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Home > Forum > Real estate News > SEBI interrupted DLF promoters for utilizing markets for 3 years

SEBI interrupted DLF promoters for utilizing markets for 3 years

Q: have you heard this news that the Securities and Exchange Board of India (SEBI) has interrupted real estate firm DLF and five key executives from approaching the securities market for a three years.

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Replies (42)
1
True Nikhil,
Now, i understand that why DLF adopt DevCo. The company had a net debt of Rs 20965 crore as on March 31, 2015 of which about Rs 14000 crore refered to rental business and the rest was towards DevCo.
Sharath bharadwaj


Hey Sharath,
But don't forget that the DLF has posted 22% fall in combined net profit at Rs 171.62 crore in the 4th qtr of 2014-15 fiscal, as against Rs 219.68 crore in the year-ago period.

But during the full 2014-15, net profit dropped by 16% to Rs 540.24 crore from Rs 646.21 crore in previous year.
Shantanu Kumar,  Mumbai
1st June 2015


2
Good morning all,
As per the latest news, India's largest realty firm DLF is looking at closing two private equity deals worth around Rs 1000 crore by September 2015 to part-finance its upcoming housing projects in Chennai and Gurgaon.
Shantanu Kumar


Good morning Shantanu,
In February' 2014, the co. had announced to raise over Rs. 3000 crore through divestment of stakes in certain housing projects to private equity players. They are targeting at least two deals in the first half of this fiscal worth Rs. 1000 crore.
N.Mathur,  Delhi-NCR
1st June 2015


@Nikhil,
If i am not wrong, due to sluggish housing sales in last few years, DLF has decided to raise private equity funds at project levels to boost cash flows, Private Equity fund will be the alternative for the cash flow which would have normally come from sales.
Shantanu Kumar,  Mumbai
1st June 2015


@Shantanu,
May be you are right because DLF's sales bookings fell by over 5% to Rs 3850 crore in 2014-15 against Rs 4070 crore in the previous year. Even for the 2015-16 fiscal, DLF has recently given a sales bookings guidance of Rs 3500-4000 crore as the company feels that it would take at least 12 months for the sales momentum to start improving.
N.Mathur,  Delhi-NCR
1st June 2015


3
Thanks for the information,
What was the DLF's reaction on this matter? How many apartment owners have to face this issue? Is there any action take by the police?
Suhail


DLF denied these claims and said it had not charged for the club in super built-up area. There are 1500 apartment owners of Park Place. As per them they paid a lot of money for buying the apartment and enjoying the club's facilities, but now any outsider can avail the benefits by paying a mere Rs 1500 a month.

As per Police Commissioner, Navdeep Singh, brochure and buyer's agreement and both mention the provision of exclusive club facility. Since there has been a breach of contract and residents have borne losses, They have accordingly booked the complain under sections 420 and 406 of the IPC.
Jamuna sikhri,  Delhi-NCR
18th March 2015


4
Hi Jamuna,
Can you give us the detail information why the FIR has been made in the name of Chairman and the Director Of DLF?
Suhail


Well Suhail,
Actually the allegation was that the real estate company DLF did not transfer the club to Park Place owners as per the promise and instead started offering membership to outsiders.
N.Mathur,  Delhi-NCR
18th March 2015


It is also found that the flat owners claimed DLF had marketed Park Place as a luxury housing complex and promised an exclusive club to residents with facilities such as a swimming pool, tennis court, etc to charge a higher price per sq-ft on the sale of the apartments. They also claimed the club area was included in the super built-up area of apartments to recover land and construction costs. Super built-up area is calculated by adding the carpet area of a flat with the common area.
Jamuna sikhri,  Delhi-NCR
18th March 2015


5
Well Mritunjoy,
For your knowledge, i would like to tell you that total income declined by 20% to Rs 2079.82 crore for the quarter ended December from Rs 2590.2 crore in the year-ago period. Company has a land bank of about 295 million sq-ft, of which 50 million sq-ft is under development.
Kalki K


6
@Mritunjoy,
Do you know that DLF has divided its real estate business in 2 parts - DevCo, under which all residential projects fall, and RentCo, which is the rental business from office and retail projects. Since sales are slow, they are planning to raise about Rs 3000 crore through private equity. In the short term, PE fund will be the replacement for the cash flow which would have normally come from sales.
Kalki K


You are right Kalki,
Earlier this month, DLF had reported 9% decline in consolidated net profit at Rs 131.79 crore for the quarter ended December due to fall in sales and other income. While Its net profit stood at Rs 145.29 crore in the year-ago period. Income from operations fell 5% to Rs 1956.72 crore for the 3rd Qtr. of this financial year from Rs 2058.42 crore in the corresponding period of the previous year.
Mritunjoy Deb,  
23rd February 2015


