Chandigarh HC stay order won't impact launch plans: DLF

DLF shocked the street by reporting its first ever quarterly loss. The country's largest developer in the fourth quarter of FY13 announced a net loss of Rs 4.19 crore as against a net profit of Rs 212 crore in the same quarter a year ago. This was not the only bad news for DLF this week. The Chandigarh High Court put a stay on DLF from selling, marketing and constructing its latest luxury residential project in Gurgaon, The Crest.

This, after the RWA association of one of DLF's projects Park Place - a group-housing society, filed a writ petition alleging DLF was encroaching on its condo property. The Crest is located at Gurgaon's famous Gold Course Road and DLF has not launched a project here for over 5 years. For over a decade one has seen frenzied real estate activity on this road, the genesis of which can ironically be attributed to DLF and the golf course it built here in 1998. The Crest is an important high margin project for DLF. It has already sold 250 apartments and DLF in the past has said The Crest will play a vital role in debt reduction. With a basic price of Rs 15,500/square foot, the starting price of a 2BHK is Rs 3.4 crore to Rs 6 crore for a 4BHK. This does not include charges like Preferential Location Charges (PLC), parking etc. Penthouses are more expensive with a basic price tag of Rs 16,500/square foot costing up to Rs 10.3 crore. In an interview to CNBC-TV18, DLF's Executive Director Saurabh Chawla spoke said that this stay order won't impact the company's other launches and business plans. Also Read: All that you should know about the Real Estate Bill Below is the edited transcript of Chawla’s interview with CNBC-TV18. Q: DLF's appeal to the Chandigarh High Court to vacate the stay on this ex-parte order has not been granted. The District Town and Country Planning Department has been told to file its reply. What does all this mean for DLF and its planned launches in Gurgaon? A: It is an ex-parte order, so the other party has to put the facts on the table which will be done. I am sure the courts will take a considered opinion based on facts that are put on the table. Being subjudice I would not really like to comment on it, but we are very confident of where we stand on that particular issue. We believe that it did not impact our launch plans and businesses going forward. Q: The fact is third party interest have been created. DLF has billboards all over Delhi and Gurgaon saying The Crest is sold out. What do you want to tell your buyers? I am sure they must be feeling quite jittery with this development? A: All that I would like to tell them is that this is not the first time that vested interest has moved against DLF. We have the credibility of last 70 odd years in this marketplace and never has any investor or customer been at loss. We will stand behind our customers. It is a due process of law. Over the last few years in a very litigious environment, we have stood our ground and demonstrated to the market that we will meet our obligations to customers. I do not think the customers have to worry about anything. Q: It is very interesting to hear you say that. Its your old customers that took you to Chandigarh High Court in the first place. In light of all these developments you are still going to go ahead with launches in Gurgaon. I am speaking to you for the first time. This fiscal what is your launch pipeline? A: The way we are working ahead is as Kris Kristofferson said in his song old is dead and gone and future is where we want to do launches anything between 8-10 million odd square feet. These are high value and high margin launches. We want to reach a steady state of EBITDA margins double of what they are today in next two to three years. It is a very conservative plan with very low hanging fruit. Our focus is to go back to the core, which we have done quite successfully. It will not be a Q-o-Q story. I want to guide the investors that DLF is not a Q-o-Q story. It is an amalgamation of almost 15-20 odd projects across the country. It is very difficult to pinpoint on the accounting capture of all the aspects of the business. We are a medium-term story, so you have to look at a 2-3 year play to fully realise your investment in any DLF stock. Q: What is the pricing strategy for these launches? Do not give me exact numbers, but you said high margin, high value. So what kind of ticket prices are we talking about and again you do not want to relook at launching projects in Gurgaon given the relationship between the company and buyer associations it is still so stormy? A: I would not like to highlight the exact strategy, but I would say Gurgaon will continue to play a role in our plans forward. Both in Phase V in Gurgaon and new Gurgaon those launches will come fore. The previous launches where Phase I of bookings were done you will have the second and third phase of bookings happening as we go forward. We are not going to be in a rush to sell out projects. We will be phasing our sales in order to capture or mitigate the commodity inflation that keeps hitting Indian markets. We intend to be quite aggressive in launches in many other parts of the country. The big segment of our story now is the rental business. The current rental run rates is of about Rs 1,700-1,800 crore odd, we expect them to go up to about Rs 2,700-2,800 crore over next three years. It is a very low hanging fruit for us. Most of the capital expenditure has happened.