DLF-Building India


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  • DLF-Building India

    2. 2. Agenda 1. Industry Overview 9. Legal Issues 2. Company Overview 10. 3. DLF’s core business Ups and downs seen by DLF in current years 11. Competition Profiling 12. Competitive analysis 13. Strategies Adopted by Competitors & their Impact 14. Financial analysis of Competitors 15. Road Ahead 4. 5. DLF’s Business Model Current track of Business 6. Current Strategies of DLF 7. Strategies adopted by DLF at different phases 8. Financial Analysis of DLF
    3. 3. The Indian Real Estate Overview  Considering overall economic trends, like GDP, Inflation etc, the year was not favorable for this sector  Tightened credit policy made it difficult to raise funds.  Demand in the housing market varied highly across regions.  NCR, Chennai, Pune saw infusion of new projects due to sustained demand  Bangalore, Kolkata witnessed healthy supply  Hyderabad, Mumbai saw restraints due to stringent changes in Development control rules.  Commercial segment performed well in Mumbai, followed by Bangalore. The supply is expected to grow at moderate rate of 2%.  The organised retail segment, which is expected to grow to US $42.0 bn in 2020, from US $22.5 bn now, will definitely create the demand. FDI in multi brand retail is again a catalyst.
    4. 4. Housing Growth Trajectory
    5. 5. Company Overview
    6. 6. DLF Limited (Delhi Land & Finance)  The largest real estate developer in India  Founded by Raghuvendra Singh in 1946 and is based in New Delhi, India  Builds residential, office, and retail properties.  Pan India presence.  The company earnings arising from development and rentals.  Acquired land at relatively low cost in Gurgaon, after the Delhi development act that controlled the real estate in Delhi  In the mid-1970s, the company started developing their DLF City project at Gurgaon.  Its exposure across businesses, segments and geographies, mitigates any down-cycles in the market.  Developed 22 major colonies in Delhi, DLF is now present across 15 states-24 cities in India.
    7. 7. Vision, Mission & Values  Vision  To contribute significantly to build the new India and become the word’s most valuable real estate company  Mission  To build world-class real-estate concepts across six business lines with the highest standards of professionalism, ethics, quality and customer service.  Values  Sustained efforts to enhance customer value and quality  Ethical and professional service  Compliance and respect for all community, environmental and legal requirements.
    8. 8. Value Proposition  Multi-business, multi-segment across geographies, mitigating cycles in the business  A mix of development earnings and rental / incremental earnings  High quality ‘zoned’ land resource with development potential for more than ten years  Strong execution strengths based on deep long-term relationships with companies like Shapoorji, etc. and partnerships such as LOR, WSP, etc.  Raised resources from capital markets, primarily for investments in long-term businesses such as Hotels and large townships / SEZs  Build-up of embedded value in many businesses, like LOR, DLF Utilities, etc.
    9. 9. Milestones 2004 Commences development of ‘DLF Cybercity” in Gurgaon 2003 2002 Ventured into Grade ‘A’ office spaces in Gurgaon Ventured into group housing project 1985 1950-64 Founded by Choudhury Raghavendra Singh Ventured into organised retail complexes 1999 1996 Commenced development of 3,000-acre DLF City, Gurgaon Launched premium residential complexes with luxurious milieu of the Golf Links 1946 Development of 22 urban colonies like SouthEx, GK, Kailash Colony, Hauz Khas 2012 Launched Capital Greens, the largest private sector residential projects in Delhi Formed JVs with Prudential for Life Insurance & AMC. Also entered Capital markets Focus on IT Parks and next generation malls 2010 Launched plots in Gurgaon after a decade, creating a suburb- ‘New Gurgaon’ 2008 Commenced operations of DLF Emporio, India’s first luxury mall 2006 Delivered Delhi’s first Automated Car Parking in Sarojini Nagar •Launched 8.3 Km Gurgaon Expressway •2nd automated Car Parking in CP, Delhi Significant progress in pursuing and ramping up new businesses – Hotels and Large Townships 2011 2009 2007 2005
    10. 10. Corporate strategy  Business organised on vertical basis: Homes, Office, Retail, Hotels, etc., each independent of the other  Same structure is followed not only at the corporate level, but flows down to the regional/local level  DLF, at the corporate level, plays the role of an aggregator of businesses where stiff, competing interests of different SBUs and businesses get aligned, resulting in sum of parts being worth more than parts  Going forward, DLF plans to monetize subsidiaries/assets to unlock the embedded value  With core businesses reaching stable operating performance, focus is to aggressively ramp up new businesses like hotels, infrastructure, SEZs, etc.  Key focus on execution of projects  The compensation structure within allows the mid / senior level employees for participation in the success of various projects/businesses
    11. 11. LOGO
    12. 12. LOGO  The pyramid symbol and the mission line 'Building India’ is collectively referred to as the DLF Logo.  The company's name is represented in black capital letters. The typeface represents the solidity of the enterprise; emphasizes accountability, responsibility as being a strong and integral part of the Group's ethos.  The pyramid depicts nine smaller pyramids; each composes itself into a larger pyramid all-encompassing in nature and presentation. The pyramid itself and the component pyramids convey cohesion, interdependence, support and foundation, to a common purpose and to achieve greater heights.  The words ’BUILDING INDIA’, is in capitals like the company’s name, and at once conveys DLF’s mission and vision. It is an intrinsic reflection of the Group’s commitment and its 60-year heritage
    13. 13. DLF’s Core Business
    14. 14. DLF’s Core Businesses DLF Core Business Homes Office New Business Retail Hotels SEZs Infrastructure Execution Enablers Investments
    15. 15. Homes  Pioneered townships and group housing in India  Offers plots and urban colonies as well  Introduced the super-luxury and luxury category for homes  Business model allows pre-sale of property prior to breaking ground, leading to positive cash flows  Trusted brand with superior execution track record  First group housing project launched in 1996  Operates in three main subcategories:    Super Luxury Luxury Mid Income
    16. 16. Office  India being the major part of growth strategies for every multinational there is a large demand of office space.  DLF is the founder of “Grade A – office leasing market: in India  Offers well-balanced mix of commercial office space including IT/ITES facilities, multi-tenant corporate office buildings and integrated commercial complexes  Continue to leverage location advantages and deep customer relationships to enter new geographies  Operates mainly in two subcategories:   Lease: Sale  A perfect model of long term rental flows and selling propertiesto a listed business trust, with a long-term fee income as earnings
    17. 17. Retail  Given the scarcity of quality organized retail, DLF enjoys the benefits of a portfolio of premium locations across the country and rush by large retailers  DLF envisages to introduce a new retail infrastructure to cater to the need for shopping malls and commercial centers across al segments and all places in India  All major retail players, including new entrants pitch aggressively for space in DLF Malls  Introducing the concept of Next Generation Theme Malls  Operates under two subcategories  Sale: Commercial complexes and smaller malls    Build and sell model for commercial complexes and shopping centers Introducing commercial spaces with small offices, small shops Lease: Large malls    Build and lease model for Malls Leasing would ensure strong and sustained rentals given the increasing demand Rental values increasing substantially due to better mix
    18. 18. Hotels  Operates under a separate entity namely; DLF Hotels Holdings Limited  The objective is to develop, acquire, finance and actively manage world-class hospitality properties  Plans to develop 5000 luxury hotel rooms and 20000 business hotel rooms in next 5 years.  These are being developed under the luxury, business, leisure & recreational segments of the hospitality industry  Operates under three main subcategories:  Hilton JV: Business Hotels/Serviced Apartments  Aman Acquisition: Part of luxury strategy  Other Luxury Hotels
    19. 19. Special Economic Zones  SEZs are developed keeping in view the zooming demand for office and commercial space, especially for the knowledge industry  With the economic policies of the country directed towards modern infrastructural development, the focus is also increasingly expanding towards the development of modern Special Economic Zones (SEZs)  DLF is the founder of SEZ market in India, with current occupancy of 98%  IT parks developed at Gurgaon, Noida, Chandigarh, Kolkata, Bangalore, Hyderabad, Chennai, Bhubaneswar and Nagpur.  Currently two SEZ works under progress  Manesar SEZ &  Ambala SEZ
    20. 20. Infrastructure  Current rate of infrastructure investment in India, at 3.5% of GDP, is well below the target rate of 8.0% proposed by the Expert Group on Commercialization of Infrastructure Projects  Started with South Square multi-level car parking, Sarojini Nagar Market, Capitol Point – Baba Kharag Singh Marg, DLF – Huda Expressway, Gurgaon  Partner with several multinationals like Laing O’Rourke to gain expertise and participate in the construction of infrastructure projects including roads, bridges, tunnels, pipelines, harbors, runways and power projects  MoU signed with Fraport AG for development and management of airport projects in India.