7
HI all,
Realty major DLF plans to divest around 50% stake each in 4 new housing projects to private equity firms for over Rs 3000 crore. Comapany expects to close some of the deals by June and would utilise the funds to improve its cash-flows that have been affected due to slowdown in housing demand.
Kalki K


Hi Kalki,
It is also heard that their area of operation will be 4 greenfield housing projects in Delhi-NCR and South India. It is expected that at least 2-3 PE deals should get closed by June-end. They are targeting to raise about Rs 2500 crore by June from 2-3 deals. On the utilisation of funds raised via private equity at projects level, the same would be utilized to increase the operating cash flow of their development arm DevCo.
Mritunjoy Deb,  
23rd February 2015


8
Don't forhget that the company has been at the receiving end of two other CCI orders in the past few days. All these issues will be examined at length from February 18.
Lokesh Patwa


9
You are right Sisir,
The penalty was calculated at 7% of the average turnover of the company. The real estate company has paid this amount in installment to the top court, pending its appeal against the decision.
Lokesh Patwa


Well Lokesh,
The company first paid Rs 150 crore and later moved the top court to allow it to pay the rest in installments, citing financial constraints. This was allowed by a bench headed by current chief justice HL Dattu.

CCI lawyer Amit Sibal and residents of some of DLF's projects, who had taken the company to the anti-trust regulator, opposed any relief to the company.
Sishir,  
19th February 2015


10
Hi all,
Again a sad news for DLF. The Supreme Court on 12th Feb'2015, refused to impose a blanket stay on proceedings pending in the Competition Commission of India (CCI) against real estate company DLF. The demand had been made by the company through lawyer CA Sundaram citing the multi-crore penalties being imposed on it by the regulator.
Lokesh Patwa


Are you talking about Rs 630 crore penalty on the company that had levied in August 2011, CCI for using its dominant position in the market to engage in unfair trade practices such as making consumers sign inequitable agreements? The commission had faulted 16 clauses in the agreements as being unfair.
Sishir,  
19th February 2015


11
DLF had over 94% share in DLF New Gurgaon Homes Developers. The latter was then involved with DLF Home Developers Ltd, a wholly-owned subsidiary of the realty major.

According to the Commission, any reference to DLF New Gurgaon Homes Developers would necessarily be interpret as referring to DLF Home Developers also.
Javed


12
DG is the investigation arm of the fair trade watchdog. The case relate to stated one-sided clauses in the buyer's agreement with respect to apartments in the residential township 'Regal Gardens at DLF Garden City' in Gurgaon.

Briefing that it has already held DLF to be ruling in the geographic market of Gurgaon, the Commission in its latest order said that such cases were related to agreement with buyers during the period from 2007 to 2010.
Sishir


13
You are right Sishir,
But earlier, the company has come under the scanner of Competition Commission, which striked a large penalty of Rs 630 crore on the realty firm for violating fair trade norms in 2011. The penalty was challenged by DLF before the Competition Appellate Tribunal, which managed CCI order and the company has gone to the Supreme Court. At the time of examine order, the Commission told DLF that the conduct of Co. and Co's New Gurgaon Homes Developers appeared to be in violation of competition norms.
Javed


14
But i heard that there were no comments from the company on the CCI order directing a detailed examine by its Director General against DLF and DLF New Gurgaon Homes Developers, which has been involved with another DLF subsidiary, DLF Home Developers Limited.
Sishir


15
Hey,
Again a bad news for the realty major DLF Ltd., Competition Commission has ordered a fresh examine against DLF Ltd. with regard to alleged abuse of its dominant market position, after it found the realty major prima facie in violation of fair trade norms in a new case.
Javed


16
Jain had approached the forum asking for Rs 10.82 lakh for lack on the part of DLF including delay in giving possession, charging for maintenance for the time prior to giving possession and not providing several facilities in the flat.
Aneek Das


17
The New Delhi District Consumer Disputes Redressal Forum, lead by C K Chaturvedi, asked the firm to pay Rs 268556 to south-Delhi resident Sudha Jain. The payment amount also included Rs 20000 for litigation expenses.
Pranab Malakar


18
Charged after charge, a consumer forum here has asked real estate major DLF to pay Rs 2.68 lakh to its consumer for delay in handing over the possession of a flat, besides wrongly charging service tax and maintenance charges before giving its actual possession.
Aneek Das


