DLF, the nation’s biggest real estate developer, has raised Rs 720 crore from selling bonds to insurance companies as part of its plan to raise Rs 5,000 crore from such sales.
DLF on February 24 raised the funds through issue of non-convertible debentures maturing in five years which offered as much as 14 per cent interest, sources in the company said. The bonds were sold to Life Insurance Corporation (LIC) of India and a few others. DLF officials were not available for comments.
DLF in March disclosed plans to raise Rs 5000 crore from selling bonds to investors. It received a ‘AA stable’ rating for the issue from Crisil. However, the rating company in January downgraded the real estate developer’s pass through certificates to ‘A+’ from ‘AA-’ because of “slowdown in the company’s real estate sales”.
The developer, while announcing its quarterly results, admitted that it had put a quarter of its projects on hold.
The rating company believed that the sales would continue to adversely affect DLF’s operating cash flows. The realtor has been forced to increasingly rely on refinancing of its debt, Crisil said.
DLF, which has to repay as much as Rs 4,300 crore of loan by June this year, has already refinanced about half of the amount. The developer has been able to refinance Rs 2,000 crore at 12-13 per cent interest rate, company sources said. The company doesn’t have loan repayments for next two years after June, the officials said.
The company plans to raise the remaining Rs 2,300 crore from selling bonds, discounting lease rentals and selling stake to private equity investors officials said.
While assigning the revised rating in January, Crisil believed that DLF had comfortable liquidity, backed by cash and bank balances of nearly Rs 800 crore. The realtor planned to raise loans of about Rs 4,900 crore against its portfolio of leased assets, CRISIL said.
DLF’s consolidated profit in the fiscal third quarter dropped 69 per cent to Rs 670.79 crore. Sales of the Kushal Pal Singh-owned company fell 62 per cent to Rs 1366.67 crore in the three months ended December 3.
