Giving a CSR status for slum redevelopment programmes and pass-through status to REITs, are two major announcements by the finance minister that will strongly help in the revival of the real estate sector. That's the word coming in from Hariprakash Pandey, Vice President (Finance) of HDIL .
He believes plan to incentivise development of low cost housing, raising of income tax exemption limit, deduction of interest on self occupied properties, allocation of Rs 8,000 crore for National Housing Bank programme for development of rural houses, will create a favourable environment that will boost affordable housing in the country.
Below is a verbatim transcript of Hariprakash Pandey's interview to CNBC-TV18's Latha Venkatesh and Sonia Shenoy
Sonia: I want to ask you about the statement of slum development that will be added in company's mandatory corporate-social responsibility (CSR) activity. How will that benefit a company like yours?
A: We need more clarity on this whether it also includes the rehabilitation. Our understanding is that in terms of -- if they really want to do slum development and that is where this statement comes on then it has to include rehabilitation. We have seen in past that a lot of large corporates, multinational companies, were keen to be a part of slum rehabilitation process.
So if that includes rehabilitation also, which our understanding is that it should to make a meaningful difference then it should be a positive for company.
Latha: Our discussion with lawyers indicated that CSR contribution should always be made to charitable organisations, trusts or made through them. So in that case since an SRA for a real estate company is always a profitable venture with some social benefit also being accruing to the society, the legal position was that it will not qualify. Could you check with any of the lawyers?
A: The slum rehabilitation for HDIL will not be a CSR activity because this is a normal course of business for us. So the CSR guidelines is very clear that the normal course of business cannot be -- so even though we do a slum, it should not be for us.
Now, the question here is that, let us say any of the large corporates or any of the large institution wants to do a slum rehabilitation or slum development, which is allowable as per CSR, can they work with company like us and appoint us as an implementation agency because in CSR policy, they have mentioned that there should be an implementing agency which could be a developer.
Latha: How will that benefit your P&L?
A: How that will benefit the P&L needs to be checked in terms of clarity because a large corporate wants to do any construction of schools, colleges, they always give a contract to any of the agencies. So that agency will not work on CSR. They will work on a cost plus margin basis. But we need more clarity on this as of now.
Yesterday, only a one line has come in the Budget. So we need more clarity on this.
HDIL stock price
On July 11, 2014, at 14:13 hrs Housing Development and Infrastructure was quoting at Rs 91.10, down Rs 3.2, or 3.39 percent. The 52-week high of the share was Rs 113.85 and the 52-week low was Rs 26.10.
The company's trailing 12-month (TTM) EPS was at Rs 5.84 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.6. The latest book value of the company is Rs 248.84 per share. At current value, the price-to-book value of the company is 0.37.
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