Realty major DLF, which played a big role in transforming Gurgaon from a sleepy village into a bustling satellite city, housing some of the top corporates is banking on reducing its over ₹22,000-crore debt by selling 40 per cent stake in its rental assets arm, DLF Cyber City Developers. “We expect to finalise a partner for the stake sale in the next two-three months,” DLF’s Chief Financial Officer Ashok Tyagi told BusinessLine. The company will focus less on bulk housing and more on select luxury projects, he said. Excerpts from the interview:

What is the status of the stake sale in Cyber City Developers?

Expressions of interest are expected in the next few weeks. It will be a two-fold process — a discussion on the financial and non-financial aspects of the transaction, and then we will start sharing data due diligence reports with the shortlisted parties.

In the next two-three months, we expect to be in a position to finalise the partner. Once that is done, we will need time for legal documentation, after which we will go for regulatory approvals, if required. We hope to conclude the transaction (and receive the funding) in the financial year, but we are trying to see if it can be done in this calendar year.

What kind of parties are you in talks with?

We are reasonably secular in terms of whom we want to partner with… As long as they agree on the valuation and, more importantly, the strategy of business... Four-six weeks down the line, once we have made some progress in individual bilateral discussions, we will get a better grip on who to take the discussions with.

How many partners you are looking at?

That depends on mutual comfort and a party’s ability and inclination to write out a full or partial cheque.

How will you tackle your debt, which today stands at ₹22,202 crore?

Our debt can be broken in two parts. The ₹14,000-crore debt accrues to the lease rental business, which not only will not go down, but could potentially even go up with more and more capital projects. Out of our net debt of ₹22,000-22,500 crore, that on our residential side (₹8,500 crore) is what we don’t like, as it creates pressure on trying to do sales, launches, etc., in markets that may not be amenable to that. So, we want to use the proceeds of this transaction (stake sale) to get the residential debt completely out of the picture.

Will you launch more projects similar to the deal with Singapore’s GIC?

Right now, we are focussed on the stake sale. We have other land parcels that lend themselves to a GIC sort of a transaction, but we are not opening those fronts for now.

The Competition Commission of India (CCI) has excluded seven DT cinema screens from those being acquired by PVR. Will you sell these to other parties?

What the CCI has decided is that either we run them ourselves for the next five years or if we were to sell them, it would need CCI approval. To be fair, running seven screens is sub-optimal. Let’s see how it pans out. From a financial standpoint, those seven screens will not get a game-changing number.

When do you plan to launch REITs?

The entire monetisation of our rental company is a two-stage process. First, getting a private equity investor into the rental company.

Second, for the growth and further monetisation, we will look at REITs which, at some stage, could also provide partial exit for these investors. First, we will close the stake sale transaction in this financial year and then explore REITs.

What is the way ahead for DLF?

Hopefully, the rental business will become a stronger annuity generator for us. On the residential side, with the debt burden hopefully gone, we want to focus not on volumes, but on value. We will focus less on bulk housing and more on select luxury projects.

We don’t want to reduce the intensity of execution of projects, and will focus more on value appreciation than just having millions of square feet in the pipeline.

We have been through that journey in 2008-10. Honestly, while it gives a great high in terms of execution, it doesn’t make too much money.

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