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Old October 11 2012, 10:19 AM   #1
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Default DLF Clarifies IAC allegations

In their press conference, India Against Corruption (IAC) raised certain allegations, some of which pertained to DLF.

In this regard, we would like to state that the business relationship of DLF with Mr Robert Vadra or his companies, has been in his capacity as an individual entrepreneur, on a completely transparent and at an arm’s length basis. Our business relationship has been conducted to the highest standards of ethics and transparency, as has been our business practices, all around.



The facts are as follows on the matter raised:





Question 1: Why should DLF give unsecured interest free loans to Robert Vadra?



Answer: We wish to categorically state that the DLF has given NO unsecured loans to Mr. Vadra or any of his companies.



An amount of Rs 65 crores was given as business advances for the purchase of land as per standard industry practice comprising of the following two transactions.



M/s Skylight Hospitality Pvt Ltd approached us in FY 2008-09 to sell a piece of land measuring approximately 3.5 acres approx just off NH 8 in Village Sikohpur, Dist Gurgaon. This was licensable to develop a Commercial Complex and the LOI from Govt of Haryana to develop it for a Commercial Complex had been received in March 2008 itself.



DLF agreed to buy the said plot , given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crores. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY 2008-09 itself and a total sum of Rs 50 crores given as advance in instalments against the Purchase consideration. After receipt of all requisite approvals, the said property was conveyanced in favour of DLF. The average cost of the licensed property in hands of DLF works out to approx Rs 2800 psf of FSI, which was comparable with similar transactions in that area. The price of the said property has significantly appreciated today to the benefit of DLF and its shareholders.



M/S Skylight Group of companies also offered us in FY 2008-09 an opportunity to purchase a large land parcel in Faridabad and accordingly, DLF agreed to advance Rs 15 crores in instalments simultaneous to the commencement of due diligence of the said land parcel. After concluding that the said land had certain legal infirmities, we decided against its purchase. Accordingly on DLF’s request, the Skylight group refunded the advance of Rs 15 crores in totality.



To reiterate, at no stage was a interest free loan ever given to the Skylight group. There were two sets of Business Advances against purchase of property , one of which amounting to Rs 50 crores resulted in a satisfactory conclusion of purchase of commercial land and the second advance of Rs 15 crores was fully refunded.







Question 2: Why should DLF sell its properties to Vadra at throwaway prices and on the basis of funds obtained by Vadra from DLF itself.



Answer: Since no unsecured loans were provided by DLF the question of acquiring the said properties from DLF loans does not exist. It is not unusual for parties which sell land to DLF to choose to reinvest the consideration received or part thereof in projects being developed by DLF.



Keeping the above in view we clarify as under:





Residential Properties



Mr Vadra purchased one apartment for his personal use in Aralias in Sept 2008 at the then prevalent market price of Rs 12000 psft . The total purchase consideration of Rs 11.90 crores was paid by Mr Vadra, for which the apartment was conveyanced in his favour. We may also mention that while Aralias was initially launched at Rs 1800 psft , Mr Vadra’s purchase at Rs 12,000 psft is among the highest prices at which the company sold the apartments in Aralias. The alleged figure of Rs 89 lakhs as total purchase consideration is completely incorrect.



As part of its real estate business, Skylight group had invested in Magnolias apartments at a price of Rs 10,000 psft in March 2008 , which was the prevalent offer price of the company for all its customers. The initial launch price was only Rs 4500 only at which price a large number of customers made their purchases from the company. The Skylight Group also booked some apartments in the company’s Capital Greens project at the then Company’s offer price of Rs 5,000/6,000 psft which was availed by more than a thousand other customers.



There is no question of offering, let alone selling, Mr Vadra or his group companies any property at a throwaway price. The allegation that 7 apartments in Magnolias were sold for Rs 5.2 crores only is also completely baseless.



At NO stage was a property ever sold to the Skylight group below the then offered price to all customers. The gains, if any, made by Skylight group, by subsequent retrading would be similar to the gains made by those customers and in line with applicable market price appreciation experienced by all DLF customers in general.





Saket Hilton Hotel:



As part of its publicly stated objective of exiting the non core business of hotels, DLF, based on independent valuation, arrived at an enterprise value of Rs 150 crores for the Saket Hilton Hotel. It was agreed to sell an equity stake of 50% at the above enterprise value. The enterprise value comprised of Rs 80 crores of debt (at an interest rate of 12% pa) and an equity value of Rs 70 crores. Accordingly, for a 50% equity stake in the hotel, a sum of Rs 35 crores was contributed by Skylight Group.



