Key takeaways of the call

Saleable area on ongoing projects as on 31st March, 2018 stands at 43.85 million sft and of which residential was 28.48 million sft (or 64.94%), commercial 2.75 million sft (or 6.27%), retail 0.06 million sft (or 0.15%) and slum rehabilitation 12.56 million sft (or 28.64%). Residential sales area of 28.48 million sft spreads across 11 projects including multiple phases of a projects all in the MMRDA market and include budget homes of 0.22 million sft of saleable area.

Income from operation for Q4FY18 stood lower by 69% to Rs 41.31 crore and the PAT was down by 86% to Rs 8.33 crore. For FY18 the operating income was down by 46% to Rs 387.75 crore and PAT was down by 47% to Rs 95.69 crore.

Income from operation for Q4FY18 comprises income recognized from Residential & Commercial units along with Sale of FSI. While the company follows completed method of accounting for ongoing projects, it's following percentage of completion method (POCM) for projects launched after April 1, 2017.

Operating income of the company in Q4FY18 and FY18 suffered as TDR/FSI sales taken a beating with Mumbai RE market in weak phase. With not much liquidity in the market with PSU banks in trouble has worsened the situation further.

DP2034 came into existence in last month and subsequent to it (i.e. DP2034) there was uptick in demand for TDR and sales has picked up.

Overall expect FY19 will be a better year than FY18.

Monetization of few land parcels is under way. Received BoD approval for monetization of two of its properties. There are prospective buyers and close the deal within this quarter and that will be used to substantially bring down the debt. With debt coming down the company expect the finance cost is expected to come down going forward from FY18 level of Rs 300 crore.

Proceeds from monetization of land parcel along with sales of TDR and FSI will help the company to further reduce the debt. The company has reduced the debt to Rs 2445 crore from about Rs 2581 crore and don't want to put a number by which it will get reduced. Since closure of transaction is important once that is done only the company will get an idea but expects substantial reduction in debt in next 2 quarters.

Current TDR inventory is about 1.5 million sft down from 2 million sft as end of Dec 2017. Part of the reduction in TDR inventory is due to captive consumption. TDR rates currently in the range of Rs 4000-4500/sft and with DPR 2034 coming in and SC lifting the high court ban on construction in Mumbai Region there is increased demand for TDR.

In Q4FY18 the company has made the allotment of 2 crore warrants at an issue Price of Rs 70.50/- per warrant to Promoter of the Company. The warrants will be converted into Equity shares upon the receipt of full subscription within the period of 18 month. Promoters have already made payment for the share warrant and that is used for repayment of debt.

HDIL has launched its first flagship project under Budget Homes – "The Nest" in Mulund with total flats count of 243 and out of which 222 flats already sold and 43 families taken possession.

To launch about 0.55 million sft over next two quarters. The company will be first launching the project at central Suburb of Mumbai with a saleable area of about 0.1 million sft in Phase I and in Phase II it will launch another 0.45 million sft. While the Budget Homes at Mulund Phase II to be launched in Q2FY19 the Ghatkopar project was also lined up to be launched in Q2FY19. The company is organizing funding for construction of the projects new launches will be in budget homes.

Guruashish Construction (a wholly owned Subsidiary of the company) is presently under the process of IBC (Insolvency and Bankruptcy Code, 2016). The petition has been filed with the National Company Law Tribunal (NCLT) and the same has been admitted and the company is under the moratorium period. A Resolution Professional has been appointed and Committee of Creditor ('CoC') has been directing the affairs of the Company. A Resolution Plan is under progress and shall be submitted shortly to NCLT for its approval, and once confirmed the Project work of 'The Meadows' shall resume. The hearing is scheduled to be on June 09, 2018 before the NCLT. Meanwhile MHADA has retaken possession of land (Patrawal Chawl, Mumbai) given to Guruashish for redevelopment. The company has filed an appeal in the NCLT against the termination and the matter is subjudice. The company hopes clarity to emerge in the hearing in court hearing tomorrow. Meanwhile the directors of the company were served with notices or FIR by any authority is not true. If the order is in favour of the company, the MHADA issue will be sorted out once for all.

Santacruz FSI sale money not received as some approval is still pending. The company can get additional FSI in Santacruz project for sale.

The company's land reserve stands at 193 million Sft as end of March 31, 2018 and it is the owner of largest Land Bank in Mumbai Metropolitan Region. So apart from Virar Land bank the company has other land parcel within Mumbai to monetize.

Monetization of Delhi land parcel – The subsidiary that own the land parcel is no more the subsidiary of it and it owes HDIL anywhere between Rs 25-40 crore.

Currently the company has no bar on selling of assets in normal course of business due to HC order.

Net worth of the company 11572 crore.

Approval by BoD for fund raising is just an enabling resolution to raise funds either through FCCB or equity. In future if capital market conditions are favourable the company will raise funds through QIP.

The company will review every project post June 8, 2018 for increase in FST as per (the guidelines under DP2034) the new road width criteria. No additional TDR generation is expected from Kurla project on account of new DP2034.

Couples of developers are showing interest for joint development of Virar land parcel.

The company is able to sort out most of its banking issues. Andhra bank has no major exposure with the company. Only Rs 5 crore is outstanding out of the total Rs 49 crore of debt for which it took the company to NCLT. Union Bank has already withdrawn all the applications that they had submitted to NCLT. Most of the banks are amenable in giving one time settlement or restructuring some of the loans. The company has agreed for one time settlement with IDBI bank and Bank of India. The company is repaying as per the schedule and nothing to worry. Hopefully J&K bank will be paid off by sale of a property.