Originally Posted at http://gurgaonscoop.com/comments/2009/6/9/104347/3130/4#4
by dheerajmatta on Wed Jun 10, 2009
The stock price went up, the QIP was very successful, the realty market is back on track..... hold on to the last one.
Its true that the economy may not face the worst in terms of slow GDP growth but has that so suddenly changed the fortunes of all realty companies.
This company seems to have tried its luck for all fund raising.... sold its non-residential inventory i.e. the hotel and commercial building, raised cash from QIP and restructured some of its debt but it still needs thousands of crores to stay solvent (in the range of 7-8k). It has also sold lots of new bookings at so called low rates - now what?
It can either sell its huge residential stock (take a walk around nirvana country) at more acceptable rates to the end users (no investor is willing at current rates) or find some other way to generate cash.... bingo!! catch hold of retail investors who will jump at 11-12% FD returns. Well FDs are almost INSECURE. The company may have launched secured NCDs instead even at a lower rate... Look how Tata Capital raised the money...
The bet is that this money thru FDs can help them survive and then the same flats which are not getting sold today can be sold at much higher rates in 2 years to repay the paltry 11-12% to the FD holders.
Great story!!!! But not worth my money ;-)
Source: http://gurgaonscoop.com/comments/2009/6/9/104347/3130
