DLF plans to raise Rs.7,000 crore in the next two to three years from the sale of non-core assets to reduce its net debt of Rs.21,424 crore. In a presentation, DLF said it had raised the divestment target for non-core assets, including land parcels, to Rs.10,000 crore from Rs.4,500 crore earlier.
The company has raised Rs.3,070 crore so far from the divestment of non-core assets such as hotel plots. Of the Rs.3,070 crore, Rs.1,270 crore was garnered last fiscal.
“Non-core asset divestments will gain momentum with Rs.6,000-7,000 crore worth of divestments expected in the next 2-3 years,” the company said, adding that it has raised this target as it expects higher realisations from the sale of some businesses in the current financial year.
DLF said it aimed to become a net debt-free entity in the next three to four years through internal accruals and the sale of non-core assets.
However, the net debt of the company increased Rs.552 crore during the fourth quarter of 2010-11 and stood at Rs.21,424 crore because of strategic investments in land aggregation and a capital expenditure of Rs.1,800 crore last fiscal.
Besides the sale of non-core assets, the company expects to generate “faster cash flows” from operations.
Demand for new homes and offices in India declined in 2008 and early 2009 because of the global credit crunch.
The financial performances of property developers, including DLF, also suffered. The slowdown forced major real estate companies to either completely or partly sell non-core assets to infuse cash into their core businesses.
DLF has been trying to sell a number of its business units, such as hotels and resorts. It has sold its stake in an insurance venture with US-based Prudential Financial.
