DLF has ambitious plans of making money from sale of non-core assets

NEW DELHI: India’s largest realty firm DLF Ltd recently announced that it expects to generate Rs 2,000 crore from the sale of non-core assets, including hotel plots, in the next 12-18 months. Against the medium-term target of Rs 5,500 crore, the company has raised Rs 2,507 crore in the last 18 months, DLF told investors in an analyst presentation. The company has also decided to retain its wind-power venture, which was valued at Rs 1,000 crore. In the first half of the current fiscal, the wind power arm of the real estate major garnered Rs 707 crore. The proceeds would be raised from land bank rationalisation and refunds from state government authorities.
Meanwhile, in a conference call with analysts, DLF Executive Director (Finance) Saurabh Chawla said the sale of non-core assets would take place in new Gurgaon, where the company has surplus scattered land parcels. DLF said its net debt had reduced to Rs 19,913 crore as of September 30 from Rs 20,107 crore at the end of the first quarter.
The real estate giant believes that their continued focus on de-leveraging will continue with funds coming from operational cash flows and non-core asset investments. Stating that the current average cost of debt is 10.5 per cent, DLF said its debt-equity ratio currently stands at 0.73. Going ahead, the company declared that it will continue to use all free cash flows to reduce debt on an accelerated basis, as well as improve the tenure and quality of debt. It will also explore other possibilities for further reduction of debt costs.
DLF hopes to achieve a net cash flow of Rs 750-1,000 crore each quarter from operations and recoveries.
Chawla said the company expects rental inflow to amount to Rs 1,700 crore by the end of this fiscal. In the last two months, the company has leased out 2.5 million sq ft of area and expects to find takers for another 4.5 million sq ft by March, 2011.
The company plans to launch more projects, including plotted development, in Gurgaon and Chandigarh in the coming quarters, he added.