Page 20 - Forbes - India (January 2020)

Special Report

According to Lodha, the London The London assets properties. In its India operations, the
assets have a debt of £750 million have a debt of £750 company managed to sell 6.4 million
(`6962 crore) against which they sq ft for a realisation of `7,162.7 crore
have already paid £200 million (`1856 million against in FY 2019 as against 7.4 million
crore) in the last three months, and which the Lodhas sq ft for `8,130 crore in FY 2019.
“the debt will be fully paid off by have already paid Lodha says, “Our market share
July 2020”. This means Lodha needs in the MMR region has gone up
to pay £550 million (`5,110 crore) in £200 million in the from 10 percent two years ago to
the next six months, but that may last three months, about 17-18 percent now; just to put
not be the big worry. What has been and “the debt it in context, the top 10 developers
a matter of concern for the credit are 35 percent, so we are half of
rating agencies over the last year will be fully paid the top 10 developers.” He adds,
has been the developer’s ability to off by July 2020” “Last year our cash flow was 54
pay off its dollar denominated bonds percent of the total cash flow of
worth $325 million (`2,241.15 crore). the top 10 listed developers.”
Lodha confidently says, “We According to its latest available
have made full arrangements for annual report for FY 2019, on a
the repayment of the bond.” These consolidated basis Macrotech
include about $155 million which Ratings & Research downgraded Developers posted revenues from
has been arranged through financing the company’s non-convertible operations of `11,907 crore for
against unsold inventories in the debentures (NCD) and bank loans to the full year, a 23 percent jump
London project, while another $110 IND BB (moderate risk of default) and over the previous year. Net profit
million will be infused by promoters maintained a rating watch negative more than doubled to `1,647
through family offices. Another $60 (RWN). The bank loan amount was from `794 crore in FY 2018.
million will come through the recent `150 crore and NCDs worth `495 crore These numbers tell a story of
20 sale of its commercial office property come up for maturity in July 2023. growth, although finance costs
in New Cuffe Parade (Wadala), too have headed northward—to
which it sold to a joint venture of the Back to BomBaim `511 crore in FY 2019 from `203
Tata Group and Varde Partners. Lodha’s India business is crore in the previous year. The
The realtor has sold its commercial geographically concentrated across company states in its annual report
office building in New Cuffe Parade the Mumbai Metropolitan Region that it has changed its accounting
for `1,350 crore of which the Tatas (MMR). At the end of FY 2019, it standards and a comparison to the
have paid `300 crore and Varde had 38 ongoing projects in India previous year’s number isn’t fair.
Partners the rest. The money came in across 28.59 million sq ft; another But then there is the spiraling debt.
during the last week of December. 1.82 million sq ft are the London Net debt of `19,006 crore at the end
For now Lodha is busy with
roadshows for his next US-
denominated bond. At the time of
the interview in the third week of
December, he said that they have
already done two roadshows and
discussions were on with investors
to undertake a fresh bond issuance
in February of $200 million.
Lodha rues that credit rating
agencies and Indian investors
don’t understand his business. On
November 12, Moody’s Investor
Service downgraded the corporate
family rating of Macrotech Developers
to Caa1 from B3; Caa1 indicates poor
quality and very high credit risk, and
B3 suggests speculative and a high
credit risk. Later that month, India 1 Grosvenor House is one of Lodha’s two properties in London

forbes india • january 31, 2020