Unitech Annual Report Analysis :: Edelweiss

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Operating cash flows strained further on increased working capital requirement …
􀂄 Unitech’s debtors increased from INR 9.3 bn in FY09 to INR 12.7 bn in FY10. However,
debtors outstanding for more than six months increased to INR 5.7 bn in FY10 (FY09:
INR 2.6 bn). Management has attributed reasons for increase in debtors to drop in
property prices during 2009.
􀂄 Project-in-progress rose to INR 171.7 bn in FY10 (FY09: INR 157.4 bn), more than
proportionate to the increase in advances from customers from INR 74.5 bn in FY09 to
INR 80.2 bn in FY10.
􀂄 During FY10, cash flow from operations was INR (13.2) bn, though, profits before tax
were INR 9.2 bn, primarily on account of increase in receivables and projects in progress
(refer table 2 for details).
… QIP and warrant issue offered some respite
􀂄 Unitech has raised INR 44.1 bn through two rounds of Qualified Institutional Placements
(QIP) issues and additional INR 2.9 bn through issue of share warrants to the promoter
group company (refer table 3 for details).
􀂄 Loan book has reduced from INR 90.6 bn in FY09 to INR 60.1 bn in FY10, which led to
reduction in debt/equity from 1.8x to 0.6x.
􀂄 Finance expenses have reduced significantly from INR 5.5 bn in FY09 to INR 2.0 bn in
FY10. The average borrowing cost charged through P&L (excl. interest capitalised) dipped
from 6.3% in FY09 to 2.7% in FY10. Details of interest capitalised on projects are not
available.
Operational highlights and adjustments to reserves
􀂄 Revenue has marginally increased from INR 28.9 bn in FY09 to INR 29.3 bn in FY10.
However, EBIT decreased from INR 15.7 bn in FY09 to INR 10.3 bn in FY10 primarily on
account of increase in input costs for real estate projects.
􀂄 Revenue includes income on sale of investments in real estate projects, which decreased
significantly from INR 14.5 bn (50% of FY09 sales) in FY09 to INR 8.7 bn (30% of FY10
sales) in FY10.
􀂄 Movement in shareholders’ funds includes write-off of securities premium of INR 3.1 bn
(46% of FY10 PAT) (refer table 5 for details) and increase in capital reserve of INR 2.2
bn. Further details in respect of these adjustments are not available.
􀂄 Unitech adjusted INR 166 mn (2.5% of FY10 PAT) during FY10 from opening reserves.
The company has prior period expenses (including taxes paid for earlier years) of INR 13
mn during FY09, which has increased to INR 160 mn (2.4% of FY10 PAT) during FY10.
􀂄 Goodwill on consolidation increased from INR 11.7 bn (23% of net worth) in FY09 to INR
15.3 bn (15% of net worth) in FY10.
􀂄 Fixed assets include office vehicles of INR 1.2 bn towards aircraft purchased. As informed
to us, post BS date, the Company has exited the transaction.