HDIL – Company has 1 million square feet of TDR as stock in trade

Highlights-

• The company posted extremely disappointing set of numbers during the third quarter ended December 2008 with the revenue falling by 37% to Rs 313.79 crore as compared to the corresponding quarter of the previous year.
• The company follows a project completion method of accounting rather than the other methodology. So the sales are booked when the project is completed. So the previous quarter pertains to project completed during the previous quarter.
• 85% of the revenue was contributed by sale of FSI generated from slum rehabilitation projects whereas the rest of the revenue is contributed by TDR (Transfer of development right).
• The interest cost during the quarter under review increased significantly to Rs 14.15 crore as compared to just Rs 35 lakh during the same period last year.
• However during the quarter the company had an excess provision of income tax write back and MAT credit entitlement to the tune of Rs 109.22 crore. Thus after adjusting these write-backs the net profit posted a fall of 32% to Rs 184.88 crore during the quarter ended December 2008.
• Performance during the nine-month period ended December 2008 was disappointing too. The top-line fell marginally by 3% to Rs 1,361.43 crore during the period under review as compared to the same period last year.
• After adjusting for the excess provision of income tax write back and MAT credit entitlement to the tune of Rs 109.22 crore, the net profit after adjustment was 9% higher at Rs 768.51 crore during the nine-month period ended December 2008 as compared to the same period last year.
• The company during the quarter ended December 2008 sold FSI of 1 million square feet at Rs 2,600-Rs 2,700 per square feet. Less than 0.5 million square feet of TDR was sold during the same period at Rs 1,250-Rs 1,300 per square feet.
• The total interest cost of the company is below 14% and the company holds substantial land bank in Mumbai acquired at very cheap prices.
• The 3 Slum rehabilitation projects (SRA) of the company, i.e. Andheri SRA scheme I, Scheme II and Malad SRA scheme, most of development work has been completed.
• Currently the company’s main focus is to reschedule the major borrowings and liabilities and to focus on cash flows.
• Till 20^th January 2008 the company has restructured all its debt which was due in the next 6 months. The company has refinanced debt worth Rs 645 crore.
• All the company’s loans are from nationalized banks and the company has approached the bankers in order to reschedule its loans from 18 months to a period of 5 years.
• Rs 275 crore worth of Non convertible Debenture would fall due from April 2009 to March 2010. This is nearly 80% of the loan which is due next year. Hence the company is working with its bankers to reschedule this NCD.
• Rescheduling is being worked out from a bullet repayment to a repayment schedule of longer duration of 1 yrs to 5 yrs.
• The company is focusing on low and middle income housing projects. On 14^th January 2009 the company started its development work on its 1 million square feet project in Kurla with a saleable area of 7.5 lakh square feet. The project will have 850-900 flats of 1-2 BHK flats. The existing rate in these areas is Rs 7000-7200 per square feet; however the company plans to introduce the flat at a price of 5000-5200 per square feet.
• On this same day (i.e. 14^th January 2009), the company launched another project in Versova, Andheri for 2 million square feet of construction, that will be completed in the next 3-4 years. This project will have 325 apartments with commercial and real estate space as well. The company is hoping for a launch price of 8,500 per square feet.
• Both the Kurla- residential project and Andheri project is expected to bring in revenues over the next two-years to the tune of Rs 1,200 crore.
• The transfer of development rights (TDR) prices are trading around Rs 1000-1200 per square feet. TDR prices have corrected substantially since September-December 2008.
• The company has 1 million square feet of TDR as stock in trade.
• Advance from the customers now is Rs 250 crore, out of which Rs 100 crore are TDR advances.
• For the airport scheme, the company has four FSI on the entire airport scheme, which has been declared as a vital public project. The company has a total land bank of 192 million square feet currently.
• The net-worth of the company is Rs 4,405 crore. The debt on the books as on December 2008 is around Rs 4,055 crore and the company has a cash balance of Rs 100 crore.