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BW Businessworld

The Leader Guards

It posted over 50 per cent jump in its revenue, while its net profit more than doubled to Rs 694.17 crore from Rs 331.95 crore in the previous year

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Based on financials and returns to shareholders, among several other parameters, DLF is ranked fifth in the BW Businessworld Most Respected Companies list. In 2016-17, the company had a fantastic overall financial result despite a slew of challenges and hurdles faced by the real estate sector. It posted over 50 per cent jump in its revenue, while its net profit more than doubled to Rs 694.17 crore from Rs 331.95 crore in the previous year.

Seen as the country’s largest real estate developer, DLF completed seven decades last year. It was founded in 1946 by Chaudhary Raghvendra Singh, who then went on to develop residential colonies in Delhi such as Shivaji Park, Rajouri Garden, Hauz Khas and Greater Kailash among other areas. Today, DLF builds residential, office, and retail properties across India.

Lately, the company has been thriving on healthy growth in its rental business, which according to chairman K. P. Singh will “continue to strengthen. Gurgaon remains one of the most preferred markets in the National Capital Region for quality office spaces, group housing residential complexes and IT/SEZs. DLF Cybercity has proved to be an attractive destination for premium office space and superior infrastructure facilities,” he wrote to shareholders in the company’s latest annual report. Recounting some of the company’s top achievements, Singh mentioned DLF’s 16-lane road, from the border of Delhi to the end of the golf course (a distance of 8.3 km) in Gurgaon with underpasses and flyovers costing Rs 650 crore. 

The project was jointly financed by DLF and Haryana Urban Development Authority. “Stellar achievements such as the Mall of India and 14 million square feet of completed assets made available to buyers for the second year running, signify two basic factors, fulfilment of commitments made to buyers and the company’s ability to continue with such large deliveries even in the face of years of general economic slowdown,” said Singh.

Bright Outlook

Despite sectoral challenges, DLF expects its total rental income to increase by 12 per cent to about Rs 2,900 crore in 2017-18 from Rs 2,600 crore in 2016-17, on the back of better realisation from existing commercial assets and addition of new properties in Chennai and Delhi, the company recently informed analysts. 

Besides, DLF has renewed its existing stock at a higher value after the expiry of a 9-year leasing agreement with the occupiers. According to the company, DLF’s gross leasing stood at 4.03 million sq ft during the last FY. In FY17, there was net leasing of 0.88 million sq ft post lease terminations/expiry of 3.15 million sq ft. Unlike the housing segment, which has been in a slowdown phase for some years now, the commercial real estate is by and large doing well.

Also working in favour of DLF is the fact that its new deal is expected to be concluded by October 2017. According to the deal — announced in October 2015 — DLF promoters would sell their entire 40 per cent stake in DLF Cyber City Developers (DCCDL), which holds the bulk of the commercial assets of the group. In March this year, the company entered into an exclusivity pact with GIC for the deal, estimated at about Rs 13,000 crore.

 The promoters — billionaire K .P. Singh and family — are expected to invest a significant amount from this proposed transaction into DLF, which will use it for reduction of debt that has crossed Rs 25,000 crore. The company has about 30 million sq ft of commercial area and out of that, DCCDL holds about 22 million sq ft of commercial space.  

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magazine 5 August 2017 kp singh dlf