    21. 21. Enablers Laing O’Rourke  50:50 JV with LOR, a leading UK based construction company with expertise in construction of infrastructure projects including roads, bridges, tunnels, pipelines, harbors, runways and power projects  Created an opportunity to exploit new sources of revenue  JV has commenced development of 16 projects covering a total area of 40 msf  DLF-LOR has submitted tenders for construction of various infrastructure projects including roads, laying of railway tracks, airport terminals and a port WSP  50:50 JV with WSP for engineering and design consultancy and project management services  WSP’s experiences include world class projects such as Freedom Tower at Ground Zero, New York; the Mall of the Emirates, Dubai; and major developments at Heathrow and Stansted Airports in London  WSP to bring specialist staff and expertise from their global operations to support local professionals
    22. 22. Partners of DLF  Laing O'Rourke is a UK-based construction company will construct all DLF's landmark projects  Nakheel of Dubai are partnering with DLF for developing townships in India.  WSP Group Plc is partnering DLF, providing management and consultancy to the built and natural environment  Feedback Ventures is providing consultancy for faster project execution.  Hilton Hotels are partnering DLF to jointly develop hotels in India
    23. 23. Business Model of DLF
    24. 24. Business Model  DLF's primary business is development of residential, commercial and retail properties. The company has a unique business model with earnings arising from development and rentals. Its exposure across businesses, segments and geographies. DLF has also forayed into infrastructure, SEZ and hotel businesses.  The DLF real estate management has got a business model which enables seamless integration of real estate business model owing to its business operation spanning across land, design, construction, facilities and marketing.  These bouquet of services are managed by a team of professionals with expertise spanning across these functions
    25. 25.  DLF’s Business model mainly consist of two models:  Development Business  Annuity Business  Development Business: The development business of DLF includes Homes and Commercial Complexes. The Homes business caters to 3 segments of the residential market - Super Luxury, Luxury and Mid-Income. The product offering involves a wide range of products including condominiums, duplexes, row houses and apartments of varying sizes. DLF has 216 msf of developed area under homes and residential plots.  Annuity Business: The annuity business consists of the rental businesses of offices and retail. With over six decades of excellence, DLF is a name synonymous with global standards, new generation workspaces and lifestyles. It has the distinction of developing commercial projects and IT parks that are at par with the best in the world. DLF has become a preferred name with many IT & ITES majors and leading Indian and International corporate giants, including GE, IBM, Microsoft, Canon, Citibank, Vertex, Hewitt, Fidelity Investments, WNS, Bank of America, Cognizant, Infosys, CSC, Symantec and Sapient, among others.
    26. 26. The ‘New’ Business Model Approach  In 2006, the company adopted a new business model to cover all the aspects of the realty sector in detail  The old business model was completely changed  The new business model is divided into four important components: Design & Development Management Retail Management & Operational Leasing Strategic Marketing & Promotions Property management
    27. 27. Design & Development Management  DLF Realty project team collaborates with world class architectural firms to create un paralleled home, retail spaces which include shopping malls and integrated developments.  One of the distinctive in house services consists of tenancy design and coordination functions.  The designs of the apartments undergo serious scrutiny and checks within the company in various divisions like quality, strength et al.  The development phase is carried on once the design is approved from the approving department  DLF not only develops projects but creates unique propositions to anchor its developments such as:  DLF Emporio  DT Cinemas
    28. 28. DLF Emporio:  This is the first of its kind in India. People will be having an opportunity to witness the creations of 185 of the finest luxury brands in the world.  Over 74 international labels and over 100 Indian designers participate in this  Cafe E in the atrium offers world gourmet cuisine and Set'z, is a spectacular 5 cuisine restaurant designed by the famous Super Potato of Hong Kong which adds to the attraction to the mall.  The beautiful architecture and lavish interiors of DLF Fmpono are designed to make shopping a pleasure.  Generous spaces, Italian marble, soaring atria and dazzling chandeliers are some of the features of this style
    29. 29. Management & Operational Leasing  DLF considers the retailers and its end user customers in the apartments as not only as customers but also as partners in all the developments.  When it comes to Retailers segment, DLF Retail has built an extensive network with national and international retailers and leverages on this established network to create an optimal tenancy mix in all its projects.  With innovative and consumer friendly shopping, food and entertainment combinations, DLF enhances the retail experience along with maximizing growth and sales for tenant partners.  The tenancy and leasing concepts are also followed in the retail apartment segment but the company pushes for full sale of the property.
    30. 30. Strategic Marketing & Promotions  The marketing and promotions experts continually develop exciting plans regarding the marketing of the apartments and commercial spaces.  Several fun activities are designed to increase the shopper traffic and facilitate tenant sales at the malls.  The marketing team also conducts extensive activities to promote the apartments by targeting the target segment according to the income, and other parameters.  Promotions in the form of putting up stalls in the property expo, tie ups with agencies are some of the commonly followed techniques in this area..  All this is backed by well etched out advertising and PR initiatives for the efficacy of the marketing plans.
    31. 31. Property Management  Property management is one of the biggest issues in the realty sector.  The properties are vey huge and due to non availability of the required documents and also the duplication and fraudulent activities concerning the title deeds have become the major issues in the company’s property management model.  A specialized department with tie ups with the municipal authority and also other concerned authorities is set up in the company to check on such fraudulent activities.  All the proposed properties must pass through a strict ‘New Property Acquisition Process’ in which the proposal passes through various legal checks, municipality checks et al.  The property is finally managed by the DLF’s property management division where the division over sees the entire operations on a day to day basis.
    32. 32. Current Track of Business
    33. 33. Development Business  DLF’s development business primarily focuses on the development and sale of residential real estate which include plotted developments, houses, villas and apartments of varying sizes and integrated townships, with a focus on the high end, luxury residential developments.  The development business also consists of certain commercial and shopping complexes, including those that are integral to the residential developments they are attached to.  DLF further splits the development business into three geographical segments – Gurgaon, Super Metros and Rest of India.  Each of these three geographical segments are independently responsible and accountable for all activities across the product value chain from acquisition of land, obtaining approvals, project planning and execution, to launch, sales & marketing and final delivery of the developed property to the customers.
    34. 34. Residential Segment Projects Under Construction  DLF, as of 2013, had 27 Projects under Construction in its residential business with expected Saleable Area of approximately 36.7 msf.
    35. 35. Residential Segment – A Snapshot
    36. 36. Commercial and Shopping Complexes  DLF has four commercial and shopping complexes under construction with expected Saleable Area of approximately 3.96 msf.
