The global credit crunch has taken the sheen off large property firms, with DLF and Unitech, two of India's leading real estate companies seeing their market cap eroding almost completely and their fund raising plans hitting a rut due to unavailability of funds.
The situation has also led many non-banking financial companies holding large equity stakes in real estate companies as collateral. Their shareholding is also likely to cross the crucial 15% limit as most realty firms fail to meet payment deadlines.
'A lot of projects announced may simply not happen. With significant pressure on companies, they are likely to go for restructuring and focus on selective projects in the short to medium-term,' a senior investment banker said.
But Unitech said it was securing finance. 'The disbursal of loans has again begun after a freeze of few weeks. We have very recently got the disbursal of a loan from a public sector bank, although the rate was 250 basis points more than the earlier agreed rate,' said managing director D Sanjay Chandra.
He added that the company has not defaulted on any loan or fixed maturity plan. 'We will continue to service debt as and when they become due. We expect to make some announcement on a PE deal for our hotel business,' he added.
DLF said it is confident. 'The highest rate at which we have borrowed so far has been at 15%. We are confident of raising funds through private placement in DLF Assets. We are injecting liquidity in the market by buying back shares,' said DLF executive director Rajeev Talwar.
But with stocks of all listed real estate companies plummeting, jittery non banking finance companies are seeking higher margins in the form of pledged shares from borrowers.
Non-banking finance companies such as Reliance Capital, Indiabulls, GE Capital, ECL Finance are believed to have sought higher collateral by way of pledged shares from the promoters of real estate firm such as Parsvnath Developers, Omaxe, Unitech, Akruty City and Lok Housing.
'We have started asking for more fresh shares or equivalent cash in order to maintain the margin,' said a spokesman for ECL Finance.
