DLF to sell wind energy business to French major

DLF to sell wind energy business to French major
The Financial Express, December 15, 2009, Page 4

Rajat Guha, New Delhi

The country's largest real estate company, DLF, is selling its wind energy business to the world's second-largest energy major, Gaz de France Suez, for around Rs 950 crore. The deal has been finalised and the sale is likely to be concluded by January end, a person involved with the transaction told FE. Ernst & Young is understood to have advised DLF on the deal. The sale is part of the company's plan to get out of non-core businesses.

When contacted, a DLF spokesperson declined to comment.

Companies, including Akuo Energy, Adani Power, IL&FS, UK's BG Group and Essar Power, were in the fray to buy out DLF's wind energy business. DLF had created a separate subsidiary called DLF Wind Power for its wind energy business prior to the sale.

The sale of the business is part of DLF's efforts to reduce its debt, which is more than Rs 12,000 crore at present.

DLF registered a 77% drop in its net profit during the quarter ended September, as demand for real estate continued to be sluggish compared to last year. The company registered a profit of Rs 439.7 crore during the quarter, compared to Rs 1,934.1 crore during the comparable quarter last year. Sales during the quarter also dipped 53% to Rs 1,751 crore.

While declaring the results, DLF MD Rajiv Singh had said that the company would focus more on leveraging on the core assets and sell its non-core business in a bid to generate revenue and subsequently retire its debts.

"We remain committed to deleveraging the balancesheet and actions on sale of non-core assets are currently underway," Singh had said.

On the wind power front, he had said it had met with a good response from strategic partners and due diligence of the assets was underway.

Besides, the company has also made an exit from long gestation projects such as hotels. It had already withdrawn from large township projects at Bidadi (Karnataka) and Dankuni (Bengal).

Earlier in the year, the company had sold assets worth Rs 1,000 crore and sold its stake in the joint venture with Ackruti City for Rs 200 crore. All efforts are directed at bringing down the company's debt burden. Apart from the sale of land and other non-core assets, the company has received Rs 336 crore from the West Bengal government after it exited the Dankuni township.

The management had also indicated that DLF will be refunded Rs 850 crore from the Delhi government for exiting the Delhi Convention Centre project. DLF's total area for development has fallen by more than 40%, from 751 million sq ft to 425 million sq ft, mainly due to its exit from the Bidadi township project in Karnataka and Dankuni project.