Omaxe Ltd expects net debt to fall to Rs.880-890 crore by March 31 as it plans to repay debt over the next three quarters, mainly from operations, a top official said on Tuesday, August 9.
“For the next nine months, we have a target of repayment of another Rs.400 crore (Rs.4 billion). There could be new loans also for new projects. So, effectively, we still see that we will be repaying net of Rs.200-250 crore (Rs.2-2.5 billion) in the next nine months,” Sumit Arora, Vice-President, Investor and Strategic Relations, Omaxe, told Reuters in an interview.
As on June 30, the company’s net debt was about Rs.10.50 billion. The firm, which has a gross debt of Rs.14.77 billion, expects to cut it to Rs.12.50 billion by the end of this financial year.
“Our cash flows have been good for the last quarter as well. We mobilised almost Rs.540 crore (Rs.5.40 billion) from business and cash accruals from old sales and new bookings put together.”
Admitting that sales in July so far have not been very aggressive, he said he expected to sell 2.2-2.5 million square feet of space in July-Sept. In April-June, the sales stood at 2.62 million square feet.
“At couple of projects we are waiting for some approvals. The moment those approvals are in place, we believe those projects will pick up…”
For FY12, it is expecting to sell about 9-10 million square feet, compared with 9.76 million in the previous financial year.
Property prices in major Indian cities have more than doubled over the past 18 months, but sales volumes are down almost 40% from a year ago as high prices and rising borrowing costs deter buyers.
INTEREST COSTS BURDEN
Omaxe’s consolidated net profit in June quarter fell 7.78% to Rs.200.3 million.
“Net profit is down largely because of the interest rate impact,” Arora said, adding the company’s cost of funds during the past one year has gone up about 150-160 basis points.
India’s central bank raised interest rates by a higher-than – expected 50 basis points in July 26 – 11th increase since March 2010 – stepping up its fight against persistently high inflation despite slowing growth in Asia’s third-largest economy.
Omaxe, which also undertakes infrastructure projects through unit Omaxe Infrastructure and Construction Ltd, has an infrastructure order book as on June 30 was at Rs.13.70 billion.
It has placed bids for additional projects, but declined to give further details.
He, however, said fear of scams and scandals have brought down the companies’ keenness to bid for new projects.
The Indian government was grappled with a slew of scandals that have seen several leading coalition politicians sacked, brought parliament to a standstill and raised questions about the prime minister’s judgement.
