Debt reduction to continue, FY14 to be better: DLF

Moneycontrol Bureau

Emboldened by the government reform measures, country's largest developer, DLF sees an improvement in business in 2013-14. According to Rajeev Talwar, group executive director of the company, the number of enquiries by customers has increased on the back of policy actions. Occupancy levels are likely to increase in next six months, he told CNBC TV18 in an exclusive interview.
Meanwhile, the real estate major is pursuing the Amanresorts stake sale, the proceeds of which is expected to bring down its debt to an extent. The management hopes to meet debt reduction projections. The company's debt reportedly stood around Rs 22,680 crore as on June 30.
"This policy initiative has helped to generate more enquiries now. There is a greater traction in retail space in Noida, Gurgaon, Delhi and other cities. This reform has a very positive impact and we hope that any political uncertainty would be settled in times to come and therefore the next step towards linking rural producer and the urban consumer would be cemented and get formalized," said Talwar
DLF shares climbed more than 16% in the last one year as against as against a rise of 8% of the benchmark BSE Realty index. According to media reports, the realty company has been in talks to sell luxury hospitality business Amanresorts for around Rs 1,900 crore. DLF is currently holding 100% ownership in the hospitality chain that has about 25 resorts across the world.
Recently, DLF sold 17 acres of prime land in Mumbai to Lodha Developers for Rs 2,700 crore as part of the company's strategy to exit from non-core business.
_PAGEBREAK_ Below is the edited transcript of Rajeev Talwar, Group ED, DLF interview to CNBC-TV18. Q: The retail sectors getting more foreign investment or likelihood of getting more investment. Have you opened any of your plans at all? Is there any tangible ground improvement in terms of conversation?
A: This policy initiative has helped to generate more enquiries now. There is a greater traction in retail space in Noida, Gurgaon, Delhi and other cities. This reform has a very positive impact and we hope that any political uncertainty would be settled in times to come and therefore the next step towards linking rural producer and the urban consumer would be cemented and get formalised. Q: Are you noticing that people are making enquiries about Gurgaon mall in terms of single brand retail?
A: There is greater traction and more enquiries for leasing now. Suddenly, some people are planning where hyper markets can or super markets come in. There is movement in the sector but let us see how it pans out. Q: When do you think it might start hitting the ground in terms of improvement in P&L, income flows? Will that be FY13 at all?
A: FY13 would have very little impact on that right now. But certainly some spaces will be taken up. There might be some improvement in the Q4 of this financial year but it should really show itself in the coming financial year. At that time rentals would go up and more space being leased out to such initiatives. Q: The CRR cut may not have been substantial enough to have improved liquidity much but it could have improved sentiment and the intention to invest, are you seeing more movement in your residential space in terms of enquiries?
A: Yes, the cut has added Rs 17,000 crore. Indian economy is so vast that it can take in much more. But it gave a hope that in future if inflation remains under control it will augur well for interest rates and will be a great booster for the consumer. Currently, large number of flats which are seemingly being made and kept locked up, I think those would then take up occupancy, increase occupancy and investment by individual buyers of homes. One can expect brighter future in coming next two quarters. Q: Do you have on ground projects where you are looking for sales; has sales skip even a little in the recent weeks?
A: Yes, sales are picking up in North India and other parts of the country. Sales are closing better right now. People are generally hopeful that whatever loans they have to take, whatever money they can put in right now from their savings, by the time they go in for the loan documents, hopefully there should be some downward movement on rates of interest Q: What is the update on Aman Resorts transaction?
A: Aman Resorts is a complex negotiation and is under progress. Q: Broadly, at the moment what is the debt and where do you see it by the end of the year?
A: We are hopeful to meet the projected debt reduction by year end. Bombay deal, wind energy business and Aman Resorts would come as a great help. If the interest rates come down then a lot of cash flow would be kicking in from new launches and new sales and this would be a much better surprise and addition than we had really hoped for. Q: Will you count Aman Resorts and wind business in FY13 itself?
A: We are hopeful that negotiations would close. Q: Has presales of The Magnolias begun too?
A: DLF don't do pre sales. We formally launch a project and then start selling.