    37. 37. Lease Business  The Company’s lease business involves leasing of its developed commercial and retail properties.  One of the key objectives of its lease business is to achieve returns from investments in its portfolio properties within a targeted timeframe.  Another key objective is to achieve high occupancy rates for the leased portfolio properties.  The utilities and facility management business supports and complements the lease business.  DLF’s lease business comprised completed commercial and retail properties with Leasable Area of 23.8 msf, which yielded incomes of approximately 1,635 crore.
    38. 38. Offices Segment  As of 2013, the occupancy rate for DLF’s leased commercial portfolio properties was approximately 88.0%.  It had four commercial projects under construction with expected leasable area of approximately 3.8 msf. Retail Segment  As of 2013, the occupancy rate for Company’s leased retail portfolio properties was approximately 96%.  DLF has two projects under construction with expected leasable area of approximately 2.0 msf, both of which are malls catering to middle and higher income groups.
    39. 39. Lease Business – A Snapshot
    40. 40. Company’s Project Execution Status and Development Potential  DLF completed 12 msf of commercial and residential projects in FY’13 while adding approximately 19 msf to new construction.  As a result, the total area under construction is 57 msf till 2013. This includes approx 10.5 msf of saleable area pursuant to certain joint venture arrangements. Handover of 12 msf were commenced across the cities comprising plots, commercial complexes and commercial offices.  The development business comprising primarily the residential segment, followed by commercial complexes has a combined area of 50.8 msf under construction.  The Rental business has approximately 6 msf of area under construction.
    41. 41. Hotels  DLF in the recent times is trying to exit non-core assets and non-strategic businesses,  Hence it has divested a significant portion of its interests in the hospitality business including its shareholding in Adone Hotels and Hospitality Limited which held various hospitality related land parcels.  Entered into a share purchase agreement to sell its entire 100% shareholding in Silverlink which operates various properties under the “Aman Resorts” brand.  However, The Lodhi, which is a hotel property located in New Delhi, was not included in this sale and continued to be owned and operated by DLF.
    42. 42. Insurance  DLF currently holds 74% equity stake in the joint venture company with U.S. Based Prudential International Insurance Holdings to develop, promote, market and sell life insurance products in India.  The joint venture has completed about four and half years of operations and had 55 branches in India and a team of 5,487 individual agents.  The loss in FY’13 was ` 132.4 crore as against ` 128.3 crore in FY’12.
    43. 43. Wind Assets  DLF’s wholly- owned subsidiary DLF Home Developers Ltd. (DHDL) and Violet Green Power Private Limited (Violet) entered into a business transfer agreement for transferring of DHDL’s undertaking comprising of 33 MW capacity wind turbines situated at Rajasthan  DHDL has transferred its undertaking comprising of 34.5 MW capacity wind turbines situated at Tamil Nadu to Tulip Renewable Powertech Private Limited (Tulip).
    44. 44. DLF’s Presence in India
    45. 45. Current Strategies of DLF
    46. 46. Expansion  With the economic policies of the country directed towards modern infrastructural development spanning- express highways, roadways, airports and mega projects, the focus is also increasingly expanding to the development of modern Special Economic Zones (SEZs).  In line with this, DLF is aggressively pursuing the developments of SEZs across the country with over half a dozen projects secured/identified in northern India including Punjab and Haryana, and many more in the pipeline.  Further, DLF Retail in association with DT Cinemas, an integral part of its multiplexes, is well on its way to enlarging its national leadership presence with firm outlays to develop over 100 malls across some 60 cities nationally in the medium term
    47. 47.  India’s largest real estate firm DLF reported a 38% fall in net profit to Rs.181.19 crore for the June quarter, while net sales rose 5.29% from a year ago to Rs. 2,314.08 crore.  DLF’s 2012-13 annual report highlighted various operational and regulatory challenges that would create hurdles for the immediate fruition of its recently adopted business strategies.  To reduce debt and focus on core realty business, DLF has been selling its non-core businesses and assets such as plots, hotels, wind mills and insurance venture. It has raised about Rs 10,000 crore in last three years through divestment of its non-core assets
    48. 48. Recently adopted strategies  consolidation of its core operations  cash flow maximization  long-term growth
    49. 49. Wind-turbines  DLF has wind projects in Gujarat , Tamilnadu , Rajasthan and Karnataka with a capacity of 227MW.  Since DLF has been suffering huge debt of 20,184 Cr (As on March 2013) .By selling wind mill, it has raised 1084Cr.  The transaction is a part of DLF’s objective of divesting its non-core business.
    50. 50. Divestures Gujarat • DLF also sold its 150MW in Gujarat to Bharat Light and Power private Ltd for 282.3Cr • It has also signed an agreement with Tulip Renewable Powertech Ltd to sell 34.5MW Tamilnadu plant with related liabilities, assets and long term loans for Tamilnadu 188.7 Cr Rajasth an • DLF completed the sale of its 33MW wind turbine project to violet green power for Rs 67.44 Cr.
    51. 51. Exit from fabrication business  Lixil corporation , largest housing and building materials company has made a foray in the Indian market by acquiring 70% stake in a DLF group company Star Aluibuild for Rs 79.8 Cr.  Star Aluibuild is a leading Indian curtain wall company which specializes in designing , engineering and fabrication and installation of curtain walls for commercial walls , retail malls  The company gives top priority to Indian market due to company’s fast and enormous potential for growth.  This deal is a part of DLF’s strategy of divesting its non-core business.
    52. 52. Exit from life insurance business  As part of this, DLF in July said it will sell its 74% stake in a life insurance joint venture with Prudential International Insurance Holdings Ltd—DLF Pramerica Life Insurance Co. Ltd—to Dewan Housing Finance Corp. Ltd, and its group entities for an undisclosed amount.  DLF had announced exit from the life insurance business by selling its entire 74% stake in the JV with US insurance giant Prudential Financial. The JV was announced in 2007 and started operation in September 2008.  Name of the JV shall change from DLF Pramerica Life Insurance Company to DHFL Pramerica Life Insurance Company  Analysts have pegged the deal value at Rs.90-200 crore.
    53. 53. Exit from Hospitality business  DLF had bought the luxury hotel chain for $400 million few years ago but the depreciation of Indian currency would allow it to exit the venture with an appreciation in value  DLF, India’s largest realty company, has announced the sale of Aman Resorts to Adrian Zecha, the luxury hotel chain’s founder and chairman, for $300 million (about Rs 1,600 crore).  The transaction, which will see DLF Global Hospitality selling its full stake in Silverlink, the controlling entity of Aman Resorts, to Indonesian hotelier Zecha
    54. 54. IPP  DLF has raised 1863Cr through the issue of over 81 million fresh shares to institutional investors , enabling it to dilute promoters stake to 75% in line with SEBI.  The fund will be utilized primarily to reduce its debt.  The price of the share was Rs 230/share.  DLF’s institutional placement program was oversubscribed 1.82 times with the company receiving bids for over 1.48 billion shares.
    55. 55. Sale of plots  DLF recently sold its plot in Mumbai to Lodha developer as apart of its divesting strategy.  It is also planning to sell its unused plots in National Capital Region and other parts of the country to raise money.
    56. 56. Strategies adopted by DLF at Different Phases
    57. 57. Corporate Strategy  Business organized on vertical basis  Hotels ,Homes , Office and retails independent of each other.  Same structure is followed not only at corporate level but also at national level.  With core business reaching stable operating performance , focus is to aggressively ramp up new businesses  Key focus on execution of projects  DLF will look into making small pure investment in non-real business, with target ROI of 20%.  The compensation structure within the mid/senior level employees allows for participation in the success of various projects/businesses.
