The Omaxe board has approved a proposal to raise Rs 500 crore over the next 2-3 years to fund ongoing projects. Talks are on to raise Rs 100 crore via NCDs in the next couple of months.
Mohit Goel, CEO of Omaxe says the company is in talks with a lot of merchant bankers and the interest will most probably be below the average cost of borrowing. "The coupon rate for the NCD is yet to be finalized," he told CNBC-TV18.
Currently, the company has a total debt of Rs 1,000 crore and in the next fiscal year it will remain in the Rs 800-1200 crore range, he adds.
Below is the verbatim transcript of Mohit Goel's interview to CNBC-TV18's Sumaira Abidi and Latha Venkatesh
Sumaira: This money that you will be raising is to fund some on going projects. What are the projects that you have raised this money for?
A: There are many projects which are running right now so we will raise this fund majorly for delivering our ongoing projects which are there in Chandigarh, Lucknow, Ludhiana, majorly three states, Punjab, UP and Haryana. So it is all across the board.
The Rs 500 crore will be raised over a period of next two-three years and the first tranche of NCD we are thinking of raising in the next one-two months.
Latha: What is the likely yield on the NCDs and will it be a little less than the current debt you have, I mean the interest that you are paying on the debt.
A: We are talking to a lot of merchant bankers right now so the coupon rate is yet to be fixed but I think it is going to be below the average current cost of borrowing for us.
Latha: So would you be replacing some existing debt or all this is additional incremental debt?
A: We would be putting this fund to actually concession activities because we are majorly concentrating on delivery so we want to deliver our projects quickly and there is a possibility that we would replace the higher cost of funding as well.
Sumaira: So what is your total debt?
A: Presently it is Rs 1000 crore and next financial year it is going to remain in the range of Rs 800-1200 crores.
Latha: What is the advantage of this floor area ratio increase that you are getting in Delhi? Is that far rule going to help you in any fashion?
A: We don’t have any stake in Delhi, we don’t have any project in Delhi presently but otherwise generally of course it is a good thing for Delhi but it is going to be useful for few pockets of Delhi, not the total of Delhi.
Latha: Are you likely to see any project coming into income recognition this quarter or the next?
A: Yes in next six months there will be many projects which would actually come in revenue recognition. Majorly it is going to be Chandigarh, Lucknow and Ludhiana.
Sumaira: Has there been any improvement in revenue recognition because last time when we spoke to you in your Q2 results, the indication was that this low revenue recognition and the big drop that you had in areas sold was what was actually dragging your earnings lower. Have things improved, are you seeing a lot more activity in demand?
A: In terms of sentiment things have improved. So I believe next 6-12 months it would actually translate into a number of bookings and then revenue recognition as well.
Latha: How are you looking at realisations, are things picking up or are they stable?
A: We are absolutely stable and we think we will be stable for the next 6-12 months. I don’t see rates going up but if the transactions go up, that is actually good for any real estate company in India right now.
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