However, despite good operating management, the Hotel continues to suffer financially due to the economic slowdown. Consequently the equity owners have jointly mandated an International Property Consultant to find an appropriate buyer at the best available market value. The indicative valuation is around Rs 200 crores and substantially lower than the Rs 300 crores being alleged. The final consideration shall be arrived after a market discovery process and shall be publicly disclosed upon its closing.



Q3: It is well known that DLF has been given 350 acres of land by Haryana Government for the development of Magnolias project in Gurgaon(where Vadra was allocated 7 apartments) and has been given various other properties and benefits by the Congress Governments in Haryana and Delhi. Is that the quid pro quo for DLF giving Vadra the seed money for the purchase of these massive properties worth hundreds of crores?



Answer: DLF vehemently denies any quid pro quo in its transactions with Mr Vadra and his group of companies. DLF is engaged in Real estate development in Haryana for over 40 years and has successfully implemented large projects by purchasing land from individual land owners directly at fair market prices and developing the same in strict compliance of all rules, regulations and applicable laws.



The development in which Magnolias project is located is part of the Phase V project in DLF City, Gurgaon. The land for the same was purchased from numerous individual land owners over the last 25 years and the relevant licenses for development were granted strictly in accordance with the rules , regulations and applicable laws way back in the Mid 1990s. As part of the ongoing development of Phase V, the Magnolias project was launched around 2005-06. The question of receiving any favours does not arise and the purchase of apartments by the Skylight group was done at a far later stage and at a price which was more than double the original launch price.



An attempt is being made to confuse the Magnolias project with an independent project of 350 Acres which was tendered by the Haryana State Industrial and Imports Development Corporation (HSIIDC) for a “Recreation and Leisure project” by a series of well advertised international tender processes in 2009. DLF emerged as the successful bidder after a thorough technical and commercial bidding process carried out in a highly transparent manner. The project is still at a nascent stage.



It may be clarified that DLF secured the project on its own merits by fulfilling the eligibility criteria through a competitive bidding process and NOT through a discretionary allotment by the Haryana Government as alleged. We further state that DLF has not been allotted any lands by the State Governments of Haryana, Rajasthan or Delhi.







Q4: It is clear that there is a lot of unaccounted black money invested in these properties of Vadra. What is the source of these funds ? Are illicit funds of the Cong party being funneled into this property buying spree by the son in law of the dynasty



Answer: All business transactions between DLF and Mr Vadra and his group of companies have been conducted with complete transparency and are fully accounted for as per the applicable laws and accounting standards. There is no question of utilization of unaccounted black money or illicit funds as alleged. We categorically and vehemently reject this allegation.




We trust we have clarified the issue adequately and with the facts, as they are. The allegations raised against DLF are therefore completely baseless and untrue. We have conducted business over the last 65 years and have been fortunate to have prospered through our commitment to the highest standards of integrity and total compliance to the laws of the land. We have never received any undue benefit from any state government or any government authorities in any part of India. DLF hopes that with this clarification, controversies of these baseless allegations stands cleared.

http://indianpropertyacresestate..com/
http://realestatezaydaadupdates..com...legations.html
Bhumiacres

 
Old October 11 2012, 12:53 PM   #2
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Goldman downgrades DLF to 'neutral', UBS
sticks to buy
NDTV
10/11/2012 New Delhi
Business
Investment bank Goldman Sachs on Thursday
downgraded real estate major DLF to 'neutral'
from 'buy', saying slower approvals could result in
fewer project launches, even as Swiss financial
services company UBS said activist Arvind
Kejriwal's accusations would have limited impact
on the company. It has maintained a 'buy' rating.
"With the stock down 11 per cent on the back of
this news flow, and our expectation of no
material impact on DLF's business--we believe
concerns are largely priced in," UBS said in a note.
Goldman has also cut its pre-sale estimates for
India's largest property developer and removed it
from its Asia-Pacific buy list, cutting its 12-month
target price to Rs. 224 from Rs 257.
Shares of the company have been under pressure
since activist-turned-politician Kejriwal accused
DLF of having extended an interest-free loan of
Rs 65 crore to businessman Robert Vadra, the
son-in-law of Congress president Sonia Gandhi, in
return for favours from the Congress government
in Haryana. Mr Vadra, DLF and the Haryana
government have all refuted the allegations.
Shares of India's largest real estate developer
declined for the third straight day yesterday over
fresh accusations by Mr Kejriwal. The stock closed
5 per cent lower at Rs. 213.10 (provisional) on
the National Stock Exchange. It was the top loser
on the 50-share Nifty benchmark.
The stock has plunged over 11 per cent since
Monday.
With inputs from Reuters
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Old October 11 2012, 04:43 PM   #3
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Default IAC's Rebuttal

Why should DLF give unsecured interest free loans to Robert Vadra?

DLF’s reply:

We wish to categorically state that the DLF has given NO unsecured loans to Mr. Vadra or any of his companies.

