Peninsula Land

I was running through the Peninsula Land annual report for the year 2008. The report threw up some interesting things and in a sense reflects the kind off trouble that the real estate industry is facing.

Like they say the devil is always in the details, I think in case of a real estate company the devil is in the numerous subsidiaries and SPV’s that get floated.

Rs in crores

The company’s sales numbers have decelerated considering the previous period is for nine months. Net profits have also shrunk and so have the Net Profit Margins.

But the interesting part is that though on a standalone basis inventory has gone up from 224 crores to 279 crores, the devil is really in the consolidated numbers. The increase in investments and loans and advances in the standalone numbers are essentially money routed to the various subsidiaries which hold the inventory.

So on a consolidated basis inventory is about 546 crores most of which would be undeveloped land. The real value of developed stock would be much higher. Total Sales last year of Rs 357 crores and unsold inventory of Rs 546 cores. With the environment turning negative, some of these balance sheets are not going to be looking very good for a few years to come.