    58. 58.  Seek Dominance  Grow  Maximize investment  Defend their position  Identify weaknesses  Build Strengths
    59. 59. Strategy adopted in the Introductory stage  DLF as it was established in 1946 , it played a major role in developing residential colonies in Delhi.  Delhi Land & Finance, or DLF, had developed no fewer than 21 colonies in Delhi between 1947 and 1961.  With the passage of Delhi Development Act in 1957, government banned the control of private players in Delhi.  That forced DLF to diversify into batteries, cables and so on.  Also result DLF started acquiring land outside the Delhi at relatively low cost in the district of Gurgaon. In the mid-1970s, the company started developing their DLF City project at Gurgaon.  Similarly Haryana government didn’t allow private players to develop the land but later when prime minister Rajiv Gandhi changed the law and Gurgaon underwent private real estate boom.
    60. 60. Strategy In Growth Phase  Real Estate sector is mired in government red tape and Babudom. Due to these red tapes and bureaucracy the real estate sector had to create ways and strategy to access growth and sustainability. The following a small glimpse of government red tape,
    61. 61.  Environmental clearance Procedure is another roadblock in the life a Real estate firm Real estate has so far been governed by a patchwork of regulations that promote arbitrariness in doing business and leave plenty of wriggle room for offenders But builders are known not to waste political patronage for speedy approvals; bribing officials does the trick. Political benefaction becomes paramount when there are opportunities to be exploited and deals to be struck (see the exhibit on the right). A popular practice involves buying land around a future airport before the project is cleared.
    62. 62.  In the light of the above rules and regulations, DLF has adopted the following strategies in its Growth Phase:  Increase Land Reserves in Strategic Locations  Expand core business verticals nationally  Diversification into SEZ development  Diversification in Hotel Development  Undertake infrastructure development: DLF is involved in the Metro development project in Gurgaon.
    63. 63.  Hybrid Business Model: Sales and Lease business model.  DLF has adopted a focus strategy by creating high entry barriers and unique construction marvels in the regions where it operates.  Enhance Execution Capabilities  Brand Loyalty Creation: DLF has been associated with unique buildings and this has helped DLF to create a brand loyalty that is not common in Real estate sector firms.  Brand building exercises : DLF has been associated with IPL and other such ventures and hence created a nationwide brand recognition which only a few of its competitors has. Real estate is fragmented sector and DLF has created a brand image that differentiates it from the clutter.
    64. 64. Strong product proposition and smart pricing strategy with cost escalations clause  DLF has adopted a smart pricing strategy to optimize sales in recent projects. We see (a) 20-40% premium pricing at home markets (NCR and northern tier-II cities), and (b) very competitive pricing in new markets (Bangalore and Hyderabad).  Strong sales in New Gurgaon group housing projects is a huge positive surprise, specially given the significant 30-40% pricing premium (launched at INR5,800/sf+) over prevailing market price of INR3,500-4,000/sf.
    65. 65.  Their channel checks indicate two major qualitative aspects of DLF’s projects –  (1) superior product design (e.g. Alameda)  (2) best brand recall in Gurgaon which makes its projects a preferred choice for buyers.  In its recent group housing launches in new Gurgaon (Regal and Primas), DLF has introduced a new clause of passing on any cost escalations (based on commodity index) to buyers during the project life cycle. Surprisingly, this has had no visible impact on demand
    66. 66. Owning Vs Leasing  DLF prefers owning land instead of developing a leased out plot.  Most of their revenue comes from leasing its own developed property.  Companies like Unitech which can be a competitor of DLF prefers developing leased out plot.  Whenever DLF enters a particular region it applies a focus strategy and becomes a dominant player.  This strategy has paid rich dividends to DLF in some areas like Haryana but not so handsomely in Lucknow.
    67. 67. Financial Analysis of DLF
    68. 68. Fact Sheet  Date of Incorporation : September 18, 1946 as Delhi Land & Finance Pvt. Ltd.  Date of Listing: July 5 2007, with 1706 million shares of Rs 2 each  Exchanges on which it is listed: BSE (532868), NSE (DLF)  Inclusion in stock indices:  MSCI Emerging Market Index – Nov 30, 2007  MSCI India Index – Nov 30, 2007  BSE Realty Index – July 9, 2007 (has 38% Weightage in the index)  CNX 100 – March 14, 2008  S&P CNX Nifty – March 14, 2008  BSE SENSEX – Nov 19, 2007  Dow Jones BRIC 50 Index – Sep 22, 2008  Credit Rating: A –ve by CRISIL and A by ICRA
    69. 69. Market Capitalization Present Shareholding pattern of DLF The total Market Cap as of 07 Feb 2013 (EOD Price Rest. 137.95 – BSE Sensex) was Rs 30199.10
    70. 70. DLF Share price vs. S&P CNX Nifty Performance DLF vs. S&P CNX Nifty Performance DLF Share Price S&P CNX Nifty Mar-13 Feb-13 Jan-13 Dec-12 Nov-12 Oct-12 Sep-12 Aug-12 Jul-12 Jun-12 May-12 6200 6000 5800 5600 5400 5200 5000 4800 Apr-12 350 300 250 200 150 100 50 0  The graph shows the performance of DLF Share price vs. S&P CNX Nifty index performance.  Through the graph, we can see that the share prices are moving in an independent way.  However the share price when analyzed separately, we can see that the prices are performing in a relatively flat way without much volatility in it.
    71. 71. DLF Share price vs. Sensex Performance DLF vs. Sensex Performance 350 300 25000 20000 250 200 15000 150 10000 Sensex 100 50 0 DLF Share Price 5000 0  The graph shows the performance of DLF Share price vs. Sensex index performance.  Through the graph, we can see that the share prices are moving relatively according to the index movement.  It can be said that the scrip is performing in a relatively flat way without much volatility in it.
    72. 72. Index Vs DLF Stock Price movement (2 years) DLF Vs NSE Realty DLF Vs BSE Realty 600 5000 500 4000 400 300 NSE Realty DLF Index Index 3000 BSE Realty DLF 2000 200 1000 100 0 7-Feb-12 0 7-Aug-12 7-Feb-13 7-Aug-13 7-Feb-14 7-Feb-12 7-Aug-12 7-Feb-13 7-Aug-13 DLF and NSE Realty move simultaneously as it contributes for about 35% Weightage in this index 7-Feb-14
    73. 73. Financial Statement & Balance Sheet
    74. 74. Company Profitability Trends 120.00% 4000 3500 100.00% 80.00% 2500 % age Rs in crore 3000 2000 1500 60.00% 40.00% 1000 20.00% 500 0 2008-09 2009-10 2010-11 2011-12 2012-13 Turnover 2827.9 2307.8 2916.08 3491.32 2150.04 Profit 1547.77 765.06 1269.58 1041.73 501.56 0.00% 2008-09 2009-10 2010-11 2011-12 2012-13 Net Profit Margin 40.36% 23.87% 31.37% 22.73% 15.17% Op Profit Margin 62.33% 45.29% 61.03% 60.43% 64.62% The main reason for fall in turnover and profit margin is due to Land reforms and other regulatory changes
    75. 75. Company Profitability Trend 120.00% 2 10 100.00% 8 80.00% % age 6 60.00% 4 40.00% 2 20.00% 0.00% 0 2008-09 2009-10 2010-11 2011-12 2012-13 ROA 72.91% 75.59% 81.35% 85.35% 86.03% IT Ratio RONW 12.50% 5.96% 9.19% 7.18% 3.43% DT Ratio ROCE 11.90% 6.96% 9.45% 11.56% 9.34% AT Ratio 2008-09 2009-10 2010-11 2011-12 2012-13 0.43 0.42 0.43 0.24 0.14 0.1 0.11 0.13 0.08 4.95 5.62 6.64 8.84 8.28 Returns have shown the same trends as for the turnover. The increase in AT ratio can be explained as, the company has been selling its assets from last two years so as to clear its debts. 0
    76. 76. Legal Issues concerned to DLF
    77. 77. The Chandigarh HC has stayed the country's largest developer from selling, marketing and constructing its latest luxury residential project - the crest - at Gurgaon This, after the resident welfare association of one of DLF’s projects, park place, filed a writ petition alleging the company was encroaching on its condominium property. In a case filed by Belaire Owners Association against DLF , the CCI pronounced DLF guilty for grossly for abusing its dominant position and imposing unfair conditions in the sale of flats. The CCI imposed penalty of Rs 6300 million ; issued ‘Cease and detist’ order against DLF Mr. Robert Vadra along with DLF falsified documents and executed a series of sham transactions for 3.53 acres of land in Shikopur village of Gurgaon. IAS officer Mr. Ashok Khmka cancelled the land deal between Robert Vadra and DLF.