19
DLF, which had earlier deposited Rs 150 crore out of total fine of Rs 630 crore, on Monday gave another Rs 75 crore to the apex court registry. The real estate firm now has to pay the remaining amount of Rs 405 crore. A bench of justices S J Mukhopadhaya and N V Ramana would now hear the final arguments in the case on February 11.
Rakshit


20
Well Rakshit,
The real estate firm has seek more time for depositing rest of the amount claiming that it was in serious financial difficulty, which was put out by SEBI's decision to ban the company and six of its senior officials from accessing the capital markets for 3 years for an alleged non-disclosure in the 2007 IPO filing.
Bikram


21
Yes Bikram,
And the court also directed DLF to amend the flat buyers' agreements. The bench had said that they will first hear the question of jurisdiction. Whether Competition Commission had the jurisdiction or a consumer forum.
Rakshit


22
Hi everybody,
Supreme Court today asked its registry to invest in a PSU Bank the money deposited with it by real estate major DLF as a fine which was imposed by the Competition Commission of India. It had earlier deposited 150 crore out of total fine of Rs 630 crore, today gave another Rs 75 crore to the Supreme Court registry. The real estate firm now has to pay the remaining amount of Rs 405 crore.
Bikram


23
You are right Hari.
At the time of incorporation of DLF Assets with Cyber City arm in 2009, DLF had planned an eventual listing of the arm on Reits or Real Estate Investment Trusts but now the company is restricted from going ahead with that plan deputation after the Sebi ban.

Amit Raj


24
Do you know Amit?
Promoters of DLF hold 40% in DCCD through compulsory convertible preference shares issued in 2009 which would require Rs 2500-3000 crores. Their earlier plan was a share swap through which the promoters KP Singh and family would have increased their shares in the main company, DLF. But as per the Sebi order DLF cannot take the share swap route to get the remaining shares in Cyber City subsidiary.

Harilal


25
Hi Hari,
For that DLF is making conversation with important players and investors like Blackstone, Brookfield Global for the transaction. DLF has challenged Sebi's order in the Securities Appelate Tribunal but in the meantime is looking for various options to raise cash as its bond conversion deadline of March 2015.

Amit Raj


26
Hi,
Real estate developer, DLF has initiated a process to sell 50% of its subordinate company, DLF Cyber City Developers to raise over Rs 3500 crores. Forced by the SEBI order which bans DLF from any capital market transaction for 3 years, cash-strapped DLF has few options for fund raising.

Harilal


27
But DLF had demanded that it had obtained the land by participating in an international auction. The Haryana government also accepted that the land was allotted in a transparent manner.

However, DLF deposited the first installment of Rs.50 crore along with the undertaking on 17 September and another Rs.100 crore on Thursday. The court will hear the case again on 7 February 2015.
Kunal


28
@Kunal,
Do you know kunal the land had been issued to DLF by the Haryana State Industrial and Infrastructure Development Corp. Ltd to build a recreation and leisure project called the Magnolias in Wazirabad in Gurgaon in February 2010. But at the same time the controversy created when farmers objected the acquisition of their land by the government.
Puneet Laskar


29
Yes Puneet,
The Supreme court had permitted a staggered payment, with the company paying Rs.75 crore every month, starting with the first installment due on 15 January 2015. It also ordered DLF to file an undertaking that it will pay the remaining balance in installments.
Kunal


30
Hi Kunal,
It happened because DLF had approached the supreme court on 8th of October 2014 against the high courts order. However, the supreme court refused to accept DLFs reason asking a disclaimer of Rs.480 crore of the Rs.630 crore penalty imposed on it by the Competition Commission of India (CCI) in 2011 for involving in unfair trade practices.
Puneet Laskar


31
Hi all,
In a separate hearing, the supreme court refused to accept DLFs plea seeking a waiver of Rs.480 crore of the Rs.630 crore penalty imposed on it by CCI. It is said that a temporary remission from the Supreme Court on Friday, which ordered DLF to be maintained with regard to a 3 September Punjab and Haryana high court order canceling allotment of 350 acres of land to the developer in Gurgaon for Rs.1700 crore and ordering it to be auctioned again.
Kunal


32
@Lewin,
Due to unachievable of funds which would otherwise have been incurred by way of non-convertible debenture, the applicant had no option but to find return of mutual funds which was permitted by SAT after considering the requirement of applicant to service the repayment of loan and principle amount gained by it from various banks/NBFCs/Financial institutions.
Ravindra Singh


33
DLF told that it deposited the first installment of Rs.50 Cr. along with the guarantee in fulfillment with the apex courts direction on 17 September 2014. They had approached the apex court against a 19 May Competition Appellate Tribunal (Compat) order that support the penalty.
Lewin G


