For the nine months ended Dec’08, total outstanding amount receivable from DAL stands around Rs 3000 crore. DAL on the other hand is facing tough times as it is not able to lease out the commercial properties and there has been many cancellations and problems in renewable of existing leases. In such circumstances it would be difficult for DAL to pay money back to DLF. The management of DLF has indicated that they are looking for some private equity participation in DAL or if the capital market improves, listing the DAL.
New launches were put on hold and ticket size of existing projects shows some changes. In luxury home segment there was no incremental sales during the quarter. The sales for mid income housing segment also was around 40 units as against average of 400 units per month. Overall the customers totally lacked confidence in future of their jobs or business or whatever they do. In such circumstances even the genuine buyers are also taking a back step.
Further there is huge expectation within the system that the real estate prices and the interest rates, both are on southward direction. In such circumstances and given the uncertainty lying ahead, everybody is delaying their exposure to real estate. According to the management also, both real estate price and interest rates will come down. Infact in some locations, the management expects the real estate prices equivalent to 1998 inflation adjusted index. Although in major part of the country price erosion in the range of 20-40% is visible, the same is not enough to create demand. The management has indicated that the company is ready to fight the price war and would offer customers lucrative prices and discounts. Further the luzury housing category projects are tweaked and are converted into affordable housing projects, where company is anticipating demand to generate in future.
Total Debt as on Dec’08 stood at Rs 15525 crore at average cost of 12%, while the cash & bank balance stood at Rs 697 crore. The debt includes cumulative convertible debentures of Rs 732 crore. There was no new debt used for operations in last quarter and the increase in debt is largely due to consolidation of loan flows into JV with Akruti, Silverlink etc. Of the total debt, Rs 2060 crore are to be repaid in next 3 months. The company is trying to meet the same through long-term funds.
The company had under construction of around 35 M sf area of which the construction of nearly 12 M sf of area has been suspended till financing of the projects are tied up.
In lease and commercial segment, the company does not expect any incremental lease and sales respectively due to customers adopting wait and watch approach and general weak sentiment in the market. In retail segment also no sales was booked during the quarter, although some lease was booked because of one of projects. No new launches expected in this segment. Of the total 12 M sf of under construction, nearly 40% is postponed due to funding crisis. The same holds true for hotel sector as well and of the 62 M sf are under construction, nearly 30% of the projects are suspended till project financing is undertaken.
There are at present around 3122 employees within the company and some restructuring has been undertaken in view of some postponement of projects.
Overall the company has mentioned that they will adopt a very cautious approach and will focus on timely completion of the existing projects