Realty major DLF continues to face trouble on litigation involving alleged improper acquisition of land in Gurugram.
The company lost Rs 6,758 crore in market capitalisation on Thursday, after a news report said the Supreme Court (SC) had issued a notice to it. DLF had to hold a conference with its investors and market analysts to allay worries. The Securities and Exchange Board of India (Sebi) also sought a clarification from the company.
During intraday trade, the company’s share price fell 19.7 per cent on BSE. It closed at Rs 144.3 or 15.9 per cent lower than on Wednesday.
The company has been in a dispute with Sebi, since complaints of irregularities in its initial public offering of shares and fund raising in 2013.
The matter began when a petitioner, K K Sinha, complained in 2013. The initial order by Sebi went against DLF but it then got a favourable order at the Securities Appellate Tribunal in 2015. Sebi then appealed to the SC.
It was also alleged that DLF failed to disclose all land related litigation pending in various courts during its two rounds of fund raising, in 2013 and 2019. During these rounds, it had raised close to Rs 5,100 crore from investors, including UBS, HSBC, Marshall & Wace and Goldman Sachs, and one of its institutional shareholders, Oppenheimer.
A company spokesperson denied any wrongdoing. “All material disclosures that needed to be done have been put out in the QIP (qualified institutional placement document) and were vetted by the lawyers and bankers concerned. Besides, this particular case that the complainant has mentioned pertains to a small parcel of land of five-six acres, belonging to a company that is not our subsidiary. In the notice, the SC has only asked for our views, on whether this complainant should be impleaded in the said matter or not,” he said.
There have also been allegations of violation of the land ceiling law and that DLF bought lots of land at lower rates in Haryana through subsidiaries. While the company did not throw any light on the matter, DLF in its latest annual report informed stakeholders, “The company’s land reserves are in strategic locations, acquired at historical costs”.
The 2018-19 report said the holding company of the group had at least 106 subsidiaries and nine associate companies, where its holding ranges from 25 to 100 per cent.
According to independent auditors, DLF’s investment in its subsidiaries, associate firms and joint ventures stood at Rs 9,535.9 crore as of end-March.
The company said at least two land lots, of 19.5 acres and 37 acres in Gurugram, owned by subsidiary DLF Assets, were under litigation.
However, this subsidiary was transferred to DLF Cyber City Developers (DCCDL), a 2:1 joint venture between DLF and Singapore’s sovereign fund, GIC, in 2018-19. Later, in August 2019, DLF lowered its payables to DCCDL by Rs 3,100 crore, to Rs 5,600 crore.
GIC, which was a key shareholder in DLF, continues to hold nearly a third of DCCDL, rental arm of the DLF group. In April 2019, GIC sold some 70 million DLF shares worth Rs 1,344 crore to other institutional investors in a block deal. The Singapore wealth fund that had nearly 83.9 million DLF shares in April 2018; now holds about 9.1 million.