Thursday, January 29, 2009

HDIL Transcripts - Q3 Results.

(HDIL) Q3 profit before tax adjustment came in at Rs 75.6 crore compared with Rs 270.2 crore. Its standalone net sales were down at Rs 313.8 crore versus Rs 496.6 crore.

Sarang Wadhawan, MD, HDIL, said the company’s interest cost is below 14%. The company, he said, holds substantial land bank in Mumbai.

Wadhawan said the transfer of development rights prices are trading around Rs 1000-1200 per sq ft. "TDR prices have corrected substantially since September-December 2008."

Here is a verbatim transcript of the exclusive interview with Sarang Wadhwan on CNBC-TV18. Also watch the accompanying video.

Q: Your profits have been boosted by a tax write-back and a MAT adjustment. But revenues are way below Street expectations at Rs 314 crore. Anything that did not work out as planned?

A: Actually you have to understand that HDIL follows a different method of accounting. We follow a project completion method of accounting rather than the other methodology. For us the sales have been booked, whatever has been completed has been booked in this quarter.

We did not account for any TDR sales that happened in the last quarter and this quarter. We do have almost 1 million square feet of TDR in stock, which will be accounted for in the next quarter.

Q: Let me just go through the TDR if I can. Could you tell us, on the airport SRA project? Can you shed light on it?

A: As far as the airport project is concerned, we have started 75% of the buildings on our Kurla property.

Q: Could you just walk us through the amount of TDR available with you and how do you believe the pricing of the TDR was on December 31 2008 and how do you expect it to be by March 31 2009 and you were also commenting on how much the Kurla property have you started to build?

A: As far as the Kurla property is concerned, we started 75% of the buildings. They are in various stages of development. At the same given point in time, the government has given us the preliminary approvals. We also are at the verge of getting our first environmental clearance. Once that comes in we did clear it in the last environment committee meeting that will be a big upside to that project. That basically means that the Government of India has actually cleared that project as well.

As far as TDR is concerned we will have almost one million square feet of TDR as stock in trade. From September till December, since TDR is a B-to-B product, we have seen that TDR prices have corrected substantially. They are currently maintaining anywhere between Rs 1,000-1,250. At times if there is a greater demand, prices can in a higher range but at current levels these prices will maintain. As we go along, we will see how that pans out.

Q: Nevertheless your revenue fall is fairly significant. It is about a 35% fall in your revenues. How did your interest cost pan out?

A: Our interest cost are covered profit this profit. We do not have any problem there. As far as our revenues are concerned, as I said earlier, we follow different methods of accounting. It is only when the project does actually get completed, is when we book the income. We do not follow a percentage completion methodology like other players and we are very conservative as far as our accounting methodology is concerned. So what we have booked this quarter were the projects which have been just completed. We have actually launched almost three new projects. We have as far as Kurla is concerned – we have a residential component coming there and as far as Andheri is concerned it is huge project which we have started with 300 apartments and almost 1.2 million square feet of commercial space. That will bring in revenues over the next two-years to almost the tune of Rs 1,200 crore to the company.

Q: You have a huge land bank in Mumbai. Have you seen any liquidity problem, which means is raising money a problem? Why is the market valuing the stock the way it is, looking at the kind of land banks you are sitting with? What interest rates have you been paying to borrow money at the present time?

A: Our interest rates are anyway below 14%. It is not above that, our interest costs. At the given point in time, we do hold substantial landbank in Mumbai City but you also have to understand that that land bank comes relatively cheaper to us since we are one of the largest slum rehabilitation companies in the country.

The valuation of the stock is a different thing altogether. It is on every analyst how he values the company. Things have not changed that drastically from where we started.

Q: Could you tell us how much land bank you are sitting with right now, and if you are talking about SRA landbank, perhaps if you could shed some light, which is completely IOD (Intimation of Disapproval) & CC (Commencement Certificate), which is clear at the moment. How much of clear landbank are you sitting with? What FSI do you have on it?

A: As far as the airport scheme is concerned, we have four FSI on the entire airport scheme, which has been declared as a vital public project. As far as the entire landbank is concerned, we have almost 192 million square feet. That is increasing as the different phases of the airport project are coming in.

The other projects where IOD and CCs are already in place, it is very difficult since we have almost 30 projects in line. So, it is very difficult to tell you how many IODs and CCs we have in place. But most of our projects are on the verge of either being completed or on the beginning of construction. The company is putting a lot of focus on execution as we go along. We do believe that people who will actually put focus there will survive this downturn.

Q: What will you do by way of EBITDA margins in the fourth-quarter? What was your EBITDA margin in the third-quarter?

