DLF has emerged as the successful bidder for a 11.76 acre land parcel in Gurugram. In an interview with CNBC-TV18, Ashok Tyagi, Group CFO of DLF spoke about the latest happenings in his company and sector.
This land parcel of 11.76 acres is a great strategic fit for us, he said.
This will be developed into a mixed use of commercial and IT development. It will be a proportion of development for sale and for lease, he added.
There will be no residential component in it, said Tyagi.
Net debt in DLF is at Rs 5,500 crore currently and we will plan to fund it through some internal accruals, he further mentioned.
Below is the verbatim transcript of the interview.
Sonia: Tell us a little bit about this particular land parcel, what do you plan to do with it, how do you plan to fund this transaction?
A: This land parcel of 11.76 acres on NH8 is almost bang opposite our existing Cybercity development that can be a great strategic fit for us because we have the 110 odd acres of Cybercity development, we have the new Cyber Park building coming up and we have the proposed mall of India of Gurugram developments. This will be developed into a mixed use – commercial and IT development. I think it will be a proportion of development for sale and for development of lease.
Latha: How much is likely to be developed as commercial and how much as a residential if at all and within commercial how much will be leased and how much will be sold?
A: There will be no residential components in this. This is all commercial most of it being IT so there is no residential in this.
Sonia: In terms of the money involved, what will this do to your debt, what is the debt on the books currently and how will it look like over the next six-twelve months?
A: This is not a part of the Cybercity joint venture (JV) with GIC. This has been bought by DLF subsidiary. As we reported in December end, the pursuant could be entire GIC transaction or net debt at the DLF level is now about Rs 5,500 crore and so obviously we will plan to fund it through some internal accruals including partly money coming out from the supposed QIP as and when it happens. I think our leverage levels are now very comfortable so that doesn’t worry us. There is also a full instalment trading plan. It is not that I have to pay this Rs 1,496 crore in the next 30 days. There is a two-year payment plan around it.
Latha: Any more details on how you will meet this 1496, 10 percent by March 1, 15 percent in 30 days and I think 25 percent by 60 days and what do you do with the remaining 75?
A: The first 50 percent – based on this go in the first 60 days and then you have a two-year instalment for the balance 50 percent.
Latha: So initially you will see a bump up in debt for the first 50 percent?
A: We will not see a bump up in debt because we had received Rs 9,000 crore of money in December. We have repaid debt of Rs 7,100 crore so we still have a corpus enough from that.
Sonia: You spoke about the proposed QIP, has the board taken a decision on the timeline, on the amount, anything that we can expect?
A: As far as the amount is concerned, the total number of shares to be offered is slightly more than Rs 17 crore share. That board and the shareholders have already left in December. The timing for that - currently markets have been slightly choppy but clearly we do want to look at it and conclude it as early as possible. So we are all focused on that. I cannot give you the exact answer, it is not going to be very long for sure.
Latha: How is demand?
A: For four-five months we had already suspended our residential projects and we recommenced them post November once all the RERA formalities were behind us. So in all sense, the demand begun slightly more than trickling back but not pouring. It is clearly better than last year for sure.
So in some sense, from November, we have been seeing consistent demand running at about Rs 200 crore a month sort of a thing which is far lower than what we were at the peak but clearly better than what we were in the last year and a half. We expect greater enquiries to come, the secondary market also has risen having seen some interest in the quantum of deals is gradually moving up. Slightly cautious uptick is what I say.
Latha: What about this new bid, when will the facility come up on this new parcel that you have won and how do you see the demand for that?
A: This will be commercial and while obviously we will have to work the details -- right now it will still take a few months for us to completely finance our plan, get the approvals done and then commence construction. So we are still talking for maybe a year for approvals to conclude before the construction starts.
Sonia: Since you concluded your deal with GIC, how will the DLF-GIC joint venture (JV) now function in terms of what are the launches that we are looking at, will it function like a private REIT of sorts, what is the game plan now?
A: The DLF-GIC JV is operating company Cybercity, it has about north of USD 25 billion sq ft already active leasing space. Right now, we are closing – we are in the final stage of completion of two big commercial towers, one in Gurugram, one in Chennai which should both be commissioned and up for leasing within the next fiscal. Then the JV is already looking at the next development in Gurugram. So you are looking at the - in the Cybercity side, there are clearly some spaces that we need to bid. So we are looking at the next card that needs to come in there. That is the engine which is running and at some stage in side, in the medium-term, we will also commence our work on the big Mall of India project which again will be in the Cybercity JV.
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