 Online edition of India's National Newspaper Saturday, Dec 06, 2008 ePaper | Mobile/PDA Version |
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NEW DELHI: Faced with shrinking demand, rising interest rates and defaults in payments in a number of cases, the global financial crisis has started taking its toll of the real estate sector with leading companies resorting to salary cuts, slashing of workforce, putting projects on hold and re-drawing their plans. Leading private developers Omaxe, Parsvnath and DLF have already announced such measures. For instance, Omaxe has announced that it had decided to slash the workforce by seven per cent with 70 people having got the pink slip till date. An official spokesman of the company said the salaries of all employees, except those who earn Rs. 10,000 or less a month, had been reduced by 20 per cent. Parsvnath Developers has also slashed the salaries of its employees in top and middle level management by up to 20 per cent amid slowdown in the real estate sector. However, the company spokesperson said that it had decided not to lay off people. At present, the company employs 1,400 people and about 30,000 people are indirectly employed. The company’s consolidated net profit declined to Rs. 21.90 crore in the second quarter ended September 30, 2008, from Rs. 102.77 crore in the year-ago period. Total income fell to Rs. 226.35 crore from Rs. 412.70 crore. Weeks after DLF announced that it would lay off people and had decided to put on hold many of its projects in the housing sector, leading ratings agency, Fitch Rating has downgraded debt instruments worth Rs. 1,200 crore of DLF from F1+ — the agency’s top rating for short-term debt — to one notch lower at F1. The downgrade applies to ten tranches of what are called single loan sell down transactions that refer to debt that is securitised by selling it to other buyers as certificates. DLF’s current liquidity is comfortable, with cash and bank balances of Rs. 1,332 crore on September 30.
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