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HDIL to explore outside Mumbai

Housing Development and Infrastructure Limited (HDIL) is going out of its comfort zone to explore beyond its home ground Mumbai and craft its first out-of-region project in Noida which is a planned township on outskirts of Delhi. The builder will be covering 100 acre land area in Noida.

HDIL hasn’t launched any project since April of last year and it needs cash flow from its new projects. The firm has been able to get all the approvals from concerned authorities and the construction process will start in coming 2 weeks, mentioned Hari Prakash Pandey, who is the Vice President, of finance and investor relations at HDIL.

The project will incorporate both villas and plots to be chosen from the huge variety of the same. In order to exit the non-core assets, HDIL is looking forward to expand few of its assets outside its home turf, Mumbai.

Property analysts said HDIL, like many other realty firms, badly needs fresh projects to generate cash flows to repay debt, which stood at about Rs 4,000 crore as of December.

New launches will bring in cash in the form of pre-sales and customer advances, according to Param Desai, research analyst, Nirmal Bang Equities Pvt. Ltd.

Pandey said HDIL will soon launch a residential project in Mumbai’s Ghatkopar suburb, following the launch of a project last year in the suburb of Mulund. The Ghatkopar project, which will generate almost 0.8 million sq. ft of saleable area, was delayed on account of approvals.

HDIL has to make sizeable repayments in the next 12 months, JP Morgan Asia Pacific Equity Research Report said in March.

“However, given policy issues in overall Mumbai real estate and specifically the airport project, work on the company’s ongoing projects has been slow over the last two-three quarters and the deliveries have been delayed,” it said.

As policy regulations gain clarity in Mumbai, the developer has tried to sell assets and development rights of plots to reduce debt in the past year. Analysts estimate this earned the company about Rs 1,400 crore in the past one year. “In the December quarter of 2011, we spoke about reducing our debt by 15% over the following year and we are on track,” said Pandey. “The asset-sale process is also on.”