Parsvnath Developers plans fund raising to reduce debt

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Parsvnath Developers plans fund raising to reduce debt

Parsvnath Developers announced it first quarter results for FY12. The company reported a consolidated net profit of Rs 25.8 crore in the quarter ended June 2011. The company has been planning for Rs 2000 crore QIP. Chairman Pradeep Jain said that they would use this fund to reduce their debt on the balance sheet.

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Parsvnath Developers announced it first quarter results for FY12. The company reported a consolidated net profit of Rs 25.8 crore in the quarter ended June 2011. The consolidated net sales of the company stood at Rs 217 crore for the first quarter of FY12.

The company plans to raise Rs 2000 crore through qualified institutional placement (QIP). Chairman Pradeep Jain said that this fund will be used to reduce the debt on their balance sheet.

Jain told CNBC-TV18, "We have over Rs 1200 crore debt on our balance sheet on net basis. With this capital (Rs 2000 crore), we would reduce our debt."

"We have enough cash for the ongoing projects and have fairly good working capital in hand," he added.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Your consolidated level numbers are not great because profits and revenues have slipped. What led to the pressures in the current quarter?

A: A couple of special purpose vehicles (SPVs) are with the private equity investors on a standalone project basis. In those projects on a quarter-on-quarter (QoQ) basis, we have not been releasing our stocks, which is why our topline and bottomline has declined in those SPVs.

Q: You have been planning a Rs 2000 crore QIP. How soon do you want to raise the money? Will it be in one tranche? Have you identified any potential interested parties?

A: We passed this resolution in the Board and referred it to the shareholder to approve the Rs 2000 crore fund raising in the next 12 months. Right now, we haven't decided on how we wish to raise the capital, but with any window available, we will raise the money.

Q: What are you primarily raising the money for? Is it to cut down debts? Would you require it for your ongoing projects?

A: We have enough cash for the ongoing projects and have fairly good working capital on hand. We have over Rs 1200 crore debt on our balance sheet on net basis. With this capital, we would reduce our debt.

Q: You have not been releasing stock from your SPVs. Is off take generally sluggish even in your projects which are nearing completion in your key markets now?

A: Fortunately, our focus is only on execution and delivery. We are getting good response for executing and offering the projects for possession or on advance stage. Most of them are into the parent company.