DLF-Building India

DLF – Building India
ACHINTYA PR
ANKIT UTTAM
ARUN KS
MANISH WATHARKAR
NISHIGANDHA
PANKAJ KUMAR
PRASHANT PATRO

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

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.

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.

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.

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.

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

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

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

DLF’s Core Businesses

DLF
Core Business

Homes

Office

New Business

Retail

Hotels

SEZs

Infrastructure

Execution

Enablers

Investments

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

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

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

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

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

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.

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

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

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

 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.

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

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

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

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.

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.

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.

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.

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.

Residential Segment – A Snapshot

Commercial and Shopping Complexes
 DLF has four commercial and shopping complexes under construction with expected
Saleable Area of approximately 3.96 msf.

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.

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.

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.

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.

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.

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).

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

 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

Recently adopted strategies
 consolidation of its core operations

 cash flow maximization
 long-term growth

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.

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.

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.

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.

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

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.

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.

Strategies adopted by DLF at
Different Phases

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.

 Seek Dominance
 Grow

 Maximize investment
 Defend their position
 Identify weaknesses
 Build Strengths

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.

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,

 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.

 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.

 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.

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.

 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

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.

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

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

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.

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.

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

Financial Statement & Balance Sheet

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

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

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.

The Ups and Downs of DLF
over the years

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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)

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.

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

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




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

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






Global tie-ups and diversification can be
possible

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.

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.

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

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

Strategy Adopted by Competitors

Barriers In Growth Of Real Estate
Skill Shortage.

Non Availability of Statistics.
Overvaluation of Property.
Highly Fragmented.
Lack of Transparency.

Bricks Prices
Increase by
30-35 %

Labor Rates
Escalated to
5-10 %

High
Interest
Rates
CONSTRUCTION
COST

Fall Of Sensex & Real Estate Stocks

Rising Prices

PARSAVNATH

UNITECH
DLF

Decreasing Demand

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.

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.

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

Unitech Business Model – Post Restructuring

Godrej Properties – Business Strategy

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.

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

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.

Competitors Shift in Business Strategy

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.

Enhancing Execution Capabilities

Financial Analysis of Competitors

Top Companies on Basis of
Turnover

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.

Total Asset

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

Investments

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

Debt
12000

48.00%
Rs Cr

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

 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

DLF-Building India

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Editor's Notes