Housing Development and Infrastructure Ltd (HDIL), the property developer based in this city, plans to convert two of its commercial projects with an area of 2.4 million sq ft into residential ones. The move is triggered by declining demand for commercial projects.
The two are the 2-million sq ft Kurla Premier project in Kurla and the 400,000-sq ft Whispering Towers project in the Mulund area, according to an analyst presentation posted by the company.
It will get 2 million sq ft of transferable development rights (TDR) from the Kurla project, which it can use there or sell to others. A developer gets TDR by doing projects such as slum rehabilitation and redevelopment.
"We are looking at multiple cash options such as conversion of commercial projects into residential, sale of new residential projects, FSI (floor space index) sale, among others, to repay debt and fund our plans," said Hariprakash Pandey, vice-president, finance and investor relations.
HDIL has posted a 44 per cent drop in net profit due to a fall in property sales. The net profit was Rs 105.4 crore for the first quarter of 2012-13 compared to Rs 189.4 crore a year ago.
Income from operations fell 61 per cent at Rs 198 crore in the first quarter as compared to Rs 510.6 crore in that of FY12.
The company had debt of Rs 4,039 crore as on June 30, with a debt to equity ratio of 0.39. It has been selling land parcels and development rights in the past couple of years to bring down debt.
"There is not much demand for commercial projects. Any cash-strapped company will look at monetising land and paying off debt. They must be thinking about launching residential projects and getting some cash," said Akshit Shah, research analyst at SBICAP Securities.
It is also looking, Pandey said, at selling its 1.22 mn sq ft Metropolis project in Andheri West and looking to get joint venture partners and private equity funds for its 2.5 mn sq ft infotech special economic zone at Kalamaserry in Kochi, Kerala.
The company plans to bring down debt to Rs 3,000 crore over the next one year, Pandey said. It had reduced its debt by Rs 300 crore since 2011, he added