    78. 78. The Ups and Downs of DLF over the years
    79. 79. 2007  DLF launched Initial public offering at Rs 525 a share to raise 9000 crore in 2007. DLF would use the proceeds of the issue for reducing the debt and for working capital requirement.  27 November 2007, Zecha the owner of Aman resorts had an agreement with DLF Ltd, to form a partnership to acquire a controlling interest in Amanresorts.  The entire transaction, when completed, is estimated to be valued at US$400 million with an assumed debt of approximately US$150 million 2009  DLF bagged the country’s largest land deal for Rs 1750 crore.  DLF plans to enter the low priced home segments.
    80. 80. 2010  DLF eyeing Haryana Punjab and Himachal Pradesh for expansion. Announces its project Panchkula Valley, in Haryana with an investment of Rs 2200 crore. 2011  2011 DLF Brands a subsidy of DLF ltd decides to launch multi brand retail store of across 10,000 to 15,000 sq. ft that required an investment approximately up to Rs 15 crore. Also decides to enter into beauty and wellness category. 2012  DLF expects an annual growth of 20 percent in office rental income that would reach Rs 2500 by 2014-15.  DLF sells Aman resorts worth $300 million back to the owner and is set to launch a new project of luxury homes in Gurgaon with sales realization of Rs 900 crore.
    81. 81. 2013  DLF sold its wind turbine business in Gujarat to Bharat Light and Power for 282.30 crore.  DLF signed an agreement to sell its wind power assets in Tamil Nadu and Rajasthan for around Rs 241 crore. This was a strategy of selling non-core assets was to trim debts. The agreement was between DLF Home and Developers (DHDL) and Tulip renewable Powertech.  India's largest realty firm DLF today said it has given a Rs 1,337 crore contract to L&T for construction of its luxury residential project in Gurgaon. The company is developing a highend housing project 'The Crest' in Gurgaon, comprising 765 units, of which about 250 flats have already been launched and sold. 2014  IBM has today announced that it will deploy with real estate company DLF Limited an innovative mobile-phone based solution that channels data insights from customers visiting DLF Promenade, a high end shopping mall serving the metropolitan New Delhi area.
    82. 82. Competition Profiling
    83. 83. Major Competitors of DLF  Major Competitors of DLF can be listed as follows:  Oberoi Realty  Prestige Group  Godrej Properties  Sobha Developers  Omaxe Ltd  Parsvanath  K Raheja Group  Ambuja Realty  Industry P/E is 16.54
    84. 84. Omaxe Ltd  Headed by: Rohtas Goel, CMD  About: Over the past 22 years, Omaxe has established itself through diverse range of residential and commercial projects. The company at present has 53 projects under execution and planning. Omaxe Ltd was the first Construction Company of northern India to receive an ISO 9001:2000 Certification.  Project Spectrum: Integrated townships, Group housing, SEZs, Shopping malls & commercial complexes and hotels.  Latest: Has entered into infrastructure sector through Omaxe Infrastructure & Construction Ltd (OICL), a wholly owned subsidiary. OICL has bagged the first contract to construct Highway and three high level bridges in Punjab. The contract is awarded by Greater Mohali Area Development Authority and its value is pegged at Rs704 million.
    85. 85. Unitech  Headed by: Ramesh Chandra, Executive Chairman  About: Established in 1972, Unitech is today India’s leading real estate developer in India. It is the first developer to have been certified ISO 9001:2000 in North India.  Project Spectrum: Unitech offers diversified projects across residential, commercial/IT parks, retail, hotels, amusement parks and SEZs segments. Unitech was the first real estate company to be part of the National Stock Exchange’s NIFTY 50 Index. The company has over 600,000 shareholders.  Unitech and Norway based Telenor Group came together to build Uninor - A telecommunication services company providing GSM services across India.  Latest: Has ventured into the infrastructure business by launching Unitech Infra.
    86. 86. Ansal API  Headed by: Sushil Ansal, Chairman  About: Established in 1967 as a family business, Ansal API today is clearly amongst the real estate leaders of India. Having established itself very strongly in the NCR region, Ansal API is now focusing on ventures in cities like Bhatinda, Mohali, Amritsar, Ludhiana, Jalandhar, Jaipur, Jodhpur, Ajmer, Sonepat, Panipat, K arnal, Kurukshetra, Faridabad, Gurgaon, Greater Noida, and Ghaziabad, Meerut, Agra, Lucknow, to name a few.  Ansal API has till date, developed and delivered more than 190 million sq ft. The company currently has a land reserve of about 9,335 acres.  Project Spectrum: Integrated Townships, Condominiums, Group Housing, Malls, Shopping Complex, Hotels, SEZs, IT Parks and Infrastructure and Utility Services  Latest: Raised Rs231.4 crore through private placement of shares with institutional investors for reducing its debt and execute ongoing projects.
    87. 87. Parsvnath Developers Ltd  Headed by: Pradeep Jain, Chairman  About: Incorporated in July 1990 by Mr Jain in New Delhi, Parsvnath today has a substantial pan India presence in over 45 cities across 16 states. The company has emerged as one of the most progressive and multi-faceted real estate and construction entities in India.  Project spectrum: Housing (premium, mid-market as well as affordable), office complexes, shopping malls & hypermarkets, hotels, multiplexes, IT Parks and SEZs.  Quick fact: First real estate company to have integrated with ISO 9001, 14001 and OHSAS 18001.  Latest update: Has partnered with Red Fort Capital to execute a Concession Agreement with DMRC for development of a prime Grade A office project in New Delhi’s Connaught Place.
    88. 88. Godrej Properties Ltd  Headed by: Milind Korde, MD  About: Established in 1990, Godrej Properties Ltd (GPL) brings the Godrej Group philosophy of innovation and excellence to the real estate industry. GPL aspires to be among India’s top three real estate companies while continuing to be the most trusted name in the industry. GPL has completed several landmark projects and is currently developing significant projects in 11 cities across India.  Godrej Properties Ltd is listed on the Bombay Stock Exchange (BSE) and The National Stock Exchange (NSE).  Latest: Sold over 200 apartments within 2 days of launch of its project Godrej Frontier in Gurgaon. This is the company’s first residential project in northern India.
    89. 89. K Raheja Corp  Headed by: Chandru L Raheja, Chairman  About: Incorporated in 1956, this Mumbai based real estate giant has been engaged in real estate development for more than four decades. K Raheja Corp has built residences, commercial buildings and hotels throughout India. The Group also diversified in the hospitality sector in 1981and in the retail sector in 1991. The company has several landmark projects to its credits across cities.  Quick fact: K Raheja Corp has given a firm commitment to have all of its future projects undertaken anywhere in India to be Leed Certified Green Building Projects.
