DLF on Tuesday disappointed the street with 19 per cent drop in consolidated net profit for the March quarter, as rising cement and steel prices pushed up input costs.

“The first half of the fiscal saw stable economic conditions, but the second half was a spoiler with higher-than-expected inflation and delay in project approvals,” the DLF Executive Director (Finance), Mr Saurabh Chawla, said at an investor call.

The net debt — a key monitorable for investors — has increased to Rs 21,424 crore in fourth quarter of current fiscal. To pare this, DLF has upped its ‘non core' asset disinvestment target and has also shifted its product basket in favour of high margin projects (such as luxury homes and plotted development). DLF is hoping to mop up up Rs 7,000 crore in the next two-three years from sale of ‘non core' assets, primarily land parcels and hotel plots. So far, it has garnered Rs 3,070 crore from such sales, including Rs 1,270 crore in during FY11.

The company has lagged behind in its debt reduction targets this fiscal, largely on account of investment in land and capital expenditure and slower launches on account of delay in approvals.

“The net debt is a key area of focus for us and we will work hard to reduce this in fiscal 2012…We will also moderate our land aggregation, and capital expenditure. As part of an ongoing focus on core operations, we have appointed advisors to evaluate strategic alternatives for hospitality business,” Mr Chawla said.

DLF logged consolidated net profit of Rs 345 crore in Q4 FY11 against Rs 426 crore for year ago period. The EBITDA stood at Rs 853 crore, after adjusting for a one-time cost charge of Rs 475 crore on account of rising input costs. The consolidated revenue was up 34 per cent at Rs 2,870 crore.

For full year, net profit was pegged at Rs 1,640 crore, 5 per cent lower than FY10. The consolidated revenue for the fiscal ended March 2011, stood at Rs 10,145 crore, up 29 per cent over the previous fiscal.

For FY12, the company plans to launch 10-12 million sq.ft (msf), of which bulk will be plotted developments in Indore, Gurgaon, Chandigarh, and Lucknow. Plotted development will reduce execution risks and mitigate inflationary pressures, the company said in a presentation.

DLF Group CFO, Mr Ashok Tyagi, said, “Close to 80-85 per cent of our buying for the next 12 months has been contracted at the current prices. So the only uncertainty now could be the minimum wage rates…Other than that inflation cycle is adjusted in project costs.”

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