India's largest real estate company DLF Ltd. is planning to generate Rs5,500 crore through the sale of some of its non-strategic assets.

The saleable assets include wind power business, hotels and non-viable development projects in Karnataka, West Bengal and Delhi.

DLF vice-chairman Rajiv Singh told in a presentation to analysts that the move was strategic and only such assets are being disposed of that can be recovered at a later stage. He added that resources worth Rs3,500 crore have already been earmarked and under disposal, and the remaining Rs2,000 crore worth assets are in the course of being identified for putting on block.

The wind power business is expected to yield Rs900 crore, and exiting the two large township projects namely Bidadi in Karnataka and Dankuni in West Bengal, as well as the Dwarka convention centre in Delhi are likely to generate around Rs1,200 crore. 

Besides, the company expects another Rs2,000 crore from DLF Assets Ltd. (DAL), a firm owned by the DLF promoter family. DAL had been buying completed projects from the real estate developer which was suspended in March quarter due to fall in demand.

The asset sale is aimed at reducing the debt burden of the company which has been growing over the past several months.

The gross debt of the company stood at Rs16,358 crore as on March 31, 2009 against Rs12,277 crore last year, showing a 33 per cent increase. Allowing for cash in hand, equity shown as debt and joint company debt, the figure is Rs13,958 crore which the company intends to bring down by more than half to Rs6,458 crore by next March.

DLF Q4 net plunges 93 per cent
The company reported on Thursday a whopping 93 per cent slump in net profit and a 69 per cent drop in revenue for the March quarter. The total revenue for the period stood at Rs1359 crore and the net profit at Rs159 crore.

For the year ended March 2009, the revenue recorded was Rs10541 crore against Rs14684 crore for FY08, a fall of 28 per cent. The net profit for the year dived by 41 per cent from Rs7812 crore to Rs4629 crore.

The huge drop in revenue and profit came out as a result of waning demand and tumbling property prices in all the business segments of the company which include residential, and commercial, sale and leasing, following the global financial crisis and the domestic economic slowdown.

The numbers reported are after adjusting Rs163 crore for losses contributed by non-core businesses like DLF Pramerica Life Insurance, hotels and power. In addition, DLF announced price reset and other benefits to its customers during the quarter which amounted to a revenue loss of Rs688 crore.

DAL contributed only 8 per cent to DLF's PBT in March quarter against 43 per cent for the whole year. Analysts believe the suspension of sales to DAL is also a reason for the Q4 slump.

In order to tide over the crisis, DLF introduced a strategy to remain liquid and at the same time attract significantly larger number of customers and bring back demand. Keeping this in view, the company launched two different projects across India in the residential space in FY09 targeting middle income customers.

In continuation of the strategy, in April, DLF unveiled the ''city-centre'' residential project in Delhi which received overwhelming response from its customers. The company plans to launch more selective products to suit the changing demand scenario.

Nevertheless, the outlook for commercial business remains weak given the present global situation, which the company believes, will improve over the next 12-18 months.

Share buy-back wound up
In another development, DLF announced on Saturday that it wound up the share buy-back arrangement, two months before schedule further to a board decision taken on Thursday.

Through the buy-back announced in last July, the company bought back 76,23,567 equity shares amounting to Rs140.69 crore  till March 31,2009, much below the planned maximum target of 2.2 crore shares aggregating Rs1,100 crore.

The promoters held 85.55 per cent stake in the company as on the March 31, 2009.