Real estate major Parsvnath Developers plans to reduce its debt by selling some of its land parcels. The realty firm has Rs 1,250 crore of net debt, and hopes to complete its debt-trimming exercise over the next 15 months.
Pradeep Jain, chairman, Parsvnath Developers told CNBC-TV18 that first round of bidding for its 1.18 acre CBD land area (KG Marg) in Delhi has been completed.
“We have given the exclusive mandate to Jones Lang LaSalle (JLL) for running the transaction and they are in the final round of the transaction,” Jain said. The company had bought this land for about Rs 200 crore in 2008.
Reports indicate that Sahara, Bhushan Steel, Red Fort Capital, ICICI Bank, Bharti Realty and Shri Lal Mahal are among the bidders. It is also learnt that the company has received bids of up to Rs 700 crore already for this land parcel.
However, ICICI Bank has denied that it has bid for the plot.
"We would like to clarify that the report on ICICI Bank's interest in Parsvnath's property is completely baseless. We have no plans to acquire or invest in this property," an ICICI Bank official said.
Below is the edited transcript of Pradeep Jain's exclusive interview on CNBC-TV18. Also watch the accompanying video.
Q: We understand you are in the process of selling some of your land among others to ICICI Bank as well which is one of the contenders. Can you tell us what is the status of this sale, is it a done deal?
A: This is a property in the central business district (CBD) area of Delhi in Connaught Place at 27, KG Marg. The land is precisely 1.18 acre. We have given the exclusive mandate to Jones Lang LaSalle (JLL), to run the transaction. The first round of transaction is already complete and they are in the final round of transaction. Few days back we got the building plan sanctioned from local authorities. Now we have to take the final round.
Q: When you say first round is over you mean, you have short listed some bidders already, in which case could you give us some idea of range of money that you might make?
A: First round deals with some expression of interest, which JLL has already received, but because of confidentiality, I won't be able to disclose that. We got the building plan sanctioned from local authorities and now JLL needs to start the final round.
Q: Could you outline why you put this land on the block have?
A: As Parsvnath continues to delevarage the balance sheet, it is the management’s mindset to completely delevearge the balance sheet in time to come. We bought this property a couple of years back for around Rs 200 plus crore. The market value of the property has gone up very high, which will help us deleverage our balance sheet.
Q: What is the margin that you are making on this?
A: It is difficult to give exact number.
Q: How much is your debt at this point in time?
A: At present around Rs 1,250 core net debt on the balance sheet and with this transaction almost half will be deleveraged.
Q: Any other plans of monetising more real estate assets?
A: We continue to monetise our non core assets. Presently, we are looking at few of the assets in North and West of India. As the company policy, we are concentrating in Delhi NCR, other states and cities of the North and exiting the business from West and South.
Q: By the end of the year what might your debt-equity be?
A: Presently our debt-equity ratio is around 0.5 times and with this sale it will be substantially reduced. Our focus is to completely deleverage our balance sheet in the next 12-15 months time.
Q: What sort of assets will you be left with post this possible deleveraing that you are undertaking?
A: We own around 200 million sq ft land bank across the country and this is just a 100,000 sq ft property. We are proposing to further monetise in South and West of India, if we are able to monetise that we will be cash rich on our balance sheet. Land Bank will be marginally reduced because our major land back is in Delhi, NCR which is around 60-75 million sq ft at different locations. We have also large land bank in North of India.
Q: In this year FY13 you have been making between Rs 20-30 crore in most quarters would that be the average run rate in the coming year as well in FY13, would the quarterly run rate be closer to Rs 20 crore or closer to Rs 30 crore?
A: It depends on government policy. Since we are monetising few of our assets and completely concentrating on execution and delivery of ongoing projects, this will be a robust year for Parsvnath. Also we have few new launches in the pipeline.