The key to progress is change. The past year has witnessed significant structuralchanges in the Indian economy that have altered the business paradigm in every sectorincluding the real estate and construction industry.
Due to several bold initiatives of the Government the nation is on the cusp of a newera of economic activity and opportunity in which the key to success will be the abilityto respond to change and overcome the challenges that inevitably arise during the periodof transition.
As I have been frequently indicating to our stakeholders and patrons during the pastfew years DLF has been strategically preparing for and indeed actively pressing forreformatory legislation and visionary policies pertaining to housing construction andreal estate development.
I am glad to share with you that your Company is now better equipped than many of ourpeers to navigate through the critical period of adaptation and course corrections thatlie ahead. This has primarily been due to the foresight of your management team which hasalready put into place many of the internal structural changes and core business portfolioroadmaps that are best suited for survival and success in the changing scenario.
As you will recall I have been persistently advocating for streamlining laws to bringabout greater transparency accountability and compliance in the real estate industry andto eliminate fly-by-night operators who have for decades been not only tarnishing theimage of genuine developers but also seriously disrupting the housing market by defraudinghome-buyers and end-users.
Your Companys aspirations are in step with the new landmark legislation that hasbeen enacted - the Real Estate (Regulation & Development) Act (RERA). Ideally thiswould boost consumer confidence pave the way for accelerated demand for housing productsand also facilitate the flow of investments into the realty sector from both global andIndian investors.
Similarly other major reforms like GST and the law regarding Benami Transactions wouldmake it incumbent upon hitherto non-compliant players to either comply or perish.
Moreover although the shock decision to demonetize high value currency notes hasevidently led to an initial slowdown in overall economic growth for a short-term it willhopefully lead to more transparent housing sector growth in the long run.
While the various reform measures that have been introduced are salutary and indeedlong overdue the Government must be mindful of the necessity to ease the travails oftransition especially in a competitive market economy by acting as an enabler andfacilitator even while exercising strict regulatory control.
During the process of adjustment and adaptation it is also essential to be open torefining some of the provisions of the new regulations and in certain cases rectifyingsome of the procedures and stipulations in response to practical difficulties andindustry feedback.
The truth is that the real estate sector has perennially been plagued by a plethora ofarchaic rules and burdensome bureaucratic formalities that hinder healthy growth. Theground reality of different States having complex and cumbersome regulations furtherhampers execution of projects in time and within the envisaged budget.
In my view although the new legislation has many positive and necessary features thathave been welcomed by builders and buyers alike RERA regrettably does not adequatelyaddress certain crucial concerns faced by developers.
From the developers point of view I would very briefly outline the aspects as absence of a single window clearance mechanism; imposition of additional layers ofapprovals; and increased reliance on external capital to achieve high growth.
For allottees too there would be some grey areas including the likelihood of delaysin delivery of apartments and consequent price escalation.
Legislative reforms in my view should be primarily aimed at bringing about a happybalance between supply and demand of real estate products. Along with ensuringtransparency the emphasis of any radical changes in policies and procedures should be onallowing market forces to create a mutually beneficial environment for developers buyersand all stakeholders.
It is but natural that arriving at such a harmonious outcome will take awhile. It needsto be kept in mind that the real estate development sector in India has been passingthrough a variety of challenges compounded by continuing sluggish demand lack ofliquidity regulatory pressure and piling up of inventory which have collectively createduncertainty about future growth.
I am confident that the Government under the dynamic and far-sighted leadership of theHonble Prime Minister Shri Narendra Modi will accord utmost priority to addressingthe concerns and removing the shackles to enable rapid growth in real estate developmentwhich I have always strongly believed will emerge as the next Sunrise Sector of the Indianeconomy.
For this to happen the Government must act as an Enabler and Facilitator not merelyas a Regulator. The housing and construction industry which supports over 250 ancillaryindustries is the second-largest provider of jobs in the country after agriculture and isrecognized as a powerful engine of growth already contributing 7%-8% ofIndias GDP with the potential to grow to over 13% by 2028.
I am confident that DLF is eminently well-equipped to not only tide over the travailsof transition but also be at the forefront of revival. Our unique business model cushionsthe impact of market down-cycles with each division in product-mix - comprising homesoffices and retail including malls and commercial complexes functioning as astrategic business unit. Moreover the sizable land resources your Company has accumulatedover several decades would facilitate new project launches in prime locations at theappropriate time.
Shareholders will also be happy to know that the Company has successfully accomplisheda major restructuring of its rental business with a game changing decision to sellPromoters stake in DLF Cyber City Developers Limited (DCCDL) to Singaporessovereign wealth fund GIC. The bulk of the sale proceeds would be reinvested in theCompany to enable substantial reduction in pending debts without recourse to heavyexternal borrowings. The Company looks forward to partnering with GIC in taking the rentalbusiness to unprecedented heights.
As a responsible and ethical corporate entity sustainable growth is high on our listof CSR programmes for the benefit of the community. The major CSR programmes implementedduring the year aimed at contributing to national priorities like skill developmenteducation rural healthcare and community development. The Company has fully utilized 2%of its three years average profits for this purpose. DLFs social outreachinitiatives have won recognition at various National & International forums.
It is heartening to note that DLFs sterling products have been awarded PlatinumCertification (highest certification) and IGBCs LEED India Platinum rating by the USGreen Building Council and Indian Green Building Council respectively.
I look forward to your continued support over the next few quarters as we face thechallenges ahead with renewed confidence and determination to maintain our stellar role asthe countrys foremost creators of high quality real estate products.
I take this opportunity to thank all our shareholders business partners and valuedcustomers for their unstinted support and trust over the last seven decades. On behalf ofmy fellow-directors and the entire DLF corporate family I renew our pledge to remaincommitted towards building a New India.
| ||With best wishes |
|New Delhi ||(Dr. K. P. Singh |
|25 August 2017 ||Chairman |