Unitech net profit surges on new norms, sales push

On the back of new accounting norms and aggressive sales, the country's second largest real estate developer, Unitech Ltd, today registered a 371 per cent increase in net profit to Rs 347.83 crore for the quarter ended June 2007.

Total income on a standalone basis for the quarter ended June 2007 stood at Rs 788.73 crore against Rs 306.21 crore in the same quarter of the previous year.

On a consolidated basis, the company recorded a net profit of Rs 365.67 crore and total income of Rs 899.67 crore. This is the first time that Unitech has declared a consolidated quarterly result.

The tremendous jump in net profit and sales is mainly on account of the new accounting practice in real estate. Realty firms can now book revenues from sales only in proportion to the completion of the construction of a project. This quarter, Unitech booked profits of many of the residential projects it had sold around a year ago in the National Capital Region. kBesides executing its announced project, Unitech will focus on entering west India in the coming quarters. The realty firm is in the process of aggregating land in Mumbai and its suburbs, south Maharashtra and Goa. "We will invest around Rs 4,000 crore in this region over the next three years," said Sanjay Chandra, managing director, Unitech.

The realty firm is also looking at foraying into the modernisation/privatisation of airports at Noida, Chennai and Kolkata. Unitech is talking to international operators to forge a joint venture. The Indian realty firm will keep the majority stake in the joint venture.

The company has also announced an investment of about Rs 18,000 crore in the next three years for development of various realty and infrastructure projects and acquire land for future projects. This investment will be funded through internal accruals and debts in 70:30 ratio. Unitech is not looking to engage in any capital raising initiative.

It is however considering a Real Estate Investment Trust (REIT) by 2008-09. Chandra said REITS provide a viable exit option from commercial properties as the company has changed its business model from selling to holding these capital assets by leasing them out.