The Karnataka government returned Rs 400 crore to cash-strapped DLF on May Day.
The Karnataka government returned Rs 400 crore to cash-strapped DLF on May Day. Separately, the country’s biggest developer has decided to go slow on new projects in seven of the eight verticals it operates in — the exception being residential property development.
Housing currently accounts for about 60% of the company’s revenues and this skew could accentuate substantially with the change in strategy.
As part of this, several projects including an 18 acre commercial project at Whitefield in Bangalore and a 5 acre mall project in Chennai are likely to be converted into residential and mixed development projects, a source in the company said.
There will be a go-slow on commercial property, hotels, cinema and infrastructure projects, the source said. The decision to go slow on non-housing verticals has been communicated internally to the senior management of the company, said a source in the know.
The company is currently executing 36 million square feet of space.
Meanwhile, Rajiv Singh, vice chairman, DLF, said in a conference call on Saturday that the company will raise Rs 5,500 crore through sale of non-strategic assets, a move he explained as “deleveraging and liquidity preservation”.
Singh said sale of assets worth Rs 3,500 crore is currently on, and the company is trying to cobble together another Rs 2,000 crore of disposable assets.
Earlier, DLF had paid large advances to various state governments to build townships and commercial projects. Following the economic slowdown, the builder is seeking refund of the advances because the projects are not moving at the expected pace.
The company also posted a stunning 93% decline in fourth-quarter profit to Rs 159 crore as it sold less properties due to decline in demand and had to lower the sale price on many properties, hurting margins.
A senior Karnataka government official told DNA, “The project has been called off and the money has been refunded to the developer on May 1.”
A senior DLF official confirmed to DNA Money the company has indeed received two cheques totalling Rs 400 crore drawn in favour of DLF Limitless Ltd. He said the cheques are yet to be encashed owing to the long weekend.
But Rajiv Singh told DNA on Saturday evening he wasn’t aware of the money coming in and requested time till Monday to confirm receipt.
Meanwhile, the Rs 400 crore deposit was lying with the Karnataka government for the past one-and-a-half years after the ambitious Bidadi Knowledge City project, estimated to cost a whopping Rs 60,000 crore, was scrapped following the state’s inability to acquire the necessary land for it and also a change of ruling government.
It was to be set up through a joint venture with the Dubai-based Limitless.
The refund comes on top of the Rs 203 crore returned by the Haryana government earlier to the company after a few commercial and IT projects slated to come up in Gurgaon were aborted.
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