Lockdown fallout: Hubtown expects profitability, cash flows to be hit this year

Our Bureau Mumbai | Updated on June 09, 2020

Hubtown Ltd on Tuesday said delay in completion of projects, slow movement of trade receivables, possible downtrend in prices and expected cancellations of sold units, among others, could affect its profitability and cash flows during the current year.

The Mumbai-based real estate company, in an exchange filing, also referred to high inventory cost, and downward valuation of inventory of floor space index (FSI)/finished apartments and under-construction units.

“Profitability for year 2020-21, may get severely affected due to disruption in operations, reduced sales, cancellation of sales, mounting interest costs, and downward valuation of inventory, among others. The combined effect may see losses being reported in the current year.

“No sales during the months of April and May 2020 with conditions likely to improve only a little in the next one quarter, since most of our operations are in Mumbai, which has most cases of Covid-19 (cases) in the country,” said the filing.

Underscoring that closure of economic activity has led to no demand, the company said, real estate will be the last priority for any person to purchase in today’s pandemic situation.

Pressure on liquidity

The company underscored that though it is looking at avenues to raise funds, there is concern on its liquidity position.

Hubtown observed that non-banking finance companies (NBFCs) and banks are not looking at the real estate sector for funding and that is going to cause further stress on the liquidity front.

“Severe pressure on liquidity position due to no sales and slowed down recovery, may require the company to do sales on differed payment basis, and that too at distress prices,” the regulatory filing said.

The company said concerns exist on the ability to service debt and other financial obligations.

Supply chain

The company said the supply chain has been severely affected. “Labour is just not available. All sites have only 10 per cent of the required labour strength. Supplies of materials are also under stress. On top of it, prices of cement and steel have gone up,” it added.

Published on June 09, 2020

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