore in the same period last year. Not surprisingly, advance revenues from customers have fallen by 32% to Rs 328 crore from Rs 479 crore.
Pradeep Jain, chairman, Parsvnath Group, said in an analyst conference call on Tuesday evening the reduction in customer advances was due to partial cancellation of deals. “Secondly, many projects have not reached 30% completion stage after which customer advances could be booked and thirdly, there has been a reduction in customer advances,” Jain said.
During September, October and November, the company did not construct properties due to the worsening financial situation. Jain also said Parsvnath will hold further investments in some of the special economic zones (SEZ) for which it has been granted in-principle approval by the government.
The company is now developing commercial malls and villas, branding them ‘King City’ in tier II towns, but analysts said this can turn out to be another cash trap for the company as malls are shutting down and at present the spending capacity of individuals has declined. “This can stretch the already lacerated balance sheet of the company,” one analyst told Jain at the call.
Jain had earlier on Monday said that the company’s promoters have pledged more than 10% shares for its Delhi Metro Rail Corporation Ltd (DMRC) project in October. The announcement came after the Securities and Exchange Board of India made it mandatory for companies to reveal shares pledged by promoters.
The shares pledged with DMRC are a collateral. Shares have also been pledged with financial institutions for acquiring loans and for the Jamnagar project for which IDBI Bank is a trustee. The Jamnagar project, an integrated group housing and mall project on an area of 13,200 square metres, was estimated at Rs 120 crore.
The company has to repay a debt of Rs 100 crore of which some amount has already been restructured and some is in the process of being recast. Parsvnath also has to pay Rs 300 crore in the next financial year as debt repayment.
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