Just residential projects enough to pay off all our debt: Abhishek Lodha

Abhishek Lodha, CEO of debtladen Lodha Group, said that with the current and future cash flows, some asset sale and a private equity infusion, the company will be in a comfortable position to repay the debt in the next 2-3 years. In an interview with ET’s Vinod Mahanta & Kailash Babar, Lodha talked about his company’s deleveraging plan, efforts to tackle the coming bond maturity, and the current state of the real estate market. Edited excerpts:

The IPO has been delayed for long. How soon is the company planning to go public?
As a company, our focus is right now on delivery and deleveraging.


Last fiscal year, we handed keys to 10,000 customers which is equal to all the developers in Mumbai put together and also did 9-10 lakh sq ft of office space. We also generated Rs 9,000-plus crore of cash flow, which is 54% of the collective cash flow of the top 10 listed real estate players.

In that context, over the next three years, we are expecting Rs 27,000 crore from our current and under construction projects and our expense against that is less than Rs 9,000 crore.

So that itself, just our residential ongoing projects, is enough to pay off all our debt. In addition, we have several ready annuity rental assets already worth about Rs 2,000 crore and another Rs 10,000 crore worth of assets are under construction.

We have more than 5 crore square feet of buildings ready to start and we have more than 4,000 acres of unencumbered land with a market value of Rs 20,000 crore.

I don't have a firm timeline in mind. We have organised ourselves as residential business and a rental business so that we can either do an IPO or we can do a REIT over the next couple of years.

When will the UK projects end?
Our UK projects are coming to an end, we will receive a total cash of about £600 million from that depending on when the Brexit situation is resolved in the next 12 to 24 months.

According to rating agencies, the company has a £250 million of construction loan maturing in December, $325 million in bonds maturing in March 2020 and another £517 million of construction loans maturing in March 2021. Are the debt levels manageable?
Most certainly. We are closing FY18-19 with an EBIDTA in excess of Rs 3,000 crore, which puts us probably amongst the top 50 corporates in the country. We have serviced our debt out of our cashflow and like I mentioned earlier, just our ongoing residential projects will pay off our entire debt over the next two to three years. And we have much more going beyond that too. In this tough market, we have never slowed down construction for one day, which shows our financial ability and our financial strength. Currently, we have 50,000 people directly working for us and another 40,000 in the supply chain based on our orders.

Any chance of a private equity infusion in the near term?
We are in fairly advanced discussions to raise about Rs 4,000 crore. We expect to make some formal announcements on those transactions in the next two to three months, which will raise about Rs 4,000 crore.

Are you also looking at assets sale too to pare down debt?
We are also in the process of selling a couple of our commercial ready assets. One is at a fairly advanced stage and we expect to close that transaction imminently.

Rating agencies have downgraded your corporate ratings citing weak liquidity position and high financing risk. How do this impact your funding and growth plans?
The rating agencies rated our USD bond. The bond that we have is a very moderate amount, it's only $325 million, which is less than half the value of one of the towers at World Towers, Worli. A refinancing arrangement for that bond, which is due in March 2020, is already in place though the date is few months away. And our lenders have lent us reasonable support because of our consistent delivery track record.

Can you share some more details of the refinancing deal?
One of our existing lenders has finalised terms with us and underwrite the refinancing of the entire dollar bond. The maturity is due in March 2020, the definitive documents for that will take about eight to 10 weeks. We are bound by confidentiality not to disclose more.