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'Rising Interest Rates Currently Do Not Impact Projects':Subba Rao,In Exclusive Interview CNBC-TV18By Ni3, Section Gurgaon Real Estate Property  Excerpts from CNBC-TV18's exclusive interview with Subba Rao:Q: You are largely an infrastructure and real estate play. You need a lot of money for developing the projects. How are the softening real estate prices going to affect you and what do you think about rising interest rates? A: Rising interest rates currently do not impact the projects which have already achieved the financial closure. We achieved the financial closure on the basis of fixed term interest for about 2-3 years. During the project period we do not usually take any interest rate exposure, rather we go for the fixed rate period. But for the projects which have not achieved the financial closure, yes, there is going to be some impact. But infrastructure projects are not short-term projects, they are long-term projects -- 30-40 projects sometimes. So if I pay 12% now, there would be a lower rate of interest sometime later. So, what we consider is overall interest rates over a long period but these cycles will come and go during the life cycle of any project. One does not need to be unduly worried about these things, we should go ahead with the projects. If we delay the projects because interest rates are high, the cost of not doing the project would be even greater. In value terms, how many of your projects on your books have achieved financial closure? A: All projects (except Kamalanga which is going for execution now) have achieved the financial closure. On Kamalanga project also we are going to achieve the financial closure by end of September. Otherwise all other projects including road projects which are being implemented have achieved the financial closure. Q: What is your outlook on real estate prices? A: The hospitality district that we are building in Delhi is not exactly a real estate project. We believe there is demand and there aren't a single hotel in the vicinity of the airport. In our view, this project is not getting adversely impacted and we are in fact going for the road shows from Monday onwards. There is a significant amount of demand. We will achieve the closure of this by end of this calendar year. We are pretty confident that nothing is significantly changed as far as our project is concerned. Click On "Full Story" For Full Interview...
Q: We understand that you are dissatisfied with Rs 375 user development charges. Are you seeing a hike in this fees anytime soon? Do you see the government getting convinced?
A: The project model took about Rs 725 on an average for all the passengers at that point of time. We started levying Rs 1,000 as permitted by the government for the international passengers. In this context, since we are already collecting Rs 1,000 for the international departing passengers, we proposed a fee of Rs 600 for the interested domestic passengers. But it's fixed at Rs 375. We take this as an interim measure. It is not a happy situation but we have to live with what has been given to us and when the Aviation Economic Regulatory Authority (AERA) comes, then again we will appeal and review the holdings. Q5: You are actually saying that the contract was not followed in letter and spirit by the government? There is a contractual clause in it. Q6: Would you not fear that if you did levy the charges the way you have said, you maybe losing out on volumes? A: Yes, a lower collection than what we requested for will have an impact in the current year. We expected to get into the black right in Q3 if Rs 600 was granted. Now, we have to review it and the interest cost will go up in the next year. So we have to review the whole cost structure again to see where we are going to be, given the permission to collect only Rs 375.
Q7: Currently what is the breakeven time?
Q8: Can you guess that end of the year or will you go into FY10?
Q9: Are you asking for levying UDF charges in Delhi as well? Source:www.moneycontrol.com 23/Aug/2008
'Rising Interest Rates Currently Do Not Impact Projects':Subba Rao,In Exclusive Interview CNBC-TV18 | 0 comments (0 topical, 0 hidden)
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