    90. 90. Kalpataru Group  Headed by: Mofatraj P Munot, Promoter  About: Established in 1969, Kalpataru is one of the leading real estate development groups in India. The Group has been active primarily in the Mumbai Metropolitan Region (MMR) & Pune. It is also undertaking projects in other key cities such as Hyderabad, Surat, Nagpur, Jaipur and Udaipur.  The Kalpataru Group has interests in real estate development, property and project management, engineering, procurement and construction (EPC) contracting for power transmission and infrastructure projects including road projects, warehousing and logistics.  Project Spectrum: The focus has been on the development of premium residential, commercial, retail, integrated townships, lifestyle gated communities and redevelopment projects.
    91. 91. DB Realty  Headed by: Vinod Goenka and Shahid Balwa  About: It is one of India’s fastest growing real estate companies headquartered in Mumbai. The Company currently has more than 30 ultra premium projects under various stages of planning and also completion in both Mumbai and Pune. It has 20.5 million sq ft of saleable area of ongoing projects with a projected area of  40.5 million sq ft in forthcoming and upcoming projects. DB Realty is publicly listed company both on BSE and NSE with a market capitalisation of more than Rs10000 crore.  Latest: Few months ago, it bagged the right to redevelop a large chunk of the 100-acre PWD government colony in Mumbai’s Bandra suburb. This will be one of the biggest redevelopment projects in the city
    92. 92. Sobha Developers Ltd  Headed by: PNC Menon, Chairman  About: The Company was founded in 1995 by PNC Menon after he returned home from the Middle East where he was acclaimed for quality interiors and construction since 1977. Today, this Rs10 billion plus company is one of the largest and only backward integrated company in the construction arena. Its IPO in 2006 was oversubscribed by 126 times that created history, being the first event of its kind in Indian capital markets.  Till date, Sobha has completed 47 residential projects, 13 commercial projects and 166 contractual projects covering about 36 million sq ft area in 18 cities across India (as of 31 March 2010). The company currently has 21 ongoing residential projects aggregating to 8.5 million sq ft, while 4.24 million sq ft of contractual projects are under various stages of construction.
    93. 93. Brigade Group  Headed by: MR Jaishankar, CMD  About: Established in 1986, Brigade is one of South India’s leading property developers. It is headquartered in Bangalore with projects extending across several major cities in South India like Chennai, Chikmagalur, Hyderabad, Kochi, Mangalore and Mysore.  Project Spectrum: Brigade has a multi-domain portfolio that covers property development, property management services, hospitality and education.  Latest: Brigade recently obtained the license from the World Trade Centers Association to classify and manage its one million sq ft office tower in its mixed use project Brigade Gateway as ‘World Trade Centre Bangalore.
    94. 94. Puravankara Group  Headed by: Ravi Puravankara, Founder and CMD  About: Established in 1975, the Group has grown to be one of the leading real estate developers of the country, primarily in the premium housing segment. It has projects across cities like Bangalore, Chennai, Kochi, Coimbatore, Hyderabad, Mysore, Kolkata and Colombo. The Group also has a presence in Dubai, UAE. With a land bank of over 125 million sq ft, the Group has above 20 million sq ft of residential and commercial space currently under construction.  Latest: Recently launched Purva Venezia that recreates the beauty of Venice at Yelhanka in Bangalore.
    95. 95. Nitesh Estates  Headed by: Nitesh Shetty, MD  About: Founded in 2004, Nitesh Estates is an integrated property development company headquartered in Bangalore.  Project Spectrum: In just six years, the Company has brought more than nine million sq ft of space under development across housing, hotels, office buildings and shopping malls. The company is growing even faster with plans to expand its operations in other cities like Goa, Chennai, Hyderabad and Kochi. Nitesh Estates has to its credit a series of firsts: the first to win India’s largest corporate housing project (ITC Limited), one among the first few to attract FDI in real estate (Och Ziff and Citigroup) and has the distinction of bringing to India it’s very first Ritz Carlton. It has 27 ongoing and forthcoming projects in and around Bangalore and Goa. It has land bank of 19 million sq ft, which will be developed in the next 4-5 years.
    96. 96. Prestige Estates Projects Ltd  Headed by: Irfan Razack, CMD  About: Founded in 1986, Prestige has completed more than 142 projects and has 59 ongoing projects. The company has presence in Bangalore, Chennai, Hyderabad, Kochi, Mysore as well as Goa.  Project Spectrum: Develops projects across segments like residential, commercial, integrated township, retail, leisure & hospitality and mixeduse.  Facts: Prestige raised Rs12 billion rupees through its IPO.
    97. 97. Ambuja Realty  Headed by: Harshavardhan Neotia, CMD  About: Ambuja Realty has been providing housing in West Bengal, in a pioneering joint venture with West Bengal Housing Board for the past 15 years under the name Bengal Ambuja. The first real estate company in Eastern India to get ISO: 9002 Certification, in 1999, Bengal Ambuja has also earned them the highest developer rating in India - DRI from ICRA, in 2003.  Project Spectrum: The Group has a diversified presence across segments like residential, retail, commercial and hospitality. The company is also planning an aggressive pan-India growth strategy to deliver an unprecedented number of high-quality projects. Currently, it is building more malls, hospitals, IT Parks, luxury resorts, business hotels and are even aspiring to build a University.  Latest: To invest around Rs500 crore in developing three shopping malls under the ‘City Centre’ brand in Raipur, Haldia and Patna.
    98. 98. Merlin Group  Headed by: Sushil Mohta, MD  About: Merlin Group is a recognized name in the realty business of India’s eastern parts. The Group has grown over past three decades with over 50 residential and commercial complexes as well as several standalone projects.  Project Spectrum: Merlin Group has innovated with various formats and core projects including premium housing, essential housing, country homes and bungalows, specialty malls, office towers, IT buildings, hotels new generation clubs, and resorts, serviced apartment’s stadium and townships. It also has presence in other parts of India with its various residential and commercial projects at Chennai, Chhattisgarh and Ahmedabad.
    99. 99. PS Group  Founded by: Pradip Kumar Chopra & Surendra Kumar Dugar  About: Today, the original pair of founders has grown into a group of seven players, with the second generation joining the business in right earnest.  Project Spectrum: PS Group is involved in the development of premium residential complexes, integrated townships, commercial buildings, hotels, IT parks and a wide range of shopping malls.  The company already has completed 100 projects with Trinity Plush and intends to complete another 50 projects in the next two years.
    100. 100. Hiland Group  Headed by: Nayan Basu, CEO  Credited with more than 50 multi-storeyed landmark developments adorning the skyline of Kolkata, the Hiland Group has today emerged as one of the most prominent developers in Kolkata.  Latest: The Group has also entered into a 50:50 joint venture with West Bengal Housing Board to form Bengal United Credit Belani Housing Ltd. Hiland Woods is the key project of this joint venture. It is a residential development catering to a mix of demographic profiles across LIG, MIG and HIG.
    101. 101. Belani Group  Headed by: Nandu Belani  About: The Company commenced operations in Kolkata in 1967 and has pioneered the business of building, promoting and developing high-rise apartments and commercial buildings in the city over the last four decades.  Some of the key projects done by this Group are Metro Towers, IDBI Building, British Deputy High Commission, Belmont Apartments, East End Gardens, Neelkamal , Shakespeare Court, Greenwoods and Palacio.  The Group has presence across segments townships, residential, commercial, retail and hospitality. like integrated
    102. 102. Tata Housing Development Company  Headed by: Brotin Banerjee, MD & CEO  About: Tata Housing is a closely held Public Limited Company and a subsidiary of Tata Sons Ltd. Since it’s revival in 2006, Tata Housing has been focused on developing and transforming real estate development in India. With the primary business being the development of properties in residential, commercial and retail sectors, the company’s operations span across various aspects of real estate development. With existing presence in Mumbai, Goa, Chandigarh, Bengaluru, Gurgaon, Pune, Lonavala, Talegaon and Kolkatta, the Company is in the process of expanding its projects to other parts of India across tier I and II cities.  Latest: Has announced aggressive growth plans to invest over Rs2500 crore in the affordable and value homes segment by 2013.
