Hubtown Ltd on Tuesday said delay in completion of projects, slow movement of trade receivables, possible downtrend in prices and expected cancellations of sold units, among others, could affect its profitability and cash flows during the current year.
The Mumbai-based real estate company, in an exchange filing, also referred to high inventory cost, and downward valuation of inventory of floor space index (FSI)/finished apartments and under-construction units.
“Profitability for year 2020-21, may get severely affected due to disruption in operations, reduced sales, cancellation of sales, mounting interest costs, and downward valuation of inventory, among others. The combined effect may see losses being reported in the current year.
“No sales during the months of April and May 2020 with conditions likely to improve only a little in the next one quarter, since most of our operations are in Mumbai, which has most cases of Covid-19 (cases) in the country,” said the filing.
Underscoring that closure of economic activity has led to no demand, the company said, real estate will be the last priority for any person to purchase in today’s pandemic situation.
Pressure on liquidity
The company underscored that though it is looking at avenues to raise funds, there is concern on its liquidity position.
Hubtown observed that non-banking finance companies (NBFCs) and banks are not looking at the real estate sector for funding and that is going to cause further stress on the liquidity front.
“Severe pressure on liquidity position due to no sales and slowed down recovery, may require the company to do sales on differed payment basis, and that too at distress prices,” the regulatory filing said.
The company said concerns exist on the ability to service debt and other financial obligations.
Supply chain
The company said the supply chain has been severely affected. “Labour is just not available. All sites have only 10 per cent of the required labour strength. Supplies of materials are also under stress. On top of it, prices of cement and steel have gone up,” it added.
A letter from the Editor
Dear Readers,
The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.
Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.
In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.
We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.
But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.
I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.
A little help from you can make a huge difference to the cause of quality journalism!
Support Quality Journalism