DLF on track to halving its debt in two years

K. Giriprakash
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A view of the towers at DLF's Garden city. - Photo : R. Balaji
Business Line A view of the towers at DLF's Garden city. - Photo : R. Balaji

India’s largest real-estate developer DLF is on track to halving its debt to Rs 12,000 crore over two years.

DLF Universal Ltd vice-chairman Mr Mohit Gujral told Business Line that it is in the process of reducing debt through sale of non-core assets and some land during this year and the next.

Rental income

The rest of the debt, which is also about Rs 12,000 crore, is against rental assets. It is being serviced from rental income. “We can be a zero debt company as far as non-rental is concerned,” he said. The company has already exited all its hospitality businesses as well as a mutual fund company. It is in the process of exiting an insurance venture with US-based Pramerica.

The land bank in Mumbai, which is about 17.5 acres, will also be disposed of soon. “Mumbai is a very important and complex market. We realised that it takes about five years to understand a particular market. It would mean putting a massive asset to risk. If I put the same money into Gurgoan, which is our base, it will pay us more dividends because we know that market,” Mr Gujral said.

“We have never defaulted on debt repayment. We have borrowed what we think we can service,” he pointed out. He said, from now onwards, DLF will “focus on what it knows best — which is how to buy land, and conceive of and plan the type of project which can be built on that piece of land.”

Ten-year plan

Mr Gujral revealed that the group’s management had identified the assets that needed to be disposed of after drawing up a business plan for the next 10 years. “We drew up a list of assets which we can use for the next five to 10 years. After that, whatever was the surplus land, we decided to sell it. That’s how we arrived at a divestment plan of Rs 12,000 crore,” he said.

(This article was published on July 27, 2012)
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