BS REPORTER Mumbai, 1 Mayhttp://zameen-zaidad.com/dlf.aspx DLF, the country’s largest real estate developer, plans to launch more mid-income housing projects in Kochi, Bangalore and Hyderabad, among other cities, and divest stakes in some hotel projects to generate liquidity in the current fiscal, a top company official has said.The company’s net profit has fallen 93 per cent in the fourth quarter of 2009, due to slowing sales and price cuts it offered to customers.“Somewhere, prices and rates had gone very high but now things are fine. There is sufficient demand for homes if you price them correctly. We have proved it by selling 1,350 homes in a day in New Delhi,” said Rajeev Talwar, group executive director, DLF, which had 36 million square feet under development by the end of the fourth quarter.The company had to take a revenue hit of Rs 688 crore and pare its profit before tax by Rs 302 crore in FY 2009 due to price resets.Analysts, however, say price cuts will not help in the long run as buyers anticipate more cuts. “DLF’s strategy of leading price cuts in the residential segment has helped revive volumes, but we believe the initial positive response will peter out as buyers look for further price cuts. The double whammy of narrower margins and elongated working capital cycles will translate into an 82 per cent fall in housing profits in 2008-10,” international stock brokerage CLSA said in a recent report.
DLF was also planning to sell some of its hotel projects to generate funds, Talwar said. The company has 41 hotel projects, out of which nearly 22 are under construction in various parts of the country.DLF has also received an advance of Rs 800 crore from group company DLF Assets (DAL), which raised the money through lease rental discounting on leased properties.In the fourth quarter, DLF suspended the sale of its commercial assets to DAL and said it had not fully completed the originally proposed volume of delivery. The company has already booked Rs 5,450 crore revenue from sale of the 5 million sq ft it has sold to DAL.
DLF said it had appointed independent directors to evaluate options after the suspension of sales and these directors had appointed advisors to facilitate the initiatives.CLSA estimated that nonresidential sales of DLF would fall 94 per cent in FY 2010 given the severe slowdown in the office and retail space.Analysts feel that first quarter of FY 2010 will be better than Q4 of FY 2009 as the company has removed the reset clause in the sale of new properties and revival of demand in residential properties. Courtesy BS: 2/5/09
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