Spending on developing projects to increase- Unitech
Unitech, Real Estate Company, is set to deliver at least six million sq ft of developed area this financial year by increasing its construction spending, a jump from its rate of four million sq ft annually in the past few years.
Prior to 2009, when the economy started slowing, the company had nine million sq ft of delivery pending. Overall, it has 12 million sq ft due for delivery. A senior company executive told sources that 37 million sq ft was under development, of which one-third was due for delivery. “The company had delivered area of around nine million sq ft annually four years ago at its peak,” said Nagaraju Routhu, executive vice-president and head (human resource, information technology and corporate planning).
Unitech is not the only company that has failed to deliver residential units on time. According to estimates, due to slowdown and a shortage of funds 200,000-300,000 units are pending for delivery from all developers in the country. Assuming an average residential unit at 1,000 sq ft, it means 200-300 million sq ft is pending for delivery. DLF, Parsvnath and Emaar-MGF are some of the prominent developers defaulting on delivery.
While Unitech has started trading assets, breaking with the sector trend, it is not aiming to cut its debt with the proceeds. It says it will use the money to speed up construction. To that end, it has also set up a 200-member in-house team, presently managing a fourth of its projects.
Officials said the developer has a debt of Rs 6,200 crore, which is manageable. It will look at servicing debt only if there’s a surplus after spending on construction, they said.
Recently sector leader DLF has been on a spree of selling non-core assets mainly to cut debt, including Amanresorts for $358 million (Rs 2,250 crore). As of the end of the third quarter of financial year 2014 DLF’s net debt was Rs 17,400 crore.
In contrast, Unitech’s Nagaraju said for Unitech, there was nothing non-core. Senior executives said, buying and selling of assets will continue since real estate is the core business of the company. That doesn’t make anything non-core, they said.
Sources: Business Standard
Amanresorts, Construction spending, DLF, Nagaraju Routhu, Residential units, Spending on developing projects, Unitech, Unitech Ltd