    103. 103. Lodha Developers  Headed by: Abhisheck Lodha, MD  About: Founded in 1980, Lodha Developers are primarily Mumbai based with some presence in Pune and Hyderabad. Lodha Developers provides comprehensive residential and office space solutions across real estate categories and diverse consumer segments - from luxury garden residences in South Mumbai to large integrated townships in the suburbs, from thoughtfully designed office environments to private villa retreats.  The group has extended this philosophy to office spaces as well, where it was one of the first in India to introduce the concept of branded office spaces.  Latest: Announcement of World One, a landmark development on a 17 acre site, slated to be the tallest residential development in the world.
    104. 104. Akshaya Private Ltd  Headed by: T Chitty Babu, Chairman & CEO  About: Headquartered in Chennai, Akshaya has successfully completed over 148 landmark projects in a short period of 15 years. Akshaya is one of the few CRISIL rated organizations in Chennai’s real estate space. Akshaya’s excellence in its endeavours has also resulted in the Integrated ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007 Management System. The Integrated Management System Certification, ncidentally, has been conferred on only 11 companies in India.  Akshaya also achieved the feat of being one of the two companies in our country to win the SA 8000:2008 Certification (the global social accountability standard for creating employeefriendly workplace). Akshaya is now foraying into commercial and IT space while envisioning state-of-the-art shopping malls and diversified operations in other parts of South India.  Latest: Recently launched its luxury project, 36-Carat, which became the only project in Chennai to get the coveted ‘Chennai-5 Star’ rating.
    105. 105. The 3C Company  Headed by: Three directors including renowned architect Vidur Bharadwaj  About: Founded in: 2007, The 3C Company has presence in the Delhi NCR. The Company stands apart due to focus on designing and developing green projects with on schedule delivery. Its USP of developing environment friendly designs has helped it carve a niche in the real estate segment. The Company is currently developing projects worth over Rs15000 crore.  Project Spectrum: The 3C Company has presence across segments such as residential, commercial, IT Parks and SEZs.  Latest: After the success of three green projects, it announced the launch of another green residential project called Lotus Zing. It has tied up with Kotak Real Estate Fund for this project, which has a total capital outlay of Rs 850 crore.
    106. 106. Competitive Analysis
    107. 107. SWOT analysis of DLF STRENGTH Huge supplier base ensure a fixed raw material cost Change in the rules and regulations effected adversely. Example Delhi Development Act in 1957 effected the development in Delhi.  Macroeconomic risks No parallel products to support during times of bad economy.  Real risk of decline of property prices and concentration in gurgoan. High brand value and advantages of being a pioneer  Not much penetration in South India.      DLF has a market share of about 54% and a strong base in north India. WEAKNESS  DLF huge land bank  effective and innovative promotional deals (eg: IPL)
    108. 108. SWOT analysis of DLF OPPORTUNITIES THREAT  Investment in raw materials- Backward integration.  Profitability decreases due to increase in the number of new entrants like Shoba developers ,Tata etc.  Government has allowed ECB for integrated township  Easy methods for new players to raise huge capital  Can cater to the needs of MNC’s who are looking to establish in south India especially in the outskirts of metros especially in tier I and tier II cities.  High competition from other major player such as Unitech, Ansals.  Brand name effected due to debt burden, timely delivery, corruption charges.  New FDI policies by FIPB  Corrupt practices in legal proceeding.
    109. 109. SWOT analysis of Unitech STRENGTH WEAKNESS  India’s second largest real estate investment company and largest real estate builder  Decline in operational performance and Low returns are a concern  Offers a diversified product mix  Global presence and international tie-ups are very less  Has decades of real estate experience and expertise  LOSS of talent pool.  Strong national presence  Wide customer and partner base
    110. 110. SWOT analysis of Unitech OPPORTUNITIES. THREAT  Investment in raw materials- Backward integration.  Profitability decreases due to increase in the number of new entrants like Shoba developers ,Tata etc.  Government has allowed ECB for integrated township  Easy methods for new players to raise huge capital  Can cater to the needs of MNC’s who are looking to establish in south India especially in the outskirts of metros especially in tier I and tier II cities.  High competition from other major player such as Unitech, Ansals.  Brand name effected due to debt burden, timely delivery, corruption charges.  New FDI policies by FIPB  Corrupt practices in legal proceeding.
    111. 111. SWOT analysis of DB Realty STRENGTH WEAKNESS  Strategic location in Mumbai and Pune  2G spectrum scam connection with Etisalat  Highly lucrative market in Mumbai   Strong CSR activities in and around Mumbai Restriction to foreign FDI may hamper its capital growth  Limited business experience for conducting business activity outside Mumbai  Ability to response to consumer requirements  It is one of India's largest real estate developer based in Mumbai
    112. 112. SWOT analysis of DB Realty OPPORTUNITIES THREATS  Ability of expansion in other metro cities in India  Rules and regulation on FSI and time consuming legal proceeding.  Joint venture and acquisition for development.  Slowdown in Indian Economic growth  Varying interest rate and exchange rates in India  Immense competition  Corrupt practices in legal proceeding.  Global tie-ups and diversification can be possible
    113. 113. SWOT analysis of Sobha Developers Limited STRENGTH    Backward integration: in-house resources to deliver a project. Eg: architectural and design studio, concrete block making plants, metal and glazing factory, interiors and wood working factory. Access to skilled labor: an academy to train tradesmen in specialised fields of the construction business Ability to identify emerging trends in customer requirements by CRM team and a Customer Care Cell. WEAKNESS  Approvals from the relevant local authority for the development of the lands is a long and tardy process.  Approximately 2.02% of the land held by Shobha is declared by government as “green belt” where no further development can be undertaken.  Inability to acquire contiguous parcels of land may affect the future developmental activities.  Significant portion of the revenues from contractual projects is attributed to one client. Example: Of the revenues from contractual projects Rs. 1.073.84 million, Rs. 2,780.15 million and Rs. 1,678.73 million relate to revenues generated from Infosys Technologies Limited, in fiscal 2004, 2005 and 2006.
    114. 114. SWOT analysis of Sobha Developers Limited OPPORTUNITIES  A business model of construction in city model development. Eg: Shobha city  State government approvals for SEZs.  Increase in the number of MNC’s setting up in India in the past decade and the need for quality services.  Rising population and the increase migration to cities. THREATS  Limited supply of land, increasing competition and applicable regulations are likely to result in land price escalation and a further shortage of developable land.  The company recognise revenue based on ‘Percentage Completion Method’ of accounting on the basis of our management’s estimates of the project cost. However this is effecting the price of equity shares.  Shortage of building materials can effect operations and financial conditions.  The Government may exercise rights of compulsory purchase or eminent domain in respect of the company’s lands.
