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Home » News » Earnings » Results Boardroom

Feb 15, 2017, 03.49 PM | Source: CNBC-TV18

HDIL pre-sales down by 35-40% due to note ban

Realty firm HDIL reported 84 percent decline in its consolidated net profit at Rs 16.22 crore for the quarter ended December on lower sales. “Pre-sales of HDIL in the third quarter were significantly lower and we have seen at least 45-50 percent decline in pre-sales,” said Hariprakash Pandey, company’s VP-Finance.

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HDIL pre-sales down by 35-40% due to note ban

Realty firm HDIL reported 84 percent decline in its consolidated net profit at Rs 16.22 crore for the quarter ended December on lower sales. “Pre-sales of HDIL in the third quarter were significantly lower and we have seen at least 45-50 percent decline in pre-sales,” said Hariprakash Pandey, company’s VP-Finance.

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Realty firm HDIL reported 84 percent decline in its consolidated net profit to Rs 16.22 crore for the quarter ended December on lower sales.

“Pre-sales of HDIL in the third quarter were significantly lower and we have seen at least 45-50 percent decline in pre-sales,” said Hariprakash Pandey, company’s VP-Finance.

Other than transfer of development rights (TDR) no other projects got completed during the quarter, said Pandey.

Housing for all has been the point of focus for Narendra Modi government and Union Budget 2017 attached infrastructure status to affordable housing. Keeping this is mind, HDIL has launched its Budget homes.

Company is planning to sell around 500 apartments in Mumbai under the price range of less than Rs 50 lakhs including stamp duty and registration. The project is already more than 70 percent constructed and realisations typically would be around 35-40 percent in affordable housing range for us, said Pandey.

Below is the verbatim transcript of Hariprakash Pandey’s interview to Latha Venkatesh & Ekta Batra on CNBC-TV18.

Latha: You have recognised transfer of development rights (TDR) sales of about 3 lakhs square feet this quarter. How much did you sell and how much is still left? What is your plan for this quarter?

A: Obviously, the quarter three was weak mainly because we follow a project completion method of accounting, so other than TDR no other projects got completed during the quarter. As far as the TDR to be sold in this quarter, we have maintained a guidance of around 3 to 4 lakhs square feet every quarter which we are selling. Even in the fourth quarter the similar numbers would be achieved.

Ekta: Can you just highlight what exactly was the impact of demonetisation for you all this quarter, more granular details?

A: In terms of the income book it is more of the TDR sales which we recognised in the third quarter. But, as I said that since we follow project completion method of accounting and we are the only real estate companies in listed space our quarterly earnings are never comparable actually. We see for next three-four quarters because we don’t have any major projects to get completed. The only income which will get recognised is from the TDR sales.

Latha: Can you tell us about your debt itself. There was a lot of talk that you will be selling some land parcels near Mumbai, is there anything that you are close to announcing that we could hear in this fiscal itself?

A: As far as the floor space index (FSI) sales is concerned our project in Virar we are potentially in discussion with couple of developers. But, we have not been able to achieve any financial closure as of now. But, what we have decided now because there is so much focus on affordable housing, we have launched our own brand call Budget Homes in which we are planning to sell around 500 apartments in Mumbai under-price range of less than Rs 50 lakhs which includes all you stamp duty and registration.

Outside Mumbai in Virar, we are starting at less than Rs 20 lakhs so that is a new vertical of affordable housing which we are starting. Mostly from the next month’s onwards we will start the launch of those projects but as far as the FSI sales and the land parcels sales are concerned, we are in discussion but we have not been able to close any transaction as of now.

Ekta: Just a quick home on these Budget Homes. When are the projects going to come up in the Mumbai region and what might the realisations be?

A: The first project is going to come up in Mulund. It is approximately 500 apartments. The project is already more than 70 percent constructed and realisations typically would be around 35-40 percent in affordable housing range for us.

Latha: It is not as if it is a one-off quarter three that your revenue fell by 65 percent. I am looking now at the 9 month that is also down about 30 percent. What do you think you will do in terms of a yearly run-rate and is this a desperate scene of no demand and therefore should be expect realtors to cut prices?

A: As I said that there was no projects which was due for completion in 2016.

Latha: All the nine month?

A: Yes, there was no projects. There are basically four main residential projects which are all getting completed in 2018. So, the only revenue which we recognised during the quarters are the TDR sales. Yes, where it has been impacted us on demonetisation is the pre-sales. But, normally for us the pre-sales doesn’t matter because there is no threshold of revenue recognition link to pre-sales. But the pre-sales in third quarter were significantly lower and we have seen at least 45-50 percent decline in pre-sales. Even in the fourth quarter it has slightly improved, but mostly in an affordable housing segment.

Latha: You said you will bring your debt down to Rs 200 crore by end of FY17 that is a distance away now, you have over Rs 2,600 crore of debt, are you changing your guidance? If you can update on the Palghar, Ghatkopar land sale?

A: As far as the debt is concerned if you look last one year from December 2016 to now we have reduced our debt by around 10 percent. From Rs 3,100 crore we are down to Rs 2,800 crore odd. We still maintain a guidance that we will below Rs 2,500 crore by the end of March 2017. As far as the Palghar project is concerned we would be recognising the revenues in the fourth quarter and the Ghatkopar which is the Pant Nagar project as I said that we are already in discussion, but we have not been able to close out any transactions.

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HDIL pre-sales down by 35-40% due to note ban

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