Real estate major DLF is likely to close the current financial year with a realisation of around Rs 1,600 crore from non-core asset sale, the same level that was achieved end of the December third quarter. The fourth quarter of 2011-12 will be muted for the company, with all big ticket non-core asset sales now pushed to 2012-13.
“I don’t expect the realisation to be significantly higher than this (Rs 1,600 crore),” DLF group CFO Ashok Tyagi told Business Standard. “The non-core asset sales will overflow the March 31 deadline,” he added.
The company was targeting Rs 6,000 crore to Rs 7,000 crore from divestment of non-core assets by March 2013. This financial year, DLF was eyeing Rs 3,000-3,500 crore from sale of two mega non-core asset sales, Aman hotel and Pune SEZ.
Of the Rs 6,000 crore to Rs 7,000 crore non-core asset sale target, around Rs 5,000 crore will be used by the company to cut its debt, Tyagi pointed out. As of end of third quarter, DLF had a net debt of Rs 22,758 crore.
But why is the Aman (hotel) deal getting delayed? “Those interested in buying Aman are global players. The global crisis in Europe and markets not being easy in India due to high interest rates, are resulting in the delay,” said Tyagi. He added, “We will do the transaction at the right value.” The group has for long been wanting to sell Aman hotel, excluding its Delhi chain (earlier Lodhi hotel).
The company offloaded its Pune SEZ to Blackstone in the October –November quarter at Rs 810 crore. Despite raising Rs 1,600 crore in the first three quarters of this financial year from non-core asset sale, its net debt did not see a significant decline.
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In the first quarter, the net debt went up by Rs 100 crore, in the second quarter it rose Rs 1,000 crore and in the third quarter it came down by a mere Rs 169 crore, against sales worth over Rs 1200 crore in that quarter.
“Around Rs 300-400 crore per quarter is the minimum capex requirement to sustain ourselves in this business, which is around Rs 1,200 crore a year,” according to Tyagi. “There was a spike in this requirement during the quarter, he added.