Proceeds of Lodha deal to be used to retire debt: DLF

The much speculated sale of DLF's Mumbai textile mill has concluded with the realty major raking in a whopping Rs 2,727 crore for the plot. While DLF's investors might heave a sigh of relief, Lodha Developers will have to increase its debt by Rs 1500 crore to fund this deal.

Satisfied of having got the deal at a great valuation, Rajeev Talwar, Executive Director of DLF says that the proceeds will be used to retire the company's debt.  Read Lodha Developer's views here.
DLF had bought the land from National Textile Corporation for Rs 703 crore. The company decided to sell this piece of land as part of the strategy to exit from non-core business. Here is an edited transcript of his exclusive interview to CNBC-TV18. Q: Can you take us through the contours?
A: We are very happy to do the deal with a very good developer from Mumbai and we wish them all the best. We have got a great valuation and I think all that the analysts have been saying about that in the last few months and quarters. We should be able to meet their requirements in the future. Q: So, you are going to get the Rs 2700 crore by October. Will all of the proceeds be used to retire debt? Also, the press release of Lodha Developers and DLF is talking about certain milestones that have to be met, if you could shed some light on those milestones?
A: Those milestones have been detailed out in the agreement and I think we would be waiting for them to take place in the gradual course of time, over the next 2-2.5 months. Yes, as far as the funds, I think it is left to the decision of the board of directors as well as the group CFO. Yes, the funds would be used to retire debt and to be made use of the best in the best interest of DLF. Q3: By when is DLF getting that first tranche of Rs 1200 crore?
A: The details of the deal, I am sure I would like to leave to both the Lodha’s and our group chief financial officer. I think they should work it out and they should be informing us and thereafter of course we would inform the requisite authorities. Q: So you are not going to tell me when exactly the first tranche of Rs 1200 crore is expected. I want to bring your attention to one paragraph in the Lodha Developer’s press release because you spoke about valuations what Lodha Developers said is “the acquisition is 3-4 times cheaper than deals recently done by other real estate players at a cost of Rs 5,000 per square foot, this land acquisition gives Lodha significant competitive advantage to build a mixed-use development over 5 million square feet in Worli.” So, is Lodha pretty much hinting that it has got a very good deal and that you have agreed to sell at a valuation lower than the prevailing market rate. Why did DLF decide to do that?
A: I think only that deal is successful where both the parties are very happy. If Lodhas are happy yes, we are delighted over that. As far as we are concerned, we are quite happy over the valuation and the deal. Therefore, I think with the background of DLF leaving always plenty on the table for those who have a transaction with the DLF whether it be a single-property purchase or a very large purchase like this. We are quite delighted that they feel happy. We are of course very happy, ourselves.
_PAGEBREAK_ Q: If you go by the Lodha Developers press release it is hinting and pretty much saying you sold at rates below market rates?
A: They are the best judges. I am quite sure that they know the prices in Mumbai. We have gone by the best knowledge that we have and our bankers have and our group experts have. So, therefore, we have no reason to feel anyway the worse and I am sure if they feel happy, we are delighted over that. Q: The next big cue for investors as well as the analysts is when is the sale of Aman Resort going to conclude because that also is essential for you to retire debt?
A: I think basically these are very complex deals. They take place over a long period of time. They have various details, which have to be worked out. I am sure we have teams working on them and therefore we would depend on our teams and global teams, which are participating in this to arrive at the best deal and the best transaction bought in the interest of DLF Limited.