An amount of Rs.65 crore was given as business advances for the purchase of land as per standard industry practice comprising the following two transactions.

M/s Skylight Hospitality Pvt. Ltd. approached us in FY 2008-09 to sell a piece of land measuring approximately 3.5 acres approximately just off NH 8 in Sikohpur village, district Gurgaon. This was licensable to develop a commercial complex and the LoI from the government of Haryana to develop it for a commercial complex had been received in March 2008 itself.

DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs.58 crore. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY 2008-09 itself and a total sum of Rs.50 crore given as advance in instalments against the Purchase consideration. After receipt of all requisite approvals, the said property was conveyanced in favour of DLF. The average cost of the licensed property in the hands of DLF works out to approx Rs.2,800 psf of FSI, which was comparable with similar transactions in that area. The price of the said property has significantly appreciated today to the benefit of DLF and its shareholders.

M/s Skylight Group of companies also offered us in FY 2008-09 an opportunity to purchase a large land parcel in Faridabad and accordingly, DLF agreed to advance Rs.15 crore in instalments simultaneous to the commencement of due diligence of the said land parcel. After concluding that the said land had certain legal infirmities, we decided against its purchase. Accordingly on DLF’s request, the Skylight group refunded the advance of Rs.15 crore in totality.

To reiterate, at no stage was an interest free loan ever given to the Skylight group. There were two sets of Business Advances against purchase of property, one of which amounting to Rs.50 crore resulted in a satisfactory conclusion of purchase of commercial land and the second advance of Rs.15 crore was fully refunded.

IAC’s rebuttal

DLF has said that no unsecured loans were ever given. This is far from the truth for the following reasons:

a. If one looks at the 2009-10 balance sheet of Real Earth Estates Pvt. Ltd. (Robert Vadra (RV) group company), there is an entry called “Loan from DLF Ltd – Rs.5 crores”. This has been declared as an unsecured loan in the return filed by them in Registrar of Companies.

b. In the same year, Rs.50 crore has been given by DLF to Sky Light Hospitality Private Ltd (SLH), which is another RV group company. According to DLF, SLH sold its land at Manesar for Rs.58 crore to DLF and Rs.50 crore was an advance paid to SLH. Interestingly, this Manesar land was acquired by SLH just a year back for Rs.15.38 crore. How did the price of this land soar to Rs.58 crore? DLF claims that DLF made an advance payment of Rs.50 crore and took possession of this land in 2008-09 itself. This is completely incorrect. The balance sheet for the year ending March 31, 2011 shows that the advance made by DLF as well as the land at Manesar are both still in the possession of SLH. Is it a normal business practice to give an advance of 90 per cent of the amount of transaction and let it remain with the seller for more than two years without even bothering to take possession of land? Is it a normal business practice to let this advance remain interest free? DLF itself borrows money from several sources at quite high cost. Interestingly, SLH used this advance to purchase 50 per cent equity in DLF’s own hotel.

c. SLH received another Rs.10 crore from DLF as “Advance from DLF Ltd (Land account)”. This is also interest free. This money was received by SLH in 2008-09 and remained with them for more than 2 years.

d. DLF advanced another loan of Rs.15 crore in 2008-09 to SLH. DLF claims that this was meant as an advance for some property in Faridabad in which, some legal problems were discovered later. After using that money for about a year, SLH returned it to DLF. DLF did not charge any interest on that. Does that appear to be a normal business practice?

e. What is the difference between the unsecured loans received by Kanimozhi and Robert Vadra?

Why should DLF sell its properties to Vadra at throwaway prices and on the basis of funds obtained by Vadra from DLF itself?

DLF’s reply: ARALIAS

Mr. Vadra purchased one apartment for his personal use in Aralias in September 2008 at the then prevalent market price of Rs.12,000 psft. The total purchase consideration of Rs.11.90 crore was paid by Mr. Vadra, for which the apartment was conveyanced in his favour. We may also mention that while Aralias was initially launched at Rs.1,800 psft, Mr. Vadra’s purchase at Rs.12,000 psft is among the highest prices at which the company sold the apartments in Aralias. The alleged figure of Rs.89 lakh as total purchase consideration is completely incorrect.

IAC’s rebuttal

In the balance sheet of Sky Light realty (SLR) Pvt. Ltd. for the year 2009-10, the Aralias flat is shown to have been purchased for Rs.89.41 lakh. However, in the next year’s balance sheet, there is an increase of Rs.8.57 crore in the property at Aralias. Why did that happen? For how much was this property purchased and when was it purchased? A story appeared in the Economic Times in March 2011 raising questions about Mr. Robert Vadra’s properties. Was this amount increased immediately thereafter? DLF in its response has said that the flat was purchased by the Vadras in 2008 for their personal use and it was transferred to them in the same year. Then how is it that the value of the flat is shown at Rs.89.41 lakh in 2009-10 and suddenly it becomes Rs.10.4 crore (including furniture) in 2010-11.

