Page 21 - Forbes - India (January 2020)

macrotech developers

of March 2017 increased to `22,094 estate investment trust for its
crore a year later (restated in the Profit and Debt rent-yielding assets in the next 2.5
latest annual report), which means the Year 31-Mar-19 31-Mar-18 31-Mar-17 years by when it expects to have
company’s net borrowing went up by (In `Crore) (In `Crore) (In `Crore) 8-9 million sq ft of ready office
`3,088 crore in one year. By the end of space in its portfolio. At the end of
FY2019, there was a jump of another Revenues 11906.98 9677.27 7754.45 March 2019, it had completed office
from
`2,890 crore, taking the net debt up to Operations leasing space of 3.83 million sq ft.
`24,983 crore. In the last three years Net Profit 1646.67 794.04 578.76 The long-term plan, which Lodha
the company’s net debt went up by Net Debt 24983.19 22093.65 19005.58 is evaluating, is a public listing of
`5977 crore. Gross debt at the end Finance 510.99 202.95 199.57 its affordable housing business.
of FY 2019 stood at `25,640 crore. Cost (net) “But that is very preliminary.”
Forbes India has calculated net debt by source Macrotech Developers Ltd Annual Report The realtor is evaluating proposals
adding borrowings, current maturities FY 2018-19; (Forbes India has calculated net debt by adding to raise equity capital at the project
borrowings, current maturities and deducting cash and
and deducting cash and equivalents. equivalents) level for both affordable housing
Lodha is unperturbed: “The and premium residential projects.
performance (of the company) to list the company; a 2018 public Last year it started its affordable
speaks for itself, if we had a issue had to be canned after markets housing brand Crown and has
mismatch there would be a tanked. In February 2019, Macrotech already launched two projects
problem somewhere, right?” raised equity capital of `500 crore in under the brand. Apart from that
He reasons that the first thing that its affordable housing project Palava it is building an office in New
happens when a developer is short of City in Dombivli on the outskirts of Cuffe Parade and has launched a
cash flows is that he stops delivering Mumbai from Piramal Enterprises residential project in Lower Parel.
his units, “…but that’s what Lodha Ltd and Ivanhoe Cambridge, a It plans to launch one or two more
is known for, for delivering units. real estate subsidiary of Canadian projects by the end of March 2020.
For every four out of five units we investment firm CDPQ through its That’s a far cry from the high-end
build, more than 80 percent of the joint residential equity fund. Palava housing ambitions of a few years 21
units are delivered ahead of time.” is spread across 4,500 acres and ago. “Of course, when you think of
According to the Lodha Group in Macrotech has completed Phase Lodha, you think of all the premium
an emailed statement, it has registered I comprising 300 acres; work is and luxury housing that we build; we
residential sales of around `5000 underway on another 700 acres. have in the past built a lot of that but
crore in April-December 2019. Of A listing of the entire company going forward clearly mid-income
this, it claims it raised `2,000 crore is now off the table. Lodha has and affordable housing are the thrust
in the festival period of October- new plans. “We have two focus of our business. That’s what our
December 2019, a growth of 30 areas: our affordable housing residential business is focused on and
percent over a year ago. By the end of business and our office or rental sales are very strong there.” Currently
FY2020, the Group expects to clock business, so when we go to the affordable housing accounts for 60
net new sales of over `7,000 crore. public markets we want to make percent of the Indian business.
On the debt front, the company sure we take to the market separate But it all boils down to the
says it has repaid its debt worth opportunities for investment.” race between cash flows and debt
`1,500 crore and has plans to reduce The company’s medium-term repayments. Lodha admits he is “very
it further by `2,500 crore taking the plan includes launching a real concerned about reducing” debt and
overall reduction in group debt by at reducing it quickly. He estimates cash
least `4,000 crore this financial year flows in the range of “`8,000 crore to
itself. During the interview, Lodha Lodha said if `9,000 crore” by March. If Macrotech
said if needed, they would sell another needed, they Developers intends to repay all its
commercial asset next year (2020) would sell another domestic debt obligations in the next
to pay off any debt requirements. three years, it has to generate a net
commercial asset operating cash flow of a minimum
the Listings that Beckon in 2020 to pay `8,000 crore every year for the next
Lodha believes that because the off any debt three years; it stands at a negative
company is a private one there is `465 crore. Even assuming that the
little information out there for the requirements India operations provided a positive
“gurus”. While this may be partly cash flow of `1,264 crore in FY 2020,
true, it isn’t that Lodha didn’t try can Lodha climb this tower?

january 31, 2020 • forbes india