NEW DELHI: Real estate firm Unitech will sell non-core assets such as land, IT parks and SEZs to pay off debt, which is at Rs 5,300 crore. In an interview, Unitech managing director Ajay Chandra said the company, India's second biggest real estate company after DLF, has also managed to tie up debt of about Rs 550 crore from two public sector banks in the last few months, after facing significant debt financing crisis in the last six months.
Chandra said the company would raise Rs 300-400 crore this year by selling land parcels, including one in Tiruvanathapuram . Unitech has also started talks with various PE funds as well as overseas real estate investment trusts to sell its four SEZs and one IT park.
The company has close to 5.5 million sq ft of rent producing office space and another 2 million sq ft will be ready in the next 18 months. This is spread over four SEZs and one IT Park. Chandra pointed out that the sale of SEZs would be completed in the next fiscal year as they are now waiting for the reaction of the
SEZ authorities on some of the other SEZ transactions that have taken place in the market recently. "In the meanwhile, we will not lose any money as we are already earning rent from these assets," he said.
In the April-June 2011 quarter, the company reduced its debt by Rs 203 crore through its cash flows. Unitech's debt has come down from a peak of Rs 10,500 crore at the end of December 31, 2008, to Rs 5,300 crore now. Yet, the interest burden has not reduced owing to regular increase of bank rates. "The two big challenges for the industry today are mounting debt and lack of financing. We all have to move towards lesser debt than we have been used to before. Our debt to equity ratio is currently at 0.4, which is a low level of debt but it needs to be lower," he said. "We intend to raise close to Rs 500-700 crore every year for the next few years through sale of these assets. The target is a 10-15 % reduction of debt on an annualised basis," Chandra said.
For the last six months, Unitech has had to face severe debt financing issues, both because of the problems around the industry as well as the 2G scam, in which, one of the company's promoters is in jail for the last four months. In the last couple of months though, the company has seen some movement among banks. "We got a first sanction from a PSU bank in the month of July for Rs 350 crore, which we will take in tranches," said Chandra.
It has also tied up Rs 200 crore from another PSU bank, which will be disbursed in the next few months. On Monday, Unitech's shares recorded an intra-day gain of 13% after the CBI told the special court that it has no evidence that Unitech Wireless, which has been charged with cheating, criminal conspiracy and forgery in the 2G spectrum scam, paid bribes to former telecom minister A Raja.
Source : economictimes.indiatimes.com