A: Our EBITDA margin in this quarter was down 62%, but at the same given point in time, we do expect that because of the fall in interest rates across the board, we have seen some sort of good rise in residential properties, commercial properties are also being sort after by people. We do expect that the fourth-quarter should be better than the third-quarter but it is very difficult to put a number to it.

Friday, January 23, 2009

HDIL not looking to cut project prices - official

MUMBAI (Reuters) - Housing Development & Infrastructure Ltd is not looking to cut project prices going forward and expects demand to return once liquidity improves, a top official said.

"We have several revenue streams so we do not foresee us correcting prices," Srang Wadhawan, its managing director, told television channel NDTV Profit on Wednesday.

Shares of the company traded down 1.42 percent at 111.2 rupees each share in the Mumbai market.

FIIs' thumbs down to construction stocks

FIIs' thumbs down to construction stocks
BS Research / Mumbai January 11, 2009, 0:13 IST

Foreign Institutional Investors (FIIs) offloaded 7.43 million shares of four construction sector stocks — Housing Development and Infrastructure (HDIL), ICSA (India), Indiabulls Real Estate and IVRCL Infrastructure and Projects — through block deals last week.

Goldman Sachs Investments Mauritius, Morgan Stanley Mauritius, Merrill Lynch Capital Markets and TCI Cyprus Holding sold shares in block deals valued at Rs 88.70 crore. The names of block deals buyers are not yet disclosed by the stock exchange.

All these four stocks declined over 24 per cent each last week as compared to 5.5 per cent fall in the Sensex, on the market perception that most of the firms from the realty and infrastructure sectors do not strictly follow good corporate governance practices.

TCI Cyprus Holding sold 3.50 million equity shares of HDIL valued at Rs 41.65 crore at an average market price of Rs 119.17 on NSE. The stock declined by 26.7 per cent from Rs 143.05 to Rs 104.80 in one week.

Goldman Sachs Investments Mauritius sold its holding in Indiabulls Real Estate via block deals. It holding were at 2.64 million shares at the end of September 2008, which has come down to 0.23 million shares on account of a block deal of 2.41 million shares last week. The stock fell by 24 per cent from Rs 151.60 to Rs 114.95 during the week.

Morgan Stanley Mauritius offloaded 247,851 equity shares of ICSA (India) at an average market price of Rs 152.69. The stock closed at a two-year low, down 28.2 per cent from Rs 143.30 to Rs 102.95. IVRCL Infrastructure also fell by 25.2 per cent, from Rs 161.15 to Rs 120.60, after the Merrill Lynch Capital Markets sold 1.28 million shares worth of Rs 15.80 crore via block deals.

Correction:

ICSA is in the power ancillary business, and not construction as reported. The error is regretted.

Varun Shipping gets delivery of fourth AHTS

Mumbai-based energy carrier Varun Shipping has informed that it has taken delivery of fourth 2008 built 16,100 BHP Anchor Handling Towing and Supply Vessel (AHTS).

The company will used this for deep sea oil exploration activity going on in areas like North Sea, KG basin and Atlantic Ocean off the coasts of Nigeria, Brazil and Mexico.

With the latest acquisition, the company owns a well diversified fleet of 20 vessels comprising of 11 LPG carriers, 3 double hull aframax crude tankers and 6 anchor handling towing and supply vessels.

A company official stated that the acquisition was financed partly out of Company's internal resources and partly out of long term loan availed from a banker.

Canoro Updates Status of AA-ON/7

CALGARY, ALBERTA--(Marketwire - Jan. 15, 2009) - Canoro Resources Ltd. ("Canoro" or the "Company") (TSX VENTURE:CNS) is updating the drilling and status on the AA-ON/7 exploration block in northeast India. Canoro has completed its appraisal drilling operations at Dergaon #2. The targeted zone was of equivalent structural height to Dergaon # 1, but appeared non-hydrocarbon bearing on well-log data. Consequently, the Dergaon #2 appraisal well has been plugged and abandoned.

The Company is currently evaluating the status of the AA-ON/7 block which comprises 473 km2 in the State of Assam and 319 km2 in the State of Nagaland. Given the results of Dergaon #2 and given that the Company has no further drilling operations contemplated on the Assam side of the Block, the Company plans to relinquish, subject to Government of India and partner approvals, this acreage back to the Government of India. As a result of the planned relinquishment, probable reserves of 21.2 BCF (3.5 MMBOE) net to Canoro's 65% working interest and possible reserves of 15.8 BCF (2.6 MMBOE) net will be written down by the Company, also subject to Government of India approval. Any relinquishment of AA-ON/7 will not affect any proven reserves of the Company previously reported.

The Nagaland portion of the Block is under consideration by the Government of India to be included in a new Production Sharing Contract which if approved, is expected to be awarded to the Company in 2009.

Common shares of Canoro trade on the TSX Venture Exchange under the symbol 'CNS'.