[image: http://im.rediff.com/money/2010/may/19builders1.jpg]
*Next*
*Raghavendra Kamath* in Mumbai
Real estate developers, who need to pay around Rs 25,000 crore (Rs 250
billion) on debt instalments in the current financial year, could face an
uphill task. For, equity issuances remain uncertain and cash flows have
dwindled.
According to Reserve Bank of India estimates, developers have piled up debt
of Rs 75,000 crore (Rs 750 billion). Public sector banks restructured debt
worth Rs 10,000 crore (Rs 100 billion) in 2009 and allowed them a roll over.
By March 2011, developers need to repay this amount. An additional Rs 15,000
crore (Rs 150 billion) will be due this year, says a recent report by Kim
Eng Securities. What has made matters worse for developers is that the
Reserve Bank of India has already ruled out fresh restructuring for them.
*Equity route risky*
The equity route, earlier a hot favourite of property developers to repay
debt and fund projects, is turning out to be tough. After developers such as
Omaxe could not raise fresh equity, Delhi-based Parsvnath had to cut its
Qualified Institutional Placement size by half, due to poor investor
response. Sobha Developers had to reduce the amount expected from a QIP
after it failed to raise funds in its first attempt last June.
Click *NEXT* to read on. . .
*Image: *Builders in trouble! Rs 25,000-crore debt payment looms
http://business.rediff.com/slide-show/2010/may/19/slide-show-1-builders-in-trouble-as-rs-25000-crore-debt-payment-looms.htm
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