QIP proceeds to help improve CAR, grow biz: Dewan Housing

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Dewan Housing See previous management interviews See what other Experts & Brokerages are saying about Dewan Housing Dewan Housing BSE | NSE 10/02/12 Are Mutual Funds betting on Dewan Housing?

Kapil Wadhawan, Vice Chairman and MD, Dewan Housing , said 80% response for the qualified institutional placement was from foreign institutional investors. He said the proceeds will help in improving capital adequacy ratio and growing the business.

Also see: Dewan Housing has target of Rs 170: Gujral

Here is a verbatim transcript of the exclusive interview with Kapil Wadhawan on CNBC-TV18. Also see the accompanying video.

Q: Could you take us through what has been the appetite for your offer?

A: We have successfully closed our QIP and raised Rs 300 crore through this route including a preferential allotment of shares to the promoters. The appetite has been strong. We are in a growth oriented sector.

Q: But was the appetite better than Rs 300 crore? Where was it largely - domestic, foreign?

A: Eighty per cent (80%) of our investor base has been FIIs. The balance twenty per cent (20%) has come in by way of participation from the domestic banks.

Q: Could you just walk us through exactly how this money is going to be utilised? What is the break-up that you are going to do right now?

A: This is pure growth capital for us. Over the last seven years, we have been consistently growing at 30%+ in terms of our home loan disbursements. So, this improves our capital adequacy ratios and all the other capital ratios that are needed for our growth platform for the next couple of years.

So, clearly this is growth capital. We are not looking at deleveraging at all because we are in a different class and a kind of business, which is very different from the realty as well as from the infrastructure space.

So, this is growth capital for the company and this will help us in maintaining a good 35-40% growth over the next couple of years.

Q: Could you walk us through how the scenario is looking on the ground as far as real estate demand itself is concerned and my question is more specific to a city like Mumbai where you are pretty strong? We saw developers go ahead and increase prices as the stock prices went up. But was that a short-term phenomenon or do you believe we have actually moved away from those depressed prices?

A: In fact our focus has always been the tier-II, tier-III markets when it comes to home loan origination. Our average loan size is also one of the lowest in the industry. So, irrespective of what happens in a city like Mumbai, the potential demand for the LMI (Lower & Middle Income) segment continues to be extremely strong on the ground. Through our property services division, we have been doing extensive marketing and taking on projects in that LMI segment for exclusive marketing and selling. So, overall from a ground reality perspective, yes, the demand is strong. That has helped us in our growth even last year. We grew by 27% in incremental disbursements.