Shares of real estate major DLF rose 2 per cent, adding to the over 6 per cent gain on Monday. The gains were thanks to the company seeking shareholder consent for raising Rs 5,000 crore.
The company intends to issue non-convertible debentures or other debt instruments such as bonds to raise these funds. These may be offered in one or more tranches through private placement on preferential basis.
Last week, DLF agreed to sell its cinema exhibition business, DT Cinemas – a non-core asset – to PVR for Rs 500 crore. The company also plans to seek project-level private equity funding. These joint ventures, along with sale of other non-core assets, should help raise around Rs 3,000 crore in 2015-16, according to the company's management.
DLF has been saddled with high debt in the last few years. The slowdown in the realty sector has hampered it ability to pay down debt from its operating cash flows. Revenue in 2014-15 dropped 17 per cent year-on-year to Rs 8,168 crore and profits fell 16 per cent to Rs 540 crore. Debt has been increasing – from Rs 19,000 crore in June 2014 to over Rs 20,000 crore in December 2014 to nearly Rs 21,000 crore in March 2015.
The current proposals on fund raising, if they come through, will provide much-needed relief to DLF.
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