    115. 115. SWOT analysis for Oberoi Realty STRENGTH  Strong presence in Mumbai  WEAKNESS Established brand and reputation Strong base of client in commercial  Financial stability of tenants  Strong workforce Volatility in prices of, or shortages of, key building materials;    Largely depend on third parties, Joint ventures, Contractors on whom they have limited control
    116. 116. SWOT analysis of Sobha Developers Limited OPPORTUNITY  Continuous focus on large development in Mumbai  Acquisition and Joint venture for sustainable development  For more growth in other metro cities in India THREATS  Extensive regulation include various Environmental laws regulation , which may be more stringent in near future  Constraint of fund  Changes to the FSI/TDR regime in Mumbai  Terrorist attacks which may affect the steady business development.  Changing and downturn in Economic condition of the country
    117. 117. Strategy Adopted by Competitors
    118. 118. Barriers In Growth Of Real Estate Skill Shortage. Non Availability of Statistics. Overvaluation of Property. Highly Fragmented. Lack of Transparency.
    119. 119. Bricks Prices Increase by 30-35 % Labor Rates Escalated to 5-10 % High Interest Rates CONSTRUCTION COST
    120. 120. Fall Of Sensex & Real Estate Stocks Rising Prices PARSAVNATH UNITECH DLF Decreasing Demand
    121. 121. Key Issues
    122. 122. Measures taken by DLF Launched affordable housing project. Payment of short term debt by raising long term debt. Terminated projects with long gestation period. Sale of properties for liquidity preservation. Cost reduction through tight cash flow.
    123. 123. Measures taken by Unitech QIP issuance to reduce debt. Reduced promoter’s stake from 64% to 51%. Increased confidence with customers on project delivery. Major Strategic restructuring.
    124. 124. Strategic Restructuring
    125. 125. Competitors Strategy
    126. 126. Demand projected in the affordable housing segment Through a combination of reduction in costs, decrease in unit sizes and reduction in margins, Unitech has been able to offer housing at prices affordable to a wider cross section of customers Unitech offering product in the sub Rs. 20 lakhs range under the ‘Unihomes’ Brand
    127. 127. Unitech Business Model – Post Restructuring
    128. 128. Godrej Properties – Business Strategy
    129. 129. Oberoi Reality  Oberoi Realty is a debt-free real estate firm (a laudable achievement for an industry drowning in debt).  Diversified portfolio across commercial and residential, the predominant focus has been on the residential side and the aim is to target the upper end of the market segment.  The company’s business model is based on five strategies — low capital employed, land is raw material, in-house construction capabilities, direct sales team and facilities management.  The company extensively out-sources work to leading international and domestic consultants in the areas of architecture, design, engineering and construction to achieve international quality and styling as well as to attain the scalability required to undertake large developments. Yet, it is able to clock a high margin due to the target segment and premium branding.
    130. 130. Omaxe – Key Strategies  Strategic Land Parcels: The Company has established a first mover advantage in Tier II and Tier III towns in the country. Its strategy to acquire large land parcels at strategically located areas in close proximity to the proposed network of national highways has kept it in good stead. Such land parcels are usually cheaper to acquire ahead of the start of development. The same offers the Company with the leverage of developing full scale townships, with residential facilities by offering plots and built up areas in apartments/ villas and floors.  Customer-centricity: A key strategy that has worked wonders for Company’s growing preference and swelling brand equity has been its steadfast focus on customer satisfaction and delight  Non-metro intensity: The Company has aligned its project development plans in line with the changing demography of the country towards rapid urbanization. The same has helped the Company deepen its engagement in many Tier II/III towns in the country
    131. 131. Omaxe – Key Strategies  Strategic Land Parcels: The Company has established a first mover advantage in Tier II and Tier III towns in the country. Its strategy to acquire large land parcels at strategically located areas in close proximity to the proposed network of national highways has kept it in good stead. Such land parcels are usually cheaper to acquire ahead of the start of development. The same offers the Company with the leverage of developing full scale townships, with residential facilities by offering plots and built up areas in apartments/ villas and floors.  Customer-centricity: A key strategy that has worked wonders for Company’s growing preference and swelling brand equity has been its steadfast focus on customer satisfaction and delight  Non-metro intensity: The Company has aligned its project development plans in line with the changing demography of the country towards rapid urbanization. The same has helped the Company deepen its engagement in many Tier II/III towns in the country
    132. 132. Omaxe – Key Strategies  Affordable Housing: The Company is aligned to encash upon the rapid shift towards nuclear families even in smaller towns. We are witnessing a consistent drop in the maiden age of buyer at the time of purchase of the first house. The Company's range of affordable housing is positioned well within the reach of such nuclear families from middle income group.  Phased Development: The Company believes in not taking up too many projects simultaneously. It follows the strategy to complete them in a phased manner with focus on timely delivery. The Company launches fresh projects across other options available in regions where it has already got land parcel, and finds visible signs of healthy absorption.
    133. 133. Competitors Shift in Business Strategy
    134. 134. Critical Impact  Competitors are forced to change their strategy in this highly fragmented market.  Focus on core competency.  No more purchase of land bank unless strategically highly opportunistic.  Focus on increasing brand loyalty.  Price war in affordable housing segment.
    135. 135. Enhancing Execution Capabilities
    136. 136. Financial Analysis of Competitors
    137. 137. Top Companies on Basis of Turnover Top Companies on Basis of Market Cap Omaxe Infra 2253.33 Puravankara 815.26 Sobha Developers 2691.85 SRS Real Infra 849.56 Godrej Properties 3166.82 Prestige Group Oberoi Realty DLF HDIL Rs. Cr 4821.25 6054.26 Omaxe Sobha Developers 30199.1 DLF Rs. Cr 980.53 1345.64 1803.02 2150.04 Even if DLF has the highest market cap, which is far more than any other companies, the turnover does not show the same trend. Hence relatively DLF has to struggle hard to grow.
    138. 138. Top Companies on Basis of Total Asset Top Companies on Basis of Net Profits Prestige Estate HDIL Prestige Estate 129.07 DB Realty 145.38 3240.05 Rs Cr 3616.72 Rs. Cr Sobha Developers Indiabulls real Oberoi Realty DLF Anant Raj 196.57 268.56 Indiabulls Real HDIL 327.47 501.66 DLF 4408.25 5877.75 12445.1 19012.4
    139. 139. Top Companies on Basis of Investments Top Companies on Basis of Tax 200 50.00% 8400 70.00% Rs Cr Rs Cr %age of Total Asset 7200 % age of PBT 160 60.00% 40.00% 6000 80 20.00% 40 40.00% 3600 30.00% 20.00% 1200 30.00% 4800 2400 120 50.00% 10.00% 10.00% 0 0.00% DLF Oberoi Realty Sobha Developers Indiabulls Real Parsvanath Purvankara 0 0.00% DLF Oberoi Realty Sobha Indiabulls Real Parsvanath Developers Purvankara
    140. 140. Top Companies on Basis of Debt 12000 48.00% Rs Cr Top Companies on Basis of Cash/Bank 1000 40.00% %age of Liability Rs Cr %age of Liability 900 10000 40.00% 35.00% 800 30.00% 8000 32.00% 700 25.00% 600 6000 24.00% 500 20.00% 400 4000 15.00% 16.00% 300 10.00% 2000 8.00% 200 5.00% 100 0 0.00% DLF Oberoi Realty Sobha Indiabulls Real Parsvanath Developers Purvankara 0 0.00% Oberoi realty DLF Puravankara Omaxe HDIL Anant Raj
    141. 141. Road Ahead
    142. 142.  Investment in raw materials- Backward integration.  Can cater to the needs of MNC’s who are looking to establish in south India especially in the outskirts of metros especially in tier I and tier II cities.  Robust strategy against increasing competition from big players like Shoba developers, Tata etc.  Focus on reducing the burden of debt  Increase market diversification by penetrating through housing and retail segments across Tier – II and Tier – III cities by acquisitions and JVs  Need for organisation of real estate sector in the country  Increase in brand loyalty to gain sustainable competitive advantage
    143. 143. Thank You