DLF plans next round of sell-off targets

India's largest real estate company, DLF Ltd, may offload its stake in the Nagpur Information Technology Special Economic Zone (IT SEZ) after September, in the second round of raising funds from non-core asset sales to cut debt.

In the March quarter analysts' presentation, the company had said it was targeting to raise a total of Rs 10,000 crore (Rs 100 billion) from non-core asset sales in the medium term.

The divestment would help the company cut its debt that stood at Rs 22,725 crore (Rs 227.25 billion) at the end of the last financial year.

Although the company had planned big-ticket divestments -- mainly to sell Aman Hotels and Resorts, NTC Mills in Mumbai and the wind energy business -- in 2011-12, it failed to conclude the deals in that timeframe.

DLF has now set September 2012 as the new target date for completing these deals. In the analysts' presentation, the company had said after completing the big ticket sales by September, it would strategise for the next round of asset divestment.

Sources said the company would exit the Nagpur IT SEZ in the second round of asset sale.

DLF launched the 140-acre IT SEZ at the Multi-modal International Hub Airport at Nagpur, Maharashtra, in 2007.

The company planned to invest nearly Rs 1,000 crore (Rs 10 billion) in the project, but the construction work halted in 2009 as the sector was hit by the global economic crisis.

SEZs have not turned out to be attractive for developers, and they are now exiting such projects.

In December 2011, DLF, along with its joint venture partner, had sold its entire stake in DLF Ackruti Info Parks, Pune, to private equity major Blackstone for Rs 810 crore (Rs 8.1 billion).

Besides the Nagpur IT SEZ, DLF is also likely to put on the block land parcels in Gurgaon and New Gurgaon, which do not fit in the long term strategy of the company, sources said.

The company is expected to conduct a mid-term review on non-core asset sale after September.

DLF raised Rs 1,774 crore (Rs 17.74 billion) in 2011-12 through divestments of non-core assets, including plots and IT SEZ parks.

The divestments proceeds have touched Rs 4,844 crore (Rs 48.44 billion) so far.

The company, however, refused to comment on the second round of non-core asset sale at this point of time, saying it would be decided only after the big ticket sales were concluded by September.

NTC land sale in Mumbai is expected to help the company raise Rs  2,900 crore (Rs 29 billion), but the deal is stuck due to valuation issues.

DLF wants to sell the land as it does not feel it is feasible to do a project in Mumbai as the company is based in Gurgaon.

Analysts pointed out that the company might find it tough to meet the September target for Aman hotel sale due to valuation issues.

Aman hotel has been on the block since May 2011.

Photograph: Adnan Abidi/Reuters