34
Hi Lewin,
I read in the newspaper yesterday. As an alternative to giving up the payment at this stage, DLF has seek to provide land as security for the remaining Rs.580 Cr.. The apex court had, on 27 August, directed payment of the whole sum of Rs.630 Cr. within three months, and a guarantee to pay 9% interest on the principal if DLFs appeal against the penalty failed.
Ravindra Singh


35
Hi,
Have you heard that Real estate company DLF Ltd has approached the Supreme Court seeking a disclaimer of the balance amount of the penalty put upon it by the antitrust regulator in 2011 for claimed unfair business practices. Rs.630 Cr. penalty has been paid by the company but Rs.580 Cr. remains to be deposited.
Lewin G


36
Point to be noted here that BJP proceeded Ashok Gehlot in Rajasthan with clear majority, now BJP at center and BJP in state but no any action against Vadra. Vadra was given huge volume of lands in Rajasthan during Gehlot rule. Please note, It has been 8 months government in Rajasthan and three months in Center. No Action here.
Harmeet Kaur


37
Not only this, Haryana IAS officer Ashok Khemka, who supported Vadra for his controversial land deals in Gurgaon, admitted in a conversation with Karan Thapar on Devils Advocate that there is further investigation required to prove that Vadra disprove documents for the deals.
He said that the evidence mentioned in the report submitted in the matter published that Vadra had only Rs.1 lakh in his account while a cheque for Rs.7.5 crore was issued from the same account for the deal.
Kunal


Yes, even i heard the same.....
Similarly, a three times Congress MP Rao Indrajeet Singh has publicly demanded a detailed investigation into the Rs. 21000 acres of land licensed for various uses in Haryana in the past 8 years. In which 3 acres that was part of the Vadra-DLF deal. He further told the reporter that he can reveal many more names who have been involved in such illegal transactions.
Govinda,  
14th November 2014


38
Hi everybody,
Almost 10 months after it created a political controversy, the controversy surrounding the claimed the land dealing of Robert Vadra, son-in-law of congress president Sonia Gandhi. Anti-graft protester Arvind Kejriwal and his friend or party member accused Vadra of corruption.
Kunal


@Kunal,
Kejriwal alleged that Vadra purchased at least 31 properties mostly in New Delhi worth more than Rs.300 crore for which money has come from unsecured interest-free loans from DLF Ltd. Both Vadra and DLF refused the allegations. The main opposition party BJP demanded a investigation into the matter.
Govinda,  
14th November 2014


39
Rajeev Agarwal, whole-time member of Sebi was satisfied that the violations were grave and had larger implications on the safety and integrity of the securities market.
Dhiraj


Well Dhiraj,
I would like to tell you that among the transactions that drew the attention of the regulator were those in which three of DLF’s subsidiaries, DLF Estate Developers (DEDL), DLF Home Developers (DHDL) and DLF Retail Developers (DRDL) subscribed to the share capital of three companies.
Lekshmi,  
14th October 2014


40
Yes, now i remembered, the order follows a show-cause notice issued by Sebi in June 2013 to the company and its executives in which it alleged DLF had failed to disclose related-party transactions.
Dhiraj


Yes and the violations relate to, among other laws, the Disclosure and Investor Protection (DIP) Guidelines and the PFUTP (Prevention of Fraudulent and Unfair Trade Practices) norms.
Lekshmi,  
14th October 2014


41
Can you tell me Lekshmi why is the case all about and when did it happen?
Dhiraj


Well Dhiraj,
In November 2006 DLF Subsidiaries subscribed to the share capital of three company, sold these shares to three persons, Madhulika Basak, Niti Saxena and Padmaja Sanka. These three persons were the wives of Surojit Basak, Joy Saxena and Ramesh Sanka, respectively.
Lekshmi,  
14th October 2014


@Dhiraj,
Because of that the capital markets watchdog has prohibited the company and the executives from buying, selling or otherwise dealing in securities, directly or indirectly.
Lekshmi,  
14th October 2014


42
Yes, i read in Econmic Times today. This trouble is for refusing to give material information on the company's subsidiaries and legal cases against them in the brochure it filed for its initial public offering (IPO) in 2007.
Lekshmi


Today's breaking news!!!!! once again DLF staff found in fraud cases. An FIR has been filed against realty major DLF, its chairman and directors after the Park Place Condominium Association lodged a complaint accusing them of fraud.
Jamuna sikhri,  Delhi-NCR
18th March 2015


43

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