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DLF gets tribunal nod to redeem MF investments

SAT allows realtor to do so for serving Rs 1,806-cr loans

BS Reporter  |  Mumbai 

The Securities Appellant Tribunal (SAT) on Wednesday, in an interim relief, allowed DLF to redeem its mutual fund investments of Rs 1,806 crore to service its debt. The tribunal, while allowing DLF’s plea, said the company would have to give a certificate by the statutory auditor that the money was used for the stated purpose.

The realty major has moved SAT against market regulator Securities and Exchange Board of India (Sebi)’s order banning the company from accessing the securities market for three years.

“The Sebi order doesn’t stop the company from doing business. It is reasonable to allow the company to redeem mutual fund units as and when necessary,” said J P Devadhar, presiding officer, SAT, on Wednesday.

During the previous hearing, the tribunal had directed DLF to give an affidavit stating the amount and the reason for withdrawing its MF investments. DLF, which has MF investments of over Rs 2,500 crore, was unable to withdraw these following the Sebi order of October.

DLF had stated it needed Rs 767 crore in November and Rs 1,039 crore in December to service its loans and those of some subsidiaries. The company has debt of over Rs 20,000 crore, which it owes to various financial institutions.

Expressing surprise that DLF had to redeem MF investments for servicing loans, Sebi counsel Rafiq Dada said the liabilities of the company’s subsidiaries don’t lie with DLF.

The market regulator also asked for a detailed break-up of the fund requirement.

The counsel for DLF said they did not mind sharing bank details with Sebi but did not want to disclose it in public.

“You don’t disclose anything that you don’t want to disclose in public. Also, don’t say anything that will embarrass you later because if you say in affidavit that they (DLF) cannot pay, it is somewhat a drastic statement,” said Dada.

The SAT bench took a break to allow the appellant to modify its affidavit.

The company’s group chief financial officer (CFO), Ashok Kumar Tyagi, gave a written statement to the tribunal.

“Of the total liability of Rs 767 crore in November, DLF owes Rs 350 crore and subsidiaries owe Rs 413 crore to its lender. For December, DLF has to pay back Rs 752 crore to its lenders, while the subsidiaries need to pay back Rs 287 crore,” the company stated.

During the arguments, SAT made it clear the company would need to disclose the names of the subsidiaries whose loans would be serviced by the redeemed mutual fund units and that these should not be the ones mentioned in the Sebi order.

Additionally, SAT clarified that the 13 demat accounts frozen by the National Securities Depository (NSDL) and Central Depository Services Ltd would be allowed to be defrozen if the lenders invoked the share pledge made by DLF promoters.

The tribunal would hear the appeal next on December 10.

REDEMPTION TIME

  • SAT allows DLF to redeem MF investment worth Rs 1,806 crore to service loans
  • Directs DLF to submit auditor certificate stating that money has been used for stated purpose
  • DLF submits that it needs Rs 767 crore in November and Rs 1,039 crore in December to service loans of itself and its subsidiaries
  • SAT clarifies that frozen demat accounts would be available if lenders invoke share pledge
  • SAT to next hear DLF appeal on December 10

First Published: Wed, November 05 2014. 22:19 IST
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