DLF Ltd.: India's Leading Real Estate Company in Trouble
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Case Code: BSTR382 Case Length: 27 Pages Period: 2005-2010 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.600 Organization: DLF Limited Industry: Real Estate Countries: India Themes: Corporate Restructuring , Turnaround Strategies |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
About DLF
DLF, Indian's largest real estate company in terms of earnings, revenues, market capitalization, and total developed area, was headed by KP Singh as Chairman, as on March 31, 2010. The company had a presence in more than thirty cities across India including Super Metro, Metro, Tier-1, and Tier-2 cities (Refer to Exhibit II for footprints of DLF)...
Growth in Real Estate Canvas of DLF
DLF witnessed significant growth as a private company, utilizing internal and external funding. It went public in June 2007. The company's growth was supported by the growing Indian economy and DLF's access to strategic land holdings, particularly around the Indian Nation Capital Region (NCR), Delhi...
Changed Economic Scenario
India witnessed an increasing demand for both the residential and commercial real estate properties till late 2008. However, the global financial crisis, an outcome of the sub-prime crisis in the US , and the subsequent collapse of many big corporations, worsened the economic environment across the globe and in India as well...
Problems Faced by DLF
Though DLF was able to book significant sales in the months before November 2009, the sales started falling across segments from November 2009. In the housing segment, DLF had launched some projects in the middle of the year in Kochi, Bangalore, and Gurgaon which were witnessing marginal sales...
Credit Crunch & Increasing Debts
Analysts felt that under the duress of the prevailing market conditions, DLF was unable to secure the required loans for implementing many of its projects. The overseas credit markets had been shut since January 2008 giving DLF no access to FIIs...
The Struggle Continues
By the beginning of 2010, there was a slow revival in demand for both housing and commercial properties within the country. This enabled DLF to increase the prices of some of its residential properties by around 15%, which helped it to realize higher margins...
Exhibits
Exhibit I: Demand for Residential Sector in India
Exhibit II: Foot Prints of DLF
Exhibit III: DLF Land Bank as on March 31, 2010
Exhibit IV: DLF's Balance Sheet
Exhibit V: DLF's Profit & Loss Account
Exhibit VI: Vertical Wise Sales, Lease, Inventory, Sale Price, Least Rentals and Project Cost - April, 2007 to December, 2008
Exhibit VII: Vertical Wise Sales, Lease, Inventory, Sale Price, Least Rentals and Project Cost - January, 2009 to March, 2010
Exhibit VIII: Vacancy Levels across Major Cities in Financial Year 2008-2009
Exhibit IX: Expected Correction in Prices of Commercial Properties across Major Cities
Exhibit X: DLF Closing Stock Price in US$ from July 5, 2007 (Listing) till July 30, 2010
Exhibit XI: DLF Gross Debt, Revenue and Net Profit from April 2007 to June 2010 (Figures in Million US$)
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