DLF’s reply: MAGNOLIAS

As part of its real estate business, Skylight group had invested in Magnolias apartments at a price of Rs.10,000 psft in March 2008, which was the prevalent offer price of the company for all its customers. The initial launch price was only Rs.4,500 only at which price a large number of customers made their purchases from the company. The Skylight Group also booked some apartments in the company’s Capital Greens project at the then Company’s offer price of Rs.5,000/6,000 psft which was availed by more than a thousand other customers.

There is no question of offering, let alone selling, Mr. Vadra or his group companies any property at a throwaway price. The allegation that 7 apartments in Magnolias were sold for Rs.5.2 crore only is also completely baseless.

At NO stage was a property ever sold to the Skylight group below the then offered price to all customers. The gains, if any, made by Skylight group, by subsequent retrading would be similar to the gains made by those customers and in line with applicable market price appreciation experienced by all DLF customers in general.

IAC’s rebuttal DLF has said that the Magnolias flats were sold at Rs.10,000 psf to Sky Light Group. At that rate, the cost of each Magnolia flat comes to Rs.5 crore. But in the balance sheet for the year 2009-10 for SLR Pvt. Ltd., it is clearly mentioned in Current assets — “DLF Ltd 7 flats Magnolias – Rs.5.232 crore”. Did Vadra file a wrong balance sheet with the Registrar of Companies?

It is well known that DLF has been given 350 acres of land by Haryana Government for the development of Magnolias project in Gurgaon (where Vadra was allocated 7 apartments). Is that the quid pro quo for DLF giving Vadra the seed money for the purchase of these properties?

DLF’s reply:

An attempt is being made to confuse the Magnolias project with an independent project of 350 acres which was tendered by the Haryana State Industrial and Imports Development Corporation (HSIIDC) for a “Recreation and Leisure project” by a series of well advertised international tender processes in 2009. DLF emerged as the successful bidder after a thorough technical and commercial bidding process carried out in a highly transparent manner. The project is still at a nascent stage.

It may be clarified that DLF secured the project on its own merits by fulfilling the eligibility criteria through a competitive bidding process and NOT through a discretionary allotment by the Haryana government as alleged. We further state that DLF has not been allotted any lands by the State governments of Haryana, Rajasthan or Delhi.

IAC’s rebuttal

Some of the favours given by the Haryana government in this project:

1. International bids were invited for this project. Three parties applied — DLF, Country Heights and Unitech. Financial bids of Unitech and Country Heights were not even opened. They were rejected at the technical stage saying that they did not have experience in constructing and maintaining a golf course. This condition was introduced at the time of evaluating technical bids. Doesn’t it raise suspicion whether this was done to reject other parties and to grant this contract to DLF? From news reports, it is understood that the other two bids were much more than DLF’s bid. This means that the government suffered a loss by giving it to DLF.

2. Out of 350 acres, 75.98 acres of land was owned by the Haryana Urban Development Authority (HUDA) and 275 acres of land belonged to HSIIDC. HSIIDC’s mandate is to encourage industry in Haryana. It normally uses the land in its possession to carve out land plots for industrial use. HUDA uses its land for residential purposes. However, in this case, they were expected to simply transfer their land to DLF.

3. Out of 275 acres of land with HSIIDC, 91.97 acres of land is forest land covered under the Punjab Land Preservation Act (PLPA). SC has ordered that lands covered under PLPA should be treated as forest land and cannot be used for non-forest purposes. 161.03 acres of land is under Aravali plantation. This also cannot be used for any other purpose. The Haryana government has assumed the responsibility of seeking permissions from all Central and State government authorities to facilitate it for DLF. Interestingly, the Haryana government has given all this land to DLF without even getting these permissions.

4. No Environmental Impact Assessment was done. The process is believed to have been started but was cancelled midway.

5. As mentioned above, HUDA had to part with 75.98 acres of land for this project. HUDA’s job is to develop residential and commercial plots for the common people. They have done so in the past by developing various sectors in Gurgaon. HUDA had acquired this land a few years ago from the farmers of Gurgaon saying that this land would be used for “Public purpose” for various sectors in Gurgaon, constructing roads, etc. However, now this land was being transferred to DLF, not for “public purpose” but for private profit. This was a fraud on those farmers who had sacrificed their land earlier.

Source: Press Releases from India Against Corruption
 
Old October 31 2012, 11:38 AM   #4
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DLF is a big and old company with terrific reputation, I am not surprised that some people are trying to destroy it using politics as a weapon.
 
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