Analyst Meet / AGM     16-Aug-13
Conference Call
Housing Development & Infrastructure
Expects consolidated debt to reduce to Rs 3600 crore by FY14-end
Housing Development & Infrastructure (HDIL) held a conference call on Aug 14, 2013. In the conference call the company was represented by Hariprakash Pandey, Vice President – Investor Relations & Finance.

Key takeaways of the conference call

Sales of Q1FY14 mainly came largely from residential portfolio and there is no FSI sale. The company recognized revenue relating to about 5lakh sft pertaining to Residency Park (Phase I) and Virar Residency(West).

The Virar Residency(West) project has another 5 lakh sft for which the company will recognize revenue in Q2&Q3FY14. Set to recognize revenue for another 4-5 project in current fiscal.

Typically the residential portfolio carry a EBITDA margin of 35%-40%. In comparison the FSI vertical have a EBITDA margin of over 60%.

Given Q1FY14 sales is more from residential portfolio and Q1FY13 came mainly from FSI, it is not appropriate to compare the margin when the revenue mix changes.

Higher tax rate for the quarter is largely on account of change in revenue mix as residential attracting complete tax and there won't be benefit of MAT.

Mumbai outskirts the demand is good though within Mumbai the demand is bit sluggish especially high end segment.

Close to a year the company has not launched any new projects. Would be launching two project large township project in Virar and Ghatkopar. Environmental Clearance (first round) received for Mega Township located at Kopari, Virar. It is the Largest Township Project in entire Mumbai Metropolitan Region (MMR) spread over 500 acres. The company is expected to launch low cost housing in the township any time in first week of Oct 2013. The company also expected to launch the PantNagar Project in Ghatkopar within Mumbai.

The projects launched between 2009-11 have seen a cost escalation to the tune of 20-25%.

Still to be collected from FSI sales is Rs 695 crore (including aprox Rs 300 crore of GuruAshish) as end of June 2013. This has come down from 806 crore as end of March 2013. The company expects this to be collected within next four quarters.

Not seeing kind of demand for FSI sales. So stopped FSI sales as of now. The focus of the company is construction. Not looking out for land purchase or launch of SRA project.

In Q1FY14 the company has registered more than 550 agreements for sale. These agreements for largely for projects in Goregoan and Palghar and Virar. Since the company has not got FSI (fungible) approval no agreement has signed as far as Mulund project.

Don't have much of a TDR. The TDR volume is less than half a million which will be used for HDIL's own projects.

Of the ongoing project the company has unsold inventory in Paradise City (Phase I & II), Whispering Tower Phase II (Mulund), The Era (at EktaNagar, Khandivali) and Majestic (Bhandup). Both Majestic and Whispering project has 50% of their inventory pending for sales. The unsold inventory in these two project aggregates to 1000 apartments.

In FY14 the company expects to incur a construction cost of Rs 450 crore for its residential portfolio.

Consolidated Debt Reduced by approximately Rs 188 crore and stands at Rs 3830 crore. Cash on books is Rs 198 crore and thus the net consolidated debt is Rs 3631 crore. Standalone Debt reduced by approximately by Rs 204 crore and stands at Rs 2940 crore. Further in Q2FY14 the company has repaid NCD to the tune of Rs 190 crore and thus the gross standalone debt declined to Rs 2750 crore with net debt to Rs 2500 crore.

Cash from operations stood at 347 crore on consolidated basis and that is fully utilized to repay debt. Customer advances doubled in Q1FY14 on year on year basis as the company's focus is on execution.

Expects the standalone debt and consolidated debt to reduce to Rs 2300 crore and Rs 3600 crore respectively by FY14 end.

Debt repayment commitment for balance of the period is Rs 460-470. But the company sees standalone debt repayment of Rs 500-600 crore for remaining period of current fiscal.

Considering construction budget, debt repayment commitment of Rs 450 crore and interest outgo of about Rs 500 crore total cash requirement will be Rs 1400 crore.

In addition to collection of outstanding against FSI sales, residential cash flow out of new launches and existing unsold inventory, the company expects proceeds from sale of its land at Hyderabad. Moreover the company has line of credit for Rs 800 crore with repayment over 10 years. All this are expected to meet the cash needed for construction and debt servicing of the company.

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