Developer sees India cash crunch toppling weaker peers

Mumbai

INDIA'S largest listed property developer expects many of its smaller peers to go belly-up as creditors cut financing after a shock default.

"Weaker balance sheets are going to fall off, while large listed developers will get though current liquidity crisis," Saurabh Chawla, the outgoing chief financial officer of DLF, said in a phone interview.

Smaller developers have already been struggling amid a slump in apartment sales and prices over the past two years.

Now, they are also finding it tougher to access the bond markets as investors become more cautious about default risks after the shock failure by Infrastructure & Leasing Financial Services.

Larger real estate companies are paring assets to get through the crisis.

Mr Chawla, who worked with the developer for 12 years, is resigning as CFO of the company, a Dec 13 exchange filing showed.

Indian developer rupee bond sales dropped last month to a four-year low of 2.49 billion rupees (S$46.7 million). That was down from 18.28 billion rupees in the same month last year, according to Bloomberg data.

Dwindling sales may make it harder for developers to repay US$4.9 billion of debt that comes due in 2019.

Top developers including DLF, Indiabulls Real Estate, and Lodha Developers have been selling their rent-yielding assets or other developed projects to raise funds and pare debt.

That's harder for smaller developers. Ones like Nirmal Lifestyle Realty and Omkar Realtors & Developers have been seeking to partner larger companies to finish projects. BLOOMBERG