Sales reversal is one-off; initiative on to cut debt: Ansal

Dinesh Gupta, COO, Ansal Properties explains to CNBC-TV18 that the sales reversal, which impacted the top-line by about Rs 80 crore and the bottom-line by about Rs 70 crore, was caused by forced receipt of 13 acres due to the inability to resolve the disagreement with the purchaser. Gupta adds that the company has been in a consolidation spree and continues to initiate measures such as sale of assets to reduce debt.

Below is the edited transcript of the interview on CNBC-TV18. Q: What were these reversals in FSI sales?
A: At one of our townships in Punjab, we sold close to about 45 acres of a group housing project and out of which about 32 acres were finally agreed to be purchased by the party to continue construction and sale. The party faced some challenges on approvals on a plot of 13 acres and also disagreed with us regarding certain technical aspects.
When the disagreement could not be resolved, we agreed to take back the 13 acres and due to this we had to reverse these sales which were earlier passed through the revenue accounts as per the accounting standards and as per the policy of recognition.
So in September, when the decision to take back the land was approved, we went ahead and reversed the transaction. This impacted the top-line by about Rs 80 crore, the bottom-line by about Rs 70 crore and wiped out the entire margin earned during the quarter from the current sales and the sales conducted in the recent past. Q: The Street is a bit worried that this trend of reversals could continue. How would you like to ally those concerns? Do you think this is a one-off?
A: The concerns are very valid and have been voiced by a lot of investors and analysts. During the last three quarters, we have been on a consolidation spree and addressed persisting problems and concluded pending negotiations. This has also made us aware of our stock of real estate to be offered for sale or taken back from customers
We have also conducted certain cost revisions in Q4 of FY12 and in Q1. In Q2, we had to initiate and suffer the consequences of the reversal of sale. But apart from this, our internal records and pending projects do no indicate the occurrence of any major or minor reversals. Q: What are your levels of debt and are you looking at selling assets sales to bring those levels down?
A: The gross debt at the end of Q2 FY13 stood at about Rs 1,260 crore- the total debt  owed to banks and financial institutions. This is down from about Rs 1,380 crore at the start of the financial year. So, there has been a reduction of about Rs 100 crore in gross debt during the two quarters. As far as the sale of assets is concerned, we have sold  assets in the past and have received only partial amounts.
We are to receive the balance of the proceeds over the next two quarters and this will definitely be utilised to reduce the debt as promised by the management to the investors. We are also looking at certain other assets that may generate quick cash flows, which can be utilised to reduce the debt level of the company.