The Hindu Business Line : Puravankara’s profit drops 16% in Q2

Bangalore, Oct. 31 “This is not the time for bravado, but for actual performance. A good performance in such times will have a spin-off effect in the long term,” said Mr Ravi Ramu, Director, Puravankara Projects Ltd.

At such times, the company’s “emphasis is on timely execution of existing projects, and if possible, complete them ahead of schedule,” he added. The company has not launched any project in Bangalore since 2006, and across India in the past and current quarters; “we are adopting a wait-and-watch stance now,” Mr Ramu said. The company’s hospitality projects are also on hold now.

The company’s net profit for the second quarter of 2008-09 has decreased 16 per cent to Rs 50.47 crore (Rs 60.21 crore) while revenues have reduced by 1 per cent for the same period to Rs 139.37 crore. Net profit for the first half of the financial year was up 8 per cent to Rs 112.37 crore and revenues grew 14 per cent to Rs 296.94 crore for the same period. “Right now, our concern is not profits or revenues, but how well we manage our business. It’s time to go back to the basics,” said Mr Ramu.

The debt to equity ratio is 0.58, and its net debt stood at Rs 768 crore. “Liquidity is key” in the current scenario, according to Mr Ramu, and funds are available at comfortable rates for big players in the industry, he said. “Today, we are negotiating on fresh funding from a financial institution at 14.5 per cent,” he added. However, the efforts are manifold compared to, say, six months ago.

Mr Ravi Puravankara, Chairman and Managing Director, Puravankara Projects, said that the medium to long-term prospects of the group, “especially with the planned launch of projects in the affordable housing segment, is comfortable given our market positioning, asset base and financial position. The current scenario is challenging with customers essentially preferring to hold their home purchases in the present economic environment.”

To wade through these tough times, “project plans are being tailored to the present circumstances,” said Mr Ramu. The industry needs to look inwards now in order to provide a stimulant for the market, besides reduction in home loan interest rates. “A 15-year home loan is more of a concern for the customer than prices coming down marginally,” said Mr Ashish Puravankara, Director, Puravankara Projects.

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