Eye Rs 2500 cr debt by next yr; pre-sales to improve: HDIL

“We are also looking to cut it to Rs 2500-2600 crore in the next one year. We expect the sales momentum to aid this leveraging,” he further adds.Below is the verbatim transcript of Hariprakash Pandey’s interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.

Reema: How much can your gross debt come down to by the end of this fiscal year and perhaps if you can give us your targets for reducing your gross debts even for FY16?

A: Over a period of last one year from September 2013 when we had a peak debt of around Rs 4,100 crore we are down to currently Rs 3,200 crore odds. The forecast going ahead also is to work on our debt reduction strategy. I would say that one year down the line we should be somewhere around Rs 2,500-2,600 crore debt. This will largely happen due to internal accruals and the strong momentum in sales what we are seeing on the grounds.

Sumaira: You have any non core assets I believe some land parcels etc that you could, the sales proceeds of which could be used to bring down debt?

A: Largely as I said that the sales momentum itself should help us to kind of pay down our debt as we move a head. We had certain land parcels outside Mumbai which we are trying to monetise especially in Southern India, in Hyderabad and in Cochin. So, those are the ones which we are being trying to work out to dispose of those land parcels or enter into some kind of the Joint Venture (JV) agreements so that we can monetize those land parcels. However, largely the debt reduction would happen through the internal accruals and there are no further land parcels which we are looking to sell in Mumbai as such.

Reema: In order for the company to pair down its debt via internal accruals you will need significant pick up in the momentum in sales. How have pre-sales been in Q3 because in Q1 and Q2 you pre-sales were quite strong? Is it better than about Rs 3.3 billion that you clocked in Q2?

A: Q3 and even the continuing fourth quarter has seen a very strong momentum in sales. Yes, we have better the number what we have done in Q2 as such. In fact Q3 has been the strongest pre-sales for us in last three years. So, you can just imagine the kind of volume pick up which has happened over a period of last quarter and even in this quarter we have seen a very strong sales over all.

Sumaira: What are the realisations that you are seeing and has that picked up as well?

A: Our prices have remained more or less kind of a constant so we have not gone ahead and increased the pricing. In fourth quarter this year because of the ready reckoner increase some place we have to take increase in the price. However, largely for our projects because we are in to an affordable housing segment so on outskirts of the city we start selling at around Rs 4,000 per square foot and within the city our projects sells at around between Rs 10,000 -12,000 per square foot.

Reema: Give us the sense what do you expect your pre-sales average run rate be for the next four quarters? Can it move up towards that Rs 400 crore per quarter perhaps Rs 500 crore just an average run rate that you expect going ahead?

A: We are already closure to the Rs 400 crore number for the third and I can say that for the next one year we should look at number of around Rs 500 crore per quarter of pre-sales. This is a number what we used to have in 2007, 2008 and 2009. So, that is the kind of number because our execution is now back on the full scale. With the volume picking up hopefully the interest rates keeps on the down trend. We should be able to look at that number of Rs 500 crore quarterly sales as we move ahead.

Sumaira: There was an indication that we had received from promoters that they were looking to buyback the over one percent stake that they had sold in 2013. Is there any concrete plan on when this could go ahead?

A: As of now I have no idea about it so if there is any information than probably we can share with you. However, as of now we do not have any information.

Sumaira: When do you plan to launch this Planet HDIL? You had indicated earlier that it would be in calendar year 2015, is there any more indication as to which part of the year we could expect this?

A: We have already got the whole of the construction approvals and environmental approvals in last one and a half months. We have already started the work on infrastructure there in terms of the roads, sewage, and drainage and getting the electricity approvals. The company’s strategy is to sell some floor space index (FSI) there of plotted development and also to look at launching our own segment of around 5 million square feet. So we should hope that probably this quarter or the start of the next quarter we will start monetising these assets.

Reema: On an average what can be the cash flows you will generate from Planet HDIL once you launch it and start selling FSI?

A: The FSI pricing is anywhere around Rs 1200-1500 per square foot. I would not be bale to give an exact number of what should be able to monetise but there is a fairly strong demand because this is the only land parcel on the outskirts of the city which is very close proximity on the western side. It has got all the approvals in place. So, once we are able to close out any transaction then probably I can give you the exact details.

Reema: What would be the total size of Planet HDIL?

A: It is around 65 millions square feet saleable area.