Mumbai-based HDIL has put up a 113 acre industrial plot for sale, the company said in statement today. Speaking to CNBC-TV18, VP Finance Hariprakash Pandey said proceeds from the sale would be used to pare debt.
Mumbai-based HDIL has put up a 113 acre industrial plot for sale, the company said in statement today.
Speaking to CNBC-TV18, VP Finance Hariprakash Pandey said proceeds from the sale would be used to pare debt. He also touched upon the RBI's decision today to cut interest rates by 25 basis points.
Below is the transcript of Hariprakash Pandey's interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Reema: We have got about a 50 basis point rate cut by the RBI just in the last two months or so. How much will this improve the situation on the ground and given the fact that now it is quite likely given that we have two rate cuts the banks will pass it on is the outlook for 2016, will it look better compared to what you were earlier anticipating given the expansive monetary policy?
A: It is a positive sign by the Reserve Bank of India (RBI). We have already seen 50 basis point reductions in the fourth quarter and as we move ahead there will be more reduction that is the indication which we get from the various comments of the RBI.
Now specifically for real estate it is a very positive sign because it helps you to get more capital for the working capital kind of stock and you can launch more projects. Also it helps the customers because mortgage rates can decline.
So it is a good positive sign and we expect that going ahead, first of all this 50 basis points gets translated into reduction of base rates and is passed on to the corporate. Second we expect further rate cut reduction.
Sumaira: Would your own borrowing cost come down and if so by how much?
A: Currently our borrowing cost is around 14 percent so as of now we have not seen any pass by any of the bankers. However if we take a 50 basis points reduction in the borrowing cost that should help us to get our total interest cost down by around 10 percent.
Reema: So just a 50 basis points reduction in your borrowing cost to 13.50 percent can reduce your interest cost by 10 percent?
A: Yes, because what happens is that 70 percent of our borrowings are on floating cost. Even if there is a 50 basis point reduction on the overall interest cost and also we are reducing our debt so if we take both the aspects into consideration our borrowing cost can fall down by 10 percent.
Sumaira: We have just got news that you had a land parcel in Baroda which is now on the block. I understand it is an over 100 acre industrial plot. Can you tell us how much you are expecting this to fetch and how much it could bring your debt down by?
A: We had given an advertisement today and we have given a mandate to couple of brokers for getting us a bet on this property. This is a very large industrial plot which we have been owing for last 5 years. So can not put on the bed amount exactly but the whole idea is to diverse some of these non core assets and strengthen the balance sheet and focus more on working capital and debt reduction as we move ahead.
HDIL stock price
On March 04, 2015, at 14:13 hrs Housing Development and Infrastructure was quoting at Rs 117.45, up Rs 1.80, or 1.56 percent. The 52-week high of the share was Rs 124.85 and the 52-week low was Rs 40.45.
The company's trailing 12-month (TTM) EPS was at Rs 8.18 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 14.36. The latest book value of the company is Rs 248.81 per share. At current value, the price-to-book value of the company is 0.47.
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