Abstract

This case study is about India's largest real estate company DLF Limited's (DLF) struggle in the stressed market conditions due to the global financial crises which started in the year 2007. The company which created India's biggest IPO in history, raising more than US$ 2 billion, was counting on the continued growth of realty sector in the country. However, the depressed economic situation coupled with credit crunch led to a significant decline in the demand and property prices. While the company had ambitions plans to launch several properties ranging from Special Economic Zones (SEZs), large townships, hotels, and convocation centers, the market conditions took its toll on the business. These factors disturbed the cash flow cycle of DLF, making it difficult for it to repay its debt on time. The debt to equity ratio of the company increased to all time of high of 0.7 in June, 2010, with inadequate debt paying capacity. In light of these factors, DLF had to exit from many of its projects either before, or even in middle of starting the operations. The company devised several strategies overcome the prevailing situation. By the mid-2010, DLF had a much leaner business structure, but it still facing various challenges in bringing its business back into shape.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the real estate sector in India and issues and challenges faced by the market leader in this sector.
• Understand the impact of global financial crises on business dynamics.
• To analyze how macro and micro economic factors influences the success of an organization.

Keywords

Corporate restructuring, Turnaround strategy, Strategic fit, Product mix, SWOT, PESTEL, Micro economic, Macro economic, Global financial crisis, Divestment, Market leader, DLF